SFC - Annual Report 2019 | FinancialReports.eu

==> picture [596 x 110] intentionally omitted <==

==> picture [596 x 102] intentionally omitted <==

==> picture [596 x 61] intentionally omitted <==

==> picture [596 x 94] intentionally omitted <==

Table of Contents
	Page
One. Letter to Shareholders..........................................................................................................	1
Two. Company Profile...................................................................................................................	5
I. Date of incorporation .........................................................................................................	5
II. Development history ..........................................................................................................	5
Three. Corporate Governance Report...........................................................................................	10
I. Organization of company .....................................................................................................	10
II. Directors, supervisors, president, vice president, assistant VP, and department heads ........	13
III. Implementation of Corporate Governance ...........................................................................	20
IV. Information Regarding Audit Fee ........................................................................................	51
V. CPA’s change information ....................................................................................................	52
VI. The chairman, president, and financial or accounting managers of the Company who
worked for the CPA or its affiliates last year ......................................................................	52
VII. Share transfer and share mortgage of directors, supervisors, executives, and
shareholders holding over 10% of shares in the last year and by the report publishing
date .....................................................................................................................................	53
VIII. Relationships of the top ten shareholders……………………………………………….	54
IX. The shareholding of the same invested company by the Company, the directors, the
supervisors, the managers, or another business that is controlled by the Company
directly or indirectly ...........................................................................................................	57
Four. Stock Subscription.............................................................................................................	58
I. Capital and shares ................................................................................................................	58
II. Corporate bond ....................................................................................................................	63
III. Preferred stock .....................................................................................................................	63
IV. Issuance of global depository receipts .................................................................................	64
V. Employee stock option certificates ......................................................................................	64
VI. Restricted employee rights and new shares issue ................................................................	64
VII. Mergers and acquisitions ..................................................................................................	64
VIII. Fund implementation plan ................................................................................................	64
Five. Overview of Business Operations.......................................................................................	65
I. Principal activities ..............................................................................................................	65
II. Overview of Marketing and Production & Sales ...............................................................	68
III. Status of employees over the past two years and up to the printing of the annual report ..	80
IV. Information on Environmental Protection Expenditure .....................................................	81
V. Employee/Employer Relations ...........................................................................................	82
VI. Important commitments .....................................................................................................	86

Six.	Financial Information.........................................................................................................	87
I.	Condensed balance sheet, income statements, CPAs, and their opinions over the last five
	years .....................................................................................................................................	87
II.	Financial analysis in the past five years ...............................................................................	91
III. Audit committee’s report in the most recent year ................................................................		94
IV. Financial report and consolidated financial statements .......................................................		95
V.	Financial report of standard foods corporation ....................................................................	179
VI. Financial difficulties of the company and related parties in the current year and up to the
	printing of the annual report ................................................................................................	268
Seven.	Review of Financial Position, Financial Performance, and Risk Management.............	269
I.	Financial position ...............................................................................................................	269
II.	Financial performance ........................................................................................................	270
III. Cash flows ..........................................................................................................................		271
IV. Impact of major capital expenditures on finance and business in the current year ............		272
V.	Reinvestment Policies, Main Reasons of Its Profits/Losses, Improvement Plans in the
	Most Recent Year and Investment Plan for the Following Year……................................	273
VI. Analysis and Evaluation of Risks in the Most Recent Year and Up to the Date of
	Publication of the annual report .........................................................................................	274
VII. Other matters ......................................................................................................................		277
Eight.	Special Disclosures...............................................................................................................	278
I.	Related parties ....................................................................................................................	278
II.	Private subscription of marketable securities in the most recent years and up to the
	printing of the annual report ...............................................................................................	286
III. The Stock shares of the company held or disposed of by subsidiaries in the most recent
	years and up to the printing of the annual report ................................................................	287
IV. Other Necessary Supplements ............................................................................................		288
V.	Matter that materially affect shareholders’ equity or the price of the company’s
	securities as specified in Subparagraph 2, Paragraph 3, Article 36 of the Securities
	Exchange Act occurred in the most recent year and up to the date of publication of
	the annual report .................................................................................. ………………..	289

One Letter to Shareholders

Dear Shareholders, ladies and gentlemen,

Despite the continuous changes in macro-environment in 2019, customers' pursuits of balanced nutrition and health remain the same. Therefore, with the joint efforts of all colleagues, the consolidated operating revenue of Standard Foods is over NT$ 30 billion for the first time.

We believe that "balanced nutrition is the basis for people's health." With this concept, Standard Foods will continue to promote a healthy diet, not only paying attention to food safety and trying hard to develop high-quality products meeting people's demands, but also continuing to pursue the growth and improving company governance, so as to maintain customer's satisfaction and trustworthiness, and finally become a trustworthy food company.

Looking forward to 2020, the COVID-19 epidemic greatly influences economy domestically and overseas. More and more attention has been paid towards to the importance of nutrition and health. Standard Foods is on a mission to become "nutrition and health partner for the family." With intention, innovation and love, the company is devoted to developing new products and maintaining high-quality products. Under the joint efforts of everyone, the company expects to provide customers with reassuring, nutritious, and healthy products, making the company's business more and more prosperous.

The shareholders' trust and support for our operating team are highly appreciated.

2019 consolidated operating results and 2020 annual business plan are reported as below:

I. 2019 Consolidated Business Results

Consolidated revenue and profit

Unit: NT$ Thousand

Item	2019	%	2018	%	+/- %
Operatingrevenue	31,266,232	100	27,340,587	100	14.4
Operatingcosts	21,635,219	69	19,086,242	70	13.4
Grossprofit	9,631,013	31	8,254,345	30	16.7
Net operating profit	4,423,873	14	3,149,836	12	40.4
Net income before tax	4,548,534	15	3,676,232	14	23.7
Net profit for the period	3,454,836	11	2,968,307	11	16.4
Total comprehensive income	3,198,647	10	2,829,558	10	13.0

The combined operating revenue of Standard Foods in 2019 was NT$ 31.26 billion, with a year-on-year increase of 14.4%, equivalent to NT$ 3,925 million. The operating revenue of individual company in 2019 was NT$ 13.14billion, with a year-on-year increase of 7.8%, equivalent to NT$ 952 million.

-1-

The total comprehensive income in 2019 was NT$3.2 billion, with a year-on-year increase of 13.0%, equivalent to NT$369 million. The total comprehensive income belonging to the owners of the company was NT$3.14 billion, with a year-on-year increase of 11.7%, equivalent to NT$329 million.

Research and development

With the purpose of providing customers with nutritious, delicious, healthy, and high-quality products, Standard Foods invested NT$148 million for research and development in 2019. Besides continuous development of various new products, clinical trials and technical research, the company also upgrades and improves the formulation and packaging of existing products, with the expectation of bringing consumers higher quality of products.

II. 2020 Business Plan and Future Development Strategies

Business directions
(1) As the awareness of health rises in Taiwan, nutrition and health products are increasingly demanded for all ages. The company will conduct consumer research and investigation persistently to grasp the trend of the market, and develop more convenient and more diverse 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.
Expected sales volume and important production and sales policies

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:

(1) Production
Follow the Group's future development strategy and goals, and 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.
(2) Sales
Grasp the market consumption trend and listen to customers attentively.

-2-

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.

III. Impact of External Competitive Environment, Legal Environment, and Overall Business Environment

1. External competitive environment

In respond to the constant change in domestic and foreign environment as well as the rise of sales channels such as social marketing and live marketing, the consumption is transferred through the changes between virtual and real channels. Other than responding to the fierce competition from many domestic and foreign manufacturers, it is urgent to master customers' consumption behaviors and methods. In addition to upholding the original intention and strictly inspecting and producing each product with high standards, Standard Foods strengthens the communications with customers and understands their real demands through various marketing channels, continues to develop products that make customers "buy and eat with no worries," and improves the innovation and added value of products. Through various multimedia and experience activities, the company delves into customers lives, and then further strengthens the brand image and improves customer's loyalty to the brand, making it the leading brand of the market.

2. Regulatory environment

In recent years, the government has made the food safety and health management systems more comprehensive through numerous amendments to laws to ensure food safety in Taiwan. The mission of Standard Foods is to become the nutrition and health partner of the whole family of customer. "Safe food" is our permanent promise to customers. Except for abiding by government's food safety acts, laws and regulations, the company establishes food safety monitoring plan and constantly improves the plan, so as to perfect the quality of all products.

-3-

3. Overall business environment

Recently, affected by COVID-19 epidemic, the international oil price fluctuates wildly, which also exerts an influence on bulk commodities, raw materials, and exchange rate. Although the domestic epidemic has been controlled properly, the violent change in international economy will inevitably affect the domestic economy and consumption momentum. It is still considerably challenging for the operation of food industry relying on imported raw materials and mainly depending on domestic markets.

Looking forward to the future, though the unpredictable changes in the economic situation, Standard Foods still sticks to the concept of prudent operation, keeps promise to customers, continues to improve and launch high-quality products to serve customers.

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

-4-

Two. Company Profile

I. Date of incorporation: June 6, 1986
II. Development history 1986 � Standard Foods Taiwan Ltd. was invested and established by Standard International Foods Corp. The paid-in capital was NT$4,788,300.
Quaker Products Taiwan Ltd. invested in Standard Foods Taiwan Ltd., the paid-in capital increased to NT$4,788,400.
Standard Foods acquired the assets of Quaker Products Taiwan Ltd. and was granted its business license on August 8 to continue to manufacture and sell Quaker’s White Oats and Baby Cereal.
Increased the paid-in capital to NT$15,000,000 by cash capitalization of NT$10,211,600.
1987 � Quaker Products Taiwan Ltd. transferred all its shares in the Company to Quaker Oats Company.
Expansion of Ta Yuan plant facilities at an expense of over NT$15 million.
1988 � Increased the paid-in capital to NT$45,000,000 with retained earnings of NT$30,000,000 for expanding facilities and acquiring manufacturing equipment.
1990 �Acquired land in Wugu Industrial Zone for an amount over NT$120 million.
�Grand opening of the first Pizza Inn Restaurant in Taiwan.
�Increased the paid-in capital to NT$162,000,000 with retained earnings of NT$117,000,000. Par value of each share split from NT$100 to NT$10.
�Securities and Exchange Commission authorized the Company as a public company
1991 �Expansion of Ta Yuan shipping warehouse at an expense of over NT$21 million.
�Increased the paid-in capital to NT$194,400,000 with retained earnings of NT$32,400,000
1992 �Increased the paid-in capital to NT$307,152,000 with retained earnings of NT$64,152,000 and cash capitalization of NT$48,600,000.
1993 �Invested in Standard Foods Singapore Pte Ltd. of US$2.32 million to re-invest an amount of US$2.25 million in Suzhou Standard Foods Co. to manufacture cereal products.
�Increased the paid-in capital to NT$430,012,800 with retained earnings of NT$122,860,800.
�Invested $79,999 thousand in Standard Friendship Taiwan Ltd. for 99.99% shareholdings
�Food and beverages operations transferred to Standard Friendship Taiwan Ltd. for professional management.

-5-

1994 �Increased the paid-in capital to NT$602,017,920 with retained earnings of NT$172,005,120.
�The Company became a listed company in the Taiwan Stock Exchange on April 9.
1995 �Increased the paid-in capital to NT$848,338,570 with retained earnings of NT$246,320,650.
�Wired US$8.5 million, to repurchase the 51% equity interest of Standard Foods Singapore Pte Ltd. held by Quaker Oats Company for US$3.8 million and increased the investment in China by US$4.7 million.
1996 �Increased the paid-in capital to NT$1,191,168,430 with retained earnings of NT$342,829,860.
1997 �Increased the paid-in capital to NT$1,672,052,910 with retained earnings of NT$480,884,480.
�As resolved in the shareholders' meeting, Standard Friendship ceased its operations and sold its operational assets in December 1996.
�Invested in Charng-Li Investment Ltd. with an amount of NT$289,994 thousand for a shareholding of 99.9% to run investment business.
�In June 1997, Mr. Ter-Fung Tsao (Chairman of the Company) and Ms. H.D. Mon (major shareholder of the Company) used part of their equity interest in the Company to issue 3,000,000 Global Depositary Receipts ("GDRs") in Asia, Europe, and the United States; each unit represents 5 common shares of the Company.
1998 �Increased the paid-in capital to NT$2,094,702,360 with retained earnings of NT$422,649,450.
�Invested in Standard Beverage Ltd. with an amount of NT$99,999 thousand for a shareholding of 99.9% to produce bottled water.
�Increased investment in China by US$5 million.
1999 �Increased the paid-in capital to NT$2,623,606,510 with retained earnings of NT$528,904,150.
�Invested NT$328 million to establish Standard Dairy Products Taiwan Ltd. for the production of yogurt with 75% shareholding acquired. The products are included in the “Yoplait” brand.
�Acquired the factory, machinery and trademark of Fresh Dairy with NT$350 million to launch Fresh Delight series products.
2000 �Increased the paid-in capital to NT$3,022,645,060 with retained earnings of NT$399,038,550.
�Invested additional NT$108 million in Standard Dairy Products Taiwan Ltd. with 99% shareholding acquired in total.
�Increased the equity of Domex Technology Corporation to 49% by NT$214 million.
�Disposed of 900,000 shares of Standard Beverage Ltd. The equity interest decreased to 91%.

-6-

�Invested 100% equity in Accession Limited, based on BVI, with US$2 million. Then increased the equity by transferring assets as capital contribution and by cash total up to US$11.9 million.
2001 �Charng-Li Investment Ltd., our wholly-owned company, was renamed as Charng Hui Ltd.
�Automated storage was completed.
�Accession Limited invested in Shanghai Standard Foods Co. to sell cereal products.
�Increased the paid-in capital to NT$3,209,184,420 with retained earnings of NT$186,539,360.
�Invested 56% equity in Renewable Resource Technology (Cayman) Co., Ltd. with US$2.8 million with the goal of re-investing in Hunan Jiage Biotechnology Co., Ltd. with US$3.4 million to manufacture fermented organism products.
2002 �Accession Limited increased the paid-in capital to US$20,344,080 with US$5 million cash injection and US$1.42 million retained earnings.
�Accession Limited acquired the equity of Suzhou Standard Foods Co. from Standard Foods Singapore Pte Ltd. and Standard Foods Singapore Pte Ltd. went into liquidation.
�Changed the Company’s name from “Standard Foods Taiwan Ltd.” to “Standard Foods Corporation”.
2003 �Shanghai Standard Foods Co., merged with Suzhou Standard Foods Co., Shanghai Standard Foods Co., is the continuing company. Suzhou Standard Foods Co., became a branch company of Shanghai Standard Foods Co.
�Invested in Accession Limited by US$2.2 million.
�Charng Hui Ltd., our wholly-owned, decreased the paid-in capital to NT$194 million by NT$96 million.
2004 �Liquidation of Singapore Standard Foods was completed. �Accession Limited increased the paid-in capital to US$37,344,080 with Accession Limited increased the paid-in capital to US$37,344,080 with US$14.8 million cash injection. Accession Limited decreased the paid-in capital to US$33,100,000 by US$4,244,080 in October 2004.
2005 �Accession Limited increased the paid-in capital to US$38,100,000 with US$5,000,000 cash injection.
�Increased the equity of Standard Dairy Products Taiwan Ltd. from 99.9% to 100%.
2006 �Changed the fiscal year to calendar year on January 1.
�Accession Limited increased the paid-in capital to US$37,344,080 with Accession Limited increased the paid-in capital to US$37,344,080 with US$14.8 million cash injection. Accession Limited decreased the paid-in capital to US$33,100,000 by US$4,244,080 in October 2004.
�SAP ERP system officially online.
�Charng Hui Ltd., our wholly-owned, decreased the paid-in capital to NT$150 million by NT$44 million.
2007 � Accession Limited increased the paid-in capital to US$43,100,000 with US$5,000,000 cash injection.

-7-

2008 �Signed a distribution agreement with Fonterra Brands (Far East) Limited (Hong Kong).
�Accession Limited increased the paid-in capital to US$50,600,000 with US$7,500,000 cash injection.
2009 �Accession Limited increased the paid-in capital to US$73,600,000 with US$23,000,000 cash injection.
�Increased the paid-in capital to NT$3,225,230,340 with retained earnings of NT$16,045,920.
2010 �The Company's tangible stock shares are converted to intangible stock shares.
�Accession Limited increased the paid-in capital to US$123,600,000 with US$50,000,000 cash injection.
�Increased the paid-in capital to NT$3,709,014,890 with retained earnings of NT$483,784,550.
2011 �The Company invested in and established Standard Investment (Cayman) Limited, which reinvested in and established Standard Corporation (Hong Kong) Limited.
�Standard Corporation (Hong Kong) Limited invested in and established Standard Investment (China) Limited.
�Standard Investment (China) Limited made reinvestment to set up Standard Food (China) Limited.
�Increased the paid-in capital to NT$4,636,268,610 with retained earnings of NT$927,253,720.
2012 �Increased the paid-in capital to NT$5,748,973,070 with retained earnings of NT$1,112,704,460.
� Made a cash injection of US$ 30,010,000 to Standard Investment (Cayman) Limited. Total paid-in capital of the Company increased to US$ 30,010,000.
2013 �Increased the paid-in capital to NT$6,611,319,030 with retained earnings of NT$862,345,960.
�Made a cash injection of US$ 15,035,000 to Standard Investment (Cayman) Limited. Total paid-in capital of the Company increased to US$ 45,045,000.
�An increase in cash capital of NT$380,000,000 was invested in Charng Hui Ltd. for a total investment of NT$541,000,000.
2014 �Increased the paid-in capital to NT$7,206,337,740 with retained earnings of NT$595,018,710.
Increased shareholding of Standard Beverage Ltd. from 97.1% to 100%.
�Increased the paid-in capital of Standard Investment (Cayman) Limited to US$66,396,296 with retained earnings of CNY131,211,500 (equivalent to US$21,351,296).
�Established Shanghai Dermalab Corporation with re-investments through Standard Investment (China) Ltd.
�Established Le Bonta Wellness Co., Ltd. with re-investments through Standard Investment (China) Ltd.

-8-

2015	�Transferred capital surplus at NT$720,633,770 to capital to increase paid-in
	capital to NT$7,926,971,510.
	�Increased capital to US$22,899,457 to Standard Investment (Cayman)
	Limited to increase paid-in capital to US$89,295,753. Standard Investment
	(Cayman) Limited then reinvested in Standard Foods (Xiamen) Co., Ltd.
	and Shanghai Dermalab Corporation through Standard Foods (Hong Kong)
	Ltd. and Standard Investment (China) Ltd.
	�Shanghai Standard Foods Co. established Shanghai Le Ben De Health
	Technology Co., Ltd. through asset partitioning at US$1,000,000.
	�Accession Limited acquired 80% shares of Dermalab S.A
	�Le Bonta Wellness Co., Ltd. acquired Beijing Yisheng Tong Kang
	Biotechnology Co., Ltd. via cash merger.
2016	�Transferred capital surplus NT$871,966,860 to capital to increase paid-in
	capital to NT$8,798,938,370
	�Increased capital US$45,040,101 to Standard Investment (Cayman) Limited
	to increase paid-in capital to US$134,335,854. Standard Investment
	(Cayman) Limited established Shanghai Le Ho Industrial Co., Ltd. and
	Shanghai Le Min Industrial Co., Ltd. with re-investments through Standard
	Foods (Hong Kong) Limited.
	�Acquired 100% share equity of Le Bonta Wellness International Co.
2017	�Capitalization of undistributed earnings into new shares amounting to
	NT$351,957,540. The paid-in capital amounted to NT$9,150,895,910 after
	the capitalization
	�TheCompany’s Chairman and President, Mr. Ter-Fung Tsao, resigned from
	the position of the Company’s President on May 1, and Vice President of the
	Company, Yao Steven Yih-Chun, took over the office.
	�The Company established the position of Chief Executive Officer on May 5,
	assumed by the Chairman, Ter-Fung Tsao
	�Lebonata Health Technology (Shanghai) Limited increased its capital in
	cash amounting to CNY40,900,000, which made the paid-in capital of the
	company amounting to CNY80,100,000
	�Standard Investment (Cayman) Limited and Standard Foods (Hong Kong)
	increased capita in cash amounting to USD15,724,960, which made the
	paid-in capital amounting to USD 150,060,815 and USD 150,012,815,
	respectively.
2018	�Accession Limited acquired 20% of the share equity of Dermalab S.A..
	�Disposed of the Company’s land in Wugu IndustrialZone in May. The total
	trading value was NT$508,620 thousand, and the gains from the disposition
	were NT$304,600 thousand.
	�Increased capital by US$64,000 to Standard Investment (Cayman) Limited
	and US$38,000 to Standards Foods (Hong Kong) to increase said
	companies’ paid-in capital to US$150,124,815 and US$150,050,815
	respectively.
2019	�Mr. Arthur Tsao, the General Manager of Standard Foods China, is the Chief Executive Officer of the company since March 22nd.

Miss Chris Hong, the Chief Financial Officer , is the post of director of corporate governance, since March 22[nd] .

-9-

==> picture [15 x 272] intentionally omitted <==

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

Three. Corporate Governance Report
----- End of picture text -----

==> picture [444 x 700] intentionally omitted <==

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

IT Division
Finance & Accounting
Division
Human Resources
Division
Factory Affair
Division
Engineering
Maintenance Division
Purchasing Division
Quality Assurance
Division
Sales and Marketing
Division
New Business
Development Division
Marketing Division
R&D Division
Legal
Department
info. date: 2020/3/31
Center
Administrative
Office
Auditing GM office
CEO Supply
Chain Center
Chairman
shareholder meetings Board of Directors General Manager
Audit
Committee Committee
Remuneration to the GM office
Executive Assiatance
Organization chart
Organization of company
I. I.1.
----- End of picture text -----

-10-

I.2. Department function description

Major Departments	Major Departments	Functions
Audit Committee		Oversee the company and ensure that the power granted by Company Act, Securities and Exchange Act, and other related laws and regulations are effectively exercised.
Remuneration Committee		Assist the Board of Directors to review the compensations of directors, supervisors and managerial officers to strengthen the company's governance capabilities.
Auditing Office		Carry out the internal audit of the company, and provide the audit results to the management and assess corporate risks.
General Manager (President) Office		Assist the General Manager to comprehensively manage the execution and coordination of the company's overarching business, set operating goals and arrange and supervise various departments to handle the business.
R&D Division		Responsible for R&D of new products and technologies, product quality improvement research, cost reduction research, new product business evaluation, health certification application, etc.
Marketing Division		Responsible for planning and implementing brand marketing strategy, advertising planning, consumer services, etc.
New Business Development Division		Responsible for planning and developing the company's future products on the basis of company strategy.
Sales and Marketing Division		Responsible for annual customer operation plan, planning and implementation of channel sales activity, dealer management, etc.
Supply Chain Center	Quality Assurance Division	Responsible for production system management and control, inspection and analysis, quality system management and control, etc.
	Purchasing Division	Responsible for the procurement of domestic and foreign raw materials and packaging materials, and the management of outsourcing manufacturers.
	Engineering Maintenance Division	Responsible for the planning and implementation of new engineering of production equipment, procurement of production equipment, outsourcing and maintenance, new processes and process changes and improvements, etc.
	Factory Affair Division	Responsible for product manufacturing and packaging, supply planning and implementation, inventory management, storage and transportation, factory labor safety and health management matters, etc.
Human Resources Division		Responsible for recruitment, appointment, training, compensation benefits and other related operations.

-11-

Major Departments	Major Departments	Functions
Administrative Center	Legal Department	Responsible for asset management, legal affairs, investor relations, etc.
	Finance & Accounting Division	Responsible for summary of transaction accounting and bookkeeping, tax affairs, cost calculation, budget management, investment and business analysis, finance, stock affairs, reinvestment company accounting, and accounting information provision, etc.
	Information Systems Division	Responsible for the planning, management and maintenance of information and network systems.

-12-

Re	mark
Executives who are spouses or within 2 degrees of consanguinity	Relation	Sibling	Son	None	Sibling	Father	None	None
	Name	Wendy Tsao	Arthur Tsao	None	Ter-Fung Tsao	Ter-Fung Tsao	None	None
	Title	Director		None	Chairman	Chairman	None	None
Current Position with Other Company		Chairman of the Company Chairman of Standard Dairy Products Taiwan Ltd. Chairman of Domex Technology Corporation Chairman of Standard Beverage Company Ltd. Director of Accession Ltd. Institutional Directors’ Representative of Polytronics Technology Corporation Director of Green Wall Enterprise Co., Ltd. Independent Director of PlexBio Co., Ltd. Supervisor of Crosslink Semiconductor, Inc. Director of Standard Investment (Cayman) Ltd. Director of Standard Corp (HK) Ltd. Director of Standard Investment (China) Ltd. Chairman, Mu Te Investment Co., Ltd. Director, Chia Yun Investment Co., Ltd. Director, Chia Chieh Investment Co., Ltd.		Chairman and Chief Executive Officer of TPV Technology Limited Independent Director of Array Inc. Chairman of Shanghai Standard Foods Co. Chairman of Standard Investment (China) Ltd. Chairman of Standard Foods (China) Ltd. Chairman of Standard Foods (Xiamen) Co., Ltd. Chairman of Le Bonta Wellness Co., Ltd.	Chairman of Green Wall Enterprise Co., Ltd. Chairman of Crosslink Semiconductor, Inc. Chairman of SPARKLE Inc. Director of Charng Hui Ltd.	CEO of the Company President of Standard Investment (China) Ltd. President of Shanghai Standard Foods Co. President of Standard Foods (China) Ltd. President of Standard Foods (Xiamen) Co., Ltd. President of Le Bonta Wellness Co., Ltd. President of Shanghai Le Ben De Health Technology Co., Ltd. Chairman of Shanghai Dermalab Corporation Chairman of Shanghai Le Ho Industrial Co., Ltd. Chairman of Shanghai Le Min Industrial Co., Ltd.	Institutional Directors’ Representative of Polytronics Technology Corporation Independent director of Pegatron Corporation Independent director of Raydium Semiconductor Corporation	Independent Director of Yulon Motor Co., Ltd. Independent Director of Taiwan Acceptance Corporation Independent Director, Fubon Life Insurance Co., Ltd. Representative of Institutional Director, Kino Biotech Co., Ltd. Representative of Institutional Director, Easycard Corp.
Experience (Education)		Ph.D., Colorado University, USA R&D Director of Quaker Plant Manager of Quaker(Taiwan) General Manager of Quaker(Taiwan) President, Standard Foods.		Polytechnic Institute of New York University Ph.D. of Systems Engineering	Soochow University, R.O.C.	MBA, Stanford University, USA	Master in Statistics, National Chengchi University, R.O.C	Master in Mathematics, Colorado State University
Shares held by other persons in their names	Share- holding ratio%	2.48%		0	0	0	0	0
	Shares	22,651,211		0	0	0	0	0
Shareholding of spouse and minor	Share- holding ratio%	0		0	0	0	0	0
	Shares	0		0	0	0	0	0
Current shareholding of representative	Share- holding ratio%	4.46%		0.00%	0.54%	0.00%	0.00%	0.00%
	Shares	40,848,203		0	4,949,915	0	0	0
Current Shareholding	Share- holding ratio%	2.48%				0.73%	0.00%	0.00%
	Shares	22,650,057				6,669,471	0	0
Shareholding when elected	Share- holding ratio%	2.48%				0.73%	0.00%	0.00%
	Shares	22,650,057				6,669,471	0	0
Date of First Elected		June 15, 2016				June 15, 2016	June 15, 2016	June 15, 2016
Term (year)		3 years				3 years	3 years	3 years
Date elected (inaugurated)		June 13, 2019				June 13, 2019	June 13, 2019	June 13, 2019
Gender		Male		Male	Female	Male	Male	Male
Name		Mu Te Investment Co. Ltd. Representative: Ter-Fung Tsao		Mu Te Investment Co. Ltd. Representative: Jason Hsuan	Mu Te Investment Co. Ltd. Representative: Wendy Tsao	Charng Hui Ltd. Representative: Arthur Tsao	Ben Chang	George Chou
Nationality or Residency		ROC		ROC	ROC	ROC	ROC	ROC
Title		Chairman		Director	Director	Director	Inde- pendent Director	I Inde- pendent Director

-13-

Re	mark			Mu Te Investment Co., Ltd. Ter-Fung Tsao 99.99 Charng Hui Ltd. Standard Foods Corporation 100.00 I.1.3. Major institutional shareholders of institutional shareholders, if available As of April 18, 2020	Mu Te Investment Co., Ltd. Ter-Fung Tsao 99.99 Charng Hui Ltd. Standard Foods Corporation 100.00 I.1.3. Major institutional shareholders of institutional shareholders, if available As of April 18, 2020
Executives who are spouses or within 2 degrees of consanguinity	Relation	None
	Name	None
	Title	None
Current Position with Other Company		Chairman of Purestone Capital Group Independent Director of TPK Holding Co., Ltd
Experience (Education)		Master in Political Economics, University of Taxes President, Trend Micro; CEO, Business Engine; Chairman, Sina Net
			Shareholding (%)	99.99	100.00	Shareholding (%)	17.16	14.55	11.86	4.46	3.61	2.48	2.29	1.45	1.33	1.30
Shares held by other persons in their names	Share- holding ratio%	0
	Shares	0
Shareholding of spouse and minor	Share- holding ratio%	0
			Major shareholders of institutional shareholders	Ter-Fung Tsao	Standard Foods Corporation	Major Shareholders of the Legal Persons	Mu Te Investment Co., Ltd. Trust Property Account	Chia Yun Investment Co., Ltd. Trust Property Account	Chia Chieh Investment Co., Ltd. Trust Property Account	Ter-Fung Tsao	Bilai Investment Co., Ltd.	Mu Te Investment Co., Ltd.	HSBC as Trustee of RBC Emerging Markets Equity Fund	Cathay Life insurance co., Ltd.	Chun-Yao Lin	Nan Shan Life Insurance Co., Ltd.
	Shares	0
Current shareholding of representative	Share- holding ratio%	0.00%
	Shares	0
Current Shareholding	Share- holding ratio%	0.00%
	Shares	0
Shareholding when elected	Share- holding ratio%	0.00%
	Shares	0
Date of First Elected		June 15, 2016
			Name of institutional shareholders	Mu Te Investment Co., Ltd.	Charng Hui Ltd.	Name of Legal Person	Standard Foods Corporation
Term (year)		3 years
Date elected (inaugurated)		June 13, 2019
Gender		Male
Name		Daniel Chiang

Nationality or Residency		ROC
Title		Inde- pendent Director

-14-

As of April 18, 2020	Conditions With or without five years of work experience or more and the following professional experience Independence (Note 1) Also an	independent Teachers of public or Judge, prosecutor, attorney, With job	director of private colleges for the accountant, or business experience in	another public subject of commerce, law, finance, salesperson who passed national exams & certified commerce, law, finance, 1 2 3 4 5 6 7 8 9 10 11 12	company accounting, or business specialists or technicians accounting, or	Name business	Mu Te Investment Co., Ltd. Representative:Ter-Fung Tsao V V V V 1	Mu Te Investment Co., Ltd. Representative: Jason Hsuan V V V V V V V V V V 1	Mu Te Investment Co., Ltd. Representative: Wendy Tsao V V V V V V V V 0	Charng Hui Ltd. Representative: Arthur Tsao V V V V V V V 0	Ben Chang V V V V V V V V V V V V V 2	George Chou V V V V V V V V V V V V V 3	Daniel Chiang V V V V V V V V V V V V V 1	Note 1: Please tick the corresponding items when directors and supervisors comply with the following conditions two years before being elected and during their term.	(1) Not an employee of the Company or any of its affiliates.	(2) Not a Director or Supervisor of the affiliates of the Company (except the seats of Independent Directors established by the Company or its parent company, subsidiaries in accordance with local laws	or applicable laws in the host countries of investment).	(3) Does not hold more than 1% of total stock issued directly or indirectly nor is a natural shareholder on the top-ten shareholdings list;	(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of a managerial officer as stated in (1) or any of the persons mentioned in (2) and (3).	(5) Not a director, supervisor or employee of a corporate shareholder who directly holds more than 5% of the total number of issued shares of the company or is ranked top 5 in holdings or is a legal	person shareholder who is a director or supervisor of the company per Paragraph 1 or 2 of Article 27 of the Company Act (this does not apply in cases where the person is an independent director of	the company, its parent or subsidiary, or a subsidiary of the same parent company established in pursuant to this law or local laws).	(6) Not directors, supervisors or employees of other companies controlled by the same person holding a majority of the company's director seats or voting shares of the company. (However, this	restriction shall not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company	and its parent or subsidiary or a subsidiary of the same parent).	(7) Not directors (governors), supervisors or employees of other companies or institutions who are the same person or spouse as the chairperson, general manager or person holding an equivalent	position of the company. (However, this restriction shall not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently	serving as such at, a company and its parent or subsidiary or a subsidiary of the same parent).	(8) Not any director, supervisor, officer, or shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business relationship with the company(for	a particular company or institution holds more than 20%, but not exceed 50%, of the company's issued shares, and the independent directors appointed in accordance with the Act or the laws and	regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent, shall not be restricted by this provision.)	(9) Not a professional individual who, or an owner, partner, director, supervisor, or managerial officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal,	financial, accounting services or consultation not to the company or to any affiliate of the company, nor a spouse thereof and the cumulative amount of remuneration obtained in the last two years	did not exceed NT$ 500,000; However, members of the special committee on remuneration, public acquisition review, or merger and acquisition who perform their functions and powers in	accordance with the provisions of the Securities and Exchange Act or Business Mergers and Acquisitions Act and other relevant regulations shall not be subject to this provision.	(10) Not the spouse or a relative within two degrees of lineal consanguinity of an individual;	(11) Free of any of the behaviors as defined in Article 30 of Company Act;	(12) Not a governmental officer, juridical person or its representative as defined in Article 27 of Company Act.

-15-

Manager Who has Spouse or Second Cousin Status	Relation	Father and Son	None	None
	Name	Ter-Fung Tsao	None	None
	Title	Chairman	None	None
Current Position With Other Company		President of Standard Investment (China) Ltd. President of Shanghai Standard Foods Co. President of Standard Foods (China) Ltd. President of Standard Foods (Xiamen) Co., Ltd. President of Le Bonta Wellness Co., Ltd. President of Shanghai Le Ben De Health Technology Co., Ltd. Chairman of Shanghai Dermalab Corporation Chairman of Shanghai Le Ho Industrial Co., Ltd. Chairman of Shanghai Le Min Industrial Co., Ltd.	President of Standard Dairy Products Taiwan Ltd. Chairman, Charng hui Ltd. Director, Le Bonta Wellness International Co. Director, Dermalab S.A.	Director of Standard Dairy Products Taiwan Ltd. Director of Standard Beverage Ltd. Director of Domex Technology Corporation Representative of Institutional Director, GeneFerm Biotechnology Co., Ltd. Supervisor of Shanghai Standard Foods Co. Supervisor of Standard Investment (China) Ltd. Supervisor of Standard Foods (China) Ltd. Supervisor of Shanghai Dermalab Corporation Supervisor of Le Bonta Wellness Co., Ltd. Supervisor of Shanghai Le Ho Industrial Co., Ltd. Supervisor of Shanghai Le Min Industrial Ltd. Supervisor of Standard Foods (Xiamen) Ltd.
Experience (Education)		MBA, Stanford University, USA	Master’s From Northwestern University U.S.A. Attorney Partner of Bluefield Ventures Partner of Dubuglo Vice President of California Pacific Bank Vice President of the Supply Chain of Standard Foods Corporation President of Standard Foods	Master, National Cheng Chi University. Vice President of PriceWaterhouseCoopers CPA Firm President of Standard Dairy Products Taiwan Ltd.
Shares Held by Other Persons in Their Names	Share- holding Ratio%	-	-	-
	Shares	-	-	-
Shareholding of Spouse and Minor	Share- holding Ratio%	-	-	-
	Shares	-	-	-
Shareholding	Share- holding Ratio%	0.73	-	-
	Shares	6,669,471	20,000	-
Date Elected (Inaugurated)		March 22, 2019 Arpil 1, 2020	Arpil 01, 2020	September 30, 2015
Gender		Male	Male	Female
Name		Arthur Tsao	Yao Steven Yih Chun	Chris Hong
Nationality or Residency		ROC	USA	ROC
Title		CEO Also President	Chief Investment Officer	Chief Financial Officer

-16-

Remuneration From the Invested Company Other Than the Company's Subsidiaries	Remuneration From the Invested Company Other Than the Company's Subsidiaries	Remuneration From the Invested Company Other Than the Company's Subsidiaries		None	None	None	None	None	None	None
Ratio of A+B+C+D+E+F+G to Net Income (%) (Note 2)	From all	Consoli- dated Entities in	This Report	0.35	0.11	0.11	0.24	0.11	0.11	0.11
		From the Company		0.35	0.11	0.11	0.24	0.11	0.11	0.11
Remuneration of Part-time Employees	Compensations for Employees (G)	From all Consolidated Entities in This Report	Stock	-	-	-	-	-	-	-
			Cash	-	-	-	-	-	-	-
		From the Company	Stock	-	-	-	-	-	-	-
			Cash	-	-	-	-	-	-	-
	Pension (F)	From all Consoli- dated Entities in This Report		189	-	-	138	-	-	-
		From the Company		189	-	-	138	-	-	-
	Salary, Bonus, and Compensation (E) (Note 1)	From all Consoli- dated Entities in This Report		8,100	-	-	4,400	-	-	-
		From the Company		8,100	-	-	4,400	-	-	-
Ratio of A+B+C+D to Net Income (%) (Note 2)		From all Consoli- dated Entities in This Report		0.11	0.11	0.11	0.11	0.11	0.11	0.11
		From the Company		0.11	0.11	0.11	0.11	0.11	0.11	0.11
Remuneration of Directors	Business Expenses (D) (Note 1)	From all Consoli- dated Entities in This Report		60	60	60	60	60	60	60
		From the Company		60	60	60	60	60	60	60
	Remuneration for Directors (C)	From all Consoli- dated Entities in This Report		3,594	3,580	3,580	3,580	3,580	3,580	3,580
		From the Company		3,594	3,580	3,580	3,580	3,580	3,580	3,580
	Pension (B)	From all Consoli- dated Entities in This Report		-	-	-	-	-	-	-
		From the Company		-	-	-	-	-	-	-
	Remunerati on (A)	From all Consoli- dated Entities in This Report		-	-	-	-	-	-	-
		From the Company		-	-	-	-	-	-	-
	Name			Ter-Fung Tsao	Jason Hsuan	Wendy Tsao	Arthur Tsao	Ben Chang	George Chou	Daniel Chiang
	Title			Chairman	Director	Director	Director	Independent Director	Independent Director	Independent Director

-17-

Remuneration From an	Invested Company Other Than the Company's Subsidiary	Invested Company Other Than the Company's Subsidiary	None	None
Ratio of A+B+C+D to Net income (%) (Note 1)	From all Consolidated Entities in This Report		0.13	0.22
	From the Company		0.13	0.22
Compensation for Employees (D)	From all Consolidated Entities in This Report	Stock	0	0
		Cash	0	0
	From the Company	Stock	0	0
		Cash	0	0
Bonuses and Allowance (C) (Note 2)	From all Consolidated Entities in This Report		900	2,100
	From the Company (Note 2)		900	2,100
Pension (B) (Note 3)	From all Consolidate d Entities in This Report		138	194
	From the Company		138	194
Salary (A) (Note 2)	From all Consolidated Entities in This Report		3,500	5,200
	From the Company		3,500	5,200
	Name		Arthur Tsao	Yao Steven Yih Chun
	Title		CEO	President

Ratio of the Total Amount of Net Income (%) (Note 1)			0%	0%
Total				0
Cash				0
Stock				0
Name	Ter-Fung Tsao	Yao Steven Yih Chun	Chris Hong	Hsin-Chuan Wang	Yen-Lin Cheng	Yi-Ting Huang
Title	CEO and also President	Chief Investment Officer	Chief Financial Officer	R&D Division Director	Marketing Division Director	Supply Chain CenterDirector
		Management

-18-

					Total 28,753 28,753 0.97 0.97 32,988 32,988 0.97 0.97 (1) Analysis of the Remuneration to the Directors, Supervisors, and Presidents of the Company in Proportion to the Net Income After Tax Stated in the Separate Financial Statements of the Last Two Years:The ratio of the remunerations to the Directors, Supervisors, and Presidents of the Company to net income after tax of all companies included in the Consolidated Financial Statements paid in 2019 was same as 2018. (2) Please refer to Provision (VIII) on page 62for the payment policy of bonus to employees and remuneration to directors The policies, standards, packages and procedures for payment of remuneration, and their linkages to business performance and future risks: The Remuneration Committee shall be responsible for the formulation and periodic review for the remuneration of directors and managerial officers paid by the company. In addition to the reference to the general remuneration level of the industry, the linkages to the individual performance, corporate operation performance, mode of payment and future operating risks shall be taken into consideration as well. It shall be implemented after submitting to the Board of Directors for approval; for the items assigned in statement of surplus allocation, it can be implemented only after submitting to the shareholders' meeting for approval.
2019	Ratio of Total Amount to Net Income After Tax (%)	Companies in the Consolidated Financial Statements	0.75	0.22	0.97
		From the Company	0.75	0.22	0.97
	Total Amount of Remuneration	Companies in the Consolidated Financial Statements	25,494	7,494	32,988
		From the Company	25,494	7,494	32,988
2018	Ratio of Total Amount to Net Income After Tax (%)	Companies in the Consolidated Financial Statements	0.72	0.25	0.97
		From the Company	0.72	0.25	0.97
	Total Amount of Remuneration	Companies in the Consolidated Financial Statements	21,380	7,373	28,753
		From the Company	21,380	7,373	28,753
		Title	Director	President	Total

-19-

III. Implementation of Corporate Governance

III.1 Information on operations of the Board of Directors

In order to strengthen corporate governance and promote the sound development of board composition and structure, Article 20-3 of the "Corporate Governance Best Practice Principles" issued by the company in 2016 states that Board members shall be diverse in form, and the corresponding diversity policies shall be formulated in accordance with its own operations, operating patterns and development demands, including but not limited to the following two standards:

I. Basic requirements and values: gender, age, nationality, and culture.

II. Professional knowledge and skills: professional background (such as law, accounting, industry, finance, marketing or technology), professional skills and industry experience.

The current Board of Directors of the company consists of 7 directors, including 4 directors and 3 independent directors with rich experience and expertise in the fields of finance and economics, business and management. The company also pays attention to the gender equality, improves women's participation in decision-making and improves the structure of the Board of Directors. At present, there is a female director among 7 directors.

1. A total of 6 meetings (A) were held by the Board of Directors in the most recent year. The attendance of directors is as follows:

Title	Name	Number of Attendances (B)	Time of proxy attendance	Ratio of Attendances (%) [B / A]
Chairman	Mu Te Investment Co. Ltd. Representative: Ter-FungTsao	5	1	83%
Director	Mu Te Investment Co. Ltd. Representative: Jason Hsuan	2	4	33%
	Mu Te Investment Co. Ltd. Representative: WendyTsao	6	-	100%
	Charng Hui Ltd Representative: Arthur Tsao	6	-	100%
Independent Director	Ben Chang	6	-	100%
	George Chou	5	1	83%
	Daniel Chiang	6	-	100%
Other matters: 1. Where the proceedings of the board meeting include one of the following circumstances, then describe the date, session, topic discussed, opinions of every independent director, and their handling: (I) Matters referred to in Article 14-3 of the Securities and Exchange Act.

-20-

	Date of the meeting (Period)	Proposals	Opinions of all independent directors and the company's handling of these opinions
	Mar. 22, 2019 (14th Meeting from the 12th term of theBoard of Directors)	Amendments to the "Procedures for Acquisition and Disposal of Assets."	Approved by all Independent Directors
	May 08, 2019 (15th Meeting from the 12th term of the Board of Directors)	1. Amendments to the "Procedures for Loaning of Funds to Other Parties." 2. Amendments to the "Procedures for Endorsements and Guarantees."
	Nov. 05, 2019 (4th Meeting from the 13th term of the Board of Directors)	2019 remuneration case for the CPAs.
Evaluation of the performance for the Board of Directors Evaluation cycle Annually Period of Evaluation Evaluation of the performance for the Board of Directors from Jan. 1, 2019 to Dec. 31, 2019 Scope Performance evaluation of the Board of Directors and individual directors Evaluation methods Self-evaluation by board members Evaluation contents (1). Mastery of company goals and tasks, internal control, participation in company operations,internal relationshipmanagement and communication,board operation,

2. Evaluation of the performance for the Board of Directors

-21-

professional and continuing education of directors, cognition and self-evaluation of responsibilities by directors.

(2). Participation in the discussion and evaluation - compliance with relevant laws and regulations by the Board of Directors.

III.2 Operations of the Audit Committee:

The company's Audit Committee is composed of 3 independent directors, and the purpose of the Audit Committee is to assist the Board of Directors in supervising the quality and integrity in respect of implementation of relevant accounting, auditing, and financial reporting procedures and control over finance by the company.

A total of 4 meetings (A) were held by the Audit Committee in 2019. The matters reviewed mainly include:

Preparation and Adjustment of the Financial Reports
2019 Business Plan and Budget
Revision of the "Procedures for Acquisition and Disposal of Assets," "Procedures for Loaning of Funds to Other Parties," and "Procedures for Endorsements and Guarantees"
Financial Report and Consolidated Financial Statements
Information Security
Material Capital Loan and Endorsement or Guarantee
Evaluation of the Qualifications, Independence, and Performance of the CPAs
Appointment, Dismissal, and Compensation of CPAs
Self-evaluation Questionnaire for Performance of Audit Committee
The Design and Implementation Instructions for the Internal Control System

A total of 4 meetings (A) were held by the Board of Directors in the most recent year. The attendance of independent directors is as follows:

Title	Name	Number of attendance in person(B)	Time of proxy attendance	Percentage of attendance in person(%) [B/A]
Independent Director	Ben Chang	4	0	100%
	George Chou	4	0	100%
	Daniel Chiang	4	0	100%
Other matters: I. If the Audit Committee has any of the following circumstances, the date, session, proposal content, the resolution of the Audit Committee and the company's response toward the Audit Committee's opinions shall be specified. (I)Matters listed in Article 14-5 of the Securities and Exchange Act Date of the meeting (Period) Proposals The Audit Committee's opinion and the company's disposition to Audit Committee's opinion. Mar. 22, 2019 (12th Meeting from the 1st term of the Board of Directors) 1. Amendments to the "Procedures for Acquisition and Disposal of Assets" 2. 2018 Financial Report and Consolidated Financial Statements. Approved by all Independent Directors May 08, 2019 (13th Meeting from the 1st term of the Board of Directors) 1. Amendments to the "Procedures for Loaning of Funds to Other Parties." 2. Amendments to the "Procedures for Endorsements and Guarantees."

-22-

		Aug. 05, 2019
		(1st Meeting from Consolidated Financial Report for the second
		the 2nd term of the quarter of 2019.
	Board of Directors)
		Nov. 05, 2019
		(2nd Meeting from the 2nd term of the 2019 remuneration case for the CPAs.
	Board of Directors)
		(II) Except the items in the preceding issues, other resolutions which was not approved by the
		Audit Committee but approved by two-thirds of all Board of Directors	members: None.
II.		In regard to the recusal of Independent Directors from voting due to conflict of interests, the
		name of the Independent Directors, the proposal content, reasons for recusal due to conflict of
		interests and voting outcomes should be specified: None.
III. Communication between the independent director and internal audit supervisor and the CPA: The
		independent director of the company shall discuss and communicate regularly with the CPA,
		discussing accounting principles and financial statements, as well as exchanging views on major
		financial changes and business changes or operating risks; and the chief internal auditor shall
		report to the independent director on a regular basis and communicate on the company's internal
		controls and risks.

III.3 Supervisors’ involvements in Board of Directors meetings:

The company has set up an Audit Committee to replace the supervisors on Jun. 15, 2016.

-23-

Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof	Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof	Compliant to the regulations prescribed by Article 2 of the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies."	Compliant to the regulations prescribed by Articles 10, 13, 14, 19 and 30 of the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies."
Implementation status	Description	The company has established the "Corporate Governance Best Practice Principles" and has related regulations for protecting the shareholders' rights, strengthening the functions of the Board of Directors, respecting the rights of stakeholders, and improving information transparency.	(I) In order to ensure shareholders 'rights, the company has spokesperson, Stock Affairs Department, Legal Department and other relevant departments to handle shareholders' suggestions or disputes. (II) The company shall regularly obtain the latest register of shareholders from the stock affairs agency, and acquire the list of major shareholders substantially controlling the company and their ultimate controlling parties and maintain good interaction with them. The change data shall be declared in accordance with regulations on information declaration of listed companies and disclosed on Market Observation Post System. (III) The assets, business, and finance between the company and affiliates shall be split clearly and operated independently. Besides, the "Supervision Measures for Subsidiaries," "Procedures for Acquisition and Disposal of Assets," "Procedures for Loaning of Funds to Other Parties," "Procedures for Endorsements and Guarantees," and other related measures have been established in accordance with regulations, to implement risk control mechanism and firewall management for affiliates.
	No.
	Yes	V	V V V
	Evaluation item	I. Does the company establish and disclose the "Corporate Governance Best Practice Principles" based on "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies"?	II. Shareholding structure & shareholders' rights (I) Does the company establish an internal operating procedure to deal with shareholders' suggestions, doubts, disputes and litigations, and implement based on the procedure? (II) Does the company possess the list of its major shareholders as well as the ultimate owners of those shares? (III) Does the company establish and execute the risk management and firewall system within its conglomerate structure?

-24-

Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof	Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof		Compliant to the regulations prescribed by Articles 27, 20, 28-1 and 37 of the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies."
Implementation status	Description	(IV) The company has established "Management Regulations for Prevention of Insider Trading" against insiders trading with undisclosed information.	(I) There is one female member out of the seven directors in the company, accounting for 14%; the directors are experts in aspects like assets management and risk control, with Ter-Fung Tsao, Jason Hsuan, Arthur Tsao good at food industry, George Chou, Daniel Chiang good at information technology and Ben Chang, Wendy Tsao good at finance and investment. Four directors are over 70 years old, two are between 60 and 69 years old, and one director is under the age of 40. The Board of Directors and the independent director shall exercise their power in accordance with laws, the provisions of the Articles of Incorporation and resolutions of shareholders' meeting. The diversity policy on the formation of the Board members is disclosed on the company website and on the Market Observation Post System. (II) The company has set up the Remuneration Committee and the Audit Committee according to law, but has yet to set up other various functional committees. (III) The company's policy, system, standard and structure for annual and long-term performance goals and remunerations of directors, independent directors, and managerial officers shall be established and regularly reviewed by Remuneration Committee, in accordance with "Remuneration Committee Charter." The company has established "Measures for the Performance Evaluation of Directors and Managerial Officers" and evaluates the performance of directors regularly every year. The latest internal performance evaluation
	No.		V
	Yes	V	V V
	Evaluation item	(IV) Does the company establish internal rules against insiders trading with undisclosed information?	III. Composition and responsibilities of the Board of Directors (I) Does the Board of Directors develop and implement a diversified policy for the composition of its members? (II) Does the company voluntarily establish other functional committees in addition to the Remuneration Committee and the Audit Committee? (III) Does the company establish a standard to measure the performance of the Board of Directors, and implement it annually?

-25-

Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof	Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof
Implementation status	Description	of the Board of Directors (2019) was completed by in Mar. 2020, and the report was submitted to the Board of Directors on Mar. 18, 2020 for review and improvement. The items of the performance evaluation of the Board of Directors shall include: mastery of company goals and tasks, internal control, participation in company operations, internal relationship management and communication, board operation, professional and continuing education of directors, cognition and self-evaluation of responsibilities by directors. The indicators of directors' participation in the discussion shall include: compliance with recusal of directors' interests, required continuing education hours per year, percentage of attendance in person in board meetings and shareholders' meetings. The average score of the evaluation was 87.43. The outcome of overall result of board performance was still effective. (IV) An annual evaluation of CPA independence shall be carried out by the Accounting Department of the company. The results were submitted to the Audit Committee and Board of Directors on Nov. 5, 2019 for approval. According to the evaluation by the Accounting Department of the company, the CPAs, Tse-Li Kung and Ching-Chen Yang from Deloitte & Touche comply with the company's evaluation standards of independence (Note 1), so they are qualified to serve as the company's CPAs. Deloitte & Touche has issued a statement declaring no violation of independence. (Note 1): Evaluation standards for the independence of CPAs
			Meet independence criteria	Yes	Yes	Yes
			Evaluation results	No	No	No
			Evaluation item	1. Is the CPA an employee of the company or the related companies?	2. Does the CPA hold the company's shares?	3. Does the CPA engage in financing activities or guarantee behaviors with the company or its directors?
	No.
	Yes	V
	Evaluation item	(IV) Does the company regularly evaluate the independence of CPAs?

-26-

Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof	Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof							In compliance with Article 3-1 of the "Corporate Governance Best Practice Principles for TWSE or TPEx Listed Companies."
Implementation status	Description							The company established a corporate governance team according to the resolution of the board meeting on Mar. 22, 2019, appointing Ms. Chris Hong, CFO, as the corporate governance officer in charge of promoting corporate governance, protecting shareholders' rights and strengthening the functions of the Board of Directors. Ms. Chris Hong passed the CPA college entrance examination of Taiwan and has been engaged in financial work in public companies for more than three years. The corporate governance officer shall be responsible for handling matters related to the Board of Directors and shareholders' meeting in accordance with laws, drawing up agendas of the board meetings and shareholders' meetings, assisting induction and continuing education of directors and supervisors, providing directors, supervisors with the information required to carry out business, and assisting directors and supervisors to comply with ordinance. Implementation status in 2019 is as follows: 1. Assist independent directors and general directors to perform their duties, provide necessary information and arrange for continuing education for directors: (1) Notify the board members of the latest amendments and development to laws and regulations relating to the company's businesses and corporate governance and regularly update them.
		Yes	Yes	Yes	Yes	Yes	Yes
		No	No	No	No	No	Yes
		4. Are there direct or indirect material financial interests between the CPAs and the company?	5. Are there close business relations between the CPA and the company?	6. Are there close business relations between the CPA and the company's management, or other individuals in positions that could seriously impact the audit?	7. Does the CPA provide the company non-audit items that may directly affect the audit?	8. Does the CPA act as the defender of the company or on behalf of the company to coordinate conflicts with other third parties?	9. Does the CPA provide the statement of independence?
	No.
	Yes							V
	Evaluation item							IV. Does the listed company appoint an exclusively (or concurrently) responsible unit or personnel to be in charge of corporate governance affairs (including but not limited to furnishing information required for business execution by directors and supervisors, and handling, in accordance with relevant laws, matters related to board meetings and shareholders' meetings, business registration and changes to the registration, and for preparing minutes of board meetings and shareholders' meetings)?

-27-

Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof	Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof
Implementation status	Description	(2) Review the confidentiality level of the relevant information and provide corporate information required by the directors to maintain smooth communication and interaction between directors and managers. (3) Arrange meetings with the chief internal auditor or CPAs for independent directors who are in need of investigating the company's financial or business operation, in accordance with the "Corporate Governance Best Practice Principles." (4) Assist independent directors and general directors in drawing up annual continuing education plan and making arrangement for courses in accordance with the nature of the industry to which the company belongs and the experience and background of directors. 2. Assist in the matters related to the rules of procedures of Board of Directors and shareholders' meeting as well as legal compliance with resolutions: (1) Report the implementation of corporate governance to the Board of Directors, independent directors, and Audit Committee or supervisors, and confirm whether the meetings of the company's shareholders' meeting and Board of Directors are held in compliance with relevant laws and regulations and the "Corporate Governance Best Practice Principles." (2) Assist in and remind directors of the regulations to be complied with when performing their duties or officially voting on resolutions by the Board of Directors, and offer suggestions when the Board of Directors is going to vote on an illegal resolution. (3) Be responsible for checking the release of the major information related to the important resolutions made by the Board of Directors, and ensure the legality and accuracy of the contents of such information, so as to keep the consistency of investor's trading information. 3. Draw up agendas for board meetings and notify directors of the agendas seven days before the meeting, convene meetings and provide information about the meetings, send out reminders regarding agendas that require
	No.
	Yes
	Evaluation item

-28-

Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof	Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof						Compliant to the regulations prescribed by Article 51 of the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies."
Implementation status	Description	recusal of directors and complete the minutes of the board meeting within 20 days after the meeting. 4. Handle prior registration for shareholders' meetings, prepare meeting notices, agenda handbook, meeting minutes within the statutory period, as well as handle registration of changes due to amendment of regulations and re-election of directors A total of 18 continuing education hours in 2019:				Dec. 6, 2019 Audit and control practice over lowering costs and competitive strategies of companies 6	The company has established a spokesman system and properly uses the public information systems, ensuring shareholders and stakeholders fully understanding the company's financial operations and corporate governance. The company has also established a special zone for the stakeholders on the website, so the stakeholders may contact the company via telephone or e-mail to reflect different CSR issues of concern.
			Hours	6	6	6
			Course title	Lectures on internal auditing practice: How to Deal with Corporate Crisis - Focusing on Risk Management and Crisis Communication	Audit and law compliance practice over "independent directors" and "Audit Committees" of companies required by the competent authorities	Audit and control practice over lowering costs and competitive strategies of companies
			Undertaker Unit	Accounting Research and Development Foundation
			Continuing education date	Oct. 23, 2019	Oct. 31, 2019	Dec. 6, 2019
	No.
	Yes						V
	Evaluation item						V. Has the company established a communication channel with stakeholders (including but not limited to shareholders, employees, customers, and suppliers)? Has a stakeholders' area been established in the company's website? Are major Corporate Social Responsibility (CSR) topics that the stakeholders are concerned with addressed appropriately by the company?

-29-

Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof	Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof	Compliant to the regulations prescribed by Article 7 of the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies."	Compliant to the regulations prescribed by Articles 55, 56, 57 and 58 of the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies."	Compliant to the regulations prescribed by Article 59 of the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies."
Implementation status	Description	The corporation has appointed CTBC Bank to handle affairs of the shareholders' meeting.	(I) The company has established a website in both Chinese and English to information on financial operations and corporate governance under the "Investor Information" area at www.sfworldwide.com The website is maintained by a dedicated person to ensure that the information is correct and real-time. (II) The company has a spokesperson and a deputy spokesperson, and arranges dedicated units responsible for company information collection and disclosure. The significant external announcement shall be made according to regulations in "Taiwan Stock Exchange Corporation Procedures for Verification and Disclosure of Material Information of Companies with Listed Securities"; and the relevant information of legal representative meeting shall also be placed on the company's website for shareholders' reference.	(I) Employee's rights and employee wellness: 1. The employee asset is one of the most important assets of the company. The "Working Rules for Employees" shall be made by the company in accordance with Labor Standards Act and relevant regulations to specify the rights and obligations of the employees. 2. The company continuously and systematically improves the quality of talents. In addition to the regular employee education and training, the supply of external training opportunities and funding,
	No.
	Yes	V	V V	V
	Evaluation item	VI. Has the company appointed a professional shareholder service agency to deal with shareholder affairs?	VII. Information disclosure (I) Does the company establish a website to disclose information on financial operations and corporate governance? (II) Does the company adopt other means of information disclosure (such as establishing an English language website, delegating a professional to collect and disclose company information, implement a spokesperson system, and disclosing the process of investor conferences on the company website)?	VIII. Is there any other important information to facilitate a better understanding of the company's corporate governance practices (including but not limited to employee rights, employee wellness, investor relations, supplier relations, stakeholder

-30-

Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof	Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof
Implementation status	Description	the company also develops talents via job rotations, special project participation, and senior supervisor guidance. 3. The company has established an Employee Welfare Committee, which gives out birthday or anniversary gift regularly, arranges employee club activities and provides travel subsidies and allowances for marriage, death, birth and illness. Furthermore, the company arranges regular health check and purchase group accident insurance and medical insurance for employees and the premiums are fully borne by the company. 4. The company promotes labor safety and health and has established a complete proposal system, encouraging employees to make suggestions on continuous improvement and innovation of the company. Moreover, the corporate culture emphasizes the steady and practical team spirit and encourages the employees to face challenges with mutual respect and support. (II) Investor relations: the company discloses all the information on Market Observation Post System in accordance with acts and regulations to protect rights of investors, and establishes a "Special Investor Information Zone" on website, from which investors can acquire the relevant information of the company, with service contact information to maintain the good and harmonious relationship between the company and its shareholders. (III) Supplier relations: the company maintains a smooth communication channel with suppliers and adheres to the principle of sincerity in order to establish a long-term, stable and cooperative relationship with mutual trust, jointly pursuing sustainable growth. Furthermore, the company carries out supplier evaluation on a regular basis and selects good suppliers as partners. (IV) Stakeholders' rights: the company maintains a smooth communication channel for the stakeholders' rights, and respects and maintains their legitimate rights. If there is any dispute about the legitimate rights of
	No.
	Yes
	Evaluation item	rights, continuing education records of directors and Audit Committee members, implementation of risk management policies and risk evaluation measures, implementation of customer policies, and participation in liability insurance by directors and supervisors)?

-31-

Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof	Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof
Implementation status	Description	the stakeholders, the company shall abide by the principle of sincerity and settle the disputes properly. (V) Continuing education of directors and Audit Committee members: the directors and Audit Committee members of the company are qualified with professional skills. Please refer to the following attachment: Summary on continuing education of directors in 2019. (VI) Implementation of risk management policies and risk measurement standards: for the risk management policies, organizational structure and related risk control operations of the company, please refer to the descriptions in Pages 274-277 of "Risk Analysis and Evaluation during the Most Recent Year up to the Publication Date of the Annual Report." Furthermore, the company has analyzed, tracked and responded to events that may pose high risks to operating objectives, in order to establish a sound management mechanism. (VII) Implementation of customer policies: the company has established a special line for customer service, maintaining smooth communication with customers. The company has been actively participating in related food safety association, fulfilling the responsibilities and obligations as a member, caring about community environmental protection and other public welfare issues, and being dedicated to obtaining health food certification. (VIII) Liability insurance purchased by the company for its directors and the Audit Committee: the company has covered the director liability insurance for all directors and the Audit Committee.
	No.
	Yes
	Evaluation item

-32-

Hours of continuing education	3	3	3	3	3	3
Course title	Practices for Anti-money Laundering and Bribery Risk Management	Countermeasures for the business secret maintenance and the infringement prevention of company	Innovation, Digital Technology and Competitive Advantages	Group corporate governance	Corporate management and media PR strategies	Discover Corporate Values from CSR
Organizer	Taiwan Corporate Governance Association		Taiwan Corporate Governance Association		Taiwan Investor Relations	Institute
Continuing education date	2019.09.24		2019.07.12		2019.12.13
Name	Ben Chang		George Chou		Daniel Chiang
Title	Independent Director		Independent Director		Independent Director

-33-

Remarks	Remarks	-	-	-
Number of other public companies where the individual concurrently serves as a Remuneration Committee member		2	3	1
Independence criteria (Note)	10	V	V	V
	9	V	V	V
	8	V	V	V
	7	V	V	V
	6	V	V	V
	5	V	V	V
	4	V	V	V
	3	V	V	V
	2	V	V	V
	1	V	V	V
Meets one of the following professional qualifications, with at least five years of work experience	Work experience necessary for business administration, legal affairs, finance, accounting, or business sector of the company	V	V	V
	Currently serving as a judge, prosecutor, lawyer, accountant, or other professional practice or technician that must undergo national examinations and specialized license
	Currently serving as an instructor or higher post in a private or public college or university in the field of business, law, finance, accounting, or the business sector of the company
Qualification	Name	Ben Chang	George Chou	Daniel Chiang
	Title	Independent Director	Independent Director	Independent Director

-34-


Remarks		None		Other matters: I. Discussions and resolutions of the Remuneration Committee		Mar. 22, 2019 (6th Meeting from the 3rd term of the BOD) 1. 2018 Performance Evaluation of Directors and Managerial Officers. 2. Report on the Distribution Status of the Compensation of Employees and Directors for 2018 Approved by all Independent Directors Nov. 05, 2019 (1st Meeting from the 4th term of the BOD) Discussions on the ratio of appropriation of compensation of employees and Directors for 2019. II. If the Board of Directors chooses not to adopt or revise recommendations proposed by the Remuneration Committee, the date of the meeting, term, agenda, resolution results, and the company's response to the comments provided by the Remuneration Committee shall be described: None. III. If the resolutions to which the members of the Remuneration Committee have an objection or reservation are recorded or written, please state the date and session of the meeting of the Remuneration Committee, proposals, opinions of the members, and handling of the opinions: None.
					Resolution	Approved by all Independent Directors
Percentage of attendance in person (%) [B / A]	100%	100%	100%
					Proposals	1. 2018 Performance Evaluation of Directors and Managerial Officers. 2. Report on the Distribution Status of the Compensation of Employees and Directors for 2018	Discussions on the ratio of appropriation of compensation of employees and Directors for 2019.
Number of attendance in person (B)	2	2	2
Name	Ben Chang	George Chou	Daniel Chiang
					Date of Meeting (Period)	Mar. 22, 2019 (6th Meeting from the 3rd term of the BOD)	Nov. 05, 2019 (1st Meeting from the 4th term of the BOD)
Title	Convener	Committee member	Committee member

-35-

Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof	Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof		The Company complies with the Corporate Social Responsibility Best Practice Principles for TWSE/TPEX Listed Companies.	The Company complies with the Corporate Social Responsibility Best Practice Principles for TWSE/TPEX Listed Companies.
Implementation	Performance Summary		1. The Company has established the “CSR Best Practice Principles” and actively implemented environmental protection and energy conservation, and involved in social charity events. 2. The Company provides education on occupational safety and health and arranges disaster response exercises at planned intervals. 3. The Company has formed a dedicated team to promote CSR and related affairs and report the results to the management. 4. The Company has defined the organizational reward and punishment policies in the “Employee Work Rules” and has established a well-planned system to evaluate employee performance and reward excellent employees.	1. The main packaging materials adopted by the Company’s products are categorized into glass, iron/aluminum cans, plastic and paper cases, etc., by nature, which are selected based on the four indicators: (1). Quality and Safety: All packaging materials holding food comply with the “Sanitation Standard for Food Utensils, Containers, and Packages” to ensure the safety of the packaging materials. (2). Environmental Protection and Recycling: The packaging of all products bears the CNS recycling mark to remind consumers that the packaging may be recycled after using the products, and the paper cases are made
	No
	Yes		� � � �	�
Assessment Item		1. Corporate governance promotion	(1) Does the Company establish a CSR policy or system and review the effectiveness of implementation? (2) Does the Company arrange CSR training on a regular basis? (3) Does the Company establish a dedicated (concurrent) unit to promote CSR with authorization from top management and to report the effectiveness of implementation to the board? (4) Does the Company establish a fair compensations policy combing with the employee performance evaluation system and CSR policy and an effective and well-defined reward and punishment system?	2. Development of a sustainable environment: (1) Does the Company make efforts to enhance resource efficiency and use recycled materials with lower environmental impact?

-36-

Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof	Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof
Implementation	Performance Summary	of eco-friendly pulp. The Company selects suppliers who pass product certification, and uses its best efforts to reduce consumption of the consumables for packaging materials in order to mitigate the rapid decrease of trees due to human being’s excessive development and to do its best for the environment and ecology in which human beings are living.	(3). Waste Reduction: The packaging and design of such products as gift boxes have been reviewed and approved in accordance with the “Excessive Product Packaging Restriction” laws and regulations promulgated by Environmental Protection Administration before the product hits the market, in order to prevent the packaging from deriving excessive waste and to protect the environment on the earth. (4). Green Ecology: Given the increasing green consumption consciousness, paper packaging materials adopted by bulk products, which pass FSC certification, account for 72.43% of all packaging materials, including the long-life milk series already adopting 100% packing materials with FSC certification.
	No
	Yes
Assessment Item

-37-

Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof	Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof
Implementation	Performance Summary	2. The Company always spares no effort to protect the environment in response to the environmental protection policies promoted by the government. The Company implements environment management and environmental equipment inspections, and also establishes a dedicated unit to engage in transportation, maintenance, and improvement of various pollution equipment. Meanwhile, the Company adopts a management model consisting of planning (P), deployment (D), checking (C), and auditing (A) to set the indicators about the consumption of power, water, waste water emission, waste articles, and waste gas emission to help it control said conditions from time to time. In response to the implementation of ISO 14001 environmental management system, the Company has successively adopted the air pollution control procedure, wastewater control procedure, industrial waste management regulations, toxic chemical substance operation control, operating standards for noise control, and operating procedures for management of water dispensers since November 2014. The company follows the following policies for energy management department: � Comply with energy laws and regulations, building energy management system � Actively promote energy conservation, strengthen energy independent management � Follow energy management policy, everyone join in conservation and carbon reduction � Design to purchase the products of energy saving,improve energy efficiency � Building the protection and energy saving environment, improve resource utilization efficiency � Continue to promote energy conservation and carbon reduction , Achieve greenhouse gases reduction
	No
	Yes	�
Assessment Item		(2) Does the Company establish an appropriate environmental management system (EMS) according to the characteristics of its industry?

-38-

Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof	Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof
Implementation	Performance Summary	3. The company actively promotes various energy conservation and carbon reduction policies. In addition to the continuous monitoring process of the factory to improve equipment efficiency, it also implements energy conservation and power saving management. The projects that have been implemented in 2020 years are listed below : (1) Reuse of process water: The clean water after moistening the packing material is recycled and reused. The recycled water is filtered by the activated carbon tank and sent to the ion exchange resin to make pure water, which will be used by the boiler after passing the inspection. It is estimated that 24,000 tons of water can be recovered every year, while 24,000 tons of waste water can be reduced. (2) New monitoring and improvement of public equipment in Dayuan plant: There are 4 air compressors in total - 3 in air compressor room and 1 in air compressor room of production line. After centralized monitoring and management of air compressor, effective power and invalid power are analyzed It is estimated that 10% of the operating power can be saved, 832 hours can be saved every year, 111.9kw can be reduced per hour, and 93100kwh can be reduced every year. (3) Replace the variable frequency air compresso: This year, the 100hp air compressor will be replaced with frequency conversion oil-free type, which is expected to improve the efficiency by 8% and reduce the power consumption of 42600kwh (KWH) every year. (4) Renewal of high energy consumption and water consumption equipment (Sterilizer): The high energy consumption and water consumption production equipment will be replaced with the equipment with high heat transfer efficiency and recyclable water. It is estimated that each
	No
	Yes	�
Assessment Item		(3) Has the Company noticed the effect of climate change on its business activities and does it implement GHG inventory and establish an energy conservation and GHG reduction strategy?

-39-

Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof	Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof		The Company complies with the Corporate Social Responsibility Best Practice Principles for TWSE/TPEX Listed Companies.
Implementation	Performance Summary	production can save 2 tons of water source, reduce waste water source and reduce heat consumption. It is estimated that 252,000 kilojoules (kJ) can be saved each time.	1. The Company has established the “Employee Work Rules” to protect the rights and benefits of employees and contributed pension funds for employees. The Company has also established the Employee Welfare Committee to undertake various employee welfare affairs. 2. The Company has established a grievance system and procedures as defined in the “Measures for Workplace Sexual Harassment Prevention” and Regulations for Grievances and Punishment”. The Company has also established the Grievance Address Committee to implement the grievance system. Apart from reporting grievances to the committee, employees can file their grievances by grievance hotline or e-mail. 3. The Company implements education and training on labor safety and health whenever new employees come onboard, and conducts a health examination for workers at all of the plants in August. In addition, the Company also feeds the employees with information on occupational safety and health of the work environment from time to time. 4. The Company holds the employer-employee (labor/management) meeting at planned intervals and has set up a suggestion box on the intranet mechanism to interact with employees. In addition, the Company gives notices to employees through harmonious employer-employee communication and maintains sound and harmonious employer-employee relations, to prevent significant operational changes. 5. The Company provides a diversified learning environment, by virtue of the systematic general education courses, inter-departmental on-the-job training and practice, research counseling from senior consultants,
	No
	Yes		� � � � �
Assessment Item			3. Implementation of philanthropy (1) Does the Company establish relevant management policies and procedures with reference to relevant international regulations and international human rights treaties? (2) Does the Company establish mechanisms and channels for and properly handle employee grievances? (3) Does the Company provide employees with a safe and healthy work environment and regularly arrange safety and health training/education for employees? (4) Does the Company establish mechanisms for periodic employee communication and reasonably notify employees of significant operational changes that could substantially affect them? (5) Does the Company establish effective training programs for employees to develop

-40-

Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof	Deviations from the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and reasons thereof			The Company complies with the Corporate Social Responsibility Best Practice
Implementation	Performance Summary	participating in projects, attendance at theme meetings, inter-departmental and inter-company job rotation, management’s continuing education abroad, and self-learning by reading designated reading materials, in order to facilitate personal and team development and growth.	6. The Company provides a hotline of the contact window for stakeholders on the corporate website to provide immediate services and assistance so as to maintain and protect consumer rights and benefits. 7. The Company labels foods and manages advertisements with reference to the “Act Governing Food Safety and Sanitation” and discloses ingredient supplier information with reference to the “Regulations Governing the Registration of Food Businesses”. 8. The Company evaluates each supplier prior to having business with them. The evaluation also includes if suppliers have food safety records and assesses the severity of their offences, so as to select excellent suppliers as partners through the supplier evaluation process. 9. Given food safety is the most important thing to protect consumer rights and benefits, although the Company does not include CSR-related terms in contracts signed with suppliers, through periodic visits and annual evaluation and audit of active suppliers, the Company reinforces supplier management to ensure the quality (Q), cost (C), delivery (D), and service (S) of suppliers and ingredients conform to production needs and thereby ensure consumer health and safety.	The Company has formed a dedicated team to promote CSR affairs, and has completed the CSR Reports for 2015-2017 and established the “CSR” site on the Company's website for the public to download the same Report from
	No
	Yes		� � � �	�
Assessment Item		employability?	(6) Does the Company establish policies and procedures to protect consumer rights and benefits in R&D, procurement, production, operation, and service processes? (7) Does the Company follow relevant regulations and international standards to market and label products and services? (8) Does the Company assess if suppliers have records of causing impacts on the environment and society? (9) When signing contracts with major suppliers, does the Company include the following terms in the contract: when suppliers violate the Company’s CSR policy and have significant impact on the environment and society, the Company may terminate or rescind the contract at any time?	4. Reinforcement of disclosure of CSR information. (1) Does the Company disclose

-41-

Deviations from the "Corporate Governance Best Practice Principles	for TWSE/TPEx Listed Companies" and reasons thereof	Principles for TWSE/TPEx Listed Companies.										9 Association legal person Kaohsiung Federation of charities 19 Foundation for academic development of Taiwan University 10 Taipei Medical University 20 World Vision	9 Association legal person Kaohsiung Federation of charities 19 Foundation for academic development of Taiwan University 10 Taipei Medical University 20 World Vision
			Beneficiary	Taiwan Association for Food Science and Technology	Taiwan industry and Economic Construction Institute	Association of the Republic of China	Foundation for drug control and development	Association legal person Taiwan Society of biotechnology and Bioengineering	Miao Li County Private Haiqing elderly care center	Taiwan Institute of Directors	Lixin Social Welfare Foundation	Foundation for academic development of Taiwan University	World Vision
Implementation	Performance Summary	the site.
			Item	11	12	13	14	15	16	17	18	19	20
			Beneficiary	Chinese Christian Relief Association	Taipei Trend Study Educational Foundation	Taipei Communications Educational Foundation	CNEX Foundation	Hong-Hua Foundation	Christian Huashen school Consortium	Taipei Qingjing medical care Charity Foundation	Taiwan heart surgery research and Development Association	Association legal person Kaohsiung Federation of charities	Taipei Medical University
	No
	Yes
Assessment Item		relevant and reliable CSR information on the corporate website and MOPS?
			Item	1	2	3	4	5	6	7	8	9	10

-42-

Deviations from the "Corporate Governance Best Practice	Principles for TWSE/TPEx Listed Companies" and reasons thereof	The Company complies with the Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies.
Implementation	Performance Summary	The Company has established the “ Ethical Corporate Management Best Practice Principles” and specified clearly in the “Ethical Corporate Management Best Practice Principles” and “Employees Work Rules” that employees are not allowed to extort treatments, gifts, kickbacks, or benefits of any form based on their authority. The Company also makes known to employees that “maintaining business integrity through fair and ethical operations” is the backbone policy of Standard Foods. To protect organizational trade secrets and intellectual property, employees are requested to sign a “letter of undertaking” to promise not to accept commissions, kickbacks, paybacks, cash, loans, or undue or improper advantage (including, but not limited to, treatment or travel or gift). In addition, the Company has specified the policy for avoiding conflicts of interest in the “Rules of Procedure for Board Meetings”.
	No
	Yes	� � �
Assessment Item		1. Policies and plans for fair and ethical business operations (1)Does the Company specify its policies and practices to maintain fair and ethical business operations in relevant regulations and external documents? Do the board and management actively implement the commitments made in relevant policies? (2)Does the Company draw up programs to prevent unethical conduct and set out in each program and implement SOPs, conduct guidelines, penalties for violation, and a grievance system? (3)Does the Company take precautionary action to prevent business activities specified in paragraph 2 of Article 7 of the Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies and other business activities within its scope of business with higher behavioral risk?	2. Implementation of fair and ethical business operations

-43-

Deviations from the "Corporate Governance Best Practice	Principles for TWSE/TPEx Listed Companies" and reasons thereof	The Company complies with the spirit of the Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies.
Implementation	Performance Summary	The Company does not accept cash gifts or kickbacks of any kind from suppliers to ensure reasonable prices and premium quality. The Company’s human resources unit is the dedicated (concurrent) unit to promote fair and ethical business operations. In addition, the Company has established a sound internal control system where internal auditors audit the performance of each unit at planned intervals. When new employees report to the Company, the human resources unit will inform them of the Company’s fair and ethical business operations. In addition, we have established a laws and regulations site on the intranet to provide employees with relevant legal knowledge.
	No
	Yes	� � � � �
Assessment Item		(1)Does the Company assess if trading counterparts involved in any unfair and unethical business operations and include the fair and ethical business operations clause in the transaction agreement signed with them? (2)Does the Company establish a dedicated (concurrent) unit directly under the board to promote fair and ethical business operations and report the effectiveness of implementation directly to the board? (3)Does the Company establish and implement policies to prevent conflicts of interest and provide appropriate channels for reporting such conflicts? (4)Has the Company established effective accounting and internal control systems to implement fair and ethical business operations? Does the Company have these system audited regularly by the internal audit unit or a CPA? (5)Does the Company arrange regular internal/external training/ education for fair and ethical business operations?

-44-

Deviations from the "Corporate Governance Best Practice	Principles for TWSE/TPEx Listed Companies" and reasons thereof	The Company complies with the spirit of the Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies.	The Company complies with the spirit of the Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies.
Implementation	Performance Summary	Coordinated by the human resources unit, the Company’s audit unit accepts reports on unfair and unethical business operations, and such reports and reward system, investigation standards and protection measures for informers are handled with reference to the Company’s “Ethical Corporate Management Best Practice Principles” and human resources regulations.	The Company posts the annual report on the corporate website for investors to download to understand relevant information.
	No
	Yes	� � �	�
Assessment Item		3. Operation of the whistleblower system (1)Does the Company establish a practical whistleblower and reward system and channels to facilitate reporting of unfair and unethical business operations and assign appropriate personnel to handle a reported case? (2)Does the Company establish a SOP and a non-disclosure mechanism of relevant investigations? (3)Does the Company establish and implement an informer protection policy to ensure no informer will receive indecent treatment?	4. Reinforcement of information disclosure (1)Does the Company disclose the content and effectiveness of implementation of the Code of Business Ethics on the corporate website and MOPS?

-45-

Deviations from the "Corporate Governance Best Practice	Principles for TWSE/TPEx Listed Companies" and reasons thereof	6. Other material information enabling a better understanding of fair and ethical business operations (such as review and revise the code of business ethics): (1) The Company always observes the Company Act, Securities and Exchange Act, Business Entity Accounting Act, relevant rules and regulations governing TWSE/TPEX listed companies, and other business behaviors to implement fair and ethical business operations. (2) The Company has specified the policy for avoiding conflicts of interest in the “Rules of Procedure for Board Meetings”. Under this policy, for proposals constituting a conflict of interest between himself/herself or his/her representatives that may harm the interest of the Company, a director may express opinions and answer to interpellation but is not allowed to join relevant discussions and vote for the proposal. In addition, this director should recur from the discussions and voting of the proposal. (3) The Company has established the “Insider Trading Prevention Regulations” to prohibit directors, managers, and employees from disclosing material internal information to a third party or from enquiring or collecting undisclosed material internal information unrelated with own duties from those acknowledging such material internal information. They are also requested not to disclose to others undisclosed material internal information acknowledged from work.	III.8 Corporate governance rules and regulations of the Company (1) Please visit our corporate website at http://www.sfworldwide.com for updates of corporate governance. (2) Corporate website information collected and maintained by dedicated personnel, and all major policies such as Corporate Governance Best Practice Principles are posted on the corporate website for public retrieval. III.9 Other material information enabling a better understanding of corporate governance: None.
Implementation	Performance Summary
	No
	Yes
Assessment Item

-46-

III.10 Status of implementation of the internal control system III.10.1 Statement of Internal Control

Standard Foods Corporation Statement of Compliance of the Internal Control System

Date: March 18, 2020

This Company makes the following statements on the compliance of the internal control system in 2019 with reference to self-assessment results.

We understand that it is the responsibility of the Company's management to establish, implement, and maintain the internal control system. The Company has established the internal control system to provide a reasonable assurance for the realization of operating effectiveness and efficiency (including profits, performance, and assets safety), the reliability, timeliness, transparency, and compliance of reports, and the conformity to relevant laws and regulations.
The internal control system is designed with limitations; therefore, no matter how perfect it is designed, an effective internal control system ensures only the realization of the aforementioned three objectives. Due to the changes in the environment and conditions, the effectiveness of an internal control system could change at any time. Our internal control system is designed with self-monitoring mechanisms; therefore, we are able to have corrective actions initiated upon identifying any nonconformity.
We have based the internal control criteria on the “Regulations Governing Establishment of Internal Control Systems by Public Companies” (referred to as “the Governing Rules” hereinafter) to determine the effectiveness of internal control design and enforcement. The internal control criteria of the “Governing Rules” are the management control processes. The internal control, are divided into five elements: (1) environment control, (2) risk analysis, (3) control process, (4) information and communication, and (5) supervision. Each element is subdivided into several items. Please refer to the “Governing Rules” for the details of the said items.
We have established the aforementioned internal control criteria to assess the effectiveness of internal control design and enforcement.
According to the aforementioned assessment results, the Company�s internal control system on December 31, 2018 (including the supervision and management of subsidiaries), including the understanding of business performance and efficiency, the reliability, timeliness, transparency, and regulatory compliance of reports, the conformity to governing regulations, and the design and enforcement of the internal control system are effective and feasible to ensure the realization of the aforementioned objectives.
The Declaration of Internal Control is in our annual report and prospectus for public information. For any forgery and concealment of the aforementioned information to the public, we will be held responsible by law in accordance with Securities Transaction Regulation No. 20, No. 32, No. 171 and No. 174.
We hereby declare that the Declaration of Internal Control was approved by the seven directors at the board meeting unanimously on March 18, 2020

Standard Foods Corporation

Chairman: Ter-Fung Tsao (Signature)

President: Yao Steven Yih Chun (Signature)

-47-

III.10.2 The CPA audit review should be disclosed if the internal control system is audited by a CPA: None.
III.11 Punishment of the Company and employees by the law, punishment of employees by the Company for violation of internal control system regulations, and major defects and improvement in last year and by the report publishing date: None.

III.12 Major Resolutions of Shareholders' Meeting and Board Meetings During the Most Recent Fiscal Year Up to the Date of Publication of the Annual Report: (1) The most recent important board resolutions are as follows:

Date	Major resolution matters
Mar. 22, 2019 14th Meeting from the 12th term of the Board of Directors.	1. The resolution on Business Plan and Budget for 2019 was passed. 2. The resolution on the amendment to the "Procedures for Acquisition and Disposal of Assets" was passed. 3. The resolution on the Performance Evaluation of Directors and Managerial Officers for 2018 was passed. 4. The resolution on the Distribution of Compensation of Employees and Directors for 2018 was passed. 5. The resolution on Financial Report and Consolidated Financial Statements for 2018 was passed. 6. The resolution on 2018 Profit Distribution for 2018 was passed. 7. The resolution on Internal Control Declaration for 2018 was passed. 8. The resolution on Reelecting the 13th Term of Directors (Independent Directors) was passed. 9. The resolution on nomination for 13th term of directors (including independent directors), including time, number of nominees, and place of nomination was passed. 10. The resolution on review the list of candidates nominated by the Board of Directors (including independent directors) was passed. 11. The resolution on approval for the newly elected directors of the 13th term to be a director, supervisor or managerial officers of other companies with the business scope similar to the company was passed. 12. The resolution on the date and agenda and other related matters of 2019 shareholders' general meeting of the company was passed. 13. The resolution on the establishment of CSR project team was passed. 14. The resolution on the establishment of the "Corporate Governance Team" was passed. 15. The resolution on the change of the CEO waspassed.
May 08, 2019 15th Meeting from the 12th term of the Board of Directors	1. The resolution on the Consolidated Financial Statements for the first quarter of 2019 was passed. 2. The resolution on the amendments of the "Procedures for Loaning of Funds to Other Parties" was passed. 3. The resolution on the amendments of the "Procedures for Endorsements and Guarantees" waspassed.
Jun. 14, 2019 1st Meeting from the 13th term of the Board of Directors	1. The resolution on election of the 13th Chairman of the company was passed.

-48-

Date	Major resolution matters
Jun. 14, 2019 2nd Meeting from the 13th term of the Board of Directors	1. The report on the renewal of director's liability Insurance was passed. 2. The resolution on the confirmation of cash dividend base date and payment date and other related matters of the company for 2018 was passed. 3. The resolution on the employment of members of the 4th term of the Remuneration Committee was passed. 4. The resolution on the formulation of the company's "Standard Operating Procedures for Directors' Request" was passed. 5. The resolution on the supply of CHF 1,500,000 as loans to Dermalab S.A waspassed
Aug. 05, 2019 3rd Meeting from the 13th term of the Board of Directors	1. The resolution on the Consolidated Financial Statements for the second quarter of 2019 was passed.
Nov. 05, 2019 4th Meeting from the 13th term of the Board of Directors	1. Report on the Overall Implementation of the Information Security Policies of 2019. 2. The resolution on the regular evaluation of the independence and suitability of CPAs was passed. 3. 2019 remuneration case for the auditing CPAs. 4. The resolution on the Consolidated Financial Statements for the third quarter of 2019 was passed. 5. The resolution on "Audit Plan" for 2020 was passed. 6. The resolution on the proportion of compensation of employees and Directors for 2019 waspassed.
Mar. 18, 2020 5th Meeting from the 13th term of the Board of Directors	1. The resolution on the Business Plan and Budget for 2020 was passed. 2. The resolution on the cooperation with the accounting firm's internal rotation mechanism to change the CPA for checking the financial report was passed. 3. The resolution on Financial Report and Consolidated Financial Statements for 2019 was passed. 4. The resolution on 2019 Internal Control System Statement was passed. 5. The resolution on 2019 Profit Distribution was passed. 6. The resolution on preparation and adjustment of the design and implementation instructions for the internal control system in the financial reports by the company was passed. 7. The resolution on distribution of compensation of employees and Directors and Supervisors in 2019 was passed. 8. The resolution on 2019 performance evaluation of directors and managerial officers was passed. 9. The resolution on the date and agenda and other related matters of 2020 shareholders' general meeting of the company was passed. 10. The resolution on dismissing the accounting supervisor's competitive behavior was passed and the review was submitted. 11. The resolution on the establishment of Standard Foods LLC. (USA), a subsidiary of the company was passed. 12. The resolution on the supply of RMB 200 million as loans to the Chinese subsidiarywaspassed.

-49-

Date	Major resolution matters
Mar. 31, 2020 6th Meeting from the 13th term of the Board of Directors	1. The resolution on the addition of the position of the Chief Investment Officer was passed. 2. The resolution on having the position of General Manager served by the Chief Executive Officer was passed.

2. The important resolutions made by the company at the 2019 general shareholders' meeting are as follows:

  - (1) The resolution on recognizing the 2018 business report and financial statements was passed.

  - (2) The recognition of the 2018 Profit Distribution: according to the resolution passed by the shareholders' meeting, the company's undistributed profit at the beginning of 2018 was NT$ 1,092,218,067. After tracing the amount impacted with IFRS9, applying investment adjustment by equity method to retain surplus, determining that the benefit plan rebalances are recognized as retained earnings and accumulated profit and loss from disposal of equity instrument investments, the undistributed surplus was NT$ 1,055,092,263. After adding the net profit of NT$ 2,949,089,197 of 2018 and deducting the statutory and special surplus reserve of NT$ 365,427,282, the distributable surplus was NT$ 3,638,754,178; this plan gives priority to the distribution of surplus of 2018. A cash dividend of NT$ 2.5 per share is distributed and NT$ 2,287,723,978 is distributed in total, resulting in an undistributed surplus of NT$ 1,351,030,200 after distribution.

  - (3) The resolution on revising the "Procedures for Acquisition and Disposal of Assets" was passed, and the declaration of relevant information of shareholders' meeting on Market Observation Post System was completed on Jun. 13, 2019.

  - (4) The resolution on reelecting the directors (including independent director) of the 13th term was passed and the declaration of relevant information of shareholders' meeting on Market Observation Post System was completed on Jun. 13, 2019.

III.13 Major contents of any dissenting opinions on record or stated in a written statement made by Directors or Supervisors regarding key resolutions of the Board of Directors' meeting during the most recent year up to the publication date of the Annual Report: None.

III.14 A summary of resignations and dismissals of the company's chairman, general manager, accounting manager, financial manager, chief internal auditor, corporate governance officer or research and development officer during the most recent fiscal year up to the date of publication of the Annual Report:

Title	Name	Date of Assumption of Duty	Date of Dismissal	Reasons for Resignation or Dismissal
General Manager	YAO STEVEN YIH CHU	2017.05.01	2020.04.01	Serving as the chief investment officer after the position adjustment

-50-

IV. Information Regarding Audit Fee

Range of CPA professional fees

CPA firm	Name of CPAs	Name of CPAs	Audit period	Remarks
Deloitte & Touche	CPA Tse-Li Kung	CPA Ching-Chen Yang	2019.01-2019.12

Unit: NT$

				Unit: NT$
Category of fees Range of fees		Audit fee	Non-audit fee	Total
1	Under NT$2,000,000		V
2	NT$2,000 thousand(inclusive)- NT$4,000 thousand
3	NT$4,000 thousand(inclusive)- NT$6,000 thousand	V
4	NT$6,000 thousand(inclusive)- NT$8,000 thousand			V
5	NT$8,000,000(inclusive)~ NT$10,000,000
6	Over NT$10,000,000(inclusive)

The company must disclose the following situations should they have taken place: (I) If any non-audit fee paid to CPAs, CPA accounting firm and its affiliates accounts for over one fourth of audit service fee, the amount of non-audit fee and audit fee and the contents of non-audit service shall be disclosed:

Unit: thousand NT$

CPA firm	Name of CPAs	Audit fee	Non-audit fee	Non-audit fee	Non-audit fee		CPA audit period	Remarks
			Business registration	Human Resource	Other	Sub-total
Deloitte & Touche	Tse-Li Kung	5,410	-	-	1,280	1,280	2019.01 -2019.12	Including non-audit services such as CSR report confirmation and transfer pricing report.

(II) Where the CPA firm was replaced, and the audit fees in the fiscal year when the replacement was made were less than that in the previous fiscal year before replacement, the amount of audit fees paid before replacement and reasons for paying this amount shall be disclosed: Not applicable.
(III) Where audit fee paid for the year was more than 15% less than that of the previous year, the amount, proportion, and cause of the reduction shall be disclosed: Not applicable.

-51-

V. CPA’s change information:

V.1 Regarding former CPAs

==> picture [435 x 252] intentionally omitted <==

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

Replacement date June 2018
Cause of replacement Internal duty adjustment of Deloitte Taiwan
Party Concerned
Specify the reasons for replacement: Termination of Condition CPA Client
appointment by the client or the CPA or rejection of
appointment
Voluntary termination of appointment
N/A
Rejection of (successive) appointment
Opinions and reasons for audit reports other than
N/A
“unqualified opinion” issued within the past two years.
Accounting principles or practice
Disclosure of financial statements
Yes
Scope or procedure of audit
Opinions different from the issuer Others
None V
Explanation
Other Information to Disclose
(Information to be disclosed in Items 1-4 to 1-7, None
Paragraph 6, Article 10 of these Regulations)
----- End of picture text -----

V.2 Regarding successive CPAs

Firm	Deloitte Taiwan
CPA’s name	CPA Tza-Li Kung
	CPA Ching-Chen Yang
Appointment date	June 2018
Consultation of the accounting processing method or accounting principles and potential opinion expressed for financial statements for specific transactionsprior to appointment and results.	N/A
Written opinions different from the opinions expressed by former CPAs	N/A

V.3 Reply from former CPAs on items 1 and 2-3, paragraph 6, Article 10 of these Regulations: N/A.

VI. The chairman, president, and financial or accounting managers of the Company worked for the CPA or its affiliates last year: None.

-52-

VII.Share transfer and share mortgage of directors, supervisors, executives, and shareholders holding over 10% of shares in last year and by the report publishing date:

VII.1 Information on the change in shareholding of directors, supervisors, executives, and major shareholders. Unit: Shares Title Name 2019 As of April 18 Shares Increase (Decrease) Shares Under Pledge Increase (Decrease) Shares Increase (Decrease) Shares Under Pledge Increase (Decrease) Chairman Mu Te Investment Co., Ltd. Representative: Ter-Fung Tsao 0 0 0 0 Director Mu Te Investment Co., Ltd. Representative: Jason Hsuan Director Mu Te Investment Co., Ltd. Representative: Wendy Tsao Director Charng Hui Ltd. Representative: Arthur Tsao 0 0 0 0 Independent Director Ben Chang 0 0 0 0 Independent Director George Chou 0 0 0 0 Independent Director Daniel Chiang 0 0 0 0 And also major shareholder holding 10% or more Ter-Fung Tsao 0 0 0 0 CEO and also President Arthur Tsao (Date of Taking Office: April 01, 2020) 0 0 0 0 Chief Investment of Officer Yao Steven Yih Chun (Date of Taking Office: April 01, 2020) 0 0 0 0 Chief Financial of Officer Chris Hong 0 0 (1,000) 0 Sales Division Director Hsiang-Jung Huang (Date of retire : Feb. 29, 2020) 0 0 0 0 R&D Division Hsin-Chuan Wang 0 0 0 0 Marketing Division Director Lydia Cheng 0 0 0 0 E-Commerce Director Yi-Ting Huang (Date of departure : Jun. 30, 2019) 0 0 0 0 Major Shareholder Holding 10% or More Chia Chieh Investment Co., Ltd. Trust Property Account 0 0 0 0	VII.1 Information on the change in shareholding of directors, supervisors, executives, and major shareholders. Unit: Shares Title Name 2019 As of April 18 Shares Increase (Decrease) Shares Under Pledge Increase (Decrease) Shares Increase (Decrease) Shares Under Pledge Increase (Decrease) Chairman Mu Te Investment Co., Ltd. Representative: Ter-Fung Tsao 0 0 0 0 Director Mu Te Investment Co., Ltd. Representative: Jason Hsuan Director Mu Te Investment Co., Ltd. Representative: Wendy Tsao Director Charng Hui Ltd. Representative: Arthur Tsao 0 0 0 0 Independent Director Ben Chang 0 0 0 0 Independent Director George Chou 0 0 0 0 Independent Director Daniel Chiang 0 0 0 0 And also major shareholder holding 10% or more Ter-Fung Tsao 0 0 0 0 CEO and also President Arthur Tsao (Date of Taking Office: April 01, 2020) 0 0 0 0 Chief Investment of Officer Yao Steven Yih Chun (Date of Taking Office: April 01, 2020) 0 0 0 0 Chief Financial of Officer Chris Hong 0 0 (1,000) 0 Sales Division Director Hsiang-Jung Huang (Date of retire : Feb. 29, 2020) 0 0 0 0 R&D Division Hsin-Chuan Wang 0 0 0 0 Marketing Division Director Lydia Cheng 0 0 0 0 E-Commerce Director Yi-Ting Huang (Date of departure : Jun. 30, 2019) 0 0 0 0 Major Shareholder Holding 10% or More Chia Chieh Investment Co., Ltd. Trust Property Account 0 0 0 0	VII.1 Information on the change in shareholding of directors, supervisors, executives, and major shareholders. Unit: Shares Title Name 2019 As of April 18 Shares Increase (Decrease) Shares Under Pledge Increase (Decrease) Shares Increase (Decrease) Shares Under Pledge Increase (Decrease) Chairman Mu Te Investment Co., Ltd. Representative: Ter-Fung Tsao 0 0 0 0 Director Mu Te Investment Co., Ltd. Representative: Jason Hsuan Director Mu Te Investment Co., Ltd. Representative: Wendy Tsao Director Charng Hui Ltd. Representative: Arthur Tsao 0 0 0 0 Independent Director Ben Chang 0 0 0 0 Independent Director George Chou 0 0 0 0 Independent Director Daniel Chiang 0 0 0 0 And also major shareholder holding 10% or more Ter-Fung Tsao 0 0 0 0 CEO and also President Arthur Tsao (Date of Taking Office: April 01, 2020) 0 0 0 0 Chief Investment of Officer Yao Steven Yih Chun (Date of Taking Office: April 01, 2020) 0 0 0 0 Chief Financial of Officer Chris Hong 0 0 (1,000) 0 Sales Division Director Hsiang-Jung Huang (Date of retire : Feb. 29, 2020) 0 0 0 0 R&D Division Hsin-Chuan Wang 0 0 0 0 Marketing Division Director Lydia Cheng 0 0 0 0 E-Commerce Director Yi-Ting Huang (Date of departure : Jun. 30, 2019) 0 0 0 0 Major Shareholder Holding 10% or More Chia Chieh Investment Co., Ltd. Trust Property Account 0 0 0 0	VII.1 Information on the change in shareholding of directors, supervisors, executives, and major shareholders. Unit: Shares Title Name 2019 As of April 18 Shares Increase (Decrease) Shares Under Pledge Increase (Decrease) Shares Increase (Decrease) Shares Under Pledge Increase (Decrease) Chairman Mu Te Investment Co., Ltd. Representative: Ter-Fung Tsao 0 0 0 0 Director Mu Te Investment Co., Ltd. Representative: Jason Hsuan Director Mu Te Investment Co., Ltd. Representative: Wendy Tsao Director Charng Hui Ltd. Representative: Arthur Tsao 0 0 0 0 Independent Director Ben Chang 0 0 0 0 Independent Director George Chou 0 0 0 0 Independent Director Daniel Chiang 0 0 0 0 And also major shareholder holding 10% or more Ter-Fung Tsao 0 0 0 0 CEO and also President Arthur Tsao (Date of Taking Office: April 01, 2020) 0 0 0 0 Chief Investment of Officer Yao Steven Yih Chun (Date of Taking Office: April 01, 2020) 0 0 0 0 Chief Financial of Officer Chris Hong 0 0 (1,000) 0 Sales Division Director Hsiang-Jung Huang (Date of retire : Feb. 29, 2020) 0 0 0 0 R&D Division Hsin-Chuan Wang 0 0 0 0 Marketing Division Director Lydia Cheng 0 0 0 0 E-Commerce Director Yi-Ting Huang (Date of departure : Jun. 30, 2019) 0 0 0 0 Major Shareholder Holding 10% or More Chia Chieh Investment Co., Ltd. Trust Property Account 0 0 0 0	VII.1 Information on the change in shareholding of directors, supervisors, executives, and major shareholders. Unit: Shares Title Name 2019 As of April 18 Shares Increase (Decrease) Shares Under Pledge Increase (Decrease) Shares Increase (Decrease) Shares Under Pledge Increase (Decrease) Chairman Mu Te Investment Co., Ltd. Representative: Ter-Fung Tsao 0 0 0 0 Director Mu Te Investment Co., Ltd. Representative: Jason Hsuan Director Mu Te Investment Co., Ltd. Representative: Wendy Tsao Director Charng Hui Ltd. Representative: Arthur Tsao 0 0 0 0 Independent Director Ben Chang 0 0 0 0 Independent Director George Chou 0 0 0 0 Independent Director Daniel Chiang 0 0 0 0 And also major shareholder holding 10% or more Ter-Fung Tsao 0 0 0 0 CEO and also President Arthur Tsao (Date of Taking Office: April 01, 2020) 0 0 0 0 Chief Investment of Officer Yao Steven Yih Chun (Date of Taking Office: April 01, 2020) 0 0 0 0 Chief Financial of Officer Chris Hong 0 0 (1,000) 0 Sales Division Director Hsiang-Jung Huang (Date of retire : Feb. 29, 2020) 0 0 0 0 R&D Division Hsin-Chuan Wang 0 0 0 0 Marketing Division Director Lydia Cheng 0 0 0 0 E-Commerce Director Yi-Ting Huang (Date of departure : Jun. 30, 2019) 0 0 0 0 Major Shareholder Holding 10% or More Chia Chieh Investment Co., Ltd. Trust Property Account 0 0 0 0	VII.1 Information on the change in shareholding of directors, supervisors, executives, and major shareholders. Unit: Shares Title Name 2019 As of April 18 Shares Increase (Decrease) Shares Under Pledge Increase (Decrease) Shares Increase (Decrease) Shares Under Pledge Increase (Decrease) Chairman Mu Te Investment Co., Ltd. Representative: Ter-Fung Tsao 0 0 0 0 Director Mu Te Investment Co., Ltd. Representative: Jason Hsuan Director Mu Te Investment Co., Ltd. Representative: Wendy Tsao Director Charng Hui Ltd. Representative: Arthur Tsao 0 0 0 0 Independent Director Ben Chang 0 0 0 0 Independent Director George Chou 0 0 0 0 Independent Director Daniel Chiang 0 0 0 0 And also major shareholder holding 10% or more Ter-Fung Tsao 0 0 0 0 CEO and also President Arthur Tsao (Date of Taking Office: April 01, 2020) 0 0 0 0 Chief Investment of Officer Yao Steven Yih Chun (Date of Taking Office: April 01, 2020) 0 0 0 0 Chief Financial of Officer Chris Hong 0 0 (1,000) 0 Sales Division Director Hsiang-Jung Huang (Date of retire : Feb. 29, 2020) 0 0 0 0 R&D Division Hsin-Chuan Wang 0 0 0 0 Marketing Division Director Lydia Cheng 0 0 0 0 E-Commerce Director Yi-Ting Huang (Date of departure : Jun. 30, 2019) 0 0 0 0 Major Shareholder Holding 10% or More Chia Chieh Investment Co., Ltd. Trust Property Account 0 0 0 0
Title	Name	2019		As of April 18
		Shares Increase (Decrease)	Shares Under Pledge Increase (Decrease)	Shares Increase (Decrease)	Shares Under Pledge Increase (Decrease)
Chairman	Mu Te Investment Co., Ltd. Representative: Ter-Fung Tsao	0	0	0	0
Director	Mu Te Investment Co., Ltd. Representative: Jason Hsuan
Director	Mu Te Investment Co., Ltd. Representative: Wendy Tsao
Director	Charng Hui Ltd. Representative: Arthur Tsao	0	0	0	0
Independent Director	Ben Chang	0	0	0	0
Independent Director	George Chou	0	0	0	0
Independent Director	Daniel Chiang	0	0	0	0
And also major shareholder holding 10% or more	Ter-Fung Tsao	0	0	0	0
CEO and also President	Arthur Tsao (Date of Taking Office: April 01, 2020)	0	0	0	0
Chief Investment of Officer	Yao Steven Yih Chun (Date of Taking Office: April 01, 2020)	0	0	0	0
Chief Financial of Officer	Chris Hong	0	0	(1,000)	0
Sales Division Director	Hsiang-Jung Huang (Date of retire : Feb. 29, 2020)	0	0	0	0
R&D Division	Hsin-Chuan Wang	0	0	0	0
Marketing Division Director	Lydia Cheng	0	0	0	0
E-Commerce Director	Yi-Ting Huang (Date of departure : Jun. 30, 2019)	0	0	0	0
Major Shareholder Holding 10% or More	Chia Chieh Investment Co., Ltd. Trust Property Account	0	0	0	0

VII.2 Shares transferred: None.

VII.3 Shares mortgaged: N/A.

-53-

Rem arks
Name and relationship of spouse or relative who is a top-ten shareholder and is within the second degree of lineal consanguinity of another top-ten shareholder (Note 3)	Relationship	Chairman of Mu Te	The Chairman of Mu Te also holds the position as theDirector of Chia Yun.	The Chairman of Mu Te also holds the position as theDirector of Chia Chieh.	Mu Te is the trustee.	Director of Chia Yun	Director of Chia Chieh	Chairman of Mu Te	Director of Chia Yun	The Chairman of Chia Yun also holds the position as the Director of Mu Te.	The Chairman of Chia Yun also holds the position as the Director of Chia Chieh.	The Chairman of Chia Yun also holds the position as the Director of Mu Te.	Director of Mu Te	Director of Chia Chieh	Director of Mu Te
	Name	Ter-Fung Tsao	Chia Yun Investment Co., Ltd. Trust Property Account	Chia Chieh Investment Co., Ltd. Trust Property Account	Mu Te Investment Co., Ltd.	Chia Yun Investment Co., Ltd. Trust Property Account	Chia Chieh Investment Co., Ltd. Trust Property Account	Mu Te Investment Co., Ltd.	Ter-Fung Tsao	Mu Te Investment Co., Ltd. Trust Property Account	Chia Chieh Investment Co., Ltd. Trust Property Account	Mu Te Investment Co., Ltd.	Mu Te Investment Co., Ltd. Trust Property Account	Chia Chieh Investment Co., Ltd. Trust Property Account	Mu Te Investment Co., Ltd.
Shares held in other’s names	Share- Holding Ratio %		0				2.48				0			0
	Shares		0				22,651,211				0			0
Shareholding of spouse and minor children	Share- Holding Ratio %		0				0				0			0
	Shares		0				0				0			0
Shares held by shareholder	Shareholding ratio% (note 2)		17.16				4.46				14.55			0.00
	Shares		157,008,400				40,848,203				133,125,408			10,988
Name (Note 1)			Mu Te Investment Co., Ltd. Trust Property Account			Representative: Ter-Fung Tsao				Chia Yun Investment Co.,	Ltd. Trust Property Account			Representative: Yi-Ling Chen

-54-

Rem arks
Name and relationship of spouse or relative who is a top-ten shareholder and is within the second degree of lineal consanguinity of another top-ten shareholder (Note 3)	Relationship	Director of Chia Chieh	The Chairman of Chia Chieh also holds the position as a Director of Mu Te.	The Chairman of Chia Chieh also holds the position as a Director of Chia Yun.	The Chairman of Chia Chieh also holds the position as a Director of Mu Te.	Director of Mu Te	Director of Chia Yun	Director of Mu Te	Chairman of Mu Te	Director of Chia Yun	Director of Chia Chieh	Chairman of Mu Te	-	-	Chairman of Mu Te	Mu Te is the trustee.	The Chairman of Mu Te also holds the position as the Chairman of Chia Yun.
	Name	Ter-Fung Tsao	Mu Te Investment Co., Ltd. Trust Property Account	Chia Yun Investment Co., Ltd. Trust Property Account	Mu Te Investment Co., Ltd.	Mu Te Investment Co., Ltd. Trust Property Account	Chia Yun Investment Co., Ltd. Trust Property Account	Mu Te Investment Co., Ltd.	Mu Te Investment Co., Ltd. Trust Property Account	Chia Yun Investment Co., Ltd. Trust Property Account	Chia Chieh Investment Co., Ltd. Trust Property Account	Mu Te Investment Co., Ltd.	-	-	Ter-Fung Tsao	Mu Te Investment Co., Ltd. Trust Property Account	Chia Yun Investment Co., Ltd. Trust Property Account
Shares held in other’s names	Share- Holding Ratio %			11.86			0.00			2.48			0	0			0
	Shares			108,503,160			5,871			22,651,211			0	0			0
Shareholding of spouse and minor children	Share- Holding Ratio %			11.86			0.00			0			0	0			0
	Shares			108,50 3,160			5,871			0			0	0			0
Shares held by shareholder	Shareholding ratio% (note 2)			11.86			0.00			4.46			3.61	0.02		2.48
	Shares			108,503,160			5,871			40,848,203			33,039,081	163,822		22,650,057
Name (Note 1)			Chia Chieh Investment Co., Ltd. Trust Property Account			Representative: Xiu-Zhen Hsiao				Ter-Fung Tsao			Bilai Investment Co., Ltd.	Representative: Su-Win Tseng		Mu Te Investment Co., Ltd.

-55-

Rem arks
Name and relationship of spouse or relative who is a top-ten shareholder and is within the second degree of lineal consanguinity of another top-ten shareholder (Note 3)	Relationship	The Chairman of Mu Te also holds the position as the Chairman of Chia Chieh.	Chairman of Mu Te	Director of Chia Yun	Director of Chia Chieh	-	-	-	-	-	-
	Name	Chia Chieh Investment Co., Ltd. Trust Property Account	Mu Te Investment Co., Ltd. Trust Property Account	Chia Yun Investment Co., Ltd. Trust Property Account	Chia Chieh Investment Co., Ltd. Trust Property Account	-	-	-	-	-	-
Shares held in other’s names	Share- Holding Ratio %			2.48		0	0	0	0	0	0
	Shares			22,651,211		0	0	0	0	0	0
Shareholding of spouse and minor children	Share- Holding Ratio %			0		0	0	0	0	0	0
	Shares			0		0	0	0	0	0	0
Shares held by shareholder	Shareholding ratio% (note 2)			4.46		2.29	1.45	0	1.33	1.30	0.00
	Shares			40,848,203		20,981,259	13,261,354	0	12,140,000	11,876,000	0
Name (Note 1)				Representative: Ter-Fung Tsao		HSBC as Trustee of RBC Emerging Markets Equity Fund	Cathay Life insurance co., Ltd.	Representative: Diaogui Huang	Chun-Yao Lin	Nan Shan Life Insurance Co., Ltd. Representative: Ying-Zhog Du

-56-

IX. The shareholding of the same invested company by the Company, the directors, the supervisors, the managers or another business that is controlled by the Company directly or indirectly

directly or indirectly
			April 30,2020;Unit: Shares
Transfer Invested Business (Note 1)	The Company’s Investment		Investment of Director, Supervisor, Management, and a Business Controlled by the CompanyDirectlyor Indirectly		Comprehensive Investment
	Shares	Shareholding Ratio	Shares	Shareholding Ratio	Shares	Shareholding Ratio
Standard Dairy Products Taiwan Ltd.	30,000,000	100.0%	�	�	30,000,000	100.0%
Standard Beverage Co., Ltd.	7,907,000	100.0%	�	�	7,907,000	100.0%
Charng Hui Ltd.	24,100,000	100.0%	�	�	24,100,000	100.0%
Domex Technology Corporation	10,374,399	52.0%	�	�	10,374,399	52.0%
Le Bonta Wellness International Co.	N/A (Note 2)	100.0%	�	�	N/A (Note 2)	100.0%
Accession Ltd.	123,600,000	100.0%	�	�	123,600,000	100.0%
Dermalab S.A.	�	�	2,600	100.0%	2,600	100.0%
Shanghai Standard Foods Co.	�	�	N/A (Note 2)	100.0%	N/A (Note 2)	100.0%
Shanghai Le Ben De Health Technology Co., Ltd.	�	�	N/A (Note 2)	100.0%	N/A (Note 2)	100.0%
Swissderma, SL	�	�	3,000	100.0%	3,000	100.0%
Standard Investment (Cayman) Ltd.	150,124,814	100.0%	�	�	150,124,814	100.0%
Standard Corporation (Hong Kong) Ltd.	�	�	150,050,814	100.0%	150,050,814	100.0%
Standard Investment (China) Ltd.	�	�	N/A (Note 2)	99.0%	N/A (Note 2)	99.0%
Standard Foods (China) Ltd.	�	�	N/A (Note 2)	100.0%	N/A (Note 2)	100.0%
Shanghai Dermalab Corporation	�	�	N/A (Note 2)	100.0%	N/A (Note 2)	100.0%
Le Bonta Wellness Co., Ltd.	N/A (Note 2)	51.0%	N/A (Note 2)	49.0%	N/A (Note 2)	100.0%
Standard Foods (Xiamen) Ltd.	�	�	N/A (Note 2)	100.0%	N/A (Note 2)	100.0%
Shanghai Le Ho Industrial Co., Ltd.	�	�	N/A (Note 2)	100.0%	N/A (Note 2)	100.0%
Shanghai Le Min Industrial Ltd.	�	�	N/A (Note 2)	100.0%	N/A (Note 2)	100.0%

Note1: Recorded with equity method. Note2: It is a limited company without any shares

-57-

Remarks	Others	1986.06.06 MOEA. Investment Bureau (75) Kong-Son-Tzi No. 2799	1986.06.27 MOEA. Investment Bureau (75) Kong-Son-Tzi No. 3149	1986.09.22 MOEA. Investment Bureau (75) Kong-Son-Tzi No. 4718	1988 04.09 MOEA. Investment Bureau (77) Kong-Son-Tzi No. 1831	1990.05.16 MOEA. Investment Bureau (79) Kong-Son-Tzi No. 3425	1991.05.15 SFE Ruling (80) Tai-Tsai-Cheng (1) No.00935	1992.02.17 SFE Ruling (81) Tai-Tsai-Cheng (1) NO.00269	1993.04.13 SFE Ruling (82) Tai-Tsai-Cheng (1) No.00771	1994.01.14 SFE Ruling (83) Tai-Tsai-Cheng (1) No.49242	1995.01.07 SFE Ruling (84) Tai-Tsai-Cheng (1) No.52905	1995.12.04 SFE Ruling (84) Tai-Tsai-Cheng (1) No.62578	1996.12.24 SFE Ruling (85) Tai-Tsai-Cheng (1) No.74787
	Non-money Capital	None	None	None	None	None	None	None	None	None	None	None	None
	Source of Capital (NTD)	Incorporation	Capital increased by cash NT$ 100	Capital increased by cash NT$ 10,211,600	Capitalization from retained earnings for NT$ 30,000,000	Capitalization from retained earnings for NT$ 117,000,000	Capitalization from retained earnings for NT$ 32,400,000	Capital increased by cash NT$ 48,600,000 Capitalization from retained earnings for NT$ 64,152,000	Capitalization from retained earnings for NT$ 122,860,800	Capitalization from retained earnings for NT$ 172,005,120	Capitalization from retained earnings for NT$ 240,807,170 Capitalization from employee bonus for NT$ 5,513,480	Capitalization from retained earnings for NT$ 339,335,420 Capitalization from employee bonus for NT$ 3,494,440	Capitalization from retained earnings for NT$ 476,467,380 Capitalization from employee
Issued shares	Amount	4,788,300	4,788,400	15,000,000	45,000,000	162,000,000	194,400,000	307,152,000	430,012,800	602,017,920	848,338,570	1,191,168,430	1,672,052,910
	Shares	47,883	47,884	150,000	450,000	16,200,000	19,440,000	30,715,200	43,001,280	60,201,792	84,833,857	119,116,843	167,205,291
Authorized shares	Amount	5,000,000	5,000,000	15,000,000	45,000,000	162,000,000	194,400,000	307,152,000	430,012,800	602,017,920	848,338,570	1,191,168,430	1,672,052,910
	Shares	50,000	50,000	150,000	450,000	16,200,000	19,440,000	30,715,200	43,001,280	60,201,792	84,833,857	119,116,843	167,205,291
Issuing price (NTD)		100	100	100	100	10	10	10	10	10	10	10	10
Year / Month		1986/06	1986/06	1986/09	1988/04	1990/05	1991/07	1992/03	1993/07	1994/02	1995/03	1996/02	1997/03

-58-

Remarks	Others		1997.12.16 SFE Ruling (86) Tai-Tsai-Cheng (1) No.92147	1998.12.28 SFE Ruling (87) Tai-Tsai-Cheng (1) No.106085	1999.12.24 SFE Ruling (88) Tai-Tsai-Cheng (1) No.109947	2001.01.02 SFE Ruling (90) Tai-Tsai-Cheng (1) No.103971	2009.07.03 FSC Far.Tzi No. 0980033057 Letter	2010.07.05 FSC Far.Tzi No. 0990034588 Letter	2011.07.04 FSC Far.Tzi No. 1000030659 Letter	2012.06.26 FSC Far.Tzi No. 1010027983 Letter	2013.07.02 FSC Far.Tzi No. 1020025191 Letter	2014.07.11 FSC Far.Tzi No. 1030026432 Letter	2015.07.29 FSC Far.Tzi No. 1040028838 Letter	2016.09.01 JinSoSunTzi No. 10501215010	2017.09.04 JinSoSunTzi No. 10601126490
	Non-money Capital		None	None	None	None	None	None	None	None	None	None	None	None	None
	Source of Capital (NTD)	bonus for NT$ 4,417,100	Capitalization from retained earnings for NT$ 418,013,220 Capitalization from employee bonus for NT$ 4,636,230	Capitalization from retained earnings for NT$ 523,675,590 Capitalization from employee bonus for NT$ 5,228,560	Capitalization from retained earnings for NT$ 393,540,980 Capitalization from employee bonus for NT$ 5,497,570	Capitalization from retained earnings for NT$ 181,358,710 Capitalization from employee bonus for NT$ 5,180,650	Capitalization from retained earnings for NT$ 16,045,920	Capitalization from retained earnings for NT$ 483,784,550	Capitalization from retained earnings for NT$ 927,253,720	Capitalization from retained earnings for NT$ 1,112,704,460	Capitalization from retained earnings for NT$ 862,345,960	Capitalization from retained earnings for NT$595,018,710	Capitalization from retained earnings for NT$720,633,770	Capitalization from retain earning for NT$ 871,966,860	Capitalization from retain earning for NT$ 351,957,540
Issued shares	Amount		2,094,702,360	2,623,606,510	3,022,645,060	3,209,184,420	3,225,230,340	3,709,014,890	4,636,268,610	5,748,973,070	6,611,319,030	7,206,337,740	7,926,971,510	8,798,938,370	9,150,895,910
	Shares		209,470,236	262,360,651	302,264,506	320,918,442	322,523,034	370,901,489	463,626,861	574,897,307	661,131,903	720,633,774	792,697,151	879,893,837	915,089,591
Authorized shares	Amount		3,300,000,000	3,300,000,000	3,300,000,000	3,300,000,000	3,300,000,000	3,800,000,000	4,800,000,000	5,800,000,000	6,800,000,000	7,400,000,000	8,000,000 ,000	8,800,000,000	9,200,000,000
	Shares		330,000,000	330,000,000	330,000,000	330,000,000	330,000,000	380,000,000	480,000,000	580,000,000	680,000,000	740,000,000	800,000,000	880,000,000	920,000,000
Issuing price (NTD)			10	10	10	10	10	10	10	10	10	10	10	10	10
Year / Month			1998/03	1999/02	2000/02	2001/02	2009/08	2010/08	2011/08	2012/08	2013/07	2014/08	2015/08	2016/08	2017/09

-59-

2. Type of Share:

Type of Share	Authorized shares	Authorized shares	Authorized shares	Remarks
	Outstanding shares (Available for tradingon the TWSE)	Un-issued shares	Total
Registered common shares	915,089,591	4,910,409	920,000,000

3. Relevant information on the declaration system: None.

(II) Shareholder structure


(II) Shareholder structure April 18,2020
Shareholder structure QTY Quantity	Government agencies	Financial institutions	Other institutional investors	Natural persons	Foreign institutions & natural persons	Total
Number of persons	1	14	154	31,029	616	31,814
Share held	2,846	39,362,887	493,853,961	168,634,876	213,235,021	915,089,591
Shareholding ratio%	0.00%	4.30%	53.97%	18.43%	23.30%	100.00%

(III) Dispersal of shareholding NTD 10 Par value

April 18, 2020

Classification	Number of Shareholders	Share Held	Shareholding ratio %
1-999	11,737	2,443,515	0.27%
1,000-5,000	15,096	30,900,118	3.38%
5,001-10,000	2,476	17,766,924	1.94%
10,001-15,000	814	10,054,813	1.10%
15,001-20,000	367	6,449,053	0.70%
20,001-30,000	416	10,306,721	1.13%
30,001-40,000	184	6,418,889	0.70%
40,001-50,000	126	5,699,275	0.62%
50,001-100,000	253	17,949,549	1.96%
100,001-200,000	147	20,740,932	2.27%
200,001-400,000	77	22,222,993	2.43%
400,001-600,000	27	13,328,204	1.46%
600,001-800,000	11	7,833,161	0.86%
800,001-1,000,000	12	10,738,214	1.17%
Over 1,000,001 shares	71	732,237,230	80.01%
Total	31,814	915,089,591	100.00%

-60-

(IV) Major shareholder


(IV) Major shareholder April 18,2020 Shares Name of Major Shareholders Share Held Shareholding Ratio Mu Te Investment Co.,Ltd. Trust PropertyAccount 157,008,400 17.16 Chia Yun Investment Co.,Ltd. Trust PropertyAccount 133,125,408 14.55 Chia Chieh Investment Co.,Ltd. Trust PropertyAccount 108,503,160 11.86 Ter-FungTsao 40,848,203 4.46 Bilai Investment Co.,Ltd. 33,039,081 3.61 Mu Te Investment Co.,Ltd. 22,650,057 2.48 HSBC as Trustee of RBC Emerging Markets Equity Fund Investment Account 20,981,259 2.29 CathayLife insurance co.,Ltd. 13,261,354 1.45 Chun-Yao Lin 12,140,000 1.33 Nan Shan Life Insurance Co.,Ltd. 11,876,000 1.30
Shares Name of Major Shareholders	Share Held	Shareholding Ratio
Mu Te Investment Co.,Ltd. Trust PropertyAccount	157,008,400	17.16
Chia Yun Investment Co.,Ltd. Trust PropertyAccount	133,125,408	14.55
Chia Chieh Investment Co.,Ltd. Trust PropertyAccount	108,503,160	11.86
Ter-FungTsao	40,848,203	4.46
Bilai Investment Co.,Ltd.	33,039,081	3.61
Mu Te Investment Co.,Ltd.	22,650,057	2.48
HSBC as Trustee of RBC Emerging Markets Equity Fund Investment Account	20,981,259	2.29
CathayLife insurance co.,Ltd.	13,261,354	1.45
Chun-Yao Lin	12,140,000	1.33
Nan Shan Life Insurance Co.,Ltd.	11,876,000	1.30

(V) Market Price, Net Worth, Earnings & Dividend per Share in the past two years

Item	Year	Year	2018	2019	As of March 31, 2020 (Note 5)
Market Price per Share	Highest		75.30	73.00	73.70
	Lowest		42.90	48.05	51.20
	Average		59.34	58.52	64.21
Net Worth per Share	Before Appropriation		17.40	18.36	0.67
	After Appropriation		17.40	(Note 1)	(Note 1)
Earnings per Share	Weighted Average Shares		908,420,120	908,420,120	908,420,120
	Earnings per Share Before Adjustment		3.25	3.76	0.67
	Earnings per Share After Adjustment		3.25	(Note 1)	(Note 1)
Dividends per Share	Cash Dividends		2.50	(Note 1)	-
	Stock Dividends	Earnings Distribution	-	(Note 1)	-
		Capital Reserve Distribution	-	-	-
	Accumulated Unpaid Dividends		-	-	-
Analysis of Return on Investment	Price/Earnings Ratio (Note 2)		18.26	15.56	-
	Price/Dividend Ratio (Note 3)		23.74	(Note 1)	-
	Cash Dividends Yield Rate(Note 4)		4.21	(Note 1)	-

Note 1: Subject to the approval of annual shareholders' meeting.

Note 2: Profit ratio = Closing price per share of the year / Earning per share.
Note 3: Earning ratio = Closing price per share of the year / Cash dividend per share.
Note 4: Cash dividend yield rate = Cash dividend per share / Closing price per share of the year.
Note 5: The column of the net worth per share and earnings per share is the data of the latest quarter certified (or reviewed) by auditors while other columns are for the financial data of the year.

-61-

(VI) Execution of Dividend Policy

1. Dividend Policy:

Based on the amended Company Act announced in May 2015, the distribution of stock dividends and bonus is only limited to the shareholders, employees are not included. Accordingly, we have resolved to change the profit distribution policy under the Company Chapter in the General Shareholders’ Meeting held on June 15, 2016.

Based on the revised policy, if there is a profit after the annual closing of books, this Company shall pay the profit-seeking enterprise annual income tax, cover losses of previous years, make 10% legal reserve, and appropriate or reverse special reserve by law. Then, this Company shall appropriate 30-100% of the remaining amount with the accumulated unappropriated earnings as dividends for shareholders. Cash dividends shall equal to 30-100% of the distributable dividend. However, for a major investment program without the possibility of obtaining other funding, the cash dividend can be reduced to 5-20% of the distributable dividend. The distribution to the shareholders shall be proposed by the Board of Director and resolved by the shareholders’ meeting.

2. Proposed Distribution of Dividends:

The Company’s Board of Directors resolved on March 18, 2020 to have stock dividends distributed at $2.65/share; also, the proposal is to be reviewed and discussed at the Annual Meeting of Shareholders on June 16, 2020.

(VII) Impact on operating performances and EPS that resulted from the stock dividend distribution of this year: None.

(VIII) Compensations for employees and remunerations to directors and supervisors

Information of compensations for employee and remunerations to directors and supervisors:

When there is pretax income before deducting employee profit distribution and remuneration to the board members, the company shall set aside no less than 0.5% of the figure to its employees as profit sharing. The distribution, whether in cash or stock, shall be resolved by the board. The eligible employees are subject to certain criteria. No more than 0.75% of the same base above shall be set aside as remuneration to directors. The above appropriations shall be reported in the shareholder’s meeting. No such allocation shall be made before accumulated losses from previous years are made up.

The basis of estimating the amount of compensations for employee and remunerations to directors/supervisors for calculating the number of shares to be distributed as stock distribution and the accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figure, for the current period:

The Company’s compensations payable to employees and remuneration payable to Directors and Supervisors for 2019 are estimated at NT$52,013,000 and NT$25,073,599 respectively. Said employee compensation and remuneration to the Directors in 2019 are calculated as an amount equivalent to 1.22% and 0.59%, respectively, of the pretax income before the distribution deduction.

-62-

If the distribution amount is changed after the date the Company’s individual financial statements approved for publication, it is processed as change in accounting estimate and adjusted to the bookkeeping in the following year.

If the distribution of stock dividend to employees is resolved by the Board of Directors, the number of stock dividend share is determined by having the bonus amount divided by the closing price on the day before the board meeting.

Distribution policy proposed by the Board of Directors:
(1) The distribution of stocks as compensations for employees and remunerations to directors:
- 1.1 Compensations for Employees: NT$52,013,000.
- 1.2 Stock Compensation for Employees: NT$ 0
- 1.3 Remuneration to Directors and Supervisors: NT$25,073,599.

The aforementioned pro forma employee bonus and remuneration to Directors proposed by the Board was in line with the estimated amount in the 2019 Financial Statements.

(2) The stock compensations to employees and the ratio of the stock compensations to the total amount of net income and total remuneration to employees: N/A.
Actual distribution of dividends to employees and remuneration to directors and in the prior year:

In 2018, the Company distributed cash bonuses to employees at NT$31,722,923 and remuneration to Directors at NT$20,959,787. These amounts were consistent with the amount adopted in the 2018 Financial Statements.

(IX) Treasury stock: None.

II. Corporate bond: None. III. Preferred stock: None.

-63-

IV. Issuance of global depository receipts

IV. Issuance of global depository receipts	IV. Issuance of global depository receipts	IV. Issuance of global depository receipts
Date of the initial issuance			June 19,1997
Place of issuance and listing			Issued in the United States and Europe and traded at Euro MTF Market of LuxembourgStock Exchange.
Total Amount			USD29,070,000
Offering priceper GDR(US$)			USD9.69
Units Issued			3,000,000 units
Underlying Securities			Common stock of Standard Foods Corporation held bythe shareholders
Common Shares Represented(Shares)			15,000,000 share
Rights and Obligation of GDR Holders			Same as those of Common Share Holders
Trustee			None
Depository Bank			The Bank of New York Mellon Corporation
Custodian Bank			Trust Department,Mega Bank
GDRs Outstanding (Units)as of March 31,2020			6,908.4 units
Apportionment of the expenses for the Issuance and the maintenance			All fees and expenses related to the issuance of GDRs were borne by the selling shareholders while the maintenance expenses were borne byissuer
Terms and Conditions in the Deposit Agreement and the CustodyAgreement			Please see the Deposit Agreement and the CustodyAgreement for details
Market price per unit (USD)	2019	Highest	12.00
		Lowest	7.85
		Average	9.42
	As of March 31, 2020	Highest	12.02
		Lowest	8.65
		Average	11.01

V. Employee stock option certificates: None.

VI. Restricted employee rights and new shares issue: None

VII. Mergers and acquisitions: None.

VIII. Fund implementation plan

(I) Plan Details

Outstanding equity issuance and marketable security subscription, or the completed equity issuance or subscribed marketable security in the last three years without success up to the last quarter before the printing of the annual report: N/A.

(II) Execution

The implementation of the aforementioned plans: N/A.

-64-

Five. Overview of Business Operations

I. Principal activities

(I) Business Scope:

Standard Foods is mainly engaged in production and sales of nutritious foods, edible oils, dairy products and drinks, etc.
Main product items and operating ratio

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

(II) Industry overview:

Current State and Development of the Industry
As people attach importance to food safety issues, the relevant domestic laws about food safety are also becoming stricter. The inspection capabilities of food manufacturers need to keep pace with the times so as to ensure the food safety of consumers. In addition, with the progress of medical treatment and improvement of life expectancy, consumers are worried about the quality of life after they get old. Daily healthcare at a young age has become a part of their daily life. Besides sports, the public is also interested in functional healthcare and nutrition foods, which have been the fields that major food factories want to develop.
Correlation with up-, mid-, and downstream sections of the industry (1) Upstream: agriculture, animal husbandry, food packaging materials industry, raw materials for Biotechnology,etc.
(2) Midstream: R&D, food manufacturing, drink manufacturing, inspection, etc.
(3) Downstream: transportation, storage, sales channels and platforms, etc.
Trends in the development of various products
(1) 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.
(2) 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.
(3) 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.

-65-

Competitive situation
(1) 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.
(2) 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.
(3) 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.

(III) Technology and R&D Overview

R&D expenses incurred in the most recent year and as of the date of publication of the annual report

		Unit: NT$ thousand
	2019	As of April 30, 2020
Amount	148,384	49,135

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:
(1) 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.

(2) 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.

(3) 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.

-66-

(4) 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.
(5) 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.
R&D plans in the most recent year:
- (1) Research on application of crystal ball coating.
- (2) Development of formula of sleeping drink.
- (3) Establishment of Aventhramides analysis method for oat milk.
- (4) The effect of UHTs on the quality of Completion products.
- (5) Research on drum drying and spraying equipment.
- (6) Research on instant oats with different tastes.
- (7) R&D of functional candy series.
- (8) Development of PE cover feeder.
- (9) Development of a method for fixing solid particles to dry flakes.

(IV) Long-term and Short-term Business Development Plans

Short-term Business Development Plans
(1) 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.
(2) 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.
(3) To continuously improve product quality, refine production technology, and pursue production efficiency.
Long-term Business Development Plans
(1) 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.

-67-

(2) To continue to invest in brand management to deepen consumers' trust and affection for brands.
(3) 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.

II. Overview of Marketing and Production & Sales

(I) Market Analysis

Sales areas of major commodities: mainly in China and Taiwan.

Future supply and demand of major products:

Nutritional foods:

1. Oats

(1) Market share

The company's grain products, including brewing oat products, three-in-one cereal, canned cereal powder, bagged cereal powder, and frozen oat cereal drinks, are widely welcomed by consumers. Quaker Brand continues to control quality for Taiwan consumers, and it took the lead in Taiwan grain market in 2019 with large market share.

(2) Future market demand & supply status and growth

On the basis of food safety and quality, the company tracks market trends and develops innovative technologies to introduce better products to meet the needs of Taiwan consumers. Taiwan's grain market continues to develop steadily. In order to expand brand management, we will continue to invest in higher quality commodities with more innovation to provide people with healthier and more reassuring food to eat more happily.

(3) Favorable factors and unfavorable factors of competitive niches and development prospect as well as countermeasures

In cereal products, the company actively studies the needs of consumers, taking into account the balanced development of health, delicacy, safety, and diversity. By deep cultivation of cereal products in 2019, it introduced farina of Mixed Grains & Nuts Drink, Good Day drink, and Chia Seed Cereal through innovative technology to satisfy customers' demands for freshness and natural nutrition supplement. Given that, more consumers will know about Quaker.

In view of the existing cereal products, we will continue to promote the health advantages of high-quality cereals, so that young people can more accept the health of cereal products and expand the popularity rate of cereal products. In 2020, we will combine the strength of the overall Quaker brand to promote the diversified nutrition and quality assurance of cereals to consumers, and at the same time continue to develop more delicious food to win the favor of more consumers.

Looking ahead, the company will plough deep into grain products and develop

-68-

grain products with better quality, so as to make Quaker grain a favorite brand for consumers and satisfy healthy choices of different demographic groups. Also, focusing on consumer demand, it will continue to introduce new products and diversified advertising communication to strengthen brand value and achieve performance growth.

2. Healthy drinks

(1) Market share

According to Nielsen market survey, the company's market share in Taiwan's healthcare tonic market exceeded 40% in 2019, maintaining the first place and the growth trend in sales. As a leading brand in the healthcare tonic market, the company is deeply loved by consumers and continues to expand the market penetration rate.

(2) Future market demand & supply status and growth

The health awareness is on the rise in Taiwan where it is entering an aging society. The demand for healthcare continues to grow steadily. The prospect of various functional commodities targeted at the specific needs of consumers is promising.

In addition, health awareness has taken root in Taiwan. Taiwan's younger generations have grown up in an environment where health awareness is on the rise since their childhood. Therefore, the importance of healthcare is relatively high. In combination with the needs of environmental protection and convenience, healthcare products continue to be promoted among the younger generations.

According to Nielsen retail data, the overall market size of health drinks is growing at an annual rate of 4%, while Kantar Worldpanel market research data show that 26% of households have used health nutrition products, which is in a continuous growth trend in the past five years, indicating that the overall consumer market has a stable growth demand for health products.

(3) Favorable factors and unfavorable factors of competitive niches and development prospect as well as countermeasures

The company has always been a leader in the health tonic drink market and a pioneer in the development of new products. The four drinks, Quaker Ginseng Drink, Advanced Glucosamine Drink, Lingzhi Tonic Drink, and Rose Drink, are currently the leading brands in this field. With years of investment and operation, the company has established an image of health nutritionists in the minds of consumers, and has kept improving. The company continues to introduce new products according to the needs of consumers, leading the market, and bringing about sustained growth with great development potential.

The company is committed to providing consumers with higher-quality, effective and innovative products. In 2020, the company will launch a new type of

-69-

Quaker 5X Ginseng Concentrated Essence Drink in convenient ready-to-drink packaging to innovate and expand the overall health drink market. Advanced Glucosamine Drink has become a market leader brand recognized by mature and aged groups, and will continue to be promoted to young and middle-aged groups according to the needs of Taiwanese people for mobility. In addition, in response to the trend of 3C usage in Taiwan, the Lutein Drink introduced in 2017 was well received by the market and confirmed by human body experiments. By matching lutein with healthy supplements of medlar and blueberry, it provides consumers with a brighter and more comprehensive choice for healthcare.

In view of the large scale of lozenge type products in the overall healthcare product market, the company will enter the healthcare product market in 2020 to provide more convenient and complete nutrition choices for the efficiency-oriented millennial generation. The company is continuously committed to the development and promotion of innovative healthcare products to meet the health enhancement needs of different consumer groups, and continuously invests in advertising communication to diversify marketing and channel activities and stays in touch with consumers in various ways to ensure them know about and use the products. It will also maintain market share and increase penetration rate in order to create better sales performance of healthcare drinks, contribute to the health of modern people and become the first choice for healthy life in Taiwan.

3. Baby Food

(1) Market share

Quaker knows that mothers want to give their babies the best. Quaker Infant Nutrition Research Center, based on health science, provides products that conform to nutrition and the highest quality for babies in Taiwan. The formula of probiotics for Grow Up Milk, Organic Rice Essence, and Organic Wheat Essence series are Quaker's most popular products for infants and young children. We also aim to make every bite of the baby feel at ease and comfortable to meet the professional nutrition required at all stages from pregnancy to the growth of the baby. Besides, we have introduced Mom's milk powder, non-staple food, baby milk, grow up milk powder, and children's milk as best choices for connecting mother milk and each stage of growth, which takes care of Taiwan babies attentively.

(2) Future market demand & supply status and growth

The number of babies in 2019 is nearly 180,000 (3% less than that of last year). As breastfeeding rate increased due to continuous promotion by the government and rising awareness of mothers, the overall market size on infants is declining. At present, there are only 1 to 2 babies per family in Taiwan. The new generation of parents gradually attach importance to formula nutrition and product safety in concept. Quaker continuously invests in formula and innovative and safe products that conform to the nutrition trend of Taiwanese babies, thus becoming the most reassuring choice for parents to exchange milk.

-70-

(3) Favorable factors and unfavorable factors of competitive niches and development prospect as well as countermeasures

Although the scale of Taiwan's baby market is weak, the Quaker brand continues to cultivate in the spirit of striving for good nutrition, and continues to research and develop in the spirit of honesty and integrity. In addition to the only efficacy certification, it has developed probiotics for the healthy growth of the baby's intestinal tract. The product is imported from Denmark and has become the first choice for baby to change milk. There is also the organic rice essence verified and produced with Taiwan organic rice, giving babies the first bite of pure non-staple food. With Quaker's Loving series products covering three stages of infant milk, grow up milk, and children's milk, babies smoothly connect breast milk with balanced nutrition, realizing Quaker's promise of best formula for the baby.

In recent years, Quaker has actively launched a new series of Nutritional Milk with Highest DHA and Immu Advanced Children Formula to meet the needs of a new generation of mothers and the nutrition of their babies. It has continuously invested in creative TV and network image advertisements as well as entity and digital marketing activities. At the same time, it has accumulated Quaker Mother's classroom of Loving Music, cooperated with professional lecturers and teams, provided health and education services, and operated diligently to make Quaker one of the brands trusted by Taiwan consumers and continue to be the most popular brand for infants and children in Taiwan.

Dairy and drink:

4. Milk powder (adult milk powder and nutrition)

(1) Market share

The company is a market leader of low-fat/fat free milk powder with its adult milk powder in Taiwan. According to the Kantar Worldpanel market survey report, functional products have entered the low-fat milk powder market in response to the health needs of the Taiwanese people. With market share staying ahead of other competitive brands, it is still the No. 1 brand of low-fat milk powder up to now, reaching more than 50% on Taiwan's market in 2019.

(2) Future market demand & supply status and growth

Taiwan's adult milk powder market has grown steadily. Quaker is highly praised by consumers for its health and nutrition specialty, continuous high-quality and multi-functional products to meet consumers' health needs, and continuous innovative marketing strategies and multi-faceted communication.

Looking ahead to market opportunities, the adult milk powder market still has sales potential as Taiwan is turning into an aging population structure and focusing on healthcare. In view of the need for the mature people to live longer and healthier, the adult milk powder market will require great investment in their own health.

-71-

Therefore, it will be the direction of Quaker's continuous investment to upgrade the product formula again and strengthen the requirements of health, function, and nutrition.

The R&D team of the company has formulated a series of health milk powder exclusively for individuals according to the nutritional needs of the Taiwanese people. In 2019, the formula of Quaker's Glucosamine Milk Powder has been upgraded, and the original three-effect mobility formula contains 12 times glucosamine, 2 times calcium, and high-quality milk protein, which has won the national food health certification. Animal experiments have proved that it may help delay bone loss, providing calcium supplement and all-round mobility maintenance for adults over 40 years old.

The main product, Quaker High Calcium Milk Powder, has also established a more stable leading position in adult nutrition and won consumers' trust and praise. Quaker milk powder will work harder to meet the needs of more consumers and continue to strengthen the company's leading position in the low-fat milk powder market.

(3) Favorable factors and unfavorable factors of competitive niches and development prospect as well as countermeasures

In order to take full care of the nutrition and health of the Taiwanese people, the company strives for perfection and makes unremitting efforts. Since the introduction of the nutritionally complete and easy-to-drink "Quaker Completion Nutrition Food" in 2007, the company has also introduced diabetes formula, dialysis formula and tumor formula in response to market demand. Through all-round marketing activities and celebrity endorsements, the company has made continuous growth in its performance. Subsequently, it has introduced a series of sugar-free or low-sugar products in response to the consideration of sugar intake of some Taiwanese people, hoping to give consumers more choices. We can "drink all the nutrition in one jar in a balanced way." At the same time, it strengthens the market position of Quaker's medical nutrition. According to the Nielsen market survey report of 2019, Quaker's Completion Nutrition Food for Diabetes have become the first brand in the market.

The company's mission is to pursue good nutrition. It promises to provide consumers with the best quality products and many products have won national health food certification. The high-quality brand has won the recognition and trust of consumers. In the future, it will use the brand strength and sales experience of Quaker adult milk powder to attack the field of adult functional nutrition with a strong R&D team and flexible marketing strategy to create better sales performance of the company's nutrition products.

-72-

5. Agency products (milk powder and cheese)

(1) Adult milk powder: stable market and steady operation

The milk powder market is stable. Fernleaf Full Cream series performed well and achieved good results repeatedly. However, the low-fat market shrank. Anlene upgraded its products and packaging in Oct. 2019, cooperating with media communication and channel activities to consolidate the market share. Anchor launched products in bags in Dec. 2019 to actively grasp the relative economic price. Due to the lower birth rate and the sluggish market scale, the brand of Fernleaf continues to invest and grow steadily.

(2) Sliced Cheese: for the market growth, Chesdale is better

With overall market grew by 5%, Chesdale, the No. 1 brand, continued to invest and consolidate its leading position. In 2019, it launched new image advertising and online communication activities to actively expand penetration rate and market share by combination with various promotional activities through channels.

In a new year, the company has worked closely with Fonterra Brands (Far East) Limited, Taiwan Branch to continuously promote competitive consumer activities, actively increase market share in line with sound channel operations, and continue to achieve good results.

Edible oils:

6. Edible oil

(1) Market share

"Great Day" has been operated diligently for more than 30 years, insisting on providing high-quality edible oil for Taiwanese families. Its Sunflower Oil, Olive Oil, 5 Treasures Oil, and Canola Oil, etc. are all deeply loved and supported by consumers with their healthy and high-quality images. It is the first leading brand in the Taiwanese market, leading other competitive brands in the categories it manages and has stable sales.

The subsidiary of the company sells sunflower oil under the brand of "Mighty" in China, which insists on providing healthy and high-quality edible oil. It has won the first place in the market share of sunflower oil products for many years in a row and continues to increase the market share.

(2) Future market supply & demand status and growth

The public pays more attention to quality and safety on consumption. The proportion to purchase pure oil and imported oil increases. It is estimated that sunflower oil, olive oil and canola oil products will continue to grow steadily. As the leading brand of edible oil in Taiwan, Great Day will continue to promote 100% pure sunflower oil as the main product in keeping with the health trend of consumers. Adhering to consistent quality, Great Day is the first choice for

-73-

housewives in Taiwan. In the market full of different brands of imported oil, pure olive oil imported from Italy will continue to invest in TV and online advertising, matching with sales activities to strengthen sales. In addition, the 5 Treasures Oil of Great Day is a popular product and has won the national health food certification. It ranks first in the blend oil market.

In the Chinese market, the overall development of edible oil has slowed down, but there is still a trend of consumption upgrading. The main declining oils are soybean oil and low-price blended oil. Mighty has grasped the consumers' demand for good health and quality to expose the product in popular variety shows and soap operas with high quality passing double certification of IFS and SQF as well as successful advertising investment. In addition, it has actively operated social media platforms such as Weibo and WeChat, deepening consumers' recognition of Mighty healthy oil, and the brand awareness has been significantly improved in 2019.

(3) Favorable factors and unfavorable factors of competitive niches and development prospect as well as countermeasures

With the increasing emphasis on the safety of oil products and the gradual change of family structure and cooking methods, consumers have switched to a refined diet to choose healthy oil. 100% pure sunflower oil and 100% pure olive oil have become mainstream oil products in the market and are a niche for stable growth of Great Day with the market ranking first.

In order to provide more reassurance to consumers, Great Day obtained the highest-level certification from SQF International Food Safety in 2017 and continuously updated the certification, which means that the quality control of raw materials, manufacturing processes and finished products of Great Day conforms to the highest standards of international standards. In a new year, it is expected that the market for healthy edible oil will continue to grow steadily. Great Day will continue to bring more healthy oil choices to Taiwan consumers and meet the health needs of all families with professional technology and experience.

The company will continue to enhance its brand value and healthy image, and make good use of oil in the spirit of continuous brand innovation. In addition to enhancing product value and the highest quality requirements, the company will also meet the diverse needs of Taiwan consumers of different ages for healthy oil products. In the Chinese market, we will also continue to focus on the intensive cultivation of outlets, that is, the continuous operation and optimization of the sales network, in coordination with national promotional activities and TV media investment, and continue to deepen the healthy image of the market for "Mighty" edible oil. In terms of product development, we created capsule-type table oil to the market in 2019 to attract more young potential consumers to become brand users

-74-

with the combination unique shape and dietary needs for young people. In the future, more R&D resources will be invested to meet the demand for various refined edible oil products.

Others:

Agency products (candy)
(1) Market trend

According to Nielsen market data, the candy market grew slightly by 3% in 2019. There are many brands in the market. With the demand changing greatly, consumers prefer fresh products. Therefore, Mentos brand agented by Standard Foods has been introduced. Bar-packed Mentos with seasonal tastes, combined with the convenience of theme shelves in supermarkets and promotional activities, accumulated consumers' continuous purchasing habits. While Chupa Chups has expanded its operations by means of topic-oriented online communication activities, such as surprise eggs, and marketing with events such as movies and baseball teams, which has become the main momentum of growth in 2019.

(2) Favorable factors and unfavorable factors of competitive niches and development prospect as well as countermeasures

The candy market grew slightly in 2019. More Japanese and Korean candies were introduced into the market. The Mentos, agented by Standard Foods, in addition to continuously communicating the global brand spirit "Who says no to Mentos," has penetrated young people with emphasis on digital and event marketing. At the same time, it has brought more interesting and novel products as well as various consumer and channel activities for Chupa Chups, No. 1 brand of lollipop, in order to make the brand closer to Taiwan consumers and continue to grow.

8. EMS service (Subsidiary- Domex Corp.):

(1) Market share

EMS is professional Electronic Manufacturing Services; at the present, the electronic products around the world are either self-produced or commissioned to EMS for manufacture; Domex Corp owns less than 1% of the EMS market share at the moment.

(2) Future supply/demand and market growth

With the various big companies worldwide expanding their productivity through factory establishment or incorporation, the competition within the industry is afraid to become fiercer. In the future, the EMS market will advance into the era with slim margin, and along with the structural transformation of the technological industry, the EMS industry will demonstrate the trend of “the bigger the stronger”.

(3) Competitiveness, the advantages and disadvantages of development, and responsive strategies.

-75-

Since the scale of Domex Corp is not big, we are capable of providing flexibly towards the alterations of production process and product line to collaborate with the different demands from the clients, and these are the vital factors for the current competition and development for Domex Corp. However, the EMS market is an industry where the bigger the stronger, Domex Corp will use diversified strategies in the future to avoid direct competition with large OEM factories.

(II) Application and production process of major products

1. Application of major products

Main product	Product application
Nutritious Foods	High fiber grain-based foods and nutritious beverages for breakfast and health diets.
Cooking products Food product type	For cooking needs.
Other food types	For leisure foods.
EMS service (Subsidiary –Domex Corp.)	As the designated use of customers varies, most of them are medical and communicationsproducts.

Production Process of Major Products

Processing Flow Chart for Oat flake:

Raw material → cutting → pressing → cooling → sieving → packaging Processing Flow Chart for Oat powder:

Raw material → foam slurry → gelatinization → drying → graining → sieving → packaging

Processing Flow Chart for Tonic Drinks:

Raw material → extracting → filtering → mixing → bottling → packaging Processing Flow Chart for Dairy Products:

Raw material → homogenization → pasteurization → refrigerating → bottling → packaging

Processing Flow Chart for Refined Oil:

Raw oil → refining, de acidification → bleaching → deodorization → winterization → packaging

Processing Flow Chart for Three Treasure Oats:

Raw material → extrusion → drying → cooling → packaging

– EMS service production process (Subsidiary Domex Corp.):

Components → SMT → DIP → Assembly → Testing → Packaging

-76-

(III) Supply of major ingredients

Major ingredients	Sources
Oats	Imported from Australia
Sunflower Oil Crude Oil	Imported from Ukraine
Oleic Canola oil Crude Oil	Imported from Australia
Flour	Domestic suppliers
Cane sugar	Taiwan Sugar Corporation
Raw milk	Domestic milk farmers
Milk powder	Suppliers in New Zealand, Australia, Europe, and Taiwan
Electronic Parts Subsidiary –Domex Corp.	Supplied by domestic dealers for international companies,as well as domestic manufacturers.

-77-

As of March 31, 2020 (Note 2)	Relationship with the issuer					Item Name Amount Percentage of net purchase amount (%) Relationship with the issuer Name Amount Percentage of net purchase amount (%) Relationship with the issuer Name Amount Net purchase amount up to the last quarter (%) Relationship with the issuer 1 A2 Company (Note 1) 2,284,259 13.5 A2 Company (Note 1) 2,549,510 13.1 Others 14,695,165 86.5 Others 16,853,752 86.9 Others 4,769,416 100.0 Net Purchase Amount 16,979,424 100.0 Net Purchase Amount 19,403,262 100.0 Net Purchase Amount 4,769,416 100.0 Note 1: List the name, sales amount and sales ratio of the customers who have accounted for over 10% of the total sales amount in the last two years. The customers who are not related parties and must be kept in confidence in accordance with the agreement signed and can be identified by code. Note 2: Note 2: As of the date before the printing of this report. Listed companies or companies traded in brokerage shall disclose if there is any financial data for the most recent period audited and attested or reviewed by a CPA. Note 3: Our company has no suppliers with a stock amount of above 10% during the recent two years; therefore there is no need to disclose.	Item Name Amount Percentage of net purchase amount (%) Relationship with the issuer Name Amount Percentage of net purchase amount (%) Relationship with the issuer Name Amount Net purchase amount up to the last quarter (%) Relationship with the issuer 1 A2 Company (Note 1) 2,284,259 13.5 A2 Company (Note 1) 2,549,510 13.1 Others 14,695,165 86.5 Others 16,853,752 86.9 Others 4,769,416 100.0 Net Purchase Amount 16,979,424 100.0 Net Purchase Amount 19,403,262 100.0 Net Purchase Amount 4,769,416 100.0 Note 1: List the name, sales amount and sales ratio of the customers who have accounted for over 10% of the total sales amount in the last two years. The customers who are not related parties and must be kept in confidence in accordance with the agreement signed and can be identified by code. Note 2: Note 2: As of the date before the printing of this report. Listed companies or companies traded in brokerage shall disclose if there is any financial data for the most recent period audited and attested or reviewed by a CPA. Note 3: Our company has no suppliers with a stock amount of above 10% during the recent two years; therefore there is no need to disclose.	Item Name Amount Percentage of net purchase amount (%) Relationship with the issuer Name Amount Percentage of net purchase amount (%) Relationship with the issuer Name Amount Net purchase amount up to the last quarter (%) Relationship with the issuer 1 A2 Company (Note 1) 2,284,259 13.5 A2 Company (Note 1) 2,549,510 13.1 Others 14,695,165 86.5 Others 16,853,752 86.9 Others 4,769,416 100.0 Net Purchase Amount 16,979,424 100.0 Net Purchase Amount 19,403,262 100.0 Net Purchase Amount 4,769,416 100.0 Note 1: List the name, sales amount and sales ratio of the customers who have accounted for over 10% of the total sales amount in the last two years. The customers who are not related parties and must be kept in confidence in accordance with the agreement signed and can be identified by code. Note 2: Note 2: As of the date before the printing of this report. Listed companies or companies traded in brokerage shall disclose if there is any financial data for the most recent period audited and attested or reviewed by a CPA. Note 3: Our company has no suppliers with a stock amount of above 10% during the recent two years; therefore there is no need to disclose.	Item Name Amount Percentage of net purchase amount (%) Relationship with the issuer Name Amount Percentage of net purchase amount (%) Relationship with the issuer Name Amount Net purchase amount up to the last quarter (%) Relationship with the issuer 1 A2 Company (Note 1) 2,284,259 13.5 A2 Company (Note 1) 2,549,510 13.1 Others 14,695,165 86.5 Others 16,853,752 86.9 Others 4,769,416 100.0 Net Purchase Amount 16,979,424 100.0 Net Purchase Amount 19,403,262 100.0 Net Purchase Amount 4,769,416 100.0 Note 1: List the name, sales amount and sales ratio of the customers who have accounted for over 10% of the total sales amount in the last two years. The customers who are not related parties and must be kept in confidence in accordance with the agreement signed and can be identified by code. Note 2: Note 2: As of the date before the printing of this report. Listed companies or companies traded in brokerage shall disclose if there is any financial data for the most recent period audited and attested or reviewed by a CPA. Note 3: Our company has no suppliers with a stock amount of above 10% during the recent two years; therefore there is no need to disclose.
					As of March 31, 2020 (Note 2)	Relationship with the issuer
	Percentage of total net sale amount up to the last quarter (%)	19.5	80.5	100.0
						Net purchase amount up to the last quarter (%)		100.0	100.0
	Amount	1,298,464	5,372,969	6,671,433		Amount		4,769,416	4,769,416
	Name	A1 Company (Note 1)	Others	Net sale amount		Name		Others	Net Purchase Amount
2019	Relationship with the issuer				2019	Relationship with the issuer
	Percentage of total net sale amount (%)	15.5	84.5	100.0		Percentage of net purchase amount (%)	13.1	86.9	100.0
	Amount	4,858,711	26,407,521	31,266,232
						Amount	2,549,510	16,853,752	19,403,262
	Name	A1 Company (Note 1)	Others	Net sale amount		Name	A2 Company (Note 1)	Others	Net Purchase Amount
2018	Relationship with the issuer
					2018	Relationship with the issuer
	Percentage of total net sale amount (%)	16.6	83.4	100.0
						Percentage of net purchase amount (%)	13.5	86.5	100.0
	Amount	4,533,832	22,806,755	27,340,587
						Amount	2,284,259	14,695,165	16,979,424
	Name	A1 Company (Note 1)	Others	Net sale amount		Name	A2 Company (Note 1)	Others	Net Purchase Amount
						Item	1
	Item	1

-78-

(V) Production Quantities and Value over the Past Two Years

Unit: 1 tons / NTD Thousand

				Unit: 1 tons / NTD Thousand	Unit: 1 tons / NTD Thousand	Unit: 1 tons / NTD Thousand
Fiscal year QTY & Value	2018			2019
Major Products	Capacity	Production Quantity	Production Value	Capacity	Production Quantity	Production Value
Nutritious Foods	131,854	104,271.18	11,187,876	131,854	114,182.51	12,496,443
Cooking products Food product type	669,676	284,810.21	14,599,397	669,676	342,060.92	15,824,251
Others	(Note 1)	13,131.26	446,730	(Note 1)	10,996.08	438,072
		1,162,748.00 (Note 2)	1,641,365	(Note 2)	1,310,671.00 (Note2)	2,293,222
Total	801,530	402,212.65	27,875,368	801,530	467,239.51	31,051,988
		1,162,748.00 (Note 2)			1,310,671.00 (Note 3)

Note 1: Nutritious Foods production line was used for production. Note 2: Pieces as the unit

(VI) Production Sales and Value over the Past Two Years

Unit: 1 tons / NTD Thousand

					Unit: 1 tons / NTD Thousand	Unit: 1 tons / NTD Thousand	Unit: 1 tons / NTD Thousand	Unit: 1 tons / NTD Thousand
Fiscal year Sales Quantities and Value	2018				2019
Major Products	Domestic Sales		Export Sales		Domestic Sales		Export Sales
	Quantity	Value	Quantity	Value	Quantity	Value	Quantity	Value
Nutritious Foods	101,183.40	10,855,924	683.50	73,983	108,778.30	11,900,230	723.30	83,921
Cooking products Food product type	23,344.40	1,937,524	246,208.10	11,879,761	23,435.90	1,916,463	312,727.70	13,634,969
Others	12,730.50	1,788,938	0.00	804,457	10,831.60	2,515,680	0.00	1,214,969
	0.00 (Note 1)		520,632.00 (Note 1)		0.00 (Note 1)		486,785.00 (Note 1)
	578,756.00 (Note 2)		384,267.00 (Note 2)		763,877.00 (Note 2)		327,207.00 (Note 2)
Total	137,258.30	14,582,386	246,891.60	12,758,201	143,045.80	16,332,373	313,451.00	14,933,859
	0.00 (Note 1)		520,632.00 (Note 1)		0.00 (Note 1)		486,785.00 (Note 1)
	578,756.00 (Note 2)		384,267.00 (Note 2)		763,877.00 (Note 2)		327,207.00 (Note 2)

Note 1: Unit=bottle Note 2: Unit=piece

-79-

III. Status of employees over the past two years and up to the printing of the annual report

Fiscal year	Fiscal year	2018	2019	As of April 30, 2020
Number of Employees	Management & Staff	2,657	2,717	2,731
	Technicians & Laborers	948	945	928
	Total	3,605	3,662	3,659
Average Age		35.18	36.66	36.76
Average Years of Service		5.65	5.77	6.42
Education distribution	Ph. D.	12	18	18
	Masters	206	232	238
	College/ University	1,866	1,869	1,886
	Senior High School	1,126	1,321	1,303
	Junior	395	222	214

Note: Contracted personnel and foreign laborers are included.

-80-

IV. Information on Environmental Protection Expenditure

The company cooperates the government to implement environmental protection policies and spare no effort in environmental protection maintenance. In addition to environmental management inspection and environmental protection equipment, it has also set up specialized units to carry out the operation, maintenance and improvement of various pollution prevention and control equipment.

The company has passed ISO14001 environmental management system certification since 2015, and has passed ISO14001 audit certification every year since the revision certification in 2018. In terms of environmental protection, it has made continuous improvement through systematic management.

(I) In 2019 and up to the date of publication of the annual report, Standard Foods had no unusual environmental penalty cases.
(II) Expenditure on environmental protection equipment
In Jun. 2019, the components of the dryer washing tower of the air pollution emission equipment were updated and their functions were upgraded, totaling 3 units at a cost of NT$1.14 million.
In Jul. 2019, the sewage collection project of the waste disposal site of the renewal enterprise was completed at a cost of NT$960,000.

(III) Estimated capital expenditure on environmental protection in the next three years.

Year	2020	2021	2022
�Proposed acquisition of pollution prevention equipment or purchase items	Expenses on environmental protection equipment and expenses on garbage disposal	Expenses on environmental protection equipment and expenses on garbage disposal	Expenses on environmental protection equipment and expenses on garbage disposal
�Expected improvements	Maintenance normal operation of environmental protection equipment and garbage clearance	Maintenance normal operation of environmental protection equipment and garbage clearance	Maintenance normal operation of environmental protection equipment and garbage clearance
�Amount	16,000 thousand	17,370 thousand	17,370 thousand

(IV). Influence after improvement

luence after improvement
Year	2020	2021	2022
Impact on net profit	Little	Little	Little
Impact on competitive position	None	None	None

-81-

V. Employee / Employer Relations

(I) Major coordination and implementation of current labor issues

1. Employee’s welfare package

Employees’ welfare is arranged as follows:

(1) Labor insurance and health insurance are arranged for employees as required by law. The Company will have the employees informed automatically upon the occurrence of insurance settlements and will assist them in applying for the said settlement for their protection.
(2) The Company has group insurance for employees as a whole (including their spouses and children) including life insurance, accident insurance, medical insurance, and cancer-prevention insurance with the premium paid by the Company in full.
(3) Annual bonus and performance prize money from retained earnings are distributed to employees.
(4) Physical check-ups for employees are arranged periodically.
(5) Gifts are distributed to employees on Moon Festival, Dragon Boat Festival, Chinese New Year, and Labor Day.

The Employee Welfare Committee will handle the employees’ welfare as follows:

(1) Gifts are distributed to employees on Moon Festival, Dragon Boat Festival, and Chinese New Year.
(2) Birthday gift money
(3) The Committee offers wedding, birth, consolation and condolence, and disability subsidies to employees.
(4) Company tour compensation.
(5) Group activity compensation.
(6) Festival celebration activities.

The Company has set up employee welfare committee per approvals of 1986.11.03 Taoyuan County Government Ruling Fu-Lao-She-Chi No.148470 and Department of Labor, Taipei City Government 1992.07.14 Ruling Bei-Shi-Lao No.12761. The Committee members are elected by employees and a membership fee is collected monthly for welfare activities.

2. Retirement plan

The Company has a retirement plan defined for the contracted managers and employees.

Since 2005.07.01, those who elected the new pension system, the Company deposits the monthly pension to his/her personal under Bureau of Labor Insurance according to the regulation of "Labor Pension Act ". And those who elected the old pension system and the seniority of service accumulated by the aforementioned employees, according to the regulation of "Labor Pension Act ", the Company deposits the monthly pension of the actuarial computation from actuaries to an account in Taiwan under Supervisory Committee Labor Retirement Reserve for its management. In addition, the Company appoints the relevant managers to defined benefit liability.

-82-

3. Education and training

Talents are important assets of the Company. We believe that the growth of the Company will only follow the growth of employees. We have a plan formed to help our employees upgrade in order to have an outstanding team organized for competitive advantages and for the ongoing concern of the organization taken as a whole.

We have helped our employees refine their expertise, communication skills, and management and leadership. A training blueprint is drawn for each department with a focus on various trainings for each job level; moreover, management trainees are recruited for manufacturing operations and a diversified learning environment is provided. For example, orientation training, plant tours, sales joint calls, common course training, intra-departmental on-job training and practice, senior adviser’s research and guidance, project study, theme meeting attendance, intra-departmental and inter-company rotation, annual sales meetings, overseas study for management and assigned textbook reading and self-learning for personal and group development and growth in a diversified learning environment are provided.

For the cultivation of expertise, a learning program is designed according to the expertise needed for performing job responsibilities. Technology and experience are to be passed on and the core competence is to be built through the internal instructors’ training and accreditation system and the counseling procedure of the management. The industrial growth and employee’s personal development needs are to be integrated to construct a talent database for internal promotion.

We provide general new employee training, freshman guidance and factory tours for new colleagues, as well as professional advanced training courses related to the posts to assist new colleagues in blending into the Company and understanding the Company within the shortest period of time, and are capable of performing their skills to work.

Help is given to sales & marketing teams to build up and substantiate the expertise and skills needed for job performance by providing them with special skill courses, comprehensive guidance, and joint call assistance. Moreover, annual sales meetings are arranged to help salespersons understand the Company, products, and marketing strategy in order to be cooperative and maintain energy and creativity.

For the cultivation of the management trainees, courses are arranged and a supervisor will be appointed to prepare the trainees for management responsibilities in the near future. We have a talent database for internal promotion constructed through job rotation, project study, and the instruction of senior management and consultants.

Standard Foods used its best efforts to train professional talents and, therefore, was awarded the silver medal for “Taiwan Train Quality System (TTQS)” by the Workforce Development Agency, Ministry of Labor, Executive Yuan. It participated in the evaluation again and won the higher honor after it won the bronze medal in 2014. TTQS refers to the national talent evaluation system and is an indicator key to labor quality. The award presented to the Company represents that the Company's performance in upgrading the quality of human resources is remarkable.

-83-

The education and training expenses of the Company in 2018 amounted to NT$8,416 thousand.

4. Protection measures for working environment and employee personal safety:

To protect the working environment of the factory and office and the safety of employees, the Company has all kinds of standard operating manuals and protective measures regulated in accordance with the Labor Safety and Health Act and the Labor Safety and Health Facilities Rules.
(1) Establishment of Labor Health & Safety Committee: Meetings are held annually to discuss labor health and safety and firefighting plans.
(2) Stipulation of occupational hazards prevention plan: Protect labor safety and prevent occupation hazards from occurring.
(3) Stipulation of health and safety inspection plan: Inspect machine and equipment safety automatically to prevent accidents from occurring.
(4) Stipulation of health and safety code: It is stipulated by the Labor Health & Safety Committee and the labor representative to ensure its enforcement by employees.
(5) Employee’s health check-up: It includes the physical check-up and health management arranged for the contracted laborers, new recruits, and employees.
(6) Labor health and safety education and training: Labor health & safety education and disaster prevention training are arranged periodically.
(7) Special training: Machine and equipment operators must be trained by the independent training institutions that are contracted by the government and must receive a certificate of qualification.
(8) Transportation of female workers for graveyard shifts: The Company will have transportation arranged for female workers who get off duty after 22:00 at night.
(9) Employee’s dormitory: The Company has a dormitory arranged for male workers and female workers who live too far away or who work the graveyard shift.
(10)Appointment of labor health & safety personnel: The Company has labor health & safety personnel and Class A labor health & safety managers designated in accordance with laws.
(11)Designation of medical personnel: Medical personnel are arranged in the factory to care for the employees in accordance with laws.
(12)Occupational disaster investigation: Analyze the status and causes of occupational disasters and have preventive action stipulated and report the incidents to labor inspection units for the record.
(13)Subcontractor management: A review committee is organized by subcontractors and the Company to study work safety and prevent occupational disasters from occurring.
(14)Operational environment test: Inspect the noise level in the working area annually to protect worker’s hearing.
(15)Substantiate control processes: Substantiate fire control processes, restrictive space processes, and firefighting system suspension process according to the standard operation procedure.
(16)Labor health & safety audit: Firefighting directors of each unit and department head are to tour the factory daily to prevent accidents from occurring and to protect the safety of life and property.

-84-

5. Employee’s rules

Employee’s rules are stipulated according to the Labor Standards Law and regulations to define the rights and obligations of employer and employees, to substantiate management systems and to inspire employees to work together as a team. The service rules for employees are detailed as follows:
(1) Employees are obligated to perform tasks responsibly and diligently, follow the reasonable instructions and supervision of the management in all levels and may not take their job responsibilities lightly or dodge and disobey work assignments. The management is obligated to guide employers in a friendly manner.
(2) Employees are expected to work hard, take care of public property, reduce losses, improve product quality, increase productivity, and to keep business and job responsibilities in confidence to the outsiders.
(3) Employees are to report for work to their direct supervisors according to the chain of command, except in an emergency.
(4) Employees without the consent of the Company may not bring in any friend or family to work for the Company.
(5) Employees may not take advantage of the position held within the Company to benefit themselves or any third party.
(6) With the written consent from the Company, employees may not work for another company that operates similar business, which would cause a breach of the employment contract.
(7) Employees may not demand entertainment or accept gifts, kickback or any illegal gains by performing or not performing job duties.
(8) Employees may not bring ammunition, knives or guns, dangerous objects (anything that are irrelevant to their job performance, which may cause physical harm to anyone and lead to work accident, or any chemicals and flammables that are not for work purpose), illegal items by law, or any non-work associated items to the work venue.
(9) Employees may not, at will, take the property of the Company off the premises or the factory, lease the property of the Company to any outside party without authorization.
(10)The employment contract is negotiated and stipulated by both the employer and the employee by free will. The following guidelines shall be followed when the employer deem there’s necessity to make adjustment:
- i. For the needs of the Company’s operation and not for undue motive or purpose, unless stipulated in law otherwise.
- ii. No adverse changes to the employee’s salary or working condition.
- iii. Employee is still eligible to perform the new assignment, in both physical and skill-set terms.
- iv. Employer shall give necessary assistance when the employee is relocated in a remote location.
- v. Taking the welfare of employee and his/her family life for consideration.

6. Employer-employee relations

We regularly holds consultation meetings with the labor union, and the labor and capital parties closely communicate with each other on various labor conditions, employee welfare, etc. to promote the harmony of labor and capital. Meanwhile, the company also organizes and regularly holds labor and capital meetings in accordance with the implementation methods of labor and capital meetings. The company's

-85-

management system, operation and other relevant information are also announced on the internal website and bulletin board, and opinion mailbox is set up. Many measures are to establish a smooth labor communication channel and create a happy workplace to create a win-win situation for labor and capital.

(II) Losses resulting from labor disputes in the most recent years and up to the printing of the annual report: None.

VI. Important commitments

				April 30,2019 Restrictive clauses (Note 2) (Note 3) None None
Nature of agreement	Client	Agreement period	Content	Restrictive clauses
Technological Cooperation	Quaker Co.	July,1994– July11, 2034 (Note 1)	Quaker Oatmeal and Baby Oatmeal Powder in Taiwan	(Note 2)
Exclusive Distributor	Fonterra Brands (Far East)Limited	April 28,2008- April 27, 2021 (Note 3)	Exclusive Sales Agent in Taiwan for Fonterra Brand Products	(Note 3)
Supply and Sales Agreement	MND PX Ministry	October 23, 2019- October 22, 2020 (Note 4)	Welfare for Military Personnel and Their Spouses	None
Long-term Loan	Shin Kong Commercial Bank	December 15, 2017- December 15, 2021	The guarantee limit amounted to NT$50 million.	None

Note 1: The terms and conditions for Agreement renewal is for five years each time. The parties shall meet no later than six months prior to the expiration of the term of the Agreement in order to discuss the renewal of the Agreement.

Note 2: If there is a subsequent material decline of 18% or more in Net Sales of the Quaker brand products in any two consecutive quarters as compared with Net Sales in the corresponding quarterly periods in the previous fiscal year due to the non-performance of the agreement; also, the Company could not evidence it to the Quaker Oats Company in the USA that it was due to special causes instead of non-performance of the agreement, the Quaker Oats Company shall have the option to terminate the Agreement with the Company informed in writing six months in advance.

Note 3: The renewal shall be decided within three months prior to expiration of the Agreement. Unless otherwise agreed by both parties, the Agreement shall be renewed for another three years based on the original terms and conditions upon expiration of the Agreement, and so on.

Note 4: Renewed per year.

-86-

Six. Financial Information

I. Condensed Balance Sheet, Income Statements, CPAs and Their Opinions over the Last Five Years

(I) Condensed Balance Sheet and Comprehensive Income Statement- International Financial Reporting Standards

Condensed Balance Sheet – IFRS -Consolidated

Unit: NT$

Condensed Balance Sheet– IFRS -Consolidated Unit: NT$	Condensed Balance Sheet– IFRS -Consolidated Unit: NT$	Condensed Balance Sheet– IFRS -Consolidated Unit: NT$	Condensed Balance Sheet– IFRS -Consolidated Unit: NT$	Condensed Balance Sheet– IFRS -Consolidated Unit: NT$	Condensed Balance Sheet– IFRS -Consolidated Unit: NT$	Condensed Balance Sheet– IFRS -Consolidated Unit: NT$	Condensed Balance Sheet– IFRS -Consolidated Unit: NT$
Thousands
Fiscal year Item		Financial Information over the last fiveyears(Note 1)					As of March 31, 2020 Financial Information (Note 1)
		2015	2016	2017	2018	2019
Current Assets		15,391,892	15,127,876	15,496,940	17,107,047	18,513,185	18,802,457
Property, Plant and Equipment		3,783,949	4,684,441	5,676,084	5,478,238	5,125,312	5,038,850
Intangible Assets		166,422	144,702	78,066	73,050	68,087	68,346
Other Assets		1,187,011	1,862,067	1,458,398	1,339,321	1,781,681	1,691,687
Total Assets		20,529,274	21,819,086	22,709,488	23,997,656	25,488,265	25,601,340
Current Liabilities	Before appropriation	6,441,771	6,865,895	7,137,271	7,510,934	7,682,083	7,427,218
	After appropriation	7,710,086	8,273,725	8,967,450	9,798,658	(Note 2)	(Note 2)
Noncurrent Liabilities		584,030	535,430	548,609	446,397	855,491	746,397
Total Liabilities	Before appropriation	7,025,801	7,401,325	7,685,880	7,957,331	8,537,574	8,173,615
	After appropriation	8,294,116	8,809,155	9,516,059	10,245,055	(Note 2)	(Note 2)
Equity attributable to owners of theparent		13,306,157	14,217,975	14,785,740	15,806,926	16,678,127	17,169,030
Capital Stock		7,926,972	8,798,939	9,150,897	9,150,897	9,150,897	9,150,897
Capital Surplus		63,153	72,397	83,124	93,045	109,718	109,718
Retained Earnings	Before appropriation	5,022,383	5,449,618	5,833,327	6,915,111	8,016,188	8,625,674
	After appropriation	2,882,101	3,689,830	4,003,148	4,627,387	(Note 2)	(Note 2)
Other equity		314,831	(81,797)	(260,426)	(330,945)	(577,494)	(696,077)
TreasuryStock		(21,182)	(21,182)	(21,182)	(21,182)	(21,182)	(21,182)
Non-controllinginterest		197,316	199,786	237,868	233,399	272,564	258,695
Total equity	Before appropriation	13,503,473	14,417,761	15,023,608	16,040,325	16,950,691	17,427,725
	After appropriation	12,235,158	13,009,931	13,193,429	13,752,601	(Note 2)	(Note 2)

Note 1: Reviewed by CPA.

Note 2: Subject to the approval of annual shareholders' meeting.

-87-

Condensed Comprehensive Income Statement - IFRS - Consolidated

Unit: NT$Thousands,except EPS is in NT$	Unit: NT$Thousands,except EPS is in NT$	Unit: NT$Thousands,except EPS is in NT$	Unit: NT$Thousands,except EPS is in NT$	Unit: NT$Thousands,except EPS is in NT$	Unit: NT$Thousands,except EPS is in NT$	Unit: NT$Thousands,except EPS is in NT$
Fiscal year Item	Financial information over the last five years					As of March 31, 2020 Financial Information (Note. 1)
	2015	2016	2017	2018	2019
Sales revenue	25,514,586	27,073,564	26,477,924	27,340,587	31,266,232	6,671,433
Gross Profit	8,040,850	8,005,049	7,399,955	8,254,345	9,631,013	1,895,498
Operating Income	3,287,048	3,011,552	2,794,878	3,149,836	4,423,873	739,080
Non-operating Income/expense	111,503	268,253	(49,475)	526,396	124,661	28,228
Earnings before tax	3,398,551	3,279,805	2,745,403	3,676,232	4,548,534	767,308
Net income from continuingoperations	2,752,467	2,637,756	2,209,909	2,968,307	3,454,836	607,487
Loss from discontinued operations	-	-	-	-	-	-
Net income (loss)	2,752,467	2,637,756	2,209,909	2,968,307	3,454,836	607,487
Other comprehensive income(net after tax)	(191,612)	(438,072)	(214,628)	(138,749)	(256,189)	(130,453)
Current comprehensive income/loss	2,560,855	2,199,684	1,995,281	2,829,558	3,198,647	477,034
Net earnings attributable to owners of theparent	2,730,613	2,606,544	2,173,044	2,949,089	3,416,097	609,486
Net earnings attributable to non-controllinginterest	21,854	31,212	36,865	19,218	38,739	(1,999)
Comprehensive income/loss attributable to owners of theparent	2,538,837	2,170,889	1,964,868	2,813,107	3,142,252	490,903
Comprehensive income/loss attributable to non-controllinginterest	22,018	28,795	30,413	16,451	56,395	(13,869)
Earnings per share (Note 2)	3.01	2.87	2.39	3.25	3.76	0.67

Note 1: Reviewed by CPA.

Note 2: It is calculated in accordance with the weighted average shares after the retrospective adjustment proportionally to the capitalized earnings.

-88-

– Condensed Balance Sheet IFRS -Individual

Unit: NT$ Thousand

		Unit: NT$Thousand	Unit: NT$Thousand	Unit: NT$Thousand	Unit: NT$Thousand	Unit: NT$Thousand
Fiscal year Item		Financial information over the last five years
		2015	2016	2017	2018	2019
Current Assets		6,343,538	5,048,559	5,266,070	6,625,406	7,306,207
Property, Plant and Equipment		1,324,881	1,363,441	1,409,677	1,420,548	1,372,629
Intangible Assets		6,438	3,558	3,375	1,672	2,943
Other Assets		8,596,705	10,097,381	10,295,641	10,308,831	10,914,409
Total Assets		16,271,562	16,512,939	16,974,763	18,356,457	19,596,188
Current Liabilities	Before appropriation	2,599,476	1,914,283	1,790,235	2,220,075	2,384,532
	After appropriation	3,867,791	3,322,113	3,620,414	4,507,799	(Note 1)
Noncurrent Liabilities		365,929	380,681	398,788	329,456	533,529
Total Liabilities	Before appropriation	2,965,405	2,294,964	2,189,023	2,549,531	2,918,061
	After appropriation	4,233,720	3,702,794	4,019,202	4,837,255	(Note 1)
Capital Stock		7,926,972	8,798,939	9,150,897	9,150,897	9,150,897
Capital Surplus		63,153	72,397	83,124	93,045	109,718
Retained Earnings	Before appropriation	5,022,383	5,449,618	5,833,327	6,915,111	8,016,188
	After appropriation	2,882,101	3,689,830	4,003,148	4,627,387	(Note 1)
Other equity		314,831	(81,797)	(260,426)	(330,945)	(577,494)
Treasury Stock		(21,182)	(21,182)	(21,182)	(21,182)	(21,182)
Total equity	Before appropriation	13,306,157	14,217,975	14,785,740	15,806,926	16,678,127
	After appropriation	12,037,842	12,810,145	12,955,561	13,519,202	(Note 1)

Note 1: Subject to the approval of annual shareholders' meeting.

-89-

Condensed Comprehensive Income Statement - IFRS - Individual

Unit: NT$ Thousands, except EPS is in NT$

	Unit: NT$Thousands,except EPS is in NT$	Unit: NT$Thousands,except EPS is in NT$	Unit: NT$Thousands,except EPS is in NT$	Unit: NT$Thousands,except EPS is in NT$	Unit: NT$Thousands,except EPS is in NT$
Fiscal year Item	Financial information over the last five years
	2015	2016	2017	2018	2019
Sales revenue	11,746,796	11,655,791	11,259,683	12,187,907	13,139,944
Gross Profit	3,895,187	3,835,072	3,689,421	4,082,297	4,670,008
Operating Income	2,283,059	2,191,994	2,136,045	2,370,064	2,955,225
Non-operating Income/expense	934,105	883,742	427,729	1,117,097	1,228,861
Earnings before tax	3,217,164	3,075,736	2,563,774	3,487,161	4,184,086
Net income from continuingoperations	2,730,613	2,606,544	2,173,044	2,949,089	3,416,097
Loss from discontinued operations	-	-	-	-	-
Net income (loss)	2,730,613	2,606,544	2,173,044	2,949,089	3,416,097
Other comprehensive income(net after tax)	(191,776)	(435,655)	(208,176)	(135,982)	(273,845)
Total current comprehensive income/loss	2,538,837	2,170,889	1,964,868	2,813,107	3,142,252
Earnings per share (Note 1)	3.01	2.87	2.39	3.25	3.76

Note 1: It is calculated in accordance with the weighted average shares after the retrospective adjustment proportionally to the capitalized earnings.

(II) CPAs and their auditing opinions in the past five years

Fiscal year	CPA Firm	CPA’s name	Auditing opinion
2019	Deloitte Touche Tohmatsu CPA Firm	Tza-Li Kung, Ching-Chen Yang	Unqualified
2018	Deloitte Touche Tohmatsu CPA Firm	Tza-Li Kung, Ching-Chen Yang	Unqualified
2017	Deloitte Touche Tohmatsu CPA Firm	Ting-Chen Hsu, Tza-Li Kung	Unqualified
2016	Deloitte Touche Tohmatsu CPA Firm	Ting-Chen Hsu, Tza-Li Kung i	Unqualified
2015	Deloitte Touche Tohmatsu CPA Firm	Ting-Chen Hsu, Hung-Hsiang Tsai	Unqualified

-90-

II. Financial analysis in the past five years (1) Financial Analysis - IFRS (consolidated)

Item (Note 1)	Fiscal year	Financial analysis over the last five years	Financial analysis over the last five years	Financial analysis over the last five years	Financial analysis over the last five years	Financial analysis over the last five years	As of March 31, 2020 (Note)
		2015	2016	2017	2018	2019
Financial structure (%)	Ratio of liabilities to assets (%)	34.22	33.92	33.84	33.16	33.50	31.93
	Long-term capital to property, plant,and facility (%)	372.30	319.21	274.35	300.95	347.42	360.68
Solvency (%)	Current ratio (%)	238.94	220.33	217.13	227.76	240.99	253.16
	Quick ratio (%)	144.83	127.07	129.47	150.05	175.10	178.00
	(Times) interest earned ratio	147.77	62.24	37.26	46.53	98.03	52.82
Operating ability	Accounts receivable turnover (times)	5.83	5.57	5.11	4.86	4.96	4.83
	Days sales in accounts receivable	62.60	65.52	71.42	75.10	73.58	75.56
	Inventory turnover (times)	4.67	4.80	4.31	4.36	5.51	4.98
	Accounts payable turnover (times)	9.38	9.40	9.96	9.76	9.28	9.14
	Average days in sales	78.15	76.04	84.68	83.71	66.24	73.29
	Property, plant and facility turnover (times)	6.83	6.39	5.11	4.90	5.90	5.25
	Total assets turnover (times)	1.32	1.28	1.19	1.17	1.26	1.04
Profitability	Ratio of return on total assets (%)	14.33	12.67	10.21	12.99	14.11	9.70
	Ratio of return on total equities (%)	21.50	18.89	15.01	19.11	20.94	14.14
	Ratio of net income before tax to paid-in capital(%) (Note 7)	42.87	37.28	30.00	40.17	49.71	33.54
	Profit ratio (%)	10.79	9.74	8.35	10.86	11.05	9.11
	Earnings per share ($)	3.01	2.87	2.39	3.25	3.76	0.67
Cash flow	Cash flow ratio (%)	41.49	32.99	35.62	35.14	65.43	3.25
	Cash flow adequacy ratio (%)	110.34	91.42	88.34	101.02	118.09	108.88
	Cash reinvestment ratio (%)	8.89	5.41	5.88	3.93	13.12	1.13
Balance	Degree of operating leverage	1.37	1.45	1.49	1.47	1.46	1.65
	Degree of financial leverage	1.01	1.02	1.03	1.03	1.01	1.02
Root causes for the financial ratio change in the last two years: 1. The increase in interest coverage ratio in 2019 was due to the increase in operating profit, which resulted in an increase in net profit before pre-tax interest. 2. The increase in inventory turnover rate in 2019 was due to the increase in revenue, resulting in an increase in cost of sales and a decrease in average inventory. 3. The decline in the average days for sale in 2019 was due to an increase in revenue and cost of goods sold, resulting in an increase in inventory turnover. 4. The increase in turnover of property, plant and equipment in 2019 was mainly due to the increase in net sales. 5. The increase in the ratio of net profit before tax to paid-up capital in 2019 was due to the increase in net profit before tax for the increase in revenue. The increase in cash flow ratio in 2019 was due to increase in net cash flow from operating activities for the increase of operating revenue, receivables, and turnover rate of inventory. 6. The increase in cash reinvestment ratio in 2019 was mainly due to the increase in net cash flow from operating activities.

Note: Reviewed by CPAs.

-91-

Financial Analysis - IFRS (Individual)

Item (Note 1)	Fiscal year	Financial analysis over the last five years	Financial analysis over the last five years	Financial analysis over the last five years	Financial analysis over the last five years	Financial analysis over the last five years
		2015	2016	2017	2018	2019
Financial structure (%)	Ratio of liabilities to assets(%)	18.22	13.90	12.90	13.89	14.89
	Long-term capital to property, plant,and facility%	1,031.95	1,070.72	1,077.16	1,135.93	1,253.92
Solvency (%)	Current ratio(%)	244.03	263.73	294.16	298.43	306.40
	Quick ratio(%)	151.70	146.95	170.75	202.26	214.80
	(Times)interest earned ratio	12,005.34	1,382.73	-	5,091.75	3,125.78
Operating ability	Accounts receivable turnover (times)	6.29	5.99	5.74	5.97	5.91
	Days sales in accounts receivable	58.02	60.93	63.58	61.13	61.75
	Inventoryturnover(times)	3.87	4.02	4.05	4.36	4.51
	Accountspayable turnover(times)	8.61	9.01	9.39	9.90	9.35
	Average days in sales	94.31	90.79	90.12	83.71	80.93
	Property, plant and facility turnover (times)	8.98	8.67	8.12	8.61	9.41
	Total assets turnover(times)	0.77	0.71	0.67	0.69	0.69
Profitability	Ratio of return on total assets(%)	17.86	15.91	12.98	16.70	18.01
	Ratio of return on total equities(%)	21.62	18.94	14.98	19.28	21.03
	Ratio of net income before tax to paid-in capital(%) (Note 5)	40.59	34.96	28.02	38.11	45.72
	Profit ratio(%)	23.25	22.36	19.30	24.20	26.00
	Earningsper share($)	3.01	2.87	2.39	3.25	3.76
Cash flow	Cash flow ratio(%)	81.02	106.59	107.93	79.67	105.51
	Cash flow adequacyratio(%)	145.70	137.07	129.44	119.95	114.28
	Cash reinvestment ratio(%)	6.18	4.74	3.09	(0.34)	1.18
Balance	Degree of operatingleverage	1.36	1.40	1.40	1.35	1.29
	Degree of financial leverage	1.00	1.00	1.00	1.00	1.00
The root causes for the financial ratio change in the last two years: 1. The decrease in interest coverage ratio in 2019 was mainly due to the increase in interest expenses on lease liabilities. 2. The increase in cash flow ratio in 2019 was due to the increase in net cash flow from operating activities for the increase in operating profits. 3. The cash reinvestment ratio increased in 2019, resulting in an increase in net cash flow from operating activities due to an increase in operating profit. Increase in working capital (financial assets measured at amortized cost in current assets - current increase and net receivable increase) and increase in profits and losses of subsidiaries invested by equitymethod.

Note 1: The following equations shall be listed at the bottom of this chart.

Financial structure
(1) Ratio of debt to assets = Total debt/Total assets.
(2) Long-term capital to fixed assets ratio�(total equity�non-current debt)/total net fixed assets
Solvency
(1) Current ratio = Current assets / Current liability
–
(2) Quick ratio = (Current assets Inventory Prepaid expense) / Current liabilities
(3) Times interest earned ratio = Net income before tax and interest expense / Interest expense of the year
1. Operating ability
(1) Accounts receivable turnover (including accounts receivable and notes receivable derived from business operation) = Net sales / Average accounts receivable (including accounts receivable and notes receivable derived from business operation).
(2) Average collection days = 365 / Account receivable turnover
(3) Inventory turnover = Cost of goods sold / Average inventory amount
(4) Accounts payable turnover (including accounts payable and notes payable derived from business operation) = Cost of goods sold / Average accounts payable (including accounts payable and notes payable derived from business operation).
(5) Average inventory turnover days = 365 / Inventory turnover
(6) Fixed assets turnover�Net sales / Average net fixed assets
(7) Total assets turnover = Net sales / Total assets

-92-

Profitability
- (1) Return on assets = [Net income (loss) + interest expense x (1-tax rate)] / Average total assets
- (2) Return on shareholder’s equity = Net income (loss) / Net average shareholders’ equity
- (3) Profit ratio = Net income (loss) / Net sales
- (4) EPS = (Net earnings attributable to owners of the parent - preferred dividend) / Weighted-average shares issued. (Note 2)
Cash flow
- (1) Cash flow ratio = Net cash flow from operating activity / Current liability
- (2) Cash flow adequacy ratio = Net cash flow from operating activities in the past five years / (Capital expenditure + Inventory increase + Cash dividend) in the past five years
- (3) Cash reinvestment ratio = (Net cash flow from operating activity Cash dividend) / (Fixed assets + Long-term investment + other assets + Working capital). (Note 3)
Leverage:
- (1) Degree of operating leverage = (Net operating income Variable operating cost and expense) / Operating income (Note 4).
- (2) Degree of financial leverage = Operating income / (Operating income interest expense).
Note 2: When analyzing EPS equation above, please note the followings
Based on weighted average common stocks, not the shares issued at the end of the year.
Calculation for weighted-average common stock shall take into consideration the number of floating days of new shares issued from cash funding and treasury shares
Those that had capital increase from retain earnings or capital reserve, the total capital shall be adjusted retroactively by the percentage of increase, and no consideration for the issuing period is needed, when calculate EPS for the entire fiscal year or the first six months
If the preferred shares are non-convertible cumulative preferred stocks, the dividend (whether paid or not) shall be deducted from the after-tax net income/loss. If the preferred shares are non-cumulative preferred stocks, the dividends shall be deducted from the after-tax net income. No such adjustment shall be made if after-tax net loss.

Note 3: When analyzing the cash flows, please note the following matters:

Cash flows from operating activities mean the business has generated a net inflow of cash.
Capital expenditure means cash paid for long-term assets purchase during the year.
Inventory addition is only included when inventory balance at the period end is bigger than that at the beginning of the period. No inventory addition is included if inventory balance was down at the year end.
Cash dividend includes cash distribution paid to holders of both common stocks and preferred stocks. 5. Gross fixed assets means total fixed assets before depreciation.
Note 4: The issuer shall divide each operation cost and expense into fixed and variable categories based on their natures, if it is done by estimation or subjective judgments, the bases shall be logical and consistent.
Note 5: If the Company’s stock is without a par value or the par value is not NT$10, the calculation of paid-in capital ratio referred to above should be replaced with the equity ratio attributable to the shareholders of the parent company on the balance sheet.

-93-

III.Audit committee’s report in the most recent year

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

-94-

IV. Financial Report and consolidated financial statements IV.1. Financial Report of Standard Fodds Corporation and Subsidiaries

Standard Foods Corporation and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2019 and 2018 and

-95-

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The companies required to be included in the consolidated financial statements of affiliates in accordance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” for the year ended December 31, 2019 are all the same as the companies required to be included in the consolidated financial statements of parent and subsidiary companies as provided in International Financial Reporting Standards No. 10, “Consolidated Financial Statements”. Relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies. Hence, we have not prepared a separate set of consolidated financial statements of affiliates.

Very truly yours,

STANDARD FOODS CORPORATION

TER-FUNG TSAO Chairman March 18, 2020

-96-

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

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.

-97-

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, and we 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.

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.

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 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, 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.

-98-

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.

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 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.
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.

-99-

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 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.

-100-

STANDARD FOODS CORPORATION AND SUBSIDIARIES

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

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

-101-

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)

-102-

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)

-103-

								Total Equity	$ 15,023,608		43,887	15,067,495		-	-	(1,830,179 )		13,339	(11,170 )	(28,718 )	2,968,307		(138,749 )		2,829,558			-	16,040,325		-	-	(2,287,724 )		16,673	(17,230 )	3,454,836		(256,189 )		3,198,647	$ 16,950,691
							Non-controlling	Interests	$ 237,868		19,289	257,157		-	-	-		-	(11,491 )	(28,718 )	19,218		(2,767 )		16,451			-	233,399		-	-	-		-	(17,230 )	38,739		17,656		56,395	$ 272,564
								Total	14,785,740		24,598	14,810,338		-	-	(1,830,179 )		13,339	321	-	2,949,089		(135,982 )		2,813,107			-	15,806,926		-	-	(2,287,724 )		16,673	-	3,416,097		(273,845 )		3,142,252	16,678,127
									$																																	$
								Treasury Shares	$ (21,182 )		-	(21,182 )		-	-	-		-	-	-	-		-		-			-	(21,182 )		-	-	-		-	-	-		-		-	$ (21,182 )
								Total	(260,426 )		22,584	(237,842 )		-	-	-		-	48,233	-	-		(141,022 )		(141,022 )			(314 )	(330,945 )		-	-	-		-	-	-		(246,549 )		(246,549 )	(577,494 )
									$																																	$
								Other	(46,970 )		-	(46,970 )		-	-	-		-	46,970	-	-		-		-			-	-		-	-	-		-	-	-		-		-	-
									$																																	$
	Other Equity	Unrealized Gain	(Loss) on	Financial Assets	at Fair Value	Through Other	Comprehensive	Income	$ -		116,974	116,974		-	-	-		-	-	-	-		(34,736 )		(34,736 )			(314 )	81,924		-	-	-		-	-	-		33,620		33,620	$ 115,544
Equity Attributable to Owners of the Company		Exchange	Differences on	Translating the Unrealized Gain	Financial (Loss) on	Statements of Available-for-	Foreign sale Financial	Total Operations Assets	5,833,327 $ (307,846 ) $ 94,390		2,014 - (94,390 )	5,835,341 (307,846 ) -		- - -	- - -	(1,830,179 ) - -		- - -	(44,494 ) 1,263 -	- - -	2,949,089 - -		5,040 (106,286 ) -		2,954,129 (106,286 ) -			314 - -	6,915,111 (412,869 ) -		- - -	- - -	(2,287,724 ) - -		- - -	- - -	3,416,097 - -		(27,296 ) (280,169 ) -		3,388,801 (280,169 ) -	8,016,188 $ (693,038 ) $ -
									$																																	$
						Retained Earnings	Unappropriated	Special Reserve 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
								Legal Reserve	$ 2,433,199		-	2,433,199		217,304	-	-		-	-	-	-		-		-			-	2,650,503		294,909	-	-		-	-	-		-		-	$ 2,945,412
								Capital Surplus	$ 83,124		-	83,124		-	-	-		13,339	(3,418 )	-	-		-		-			-	93,045		-	-	-		16,673	-	-		-		-	$ 109,718
								Ordinary Shares	$ 9,150,897		-	9,150,897		-	-	-		-	-	-	-		-		-			-	9,150,897		-	-	-		-	-	-		-		-	$ 9,150,897
									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

-104-

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)

-105-

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)

-106-

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

STANDARD FOODS CORPORATION AND SUBSIDIARIES

1. GENERAL INFORMATION

Standard Foods Corporation (the “Company”) was incorporated on June 6, 1986. The Company mainly manufactures and sells nutritious foods, edible oils, dairy products and beverages.

The Company’s shares have been listed on the Taiwan Stock Exchange since April 1994.

The consolidated financial statements of the Company and its subsidiaries, collectively referred to as the “Group”, are presented in the Company’s functional currency, the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company’s board of directors on March 18, 2020.

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

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

Except for the following, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC did not have any material impact on the Group’s accounting policies:

1) IFRS 16 “Leases”

IFRS 16 provides a comprehensive model for the identification of lease arrangements and their treatment in the financial statements of both lessee and lessor. It supersedes IAS 17 “Leases”, IFRIC 4 “Determining whether an Arrangement contains a Lease”, and a number of related interpretations. Refer to Note 4 for information relating to the relevant accounting policies.

Definition of a lease

The Group elects to apply the guidance of IFRS 16 in determining whether contracts are, or contain, a lease only to contracts entered into (or changed) on or after January 1, 2019. Contracts identified as containing a lease under IAS 17 and IFRIC 4 are not be reassessed and are accounted for in accordance with the transitional provisions under IFRS 16.

-107-

The Group as lessee

The Group recognizes right-of-use assets or investment properties if the right-of-use assets meet the definition of investment properties, and lease liabilities for all leases on the consolidated balance sheets except for those whose payments under low-value asset and short-term leases are recognized as expenses on a straight-line basis. On the consolidated statements of comprehensive income, the Group presents the depreciation expense charged on right-of-use assets separately from the interest expense accrued on lease liabilities; interest is computed using the effective interest method. On the consolidated statements of cash flows, cash payments for the principal portion of lease liabilities are classified within financing activities; cash payments for the interest portion are classified within financing activities. Prior to the application of IFRS 16, payments under operating lease contracts were recognized as expenses on a straight-line basis. Cash flows for operating leases were classified within operating activities on the consolidated statements of cash flows. Leased assets and finance lease payables were recognized on the consolidated balance sheets for contracts classified as finance leases.

Lease liabilities were recognized on January 1, 2019 for leases previously classified as operating leases under IAS 17. Lease liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019. Right-of-use assets are measured at either amount equal to the lease liabilities, adjusted by the amount of any prepaid or accrued lease payments.

For as an operating lease under IAS 17, a lease liability measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019. Part of right-of-use assets are presented as prepaid lease or lease payments. The Company applies IAS 36 to all right-of-use assets.

The Group also applies the following practical expedients:

a) The Group applies a single discount rate to a portfolio of leases with reasonably similar characteristics to measure lease liabilities.
b) The Group accounts for those leases for which the lease term ends on or before December 31, 2019 as short-term leases.
c) The Group excludes initial direct costs from the measurement of right-of-use assets on January 1, 2019.
d) The Group uses hindsight, such as in determining lease terms, to measure lease liabilities.

The lessee’s weighted incremental borrowing rate applied to lease liabilities recognized on January 1, 2019 is 1.07%-12.04%. The difference between the lease liabilities recognized and operating lease commitments disclosed under IAS 17 on December 31, 2018 is explained as follows:

The future minimum lease payments of non-cancellable operating lease commitments on December 31, 2018 Less: Recognition exemption for short-term leases Undiscounted amounts on January 1, 2019 Discounted amounts using the incremental borrowing rate on January 1, 2019 Add: Finance lease liabilities on December 31, 2018 Lease liabilities recognized on January 1, 2019	$ 155,631 (21,890) $ 133,741 $ 132,164 6,946 $ 139,110

-108-

The Group as lessor

The Group does not make any adjustments for leases in which it is a lessor, and it accounts for those leases with the application of IFRS 16 starting from January 1, 2019.

The impact on assets, liabilities and equity as of January 1, 2019 from the initial application of IFRS 16 is set out as follows:

			Adjustments	Adjustments
	As	Originally	Arising from
	Stated on			Initial	Restated on
	January 1, 2019		Application		January 1, 2019
Finance lease receivables - current	$	-	$	2,640	$	2,640
Lease receivables - non-current		29,724		(29,724)		-
Finance lease receivables - non-current		-		29,724		29,724
Lease receivables - current		2,640		(2,640)		-
Property, plant and equipment		5,889		(5,889)		-
Prepayments for leases - non-current		381,081		(381,081)		-
Right-of-use assets		-		519,134		519,134
Total effect on assets	$	419,334	$	132,164	$	551,498
Lease liabilities	$	-	$	139,110	$	139,110
Finance lease payables - current		2,137		(2,137)		-
Finance lease payables - non-current		4,809		(4,809)		-
Total effect on liabilities	$	6,946	$	132,164	$	139,110

The amendments stipulate that, if a plan amendment, curtailment or settlement occurs, the current service cost and the net interest for the remainder of the annual reporting period are determined using the actuarial assumptions used for the remeasurement of the net defined benefit liabilities (assets). In addition, the amendments clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling. The Group applied the above amendments prospectively.

b. The IFRSs endorsed by the Financial Supervisory Commission (FSC) for application starting from 2020

Effective Date New IFRSs Announced by IASB Amendments to IFRS 3 “Definition of a Business” January 1, 2020 (Note 1) Amendments to IAS 1 and IAS 8 “Definition of Material” January 1, 2020 (Note 2)

Note 1: The Group shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.
Note 2: The Group shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

-109-

1) Amendments to IFRS 3 “Definition of a Business”

The amendments clarify that, to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process applied to the input that together significantly contribute to the ability to create outputs. The amendments narrow the definitions of outputs by focusing on goods and services provided to customers, and the reference to an ability to reduce costs is removed. Moreover, the amendments remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs. In addition, the amendments introduce an optional concentration test that permits a simplified assessment of whether or not an acquired set of activities and assets is a business.

2) Amendments to IAS 1 and IAS 8 “Definition of material”

The amendments are intended to make the definition of material in IAS 1 easier to understand and are not intended to alter the underlying concept of materiality in IFRSs. The concept of “obscuring” material information with immaterial information has been included as part of the new definition. The threshold for materiality influencing users has been changed from “could influence” to “could reasonably be expected to influence”.

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

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

New IFRSs Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”	Effective Date Announced by IASB (Note)
	To be determined by IASB January 1, 2022

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

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and IFRSs as endorsed and issued into effect by the FSC.

b. Basis of preparation

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

-110-

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

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
3) Level 3 inputs are unobservable inputs for the asset or liability.
c. Classification of current and non-current assets and liabilities

Current assets include:

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

Current liabilities include:

1) Liabilities held primarily for the purpose of trading;
2) Liabilities due to be settled within twelve months after the reporting period; and
3) Liabilities for which the Group does not have an unconditional right to defer settlement for at least twelve months after the reporting period.

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

d. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and the entities controlled by the Company (i.e., its subsidiaries).

Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statement of profit or loss and other comprehensive income from the effective dates of acquisitions up to the effective dates of disposals, as appropriate.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Company.

All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the interests of the Group and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owners of the Company.

-111-

Refer to Note 14, Tables 7 and 8 for the detailed information on subsidiaries (including the percentages of ownership and main businesses).

e. Foreign currencies

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

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

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

Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

For the purpose of presenting consolidated financial statements, the functional currencies of the Company and the group entities (including subsidiaries that use currencies which are different from the currency of the Company) are translated into the presentation currency, the New Taiwan dollar, as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; and income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income.

f. Inventories

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

g. Property, plant and equipment

Property, plant and equipment (including assets held under finance leases) are stated at cost, less recognized accumulated depreciation and accumulated impairment loss.

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

Depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. If the lease term is shorter than the useful lives, assets are depreciated over the lease term. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

-112-

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

h. Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation.

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss. Depreciation is recognized using the straight-line method.

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

i. Goodwill

Goodwill arising from the acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment loss.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units or groups of cash-generating units (referred to as cash-generating units) that is expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired, by comparing its carrying amount, including the attributed goodwill, with its recoverable amount. However, if the goodwill allocated to a cash-generating unit was acquired in a business combination during the current annual period, that unit shall be tested for impairment before the end of the current annual period. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

If goodwill has been allocated to a cash-generating unit and the entity disposes of an operation within that unit, the goodwill associated with the operation which is disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal, and is measured on the basis of the relative values of the operation disposed of and the portion of the cash-generating unit retained.

j. Intangible assets

1) Intangible assets acquired separately

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

2) Intangible assets acquired in a business combination

Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, they are measured on the same basis as intangible assets that are acquired separately.

-113-

3) Derecognition of intangible assets

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

k. Impairment of tangible and intangible assets other than goodwill

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

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

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

l. Financial instruments

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

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

1) Financial assets

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

a) Measurement category

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

-114-

i. Financial assets at FVTPL

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

Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. Fair value is determined in the manner described in Note 34.

ii. Financial assets at amortized cost

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

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

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, notes receivable, trade receivables, investments in debt instruments, other receivables and other financial assets that measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

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

i) Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of such financial assets; and
ii) Financial assets that are not credit impaired on purchase or origination but have subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.

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

iii. Investments in equity instruments at FVTOCI

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

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

-115-

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

b) Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables) and finance lease receivables.

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

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

The Group recognizes an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

c) Derecognition of financial assets

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

Before 2018, on derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss which had been recognized in other comprehensive income is recognized in profit or loss. Starting from 2018, on derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in a debt instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss which had been recognized in other comprehensive income is recognized in profit or loss. However, on derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

2) Equity instruments

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

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

-116-

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

m. Revenue recognition

The Group identifies contracts with customers and recognizes revenue when performance obligations are satisfied.

For contracts where the period between the date on which the Group transfers a promised good to a customer and the date on which the customer pays for that good is one year or less, the Group does not adjust the promised amount of consideration for the effects of a significant financing component.

Revenue from the sale of goods

Revenue from the sale of goods comes from sales of nutritious foods, cooking products, electronic goods and cosmetics. Sales of goods are recognized as revenue when the goods are delivered to the customer’s specific location because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility for sales to future customers and bears the risks of obsolescence. Trade receivables and contract assets are recognized concurrently. Any amounts previously recognized as contract assets are reclassified to trade receivables when the remaining obligations are performed. When the customer initially purchases the goods, the transaction price received is recognized as a contract liability until the goods have been delivered to the customer.

n. Leases

2019

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

1) The Group as lessor

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

Under finance leases, the lease payments comprise fixed payments, residual value guarantees. The net investment in a lease is measured at (a) the present value of the sum of the lease payments receivable by a lessor and any unguaranteed residual value accrued to the lessor plus (b) initial direct costs and is presented as a finance lease receivable. Finance lease income is allocated to the relevant accounting periods so as to reflect a constant, periodic rate of return on the Group’s net investment outstanding in respect of leases.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases.

2) The Group as lessee

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

-117-

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

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

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

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in future lease payments resulting from a change in a lease term, the Group remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets.

2018

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

1) The Group as lessor

Amounts due from lessees under finance leases are recognized as receivables at the amount of the Group’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of the leases.

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease.

2) The Group as lessee

Assets held under finance leases are initially recognized as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the consolidated balance sheets as a finance lease obligation.

Finance expenses implicit in lease payments for each period are recognized immediately in profit or loss, unless they are directly attributable to qualifying assets; in which case, they are capitalized.

Operating lease payments are recognized as expenses on a straight-line basis over the lease term.

o. Borrowing costs

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

-118-

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

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

p. Government grants

Government grants are not recognized until there is reasonable assurance that the Group will comply with the conditions attached to the grants and that the grants will be received.

Government grants are recognized in profit or loss on a systematic basis over the periods in which the Group recognizes as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are recognized as deferred revenue and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognized in profit or loss in the period in which they become receivable.

q. Employee benefits

1) Short-term employee benefits

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

2) Retirement benefits

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

Defined benefit costs (including service cost, net interest and remeasurement) under the defined contribution retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost) and net interest on the net defined benefit liabilities (assets) are recognized as employee benefits expense in the period in which they occur. Remeasurement, comprising actuarial gains and losses, effect of changes to asset ceiling and return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Group’s defined benefit plan. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

3) Termination benefits

A liability for a termination benefit is recognized at the earlier of when the Group can no longer withdraw the offer of the termination benefit and when the Group recognizes any related restructuring costs.

-119-

r. Taxation

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

1) Current tax

According to the Income Tax Law, an additional tax at 10% of unappropriated earnings is provided for as income tax in the year the shareholders approve to retain the earnings.

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

2) Deferred tax

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

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

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

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

3) Current tax and deferred taxes for the year

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

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, management is required to make judgments, estimates and assumptions based on historical experience and other factors that are considered to be relevant which related to information that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

-120-

Write-down of Inventory

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

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits Cash equivalents (investments with original maturities of less than 3 months) Time deposits Repurchase agreements collateralized by bonds		December 31	December 31
		2019 $ 2,940 3,198,093 184,478 320,392 $ 3,705,903	2018 $ 2,757 2,096,223 490,972 - $ 2,589,952

The market rate intervals of cash in bank at the end of the reporting period were as follows:

Bank deposits Repurchase agreements collateralized by bonds	December 31
	2019 2018 0.001%-3.220% 0.001%-3.600% 0.550%-0.560% -

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets at FVTPL-current Financial assets mandatorily classified as at FVTPL Non-derivative financial assets Mutual funds Financial assets at FVTPL-non-current Financial assets mandatorily classified as at FVTPL Non-derivative financial assets Domestic unlisted shares		December 31	December 31
		2019 $ 667,673 $ 7,575	2018 $ 617,790 $ 7,315

-121-

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Current Investments in equity instruments at FVTOCI Non-current Investments in equity instruments at FVTOCI a. Investments in equity instruments at FVTOCI Current Listed shares and emerging market shares Ordinary shares - Far Eastern International Bank Ordinary shares - Chunghwa Telecom Co., Ltd Ordinary shares - Formosa Plastics Corporation Ordinary shares - China Steel Corporation Ordinary shares - Polytronics Technology Corp. Ordinary shares - Taiwan Semiconductor Manufacturing Co., Ltd. Non-current Listed shares and emerging market shares Ordinary shares - GeneFerm Biotechnology Co., Ltd. Unlisted shares Ordinary shares - Dah Chung Bills Finance Corp. Ordinary shares - InnoComm Mobile Technology Corp. Ordinary shares - AsiaVest Liquidation Co.		December 31	December 31
		2019 2018 $ 186,711 $ 154,439 $ 189,695 $ 167,260 December 31
		2019 $ 16,479 5,346 9,126 19,198 106,772 29,790 $ 186,711 $ 65,640 15,702 107,424 929 $ 189,695	2018 $ 13,434 5,492 9,236 19,479 86,503 20,295 $ 154,439 $ 90,095 12,805 63,360 1,000 $ 167,260

These investments in the Group are not held for trading. Instead, they are held for medium-to long-term strategic purposes. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Group’s strategy of holding these investments for long-term purposes.

In January 2018, the Group sold its shares in Company F in order to manage credit concentration risk. The shares sold had a fair value of $798 thousand and its related unrealized valuation gain of $578 thousand was transferred from other equity to retained earnings.

Dividends of $11,231 thousand and $10,584 thousand were recognized during 2019 and 2018, respectively.

-122-

9. FINANCIAL ASSETS AT AMORTIZED COST - 2019 AND 2018

Current Time deposits with original maturities of more than 3 months		December 31	December 31
		2019 $ 2,206,805	2018 $ 1,505,913

The ranges of interest rates for time deposits with original maturities of more than 3 months were approximately 0.65%-2.85% and 0.79%-3.20% per annum as of December 31, 2019 and 2018, respectively.

10. NOTES RECEIVABLE, TRADE RECEIVABLES AND OTHER RECEIVABLES

Notes receivable Operating Trade receivables At amortized cost Gross carrying amount Less: Allowance for impairment loss Other receivables Accrued interest Payments on behalf of others Others		December 31	December 31
		2019 $ 2,977 $ 6,460,483 (20,933) $ 6,439,550 $ 8,912 595 183,576 $ 193,083	2018 $ 2,887 $ 6,169,871 (8,792) $ 6,161,079 $ 6,767 491 214,871 $ 222,129

The average credit period of receivables from sales of goods was 30-90 days. In order to minimize credit risk, the management of the Group has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate allowance is made for possible irrecoverable amounts.

The Group measures the loss allowance for trade receivables at an amount equal to lifetime ECLs. The expected credit losses on trade receivables are estimated using a provision matrix by reference to the past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecasted direction of economic conditions at the reporting date.

The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For trade receivables that have been written off, the Group continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

-123-

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

December 31, 2019

Expected credit loss rate Gross carrying amount Loss allowance (Lifetime ECL) Amortized cost December 31, 2018 Expected credit loss rate Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost	Not Past Due 0.01% $ 6,340,444 (733) $ 6,339,712 Not Past Due 0.00% $ 5,637,795 (45) $ 5,637,750	Less than 30 Days 1.68% $ 54,029 (906) $ 53,124 Less than 30 Days 0.10% $ 319,103 (325) $ 318,778	31 to 90 Days 91 to 180 Days Over 180 Days 3.36% 38.44% 61.05% $ 36,932 $ 6,717 $ 25,338 (1,242) (2,582) (15,470) $ 35,689 $ 4,135 $ 9,867 31 to 90 Days 91 to 180 Days Over 180 Days 0.14% 2.37% 100.00% $ 192,296 $ 15,789 $ 7,775 (273) (374) (7,775) $ 192,023 $ 15,415 $ -	Total $ 6,463,460 (20,933) $ 6,442,527 Total $ 6,172,758 (8,792) $ 6,163,966

The movements of the loss allowance of trade receivables were as follows:

Balance at January 1 Add: Net remeasurement of loss allowance Less: Amounts written off Foreign exchange translation gains and losses Balance at December 31	For the Year Ended December 31 2019 2018 $ 8,792 $ 5,392 12,762 5,251 - (1,733) (621) (118) $ 20,933 $ 8,792	For the Year Ended December 31 2019 2018 $ 8,792 $ 5,392 12,762 5,251 - (1,733) (621) (118) $ 20,933 $ 8,792	For the Year Ended December 31 2019 2018 $ 8,792 $ 5,392 12,762 5,251 - (1,733) (621) (118) $ 20,933 $ 8,792
		2019 $ 8,792 12,762 - (621) $ 20,933	2018 $ 5,392 5,251 (1,733) (118) $ 8,792

11. FINANCE LEASE RECEIVABLES

2019

	December 31,	December 31,
		2019
Undiscounted lease payments
Year 1	$	4,200
Year 2		4,200
Year 3		4,700
Year 4		4,800
Year 5		4,800
Year 6 onwards		13,400
Less: Unearned finance income		(6,377)
Net investment in leases presented as finance lease receivables	$	29,723

-124-

2018

	December 31,	December 31,
		2018
Gross investments in leases
Not later than 1 year	$	4,200
Later than 1 year and not later than 5 years		17,900
Later than 5 years		18,200
		40,300
Less: Unearned finance income		(7,936)
Present value of minimum lease payments	$	32,364
Lease receivables
Not later than 1 year	$	2,640
Later than 1 year and not later than 5 years		13,133
Later than 5 years		16,591
Lease receivables	$	32,364

The Group entered into finance lease arrangements for biological assets with annual fixed lease payments of $350 thousand. All leases were denominated in New Taiwan dollars. The term of finance leases entered into was 10 years.

The interest rates inherent in leases are fixed at the contract dates for the entire term of the lease. The average effective interest rates contracted were approximately 5.01% as of December 31, 2019 and 2018.

As of December 31, 2019, no finance lease receivable was past due. The Group has not recognized a loss allowance for finance lease receivables after taking into consideration the historical default experience and the future prospects of the industries in which the lessees operate, together with the value of collateral held over these finance lease receivables.

12. INVENTORIES

Merchandise Finished goods Work in progress Raw materials Packing materials		December 31	December 31
		2019 $ 578,324 1,544,663 344,702 1,111,234 68,061 $ 3,646,984	2018 $ 589,695 1,679,573 402,693 1,442,850 84,475 $ 4,199,286

The cost of inventories recognized as cost of goods sold for the year ended December 31, 2019 included loss on write-down of inventories of $2,307 thousand and loss on abandoned inventories of $46,508 thousand. The cost of inventories recognized as cost of goods sold for the year ended December 31, 2018 included reversals of inventory write-downs of $4,047 thousand and loss on abandoned inventories of $59,736 thousand.

-125-

13. PREPAYMENTS

Prepayments for purchases Prepayments for rent Prepayments for insurance Excess business tax paid Prepayments for advertisements Others		December 31	December 31
		2019 $ 884,193 6,215 1,139 255,952 13,578 224,149 $ 1,385,226	2018 $ 966,879 8,673 14,632 252,592 241,060 131,836 $ 1,615,672

14. SUBSIDIARIES

Subsidiaries included in consolidated financial statements.

Investor
Investee
Main Business
The Company
Standard Dairy Products Taiwan
Limited (“Standard Dairy
Products”)
Manufacture and sale of dairy
products and beverages
The Company
Charng Hui Ltd. (“Charng Hui”)
Investing
The Company
Domex Technology Corporation
(“Domex Technology”)
Manufacture and sale of
computer peripherals and
computer appliances
The Company
Standard Beverage Company
Limited (“Standard Beverage”)
Manufacture and sale of
beverages
The Company
Accession Limited
Investing
The Company
Standard Investment (“Cayman”)
Limited (“Cayman Standard”)
Investing
The Company
Le Bonta Wellness International
Corporation (“Le Bonta
Wellness”)
Sale of health food
Accession Limited
Shanghai Standard Foods Co.,
Ltd. (“Shanghai Standard”)
Manufacture and sale of edible
oils and nutritious foods
Accession Limited
Shanghai Le Ben De Health
Technology Co., Ltd.
(“Shanghai Le Ben De”)
Technical consultant on health
technology, technical
transfer and technical
service
Accession Limited
Dermalab S.A. (“Dermalab”)
Development and sale of
cosmetics
Dermalab
Swissdema SL (“Swissdema”)
Sale of cosmetics
Cayman Standard
Standard Corporation (Hong
Kong) Limited (“Hong Kong
Standard”)
Investing
Hong Kong Standard
Standard Investment (China) Co.,
Ltd. (“China Standard
Investment”)
Investing and sale of edible
oils and nutritious foods
Hong Kong Standard
Shanghai Le Ming Industrial Co.,
Ltd. (“Shanghai Le Ming”)
Management of properties
Hong Kong Standard
Shanghai Le Ho Industrial Co.,
Ltd. (“Shanghai Le Ho”)
Management of properties
China Standard
Investment
Standard Foods (China) Co., Ltd.
(“China Standard Foods”)
Manufacture and sale of edible
oils and nutritious foods
China Standard
Investment
Shanghai Dermalab Corporation
(“Shanghai Dermalab”)
Sale of nutritional foods,
cosmetic and engage in
import and export business
The Company and
China Standard
Investment
Shanghai Le Ben Tuo Health
Technology Co., Ltd.
(“Shanghai Le Ben Tuo”)
Sale of nutritional foods and
engage in import and export
business
China Standard
Investment
Standard Foods (Xiamen) Co.,
Ltd. (“Xiamen Standard")
Manufacture and sale of edible
oils and nutritious foods

Proportion of Ownership
December 31
2019
2018
Remark
100.0
100.0
-
100.0
100.0
-
52.0
52.0
-
100.0
100.0
-
100.0
100.0
-
100.0
100.0
In September 2018, the Company
invested RMB437 thousand in
Cayman Standard.
100.0
100.0
-
100.0
100.0
-
100.0
100.0
-
100.0
100.0
In May 2018, Accession Limited bought
20% equity from non-controlling
interests, and the Company’s
percentage of shareholding increased
from 80% to 100%, refer to Note 31.
100.0
100.0
-
100.0
100.0
In September 2018, Cayman Standard
invested RMB259 thousand in Hong
Kong Standard.
99.0
99.0
-
100.0
100.0
-
100.0
100.0
-
100.0
100.0
-
100.0
100.0
-
100.0
100.0
-
100.0
100.0
-

-126-

15. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2018 Additions Disposals Reclassified Effects of foreign currency exchange differences Balance at December 31, 2018 Accumulated depreciation and impairment Balance at January 1, 2018 Disposals Depreciation expenses Impairment losses recognized Effects of foreign currency exchange differences Balance at December 31, 2018 Carrying amount at December 31, 2018 Cost Balance at January 1, 2019 Adjustments on initial application of IFRS 16 Balance at January 1, 2019 (restated) Additions Disposals Reclassified Transfers to investment properties Effects of foreign currency exchange differences Balance at December 31, 2019 Accumulated depreciation and impairment Balance at January 1, 2019 Adjustments on initial application of IFRS 16 Balance at January 1, 2019 (restated) Disposals Depreciation expenses Transfers to investment properties Effects of foreign currency exchange differences Balance at December 31, 2019 Carrying amount at December 31, 2019	Freehold Land $ 702,405 - - - - $ 702,405 $ - - - - - $ - $ 702,405 $ 702,405 - 702,405 - - - - - $ 702,405 $ - - - - - - - $ - $ 702,405	Buildings $ 3,378,166 - (40,088 ) 149,726 (40,616) $ 3,447,188 $ 1,126,492 (39,513 ) 148,160 7,288 (8,185) $ 1,234,242 $ 2,212,946 $ 3,447,188 - 3,447,188 - (49,378 ) 871,706 (129,033 ) (62,333) $ 4,078,150 $ 1,234,242 - 1,234,242 (35,189 ) 169,112 (115,644 ) 17,158 $ 1,269,679 $ 2,808,471	Equipment $ 4,017,731 1,657 (99,012 ) 320,982 (88,150) $ 4,153,208 $ 2,562,300 (80,695 ) 267,506 10,747 (11,178) $ 2,748,680 $ 1,404,528 $ 4,153,208 - 4,153,208 846 (315,990 ) 279,875 - (48,741) $ 4,069,198 $ 2,748,680 - 2,748,680 (277,760 ) 279,868 - (20,571) $ 2,730,217 $ 1,338,981	Other Equipment $ 555,165 1,738 15,617 38,504 (366) $ 610,658 $ 400,639 18,882 55,387 - (2,895) $ 472,013 $ 138,645 $ 610,658 (9,752) 600,906 2,429 (53,531 ) 124,342 - (112,208) $ 561,938 $ 472,013 (3,863) 468,150 (48,675 ) 46,359 - (40,463) $ 425,371 $ 136,567	Property in Construction $ 1,112,048 382,849 - (523,543 ) 48,360 $ 1,019,714 $ - - - - - $ - $ 1,019,714 $ 1,019,714 - 1,019,714 402,529 (166 ) (1,275,904 ) (7,285) $ 138,888 $ - - - - - - - $ - $ 138,888	Total $ 9,765,515 386,244 (123,483 ) (14,331 ) (80,772) $ 9,933,173 $ 4,089,431 (101,326 ) 471,053 18,035 (22,258) $ 4,454,935 $ 5,478,238 $ 9,933,173 (9,752) 9,923,421 405,804 (419,065 ) 19 (129,033 ) (230,567) $ 9,550,579 $ 4,454,935 (3,863) 4,451,072 (361,624 ) 495,339 (115,644 ) (43,876) $ 4,425,267 $ 5,125,312

No impairment assessment was performed for the year ended December 31, 2019 as there was no indication of impairment.

The above items of property, plant and equipment are depreciated on a straight-line basis over the following estimated useful lives of the assets:

Building
Main buildings	20-51 years
Electrical and mechanical equipment	8-20 years
Engineering	3-39 years
Others	3-20 years
Equipment
Main equipment	2-20 years
Engineering	3-20 years
Others	3-15 years
Other equipment	2-15 years

Refer to Note 36 for the carrying amount of property, plant and equipment pledged by the Group to secure borrowings granted to the Group.

-127-

16. LEASE ARRANGEMENTS

a. Right-of-use assets - 2019

	December 31,	December 31,
		2019
Carrying amounts
Land	$	404,964
Buildings		286,147
Office equipment		390
Transportation equipment		8,178
	$	699,679
	For the Year
		Ended
	December 31,
		2019
Additions to right-of-use assets	$	176,972
Depreciation charge for right-of-use assets
Land	$	12,381
Buildings		61,539
Office equipment		29
Transportation equipment		2,975
	$	76,924
Lease liabilities - 2019
	December 31,
		2019
Carrying amounts
Current	$	83,119
Non-current	$	264,496
Range of discount rate for lease liabilities was as follows:
	December 31,
		2019
Land	1.07%-1.49%
Buildings	1.07%-4.35%
Office equipment		1.07%
Transportation equipment	1.07%-12.04%

b. Lease liabilities - 2019

-128-

c. Material lease-in activities and terms

The Group also leases land, buildings and transportation equipment for the use of plants, offices and business cars with lease terms of 1 to 50 years. The Group does not have bargain purchase options to acquire the leasehold land and buildings at the end of the lease terms. In addition, the Group is prohibited from subleasing or transferring all or any portion of the underlying assets without the lessor’s consent.

d. Other lease information

Lease arrangements under operating leases for leasing out the investment properties are set out in Note 17. Lease arrangements for leasing out the assets under finance leases are set out in Note 11.

2019

	For the Year	For the Year
		Ended
	December 31,
		2019
Expenses relating to short-term leases	$	96,334
Expenses relating to low-value asset leases	$	881
Expenses relating to variable lease payments not included in the
measurement of lease liabilities	$	-
Total cash outflow for leases	$	(178,717)

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

2018

The future minimum lease payments of non-cancellable operating lease commitments are as follows:

	December 31,	December 31,
		2018
Not later than 1 year	$	55,887
Later than 1 year and not later than 5 years		99,744
	$	155,631

The lease payments and sublease payments recognized in profit or loss were as follows:

	For the Year
	Ended
	December 31,
	2018
Minimum lease payments	$ 131,944

-129-

17. INVESTMENT PROPERTIES

Completed
Investment
Properties
Right-of-use
Assets
Cost
Balance at January 1, 2018
$ 298,579
$ -

Disposals
(141,270)

-

Balance at December 31, 2018
$ 157,309
$ -

Accumulated depreciation and impairment
Balance at January 1, 2018
$ 59,330
$ -

Depreciation expenses
2,320
-
Disposals

(15,117)

-

Balance at December 31, 2018
$ 46,533
$ -

Carrying amount at December 31, 2018
$ 110,776
$ -

Cost
Balance at January 1, 2019
$ 157,309
$ -

Transfers from right-of-use assets
-
5,898
Transfers from property, plant and equipment
129,033
-
Disposals
(41,592)
-
Effects of foreign currency exchange differences
(3,039)

(350)

Balance at December 31, 2019
$ 241,711
$ 5,548

Accumulated depreciation and impairment
Balance at January 1, 2019
$ 46,533
$ -

Depreciation expenses
2,310
225
Disposals
(37,324)
-
Transfers from right-of-use assets
-
123
Transfers from property, plant and equipment
115,644
-
Effects of foreign currency exchange differences
(2,729)

(15)

Balance at December 31, 2019
$ 124,434
$ 333

Carrying amount at December 31, 2019
$ 117,277
$ 5,215

Total
$ 298,579
(141,270)
$ 157,309
$ 59,330
2,320
(15,117)
$ 46,533
$ 110,776
$ 157,309
5,898
129,033
(41,592)
(3,389)
$ 247,259
$ 46,533
2,535
(37,324)
123
115,644
(2,744)
$ 124,767
$ 122,492

The investment properties held by the Group are depreciated using the straight-line method over the following estimated useful lives:

Building
Main buildings	35-51 years
Electrical and mechanical equipment	24-25 years
Engineering	28 years
Right-of-use assets	49 years
Others	24 years

-130-

The maturity analysis of lease payments receivable under operating leases of investment properties as of December 31, 2019 was as follows:

		December 31,
		2019
Year	1	$ 29,280
Year	2	15,769
		$ 45,049

The future minimum lease payments of non-cancellable operating lease commitments as of December 31, 2018 are as follows:

	December 31,
	2018
Not later than 1 year	$ 18,986
Later than 1 year and not later than 5 years	18,943
	$ 37,929
The investment properties held by the Group are depreciated using the straight-line method over the
following estimated useful lives:
Building
Main buildings	35-51 years
Electrical and mechanical equipment	24-25 years
Engineering	28 years
Right-of-use assets	49 years
Others	24 years

The fair values of the investment properties were $212,653 thousand and $214,323 thousand as of December 31, 2019 and 2018, respectively. The management of the Group determined the fair value with reference to market transaction prices of similar properties.

On May 8, 2018, the Company entered into a property sale agreement with Pei Chen Co., Ltd. for a property located in Wugu District, New Taipei City. The selling price was $508,620 thousand (which included business tax), and the gain on disposal of property was $369,427 thousand (which was included in the statements of comprehensive income under other gains and losses). The transaction was accomplished at the third quarter of September 2018.

All of the Group’s investment properties are held under freehold interests. The carrying amounts of investment properties pledged by the Group to secure borrowings granted to the Group are disclosed in Note 36.

-131-

18. OTHER INTANGIBLE ASSETS

Trademark Cost Balance at January 1, 2018 $ 91,195 Additions - Effects of foreign currency exchange differences 115,844 Balance at December 31, 2018 $ 207,039 Accumulated amortization and impairment Balance at January 1, 2018 $ 17,531 Amortization expenses 5,048 Effects of foreign currency exchange differences 114,690 Balance at December 31, 2018 $ 137,269 Carrying amount at December 31, 2018 $ 69,770 Cost Balance at January 1, 2019 $ 207,039 Additions - Transfers from prepayments 34 Effects of foreign currency exchange differences 20,187 Balance at December 31, 2019 $ 227,260 Accumulated amortization and impairment Balance at January 1, 2019 $ 137,269 Amortization expenses 5,081 Effects of foreign currency exchange differences 21,092 Balance at December 31, 2019 $ 163,442 Carrying amount at December 31, 2019 $ 63,818	Computer Software $ 228,195 5,572 (498) $ 233,269 $ 224,610 6,684 (487) $ 230,807 $ 2,462 $ 233,269 7,564 - (1,120) $ 239,713 $ 230,807 6,551 (1,096) $ 236,262 $ 3,451	Total $ 319,390 5,572 115,346 $ 440,308 $ 242,141 11,732 114,203 $ 368,076 $ 72,232 $ 440,308 7,564 34 19,067 $ 466,973 $ 368,076 11,632 19,996 $ 399,704 $ 67,269

The above items of other intangible assets are amortized on a straight-line basis over the following estimated lives:

Trademark 10-20 years Computer software 2-3 years

19. LONG-TERM PREPAYMENTS FOR LEASES

The long-term prepayments for leases are land use rights located in mainland China. As of December 31, 2018, long-term prepayments for leases amounted to $381,081 thousand.

-132-

20. OTHER ASSETS

Current Pledge time deposits (Note 36) Advances to officers Temporary payments Others Non-current Prepayments for equipment Refundable deposits Pledge time deposits (Note 36) Others		December 31	December 31
		2019 $ 4,013 15,570 9,683 118 $ 29,384 $ 6,984 53,615 85,950 114,426 $ 260,975	2018 $ 1,010 20,901 - - $ 21,911 $ 31,565 41,720 89,506 77,064 $ 239,855

21. BORROWINGS

a. Short-term borrowings

Secured borrowings (Note 36) Bank loans Unsecured borrowings Bank loans		December 31	December 31
		2019 $ 150,000 1,232,955 $ 1,382,955	2018 $ 90,000 1,641,478 $ 1,731,478

The range of interest rates on bank loans was 1.05%-4.35% and 1.05%-4.35% per annum as of December 31, 2019 and 2018, respectively.

b. Short-term bills payable

Commercial paper Less: Unamortized discount on bills payable		December 31	December 31
		2019 $ 100,000 (32) $ 99,968	2018 $ 120,000 (96) $ 119,904

-133-

Outstanding short-term bills payable were as follows:

December 31, 2019

Financial Institutions Commercial paper Mega Bills Finance Co., Ltd. International Bills Finance Corp. December 31, 2018 Financial Institutions Commercial paper Mega Bills Finance Co., Ltd. International Bills Finance Corp. Taiwan Bills Finance Corp.	Nominal Amount $ 50,000 50,000 $ 100,000 Nominal Amount $ 50,000 50,000 20,000 $ 120,000	Discount Amount $ (3) (29) $ (32) Discount Amount $ (13) (63) (20) $ (96)	Carrying Amount Interest Rate Collateral $ 49,997 1.36% - 49,971 1.34% - $ 99,968 Carrying Amount Interest Rate Collateral $ 49,987 1.34% - 49,937 1.34% - 19,980 1.34% - $ 119,904	Carrying Amount of Collateral $ - - $ - Carrying Amount of Collateral $ - - - $ -

c. Long-term borrowings

Secured borrowings (Note 36) Bank loans* Less: Current portions Long-term borrowings		December	31
		2019 $ 6,000 (6,000) $ -	2018 $ 27,000 (12,000) $ 15,000

As of December 31, 2019, the interest rate of the bank borrowings secured by the Group’s equipment (see Note 36) was 1.91% per annum. The bank borrowings will be repayable quarterly from March 2018 to March 2021.

-134-

22. NOTES PAYABLE AND TRADE PAYABLES

Notes payable Operating Trade payables Operating		December 31	December 31
		2019 $ 316,444 $ 2,014,619	2018 $ 131,916 $ 2,162,745

The average credit period of payables for purchases of goods was 30-90 days. The Group has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.

23. OTHER LIABILITIES

Current Other payables Payable for salaries or bonuses Payable for compensation of employees Payable for remuneration to directors Payable for commission and rebates Advertisement payable Payable for royalties Payable for freight Payable for equipment Others Other liabilities Advance receipts from customers Refund liability Others Non-current Other liabilities Guarantee deposits Others		December 31	December 31
		2019 $ 306,728 52,013 25,073 963,712 199,232 25,668 100,658 113,698 1,063,892 $ 2,850,674 $ 1,337 13,055 14,109 $ 28,501 $ 20,044 2,934 $ 22,978	2018 $ 282,514 31,723 20,960 840,152 285,122 23,806 101,140 158,266 866,203 $ 2,609,886 $ 1,147 15,231 17,938 $ 34,316 $ 19,961 4,734 $ 24,695

-135-

24. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company and domestic subsidiaries of the Group adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages. The foreign subsidiaries also make contributions to defined contribution plan in accordance with the local regulations.

b. Defined benefit plans

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

Dermalab of the Group also adopted a defined benefit plan.

The amounts included in the consolidated balance sheets in respect of the Group’s defined benefit plans were as follows:

December 31 2019 2018 Present value of funded defined benefit obligation $ 719,306 $ 700,665 Fair value of plan assets (421,021) (437,458) Net defined benefit liabilities $ 298,285 $ 263,207 Movements in net defined benefit liabilities (assets) were as follows: Present Value of the Defined Benefit Obligation Fair Value of the Plan Assets Net Defined Benefit Liabilities (Assets) Balance at January 1, 2018 $ 705,155 $ (334,366) $ 370,789 Service cost Current service cost 10,904 - 10,904 Past service cost and loss on settlements 1,305 - 1,305 Net interest expense (income) 7,901 (3,789) 4,112 Recognized in profit or loss 20,110 (3,789) 16,321 Remeasurement Return on plan assets (excluding amounts included in net interest) - (6,758) (6,758) (Continued)		December 31

-136-

	Present Value	Present Value			Net Defined	Net Defined
	of the Defined					Benefit
		Benefit	Fair Value of		Liabilities
	Obligation		the	Plan Assets		(Assets)
Actuarial loss - changes in demographic
assumptions	$	4,531	$	-	$	4,531
Actuarial gain - changes in financial
assumptions		(1,022)		-		(1,022)
Actuarial loss - experience adjustments		9,586		-		9,586
Recognized in other comprehensive income		13,095		(6,758)		6,337
Contributions from the employer		-		(130,576)		(130,576)
Contributions from plan participants		2,475		(2,475)		-
Benefits paid		(41,468)		41,468		-
Exchange differences		1,298		(962)		336
Balance at December 31, 2018		700,665		(437,458)		263,207
Service cost
Current service cost		9,845		-		9,845
Net interest expense (income)		7,701		(4,918)		2,783
Recognized in profit or loss		17,546		(4,918)		12,628
Remeasurement
Return on plan assets (excluding amounts
included in net interest)		-		(14,227)		(14,227)
Actuarial loss - changes in demographic
assumptions		4,877		-		4,877
Actuarial gain - changes in financial
assumptions		30,164		-		30,164
Actuarial loss - experience adjustments		15,853		-		15,853
Recognized in other comprehensive income		50,894		(14,227)		36,667
Contributions from the employer		-		(14,102)		(14,102)
Contributions from plan participants		2,279		(2,279)		-
Benefits paid		(41,409)		41,409		-
Exchange differences		(479)		364		(115)
Others		(10,190)		10,190		-
Balance at December 31, 2019	$	719,306	$	(421,021)	$	298,285
						(Concluded)

Through the defined benefit plans under the Labor Standards Law, the Group is exposed to the following risks:

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

-137-

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

Discount rates Expected rates of salary increase	December 31
	2019 2018 0.300%-0.800% 0.875%-1.250% 0.500%-3.000% 0.500%-3.000%

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

Discount rates 0.250% increase 0.250% decrease Expected rates of salary increase 0.250% increase 0.250% decrease		December	31
		2019 $ (21,945) $ 22,800 $ 20,102 $ (19,758)	2018 $ (21,406) $ 22,249 $ 19,815 $ (19,341)

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

The expected contributions to the plan for the next year The average duration of the defined benefit obligation		December	31
	2019 2018 $ 22,248 $ 33,078 19-16.5 years 2.8-15.1 years

25. EQUITY

a. Share capital
1) Ordinary shares

Number of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		December 31	December 31
		2019 920,000 $ 9,200,000 915,089 $ 9,150,897	2018 920,000 $ 9,200,000 915,089 $ 9,150,897

2) Global depositary receipts

As of December 31, 2019, a total of 6,908.4 units of Global Depositary Receipts (GDRs) (representing 34,542 shares of the Company’s ordinary shares), where each GDR representing five shares of the Company’s ordinary shares, were traded on the Euro MTF Market of the Luxembourg Stock Exchange. Holders of the GDRs may request at any time that the shares represented by the GDRs be transferred to them.

-138-

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (1) Recognized from the difference between consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition May be used to offset a deficit Changes in percentage of ownership interests in subsidiaries (2) Recognized from treasury share transactions		December 31	December 31
		2019 $ 1 466 109,251 $ 109,718	2018 $ 1 466 92,578 $ 93,045

1) Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s capital surplus and to once a year).
2) Such capital surplus arises from the effect of changes in ownership interests in subsidiaries that result from equity transactions other than actual disposals or acquisitions, or from changes in capital surplus of subsidiaries accounted for using the equity method.
c. Retained earnings and dividend policy

Under the dividend policy as set forth in the amended Articles, where the Company made profit in a fiscal year, the profit shall be appropriated from (less any paying taxes and deficit):

1) 10% thereof as legal reserve;
2) Special reserve provided or reversed in accordance with the regulations;
3) 30% to 100% of this the sum of the remainder and prior years’ unappropriated earnings as dividends.

The Company’s Articles of Incorporation also prescribe that 30% to 100%of dividends shall be paid in cash; however, if the Company has major investment plans for which external funds are not available, the percentage may be lowered to 5% to 20%. The distribution plan shall be proposed by the Company’s board of directors and resolved in the shareholders’ meeting for distribution of dividends and bonus to shareholders. For the policies on distribution of the compensation of employees and remuneration of directors after amendment, refer to Note 27(h) “employees’ compensation and remuneration of directors”.

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

-139-

Items referred to under Rule No. 1010012865 and Rule No. 1010047490 issued by the FSC and the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs” should be appropriated to or reversed from a special reserve by the Company.

Except for non-ROC resident shareholders, all shareholders receiving the dividends are allowed a tax credit equal to their proportionate share of the income tax paid by the Company.

The appropriations of earnings 2018 and 2017 approved in the shareholders’ meetings on June 13, 2019 and June 15, 2018, respectively, were as follows:

Legal reserve Special reserve Cash dividends Cash dividends per share (NT$)	Appropriation of Earnings
	For the Year Ended December 31
	2018 2017 $ 294,909 $ 217,304 70,519 178,629 2,287,724 1,830,179 2.5 2.0

The appropriations of earnings for 2019 had been proposed by the Company’s board of directors on March 18, 2020. The appropriations and dividends per share were as follows:

	Appropriation	Appropriation	Dividends Per	Dividends Per
	of	Earnings	Share	(NT$)
Legal reserve	$	341,610
Special reserve		246,549
Cash dividends		2,424,987	$	2.65

The appropriations of earnings for 2019 are subject to the resolution of the shareholders in their meeting to be held on June 16, 2020.

d. Special reserve

Beginning at January 1 Appropriation in respect of: Debit to other equity items Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2019 $ 260,426 70,519 $ 330,945	2018 $ 81,797 178,629 $ 260,426

Appropriation for special reserve should be made in the amount equal to the net debit balance of other equity. Any special reserve appropriated may be reversed to the extent that the net debit balance reverses and, thereafter, distributed.

-140-

e. Other equity items

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

Balance at January 1 Effect of change in tax rate Recognized for the year Exchange differences on translating the financial statements of foreign operations Other comprehensive income recognized for the year Acquisition of further interests in subsidiaries Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2019 $ (412,869) - (280,169) (280,169) - $ (693,038)	2018 $ (307,846) 11,127 (117,413) (106,286) 1,263 $ (412,869)

2) Unrealized gain (loss) on financial assets at FVTOCI

For the Year Ended December 31 2019 2018 Balance at January 1 $ 81,924 $ 116,974 Recognized for the year Unrealized gain (loss) - equity instruments 33,620 (34,736) Other comprehensive income recognized for the year 33,620 (34,736) Cumulative unrealized gain (loss) of equity instruments transferred to retained earnings due to disposal - (314) Balance at December 31 $ 115,544 $ 81,924 3) Other equity items - other (recognized from put option of equity instruments from disposal of subsidiaries) For the Year Ended December 31 2019 2018 Balance at January 1 $ - $ (46,970) Exercised the put option of equity instruments from disposal of subsidiaries - 46,970 Balance at December 31 $ - $ - f. Non-controlling interests For the Year Ended December 31 2019 2018 Balance at January 1 $ 233,399 $ 257,157 Share in profit for the year 38,739 19,218 Other comprehensive income (loss) during the year Effect of change in tax rate - 89 Exchange difference on translating the financial statements of foreign operations (1,788) (728) Unrealized gain (loss) on financial assets at FVTOCI 21,147 (1,641) (Continued)	For the Year Ended	December 31
	2019 2018 $ - $ (46,970) - 46,970 $ - $ - For the Year Ended December 31
	2019 2018 $ 233,399 $ 257,157 38,739 19,218 - 89 (1,788) (728) 21,147 (1,641) (Continued)

-141-

Remeasurement on defined benefit plans Related income tax Acquisition of non-controlling interests in subsidiaries Cash dividends distributed by subsidiaries to non-controlling interests Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2019 $ (2,129) 426 - (17,230) $ 272,564	2018 $ (609) 122 (11,491) (28,718) $ 233,399 (Concluded)

g. Treasury shares

	Shares Held by
	Subsidiaries (In
	Thousands of
Purpose of Buy-back	Shares)
Number of shares at January 1, 2019	6,669
Number of shares at December 31, 2019	6,669
Number of shares at January 1, 2018	6,669
Number of shares at December 31, 2018	6,669

For the purpose of maintaining the Company’s credit and shareholders’ equity, the Company’s shares held by its subsidiaries at the end of the reporting periods were as follows:

Name of Subsidiary Number of Shares Held (In Thousands of Shares) December 31, 2019 Chang Hui 6,669 December 31, 2018 Chang Hui 6,669	Carrying Amount Market Price $ 21,182 $ 464,195 $ 21,182 $ 331,473

The Company’s shares held by subsidiaries were treated as treasury shares, aside from the rights to participate in any share issuance for cash and to vote, the rest were similar to general shareholder’s rights.

26. REVENUE

Revenue from contracts with customers Revenue from sale of goods	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 31,266,232	2018 $ 27,340,587

-142-

a. Contract balances

Notes receivable (Note 10) Trade receivables (Note 10) Contract liabilities - current Sale of goods Disaggregation of revenue For the year ended December 31, 2019 Types of goods or services Sale of goods For the year ended December 31, 2018 Types of goods or services Sale of goods		December 31, 2019 December 31, 2018 January 1, 2018 $ 2,977 $ 2,887 $ 4,846 $ 6,439,550 $ 6,161,079 $ 5,079,140 $ 326,644 $ 360,115 $ 210,540 Reportable Segments Nutritious Foods Cooking Products Others Total $ 11,984,151 $ 15,551,432 $ 3,730,649 $ 31,266,232 $ 10,929,907 $ 13,817,285 $ 2,593,395 $ 27,340,587	December 31, 2019 December 31, 2018 January 1, 2018 $ 2,977 $ 2,887 $ 4,846 $ 6,439,550 $ 6,161,079 $ 5,079,140 $ 326,644 $ 360,115 $ 210,540 Reportable Segments Nutritious Foods Cooking Products Others Total $ 11,984,151 $ 15,551,432 $ 3,730,649 $ 31,266,232 $ 10,929,907 $ 13,817,285 $ 2,593,395 $ 27,340,587
		Nutritious Foods $ 11,984,151 $ 10,929,907	Cooking Products $ 15,551,432 $ 13,817,285

b. Disaggregation of revenue

27. NET PROFIT

Net profit includes:

a. Other income

Rental income Operating lease rental income Investment properties Others Interest income Bank deposits Financial assets at amortized cost Repurchase agreements collateralized by bonds Others Dividends Investments in equity instruments at FVTOCI	For the Year Ended	For the Year Ended	December 31
		2019 $ 23,824 863 24,687 51,405 21,459 569 1,386 74,819 11,231 $ 110,737	2018 $ 20,878 578 21,456 29,541 8,701 150 1,525 39,917 10,584 $ 71,957

-143-

b. Other gains and losses

For the Year Ended	For the Year Ended	December 31
2019 $ 7,812 - (26,043) (41,828) - - 65,423 55,439 $ 60,803 For the Year Ended		2018 $ 13,031 9,308 10,478 (8,243) 369,427 (18,035) 107,359 51,859 $ 535,184 December 31
2019 $ 37,982 1,060 - 7,788 49 $ 46,879 For the Year Ended		2018 $ 79,564 96 718 - 367 $ 80,745 December 31
	2019 $ 12,762 $ 2,307 $ -	2018 $ 5,251 $ (4,047) $ 18,035

An analysis of depreciation by function Operating costs Operating expenses Non-operating revenue and expenses An analysis of amortization by function Operating costs Operating expenses	For the Year Ended	For the Year Ended	December 31
		2019 $ 399,640 172,623 2,535 $ 574,798 $ 20,977 33,260 $ 54,237	2018 $ 381,355 89,698 2,320 $ 473,373 $ 23,794 29,734 $ 53,528

-144-

f. Operating expenses directly related to investment properties

Direct operating expenses of investment properties that generated rental income Direct operating expenses of investment properties that did not generated rental income g. Employee benefits expense Post-employment benefits Defined contribution plans Defined benefit plans (see Note 24) Other employee benefits Total employee benefits expense An analysis of employee benefits expense by function Operating costs Operating expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2019 2018 $ 702 $ 751 572 581 $ 1,274 $ 1,332 For the Year Ended December 31
		2019 $ 127,502 12,628 140,130 2,338,177 $ 2,478,307 $ 846,191 1,632,116 $ 2,478,307	2018 $ 124,208 16,321 140,529 2,126,065 $ 2,266,594 $ 828,990 1,437,604 $ 2,266,594

h. Employees’ compensation and remuneration of directors

The Company accrued compensation of employees and remuneration of directors at the rates of no less than 0.5% and no higher than 0.75%, respectively, of net profit before income tax, compensation of employees, and remuneration of directors. The compensation of employees and remuneration of directors for the years ended December 31, 2019 and 2018, which were approved by the Company’s board of directors on March 18, 2020 and March 22, 2019, respectively, were as follows:

Accrual rate

Compensation of employees Remuneration of directors Amount	For the Year Ended December 31
	2019 2018 1.22% 0.90% 0.59% 0.59%

Compensation of employees Remuneration of directors	For the Year Ended December 31	For the Year Ended December 31
	2019 Cash $ 52,013 25,073	2018
		Cash $ 31,723 20,960

-145-

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

There was no difference between the actual amounts of compensation of employees and remuneration of directors paid and the amounts recognized in the consolidated financial statements for the year ended December 31, 2018 and 2017.

Information on the compensation of employees and remuneration of directors resolved by the Company’s board of directors in 2020 and 2019 is available on the Market Observation Post System website of the Taiwan Stock Exchange.

i. Gain or loss on foreign currency exchange

Foreign exchange gains Foreign exchange losses Net gains (losses)	For the Year Ended	For the Year Ended	December 31
		2019 $ 75,308 (101,351) $ (26,043)	2018 $ 76,847 (66,369) $ 10,478

28. INCOME TAXES

a. Major components of tax expense recognized in profit or loss

Current tax In respect of the current year Land value increment tax Income tax on unappropriated earnings Adjustments for prior years Deferred tax In respect of the current year Effect of tax rate changes Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 1,057,020 - 12,941 (37,010) 1,032,951 60,747 - 60,747 $ 1,093,698	2018 $ 639,471 27,947 - (14,407) 653,011 77,051 (22,137) 54,914 $ 707,925

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

Profit before tax Income tax expense calculated at the statutory rate Nondeductible expenses in determining taxable income Tax-exempt income Unrecognized deductible temporary differences and loss carryforwards	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 4,548,534 $ 1,193,055 24,491 (118,486) 52,053	2018 $ 3,676,232 $ 887,299 23,150 (174,944) 2,459 (Continued)

-146-

Investment credits Income tax on unappropriated earnings Land value increment tax Effect of tax rate changes Adjustments for prior years’ tax Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ (33,346) 12,941 - - (37,010) $ 1,093,698	2018 $ (21,442) - 27,947 (22,137) (14,407) $ 707,925 (Concluded)

The Income Tax Act in the ROC was amended in 2018, and the corporate income tax rate was adjusted from 17% to 20%. In addition, the rate of the corporate surtax applicable to the 2018 unappropriated earnings was reduced from 10% to 5%. The applicable tax rate used by subsidiaries in China is 25%. Tax rates used by other group entities operating in other jurisdictions are based on the tax laws in those jurisdictions.

b. Income tax recognized in other comprehensive income

Deferred tax Effect of tax rate changes In respect of the current year Exchange differences on translating the financial statements of foreign operations Fair value changes of financial assets at FVTOCI Remeasurement of defined benefit plans Total income tax recognized in other comprehensive income	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ - (70,042) (3) (7,668) $ (77,713)	2018 $ (21,055) (29,037) (83) (1,049) $ (51,224)

c. Current tax assets and liabilities

Current tax assets Tax refund receivable Current tax liabilities Income tax payable		December 31	December 31
		2019 $ 46,114 $ 547,018	2018 $ 13,349 $ 337,835

-147-

d. Deferred tax assets and liabilities

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

For the year ended December 31, 2019

Deferred tax assets Temporary differences Investments accounted for using the equity method Exchange differences on translating the financial statements of foreign operations Defined benefit plans Advertisement payable Deferred sales returns and allowances Allowance for inventory loss Financial assets measured at cost Others Loss carryforwards Deferred tax liabilities Temporary differences Investments accounted for using the equity method Reserve for land value increment tax Defined benefit plans Others	Opening Balance R $ 91,100 103,216 76,490 54,776 6,767 10,071 43,886 14,345 400,651 95 $ 400,746 $ 100,460 33,685 740 1,238 $ 136,123	Effect of Tax ate Changes Recognized in Profit or Loss Recognized in Other Comprehensive Income $ - $ (9,014 ) $ - - - 70,042 - 237 7,410 - - - - 2,007 - - (11 ) - - - 3 - 4,279 - - (2,502 ) 77,455 - (95) - $ - $ (2,597) $ 77,455 $ - $ 131,725 $ - - - - - 1,781 (258 ) - (560) - $ - $ 132,946 $ (258)	Exchange Differences Closing Balance $ - $ 82,086 - 173,258 (19 ) 84,118 (2,176 ) 52,600 - 8,774 - 10,060 - 43,889 (11) 18,613 (2,206 ) 473,398 - - $ (2,206) $ 473,398 $ - $ 232,185 - 33,685 - 2,263 2 680 $ 2 $ 268,813

For the year ended December 31, 2018

Deferred tax assets Temporary differences Investments accounted for using the equity method Exchange differences on translating the financial statements of foreign operations Defined benefit plans Advertisement payable Deferred sales returns and allowances Allowance for inventory loss Financial assets measured at cost Others Loss carryforwards Deferred tax liabilities Temporary differences Investments accounted for using the equity method Reserve for land value increment tax Defined benefit plans Others	Opening Balance R $ 92,479 63,052 63,789 55,745 19,129 7,326 41,930 18,652 362,102 81 $ 362,183 $ 53,736 33,685 332 5,226 $ 92,979	Effect of Tax ate Changes Recognized in Profit or Loss Recognized in Other Comprehensive Income $ 16,330 $ (17,709 ) $ - 11,127 - 29,037 10,855 551 1,229 - - - 3,376 (15,738 ) - 1,332 1,413 - 7,400 (5,527 ) 83 3,010 (7,342) - 53,430 (44,352 ) 30,349 14 - - $ 53,444 $ (44,352) $ 30,349 $ 9,483 $ 37,241 $ - - - - 228 - 180 541 (4,542) - $ 10,252 $ 32,699 $ 180	Exchange Differences Closing Balance $ - $ 91,100 - 103,216 66 76,490 (969 ) 54,776 - 6,767 - 10,071 - 43,886 25 14,345 (878 ) 400,651 - 95 $ (878) $ 400,746 $ - $ 100,460 - 33,685 - 740 13 1,238 $ 13 $ 136,123

-148-

e. Deductible temporary differences and unused loss carryforwards for which no deferred tax assets have been recognized in the consolidated balance sheets

Loss carryforwards Expiry in 2019 Expiry in 2020 Expiry in 2021 Expiry in 2022 Expiry in 2023 Expiry in 2024 Deductible temporary differences		December 31	December 31
		2019 $ - 10,400 24,285 41,636 68,909 227,559 $ 372,789 $ 23,720	2018 $ 580 11,268 25,402 41,636 69,645 - $ 148,531 $ 50,272

f. Income tax assessments

The income tax returns of Domex Technology for the year ended December 31, 2016 had been assessed by the tax authorities.

The income tax returns of the Company, Standard Dairy Products, Charng Hui, Standard Beverage and Le Bonta Wellness for the year ended December 31, 2017 had been assessed by the tax authorities.

29. EARNINGS PER SHARE

Basic earnings per share Diluted earnings per share	For	Unit: NT$ Per Share the Year Ended December 31	Unit: NT$ Per Share the Year Ended December 31
		2019 $ 3.76 $ 3.76	2018 $ 3.25 $ 3.24

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

Net Profit for the Year

Earnings used in the computation of basic earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 3,416,097	2018 $ 2,949,089

-149-

Weighted average number of ordinary shares outstanding (in thousands of shares):

Weighted average number of ordinary shares used in computation of basic earnings per share Effect of potentially dilutive ordinary shares: Compensation of employees Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 908,420 709 909,129	2018 908,420 742 909,162

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

30. GOVERNMENT GRANTS

The Group received government grants, and recognized $65,423 thousand and $107,359 thousand as other gains during 2019 and 2018, respectively.

31. EQUITY TRANSACTIONS WITH NON-CONTROLLING INTERESTS

On May 18, 2018, the Group subscribed for shares of non-controlling interests at a percentage of 20%, which increased its continuing interest from 80% to 100%.

The above transactions were accounted for as equity transactions, since the Group did not cease to have control over these subsidiaries.

	Dermalab
Cash consideration received	$ (59,682)
The transfer of capital premium’s stock warrants	48,512
The equity instrument’s put option of the financial liability of the subsidiary transferred
to non-controlling interests	3,418
The proportionate share of the carrying amount of the net assets of the subsidiary
transferred to non-controlling interests	11,491
Reattribution of other equity from non-controlling interests
Exchange differences on translating the financial statements of foreign operation
(Note 25)	(1,263)
Others	(46,970)
Differences recognized from equity transactions	$ (44,494)
Line items adjusted for equity transactions
Capital surplus - changes in percentage of ownership interests in subsidiaries	$ (44,494)

-150-

32. CASH FLOWS INFORMATION

Changes in liabilities arising from financing activities:

For the year ended December 31, 2019

Short-term borrowings Short-term bills payable Long-term borrowings Lease liabilities Guarantee deposits received Other non-current liabilities	Opening Balance $ 1,731,478 119,904 27,000 139,110 19,961 4,734 $ 2,042,187	Cash Flows $ (301,316) (19,936) (21,000) (73,714) 705 (1,757) $ (417,018)		Non-cash Changes Exchanging Rate Adjustments $ (47,207) - - 282,219 (622) (43) $ 234,347	Closing Balance $ 1,382,955 99,968 6,000 347,615 20,044 2,934 $ 1,859,516

For the year ended December 31, 2018

Short-term borrowings Short-term bills payable Long-term borrowings Finance lease payables Guarantee deposits received Other non-current liabilities	Opening Balance $ 2,312,473 99,953 39,000 2,833 48,769 5,305 $ 2,508,333	Cash Flows $ (555,347) 19,951 (12,000) 4,067 (28,458) (687) $ (572,474)		Non-cash Changes Exchanging Rate Adjustments $ (25,648) - - 46 (350) 116 $ (25,836)	Closing Balance $ 1,731,478 119,904 27,000 6,946 19,961 4,734 $ 1,910,023

33. CAPITAL MANAGEMENT

The Group’s capital management objective is to ensure financial resources are available and operating plans are in place for working capital, capital expenditures, research and development expenses, refund liabilities and dividend disbursement, etc. in the next twelve months. The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximizing the return to shareholders through the optimization of the debt and equity balance.

-151-

34. FINANCIAL INSTRUMENTS

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

December 31, 2019 Financial assets at FVTPL Unlisted shares Mutual fund beneficiary certification Financial assets at FVTOCI Investments in equity instruments at FVTOCI Listed shares and emerging market shares Unlisted shares December 31, 2018 Financial assets at FVTPL Unlisted shares Mutual fund beneficiary certification Financial assets at FVTOCI Investments in equity instruments at FVTOCI Listed shares and emerging market shares Unlisted shares	Level 1 $ - 667,673 $ 667,673 $ 252,351 - $ 252,351 Level 1 $ - 617,790 $ 617,790 $ 244,534 - $ 244,534	Level 2 $ - - $ - $ - - $ - Level 2 $ - - $ - $ - - $ -	Level 3 $ 7,575 - $ 7,575 $ - 124,055 $ 124,055 Level 3 $ 7,315 - $ 7,315 $ - 77,165 $ 77,165	Total $ 7,575 667,673 $ 675,248 $ 252,351 124,055 $ 376,406 Total $ 7,315 617,790 $ 625,105 $ 244,534 77,165 $ 321,699

There were no transfers between Levels 1 and 2 for the years ended December 31, 2019 and 2018.

-152-

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

For the year ended December 31, 2019

Financial Assets Balance at January 1, 2019 Recognized in profit or loss (included in other gains and losses) Recognized in other comprehensive income (included in unrealized gain (loss) on financial assets at FVTOCI) Impact of exchange rates Balance at December 31, 2019 Recognized in other gains and losses - unrealized For the year ended December 31, 2018 Financial Assets Balance at January 1, 2018 Recognized in profit or loss (included in other gains and losses) Recognized in other comprehensive income (included in unrealized gain (loss) on financial assets at FVTOCI) Sales/settlements Transfers out of Level 3 Impact of exchange rates Balance at December 31, 2018 Recognized in other gains and losses - unrealized	Financial Assets at FVTPL Equity Instruments $ 7,315 260 - - $ 7,575 $ 260 Financial Assets at FVTPL Equity Instruments $ 6,368 3,125 - (1,978) (200) - $ 7,315 $ 1,147	Financial Assets at FVTOCI Equity Instruments $ 77,165 - 46,928 (38) $ 124,055 Financial Assets at FVTOCI Equity Instruments $ 83,754 - (4,749) (1,823) - (17) $ 77,165	Total $ 84,480 260 46,928 (38) $ 131,630 $ 260 Total $ 90,122 3,125 (4,749) (3,801) (200) (17) $ 84,480 $ 1,147

3) The valuation techniques of unlisted shares with no active market are mainly applicable for market and asset valuation methods.

The market method is mainly used to value the fair value of investment objects’ market prices and environments.

The asset method is mainly utilized to value the fair value of investment objects’ net asset values.

-153-

b. Categories of financial instruments

Financial assets Financial assets at FVTPL Mandatorily classified as at FVTPL Financial assets at amortized cost (1) Financial assets at FVTOCI Equity instruments Financial liabilities Financial liabilities at amortized cost (2)	December 31
	2019 2018 $ 675,248 $ 625,105 12,691,896 10,614,196 376,406 321,699 3,983,402 4,367,443

1) The balances include financial assets at amortized cost, which comprise cash and cash equivalents, debt investments, and notes receivable and trade receivables. Those reclassified to held-for-sale disposal groups are also included.
2) The balances include financial liabilities at amortized cost, which comprise short-term and long-term loans, short-term bills payable, trade and other payables, and bonds issued. Those reclassified to held-for-sale disposal groups are also included.

c. Financial risk management objectives and policies

The Group’s major financial instruments include cash and cash equivalents, equity and debt investments, mutual funds, trade receivables, trade payables and loans. The Group’s Financial Department provides services to the business, coordinates access to financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

1) Market risk

The Group’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (a) below) and interest rates (see (b) below).

a) Foreign currency risk

The Group’s foreign currency risk arises from its foreign currency monetary assets and liabilities. The Group watches out for the fluctuation of market exchange rate, and takes appropriate actions to manage the exchange rate risk.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities (including those eliminated on consolidation) at the end of the reporting period are set out in Note 38.

-154-

Sensitivity analysis

The Group was mainly exposed to the RMB, USD, EUR, AUD, CHF and SGD.

The following table details the Group’s sensitivity to a 3% increase or decrease in the functional currency against the relevant foreign currencies. A change of 3% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis used the outstanding foreign currency denominated monetary items at the end of the reporting period and assumed the exchange rates at the end of the reporting period changed by 3% increase of decrease. The amount below indicates an increase (decrease) in pre-tax profit associated with the functional currency weakening 3% against the relevant currency. For a 3% strengthening of the functional currency against the relevant currency, there would be an equal and opposite impact on pre-tax profit and the balances below would be negative.

Profit or loss Profit or loss Profit or loss	RMB Impact For the Year Ended December 31 2019 2018 $ 1,310 (i) $ 834 (i) EUR Impact For the Year Ended December 31 2019 2018 $ 2,349 (iii) $ 1,378 (iii) CHF Impact For the Year Ended December 31 2019 2018 $ 1,792 (v) $ 2,735 (v)	USD Impact
		For the Year Ended December 31
		2019 2018 $ 28,367 (ii) $ 18,939 (ii) AUD Impact
		For the Year Ended December 31
		2019 2018 $ 817 (iv) $ 2,707 (iv) SGD Impact
		For the Year Ended December 31
		2019 2018 $ (348) (vi) $ (338) (vi)

i. This was mainly attributable to the exposure of outstanding RMB bank deposits which were not hedged at the end of the reporting period.
ii. This was mainly attributable to the exposure of outstanding USD bank deposits, debt investments with no active market, receivables and payables which were not hedged at the end of the reporting period.
iii. This was mainly attributable to the exposure on bank deposits and payables in EUR which were not hedged at the end of the reporting period.
iv. This was mainly attributable to the exposure of bank deposits and payables in AUD which were not hedged at the end of the reporting period.
v. This was mainly attributable to the exposure of bank deposits and payables in CHF which were not hedged at the end of the reporting period.
vi. This was mainly attributable to the exposure of bank deposits and payables in SGD which were not hedged at the end of the reporting period.

-155-

b) Interest rate risk

The Group was exposed to interest rate risk because entities in the Group borrowed funds at both fixed and floating interest rates. The Group pays attention to the fluctuations of exchange rates in the market, and takes appropriate actions to manage the exchange rate risk.

The carrying amounts of the Group’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting periods were as follows.

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities Sensitivity analysis	December 31
	2019 2018 $ 1,658,861 $ 955,885 1,791,538 1,806,328 1,172,500 1,163,880 45,000 79,000

The sensitivity analyses below were determined based on the Group’s exposure to interest rates for non-derivative instruments at the end of the reporting period. For floating rate assets and liabilities, the analysis was prepared assuming the amount of the asset and liability outstanding at the end of the reporting period was outstanding for the whole year. A 1% basis point increase or decrease was used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 1% higher and all other variables were held constant, the Group’s pre-tax profit for the years ended December 31, 2019 and 2018 would increase (decrease) by $11,275 thousand and $10,849 thousand, respectively.

The Group’s sensitivity to interest rates decreased during the current year mainly due to the decrease in variable rate debt instruments.

c) Other price risk

The Group was exposed to equity price risk due to its investments in listed equity securities and mutual funds. The Group has appointed a special team to monitor the price risk and will consider hedging the risk exposure should the need arise.

Sensitivity analysis

The sensitivity analyses below were determined based on the exposure to equity price risks at the end of the reporting period.

If equity prices had been 1% higher/lower, pre-tax profit for the year ended December 31, 2019 would have increased/decreased by $6,752 thousand, as a result of the changes in fair value of financial assets at FVTPL, and the pre-tax other comprehensive income for the year ended December 31, 2019 would have increased/decreased by $3,764 thousand, as a result of the changes in fair value of financial assets at FVTOCI.

-156-

If equity prices had been 1% higher/lower, pre-tax profit for the year ended December 31, 2018 would have increased/decreased by $6,251 thousand, as a result of the changes in fair value of financial assets at FVTPL, and the pre-tax other comprehensive income for the year ended December 31, 2018 would have increased/decreased by $3,217 thousand, as a result of the changes in fair value of financial assets at FVTOCI.

2) Credit risk

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

In order to minimize credit risk, management of the Group has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade receivable at the end of the reporting period to ensure that adequate allowances are made for irrecoverable amounts.

The table below analyzes the collaterals held as security and other credit enhancements, and their financial effect in respect of the financial assets recognized in the Group’s consolidated balance sheets:

December 31, 2019

Carrying Amount Receivables $ 6,442,527 December 31, 2018	Maximum Exposure to Credit Risk Mitigated by
	Collateral Other Credit Enhancements Total $ 76,270 $ 391 $ 76,661

Carrying Amount Receivables $ 6,163,966	Maximum Exposure to Credit Risk Mitigated by
	Collateral Other Credit Enhancements Total $ 94,755 $ 11,189 $ 105,944

3) Liquidity risk

The Group manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

The Group relies on bank borrowings as a significant source of liquidity. As of December 31, 2019 and 2018, the Group had available unutilized bank loan facilities in the amounts of $5,186,434 thousand and $8,454,225 thousand, respectively.

-157-

Liquidity and interest rate risk table for non-derivative financial liabilities

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

December 31, 2019

Non-derivative financial liabilities Non-interest bearing Lease liabilities Variable interest rate liabilities Fixed interest rate liabilities Contract liabilities December 31, 2018 Non-derivative financial liabilities Non-interest bearing Finance lease liabilities Variable interest rate liabilities Fixed interest rate liabilities Contract liabilities	On Demand or Less than 1 Month $ 793,371 25,466 - 612,591 108,881 $ 1,540,309 On Demand or Less than 1 Month $ 260,158 222 30,067 644,922 120,038 $ 1,055,407	1-3 Months $ 1,592,308 14,902 - 788,292 217,763 $ 2,613,265 1-3 Months $ 603,234 445 3,086 627,795 240,077 $ 1,474,637	3 Months to 1 Year $ 86,769 52,197 45,003 48,461 - $ 232,430 3 Months to 1 Year $ 1,599,695 2,002 31,304 509,072 - $ 2,142,073	1-5 Years $ 20,044 283,028 - - - $ 303,072 1-5 Years $ 19,961 5,164 15,215 37,371 - $ 77,711

The amounts included above for variable interest rate instruments for non-derivative financial liabilities was subject to change if changes in variable interest rates differ from those estimates of interest rates determined at the end of the reporting period.

-158-

35. TRANSACTIONS WITH RELATED PARTIES

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Besides as disclosed elsewhere in other notes, details of transactions between the Group and other related parties are disclosed below.

a. Related parties and relationships

Name of Related Party GeneFerm Biotechnology Co., Ltd. (“GeneFerm”)	Relationship with the Group
	The Company is one of the directors

b. Purchases of goods

Related Party Category/Name The Company is one of the directors GeneFerm	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 48,186	2018 $ 25,529

Purchases from related parties were conducted on normal commercial terms.

c. Payables to related parties

Line Items Related Party Category/Name Trade payables The Company is one of the directors GeneFerm		December	31
		2019 $ 26,141	2018 $ 8,602

The outstanding payables from related parties were unsecured.

d. Compensation of key management personnel

Short-term employee benefits Post-employment benefits	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 45,293 522 $ 45,815	2018 $ 40,280 533 $ 40,813

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

-159-

36. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral for bank borrowings, issuance of bank acceptances, performance guaranty, and bond for customs clearance:

Pledge time deposits (included in other current assets) Pledge time deposits (included in other non-current assets) Property, plant and equipment, net Investment properties, net		December 31	December 31
		2019 $ 4,013 85,950 137,554 56,909 $ 284,426	2018 $ 1,010 89,506 153,868 58,697 $ 303,081

37. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant commitments and contingencies of the Group as of December 31, 2019 were as follows:

a. The Company has entered into a license agreement with The Quaker Oats Company (Quaker) for a period ending July 11, 2029. The agreement provides that the Company may use Quaker’s trademark, and process, manufacture, market and sell Quaker baby cereal, oatmeal, fruit cereal, ready-to-eat cereal, sesame paste, milk powder and other cereal products in the ROC. In consideration of the above, the Company shall pay Quaker royalties at an agreed percentage of net sales (as defined).
b. Unused letters of credit of approximately US$2,075 thousand.
c. Unrecognized commitments for acquisition of property, plant and equipment of approximately $122,010 thousand.
d. Unrecognized commitments for acquiring approximately 46,391 tons of colostrum from dairymen.

38. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The significant assets and liabilities denominated in foreign currencies other than functional currencies of the Group entities and the exchange rates between foreign currencies and respective functional currencies were as follows:

December 31, 2019

		Foreign		Carrying
	Currencies		Exchange Rate	Amount
Financial assets
Monetary items
USD	$	26,052	29.98 (USD:NTD) $	781,058
USD		6,480	6.98 (USD:RMB)	194,612
EUR		2,331	33.59 (EUR:NTD)	78,298
RMB		10,142	4.31(RMB:NTD)	43,658
AUD		2,058	21.01 (AUD:NTD)	43,228
				(Continued)

-160-

Foreign
Currencies
Exchange Rate
CHF
$ 1,341
30.93 (CHF:NTD)
CHF
591
7.18 (CHF:RMB)

Financial liabilities
Monetary items
USD
1,003
29.98 (USD:NTD)
AUD
762
20.01 (AUD:NTD)
SGD
520
22.28 (SGD:NTD)

December 31, 2018
Foreign
Currencies
Exchange Rate
Financial assets
Monetary items
USD
$ 12,753
30.72 (USD:NTD)
USD
14,631
6.86 (USD:RMB)
EUR
1,661
35.20 (EUR:NTD)
RMB
6,219
4.47 (RMB:NTD)
AUD
4,717
21.67 (AUD:NTD)
CHF
2,923
6.97 (CHF:RMB)

Non-monetary items
USD
33
6.86 (USD:RMB)
CHF
1,379
6.97 (CHF:RMB)

Financial liabilities
Monetary items
USD
771
30.72 (USD:NTD)
USD
6,045
6.86 (USD:RMB)
EUR
356
35.20 (EUR:NTD)
AUD
551
21.67 (AUD:NTD)
SGD
501
22.48 (SGD:NTD)

Carrying
Amount
$ 41,470

18,272
$ 1,200,596
$ 30,087

16,006

11,586
$ 57,679
(Concluded)
Carrying
Amount
$ 391,681

449,371

58,453

27,810

102,184

91,155
$ 1,120,654
$ 1,000

43,007
$ 44,007
$ 23,666

185,681

12,535

11,944

11,262
$ 245,088

-161-

The Group is mainly exposed to RMB and USD. The following information was aggregated by the functional currencies of the group entities, and the exchange rates between respective functional currencies and the presentation currency were disclosed. The significant realized and unrealized foreign exchange gains (losses) were as follows:

For the Year Ended December 31

Foreign Currencies NTD RMB CHF	2019 Exchange Rate Net Foreign Exchange Gains (Losses) 1 (NTD:NTD) $ (27,536) 4.45 (RMB:NTD) 1,483 30.93 (CHF:NTD) 10 $ (26,043)	2018
		Exchange Rate Net Foreign Exchange Gains (Losses) 1 (NTD:NTD) $ 5,483 4.55 (RMB:NTD) 5,136 31.19 (CHF:NTD) (141) $ 10,478

39. SEPARATELY DISCLOSED ITEMS

a. Financings provided: See Table 1 attached.
b. Endorsement/guarantee provided: See Table 2 attached.
c. Marketable securities held (excluding investments in subsidiaries): See Table 3 attached.
d. Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: None.
e. Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital: None.
f. Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None.
g. Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: See Table 4 attached.
h. Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: See Table 5 attached.
i. Trading in derivative instruments: None.
j. Others: Intercompany relationships and significant intercompany transactions: See Table 6 attached.
k. Information on investees (excluding investees of mainland China): See Table 7 attached.
l. Information on investment in mainland China
1) The name of the investee in mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, percentage of ownership, income (losses) of the investee, share of profits/losses of investee, ending balance, amount received as dividends from the investee, and the limitation on investee: See Table 8 attached.
2) Significant direct or indirect transactions with the investee, its prices and terms of payment, unrealized gain or loss: None.

-162-

40. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance focuses on types of corporation. Specifically, the Group’s reportable segments were as follows:

Standard Foods segment - the Company
Standard Dairy Products segment - Standard Dairy Products
China Standard segment - Shanghai Standard, China Standard Investment, China Standard Foods and Xiamen Standard
Other segments - other than the above corporation
a. Operating segment information

For the year ended December 31, 2019 Sales from external customers Sales among intersegments Total sales Interest income Financial cost Depreciation expense Amortization expense Operating segment income (loss) Unallocated amount Income before income tax For the year ended December 31, 2018 Sales from external customers Sales among intersegments Total sales Interest income Financial cost Depreciation expense Amortization expense Other important non-cash items Impairment loss on assets Operating segment income (loss) Unallocated amount Income before income tax	Standard Foods Segment $ 11,668,690 1,471,254 $ 13,139,944 $ 22,823 $ 1,339 $ 222,087 $ 11,998 $ 2,992,111 $ 10,675,041 1,512,866 $ 12,187,907 $ 15,502 $ 686 $ 187,440 $ 10,324 $ 18,035 $ 2,778,553	Standard Dairy Products Segment $ 2,657,213 917,346 $ 3,574,559 $ 4,946 $ 12 $ 44,583 $ 2,428 $ 564,292 $ 2,615,642 739,330 $ 3,354,972 $ 4,109 $ - $ 34,733 $ 2,029 $ - $ 540,305	China Standard Segment $ 14,334,709 412 $ 14,335,121 $ 42,255 $ 37,186 $ 234,190 $ 29,117 $ 999,415 $ 12,171,356 2,378 $ 12,173,734 $ 18,074 $ 76,371 $ 213,340 $ 34,612 $ - $ 348,732	Other Segments $ 2,605,620 14,273 $ 2,619,893 $ 9,667 $ 13,214 $ 78,508 $ 10,694 $ 35,557 $ 1,878,548 10,813 $ 1,889,361 $ 7,541 $ 8,997 $ 37,859 $ 6,563 $ - $ 10,204	Adjustments and Eliminations $ - (2,403,285) $ (2,403,285) $ (4,872) $ (4,872) $ (4,570) $ - $ (42,841) $ - (2,265,387) $ (2,265,387) $ (5,308) $ (5,308) $ - $ - $ - $ (1,563)	Consolidated $ 31,266,232 - $ 31,266,232 $ 74,819 $ 46,879 $ 574,798 $ 54,237 $ 4,548,534 - $ 4,548,534 $ 27,340,587 - $ 27,340,587 $ 39,917 $ 80,745 $ 473,373 $ 53,528 $ 18,035 $ 3,676,232 - $ 3,676,232

b. Geographical information:

The Group operates in two principal geographical areas - Taiwan and mainland China.

-163-

The Group’s revenue from external customers by location of operations and information about its non-current assets by location of asset are detailed below.

Revenue from External Customers	Revenue from External Customers	Revenue from External Customers
For the Year Ended December 31
	2019 2018 $ 16,675,005 $ 14,977,018 14,470,605 12,247,648 120,622 115,921 $ 31,266,232 $ 27,340,587 Non-current Assets
	December 31
	2019 $ 2,269,496 3,711,638 32,538 $ 6,013,672	2018 $ 2,198,922 3,812,887 28,373 $ 6,040,182

Non-current assets exclude financial instruments, deferred tax assets and net defined benefit assets.

-164-

Note	Note	Note 11	Note 11 Note 11 Note 11 Note 11	Note 11 Note 11 Note 11	Note 11 Note 11	Note 11	Note 11	Note 11	Note 11
Aggregate Financing Limits (Note 3)		$ 6,350,870 (Note 3)	1,664,013 (Note 4) 1,664,013 (Note 4) 1,664,013 (Note 4) 1,664,013 (Note 4)	1,227,427 (Note 5) 1,227,427 (Note 5) 1,227,427 (Note 5)	3,492,091 (Note 6) 3,492,091 (Note 6)	88,844 (Note 7)	11,640 (Note 8)	210,049 (Note 9)	131,101 (Note 10)
Financing Limit for Each Borrower (Note 3)		$ 6,350,870 (Note 3)	1,664,013 (Note 4) 1,664,013 (Note 4) 1,664,013 (Note 4) 1,664,013 (Note 4)	1,227,427 (Note 5) 1,227,427 (Note 5) 1,227,427 (Note 5)	3,492,091 (Note 6) 3,492,091 (Note 6)	88,844 (Note 7)	11,640 (Note 8)	210,049 (Note 9)	131,101 (Note 10)
Collateral	Value	$ -	- - - -	- - -	- -	-	-	-	-
	Item	-	- - - -	- - -	- -	-	-	-	-
	Allowance for Impairment Loss	$ -	- - - -	- - -	- -	-	-	-	-
Reasons for Short-term Financing		Need for operation	Need for operation Need for operation Need for operation Need for operation	Need for operation Need for operation Need for operation	Need for operation Need for operation	Need for operation	Need for operation	Need for operation	Need for operation
Business Transaction Amounts		$ -	- - - -	- - -	- -	-	-	-	-
Nature of Financing (Note 2)		b	b. b. b. b.	b. b. b.	b. b.	b.	b.	b.	b.
Interest Rate		-	2.50% 2.50% 2.50% 2.50%	2.50% 2.50% 2.50%	0.00% 1.90%	2.50%	2.50%	2.50%	2.50%
Actual Borrowing Amount		$ -	79,891 238,507 348,188 85,950	- 116,299 451,238	- -	-	-	658	597
Ending Balance		$ 46,387	85,950 687,600 429,750 85,950	- 623,138 451,238	- -	21,488	8,595	171,900	85,950
Highest Balance for the Period		$ 47,783	92,048 736,384 460,240 92,048	483,252 667,348 474,390	185,730 70,081	23,012	9,205	184,096	92,048
Related Parties		Y	Y Y Y Y	Y Y Y	Y Y	Y	Y	Y	Y
Financial Statement Account		Financing receivables - related parties	Financing receivables - related parties Financing receivables - related parties Financing receivables - related parties Financing receivables - related parties	Financing receivables - related parties Financing receivables - related parties Financing receivables - related parties	Financing receivables - related parties Financing receivables - related parties	Financing receivables - related parties	Financing receivables - related parties	Financing receivables - related parties	Financing receivables - related parties
Borrower		Dermalab S.A.	Shanghai Dermalab Corporation Standard Foods (Xiamen) Co., Ltd. Standard Foods (China) Co., Ltd. Shanghai Le Ben Tuo Health Technology Co., Ltd.	Standard Foods (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Foods (Xiamen) Co., Ltd.	Shanghai Standard Foods Co., Ltd. Dermalab S.A.	Standard Investment (China) Co., Ltd.	Standard Investment (China) Co., Ltd.	Standard Investment (China) Co., Ltd.	Standard Investment (China) Co., Ltd.
Lender		Standard Foods Corporation	Standard Investment (China) Co., Ltd.	Shanghai Standard Foods Co., Ltd.	Accession Limited	Shanghai Le Ben Tuo Health Technology Co., Ltd.	Shanghai Le Ben De Health Technology Co., Ltd.	Shanghai Le Ho Industrial Co., Ltd.	Shanghai Le Min Industrial Co., Ltd.
No. (Note 1)		0	1	2	3	4	5	6	7

-165-

-166-

Note	Note
Guarantee Provided to Subsidiaries in Mainland China (Note 9)		- -
Guarantee Provided by Subsidiary (Note 9)		- -
Guarantee Provided by Parent Company (Note 9)		Y Y
Maximum Endorsement/ Guarantee Amount		$ 15,877,175 (Note 4) 15,877,175 (Note 4)
Ratio of Accumulated Endorsement/ Guarantee to Net Equity Per Latest Financial Statements		0.19% 0.94%
Amount of Endorsement/ Guarantee Collateralized by Properties		$ - -
Amount Actually Drawn		$ - 20,000
Ending Balance		29,980 149,900
Maximum Balance for the Period		$ 184,620 158,000
Limits on Endorsement/ Guarantee Amount Provided to Each Guaranteed Party		$ 12,701,740 (Note 3) 12,701,740 (Note 3)
Guaranteed Party	Nature of Relationship (Note 2)	b. b.
	Name	Accession Limited Standard Beverage Company Limited
	Endorsement/Guarantee Provider	Standard Foods Corporation
	No. (Note 1)	0

-167-

	Note
December 31, 2019	Fair Value (Note 2)	$ 16,479 5,346 65,640 15,702 33,021 211,216 270,122 42,034 - - - 4,619 2,956 - - -
	Percentage of Ownership	- - 7.8 0.3 - - - - 1.9 0.9 5.5 1.9 7.0 0.2 7.8 1.0
	Carrying Amount	$ 16,479 5,346 65,640 15,702 33,021 211,216 270,122 42,034 - - - 4,619 2,956 - - -
	Shares	1,379,027 48,600 2,145,110 1,243,213 2,430,814 14,196,913 21,453,425 2,736,051 Note 1 500,000 2,424,242 850,500 180,376 11,200 800,000 107,815
	Financial Statement Account	Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current
	Relationship with the Holding Company	The Company is one of the directors
	Type and Name of Marketable Securities	Shares Far Eastern International Commercial Bank Co., Ltd. Chunghwa Telecom Co., Ltd. GeneFerm Biotechnology Co., Ltd. Dah Chung Bills Finance Corp. Mutual funds Taishin 1699 Money Market Fund Jih Sun Money Market Fund Mega Diamond Money Market FSITC Taiwan Money Market Fund Walden VC 2, L.P. Shares Techgains Pan-Pacific Corporation Authenex, Inc. Global Strategic Investment Co., Ltd. Paradigm Venture Capital Corporation U-Teck Environment Corporation, Ltd. Octamer, Inc. - Series E Preferred Stock Octamer, Inc. - Series F Preferred Stock
	Holding Company Name	Standard Foods Corporation

-168-

	Note	Note 2
December 31, 2019	Fair Value (Note 2)	$ - - - - - - 45,153 30,007 464,195 9,126 19,198 106,772 29,790 11,270 18,958 - -
	Percentage of Ownership	1.2 1.2 1.2 1.3 1.3 1.2 - - 0.7 - - 2.0 - - - 23.7 6.0
	Carrying Amount	$ - - - - - - 45,153 30,007 464,195 9,126 19,198 106,772 29,790 11,270 18,958 - -
	Shares	3,455 71,397 29,173 31,135 29,102 12,938 3,034,955 1,953,197 6,669,471 91,440 803,258 1,596,000 90,000 1,000,000 1,453,360 8,297,000 1,000,000
	Financial Statement Account	Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current
	Relationship with the Holding Company	Parent of Charng Hui Ltd. Charng Hui Ltd. is one of the directors Charng Hui Ltd. is one of the directors
	Type and Name of Marketable Securities	Fortemedia, Inc. - Series D Preferred Stock Fortemedia, Inc. - Series E Preferred Stock Fortemedia, Inc. - Series F Preferred Stock Fortemedia, Inc. - Series G Preferred Stock Fortemedia, Inc. - Series I Preferred Stock Fortemedia, Inc. - Series - Common Stock Mutual funds Jih Sun Money Market Fund FSITC Taiwan Money Market Fund Shares Standard Foods Corporation Formosa Plastics Corporation China Steel Corporation Polytronics Technology Corp. Taiwan Semiconductor Manufacturing Co., Ltd. Mutual funds Fuh Hwa Global Strategic Allocation FoF Franklin Templeton SinoAm Franklin Templeton Global Bond Fund of Funds-Accu. Shares Hong Da Leasing & Finance Co., Ltd. CNEX Co., Ltd.
	Holding Company Name	Standard Dairy Products Taiwan Limited Charng Hui Ltd.

-169-

	Note
December 31, 2019	Fair Value (Note 2)	$ 2,201 3,691 107,424 929
	Percentage of Ownership	- - 13.4 0.7
	Carrying Amount	$ 2,201 3,691 107,424 929
	Shares	225,000 282,988 3,600,000 200
	Financial Statement Account	Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current
	Relationship with the Holding Company
	Type and Name of Marketable Securities	Mutual funds Fuh Hwa Greater China Mid & Small Cap Franklin Templeton SinoAm Global Bd Acc Shares InnoComm Mobile Technology Corp. Shares AsiaVest Liquidation Co.
	Holding Company Name	Standard Beverage Company Limited Domex Technology Corporation Accession Limited

-170-

Note	Note	Note Note Note Note Note Note Note Note Note Note Note Note Note Note
Notes/Accounts Payable (Receivable)	% to Total	6.17 - 40.45 - 96.61 64.38 15.00 4.94 99.65 50.82 38.08 16.84 83.15 33.54
	Ending Balance	$ 141,484 - (141,484) - 491,530 (161,842) (491,530) 161,842 1,665,818 (1,665,818) (222,633) 222,633 1,099,150 (1,099,150)
Abnormal Transaction	Payment Terms	- - - - - - - - - - - - -
	Unit Price	- - - - - - - - - - - - -
Transaction Details	Payment Terms	55 days after month end closing (net of receivables and payables) 55 days after month end closing (net of receivables and payables) 55 days after month end closing (net of receivables and payables) 55 days after month end closing (net of receivables and payables) 60 days after month-end closing 60 days after month-end closing 60 days after month-end closing 60 days after month-end closing 55 days after month-end closing 60 days after month-end closing 60 days after month-end closing 60 days after month-end closing 60 days after month-end closing 60 days after month-end closing
	% to Total	11.19 12.24 59.38 25.66 78.07 21.46 16.51 2.95 98.62 49.16 8.78 8.64 75.44 34.20
	Amount	$ (1,470,332) 917,346 1,470,332 (917,346) (1,735,989) 397,459 1,735,989 (397,459) (5,160,756) 5,160,756 411,285 (411,285) (3,589,545) 3,589,545
	Purchases (Sales)	Sales Purchases Purchases Sales Sales Purchases Purchases Sales Sales Purchases Purchases Sales Sales Purchases
Nature of Relationships		The Company’s subsidiary Parent company of Standard Dairy Products Taiwan Limited Brother company of Shanghai Standard Foods Co., Ltd. Brother company of Standard Investment (China) Co., Ltd. Parent company of Standard Foods (China) Co., Ltd. Standard Investment (China) Co., Ltd.’s subsidiary Parent company of Standard Foods (China) Co., Ltd. Parent company of Standard Foods (Xiamen) Co., Ltd. Standard Investment (China) Co., Ltd.’s subsidiary Standard Investment (China) Co., Ltd.’s subsidiary
Related Party		Standard Dairy Products Taiwan Limited Standard Foods Corporation Standard Investment (China) Co., Ltd. Shanghai Standard Foods Co., Ltd. Standard Investment (China) Co., Ltd. Standard Foods (China) Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Standard Foods (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Foods (Xiamen) Co., Ltd.
Company Name		Standard Foods Corporation Standard Dairy Products Taiwan Limited Shanghai Standard Foods Co., Ltd. Standard Investment (China) Co., Ltd. Standard Foods (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Foods (China) Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Standard Investment (China) Co., Ltd.

-171-

Note	Note	Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2
Allowance for Bad Debts		$ - - $ - $ - - - $ - $ - - - $ - $ - - $ - $ - - $ - $ - - - $ - $ - - - $ - $ - - $ - $ - - $ - $ -
Amounts Received in Subsequent Period		$ 141,484 (Note 1) 3,127 (Note 1) $ 144,611 (Note 1) $ 202,729 (Note 1) - (Note 1) - (Note 1) $ 202,729 (Note 1) $ 6,647 (Note 1) - (Note 1) - (Note 1) $ 6,647 (Note 1) $ 8,456 (Note 1) - (Note 1) $ 8,456 (Note 1) $ 816,964 (Note 1) 34,798 (Note 1) $ 851,762 (Note 1) $ 93 (Note 1) - (Note 1) - (Note 1) $ 93 (Note 1) $ 28 (Note 1) - (Note 1) - (Note 1) $ 28 (Note 1) $ 952,155 (Note 1) 10,869 (Note 1) $ 963,024 (Note 1) $ 101,261 (Note 1) - (Note 1) $ 101,261 (Note 1) $ 222,633 (Note 1)
Overdue	Actions Taken
	Amount	$ - - $ - $ - - - $ - $ - - - $ - $ - - $ - $ - - $ - $ - - - $ - $ - - - $ - $ - - $ - $ - - $ - $ -
Turnover Rate		9.31 3.39 3.51 3.69 3.06 4.07 22.72 5.81 4.91 1.80
Ending Balance for Account Receivable - Related Parties		Trade receivables $ 141,484 Other receivables 3,127 $ 144,611 Trade receivables $ 491,530 Financing receivables 116,299 Other receivables 59,364 $ 667,193 Trade receivables $ 6,647 Financing receivables 451,238 Other receivables 6,549 $ 464,434 Trade receivables $ 8,456 Other receivables 618 $ 9,074 Trade receivables $ 1,665,818 Other receivables 34,798 $ 1,700,616 Trade receivables $ 93 Financing receivables 348,188 Other receivables 14,179 $ 362,460 Trade receivables $ 28 Financing receivables 238,507 Other receivables 12,284 $ 250,819 Trade receivables $ 1,099,150 Other receivables 13,165 $ 1,112,315 Trade receivables $ 161,842 Other receivables 40,698 $ 202,540 Trade receivables $ 222,633
Nature of Relationships		The Company’s subsidiary Brother company of Shanghai Standard Foods Co., Ltd. Brother company of Shanghai Standard Foods Co., Ltd. Brother company of Shanghai Standard Foods Co., Ltd. Parent company of Standard Foods (China) Co., Ltd. Standard Investment (China) Co., Ltd.’s subsidiary Standard Investment (China) Co., Ltd.’s subsidiary Parent company of Standard Foods (Xiamen) Co., Ltd. Brother company of Standard Investment (China) Co., Ltd. Brother company of Standard Foods (Xiamen) Co., Ltd.
Related Party		Standard Dairy Products Taiwan Limited Standard Investment (China) Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Standard Foods (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Foods (China) Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Standard Investment (China) Co., Ltd. Shanghai Standard Foods Co., Ltd. Standard Foods (China) Co., Ltd.
Company Name		Standard Foods Corporation Shanghai Standard Foods Co., Ltd. Standard Foods (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Foods (Xiamen) Co., Ltd.

-172-

Transactions Details	% to Total Sales or Assets (Note 3)	0.6 - 4.7 2.9 - - - - -	-	0.6 0.2 5.6 1.9 0.2 0.5 - 0.1 1.3 - - 0.1 0.1 - - - 0.1 - - - 1.8 -	- 0.1 6.5 0.1
	Payment Terms	According to the general conditions According to the general conditions According to the general conditions According to the general conditions According to the general conditions According to the general conditions According to the general conditions According to the general conditions According to the general conditions	Interest rate 1.900%	According to the general conditions According to the general conditions According to the general conditions According to the general conditions According to the general conditions Interest rate 2.500% According to the general conditions Interest rate 2.500% According to the general conditions According to the general conditions According to the general conditions According to the general conditions According to the general conditions According to the general conditions According to the general conditions Interest rate 2.500% According to the general conditions According to the general conditions According to the general conditions According to the general conditions Interest rate 2.500% Interest rate 2.500%	According to the general conditions According to the general conditions According to the general conditions According to the general conditions
	Amount (Note 4)	$ 141,484 3,127 1,470,332 917,346 9,146 115 1,756 1,320 922	627	161,842 40,698 1,735,989 491,530 59,364 116,299 610 42,165 397,459 8,425 5,126 23,967 16,465 8,456 618 5,029 18,297 825 6,647 6,549 451,238 6,785	93 14,179 1,665,818 34,798
	Financial Statement Accounts	Trade receivables - related parties Other receivables - related parties Sales Purchases Royalty revenue Other receivables - related parties Purchases Service revenue Sales	Interest income	Trade payables - related parties Other payables - related parties Sales Trade receivables - related parties Other receivables - related parties Financing receivables - related parties Other expenses Interest income Purchases Research and development expenses Trade payables - related parties Sales Purchases Trade receivables - related parties Other payables - related parties Interest income Sales Purchases Trade receivables - related parties Other payables - related parties Financing receivables - related parties Interest income	Trade receivables - related parties Other receivables - related parties Trade payables - related parties Other payables - related parties
Relationship (Note 2)		a. a. a. a. a. a. a. a. a.	a.	c. c. c. c. c. c. c. c. c. c. c. c. c. c. c. c. c. c. c. c. c. c.	a. a. a. a.
Counterparty		Standard Dairy Products Taiwan Limited Standard Dairy Products Taiwan Limited Standard Dairy Products Taiwan Limited Standard Dairy Products Taiwan Limited Standard Dairy Products Taiwan Limited Standard Beverage Company Limited Standard Beverage Company Limited Standard Beverage Company Limited Standard Investment (China) Co., Ltd.	Dermalab	Standard Investment (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Standard Foods (Xiamen) Co., Ltd.	Standard Foods (China) Co., Ltd. Standard Foods (China) Co., Ltd. Standard Foods (China) Co., Ltd. Standard Foods (China) Co., Ltd.
Investee Company		Standard Foods Corporation	Accession Limited	Shanghai Standard Foods Co., Ltd.	Standard Investment (China) Co., Ltd.
No. (Note 1)		0	1	2	3

-173-

Transactions Details	% to Total Sales or Assets (Note 3)	- 16.5 - 1.4 - - - - - 0.3 - - - 4.3 0.1 - 11.5 0.9 - 0.1 - - - - 0.3 - - - - - - - - - -	0.2 - -	- - - - - 0.9 - 1.3
	Payment Terms	According to the general conditions According to the general conditions According to the general conditions Interest rate 2.500% According to the general conditions Interest rate 2.500% According to the general conditions According to the general conditions According to the general conditions Interest rate 2.500% Interest rate 2.500% According to the general conditions According to the general conditions According to the general conditions According to the general conditions According to the general conditions According to the general conditions Interest rate 2.500% According to the general conditions Interest rate 2.500% According to the general conditions According to the general conditions According to the general conditions According to the general conditions Interest rate 2.500% According to the general conditions Interest rate 2.500% According to the general conditions Interest rate 2.500% Interest rate 2.500% According to the general conditions Interest rate 2.500% Interest rate 2.500% According to the general conditions According to the general conditions	According to the general conditions According to the general conditions According to the general conditions	According to the general conditions According to the general conditions According to the general conditions According to the general conditions According to the general conditions According to the general conditions According to the general conditions According to the general conditions
	Amount (Note 4)	$ 537 5,160,756 97 348,188 13,835 2,660 3,617 618 3,438 79,891 2,584 28 12,284 1,099,150 13,165 659 3,589,545 238,507 11,986 15,653 1,355 542 20 8,318 85,950 2,248 2,238 66 658 19 93 597 32 1,027 3,560	56,720 7,808 7,216	392 4,211 4,571 793 21 222,633 3,449 411,285
	Financial Statement Accounts	Sales Purchases Rental expenses Financing receivables - related parties Other revenue Interest income Other receivables - related parties Expense Advance payable Financing receivables - related parties Interest income Trade receivables - related parties Other receivables - related parties Trade payables - related parties Other payables - related parties Sales Purchases Financing receivables - related parties Other revenue Interest income Other receivables - related parties Trade payables - related parties Sales Purchases Financing receivables - related parties Advance payable Interest income Other payables - related parties Financing payables - related parties Interest expenses Other payables - related parties Financing payables - related parties Interest expenses Trade payables - related parties Purchases	Purchases Trade payables - related parties Purchases	Sales Other expense Rental revenue Other receivables - related parties Purchases Trade payables - related parties Sales Purchases
Relationship (Note 2)		a. a. a. a. a. a. a. a. a. a. a. a. a. a. a. a. a. a. a. a. a. a. a. a. a. a. a. c. c. c. c. c. c. c. c.	c. c. c.	c. c. c. c. c. c. c. c.
Counterparty		Standard Foods (China) Co., Ltd. Standard Foods (China) Co., Ltd. Standard Foods (China) Co., Ltd. Standard Foods (China) Co., Ltd. Standard Foods (China) Co., Ltd. Standard Foods (China) Co., Ltd. Shanghai Dermalab Corporation Shanghai Dermalab Corporation Shanghai Dermalab Corporation Shanghai Dermalab Corporation Shanghai Dermalab Corporation Standard Foods (Xiamen) Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Shanghai Le Ben Tuo Co., Ltd. Shanghai Le Ben Tuo Co., Ltd. Shanghai Le Ben Tuo Co., Ltd. Shanghai Le Ben Tuo Co., Ltd. Shanghai Le Ben Tuo Co., Ltd. Shanghai Le Ben Tuo Co., Ltd. Shanghai Le Ben Tuo Co., Ltd. Shanghai Le Ho Industrial Co., Ltd. Shanghai Le Ho Industrial Co., Ltd. Shanghai Le Ho Industrial Co., Ltd. Shanghai Le Ho Industrial Co., Ltd. Shanghai Le Ho Industrial Co., Ltd. Shanghai Le Ho Industrial Co., Ltd. Shanghai Le Ben De Co., Ltd. Shanghai Le Ben De Co., Ltd.	Dermalab Dermalab Shanghai Le Ben Tuo Co., Ltd.	Shanghai Le Ben Tuo Co., Ltd. Shanghai Le Ben Tuo Co., Ltd. Shanghai Le Ben Tuo Co., Ltd. Shanghai Le Ben Tuo Co., Ltd. Shanghai Le Ben Tuo Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Standard Foods (Xiamen) Co., Ltd.
Investee Company			Shanghai Dermalab Corporation	Standard Foods (China) Co., Ltd.
No. (Note 1)			4	5

-174-

Transactions Details	% to Total Sales or Assets (Note 3)	- -
	Payment Terms	According to the general conditions According to the general conditions
	Amount (Note 4)	$ 3,521 1,018
	Financial Statement Accounts	Sales Trade receivables - related parties
Relationship (Note 2)		c. c.
Counterparty		Shanghai Le Ben De Co., Ltd. Shanghai Le Ben De Co., Ltd.
Investee Company		Shanghai Le Ben Tuo Co., Ltd.
No. (Note 1)		6

-175-

Note	Note	Subsidiary (Note 5) Subsidiary (Note 5) Subsidiary (Note 5) Subsidiary (Note 5) Subsidiary (Note 5) Subsidiary (Note 5) Subsidiary (Note 5) Indirect subsidiary (Note 5) Indirect subsidiary (Note 5) Indirect subsidiary (Note 5)
Share of Profits (Loss)		$ 67,374 (Note 1) 658,622 449,425 (Note 2) 5,483 34,507 1,847 (Note 3) (2,979)
Net Income (Loss) of the Investee		$ 74,585 658,622 447,084 22,157 66,347 2,350 (2,979) 7,694 - 658,817
As of December 31 2019	Carrying Amount	$ 3,381,908 5,220,048 1,000,126 290,480 247,879 82,342 8,781 174,559 - 5,219,208
	, %	100 100 100 100 52 100 100 100 100 100
	Shares	123,600,000 150,124,815 30,000,000 24,100,000 10,374,399 7,907,000 Note 4 2,600 3,000 150,050,815
Original Investment Amount	December 31, 2018	$ 3,936,267 4,710,865 300,853 230,000 114,116 79,072 14,350 266,587 96 4,708,566
	December 31, 2019	$ 3,936,267 4,710,865 300,853 230,000 114,116 79,072 14,350 266,587 96 4,708,566
	Main Businesses and Products	Investment business Investment business Manufacture and sale of dairy products and beverages Investment business Manufacture and sale of computer peripherals and computer and information products Manufacture and sale of beverages Sale of health foods Development and sale of cosmetics Sale of cosmetics Investment business
	Location	Tortola, British Virgin Islands Grand Cayman, Cayman Islands Taipei, Taiwan Taipei, Taiwan Hsinchu, Taiwan Taipei, Taiwan Yilan, Taiwan Switzerland Spain Hong Kong
	Investee Company	Accession Limited Standard Investment (Cayman) Limited Standard Dairy Products Taiwan Limited Charng Hui Ltd. Domex Technology Corporation Standard Beverage Company Limited Le Bonta Wellness International Corporation Dermalab S.A. Swissderma SL Standard Corporation (Hong Kong) Limited
	Investor Company	Standard Foods Corporation Accession Limited Dermalab S.A. Standard Investment (Cayman) Limited

-176-

Note	Note	Note 11 Note 11 Note 11 Note 11 Note 11 Note 11 Note 11 Note 11 Note 11	Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2019 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA $8,919,525 $8,919,525 Unlimited amount of investment (Note 10) Note 1: The methods for engaging in investment in mainland China include the following: a. Direct investment in mainland China. b. Indirect investment in mainland China through companies registered in a third region. c. Other methods.	Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2019 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA $8,919,525 $8,919,525 Unlimited amount of investment (Note 10) Note 1: The methods for engaging in investment in mainland China include the following: a. Direct investment in mainland China. b. Indirect investment in mainland China through companies registered in a third region. c. Other methods.
Accumulated Repatriation of Investment Income as of December 31, 2019		$ - - - - - - - - -
Carrying Amount as of December 31, 2019		$ 2,992,501 4,391,390 1,834,068 (10,779) 211,188 28,649 1,328,982 509,309 317,638
Investment Gain (Loss) (Note 2)		$ 65,798 (Note 9) 683,014 (Note 9) 149,001 (Note 9) (7,976) (Note 9) (43,466) (Note 9) 706 (Note 9) 165,369 (Note 9) (14,666) (Note 9) (9,392) (Note 9)
% Ownership of Direct or Indirect Investment		100.0 99.0 99.0 99.0 99.5 100.0 99.0 100.0 100.0
Net Income (Loss) of the Investee		$ 69,321 689,913 162,562 (8,057) (43,680) 706 175,986 (14,666) (9,392)
Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2019		$ 3,949,575 (Note 4) 3,718,677 (Note 5) - (Note 6) - (Note 6) 181,048 (Note 7) 31,220 (Note 4) - (Note 6) 607,717 (Note 5) 378,009 (Note 5)
Remittance of Funds	Inward	$ - - - - - - - - -
	Outward	$ - - - - - - - - -
			Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA	Unlimited amount of investment (Note 10)
Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2019		$ 3,949,575 (Note 4) 3,718,677 (Note 5) - (Note 6) - (Note 6) 181,048 (Note 7) 31,220 (Note 4) - (Note 6) 607,717 (Note 5) 378,009 (Note 5)
Method of Investment (Note 1)		b. (Note 3) b. (Note 5) c. (Note 6) c. (Note 6) 1 and c. (Note 7) c. (Note 4 and 8) c. (Note 6) b. (Note 5) b. (Note 5)
Paid-in Capital		$ 3,949,575 3,755,530 1,631,668 57,205 380,418 31,220 1,307,582 607,717 378,009
			Investment Amounts Authorized by Investment Commission, MOEA	$8,919,525
Main Businesses and Products		Manufacture and sale of edible oil products and nutritional foods Investment and sales of edible oil products and nutritional foods Manufacture and sale of edible oil products and nutritional foods Sale of nutritional foods, cosmetics and international trading Sale of nutritional foods and international trading Sale of nutritional foods and international trading Manufacture and sale of edible oil products and nutritional foods Property management Property management
			Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2019	$8,919,525
Investee Company		Shanghai Standard Foods Co., Ltd. Standard Investment (China) Co., Ltd. Standard Foods (China) Co., Ltd. Shanghai Dermalab Corporation Shanghai Le Ben Tuo Health Technology Co., Ltd. Shanghai Le Ben De Health Technology Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Shanghai Le Ho Industrial Co., Ltd. Shanghai Le Min Industrial Co., Ltd.

-177-

-178-

V. Financial Report of Standard Foods Corporation

Standard Foods Corporation

Financial Statements for the Years Ended December 31, 2019 and 2018 and

-179-

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 Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2019. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

-180-

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.

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 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.

-181-

As part of an audit in accordance with 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 Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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.

-182-

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.

-183-

STANDARD FOODS CORPORATION

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 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 % $ 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 $ 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 % $ 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 $ 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.

-184-

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)

-185-

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)

-186-

							Total Equity	$ 14,785,740	24,598	14,810,338		-	-	(1,830,179 )		13,339	321	2,949,089		(135,982 )		2,813,107		-	15,806,926		-	-	(2,287,724 )		16,673	3,416,097		(273,845 )		3,142,252	$ 16,678,127
							Treasury Shares	$ (21,182 )	-	(21,182 )		-	-	-		-	-	-		-		-		-	(21,182 )		-	-	-		-	-		-		-	$ (21,182 )
							Total	(260,426 )	22,584	(237,842 )		-	-	-		-	48,233	-		(141,022 )		(141,022 )		(314 )	(330,945 )		-	-	-		-	-		(246,549 )		(246,549 )	(577,494 )
								$																													$
							Other	(46,970 )	-	(46,970 )		-	-	-		-	46,970	-		-		-		-	-		-	-	-		-	-		-		-	-
								$																													$
Other Equity	Unrealized Gain	(Loss) on	Financial Assets	at Fair Value	Through Other	Comprehensive	Income	$ -	116,974	116,974		-	-	-		-	-	-		(34,736 )		(34,736 )		(314 )	81,924		-	-	-		-	-		33,620		33,620	$ 115,544
			Unrealized Gain	(Loss) on	Available-for-	sale Financial	Assets	$ 94,390	(94,390 )	-		-	-	-		-	-	-		-		-		-	-		-	-	-		-	-		-		-	$ -
	Exchange	Differences on	Translating the	Financial	Statements of	Foreign	Operations	$ (307,846 )	-	(307,846 )		-	-	-		-	1,263	-		(106,286 )		(106,286 )		-	(412,869 )		-	-	-		-	-		(280,169 )		(280,169 )	$ (693,038 )
							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
								$																													$
					Retained Earnings	Unappropriated	Special Reserve 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
							Legal Reserve	$ 2,433,199	-	2,433,199		217,304	-	-		-	-	-		-		-		-	2,650,503		294,909	-	-		-	-		-		-	$ 2,945,412
							Capital Surplus	$ 83,124	-	83,124		-	-	-		13,339	(3,418 )	-		-		-		-	93,045		-	-	-		16,673	-		-		-	$ 109,718
							Ordinary Shares	$ 9,150,897	-	9,150,897		-	-	-		-	-	-		-		-		-	9,150,897		-	-	-		-	-		-		-	$ 9,150,897
								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	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	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

-187-

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 equipment 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 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	2019 $ 4,184,086 222,087 11,998 (95) (4,098) 1,339 (22,823) (2,787) (1,191,976) 2,087 - - (95,054) 567 (164,585) 33,008 55,058 715 (93,767) 39,532 5,061 7,040 (8,771) (8,917) 12,485 36,273 (175) 8 3,018,296 21,489 (1,339) (522,605) 2,515,841 - (2,768,840) 2,141,408	2018 $ 3,487,161 187,440 10,323 (404) (5,178) 685 (15,502) (3,847) (708,607) 1,341 (369,427) 18,035 (453,269) 2,179 (237,260) 1,474 (53,660) (1,665) 55,669 22,394 (3,892) 6,131 8,320 159,961 10,387 193,562 (14,333) (114,458) 2,183,560 13,223 (685) (427,304) 1,768,794 799 (1,282,163) 750,700 (Continued)

-188-

STANDARD FOODS CORPORATION

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

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 $ (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 $ (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)

-189-

NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

STANDARD FOODS CORPORATION

1. GENERAL INFORMATION

Standard Foods Corporation (the “Company”) was incorporated on June 6, 1986. The Company mainly manufactures and sells nutritious foods, edible oils, dairy products and beverages.

The Company’s shares have been listed on the Taiwan Stock Exchange since April 1994.

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

2. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Company’s board of directors on March 18, 2020.

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

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

Except for the following the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC did not have any material impact on the Company’s accounting policies.

1) IFRS 16 “Leases”

Definition of a lease

The Company elects to apply the guidance of IFRS 16 in determining whether contracts are, or contain, a lease only to contracts entered into (or changed) on or after January 1, 2019. Contracts identified as containing a lease under IAS 17 and IFRIC 4 are not be reassessed and are accounted for in accordance with the transitional provisions under IFRS 16.

The Company as lessee

The Company recognizes right-of-use assets or investment properties if the right-of-use assets meet the definition of investment properties, and lease liabilities for all leases on the consolidated balance sheets except for those whose payments under low-value asset and short-term leases are recognized as expenses on a straight-line basis. On the consolidated statements of comprehensive income, the Company presents the depreciation expense charged on right-of-use assets separately from the interest expense accrued on lease liabilities; interest is computed using the effective interest method.

-190-

On the consolidated statements of cash flows, cash payments for the principal portion of lease liabilities are classified within financing activities; cash payments for the interest portion are classified within financing activities. Prior to the application of IFRS 16, payments under operating lease contracts were recognized as expenses on a straight-line basis. Cash flows for operating leases were classified within operating activities on the consolidated statements of cash flows. Leased assets and finance lease payables were recognized on the consolidated balance sheets for contracts classified as finance leases.

The Company also applies the following practical expedients:

a) The Company applies a single discount rate to a portfolio of leases with reasonably similar characteristics to measure lease liabilities.
b) The Company accounts for those leases for which the lease term ends on or before December 31, 2019 as short-term leases.
c) The Group excludes initial direct costs from the measurement of right-of-use assets on January 1, 2019.
d) The Group uses hindsight, such as in determining lease terms, to measure lease liabilities.

The future minimum lease payments of non-cancellable operating lease commitments on December 31, 2018 Less: Recognition exemption for short-term leases Undiscounted amounts on January 1, 2019 Discounted amounts using the incremental borrowing rate on January 1, 2019 Add: Finance lease liabilities on December 31, 2018 Lease liabilities recognized on January 1, 2019	$ 101,663 3,309 $ 104,972 $ 94,071 5,130 $ 99,201

The Company as lessor

The Company does not make any adjustments for leases in which it is a lessor, and it accounts for those leases with the application of IFRS 16 starting from January 1, 2019.

-191-

The impact on assets, liabilities and equity as of January 1, 2019 from the initial application of IFRS 16 is set out as follows:

			Adjustments
	As Originally		Arising from
	Stated on		Initial	Restated on
	January 1, 2019		Application	January 1, 2019
Right-of-use assets	$	5,383	$ (5,383)	$	-
Investment properties		-	99,454		99,454
Total effect on assets	$	5,383	$ 94,071	$	99,454
Lease liabilities	$	-	$ 99,201	$	99,201
Finance lease payables - current		1,499	(1,499)		-
Finance lease payables - non-current		3,631	(3,631)		-
Total effect on liabilities	$	5,130	$ 94,071	$	99,201

2) IAS 19

b. The IFRSs endorsed by the Financial Supervisory Commission (FSC) for application starting from 2020

New IFRSs Amendments to IFRS 3“Definition of a Business” Amendments to IAS 1 and IAS 8 “Definition of Material”	Effective Date Announced by IASB
	January 1, 2020 (Note 1) January 1, 2020 (Note 2)

Note 1: The Company shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.
Note 2: The Company shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

1) Amendments to IFRS 3 “Definition of a Business”

-192-

2) Amendments to IAS 1 and IAS 8 “Definition of material”

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

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

New IFRSs Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”	Effective Date Announced by IASB (Note)
	To be determined by IASB January 1, 2022

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

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

These financial statements of the Company are its parent company only financial statements and have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

b. Basis of preparation

The financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair values and net defined benefit liabilities that are determined by deducting the fair value of plan assets from the present value of the defined benefit obligation.

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e,. derived from prices); and
3) Level 3 inputs are unobservable inputs for the asset or liability.

-193-

When preparing these parent company only financial statements, the Company used the equity method to account for its investment in subsidiaries. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in these parent company only financial statements to be the same as the amounts attributable to the owners of the Company in its consolidated financial statements, adjustments arising from the differences in accounting treatment between parent company only basis and consolidated basis were made to the investments accounted for by the equity method, the share of profit or loss of subsidiaries, the share of other comprehensive income of subsidiaries and the related equity items, as appropriate, in these parent company only financial statements.

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

Current assets include:

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

Current liabilities include:

1) Liabilities held primarily for the purpose of trading;
2) Liabilities due to be settled within twelve months after the reporting period, even if an agreement to refinance or to reschedule payments on a long-term basis is completed after the reporting period and before the financial statements are authorized for issue; and
3) Liabilities for which the Company does not have an unconditional right to defer settlement for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

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

d. Foreign currencies

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

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

-194-

For the purpose of presenting the financial statements, the functional currencies of the entities (including operations of the subsidiaries in other countries that use currencies which are different from the functional currency of the Company) are translated into the presentation currency - the New Taiwan dollar as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income.

On the disposal of a foreign operation (i.e., a disposal of the Company’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation), all of the exchange differences accumulated in equity in respect of that operation are reclassified to profit or loss.

In relation to a partial disposal of a subsidiary that does not result in the Company losing of control over the subsidiary, the proportionate share of accumulated exchange differences is not recognized in profit or loss. For all other partial disposals, the proportionate share of the accumulated exchange differences recognized in other comprehensive income is reclassified to profit or loss.

e. Inventories

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

f. Investment in subsidiaries

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

Subsidiaries are the entities controlled by the Company.

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

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

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

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

-195-

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

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

Profits and losses resulting from downstream transactions are eliminated in full in the financial statements. Profits and losses transactions from upstream and transactions between subsidiaries are recognized in the financial statements only to the extent of interests in the subsidiaries that are not related to the Company.

g. Property, plant and equipment

Property, plant and equipment (including assets held under finance leases) are stated at cost, less recognized accumulated depreciation and accumulated impairment loss.

Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization. Such properties are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for intended use.

Depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. If a lease term is shorter than the assets’ useful lives, such assets are depreciated over the lease term. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effect of any changes in the estimates accounted for on a prospective basis.

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

h. Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation.

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

-196-

i. Intangible assets

1) Intangible assets acquired separately

2) Derecognition of intangible assets

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

j. Impairment of tangible and intangible assets

At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

k. Financial instruments

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

-197-

1) Financial assets

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

a) Measurement category

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

i. Financial assets at FVTPL

ii. Financial assets at amortized cost

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

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

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

i) Purchased or originated credit impaired financial assets, for which interest income is calculated by applying the credit impaired effective interest rate to the amortized cost of such financial assets; and
ii) Financial assets that are not credit-impaired on purchase or origination but have subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.

-198-

iii. Investments in equity instruments at FVTOCI

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

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

b) Impairment of financial assets and contract assets

The Company recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables) and finance lease receivables.

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

The Company recognizes an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

c) Derecognition of financial assets

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

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

-199-

2) Equity instruments

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

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

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

l. Revenue recognition

The Company identifies contracts with customers and recognizes revenue when performance obligations are satisfied.

Revenue from the sale of goods

m. Leases

2019

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

The Company as lessee

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

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

-200-

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

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term resulting from a change to those payments, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets.

2018

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

1) The Company as lessor

Amounts due from lessees under finance leases are recognized as receivables at the amount of the Company’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of the leases.

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease.

2) The Company as lessee

Operating lease payments are recognized as expenses on a straight-line basis over the lease term.

n. Employee benefits
1) Short-term employee benefits

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

2) Retirement benefits

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

-201-

Defined benefit costs (including service cost, net interest and remeasurement) under the defined contribution retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost) and net interest on the net defined benefit liabilities (assets) are recognized as employee benefits expense in the period they occur. Remeasurement, comprising actuarial gains and losses, effect of changes to asset ceiling and return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Company’s defined benefit plan. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

3) Termination benefits

A liability for a termination benefit is recognized at the earlier of when the Company can no longer withdraw the offer of the termination benefit and when the Company recognizes any related restructuring costs.

o. Taxation

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

1) Current tax

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

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

2) Deferred tax

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

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

-202-

3) Current tax and deferred taxes for the year

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION

UNCERTAINTY

In the application of the Company’s accounting policies, management is required to make judgments, estimates and assumptions based on historical experience and other factors that are considered to be relevant which related to information that are not readily apparent from other sources. Actual results may differ from these estimates.

Write-down of Inventory

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits Cash equivalents (investments with original maturities of less than 3 months) Time deposits Repurchase agreements collateralized by bonds		December 31	December 31
		2019 $ 1,432 223,408 131,144 268,447 $ 624,431	2018 $ 1,434 414,277 382,984 - $ 798,695

The market rate intervals of cash in bank at the end of the reporting period were as follows:

Bank deposits Repurchase agreements collateralized by bonds	December 31
	2019 2018 0.001%-3.220% 0.001%-3.600% 0.550%-0.560% -

-203-

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

December 31 2019 2018 Financial assets at FVTPL-current Financial assets mandatorily classified as at FVTPL Non-derivative financial assets Mutual funds $ 556,393 $ 457,500 Financial assets at FVTPL-non-current Financial assets mandatorily classified as at FVTPL Non-derivative financial assets Domestic unlisted shares $ 7,575 $ 7,315 FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME December 31 2019 2018 Current Investments in equity instruments at FVTOCI $ 21,825 $ 18,926 Non-current Investments in equity instruments at FVTOCI $ 81,342 $ 102,900 Investments in Equity Instruments at FVTOCI December 31 2019 2018 Current Listed shares and emerging market shares Ordinary shares - Far Eastern International Bank $ 16,479 $ 13,434 Ordinary shares - Chunghwa Telecom Co., Ltd. 5,346 5,492 $ 21,825 $ 18,926 Non-current Listed shares and emerging market shares Ordinary shares - GeneFerm Biotechnology Co., Ltd. $ 65,640 $ 90,095 Unlisted shares Ordinary shares - Dah Chung Bills Finance Corp. 15,702 12,805 $ 81,342 $ 102,900		December 31	December 31
		2019 2018 $ 21,825 $ 18,926 $ 81,342 $ 102,900 December 31
		2019 $ 16,479 5,346 $ 21,825 $ 65,640 15,702 $ 81,342	2018 $ 13,434 5,492 $ 18,926 $ 90,095 12,805 $ 102,900

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

-204-

These investments in equity instrument are not held for trading. Instead, they are held for medium- to long-term strategic purposes. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Company’s strategy of holding these investments for long-term purposes. In January 2018, the Company sold its shares in GeneFerm Biotechnology Co., Ltd. in order to manage credit concentration risk. The shares sold had a fair value of $799 thousand and the Company transferred a gain of $578 thousand from other equity to retained earnings.

Dividend of $2,787 thousand and $3,847 thousand were recognized during 2019 and 2018, respectively.

9. FINANCIAL ASSETS AT AMORTIZED COST

Current Time deposits with original maturities of more than 3 months		December 31	December 31
		2019 $ 1,610,195	2018 $ 982,763

The ranges of interest rates for time deposits with original maturities of more than 3 months were approximately 0.79%-2.85% and 0.79%-1.97% per annum as of December 31, 2019 and 2018, respectively.

10. NOTES RECEIVABLE, TRADE RECEIVABLES AND OTHER RECEIVABLES

Notes receivable Operating Trade receivables At amortized cost Gross carrying amount Less: Allowance for impairment loss Other receivables Accrued interest Payment on behalf of others Others		December 31	December 31
		2019 $ - $ 2,150,179 (1,333) $ 2,148,846 $ 5,205 595 9,723 $ 15,523	2018 $ 567 $ 1,985,594 (1,428) $ 1,984,166 $ 3,871 491 64,884 $ 69,246

The average credit period of sales of goods was 30-90 days. In order to minimize credit risk, the management of the Company has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Company reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate allowance is made for possible irrecoverable amounts.

-205-

The Company measures the loss allowance for trade receivables at an amount equal to lifetime ECLs. The expected credit losses on trade receivables are estimated using a provision matrix by reference to the past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecasted direction of economic conditions at the reporting date.

The Company writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For trade receivables that have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

The following table details the loss allowance of trade receivables based on the Company’s provision matrix.

December 31, 2019

Not Past Due Expected credit loss rate 0.01% Gross carrying amount $ 2,147,040 Loss allowance (Lifetime ECL) (245) Amortized cost $ 2,146,795 December 31, 2018 Not Past Due Expected credit loss rate 0.01% Gross carrying amount $ 1,979,232 Loss allowance (Lifetime ECL) (218) Amortized cost $ 1,979,014	Less than 30 Days 31 to 90 Days 7.37% 18.27% $ 692 $ 1,390 (51) (254) $ 641 $ 1,136 Less than 30 Days 31 to 90 Days 6.99% 16.95% $ 4,564 $ 1,392 (319) (236) $ 4,245 $ 1,156	91 to 180 Days 47.71% $ 524 (250) $ 274 91 to 180 Days 35.76% $ 495 (177) $ 318	Over 180 Days 100.00% $ 533 (533) $ - Over 180 Days 100.00% $ 478 (478) $ -	Total $ 2,150,179 (1,333) $ 2,148,846 Total $ 1,986,161 (1,428) $ 1,984,733

The movements of the loss allowance of trade receivables were as follows:

Balance at January 1 Less: Net remeasurement of loss allowance Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 1,428 (95) $ 1,333	2018 $ 1,832 (404) $ 1,428

-206-

11. INVENTORIES

Merchandise Finished goods Work in progress Raw materials Packing materials		December 31	December 31
		2019 $ 463,267 829,612 132,498 462,095 39,299 $ 1,926,771	2018 $ 471,073 782,158 104,106 425,645 50,022 $ 1,833,004

The cost of inventories recognized as cost of goods sold for the year ended December 31, 2019 included reversals of inventory write-downs of $9,406 thousand and loss on abandoned inventories of $14,471 thousand. The cost of inventories recognized as cost of goods sold for the year ended December 31, 2018 included loss on write-downs of inventories of $4,356 thousand and loss on abandoned inventories of $5,431 thousand.

12. PREPAYMENTS

Prepayments for purchases Prepayments for equipment parts Prepayments for fuel oil Prepayments for insurance Prepayments for advertisements Others		December 31	December 31
		2019 $ 207,477 16,836 3,344 619 - 13,873 $ 242,149	2018 $ 192,721 16,225 3,216 12,019 280 57,218 $ 281,679

13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in subsidiaries Unlisted companies Accession Limited Standard Investment (Cayman) Limited (“Cayman Standard”) Standard Dairy Products Taiwan Limited (“Standard Dairy Products”) Charng Hui Ltd. (“Charng Hui”) Domex Technology Corporation (“Domex Technology”) Standard Beverage Company Limited (“Standard Beverage”) Le Bonta Wellness International Corporation (“Le Bonta Wellness”) Shanghai Le Ben Tuo Health Technology Co., Ltd. (“Shanghai Le Ben Tuo”)		December 31	December 31
		2019 $ 10,339,942 $ 3,381,908 5,220,048 1,000,126 290,480 247,879 82,342 8,781 108,378 $ 10,339,942	2018 $ 9,865,439 $ 3,450,370 4,772,853 950,516 252,543 210,974 80,577 12,288 135,318 $ 9,865,439

-207-

Name of Subsidiary Accession Limited Cayman Standard Standard Dairy Products Charng Hui Domex Technology Standard Beverage Le Bonta Wellness Shanghai Le Ben Tuo	Proportion of Ownership and Voting Rights
	December 31
	2019 2018 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 52.0% 52.0% 100.0% 100.0% 100.0% 100.0% 51.0% 51.0%

Refer to Note 32 for the details of the subsidiaries indirectly held by the Company.

14. PROPERTY, PLANT AND EQUIPMENT

Freehold Land Cost Balance at January 1, 2018 $ 396,356 Additions - Disposals - Reclassified - Balance at December 31, 2018 $ 396,356 Accumulated depreciation and impairment Balance at January 1, 2018 $ - Disposals - Depreciation expenses - Impairment losses recognized - Balance at December 31, 2018 $ - Carrying amount at December 31, 2018 $ 396,356 Cost Balance at January 1, 2019 $ 396,356 Adjustments on initial application of IFRS 16 - Balance at January 1, 2019 (restated) 396,356 Additions - Disposals - Reclassified - Balance at December 31, 2019 $ 396,356	Buildings $ 903,610 - (8,024 ) 79,856 $ 975,442 $ 551,919 (8,021 ) 48,587 7,288 $ 599,773 $ 375,669 $ 975,442 - 975,442 - (19,566 ) 71,475 $ 1,027,351	Equipment $ 2,011,643 - (25,410 ) 102,054 $ 2,088,287 $ 1,572,458 (25,409 ) 123,662 10,747 $ 1,681,458 $ 406,829 $ 2,088,287 - 2,088,287 - (26,535 ) 205,189 $ 2,266,941	Other Equipment $ 187,275 - (8,955 ) 16,570 $ 194,890 $ 151,306 (7,060 ) 14,969 - $ 159,215 $ 35,675 $ 194,890 (6,460) 188,430 - (20,102 ) 19,130 $ 187,458	Property in Construction Total $ 186,476 $ 3,685,360 218,023 218,023 - (42,389 ) (198,480) - $ 206,019 $ 3,860,994 $ - $ 2,275,683 - (40,490 ) - 187,218 - 18,035 $ - $ 2,440,446 $ 206,019 $ 1,420,548 $ 206,019 $ 3,860,994 - (6,460) 206,019 3,854,534 159,044 159,044 - (66,203 ) (295,794) - $ 69,269 $ 3,947,375 (Continued)

-208-

Freehold Land Accumulated depreciation and impairment Balance at January 1, 2019 $ - Adjustments on initial application of IFRS 16 - Balance at January 1, 2019 (restated) - Disposals - Depreciation expenses - Balance at December 31, 2019 $ - Carrying amount at December 31, 2019 $ 396,356	Buildings $ 599,773 - 599,773 (18,370 ) 52,286 $ 633,689 $ 393,662	Equipment $ 1,681,458 - 1,681,458 (25,607 ) 132,892 $ 1,788,743 $ 478,198	Other Equipment $ 159,215 (1,077) 158,138 (19,008 ) 13,184 $ 152,314 $ 35,144	Property in Construction Total $ - $ 2,440,446 - (1,077) - 2,439,369 - (62,985 ) - 198,362 $ - $ 2,574,746 $ 69,269 $ 1,372,629 (Concluded)

No impairment assessment was performed for the year ended December 31, 2019 as there was no indication of impairment.

The above items of property, plant and equipment are depreciated on a straight-line basis over the following estimated useful lives of the assets:

Building
Main buildings	40 years
Electrical and mechanical equipment	8-15 years
Engineering	7-39 years
Others	3-14 years
Equipment
Main equipment	2-20 years
Engineering	7-20 years
Others	3-15 years
Other equipment	2-15 years

15. LEASE ARRANGEMENTS

a. Right-of-use assets - 2019

	December 31,	December 31,
		2019
Carrying amounts
Land	$	3,615
Buildings		75,984
Office equipment		390
Transportation equipment		4,306
	$	84,295

-209-

	For the Year	For the Year
		Ended
	December 31,
		2019
Additions to right-of-use assets	$	8,565
Depreciation charge for right-of-use assets
Land		865
Buildings		21,754
Office equipment		29
Transportation equipment		1,077
	$	23,725

b. Lease liabilities - 2019

	December 31,
	2019
Carrying amounts
Current	$ 25,349
Non-current	$ 56,304

Range of discount rate for lease liabilities was as follows:

	December 31,
	2019
Land	1.07%
Buildings	1.07%
Office equipment	1.07%
Transportation equipment	12.04%

c. Material lease-in activities and terms

The Company leases land, buildings and transportation equipment for the use of parking garage, offices, office equipment and official vehicles with lease terms of 1 to 6 years. The Company does not have bargain purchase options to acquire the leasehold land and buildings at the end of the lease terms. In addition, the Company is prohibited from subleasing or transferring all or any portion of the underlying assets without the lessor’s consent.

d. Other lease information

2019

	For the Year	For the Year	For the Year
		Ended
	December		31,
		2019
Expenses relating to short-term leases	$	15,707
Expenses relating to low-value asset leases	$		-
Expenses relating to variable lease payments not included in the measurement of
lease liabilities	$		-
Total cash outflow for leases	$	(43,159)

-210-

The Company leases certain office equipment and retail stores which qualify as short-term leases. The Company has elected to apply the recognition exemption and, thus, did not recognize right-of-use assets and lease liabilities for these leases.

2018

The future minimum lease payments of non-cancellable operating lease commitments are as follows:

	December 31,	December 31,
		2018
Not later than 1 year	$	22,465
Later than 1 year and not later than 5 years		79,198
	$	101,663

The lease payments recognized in profit or loss for the current period was as follows:

	For the Year	For the Year
		Ended
	December 31,
		2018
Minimum lease payments	$	36,643
INVESTMENT PROPERTIES
	Completed
	Investment
	Property
Cost
Balance at January 1, 2018	$	141,270
Disposals		(141,270)
Balance at December 31, 2018	$	-
Accumulated depreciation and impairment
Balance at January 1, 2018	$	14,895
Depreciation expenses		222
Disposals		(15,117)
Balance at December 31, 2018	$	-
Carrying amount at December 31, 2018	$	-

16. INVESTMENT PROPERTIES

The investment properties held by the Company are depreciated using the straight-line method over the following estimated useful lives:

Building
Main buildings	40 years
Electrical and mechanical equipment	24-25 years
Engineering	28 years

-211-

On May 8, 2018, the Company entered into a property sale agreement at Wugu Dist., New Taipei City with Pei Chen Co., Ltd. The total selling price was $508,620 thousand (included business tax), and the gain from disposal was $369,427 thousand (included in statements of comprehensive income under other gains and losses). The transaction was accomplished at the third quarter of September 2018.

17. OTHER INTANGIBLE ASSETS

Cost Balance at January 1, 2018 Additions Balance at December 31, 2018 Accumulated amortization and impairment Balance at January 1, 2018 Amortization expenses Balance at December 31, 2018 Carrying amount at December 31, 2018 Cost Balance at January 1, 2019 Additions Balance at December 31, 2019 Accumulated amortization and impairment Balance at January 1, 2019 Amortization expenses Balance at December 31, 2019 Carrying amount at December 31, 2019	Computer Software $ 197,938 4,881
	$ 202,819
	$ 194,563 6,584
	$ 201,147
	$ 1,672
	$ 202,819 7,564
	$ 210,383
	$ 201,147 6,293
	$ 207,440
	$ 2,943

No impairment assessment was performed for the year ended December 31, 2019 as there was no indication of impairment.

The above items of other intangible assets are amortized on a straight-line basis over the following estimated lives:

Computer software 2-3 years

-212-

18. OTHER ASSETS

Current Advances to officers Non-current Refundable deposits Others		December	31
		2019 $ 15,348 $ 17,482 5,641 $ 23,123	2018 $ 20,410 $ 14,041 4,112 $ 18,153

19. NOTES PAYABLE AND TRADE PAYABLES

Notes payable operating Trade payables Trade payables		December 31	December 31
		2019 $ 577 $ 876,262	2018 $ 9,348 $ 885,178

The average credit period of payables for purchases of goods was 30-90 days. The Company has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.

20. OTHER LIABILITIES

Current Other payables Payable for salaries or bonus Payable for compensation of employees Payable for remuneration of directors Payable for commission and rebate Advertisement payable Payable for royalties Payable for freight Payable for purchases of equipment Payable for labor and health insurance Payable for environmental recycling fee Others		December 31	December 31
		2019 $ 150,195 52,013 25,073 413,234 148,641 25,668 6,456 62,297 15,568 10,394 131,597 $ 1,041,136	2018 $ 146,997 31,723 20,960 382,860 133,109 23,806 5,876 80,993 14,661 11,056 152,822 $ 1,004,863 (Continued)

-213-

Other liabilities Refund liability Others Non-current Other liabilities Guarantee deposits		December 31	December 31
		2019 $ 7,011 1,273 $ 8,284 $ 150	2018 $ 7,263 1,196 $ 8,459 $ 200 (Concluded)

21. RETIREMENT BENEFIT PLANS

a. Defined contribution plan

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

b. Defined benefit plan

The defined benefit plan of the Company is operated by the government of the Republic of China (“ROC”) in accordance with the Labor Standards Law. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The Company makes monthly contributions to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name.

Before the end of each year, the Company assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Company has no right to influence the investment policy and strategy.

The amounts included in the balance sheets in respect of the Company’s defined benefit plan were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liability		December 31	December 31
		2019 $ 524,433 (313,228) $ 211,205	2018 $ 506,793 (315,597) $ 191,196

-214-

Movements in net defined benefit liability (asset) were as follows:

	Present Value
	of the Defined		Net Defined
	Benefit	Fair Value of	Benefit
	Obligation	the Plan Assets	Liability
Balance at January 1, 2018	$ 529,249	$ (222,252)	$ 306,997
Service cost
Current service cost	4,888	-	4,888
Net interest expense (income)	5,954	(2,545)	3,409
Recognized in profit or loss	10,842	(2,545)	8,297
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(6,448)	(6,448)
Actuarial loss - changes in demographic
assumptions	3,905	-	3,905
Actuarial loss - experience adjustments	1,200	-	1,200
Recognized in other comprehensive income	5,105	(6,448)	(1,343)
Contributions from the employer	-	(122,755)	(122,755)
Benefits paid	(38,403)	38,403	-
Balance at December 31, 2018	506,793	(315,597)	191,196
Service cost
Current service cost	4,061	-	4,061
Net interest expense (income)	5,701	(3,690)	2,011
Recognized in profit or loss	9,762	(3,690)	6,072
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(6,621)	(6,621)
Actuarial loss - changes in demographic
assumptions	3,075	-	3,075
Actuarial loss - changes in financial
assumptions	19,749	-	19,749
Actuarial loss - experience adjustments	3,797	-	3,797
Recognized in other comprehensive income	26,621	(6,621)	20,000
Contributions from the employer	-	(6,063)	(6,063)
Benefits paid	(18,743)	18,743	-
Balance at December 31, 2019	$ 524,433	$ (313,228)	$ 211,205

Through the defined benefit plan under the Labor Standards Law, the Company is exposed to the following risks:

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

-215-

Discount rate Expected rate of salary increase	December 31
	2019 2018 0.750% 1.125% 3.000% 3.000%

Discount rate 0.250% increase 0.250% decrease Expected rate of salary increase 0.250% increase 0.250% decrease		December	31
		2019 $ (13,311) $ 13,802 $ 13,269 $ (12,869)	2018 $ (13,141) $ 13,636 $ 13,150 $ (12,743)

The expected contributions to the plan for the next year The average duration of the defined benefit obligation		December	31
		2019 $ 6,059 10.6 years	2018 $ 24,899 10.9 years

22. EQUITY

a. Share capital
1) Ordinary shares

Number of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		December 31	December 31
		2019 920,000 $ 9,200,000 915,089 $ 9,150,897	2018 920,000 $ 9,200,000 915,089 $ 9,150,897

-216-

2) Global depositary receipts

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (1) Recognized from the difference between consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition May be used to offset a deficit Changes in percentage of ownership interests in subsidiaries (2) Recognized from treasury share transactions		December 31	December 31
		2019 $ 1 466 109,251 $ 109,718	2018 $ 1 466 92,578 $ 93,045

1) Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s capital surplus and to once a year).
2) Such capital surplus arises from the effect of changes in ownership interests in subsidiaries that result from equity transactions other than actual disposals or acquisitions, or from changes in capital surplus of subsidiaries accounted for using the equity method.
c. Retained earnings and dividend policy

Under the dividend policy as set forth in the amended Articles, where the Company made profit in a fiscal year, the profit shall be appropriated from (less any paying taxes and deficit):

1) 10% thereof as legal reserve;
2) Special reserve provided or reversed in accordance with the regulations;
3) 30% to 100% of this the sum of the remainder and prior years’ unappropriated earnings as dividends.

The Company’s Articles of Incorporation also prescribe that 30% to 100%of dividends shall be paid in cash; however, if the Company has major investment plans for which external funds are not available, the percentage may be lowered to 5% to 20%. The distribution plan shall be proposed by the Company’s board of directors and resolved in the shareholders’ meeting for distribution of dividends and bonus to shareholders. For the policies on distribution of the compensation of employees and remuneration of directors after amendment, refer to Note 24(h). “employees’ compensation and remuneration of directors”.

-217-

The appropriations of earnings 2018 and 2017 approved in the shareholders’ meetings on June 13, 2019 and June 15, 2018, respectively, were as follows:

Legal reserve Special reserve Cash dividends Cash dividends per share (NT$)	Appropriation of Earnings
	For the Year Ended December 31
	2018 2017 $ 294,909 $ 217,304 70,519 178,629 2,287,724 1,830,179 2.5 2.0

The appropriations of earnings for 2019 had been proposed by the Company’s board of directors on March 18, 2020. The appropriations and dividends per share were as follows:

	Appropriation	Appropriation	Dividends Per
	of	Earnings	Share (NT$)
Legal reserve	$	341,610
Special reserve		246,549
Cash dividends		2,424,987	$2.65

The appropriations of earnings for 2019 are subject to the resolution of the shareholders in their meeting to be held on June 16, 2020.

d. Special reserve

Beginning at January 1 Appropriation in respect of: Debit to other equity items Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2019 $ 260,426 70,519 $ 330,945	2018 $ 81,797 178,629 $ 260,426

-218-

e. Other equity items

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

Balance at January 1 Effect of change in tax rate Recognized for the year Exchange differences on translating the financial statements of foreign operations Other comprehensive income recognized for the year Acquisition of further interests in subsidiaries Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2019 $ (412,869) - (280,169) (280,169) - $ (693,038)	2018 $ (307,846) 11,127 (117,413) (106,286) 1,263 $ (412,869)

2) Unrealized gain (loss) on financial assets at FVTOCI

For the Year Ended December 31 2019 2018 Balance at January 1 $ 81,924 $ 116,974 Recognized for the year Unrealized gain (loss) - equity instruments 33,620 (34,736) Other comprehensive income recognized for the year 33,620 (34,736) Cumulative unrealized gain (loss) of equity instruments transferred to retained earnings due to disposal - (314) Balance at December 31 $ 115,544 $ 81,924 3) Other equity items - other (recognized from put option of equity instruments from disposal of subsidiaries) For the Year Ended December 31 2019 2018 Balance at January 1 $ - $ (46,970) Exercised the put option of equity instruments from disposal of subsidiaries - 46,970 Balance at December 31 $ - $ - f. Treasury shares	For the Year Ended	For the Year Ended	December 31
		2019 $ - - $ -	2018 $ (46,970) 46,970 $ -

	Shares Held by
	Subsidiaries (In
	Thousands of
Purpose of Buy-back	Shares)
Number of shares at January 1, 2019	6,669
Number of shares at December 31, 2019	6,669
Number of shares at January 1, 2018	6,669
Number of shares at December 31, 2018	6,669

-219-

For the purpose of maintaining the Company’s credit and shareholders’ equity, the Company’s shares held by its subsidiaries at the end of the reporting periods were as follows:

Name of Subsidiary Number of Shares Held (In Thousands of Shares) December 31, 2019 Chang Hui 6,669 December 31, 2018 Chang Hui 6,669	Carrying Amount Market Price $ 21,182 $ 464,195 $ 21,182 $ 331,473

23. REVENUE

						For	For	the Year Ended December 31	the Year Ended December 31	the Year Ended December 31	the Year Ended December 31
								2019			2018
Revenue from contracts with customers
Revenue from sale of goods						$	13,139,944			$	12,187,907
a. Contract balances
		December			31,	December 31,
				2019				2018		January 1, 2018
Notes receivable (Note 10)		$			-	$			567	$	2,746
Trade receivables (Note 10)		$	2,148,846			$		1,984,166		$	1,746,502
Contract liabilities - current
Sale of goods		$		15,035		$		7,995		$	1,865
b. Disaggregation of revenue
		Reportable			Segments
		Nutritious		Cooking
		Foods		Products				Others			Total
For the year ended
December 31, 2019
Type of goods or services
Sale of goods	$	10,869,880	$	1,926,228			$	343,836		$	13,139,944
For the year ended
December 31, 2018
Type of goods or services
Sale of goods	$	9,863,953	$	1,945,877			$	378,077		$	12,187,907

-220-

24. NET PROFIT

Net Profit

a. Other income

Rental income Operating lease rental income Investment properties Interest income Bank deposits Financial assets at amortized cost Repurchase agreements collateralized by bonds Others Royalties Dividends	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ - $ 8,512 13,871 384 56 22,823 9,146 2,787 $ 34,756	2018 $ 1,995 $ 10,360 5,008 116 18 15,502 8,667 3,847 $ 30,011

b. Other gains and losses

Fair value changes of financial assets and financial liabilities Net gain on financial assets mandatorily classified as at FVTPL Net foreign exchange gains (losses) Net loss on disposal of property, plant and equipment Net gain on disposal of investment properties Impairment losses recognized on property, plant and equipment Government grants Others	For the Year Ended	For the Year Ended	December 31
		2019 $ 4,098 (13,139) (2,087) - - - 14,596 $ 3,468	2018 $ 5,178 4,165 (1,341) 369,427 (18,035) 1,200 18,570 $ 379,164

c. Finance costs

Interest on obligations under finance leases Interest on lease liabilities	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ - 1,339 $ 1,339	2018 $ 685 - $ 685

-221-

d. Impairment losses recognized (reversed)

For the Year Ended	For the Year Ended	For the Year Ended	December 31
2019 $ (95) (9,406) - $ (9,501) For the Year Ended			2018 $ (404) 4,356 18,035 $ 21,987 December 31
2019 $ 170,081 52,006 - $ 222,087 $ 4,309 7,689 $ 11,998 For the Year Ended			2018 $ 151,294 35,924 222 $ 187,440 $ 2,899 7,424 $ 10,323 December 31
2019 $ - For the Year Ended			2018 $ 44 December 31
	2019 $ 32,606 6,072 38,678 1,069,158 $ 1,107,836 $ 494,361 613,475 $ 1,107,836	2018 $ 30,102 8,297 38,399 997,340 $ 1,035,739 $ 483,690 552,049 $ 1,035,739

-222-

h. Employees’ compensation of and remuneration of directors

The Company accrued compensation of employees and remuneration of directors at the rates of no less than 0.5% and no higher than 0.75%, respectively, of net profit before income tax, compensation of employees, and remuneration of directors. The compensation of employees and remuneration of directors for the years ended December 31, 2019 and 2018 which were approved by the Company’s board of directors on March 18, 2020 and March 22, 2019, respectively, were as follows:

Accrual rate

Compensation of employees Remuneration of directors Amount Compensation of employees Remuneration of directors	For the Year Ended December 31	For the Year Ended December 31
	2019 2018 1.22% 0.90% 0.59% 0.59% For the Year Ended December 31
	2019 Cash $ 52,013 25,073	2018
		Cash $ 31,723 20,960

If there is a change in the amounts after the annual financial statements were authorized for issue, the differences will be recorded as a change in the accounting estimate.

There was no difference between the actual amounts of compensation of employees and remuneration of directors paid and the amounts recognized in the financial statements for the years ended December 31, 2018 and 2017.

Information on the compensation of employees and remuneration of directors resolved by the Company’s board of directors in 2019 and 2018 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

i. Gain or loss on foreign currency exchange

Foreign exchange gains Foreign exchange losses Net gain (loss)	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 33,162 (46,301) $ (13,139)	2018 $ 25,921 (21,756) $ 4,165

-223-

25. INCOME TAXES

a. Major components of tax expense recognized in profit or loss

Current tax In respect of the current year Land value increment tax Income tax on unappropriated earnings Adjustments for prior years Deferred tax In respect of the current year Effect of tax rate changes Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2019 $ 614,633 - 12,941 (2,299) 625,275 142,714 - $ 767,989	2018 $ 472,691 27,947 - (9,018) 491,620 64,629 (18,177) $ 538,072

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

Profit before tax Income tax expense calculated at the statutory rate Nondeductible expenses in determining taxable income Tax-exempt income Income tax on unappropriated earnings Adjustments for prior years’ tax Land value increment tax Effect of tax rate changes Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 4,184,086 $ 836,817 16,626 (96,096) 12,941 (2,299) - - $ 767,989	2018 $ 3,487,161 $ 697,432 13,374 (173,486) - (9,018) 27,947 (18,177) $ 538,072

b. Income tax recognized in other comprehensive income

Deferred tax Effect of tax rate changes In respect of the current year Exchange differences on translating the financial statements of foreign operations Remeasurement of defined benefit plans Fair value changes of financial assets at FVTOCI Total income tax recognized in other comprehensive income	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ - (70,043) (4,335) (3) $ (74,381)	2018 $ (19,365) (29,037) 487 (83) $ (47,998)

-224-

c. Current tax liabilities

Current tax liabilities Income tax payable		December 31	December 31
		2019 $ 391,748	2018 $ 289,077

d. Deferred tax assets and liabilities

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

For the year ended December 31, 2019

					Recognized in	Recognized in	Recognized in
						Other
			Recognized in		Comprehensive
	Opening Balance		Profit or Loss			Income		Closing Balance
Deferred tax assets
Temporary differences
Investments accounted for using the equity method	$	91,100	$	(9,014 )	$		-	$	82,086
Exchange differences on translating the financial
statements of foreign operations		103,216		-		70,043			173,259
Defined benefit plans		60,478		1		4,051			64,530
Deferred sales returns and allowances		2,176		(5 )			-		2,171
Allowance for inventory loss		4,058		(1,881 )			-		2,177
FVTOCI financial assets		43,886		-			3		43,889
Others		10,110		(90)			-		10,020
	$	315,024	$	(10,989)	$	74,097		$	378,132
Deferred tax liabilities
Temporary differences
Investments accounted for using the equity method	$	100,460	$	131,725	$		-	$	232,185
Reserve for land value increment tax		33,685		-			-		33,685
Others		284		-		(284)			-
	$	134,429	$	131,725	$	(284)		$	265,870

For the year ended December 31, 2018

				Recognized in	Recognized in
					Other
			Recognized in	Comprehensive		Effect of Tax
	Opening Balance		Profit or Loss		Income	Rate	Changes	Closing Balance
Deferred tax assets
Temporary differences
Investments accounted for using
the equity method	$	92,479	$ (17,709 )	$	-	$	16,330	$	91,100
Exchange differences on
translating the financial
statements of foreign
operations		63,052	-		29,037		11,127		103,216
Defined benefit plans		51,589	54		(269 )		9,104		60,478
Deferred sales returns and
allowances		3,661	(2,131 )		-		646		2,176
Allowance for inventory loss		2,709	871		-		478		4,058
FVTOCI financial assets		41,930	(5,527 )		83		7,400		43,886
Others		14,365	(6,790)		-		2,535		10,110
	$	269,785	$ (31,232)	$	28,851	$	47,620	$	315,024
								(Continued)

-225-

					Recognized in	Recognized in
						Other
			Recognized in		Comprehensive		Effect of Tax
	Opening Balance		Profit	or Loss		Income	Rate	Changes	Closing Balance
Deferred tax liabilities
Temporary differences
Investments accounted for using
the equity method	$	53,736	$	37,241	$	-	$	9,483	$ 100,460
Reserve for land value increment
tax		33,685		-		-		-	33,685
Others		3,315		(3,844)		218		595	284
	$	90,736	$	33,397	$	218	$	10,078	$ 134,429

(Concluded)

e. Income tax assessments

The income tax returns of the Company through 2017 have been assessed by the tax authorities.

26. EARNINGS PER SHARE

Basic earnings per share Diluted earnings per share	For	Unit: NT$ Per Share the Year Ended December 31	Unit: NT$ Per Share the Year Ended December 31
		2019 $ 3.76 $ 3.76	2018 $ 3.25 $ 3.24

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

Net Profit for the Year

Earnings used in the computation of basic earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 3,416,097	2018 $ 2,949,089

Weighted average number of ordinary shares outstanding (in thousands of shares):

Weighted average number of ordinary shares used in computation of basic earnings per share Effect of potentially dilutive ordinary shares: Compensation of employees Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 908,420 709 909,129	2018 908,420 742 909,162

-226-

27. CAPITAL MANAGEMENT

The Company’s capital management objective is to ensure financial resources are available and operating plans are in place for working capital, capital expenditures, research and development expenses, refund liabilities and dividend disbursement, etc. in the next twelve months. The Company manages its capital to ensure that entities in the Company and subsidiaries will be able to continue as going concerns while maximizing the return to shareholders through the optimization of the debt and equity balance.

28. FINANCIAL INSTRUMENTS

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

December 31, 2019 Financial assets at FVTPL Unlisted shares Mutual funds Financial assets at FVTOCI Investments in equity instruments at FVTOCI Listed shares and emerging market shares Unlisted shares	Level 1 $ - 556,393 $ 556,393 $ 87,465 - $ 87,465	Level 2 $ - - $ - $ - - $ -	Level 3 $ 7,575 - $ 7,575 $ - 15,702 $ 15,702	Total $ 7,575 556,393
				$ 563,968
				$ 87,465 15,702
				$ 103,167

-227-

December 31, 2018

Financial assets at FVTPL Unlisted shares Mutual funds Financial assets at FVTOCI Investments in equity instruments at FVTOCI Listed shares and emerging market shares Unlisted shares	Level 1 $ - 457,500 $ 457,500 $ 109,021 - $ 109,021	Level 2 $ - - $ - $ - - $ -	Level 3 $ 7,315 - $ 7,315 $ - 12,805 $ 12,805	Total $ 7,315 457,500 $ 464,815 $ 109,021 12,805 $ 121,826

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

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

For the year ended December 31, 2019

Financial Assets Balance at January 1, 2019 Recognized in profit or loss (included in other gains and losses) Recognized in other comprehensive income (included in unrealized gain (loss) on financial assets at FVTOCI) Balance at December 31, 2019 Recognized in other gains and losses - unrealized	Financial Assets at FVTPL Equity Instruments $ 7,315 260 - $ 7,575 $ 260	Financial Assets at FVTOCI Equity Instruments $ 12,805 - 2,897 $ 15,702	Total $ 20,120 260 2,897
			$ 23,277
			$ 260

-228-

For the year ended December 31, 2018

Financial Assets Balance at January 1, 2018 Recognized in profit or loss (included in other gains and losses) Recognized in other comprehensive income (included in unrealized gain (loss) on financial assets at FVTOCI) Sales/settlements Capital reduction of shares return Balance at December 31, 2018 Recognized in other gains and losses - unrealized	Financial Assets at FVTPL Equity Instruments $ 6,368 3,125 - (1,978) (200) $ 7,315 $ 1,147	Financial Assets at FVTOCI Equity Instruments $ 14,496 - (1,691) - - $ 12,805	Total $ 20,864 3,125 (1,691) (1,978) (200) $ 20,120 $ 1,147

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

The fair values of unlisted equity securities - ROC were determined using the market approach and the asset approach (adjusted net asset method).

The market approach uses prices and other relevant information that have been generated by market transactions that involved underlying assets.

The asset approach is that assets and liabilities of an investee are measured at fair value with the objective of obtaining the fair value of the investee’s underlying asset at the measurement date.

b. Categories of financial instruments

Financial assets Financial assets at FVTPL Mandatorily classified as at FVTPL Financial assets at amortized cost (1) Financial assets at FVTOCI Equity instruments Financial liabilities Financial liabilities at amortized cost (2)	December 31
	2019 2018 $ 563,968 $ 464,815 4,561,203 4,027,928 103,167 121,826 965,427 989,375

1) The balances include financial assets at amortized cost, which comprise cash and cash equivalents, notes receivable, trade receivables, trade receivables from related parties, other receivables and other receivables from related parties and refundable deposits.
2) The balances include financial liabilities measured at amortized cost, which comprise notes payable, trade payables, trade payables from related parties, payables for purchases of equipment and guarantee deposits.

-229-

c. Financial risk management objectives and policies

The Company’s major financial instruments include cash and cash equivalents, equity and debt investments, mutual funds, trade receivables and trade payables. The Company’s Financial Department provides services to the business, coordinates access to financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

1) Market risk

The Company’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (a) below) and interest rates (see (b) below).

a) Foreign currency risk

The Company’s foreign currency risk arises from its foreign currency monetary assets and liabilities. The Company watches out for the fluctuation of market exchange rates, and takes appropriate actions to manage the exchange rate risk.

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are set out in Note 31.

Sensitivity analysis

The Company was mainly exposed to the RMB, USD, EUR, AUD, CHF and SGD.

The following table details the Company’s sensitivity to a 3% increase or decrease in New Taiwan dollars (the functional currency) against the relevant foreign currencies. A change of 3% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis used the outstanding foreign currency denominated monetary items at the end of the reporting period and assumed the exchange rates at the end of the reporting period changed by 3% increase or decrease. The amount below indicates an increase (decrease) in pre-tax profit associated with the New Taiwan dollar weakening 3% against the relevant currency. For a 3% strengthening of New Taiwan dollars against the relevant currency, there would be an equal and opposite impact on pre-tax profit and the balances below would be negative.

Profit or loss Profit or loss	RMB Impact For the Year Ended December 31 2019 2018 $ 1,161 (i) $ 683 (i) EUR Impact For the Year Ended December 31 2019 2018 $ 2,349 (iii) $ 1,378 (iii)	USD Impact
		For the Year Ended December 31
		2019 2018 $ 15,200 (ii) $ 8,736 (ii) AUD Impact
		For the Year Ended December 31
		2019 2018 $ 817 (iv) $ 2,707 (iv)

-230-

Profit or loss	CHF Impact For the Year Ended December 31 2019 2018 $ 1,244 (v) $ - (v)	SGD Impact
		For the Year Ended December 31
		2019 2018 $ (348) (vi) $ (338) (vi)

i. This was mainly attributable to the exposure of outstanding RMB bank deposits which were not hedged at the end of the reporting period.
ii. This was mainly attributable to the exposure of outstanding USD bank deposits and payables which were not hedged at the end of the reporting period.
iii. This was mainly attributable to the exposure of outstanding EUR bank deposits and payables which were not hedged at the end of the reporting period.
iv. This was mainly attributable to the exposure of outstanding AUD bank deposits and payables which were not hedged at the end of the reporting period.
v. This was mainly attributable to the exposure of outstanding CHF bank deposits which were not hedged at the end of the reporting period.
vi. This was mainly attributable to the exposure of outstanding SGD payables which were not hedged at the end of the reporting period.
b) Interest rate risk

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

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets	December 31
	2019 2018 $ 987,086 $ 437,147 81,653 5,130 1,022,700 928,600

Sensitivity analysis

The sensitivity analyses below were determined based on the Company’s exposure to interest rates for non-derivative instruments at the end of the reporting period. For floating rate assets, the analysis was prepared assuming the amount of the asset outstanding at the end of the reporting period was outstanding for the whole year. A 1% basis point increase or decrease was used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 1% higher/lower and all other variables were held constant, the Company’s pre-tax profit for the years ended December 31, 2019 and 2018 would increase/decrease by $10,227 thousand and $9,286 thousand, respectively.

-231-

c) Other price risk

The Company was exposed to equity price risk due to its investments in listed equity securities and mutual funds. The Company has appointed a special team to monitor the price risk and will consider hedging the risk exposure should the need arise.

Sensitivity analysis

The sensitivity analyses below were determined based on the exposure to equity price risks at the end of the reporting period.

If equity prices had been 1% higher/lower, pre-tax profit for the years ended December 31,2019 and 2018 would have increased/decreased by $5,640 thousand and $4,648 thousand, respectively, as a result of the changes in fair value of financial assets at FVTPL, and the pre-tax other comprehensive income for the years ended December 31, 2019 and 2018 would have increased/decreased by $1,032 thousand and $1,218 thousand, respectively, as a result of the changes in fair value of financial assets at FVTOCI.

2) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. As at the end of the reporting period, the Company’s maximum exposure to credit risk which will cause a financial loss to the Company due to failure of counterparties to discharge an obligation and due to financial guarantees provided by the Company could arise from:

a) The carrying amount of the respective recognized financial assets as stated in the balance sheets; and
b) The amount of contingent liabilities in relation to financial guarantees issued by the Company.

In order to minimize credit risk, management of the Company has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Company reviews the recoverable amount of each individual trade receivable at the end of the reporting period to ensure that adequate allowances are made for irrecoverable amounts.

The Company’s concentration of credit risk of 79% and 77% in total trade receivables as of December 31, 2019 and 2018, was related to the Company’s four largest customers.

The table below analyzes the collaterals held as security and other credit enhancements, and their financial effect in respect of the financial assets recognized in the Company’s balance sheets:

December 31, 2019

Carrying Amount Credit-impaired financial instruments according to impairment criteria in IFRS 9 Receivables $ 2,148,846	Maximum Exposure to Credit Risk Mitigated by
	Collateral Other Credit Enhancements Total $ 35,703 $ 391 $ 36,094

-232-

December 31, 2018

Carrying Amount Credit-impaired financial instruments according to impairment criteria in IFRS 9 Receivables $ 1,984,733	Maximum Exposure to Credit Risk Mitigated by
	Collateral Other Credit Enhancements Total $ 54,812 $ 11,189 $ 66,001

3) Liquidity risk

The Company manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Company’s operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

The Company relies on bank borrowings as a significant source of liquidity. As of December 31, 2019 and 2018, the Company had available unutilized bank loan facilities in the amounts of $2,033,591 thousand and $2,585,204 thousand, respectively.

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

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

To the extent that interest flows are at floating rates, the undiscounted amount was derived from interest rate curve at the end of the reporting period.

December 31, 2019

On Demand or Less than 1 Month 1-3 Months 3 Months to 1 Year Non-interest bearing $ 304,351 $ 614,203 $ 46,723 Lease liabilities 19,334 870 6,086 Contract liabilities 5,012 10,023 - $ 328,697 $ 625,096 $ 52,809	1-5 Years $ 150 56,904 - $ 57,054

-233-

December 31, 2018

On Demand or Less than 1 Month 1-3 Months 3 Months to 1 Year Non-interest bearing $ 81,293 $ 176,243 $ 731,639 Finance lease liabilities 168 336 1,512 Contract liabilities 2,665 5,330 - $ 84,126 $ 181,909 $ 733,151	1-5 Years $ - 3,956 - $ 3,956

The amount included above for variable interest rate instruments for both non-derivative financial assets and liabilities was subject to change if changes in variable interest rates differ from those estimates of interest rates determined at the end of the reporting period.

29. TRANSACTIONS WITH RELATED PARTIES

The transactions between the Company and its related parties, other than those disclosed in other notes, are summarized as follows:

a. Related parties and relationships

Name of Related Party Standard Dairy Products Standard Beverage Dermalab Corporation GeneFerm Biotechnology Co., Ltd. (“GeneFerm”) Standard Investment (China) Co., Ltd. (“China Standard Investment”) Shanghai Le Ben Tuo Health Technology Co., Ltd.	Relationship with the Company
	Subsidiary Subsidiary Subsidiary The Company is one of the directors Subsidiary Subsidiary

b. Operating revenue

Line Items Related Party Category/Name Sales Subsidiaries Standard Dairy Products Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 1,470,332 922 $ 1,471,254	2018 $ 1,506,386 6,480 $ 1,512,866

Sales to related parties were conducted on normal commercial terms.

-234-

c. Purchases of goods

Related Party Category/Name Subsidiaries Standard Dairy Products Others The Company is one of the directors GeneFerm	For the Year Ended	For the Year Ended	December 31
		2019 $ 917,346 1,756 48,186 $ 967,288	2018 $ 739,330 7,532 25,529 $ 772,391

Purchases from related parties were conducted on normal commercial terms.

d. Receivables from related parties

Line Items Related Party Category/Name Trade receivables Subsidiaries Standard Dairy Products Other receivables Subsidiaries Standard Dairy Products Others		December 31	December 31
		2019 $ 141,484 $ 3,127 115 $ 3,242	2018 $ 174,492 $ 3,819 139 $ 3,958

The outstanding receivables from related parties are unsecured. For the years ended December 31, 2019 and 2018, no impairment loss was recognized on receivables from related parties.

e. Payables to related parties

Line Items Related Party Category/Name Trade payables Subsidiaries Standard Beverage Dermalab S.A The Company is one of the directors GeneFerm		December 31	December 31
		2019 $ - - 26,141 $ 26,141	2018 $ 307 4,747 8,602 $ 13,656

The outstanding payables from related parties are unsecured.

-235-

f. Endorsements and guarantees

Endorsements and guarantees provided by the Company

Related Party Category/Name Subsidiaries Standard Beverage Amount endorsed Amount utilized Subsidiaries Accession Limited Amount endorsed Amount utilized	December 31
	2019 2018 $ 149,900 $ 153,575 20,000 22,000 29,980 184,290 - -

g. Other transactions with related parties

Line Items Related Party Category/Name Royalty revenue Subsidiaries Standard Dairy Products Service revenue Subsidiaries Standard Beverage	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 9,146 $ 1,320	2018 $ 8,667 $ 1,320

h. Compensation of key management personnel

Short-term employee benefits Post-employment benefits	For the Year Ended	For the Year Ended	December 31
		2019 $ 45,293 522 $ 45,815	2018 $ 40,280 533 $ 40,813

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

30. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant commitments and contingencies of the Company as of December 31, 2019 were as follows:

a. The Company has entered into a license agreement with The Quaker Oats Company (“Quaker”) for a period ending July 11, 2029. The agreement provides that the Company may use Quaker’s trademark, and process, manufacture, market and sell Quaker baby cereal, oatmeal, fruit cereal, ready-to-eat cereal, sesame paste, milk powder and other cereal products in the ROC. In consideration of the above, the Company shall pay Quaker royalties at an agreed percentage of net sales (as defined).
b. Unused letters of credit of approximately US$1,857 thousand.

-236-

c. Unrecognized commitments for acquisition of property, plant and equipment of approximately $92,946 thousand.
d. Unrecognized commitments for acquiring approximately 46,391 tons of colostrum from dairymen.

31. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The significant assets and liabilities denominated in foreign currencies other than functional currency of the Company and the exchange rates between foreign currencies and functional currency were as follows:

December 31, 2019

Foreign
Currencies
Exchange Rate
Financial assets
Monetary items
USD
$ 16,901
29.98 (USD:NTD)

RMB
8,987
4.31 (RMB:NTD)
EUR
2,331
33.59 (EUR:NTD)
AUD
2,058
21.01 (AUD:NTD)
CHF
1,341
30.93 (CHF:NTD)

Non-monetary items
Investments accounted for using the
equity method
RMB
2,027,023
4.31 (RMB:NTD)

Financial liabilities
Monetary items
AUD
762
21.01 (AUD:NTD)

SGD
520
22.28 (SGD:NTD)

December 31, 2018
Foreign
Currencies
Exchange Rate
Financial assets
Monetary items
USD
$ 9,678
30.72 (USD:NTD)

RMB
5,094
4.47 (RMB:NTD)
EUR
1,661
35.20 (EUR:NTD)
AUD
4,717
21.67 (AUD:NTD)

Carrying
Amount
$ 506,678
38,690
78,303
43,235

41,472
$ 708,378
$ 8,710,333
$ 16,002

11,586
$ 27,588
Carrying
Amount
$ 297,260
22,780
58,453

102,184
$ 480,677
(Continued)

-237-

Foreign Currencies Exchange Rate Non-monetary items Investments accounted for using the equity method RMB $ 1,867,769 4.48 (RMB:NTD) Financial liabilities Monetary items USD 198 30.72 (USD:NTD) EUR 356 35.20 (EUR:NTD) AUD 551 21.67 (AUD:NTD) SGD 501 22.48 (SGD:NTD)	Carrying Amount $ 8,358,541 $ 6,067 12,535 11,944 11,262 $ 41,808 (Concluded)

The significant realized and unrealized foreign exchange gains (losses) were as follows:

Foreign Currencies USD RMB EUR AUD CHF SGD Others	For the Year Ended December 31	For the Year Ended December 31
	2019 Exchange Rate Net Foreign Exchange Gains (Losses) 29.98 (USD:NTD) $ (13,549) 4.31 (RMB:NTD) 16 33.59 (EUR:NTD) 344 21.01 (AUD:NTD) 861 30.93 (CHF:NTD) (961) 22.68 (SGD:NTD) 11 139 $ (13,139)	2018
		Exchange Rate Net Foreign Exchange Gains (Losses) 30.72 (USD:NTD) $ 4,887 4.47 (RMB:NTD) 1,215 35.20 (EUR:NTD) (1,296) 21.67 (AUD:NTD) (1,975) 31.19 (CHF:NTD) 34 22.48 (SGD:NTD) (29) 1,329 $ 4,165

32. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and investees:
1) Financings provided: See Table 1 attached.
2) Endorsement/guarantee provided: See Table 2 attached.
3) Marketable securities held (excluding investments in subsidiaries): See Table 3 attached.
4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: None.
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital: None.

-238-

6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None.
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: See Table 4 attached.
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: See Table 5 attached.
9) Information on investees (excluding investees of mainland China): See Table 6 attached.
b. Information on investment in mainland China
1) The name of the investee in mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, percentage of ownership, income (losses) of the investee, share of profits/losses of investee, ending balance, amount received as dividends from the investee, and the limitation on investee: See Table 7 attached.
2) Significant direct or indirect transactions with the investee, its prices and terms of payment, unrealized gain or loss: None.

-239-

Note	Note
Aggregate Financing Limits (Note 3)		$ 6,350,870 (Note 3)	1,664,013 (Note 4) 1,664,013 (Note 4) 1,664,013 (Note 4) 1,664,013 (Note 4)	1,227,427 (Note 5) 1,227,427 (Note 5) 1,227,427 (Note 5)	3,492,091 (Note 6) 3,492,091 (Note 6)	88,844 (Note 7)	11,640 (Note 8)	210,049 (Note 9)	131,101 (Note 10)
Financing Limit for Each Borrower (Note 3)		$ 6,350,870 (Note 3)	1,664,013 (Note 4) 1,664,013 (Note 4) 1,664,013 (Note 4) 1,664,013 (Note 4)	1,227,427 (Note 5) 1,227,427 (Note 5) 1,227,427 (Note 5)	3,492,091 (Note 6) 3,492,091 (Note 6)	88,844 (Note 7)	11,640 (Note 8)	210,049 (Note 9)	131,101 (Note 10)
Collateral	Value	$ -	- - - -	- - -	- -	-	-	-	-
	Item	-	- - - -	- - -	- -	-	-	-	-
Allowance for Impairment Loss		$ -	- - - -	- - -	- -	-	-	-	-
Reasons for Short-term Financing		Need for operation	Need for operation Need for operation Need for operation Need for operation	Need for operation Need for operation Need for operation	Need for operation Need for operation	Need for operation	Need for operation	Need for operation	Need for operation
Business Transaction Amounts		$ -	- - - -	- - -	- -	-	-	-	-
Nature of Financing (Note 2)		b.	b. b. b. b.	b. b. b.	b. b.	b.	b.	b.	b.
Interest Rate		0.00%	2.50% 2.50% 2.50% 2.50%	2.50% 2.50% 2.50%	0.00% 1.90%	2.50%	2.50%	2.50%	2.50%
Actual Borrowing Amount		$ -	79,891 238,507 348,188 85,950	- 116,299 451,238	- -	-	-	658	597
Ending Balance		$ 46,387	85,950 687,600 429,750 85,950	- 623,138 451,238	- -	21,488	8,595	171,900	85,950
Highest Balance for the Period		$ 47,783	92,048 736,384 460,240 92,048	483,252 667,348 474,390	185,370 70,081	23,012	9,205	184,096	92,048
Related Parties		Y	Y Y Y Y	Y Y Y	Y Y	Y	Y	Y	Y
Financial Statement Account		Financing receivables - related parties	Financing receivables - related parties Financing receivables - related parties Financing receivables - related parties Financing receivables - related parties	Financing receivables - related parties Financing receivables - related parties Financing receivables - related parties	Financing receivables - related parties Financing receivables - related parties	Financing receivables - related parties	Financing receivables - related parties	Financing receivables - related parties	Financing receivables - related parties
Borrower		Dermalab S.A.	Shanghai Dermalab Corporation Standard Foods (Xiamen) Co., Ltd. Standard Foods (China) Co., Ltd. Shanghai Le Ben Tuo Health Technology Co., Ltd.	Standard Foods (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Foods (Xiamen) Co., Ltd.	Shanghai Standard Foods Co., Ltd. Dermalab S.A.	Standard Investment (China) Co., Ltd.	Standard Investment (China) Co., Ltd.	Standard Investment (China) Co., Ltd.	Standard Investment (China) Co., Ltd.
Lender		Standard Foods Co., Ltd.	Standard Investment (China) Co., Ltd.	Shanghai Standard Foods Co., Ltd.	Accession Limited	Shanghai Le Ben Tuo Health Technology Co., Ltd.	Shanghai Le Ben De Health Technology Co., Ltd.	Shanghai Le Ho Industrial Co., Ltd.	Shanghai Le Min Industrial Co., Ltd.
No. (Note 1)		0	1	2	3	4	5	6	7

-240-

-241-

Note	Note
Guarantee Provided to Subsidiaries in Mainland China (Note 9)		- -
Guarantee Provided by Subsidiary (Note 9)		- -
Guarantee Provided by Parent Company (Note 9)		Y Y
Maximum Endorsement/ Guarantee Amount		$ 15,877,175 (Note 4) 15,877,175 (Note 4)
Ratio of Accumulated Endorsement/ Guarantee to Net Equity per Latest Financial Statements		0.19% 0.94%
Amount of Endorsement/ Guarantee Collateralized by Properties		$ - -
Amount Actually Drawn		$ - 20,000
Ending Balance		29,980 149,900
Maximum Balance for the Period		$ 184,620 158,000
Limits on Endorsement/ Guarantee Amount Provided to Each Guaranteed Party		$ 12,701,740 (Note 3) 12,701,740 (Note 3)
Guaranteed Party	Nature of Relationship (Note 2)	b. b.
	Name	Accession Limited Standard Beverage Company Limited
	Endorsement/Guarantee Provider	Standard Foods Corporation
	No. (Note 1)	0

-242-

	Note
December 31, 2019	Fair Value	$ 16,479 5,346 65,640 15,702 33,021 211,216 270,122 42,034 - - - 4,619 2,956 - - -
	Percentage of Ownership	- - 7.8 0.3 - - - - 1.9 0.9 5.5 1.9 7.0 0.2 7.8 1.0
	Carrying Amount	$ 16,479 5,346 65,640 15,702 33,021 211,216 270,122 42,034 - - - 4,619 2,956 - - -
	Shares	1,379,027 48,600 2,145,110 1,243,213 2,430,814 14,196,913 21,453,425 2,736,051 Note 1 500,000 2,424,242 850,500 180,376 11,200 800,000 107,815
	Financial Statement Account	Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current
Relationship with the Holding Company		The Company is one of the directors
Type and Name of Marketable Securities		Shares Far Eastern International Commercial Bank Co., Ltd. Chunghwa Telecom Co., Ltd. GeneFerm Biotechnology Co., Ltd. Dah Chung Bills Finance Corp. Mutual funds Taishin 1699 Money Market Fund Jih Sun Money Market Fund Mega Diamond Money Market Fund FSITC Taiwan Money Market Fund Walden VC 2, L.P. Shares Techgains Pan-Pacific Corporation Authenex, Inc. Global Strategic Investment Co., Ltd. Paradigm Venture Capital Corporation U-Teck Environment Corporation, Ltd. Octamer, Inc. - Series E Preferred Stock Octamer, Inc. - Series F Preferred Stock
Holding Company Name		Standard Foods Corporation

-243-

	Note	Note 2
December 31, 2019	Fair Value	$ - - - - - - 45,153 30,007 464,195 9,126 19,198 106,772 29,790 11,270 18,958 - -
	Percentage of Ownership	1.2 1.2 1.2 1.3 1.3 1.2 - - 0.7 - - 2.0 - - - 23.7 6.0
	Carrying Amount	$ - - - - - - 45,153 30,007 464,195 9,126 19,198 106,772 29,790 11,270 18,958 - -
	Shares	3,455 71,397 29,173 31,135 29,102 12,938 3,034,955 1,953,197 6,669,471 91,440 803,258 1,596,000 90,000 1,000,000 1,453,360 8,297,000 1,000,000
	Financial Statement Account	Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current
Relationship with the Holding Company		Parent of Charng Hui Ltd. Charng Hui Ltd. is one of the directors Charng Hui Ltd. is one of the directors
Type and Name of Marketable Securities		Fortemedia, Inc. - Series D Preferred Stock Fortemedia, Inc. - Series E Preferred Stock Fortemedia, Inc. - Series F Preferred Stock Fortemedia, Inc. - Series G Preferred Stock Fortemedia, Inc. - Series I Preferred Stock Fortemedia, Inc. - Series - Common Stock Mutual funds Jih Sun Money Market Fund FSITC Diamond Money Market Shares Standard Foods Corporation Formosa Plastics Corporation China Steel Corporation Polytronics Technology Corp. Taiwan Semiconductor Manufacturing Co., Ltd. Mutual funds Fuh Hwa Global Strategic Allocation FoF Franklin Templeton SinoAm Franklin Templeton Global Bond Fund of Funds-Accu. Shares Hong Da Leasing & Finance Co., Ltd. CNEX Co., Ltd.
Holding Company Name		Standard Dairy Products Taiwan Limited Charng Hui Ltd.

-244-

	Note
December 31, 2019	Fair Value	$ 2,201 3,691 107,424 929
	Percentage of Ownership	- - 13.4 0.7
	Carrying Amount	$ 2,201 3,691 107,424 929
	Shares	225,000 282,988 3,600,000 200
	Financial Statement Account	Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current
Relationship with the Holding Company
Type and Name of Marketable Securities		Mutual funds Fuh Hwa Greater China Mid & Small Cap Franklin Templeton SinoAm Global Bd Acc Shares InnoComm Mobile Technology Corp. Shares AsiaVest Liquidation Co.
Holding Company Name		Standard Beverage Company Limited Domex Technology Corporation Accession Limited

-245-

Note	Note	Note Note Note Note Note Note Note Note Note Note Note Note Note Note
Notes/Accounts Payable (Receivable)	% to Total	6.17 - 40.45 - 96.61 64.38 15.00 4.94 99.65 50.82 38.08 16.84 83.15 33.54
	Ending Balance	$ 141,484 - (141,484) - 491,530 (161,842) (491,530) 161,842 1,665,818 (1,665,818) (222,633) 222,633 1,099,150 (1,099,150)
Abnormal Transaction	Payment Terms	- - - - - - - - - - - - -
	Unit Price	- - - - - - - - - - - - -
Transaction Details	Payment Terms	55 days after month end closing (net of receivables and payables) 55 days after month end closing (net of receivables and payables) 55 days after month end closing (net of receivables and payables) 55 days after month end closing (net of receivables and payables) 60 days after month-end closing 60 days after month-end closing 60 days after month-end closing 60 days after month-end closing 55 days after month-end closing 60 days after month-end closing 60 days after month-end closing 60 days after month-end closing 60 days after month-end closing 60 days after month-end closing
	% to Total	11.19 12.24 59.38 25.66 78.07 21.46 16.51 2.95 98.62 49.16 8.78 8.64 75.44 34.20
	Amount	$ (1,470,332) 917,346 1,470,332 (917,346) (1,735,989) 397,459 1,735,989 (397,459) (5,160,756) 5,160,756 411,285 (411,285) (3,589,545) 3,589,545
	Purchases (Sales)	Sales Purchases Purchases Sales Sales Purchases Purchases Sales Sales Purchases Purchases Sales Sales Purchases
Nature of Relationships		The Company’s subsidiary Parent company of Standard Dairy Products Taiwan Limited Brother company of Shanghai Standard Foods Co., Ltd. Brother company of Standard Investment (China) Co., Ltd. Parent company of Standard Foods (China) Co., Ltd. Standard Investment (China) Co., Ltd.’s subsidiary Parent company of Standard Foods (China) Co., Ltd. Parent company of Standard Foods (Xiamen) Co., Ltd. Standard Investment (China) Co., Ltd.’s subsidiary Standard Investment (China) Co., Ltd.’s subsidiary
Related Party		Standard Dairy Products Taiwan Limited Standard Foods Corporation Standard Investment (China) Co., Ltd. Shanghai Standard Foods Co., Ltd. Standard Investment (China) Co., Ltd. Standard Foods (China) Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Standard Foods (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Foods (Xiamen) Co., Ltd.
Company Name		Standard Foods Corporation Standard Dairy Products Taiwan Limited Shanghai Standard Foods Co., Ltd. Standard Investment (China) Co., Ltd. Standard Foods (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Foods (China) Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Standard Investment (China) Co., Ltd.

-246-

Note	Note	Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2
Allowance for Bad Debts		$ - - $ - $ - - - $ - $ - - - $ - $ - - $ - $ - - $ - $ - - - $ - $ - - - $ - $ - - $ - $ - - $ - $ -
Amounts Received in Subsequent Period		$ 141,484 (Note 1) 3,127 (Note 1) $ 144,611 (Note 1) $ 202,729 (Note 1) - (Note 1) - (Note 1) $ 202,729 (Note 1) $ 6,647 (Note 1) - (Note 1) - (Note 1) $ 6,647 (Note 1) $ 8,456 (Note 1) - (Note 1) $ 8,456 (Note 1) $ 816,964 (Note 1) 34,798 (Note 1) $ 851,762 (Note 1) $ 93 (Note 1) - (Note 1) - (Note 1) $ 93 (Note 1) $ 28 (Note 1) - (Note 1) - (Note 1) $ 28 (Note 1) $ 952,155 (Note 1) 10,869 (Note 1) $ 963,024 (Note 1) $ 101,261 (Note 1) - (Note 1) $ 101,261 (Note 1) $ 222,633 (Note 1)
Overdue	Actions Taken
	Amount	$ - - $ - $ - - - $ - $ - - - $ - $ - - $ - $ - - $ - $ - - - $ - $ - - - $ - $ - - $ - $ - - $ - $ -
Turnover Rate		9.31 3.39 3.51 3.69 3.06 4.07 22.72 5.81 4.91 1.80
Ending Balance for Account Receivable - Related Parties		Trade receivables $ 141,484 Other receivables 3,127 $ 144,611 Trade receivables $ 491,530 Financing receivables 116,299 Other receivables 59,364 $ 667,193 Trade receivables $ 6,647 Financing receivables 451,238 Other receivables 6,549 $ 464,434 Trade receivables $ 8,456 Other receivables 618 $ 9,074 Trade receivables $ 1,665,818 Other receivables 34,798 $ 1,700,616 Trade receivables $ 93 Financing receivables 348,188 Other receivables 14,179 $ 362,460 Trade receivables $ 28 Financing receivables 238,507 Other receivables 12,284 $ 250,819 Trade receivables $ 1,099,150 Other receivables 13,165 $ 1,112,315 Trade receivables $ 161,842 Other receivables 40,698 $ 202,540 Trade receivables $ 222,633
Nature of Relationships		The Company’s subsidiary Brother company of Shanghai Standard Foods Co., Ltd. Brother company of Shanghai Standard Foods Co., Ltd. Brother company of Shanghai Standard Foods Co., Ltd. Parent company of Standard Foods (China) Co., Ltd. Standard Investment (China) Co., Ltd.’s subsidiary Standard Investment (China) Co., Ltd.’s subsidiary Parent company of Standard Foods (Xiamen) Co., Ltd. Brother company of Standard Investment (China) Co., Ltd. Brother company of Standard Foods (Xiamen) Co., Ltd.
Related Party		Standard Dairy Products Taiwan Limited Standard Investment (China) Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Standard Foods (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Foods (China) Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Standard Investment (China) Co., Ltd. Shanghai Standard Foods Co., Ltd. Standard Foods (China) Co., Ltd.
Company Name		Standard Foods Corporation Shanghai Standard Foods Co., Ltd. Standard Foods (China) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Standard Investment (China) Co., Ltd. Standard Foods (Xiamen) Co., Ltd.

-247-

Note	Note	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Indirect subsidiary Indirect subsidiary Indirect subsidiary
Share of Profits (Loss)		$ 67,374 (Note 1) 658,622 449,425 (Note 2) 5,483 34,507 1,847 (Note 3) (2,979)
Net Income (Loss) of the Investee		$ 74,585 658,622 447,084 22,157 66,347 2,350 (2,979) 7,694 - 658,817
As of December 31 2019	Carrying Amount	$ 3,381,908 5,220,048 1,000,126 290,480 247,879 82,342 8,781 174,559 - 5,219,208
	, %	100 100 100 100 52 100 100 100 100 100
	Shares	123,600,000 150,124,815 30,000,000 24,100,000 10,374,399 7,907,000 Note 4 2,600 3,000 150,050,815
Original Investment Amount	December 31, 2018	$ 3,936,267 4,710,865 300,853 230,000 114,116 79,072 14,350 266,587 96 4,708,566
	December 31, 2019	$ 3,936,267 4,710,865 300,853 230,000 114,116 79,072 14,350 266,587 96 4,708,566
	Main Businesses and Products	Investment business Investment business Manufacture and sale of dairy products and beverages Investment business Manufacture and sale of computer peripherals and computer and information products Manufacture and sale of beverages Sale of health foods Development and sale of cosmetics Sale of cosmetics Investment business
	Location	Tortola, British Virgin Islands Grand Cayman, Cayman Islands Taipei, Taiwan Taipei, Taiwan Hsinchu, Taiwan Taipei, Taiwan Yilan, Taiwan Switzerland Spain Hong Kong
	Investee Company	Accession Limited Standard Investment (Cayman) Limited Standard Dairy Products Taiwan Limited Charng Hui Ltd. Domex Technology Corporation Standard Beverage Company Limited Le Bonta Wellness International Corporation Dermalab S.A. Swissderma SL Standard Corporation (Hong Kong) Limited
	Investor Company	Standard Foods Corporation Accession Limited Dermalab S.A. Standard Investment (Cayman) Limited

-248-

Note	Note			$8,919,525 $8,919,525 Unlimited amount of investment (Note 10) Note 1: The methods for engaging in investment in mainland China include the following: a. Direct investment in mainland China. b. Indirect investment in mainland China through companies registered in a third region. c. Other methods.
Accumulated Repatriation of Investment Income as of December 31, 2019		$ - - - - - - - - -
Carrying Amount as of December 31, 2019		$ 2,992,501 4,391,390 1,834,068 (10,779) 211,188 28,649 1,328,982 509,309 317,638
Investment Gain (Loss) (Note 2)		$ 65,798 (Note 9) 683,014 (Note 9) 149,001 (Note 9) (7,976) (Note 9) (43,466) (Note 9) 706 (Note 9) 165,369 (Note 9) (14,666) (Note 9) (9,392) (Note 9)
% Ownership of Direct or Indirect Investment		100.0 99.0 99.0 99.0 99.5 100.0 99.0 100.0 100.0
Net Income (Loss) of the Investee		$ 69,321 689,913 162,562 (8,057) (43,680) 706 175,986 (14,666) (9,392)
Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2019		$ 3,949,575 (Note 4) 3,718,677 (Note 5) - (Note 6) - (Note 6) 181,048 (Note 7) 31,220 (Note 4) - (Note 6) 607,717 (Note 5) 378,009 (Note 5)
Remittance of Funds	Inward	$ - - - - - - - - -
			Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA	Unlimited amount of investment (Note 10)
	Outward	$ - - - - - - - - -
Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2019		$ 3,949,575 (Note 4) 3,718,677 (Note 5) - (Note 6) - (Note 6) 181,048 (Note 7) 31,220 (Note 4) - (Note 6) 607,717 (Note 5) 378,009 (Note 5)
Method of Investment (Note 1)		b. (Note 3) b. (Note 5) c. (Note 6) c. (Note 6) 1 and c. (Note 7) c. (Note 4 and 8) c. (Note 6) b. (Note 5) b. (Note 5)
			Investment Amounts Authorized by Investment Commission, MOEA	$8,919,525
Paid-in Capital		$ 3,949,575 3,755,530 1,631,668 57,205 380,418 31,220 1,307,582 607,717 378,009
Main Businesses and Products		Manufacture and sale of edible oil products and nutritional foods Investment and sales of edible oil products and nutritional foods Manufacture and sale of edible oil products and nutritional foods Sale of nutritional foods, cosmetics and international trading Sale of nutritional foods and international trading Sale of nutritional foods and international trading Manufacture and sale of edible oil products and nutritional foods Property management Property management
			Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2019	$8,919,525
Investee Company		Shanghai Standard Foods Co., Ltd. Standard Investment (China) Co., Ltd. Standard Foods (China) Co., Ltd. Shanghai Dermalab Corporation Shanghai Le Ben Tuo Health Technology Co., Ltd. Shanghai Le Ben De Health Technology Co., Ltd. Standard Foods (Xiamen) Co., Ltd. Shanghai Le Ho Industrial Co., Ltd. Shanghai Le Min Industrial Co., Ltd.

-249-

-250-

STANDARD FOODS CORPORATION

THE CONTENTS OF SCHEDULES OF MAJOR ACCOUNTING ITEMS

Item
Major Accounting Items in Assets, Liabilities and Equity
Schedule of cash and cash equivalents
Schedule of financial assets at fair value through profit or loss - current
Schedule of financial assets at fair value through other comprehensive income - current
Schedule of financial assets at amortized cost - current
Schedule of trade receivables
Schedule of inventories
Schedule of financial assets at fair value through profit or loss - non-current
Schedule of financial assets at fair value through other comprehensive income -
non-current
Schedule of changes in investments accounted for using the equity method
Schedule of changes in right-of-use assets
Schedule of trade payables
Schedule of lease liabilities
Major Accounting Items in Profit or Loss
Schedule of operating revenue
Schedule of operating costs
Schedule of operating expenses
Schedule of labor, depreciation and amortization by function

**Schedule Index **

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

-251-

SCHEDULE 1

STANDARD FOODS CORPORATION

SCHEDULE OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Item
Description
Interest Rate
Cash on hand

Cash in banks
Checking account deposits
Demand deposits
0.010%-0.350%
Foreign currency demand
deposits
Including US$2,219 thousand @29.98,
EUR2,331 thousand @33.59,
AUD1,054 thousand @21.01,
RMB1,350 thousand @4.31 and
CHF1,341 thousand @30.93
0.001%-0.500%

Cash equivalents
Foreign time deposits
Including US$3,800 thousand @29.98
and RMB4,000 thousand @4.31
2.250%-3.220%
Repurchase agreements
collateralized by bonds
Expiry in January 2020
0.550%-0.560%

Amount
$ 1,432
5,951

3,203
214,254
223,408

131,144
268,447
399,591
$ 624,431

-252-

DECEMBER 31, 2019
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Fair Value
Changes in Fair
Value Attributed
Name of Financial Assets
Shares/Units
Par Value (NT$)
Total Amount
Acquisition Cost
Unit Price
Total Amount
to Credit Risk
Note
Mutual fund
Mega Diamond Money Market Fund
21,453,425.21
12.59
$ 270,122
$ 270,000
12.59
$ 270,122
$ 122
Jih Sun Money Market Fund
14,196,912.97
14.88
211,216
211,067
14.88
211,216
149
Taishin 1699 Money Market Fund
2,430,813.88
13.58
33,021
33,000
13.58
33,021
21
FSITC Taiwan Money Market Fund
2,736,051.23
15.36
42,034

42,016
15.36
42,034
18
40,817,203.29
$ 556,393
$ 556,083
$ 556,393
$ 310

-253-

DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)	Accumulated Fair Value Name of Financial Assets Shares Par Value (NT$) Total Amount Acquisition Cost Impairment Unit Price Total Amount Listed shares Chunghwa Telecom Co., Ltd. 48,600 10.00 $ 486 $ 4,063 $ - 110.00 $ 5,346 Far Eastern International Commercial Bank Co., Ltd. 1,379,027 10.00 13,790 17,114 - 11.95 16,479 $ 14,276 $ 21,177 $ - $ 21,825

-254-

	Remark	Floating	Floating	Floating	Floating	Floating	Floating	Fixed	Floating	Floating	Fixed (@29.98)	Fixed (@29.98)	Fixed (@29.98)	Fixed (@29.98)	Fixed (@29.98)	Fixed	Floating	Floating	Floating	Floating	Fixed (@4.31)	Fixed (@29.98)	Fixed (@29.98)	Fixed (@21.01)
	Book Value	$ 8,700	9,800	44,100	29,400	9,800	34,300	39,200	44,100	44,100	74,950	59,960	41,972	29,980	29,980	200,000	349,300	99,800	199,600	149,700	15,498	59,960	14,990	21,005	$ 1,610,195
Annual	Interest Rate	1.06%	1.06%	1.06%	1.06%	1.06%	1.06%	1.05%	1.06%	1.06%	2.28%	2.28%	2.53%	2.53%	2.52%	0.80%	0.79%	0.79%	0.79%	0.79%	2.85%	2.25%	2.25%	1.29%
	Total Amount	$ 8,700	9,800	44,100	29,400	9,800	34,300	39,200	44,100	44,100	74,950	59,960	41,972	29,980	29,980	200,000	349,300	99,800	199,600	149,700	15,498	59,960	14,990	21,005	$ 1,610,195
	Currencies	NTD	NTD	NTD	NTD	NTD	NTD	NTD	NTD	NTD	USD	USD	USD	USD	USD	NTD	NTD	NTD	NTD	NTD	RMB	USD	USD	AUD
	Par Value	$ 2,900	4,900	4,900	4,900	4,900	4,900	4,900	4,900	4,900	2,500	1,000	1,400	1,000	1,000	200,000	4,990	4,990	4,990	4,990	3,600	1,000	500	1,000
	Number	3	2	9	6	2	7	8	9	9	1	2	1	1	1	1	70	20	40	30	1	2	1	1
	Description	Expiry in October 2020, maturity interest	Expiry in October 2020, maturity interest	Expiry in November 2020, maturity interest	Expiry in December 2020, maturity interest	Expiry in January 2020, maturity interest	Expiry in February 2020, maturity interest	Expiry in March 2020, maturity interest	Expiry in April 2020, maturity interest	Expiry in August 2020, maturity interest	Expiry in November 2020, maturity interest	Expiry in November 2020, maturity interest	Expiry in March 2020, maturity interest	Expiry in March 2020, maturity interest	Expiry in March 2020, maturity interest	Expiry in February 2020, maturity interest	Expiry in February 2020, maturity interest	Expiry in June 2020, maturity interest	Expiry in March 2020, maturity interest	Expiry in April 2020, maturity interest	Expiry in January 2020, maturity interest	Expiry in May 2020, maturity interest	Expiry in May 2020, maturity interest	Expiry in March 2020, maturity interest
	Name	Far Eastern International Bank time deposit	Far Eastern International Bank time deposit	Far Eastern International Bank time deposit	Far Eastern International Bank time deposit	Far Eastern International Bank time deposit	Far Eastern International Bank time deposit	Far Eastern International Bank time deposit	Far Eastern International Bank time deposit	Far Eastern International Bank time deposit	Far Eastern International Bank foreign currency time deposit	Far Eastern International Bank foreign currency time deposit	Far Eastern International Bank foreign currency time deposit	Far Eastern International Bank foreign currency time deposit	Far Eastern International Bank foreign currency time deposit	HSBC Bank (Taiwan) Limited foreign currency time deposit	The Shanghai Commercial & Saving Bank time deposit	The Shanghai Commercial & Saving Bank time deposit	The Shanghai Commercial & Saving Bank time deposit	The Shanghai Commercial & Saving Bank time deposit	Bank of China Limited foreign currency time deposit	Taishin International Bank foreign currency time deposit	Taishin International Bank foreign currency time deposit	Taishin International Bank foreign currency time deposit

-255-

SCHEDULE 5

STANDARD FOODS CORPORATION

SCHEDULE OF TRADE RECEIVABLES DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Client Name Unrelated parties Company A Company B Company C Company D Others (Note) Less: Allowance for impairment loss Related party Standard Dairy Products Taiwan Limited	Amount $ 661,937 420,706 163,785 455,620 448,131 2,150,179 (1,333) $ 2,148,846 $ 141,484

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

-256-

SCHEDULE 6

STANDARD FOODS CORPORATION

SCHEDULE OF INVENTORIES DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Item Merchandise Finished goods Work in progress Raw materials Packaging materials		Amount
		Cost Net Realizable Value $ 463,267 $ 665,312 829,612 1,618,365 132,498 268,562 462,095 896,212 39,299 63,548 $ 1,926,771 $ 3,511,999

-257-

			Remark	Note	Note	-	-		-	-	-	-	-	-	-	-
		Accumulated	Impairment	-	-	-	-	-	-	-	-	-	-	-	-	-
			Collateral	Nil	Nil	Nil	Nil	Nil	Nil	Nil	Nil	Nil	Nil	Nil	Nil	Nil
		Balance, December 31, 2019	Shares/Units Fair Value	850,500 $ 4,619	180,376 2,956	2,424,242 -	500,000 -	11,200 -	800,000 -	107,815 -	3,455 -	71,397 -	29,173 -	31,135 -	29,102 -	12,938 -	$ 7,575
Accumulated	Reversal of	Impairment	Loss	$ -	-	-	-	-	-	-	-	-	-	-	-	-	$ -
		Deduction	Shares/Units Amount	- $ 586	- -	- -	- -	- -	- -	- -	- -	- -	- -	- -	- -	- -	$ 586
		Balance, January 1, 2019 Addition	Investees Shares/Units Fair Value Shares/Units Amount	Global Strategic Investment Co., Ltd. 850,500 $ 5,205 - $ -	Paradigm Venture Capital Corporation 180,376 2,110 - 846	Authenex, Inc. 2,424,242 - - -	Techgains Pan-Pacific Corporation 500,000 - - -	U-Teck Environment Corporation, Ltd. 11,200 - - -	Octamer, Inc. - Series E preferred stock 800,000 - - -	Octamer, Inc. - Series F preferred stock 107,815 - - -	ForteMedia, Inc. - Series D preferred stock 3,455 - - -	ForteMedia, Inc. - Series E preferred stock 71,397 - - -	ForteMedia, Inc. - Series F preferred stock 29,173 - - -	ForteMedia, Inc. - Series G preferred stock 31,135 - - -	ForteMedia, Inc. - Series I preferred stock 29,102 - - -	ForteMedia - common stock 12,938 - - -	$ 7,315 $ 846	Note: The amount of investment in the investee increased/decreased due to the changes in the fair value.

-258-

FOR THE YEAR ENDED DECEMBER 31, 2019
(In Thousands of New Taiwan Dollars)

Balance, January 1, 2019
Addition
Deduction
Unrealized
Balance, December 31, 2019
Accumulated
Item
Shares
Fair Value
Shares
Amount
Shares
Amount
Gain (Loss)
Shares
Fair Value
Impairment
Collateral
Remark
Emerging market shares
GeneFerm Biotechnology
Co., Ltd.
2,145,110
$ 90,095
-
$ -
-
$ -
$ (24,455)
2,145,110
$ 65,640
$ -
Nil
Dah Chung Bills Finance Corp
1,243,213

12,805
-

-
-

-

2,897
1,243,213

15,702

-
Nil
$102,900
$ -
$ -
$(21,558)
$81,342
$ -

-259-

Net Assets Value	Balance, January 1, 2019 Addition Decrease Balance, December 31, 2019 Unit Price	Investees Shares/Unit Amount Shares/Unit Amount Shares/Unit Amount Shares/Unit % Amount (NT$) Total Price Collateral Remark	Accession Limited 123,600,000 $ 3,450,370 - $ 67,374 - $ 135,836 123,600,000 100.00 $ 3,381,908 27.55 $ 3,404,845 Nil Note 1	Standard Dairy Products Taiwan Limited 30,000,000 950,516 - 449,425 - 399,815 30,000,000 100.00 1,000,126 33.76 1,012,734 Nil Note 2	Charng Hui Ltd. 24,100,000 252,543 - 51,530 - 13,593 24,100,000 100.00 290,480 31.31 754,675 Nil Note 3	DOMEX Technology Corporation 10,374,399 210,974 - 55,579 - 18,674 10,374,399 52.00 247,879 23.84 247,274 Nil Note 4	Standard Beverage Company Limited 7,907,000 80,577 - 1,950 - 185 7,907,000 100.00 82,342 10.42 82,356 Nil Note 5	Standard Investment (Cayman) Limited 150,124,815 4,772,853 - 658,622 - 211,427 150,124,815 100.00 5,220,048 34.77 5,220,048 Nil Note 6	Le Bonta Wellness International Corporation - 12,288 - - - 3,507 - 100.00 8,781 - 8,523 Nil Notes 7 and 9	Shanghai Le Ben Tuo Health Technology Co., Ltd. - 135,318 - - - 26,940 - 51.00 108,378 - 108,378 Nil Notes 8 and 9	$ 9,865,439 $ 1,284,480 $ 809,977 $ 10,339,942 $ 10,838,833	Note 1: For the year ended December 31, 2019, the increase amount of investment income accounted for using the equity method was $67,374 thousand; the decrease amount of translation adjustment was $134,148 thousand; and other comprehensive income was $1,688 thousand.	Note 2: For the year ended December 31, 2019, the increase amount of investment income accounted for using the equity method was $449,425 thousand; the decrease amount of the cash dividend issued by the investee was $391,600 thousand; and the decrease amount of other comprehensive	income was $8,215 thousand.	Note 3: This is a subsidiary of the Company, and because it held the shares of the Company, it received cash dividend from the Company. Therefore, there was an increase in cash dividend which amounted to a total of $51,530 thousand, of which adjustment to the capital surplus was $16,673	thousand and other comprehensive income was $29,374 thousand. The investment income accounted for using the equity method was $5,483 thousand. For the year ended December 31, 2019, the decrease amount of the cash dividend which was issued by the investee was $13,593 thousand.	Note 4: The increase amount of investments amounted to a total of $55,579 thousand, of which the equity method adopted for the accounting of the investment income was $34,507 thousand; other comprehensive income was $21,072 thousand; and the decrease amount of cash dividend which was	issued by the investee was $18,674 thousand.	Note 5: The increase amount of investments amounted to $1,950 thousand, of which the equity method adopted for the accounting of the investment income was $1,847 thousand; other comprehensive income was $103 thousand; the decrease amount of cash dividend which was issued by the investee	was $185 thousand.	Note 6: For the year ended December 31, 2019, the increase amount of investment income accounted for using the equity method was $658,622 thousand; and the decrease amount of translation adjustment was $211,427 thousand.	Note 7: The decrease amount of investments amounted to $3,507 thousand, of which the equity method adopted for the accounting of the investment loss was $2,979 thousand; and the cash dividend which was issued by the investee was $528 thousand.	Note 8: The decrease amount of investments amounted to $26,940 thousand, of which the equity method adopted for the accounting of the investment loss was $22,303 thousand; and the translation adjustment was $4,637 thousand.	Note 9: This is a limited company with no issued shares.

-260-

SCHEDULE 10

STANDARD FOODS CORPORATION

SCHEDULE OF CHANGES IN RIGHT-OF-USE ASSETS DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Item Cost As Originally Stated on January 1, 2019 Adjustments Arising from Initial Application Restated on January 1, 2019 Additions Lease modification Balance at December 31, 2019 Accumulated depreciation As Originally Stated on January 1, 2019 Adjustments Arising from Initial Application Restated on January 1, 2019 Depreciation expenses Lease modification Balance at December 31, 2019	Land $ - - - 4,480 - $ 4,480 $ - - - 865 - $ 865	Buildings Office Equipment Transpor- tation Equipment $ - $ - $ - 94,071 - 6,460 94,071 - 6,460 3,667 419 - (1,015) - - $ 96,723 $ 419 $ 6,460 $ - $ - $ - - - 1,077 - - 1,077 21,754 29 1,077 (1,015) - - $ 20,739 $ 29 $ 2,154	Amount $ - 100,531 100,531 8,566 (1,015) $ 108,082 $ - 1,077 1,077 23,725 (1,015) $ 23,787

-261-

SCHEDULE 11

STANDARD FOODS CORPORATION

SCHEDULE OF TRADE PAYABLES DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Vendor Name Unrelated parties Company A Company B Others (Note) Related party GeneFerm Biotechnology Co., Ltd.	Amount $ 161,875 58,739 655,648 $ 876,262 $ 26,141

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

-262-

SCHEDULE 12

STANDARD FOODS CORPORATION

SCHEDULE OF LEASE LIABILITIES FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

			Balance at	Balance at
		Discount	December 31,
	Lease Term	Rate		2019	Remark
Land	July 1, 2019 - July 24, 2030	1.07%	$	1,040
Buildings	June 1, 2018 - December 31, 2023	1.07%		76,581
Office equipment	August 1, 2019 - August 30, 2025	1.07%		402
Transportation equipment	January 1, 2018 - December 31, 2020	12.04%		3,630
				81,653
Less: Within 1 year				(25,349)
Lease liabilities - non-current			$	56,304

-263-

SCHEDULE 13

STANDARD FOODS CORPORATION

SCHEDULE OF OPERATING REVENUES FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Item Quantity (Tons) Nutritious foods 97,360 Cooking products 23,680 Others 10,667 Total sales Less: Sales returns Sales allowances Net sales	Amount $ 12,442,144 2,178,542 418,268 15,038,954 (88,474) (1,810,536) $ 13,139,944

-264-

SCHEDULE 14

STANDARD FOODS CORPORATION

SCHEDULE OF OPERATING COSTS FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Item
Cost of goods sold - finished goods
Raw materials, beginning of year

Add: Raw materials purchased
Gain on physical inventory of raw materials
Less: Transferred to other accounts
Sales of raw materials
Raw materials scrapped
Raw materials, end of year

Raw materials consumed
Direct labor
Manufacturing expenses

Manufacturing costs
Work in progress, beginning of year
Less: Work in progress scrapped
Other use

Cost of finished goods
Work in progress, end of year
Finished goods, beginning of year
Less: Transferred to other accounts
Loss on physical inventory of finished goods
Finished goods scrapped
Finished goods, end of year

Cost of goods sold - finished goods

Cost of goods sold - merchandise
Merchandise, beginning of year
Add: Merchandise purchased
Less: Other use
Merchandise scrapped
Loss on physical inventory of merchandise
Merchandise, end of year

Cost of goods sold - merchandise

Cost of sales of raw materials

Loss on physical inventory

Inventory scrap losses

Amount
$ 475,667
5,036,782
314
(6,950)
(71,631)
(1,975)

(501,394)
4,930,813
236,757

942,085
6,109,655
104,106
(611)

(8,348)
6,204,802
(132,498)
782,158
(77,498)
(14)
(5,059)

(829,612)

5,942,279
471,073
2,455,595
(14,720)
(6,826)
(14)

(463,267)

2,441,841

71,631

(286)

14,471
$ 8,469,936

-265-

SCHEDULE 15

STANDARD FOODS CORPORATION

SCHEDULE OF OPERATING EXPENSES FOR THE YEARS ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Item Advertising expenses Salaries and pensions Freight expenses Taxes Professional service fees Rental Insurance premiums Amortization Depreciation Traveling expenses Repair and maintenance expenses Computer expenses Meal expenses Postage and telephone charges Entertainment expenses Employee welfare Utilities Donations Others Cost-sharing sectors (Note)	Selling and Marketing Expenses General and Administrative Expenses Research and Development Expenses $ 677,918 $ - $ - 261,735 251,969 33,257 115,927 - - 16,821 105 17 1,629 29,083 1,041 8,473 692 78 26,931 16,073 3,083 1,724 5,964 - 22,267 17,543 12,195 21,051 2,925 582 6,745 3,687 4,832 7,049 20,242 148 7,012 2,201 678 1,320 887 530 1,648 10,319 409 8,237 3,247 770 5,635 1,653 1,531 3,070 18,449 - 27,824 30,044 35,278 - (17,745) - $ 1,223,016 $ 397,338 $ 94,429	Amount $ 677,918 546,961 115,927 16,943 31,753 9,243 46,087 7,688 52,005 24,558 15,264 27,439 9,891 2,737 12,376 12,254 8,819 21,519 93,146 (17,745) (Note) $ 1,714,783

Note: Transferred to manufacturing expenses.

-266-

Year Ended December 31	2019 2018	Classified as Classified as	Classified as Classified as Non-operating Classified as Classified as Non-operating	Operating Operating Income and Operating Operating Income and	Item Costs Expenses Expenses Total Costs Expenses Expense Total	Labor cost	Salary and bonus $ 410,499 $ 499,601 $ - $ 910,100 $ 400,577 $ 450,390 $ - $ 850,967	Labor and health insurance 38,471 38,970 - 77,441 36,922 34,623 - 71,545	Pension 16,391 22,287 - 38,678 17,806 20,593 - 38,399	Remuneration of directors - 25,073 - 25,073 - 20,960 - 20,960	Others 29,000 27,544 - 56,544 28,385 25,483 - 53,868	$ 494,361 $ 613,475 $ - $ 1,107,836 $ 483,690 $ 552,049 $ - $ 1,035,739	Depreciation $ 170,081 $ 52,006 $ - $ 222,087 $ 151,294 $ 35,924 $ 222 $ 187,440	Amortization $ 4,309 $ 7,689 $ - $ 11,998 $ 2,899 $ 7,424 $ - $ 10,323	Note 1: As of December 31, 2019 and 2018, the Company had 975 and 976 employees, respectively, of which 5 directors were not concurrently appointed as employees.	Note 2:The average employee benefit expense for 2019 is $1,116 thousand. (“Total amounts of current year employeebenefit expenses -Total amounts of remuneration of directors”/“The number of current year	employee -The number of directors who are not concurrent employees”).	Note 3:The average employee benefit expense for 2018 is $1,045 thousand. (“Total amounts ofperiod year employee benefit expenses -Total amounts of remuneration of directors”/“The number of period year employee	-The number of directors who are not concurrent employees”).	Note 4: The average employee salary expense for 2019 is $938 thousand. (Total amounts of current year employee salary expenses -“The number of current year employee- The number of directors who are not	concurrent employees”).	Note 5: The average employee salary expense for 2018 is $876 thousand. (Total amounts of period yearemployee salary expenses/“The number of period year employee- The number of directors who are not concurrent	employees”).	Note 6:The change in average employee salary expenses is 7.08%. (“Total amounts of current year average employee salary expenses-Total amounts of period year average employee salary expenses”/Total amounts of	period year average employee salary expenses).

-267-

VI. Financial difficulties of the company and related parties in the current year and up to the printing of the annual report: None.

-268-

Seven. Review of Financial Position, Financial Performance, and Risk Management

I. Financial position

Comparative financial analysis

Comparative financial analysis	Comparative financial analysis	Comparative financial analysis
			Unit: NTD Thousand
Date Item	Dec. 31, 2018	Dec. 31, 2019	Difference
			Amount	%
Current Assets	17,107,047	18,513,185	1,406,138	8.22
Property, Plant and Equipment	5,478,238	5,125,312	(352,926)	(6.44)
Intangible Assets	73,050	68,087	(4,963)	(6.79)
Other Assets	1,339,321	1,781,681	442,360	33.03
Total Assets	23,997,656	25,488,265	1,490,609	6.21
Current Liabilities	7,510,934	7,682,083	171,149	2.28
Noncurrent Liabilities	446,397	855,491	409,094	91.64
Total Liabilities	7,957,331	8,537,574	580,243	7.29
Equity attributable to owners of theparent	15,806,926	16,678,127	871,201	5.51
Capital Stock	9,150,897	9,150,897	-	-
Capital Surplus	93,045	109,718	16,673	17.92
Retained Earnings	6,915,111	8,016,188	1,101,077	15.92
Other equity	(330,945)	(577,494)	(246,549)	(74.50)
Treasury Stock	(21,182)	(21,182)	-	-
Non-controlling interest	233,399	272,564	39,165	16.78
Total equity	16,040,325	16,950,691	910,366	5.68
Description: 1. The increase in other assets in 2019 was due to the application of the "IFRS16 Lease" bulletin from this year, and the reclassification of those assets defined in the bulletin as rights-to-use assets. 2. The increase in non-current liabilities in 2019 was due to the application of the "IFRS16 Lease" bulletin from this year, reclassification of those defined in the bulletin as lease liabilities, and the increase in deferred tax liabilities. 3. The increase of negative value of other equity in 2019 was due to the depreciation of RMB against NT$, resulting in an increase in the exchange loss in the conversion of financial statements of foreign operatingagencies.

-269-

II. Financial performance

(I) Comparative Analysis of Operational Performance

(I)Comparative Analysis of Operational Performance	(I)Comparative Analysis of Operational Performance	(I)Comparative Analysis of Operational Performance	(I)Comparative Analysis of Operational Performance	(I)Comparative Analysis of Operational Performance
Unit: NTD Thousand
Fiscal year Item	2018	2019	Increase (decrease) amount	Increase (decrease)
Operatingrevenue	27,340,587	31,266,232	3,925,645	14.36
Grossprofit	8,254,345	9,631,013	1,376,668	16.68
Operating profit(loss)	3,149,836	4,423,873	1,274,037	40.45
Non-operating income and expense	526,396	124,661	(401,735)	(76.32)
Netprofit before tax	3,676,232	4,548,534	872,302	23.73
Income tax expenses	707,925	1,093,698	385,773	54.49
Net income from continuing operations	2,968,307	3,454,836	486,526	16.39
Loss from discontinued operations	-	-	-	-
Netprofit for thisperiod	2,968,307	3,454,836	486,529	16.39
Other comprehensive income (net, after tax)	(138,749)	(256,189)	(117,440)	(84.64)
Total comprehensive income	2,829,558	3,198,647	369,089	13.04
Analysis of the proportion of increase and decrease: 1. In 2019, operating profit is increased mainly due to increase of gross profit margin (mainly due to difference of product assortment), inventory scrap loss, and decrease of sales promotion expenses. 2. The decrease in non-operating income and expenditure in 2019 was due to the revenue disposal of an investment property (Wugu Factory) last year. 3. The increase in income tax expense in 2019 is mainly due to the increase in net operating profit in the current period. 4. The increase in other comprehensive losses (net after tax) in the current period of 2019 was due to the depreciation of the exchange rate of RMB against NT$, resulting in an increase in exchange losses converted into financial statements of foreign operating agencies of overseas invested companies.

(II) Potential impact on and significant change of the future business operations of the Company: None.

-270-

III. Cash flows

(I) Analysis of cash flow changes in the most recent year

				Unit: NT$ Thousand	Unit: NT$ Thousand
Cash balance at the beginning of year (1)	Annual net cash flow from operating activities (2)	Other cash outflows throughout the year (3) (Note)	Amount of cash surplus (shortfall) (1)+(2)-(3)	Remedial measures for cash surplus
				Investment plan	Financial plan
2,589,952	5,026,474	3,910,523	3,705,903	N/A	N/A

Operating Activities: The net cash inflow in the current period was NT$5,026,474 thousand ,mainly due to operating profit.
Investment Activities: The net cash outflow of NT$1,100,029 thousand in the current period is mainly the purchase of financial assets measured at amortized cost.
Financing Activities: The net cash outflow for the current period is NT$2,705,299 thousand mainly due to the decrease of short-term loans and the payment of cash dividends.

Note : This includes the impact of exchange rate changes on cash and cash equivalents.

(II) Improvement Plan of Liquidity Shortage and Analysis of the Liquidity

There was no shortage of liquidity this year.
Liquidity Analysis in the Last Two Years:

Fiscal year Item	2018(1)	2019(2)	Ratio of increase (decrease) (2)-(1) / (1)
Cash flow ratio	35.14	65.43	86.20%
Cash flow adequacy ratio	101.02	118.09	16.90%
Cash reinvestment ratio	3.93	13.12	233.84%
Analysis of the proportion of increase and decrease: 1. The increase in cash flow ratio in 2019 was due to increase in net cash flow from operating activities for the increase of operating revenue, receivables and turnover rate of inventory. 2. The increase in cash reinvestment ratio in 2019 was mainly due to the increase in net cash flow from operatingactivities.

-271-

(III) Cash Liquidity Analysis for the Following Year

Unit: NT$Thousand

				Unit: NT$Thousand	Unit: NT$Thousand
Cash balance at the beginning of year (1)	Annual net cash flow from operating activities (2)	Other cash outflows throughout the year (3)	Amount of cash surplus (shortfall) (1)+(2)-(3)	Remedial measures for cash inadequacy
				Investment plan	Financial plan
3,705,903	4,030,147	2,977,099	4,738,950	N/A	N/A

1. Cash flow analysis for the Following Year:

(1) Operating activities: Estimated net cash inflow is mainly due to expected operating profit.
(2) Investment activities: Mainly due to the allocation of funds to financial assets and the addition of property, plant and equipment.
(3) Financing activities: Mainly refers to issuance of cash dividends.

2. Improvement plan for insufficient cash liquidity and liquidity analysis: N/A.

IV. Impact of Major Capital Expenditure on Financial Operation in the Most Recent Year

(I) Applications of Major Capital Expenditure and Source of Funds in the Most Recent Year

Unit: NT$ Thousand

Planning item	Actual or Expected Sources of Capital	Actual or Expected Dates of Completion	Total amount of capital needed	Actual or expected	Actual or expected	applications of the	applications of the	capital
				2019	2020	2021	2022	2023
Purchase of machinery, transportation and office equipment as well as computer software, renovation of houses and buildings, and land use rights (improvement)	Own funds	2020	702,329	405,804	296,525	-	-	-

(II) Expected possible benefits:

Expected increase in production and sales volume, value and gross profit: annual output increased by 7%; annual sales value increased by 10%; and annual gross profit increased by 9%.
Description of other benefits: In addition to upgrading production machines and tools in factories, it can increase production capacity and reduce subcontracting, as well as supply market demand nearby, reduce logistics costs to improve the overall profit of the company.

-272-

V. Reinvestment Policies, Main Reasons for Its Profits/Losses, Improvement Plans in the Most Recent Year and Investment Plan for the Following Year:

Unit: NT$ Thousand

Remark Item	Amount of Profit (Loss) in 2019	Policy	Main reasons for profit or loss	Improvement plan	Investment plan for the following year
Shanghai Standard Foods Co., Ltd.	69,321	Wujiang plant will lease part of the plant and Inner Mongolia plant is the edible oil production base.	Investment real estate rental income and interest income increased.	Cooperate with the development of the Group to carry out resource integration.	Depend on changes in future market demand.
Standard Dairy Products Taiwan Ltd.	447,084	Mainly develop and sell related products in this industry to increase market share and create profits.	Performance grew steadily and capacity utilization increased.	Grasp the market pulsation and continue the development of new products to meet the needs of customers for innovation and change, and cooperate with cost and expense management to maintainprofits.	No defined investment plan is made so far.
Standard Investment (China) Limited	689,913	The main plan is Standard Foods Group's investment and sales center in China to expand domestic demand in mainland China and create profits.	Performance grew steadily and profits increased.	Focus on marketing according to market segments, optimize product structure, and expand marginal contribution.	Depend on changes in market demand in the future, we will strengthen the development of diversified channels and improve our competitive advantage.
Standard Foods (China) Limited	162,562	It is mainly planned to be a production base for edible oils and nutritional foods.	Market demand increased and capacity utilization increased.	To expand product lines to make full use of production capacity and reduce allocation of capital cost.	To continue to implement expansion plan of related products.
Standard Foods (Xiamen) Co., Ltd.	175,986	It is mainly planned to be a production base for edible oils and nutritional foods.	Market demand has increased and capacity utilization rate has gradually increased.	To expand product lines to make full use of production capacity and reduce allocation of capital cost.	To continue to implement expansion plan of related products, and will expecte to expand four production lines.
Dermalab S.A.	7,694	With the change of market structure and consumption habits, it is planned to diversify and develop various products in the consumer goods field.	At present, it is in the stage of planning development and market expansion.	Actively expand the market and strengthen the internal management mechanism.	The plan to continue the development of beauty products.

-273-

VI. Analysis and Evaluation of Risks in the Most Recent Year and Up to the Date of Publication of the Annual Report

(I) Impact of fluctuation in interest rate, foreign exchange rate, and inflation on corporate profits and losses and future countermeasures:

1. Interest Rate: The interest rate risk of the consolidated company mainly comes from bank loans. The interest expense of bank loans accounted for about 1.12% of the net profit before tax in 2019, so the interest rate change has little impact on the profit and loss of the consolidated company. Looking ahead, we will continue to observe the trend of interest rates and reduce interest rate risks by adjusting the positions of assets and liabilities.

2. Foreign exchange rate: Many raw materials of the consolidated company are imported from abroad, so exchange rate changes have certain influence on profits. Therefore, in addition to formulating clear operational strategies and strict risk control procedures, the consolidated company will adjust its foreign exchange operational strategies in time to reduce the risk of exchange rate fluctuations in coordination with real-time exchange rate changes.

3. Inflation: The consolidated company effectively responds to the impact of inflation by controlling global political and economic changes and fluctuations in market prices of end products at any time, maintaining good interaction with suppliers, distributors and customers, and at the same time flexibly adjusting purchasing and marketing strategies. It is not expected to be a significant impact on the profits and operating conditions of the consolidated company.

(II) Policies of engaging in high-risk, high-leverage investments, giving loans to others, providing endorsements/guarantees and engaging in derivatives transactions, main reasons for the profits and losses as well as future countermeasures:

The consolidated company did not engage in high-risk and highly leveraged investments in 2019 and up to the date of publication of the annual report. Subsidiaries in China avoid risks arising from exchange rate fluctuations by purchasing required raw materials directly from domestic suppliers.

Funds loaned to others by the consolidated company in 2019 and up to the date of publication of the annual report are funds loaned between subsidiaries in which the company directly and indirectly holds more than 50% of the shares. The purpose is to provide turnover capitals for subsidiaries.

The endorsements/guarantees of the consolidated company for the year 2019 and up to the date of publication of the annual report are the endorsements/guarantees of the company for subsidiaries holding 100% of the shares. The purpose is to provide guarantee for the funding amount of each subsidiary.

-274-

(III) Future R&D plans and estimated expenses on the R&D:

R&D plan	Current progress	R&D expenses required to be inputted	Estimated completion time	Main factors affecting the success of R&D in the future
Development and Research of HealthyFood	22.57% completed	NT$9,024,000	4th quarter, 2020	Product development and clinical test results

(IV) Impact of Changes in Major Domestic/Overseas Policies and Regulations on the Company's Finance and Business, and Countermeasures:

In order to strengthen the management of food hygiene and safety and protect consumer rights and interests, the Food and Drug Administration, Ministry of Health and Welfare has launched eight new systems such as traceability and food labeling since Jan. 1, 2017. Food safety incidents have occurred frequently in recent years. Standard Foods will continue to pay attention to important policies at home and abroad and dynamically adjust the countermeasures. It will continue to adhere to the promise of "quality and safety," strictly control the food production process, implement supply chain management, and give priority to the health and safety of consumers.

(V) Impact of Changes in Technology and Industry on Corporate Finance and Business, and Countermeasures:

The company attaches great importance to the development of science and technology and changes in the industry, and has always been committed to the application of information technology, such as the introduction of enterprise resource integration system ERP, the establishment of a group video conference system, the establishment of a network telephone and an online management system for group employee, and a human resource management system, with active and effective application of information technology to reduce costs and enhance the competitiveness of enterprises.

(VI) Impact of Changes in Corporate Image on Corporate Risk Management, and Countermeasures

There were no major negative events affecting the corporate image in 2019. The company regards "becoming an enterprise that consumers feel at ease and trust" as its highest aim, and strictly checks the quality of the company's products with high specifications and high standards. As a result, the company has obtained the Good Food Practices (GMP)certification, excellent agricultural products of CAS, ISO22000 food safety and hygiene and the highest level (Level III) of international SQF. At the same time, it upholds the belief of giving back to the society in many ways, donates or sponsors activities to education, charity and disadvantaged groups from time to time. The company hopes to become a model enterprise that takes from the society and gives back to the society.

(VII). Expected Benefits and Possible Risks Associated with M&A and Countermeasures: N/A.
(VIII) The expected effect and possible risk of plant expansion and the response measures: The company mainly aims to continuously replace old equipment with the new in the existing product line in order to improve the production capacity and quality. Standard Foods (Xiamen), a subsidiary company, has completed its factory and is currently expanding a production line and hard equipment. It is expected to integrate regional resources with convenient location and achieve the goal of reducing costs of product and transportation as well as supply Standard Foods Group's sales needs in China, thus expanding the sales scale and improving the operating performance in China. Therefore, there should be no doubt of risks.

-275-

(IX) Risk of centralized purchase or sales, and the response measures:

Standard Foods's main purchase company in 2019 was Company A, accounting for 13.1% of the net purchase, while other individual purchase companies accounted for less than 10% of the total purchase. In addition, the main customer of sales was Company A, accounting for 15.5% of the net sales, while the remaining customers of sales did not exceed 10%, so there was no case of concentration of purchase or sales.

(X) Impact and Risks Resulted from Major Transfer or Replacement of Equities of Directors, Supervisors or Shareholders with More than 10 Percent of the Company's Shares, and Countermeasures:

Directors or major shareholders holding more than 10% of the shares have not been transferred or replaced in large quantities, so there is no significant impact or risk to the company.

(XI) Impact and Risks Resulted from Changes in Management Right on the Company, and Countermeasures: There are no changes in management right of the company.
(XII) The company and its directors, supervisors, general managers, substantive controllers, major shareholders holding more than 10% of the shares, and subordinate companies have been involved in material litigation, non-litigation or administrative litigation that have been concluded with judgment or still in progress. The result may have a significant influence on shareholders' equity or securities prices: None.

(XIII) Other Material Risks and Countermeasures:

Recently, the company has drawn up relevant epidemic prevention measures and measures against COVID-19, and complied with and cooperated with the relevant announcements of government agencies, so as to protect and take care of the health of each colleague and ensure the health and safety of the working environment. There is no doubt about the risks.

Risk management policies:

The risk management policy of Standard Foods is to build a risk management mechanism with risk identification, measurement, supervision and control and an integrated risk management system, as well as promote an operating model with an appropriate risk management to achieve operating goals and increase value for shareholders.

Standard Foods actively develops more advanced and more sensitive procedures and criteria for monitoring, evaluating and controlling risks in addition to the original systems and regulations regarding the major risks faced by various business operations, such as marketing market, production and operation, human resources planning, new product development progress, and financial and accounting control, so as to balance safety and efficiency and establish a more economical business operation mode, such as strengthening the establishment of information systems and strengthening the capability of early warning and monitoring.

Organizational structure of risk management:

Standard Foods has a risk response organization, which is responsible for different levels according to organizational units, and is managed centrally by the general manager. Under the organization, there are various divisions with central

-276-

power and responsibility, which are responsible for promoting risk management in various businesses.

(1) Financial risk, liquidity risk, credit risk and legal risk: The financial accounting and legal departments shall formulate and implement various strategies, and take various countermeasures according to regulations and analysis and evaluation of changes in the market. The auditing division will control and check them through risk evaluation.
(2) Market Risk: Each institution shall formulate and implement various strategies in accordance with their responsibilities. At the same time, according to the laws, policies and analysis and evaluation of market changes, we will take various countermeasures to control and deal with the possible market risk crisis.
(3) Auditing Office: it is instructed and operated directly by the board of directors, which sets the company's risk assessment and control procedures to assist in the completion of the overall risk management action plan; in addition, for the company's internal and related enterprises, it uses risk assessment and audit mode to examine the high-risk items that affect the achievement of the objectives, and manage the internal control system to increase the organizational value and improve the operation and management risks. Also, it reports audit results regularly to the board of directors.

VII. Other matters: None.

-277-

==> picture [342 x 588] intentionally omitted <==

-278-

Major business or products	Production and sales of dairy products and beverage	Production and sales of beverages	Investment	Selling of health supplement products	Manufacture and sale of computer peripherals and computer appliances	Investment	Investment	Investment	Development and sales of cosmetics and skincare products	Sales of cosmetics and skincare products	Production and sales of edible oil and nutritious products	Investments/selling of cooking oil and nutriments	Making and selling cooking oil and nutriments	Sales of nutrition foods and import/export trade.	Sales of nutrition foods and import/export trade.	Technological transfer, technical consultation, and technical service in health technology.
Total paid-in capital	300,000	79,070	241,000	10,000	199,471	US$123,600 thousand	US$150,125 thousand	US$150,051 thousand	CHF 2,600 thousand	€3 thousand	US$123,500 thousand	US$121,213 thousand	US$55,000 thousand	RMB12,000 thousand	RMB80,100 thousand	US$1,000 thousand
Address	5F., No.136, Sec. 3, Ren’ai Rd., Da’an Dist., Taipei City	5F., No.136,Sec. 3, Ren’ai Rd., Da’an Dist., Taipei City	5F., No.136, Sec. 3, Ren’ai Rd., Da’an Dist., Taipei City	3F.,No.136, Sec. 3, Ren’ai Rd., Da’an Dist., Taipei City	No.6, Hsinan Road, Hsinchu Science Industrial Park, Hsinchu City	Portcullis Chambers, 4th Floor, Ellen Skelton Building, 3076 Sir Francis Drake Highway, Road Town, Tortola, British Virgin Islands VG1110	P.O. Box 31119 Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman, KY1–1205, Cayman Islands	Room 1004, AXA Centre, 151 Gloucester Road, Wanchai, Hong Kong.	Seestrasse 59,8703 Erlenbach, Switzerland	CalleBalmes 177, 08006 Barcelona, Spain	3rdfloor, Building 8, o.1128, Wuzhong Road, Shanghai	No. 88, Dalien W. Rd., Economy and Technology Development District (New District), Taicang Port	No. 88, Dalian W. Rd., Economy and Technology Development District (New District), Taicang Port	418 Futer E. Rd Sec one., Room 703, Level 7, Shanghai Free-Trade Zone	Room 5, floor 4, building 1, No. 39, Jiatai Road, China (Shanghai) pilot Free Trade Zone	1128 Wuzhong Road, 2ndFloor, Block 8, Shanghai City
Date of Establishment	April 16, 1999	March 24, 1998	April 28, 1997	February 23, 2005	July 30, 1986	May 17, 2000	August 5, 2011	August 30, 2011	October 31, 1989	July 5, 2012	September 11, 2001	December 26, 2011	January 21, 2012	July 25, 2014	December 2, 2014	May 11, 2015
Corporation	Standard Dairy Products Taiwan Ltd.	Standard Beverage Company Ltd.	Charng Hui Ltd.	Le Bonta Wellness International Co.	Domex Technology Corporation	Accession Limited	Standard Investment (Cayman) Limited	Standard Corporation (Hong Kong) Ltd.	Dermalab S.A.	Swissderma, SL	Shanghai Standard Foods Co.	Standard Investment (China) Ltd.	Standard Foods (China) Ltd.	Shanghai Dermalab Corporation	Le Bonta Wellness Co., Ltd..	Shanghai Le Ben De Health Technology Co., Ltd.

-279-

Major business or products	Manufacture and sales of cooking oil and nutrition supplements	Property management	Property management
Total paid-in capital	US$40,000 thousand	US$18,600 thousand	US$11,600 thousand
Address	No. 99 Sandu Rd. Xiamen Pian District, Pilot Free Trade Zone	Room BN 138, Building No. 22, Alley No. 88, No. 1~30, Minbei Road, Shanghai.	Room BN 139, Building No. 22, Alley No. 88, No. 1~30, Minbei Road, Shanghai.
Date of Establishment	Sep 2,2015	Jun 8,2015	Jun 8,2015
Corporation	Standard Foods (Xiamen) Co., Ltd.	Shanghai Le Ho Industrial Co., Ltd.	Shanghai Le Min Industrial Co., Ltd.

-280-

Shareholding ratio (Capital investment ratio)	100.00% ─ ─ ─	100.00% ─	100.00% ─ ─ ─	100.00% ─	100.00% ─ ─ ─	100.00% ─	100.00% ─	52.01% ─ 2.76% ─
Shares (Invested capital)	30,000,000 shares ─ ─ ─	30,000,000 shares ─	7,907,000 shares ─ ─ ─	7,907,000shares ─	24,100,000shares ─ ─ ─	24,100,000shares ─	NT$ 10,000 thousand founded ─	10,374,399shares ─ 550,385shares ─
Name or Representative	Standard Foods Corporation Representative: Ter-Fung Tsao Yao Steven Yih Chun Chris Hong	Standard Foods Corporation Representative: Sophia Huang	Standard Foods Corporation Representative: Ter-Fung Tsao Glendy Chiang Chris Hong	Standard Foods Corporation Representative: Sophia Huang	Standard Foods Corporation Representative: Yao Steven Yih Chun Wendy Tsao Smart Hsu	Standard Foods Corporation Representative: Sophia Huang	Standard Foods Corporation Representative: Yao Steven Yih Chun	Standard Foods Corporation Representative: Ter-Fung Tsao Chun-Hsin Ku Chris Hong
Title	Director	Supervisor	Director	Supervisor	Director	Supervisor	Director	Director
Corporation	Standard Dairy Products Taiwan Ltd.		Standard Beverage Ltd.		Charng Hui Ltd.		Le Bonta Wellness International Co.	Domex Technology Corporation

-281-

Shareholding ratio (Capital investment ratio)	0.02%	2.72%	─ 100.00%	─ 100.00%	─ 100.00%	─ ─ ─ ─ 100.00%	─ ─ ─ ─ 100.00%	─	─
Shares (Invested capital)	3,794shares	542,513shares	─ Standard Foods Corporation holds 123,600,000 shares	─ Standard Foods Corporation holds 150,124,814 shares.	─ Standard Investment (Cayman) Limited holds 150,050,814 shares.	─ ─ ─ ─ Accession Limited holds 2,600 shares.	─ ─ ─ ─ US$ 123,500 thousand founded through Accession Limited	─	─
Name or Representative	Sophia Huang	Chun-Hsin Ku	Ter-Fung Tsao	Ter-Fung Tsao	Ter-Fung Tsao	Arthur Tsao Yao Steven Yih-Chun Glendy Chiang Olgiati, Lorenzo	Jason Hsuan Arthur Tsao Kelly Yao Wei-Lun Tang	Chris Hong	Arthur Tsao
Title	Supervisor	President	Director	Director	Director	Director Director Director Director	Chairman Director Director Director	Supervisor	President
Corporation			Accession Limited	Standard Investment (Cayman) Limited	Standard Corporation (Hong Kong) Ltd.	Dermalab S.A.	Shanghai Standard Foods Co.

-282-

Shareholding ratio (Capital investment ratio)	─ ─ ─ ─ 99.00%	─	─	─ ─ ─ ─ 100.00%	─	─	─ ─ ─ 100.00%	─	─
Shares (Invested capital)	─ ─ ─ ─ US$ 120,000 thousand founded through Standard Corporation (Hong Kong) Limited	─	─	─ ─ ─ ─ US$55,000 thousand founded through Standard Investment (China) Ltd.	─	─	─ ─ ─ Founded by Standard Investment (China) Ltd. with RMB 12,000 thousand	─	─
Name or Representative	Jason Hsuan Ter-Fung Tsao Arthur Tsao Glendy Chiang	Chris Hong	Arthur Tsao	Jason Hsuan Arthur Tsao Kelly Yao Wei-Lun Tang	Chris Hong	Arthur Tsao	Arthur Tsao Kelly Yao Yan Jinglin	Chris Hong	Arthur Tsao
Title	Chairman Director Director Director	Supervisor	President	Chairman Director Director Director	Supervisor	President	Chairman Director Director	Supervisor	President
Corporation	Standard Investment (China) Ltd.			Standard Foods (China) Ltd.			Shanghai Dermalab Corporation

-283-

Shareholding ratio (Capital investment ratio)	─ ─ ─ ─ 51.00% 49.00%	─	─	─ ─ ─ 100.00%	─	─	─ ─ ─ ─ 100.00%	─	─
Shares (Invested capital)	─ ─ ─ ─ Founded by Standard Foods Corporation with RMB 40,900 thousand Founded by Standard Investment (China) Ltd. with RMB39,200 thousand	─	─	─ ─ ─ Accession Limited funded USD1,000 thousand	─	─	─ ─ ─ ─ Founded by Standard Foods (China) Ltd. With USD40,000 thousand	─	─
Name or Representative	Jason Hsuan Arthur Tsao Kelly Yao Hui-Min Fang	Chris Hong	Arthur Tsao	Arthur Tsao Kelly Yao Guang-Yao Yu	Wei-Lun Tang	Arthur Tsao	Jason Hsuan Arthur Tsao Kelly Yao Wei-Lun Tang	Chris Hong	Arthur Tsao
Title	Chairman Director Director Director	Supervisor	President	Chairman Director Director	Supervisor	President	Chairman Director Director Director	Supervisor	President
Corporation	Le Bonta Wellness Co., Ltd.			Shanghai Le Ben De Health Technology Co., Ltd.			Standard Foods (Xiamen) Co., Ltd.

-284-

Shareholding ratio (Capital investment ratio)	─ ─ ─ 100.00%	─	─	─ ─ ─ 100.00%	─	─
Shares (Invested capital)	─ ─ ─ USD 18,600 thousand founded by Standard Corporation (Hong Kong) Ltd.	─	─	─ ─ ─ USD 11,600 thousand founded by Standard Corporation (Hong Kong) Ltd.	─	─
Name or Representative	Arthur Tsao Kelly Yao Wei-Lun Tang	Chris Hong	Arthur Tsao	Arthur Tsao Kelly Yao Wei-Lun Tang	Chris Hong	Arthur Tsao
Title	Chairman Director Director	Supervisor	President	Chairman Director Director	Supervisor	President
Corporation	Shanghai Le Ho Industrial Co., Ltd.			Shanghai Le Min Industrial Co., Ltd.

-285-

Earnings per share ($) (after-tax)	(Note 1)	0.60	(Note 1)	(Note 1)	2,959.23	4.39	4.39	(Note1)	(Note1)	(Note1)	(Note1)	(Note1)	(Note1)	(Note1)
Net income (loss)	(2,979)	74,585	69,321	706	7,694	658,622	658,817	689,913	162,562	(8,057)	(43,680)	175,986	(14,666)	(9,392)
Operating Income (loss)	(2,864)	(5,834)	4,311	(11)	8,620	(210)	(157)	464,173	180,820	(2,512)	(44,882)	210,994	(14,342)	(9,136)
Sales revenue	1,291	-	2,223,686	3,560	177,341	-	-	13,480,503	5,232,817	134,822	20,769	4,757,958	-	-
Net worth	8,523	3,404,845	2,996,109	28,649	118,847	5,220,049	5,219,207	4,435,747	1,864,403	(10,888)	212,250	1,351,155	509,309	317,639
Total Liabilities	-	1,878	509,476	1,182	59,935	20	102	4,210,223	1,084,900	91,063	13,275	1,852,989	-	-
Total Assets	8,523	3,406,723	3,505,585	29,831	178,782	5,220,069	5,219,309	8,645,970	2,949,303	80,175	225,525	3,204,144	509,309	317,639
Stock capital	10,000	3,979,085	3,949,575	31,220	81,651	4,710,865	4,708,566	3,755,530	1,631,668	57,205	380,418	1,307,582	607,717	378,009
Corporation	Le Bonta Wellness International Co.	Accession Limited	Shanghai Standard Foods Co.	Shanghai Le Ben De Health Technology Co., Ltd.	Dermalab S.A.	Standard investment (Cayman) Limited	Standard Corporation (Hong Kong) Ltd.	Standard Investment (China) Ltd.	Standard Foods (China) Ltd.	Shanghai Dermalab Corporation	Le Bonta Wellness Co., Ltd..	Standard Foods (Xiamen) Co., Ltd.	Shanghai Le Ho Industrial Co., Ltd.	Shanghai Le Min Industrial Co., Ltd.

-286-

Amount loaned to the subsidiary							-	-	-
Endorsement amount made for the subsidiary							-
Under pledge							-
Shareholdings & amount up to the printing date of the annual report						6,669,471	shares NT$21,182 thousand
Investment gain (loss)	-	-	-	-	-	-	-	-	-	-	-	-	-
Shares and amount disposed	-	-	-	-	-	-	-	-	-	-	-	-	-
Shares and amount acquired	Bought 166,000 shares for NT$4,938 thousand	9,960 shares from stock dividend	Bought 2,163,000 shares for NT$16,244 thousand	11,694 shares from stock dividend	352,598 shares from stock dividend	675,813 shares from stock dividend	810,975 shares from stock dividend	628,506 shares from stock dividend	433,669 shares from stock dividend	525,221 shares from stock dividend	635,517 shares from stock dividends	256,518 shares from stock dividends	-
Date of acquisition or disposition	2000	2000	2001	2009	2010	2011	2012	2013	2014	2015	2016	2017	Until the report publication date this year
Shareholdi ng ratio of the Company							100%
Fund source					Self-sufficient capital
Total paid-in capital					241,000
Name of Subsidiary					Charng Hui Ltd

-287-

IV. Other Necessary Supplements:

(I) Listing method of impairment of assets and liabilities

Allowance for bad debts of accounts receivable

Purpose: In order to assess the risk of collection of accounts and bills, the recovery rate of each age is obtained based on the customer's past experience and the sample number, which is used to assess the impairment amount of assets in the current period.

Basis for listing:

(1) Listing of allowance for bad debts:
1.1. Accounts receivable are agreed to be collected within one year, so significant financial components are not included. IFRS 9 simplified method is adopted to recognize impairment based on lifetime expected credit losses.
1.2. The company's customers are all companies in similar industries, and according to the historical experience of credit losses, there is no significant difference in the loss types of different customer groups. Therefore, the reservation matrix does not further distinguish the customer groups. When the accounts receivable is overdue for more than 180 days, the company judges that the recovery cannot be reasonably expected (loss rate =100%).
1.3. The accounting unit calculates the amount of asset impairment based on the above and adjusts the amount of the item "allowance for bad debts."
(2) Charging off allowance for bad debts:
2.1. Identification of bad debt:
- A. Part or all of the claims cannot be recovered due to bankruptcy, escape, conciliation or declaration of bankruptcy, or other reasons.
- B. Claims that are overdue for two years and principal or interest have not been received after collection.

2.2. Charge off:

A. In case of actual bad debt losses, legal evidence should be attached to strike a balance in accordance with Article 94 of the Code of Auditing Business Income Tax.
B. When charging off bad debts, the allowance for bad debts should be set off in the current year. If there is any shortage, it should be listed as the loss in the current year.

2. Allowance for reduction of inventory to market

Inventories include raw materials, packaging materials, work in process, finished products, and commodities. The value of inventory shall be determined based on the cost and Net Realizable Value (NRV), whichever is lower. With the exception of inventory of the same category, individual items shall be assessed when comparing the cost and NRV.

-288-

The NRV is the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated costs necessary to make the sale. Cost of inventory is calculated using weighted-average method.

(II) Key Performance I ndicators of the company: Key Performance Indicators of Standard Foods are mainly divided into financial performance indicators and non-financial performance indicators. In addition to regularly examining the financial performance indicators of operating income, debt ratio, operating cycle, return on equity of shareholders and earnings per share, we also set non-financial performance indicators to control Standard Foods' competitive advantage and industry trends at any time.
(III) Information on relevant certificates obtained by personnel who is related to transparency of financial information: one CPA.
V. Matters that materially affect shareholders' equity or the price of the company's securities as specified in Subparagraph 2, Paragraph 3, Article 36 of the Securities Exchange Act occurred in the most recent year and up to the date of publication of the annual report
On Mar. 22, 2019, the company created a new position of Head of Corporate Governance based on a resolution of board meeting, which is held by CFO Chris Hong.
On Mar. 22, 2019, the company changed CEO based on a resolution of board meeting. The position is held by Arthur Tsao, General Manager of Standard Foods (China) Limited.
On Mar. 31, 2020, the company created a new position of Chief Investment Officer based on a resolution of board meeting, which is held by YAO STEVEN YIH CHUN, General Manager of Standard Foods. Meanwhile, Arthur Tsao, the CEO, also holds the position of General Manager concurrently. The above positions have been adjusted to meet the needs of the Group's development. YAO STEVEN YIH CHUN, an American lawyer and former venture capital partner, has many years of rich experience in merger and acquisition and has deepened his understanding of Standard Foods' business. He will certainly help with the Group's development in the future with his strengths.

-289-

==> picture [589 x 717] intentionally omitted <==

AI assistant

SFC — Annual Report 2019

51753_rns_2020-07-08_6ce26b7a-c06d-4a66-acea-a60835b8f0a7.pdf

Table of Contents

One Letter to Shareholders

I. 2019 Consolidated Business Results

II. 2020 Business Plan and Future Development Strategies

III. Impact of External Competitive Environment, Legal Environment, and Overall Business Environment

1. External competitive environment

2. Regulatory environment

3. Overall business environment

Two. Company Profile

I.2. Department function description

III. Implementation of Corporate Governance

III.1 Information on operations of the Board of Directors

1. A total of 6 meetings (A) were held by the Board of Directors in the most recent year. The attendance of directors is as follows:

III.2 Operations of the Audit Committee:

III.3 Supervisors’ involvements in Board of Directors meetings:

Standard Foods Corporation Statement of Compliance of the Internal Control System

III.12 Major Resolutions of Shareholders' Meeting and Board Meetings During the Most Recent Fiscal Year Up to the Date of Publication of the Annual Report: (1) The most recent important board resolutions are as follows:

IV. Information Regarding Audit Fee

Range of CPA professional fees

V. CPA’s change information:

V.1 Regarding former CPAs

V.2 Regarding successive CPAs

VII.Share transfer and share mortgage of directors, supervisors, executives, and shareholders holding over 10% of shares in last year and by the report publishing date:

IX. The shareholding of the same invested company by the Company, the directors, the supervisors, the managers or another business that is controlled by the Company directly or indirectly

2. Type of Share:

3. Relevant information on the declaration system: None.

(II) Shareholder structure

(III) Dispersal of shareholding NTD 10 Par value

(IV) Major shareholder

(V) Market Price, Net Worth, Earnings & Dividend per Share in the past two years

(VI) Execution of Dividend Policy

1. Dividend Policy:

2. Proposed Distribution of Dividends:

(VII) Impact on operating performances and EPS that resulted from the stock dividend distribution of this year: None.

(VIII) Compensations for employees and remunerations to directors and supervisors

(IX) Treasury stock: None.

IV. Issuance of global depository receipts

V. Employee stock option certificates: None.

VI. Restricted employee rights and new shares issue: None

VII. Mergers and acquisitions: None.

VIII. Fund implementation plan

(I) Plan Details

(II) Execution

Five. Overview of Business Operations

I. Principal activities

(I) Business Scope:

(II) Industry overview:

(III) Technology and R&D Overview

(IV) Long-term and Short-term Business Development Plans

II. Overview of Marketing and Production & Sales

(I) Market Analysis

Nutritional foods:

1. Oats

2. Healthy drinks

3. Baby Food

(1) Market share

(2) Future market demand & supply status and growth

Dairy and drink:

4. Milk powder (adult milk powder and nutrition)

(2) Future market demand & supply status and growth

5. Agency products (milk powder and cheese)

(2) Sliced Cheese: for the market growth, Chesdale is better

Edible oils:

6. Edible oil

(1) Market share

(2) Future market supply & demand status and growth

Others:

8. EMS service (Subsidiary- Domex Corp.):

(2) Future supply/demand and market growth

(II) Application and production process of major products

1. Application of major products

(III) Supply of major ingredients

(V) Production Quantities and Value over the Past Two Years

(VI) Production Sales and Value over the Past Two Years

III. Status of employees over the past two years and up to the printing of the annual report

IV. Information on Environmental Protection Expenditure

(III) Estimated capital expenditure on environmental protection in the next three years.

SFC Annual Report 2019