SINON — Annual Report 2019

Jul 6, 2020

Stock Code:1712 Website for search: https://www.sinon.com.tw https://mops.twse.com.tw

2019 Annual Report

SINON CORPORATION Printed on May, 2020

Spokesperson

Name: Yu, Kuei-Ju Title: Vice General Manager Tel: 886-4-2693-7689 Email: kryu@sinon.com.tw

Deputy Spokesperson

Name: Lai, Hui-Chuan Title: Director Tel: 886-4-2693-3841 ext.1873 Email: hclai@sinon.com.tw

Headquarter and Division

• ‧ Headquarter

Address: 101, Nanrong Rd., Dadu District, Taichung City, 43245, Taiwan (R.O.C.)

Tel: 886-4-2693-3841

• ‧ Division

(1) Crop Protection Division

Address: 101, Nanrong Rd., Dadu District, Taichung City, 43245, Taiwan (R.O.C.) Tel: 886-4-2693-3841

(2) Chemical Division

Address: 101, Nanrong Rd., Dadu District, Taichung City, 43245, Taiwan (R.O.C.) Tel: 886-4-2693-3841

(3) Plastics Division

Address: No. 3, Zhangbin E. 12th Rd., Shengang Township, Changhua County 509, Taiwan (R.O.C.)

Tel: 886-4-7910393

Stock Transfer Agent

CAPITAL SECURITIES CORP.

Address: B2, No.97, Sec.2, Dunhua S. Rd., Taipei City 106, Taiwan (R.O.C.) Tel: 886-2-3-5000

Website: agency.capital.com.tw

Auditors

Deloitte & Touche Accounting Firm Auditors: Su, Ting-Chien, Tseng, Done-Yuin Address (Taichung office): 22F, No. 88, Sec. 1, Huizhong Rd. Xitun Dist Taichung, 40756, Taiwan Tel.: 886-4-3705-9988 Website: www.deloitte.com.tw

Overseas Securities Exchange: None.

Corporate Website: www.sinon.com

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Business Concept, Mission & Vision

Business Concept

Delivering Integrity and Equity, Bringing Prosperity and Growth.

Mission

Building solid strengths for our employees and shareholders practicing sincere and honest business values to be returned to the society.

Vision

Establish a balanced and happy work environment.

Ensure that every member can focus on assignment, and provide a promising career path surpassing the peer.

Contribute to strengthen Taiwan for the global arena.

Note ：

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 version shall prevail.

Contents

I	Letter to Shareholders	01
II	Company Profile	04
III	Corporate Governance Report	05
	3.1 Organization	05
	3.2 Directors, General Managers and Vice General Managers	07
	3.3 Corporate Governance Implementation	15
	3.4 Company’s Audit Fee and Independence	43
	3.5 Replacement of CPA	44
	3.6 Chairman and General Manager Has Held a Position at the Accounting Firm of	44
	Company’s CPA
	3.7 Changes in Shareholding of Directors, Managerial Officers and Major Shareholder	45
	3.8 Relationship among the Top Ten Shareholders	46
	3.9 The Total Number of Shares and Total Equity Stake Held in Any Single Enterprise by	46
	the Directors and Managerial Officers
IV	Capital Overview	47
	4.1 Capital and shares	47
	4.2 Issuance of Corporate Bonds	52
	4.3 Status of Preferred Shares	53
	4.4 Status of Global Depository Receipts	53
	4.5 Status of Employee Share Subscription Warrants and New Restricted Employee Shares	53
	4.6 Status of New Shares Issuance in Connection with Mergers and Acquisitions	53
	4.7 Status of Financing Plans and Implementation	53

V	Operational Highlights	53
	5.1 Business Activities	53
	5.2 Market and Sales Overview	55
	5.3 The Number of Employees’ Average Years of Service, Average Age, and Percentage of	58
	Employees at Each Education Levels
	5.4 Expenditure for Environmental Protection	58
	5.5 Labor Relations	58
	5.6 Important Contracts	59
VI	Financial Information	60
	6.1 Five-Year Financial Summary	60
	6.2 Five-Year Financial Analysis	62
	6.3 Audit Committee's Review Report	63
	6.4 Consolidated Financial Statements and Independent Auditors’ Report	64
	6.5 Standalone Financial Statements and Independent Auditors’ Report	64
	6.6 Occurrence of Financial Distress on the Company and Affiliates	64
VII	Review of Financial Conditions, Financial Performance, and Risk Management	64
VIII	Special Disclosure	69
IX	Other Supplementary Information	72
X	Appendix	73

I. Letter to Shareholders

Dear Shareholders,

Looking back to last year, global economy was stable under the support of the monetary easing policies and low interest rate environment adopted by central banks of major economies. However, due to the impact of China-US trade war and Brexit, the economic momentum weakened.

Secondly, crop protection is a highly climate-dependent industry. In recent years, extreme weather events such as abnormal weather, rainstorm, and drought have driven market demand out of predictable patterns. Domestic and foreign regulations governing the management and use of agrochemicals have become more and more strict. Moreover, the agricultural environment in Taiwan is aging year by year.

Despite the changing external environment, the Group's companies are still conscientious and continue to focus on the fields of crop protection, raw material synthesis, distribution, safe food and consumer products. With the joint efforts of the management team and all colleagues, the business continues to grow steadily.

In the crop protection market, we devote for Taiwan's leading brand of agricultural resources. We cultivate the agricultural resources market with a professional team, collaborate with the government's eco-friendly development policy and cooperate with major agricultural companies in the world to provide complete crop protection and nutritional cultivation solutions which guide farmers to produce safe and high-quality agricultural products. For product research and development, we develop high-efficiency biological formulations and environment-friendly cultivation materials, taking into account the cost and profit of farmers, to ensure the domestic agrochemicals brand advantages and market share. For overseas crop protection market, we effectively reduce the climate risks by continuously expanding business over the years. In the meantime, with different demand cycles of crop protection products in the northern and southern hemispheres, there is no obvious off-peak season for capacity allocation which enables stable and average shipments throughout the year.

In general, 2019 was a severe year for the crop protection market. With years of efforts on the supply side and maintenance of agrochemicals licenses, the Company remained its profitability and expanded the market continuously.

For the subsidiaries, Taiwan Fresh Supermarket Co., Ltd. consolidates the resources of the supply centers and farmers in Taiwan, establishes comprehensive control and oversight system throughout the production and sales process of vegetables and fruits and strictly controls the management of date of freshness and pesticide residues; actively develops APP to integrate online and offline technologies, and promotes multiple payment methods; in terms of store expansion, the Company has entered the northern region of Hsinchu and is developing towards Taoyuan, Taipei and New Taipei City, aiming to become a nationwide supermarket chain.

Yumei Biotec Corporation devotes to provide safe, healthy and high-quality household products and food, and focuses on upgrading cultivation technologies in farm business; in vegetable and fruit processing factories, it develops customers for ready-to-eat and cutting products, increasing profits and diversifying products; regarding catering service, it actively adopts various aspects of food safety and quality control; in terms of production and sales of household goods, it develops and promotes natural and safe products to build a secure product chain.

Moving forward, the Company will keep research and develop new technologies, utilize the products and technologies to overcome the difficulties of global warming and product production and sales, and create excellent business results.

The impact of the Company's external competitive environment, regulatory environment, and overall operating environment on the 2019 business performance, 2020 business plan, and future development strategies are summarized respectively as follows:

For supply perspective, although the increasingly stringent environmental regulations in mainland China have resulted in a contraction of supply for two consecutive years and, in turns, the higher costs. Fortunately, we have been deeply rooted in the mainland China market for a long time. By the ingenious arrangements of supply ensuring and agrochemicals licenses collaborations, some of the previous competitors have turned into strategic partners and further changed the Company's market position in India and South America. In Europe, we have been exploring Eastern European market continuously and shipped to Ukraine and Croatia for the first time in 2019. In addition, after years of hard work, the Company shipped to Germany for the first time. Germany is recognized as a hard-to-enter market within the EU. This represents an indicative significance to Sinon.

2019 Annual Report｜Letter to Shareholders

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Operating Performance in 2019

1. Outcome of business plan

• (1) Consolidated operating revenue: NT$17,081 million

• It includes:

Crop protection: NT$10,081 million, accounts for 59%.

• Supermarket: NT$4,462 million, accounts for 26%.

Houseware and catering services: NT$1,870 million, accounts for 11%.

Others: NT$668 million, accounts for 4%.

• (2) Consolidated gross profit: NT$4,541 million, accounts for 27% of the revenue.

• (3) Consolidated net profit: NT$885 million, accounts for 5% of the revenue.

• (4) Consolidated net profit after taxes: NT$675 million, accounts for 4% of the revenue.

• (5) Individual revenue: NT$8,216 million

2. Budget implementation

Budget implementation
			Unit: NT$millions
Item	Budget 2019	Actual amount 2019	Reaching rate%
Consolidated operating revenue	18,500	17,081	92%
Netprofitafter taxes	790	675	85%

1. Financial receipts and expenditures and profitability analysis

				Increase
Item		2019	2018
				(Decrease) $
Net cash generated from operating activities		NT$1,742 million	NT$1,269 million	37
Net cash used in investing activities		NT$ (335) million	NT$ (340)million	(1)
Net cash used in financing activities		NT$ (1,191) million	NT$ (1,112)million	7
Return on assets (%)		5	5	0
Return on equity (%)		10	11	(9)
Ration to paid-in capital (%)	Operating profit	21	22	(5)
	Net profit before taxes	20	21	(5)
Profit margin (%)		4	4	0
Earnings per share		NT$1.6	NT$1.74	(8)

1. Research and development status

2. (1) The Company has completed the trail runs of three kinds of products. It will be introduced in factories in the future.

3. (2) The Company has submitted samples of seven kinds of products. All samples have been registered for fulfilling the customers’ requirements.

4. (3) The Company has completed the process development for six items and improved the manufacturing process for seventeen items to increase the product competitiveness.

5. (4) The Company has completed source verification of new suppliers for fifteen items of materials to ensure stable supply for materials and reduce the costs.

Summary of Business Plan of this Year

1. Operating guidelines

2. (1) In domestic crop protection market, the Company will keep striving for product agency and OEM production of the world's major manufacturers, following the trend of the world to actively develop safe and low-toxicity prevention materials, and assisting farmers to establish production traceability and produce safe agricultural products through using the combination of pesticides. In terms of fertilizer and cultivation management, the Company will promote the combination of green and safe biological fertilizers and soil-friendly fertilization strengthen the development of organic culture products, controlled release fertilizers and natural plant biostimulants, and establish precise nutrition management and labor-saving cultivation, so as to consolidate the domestic brand advantages and market share.

3. (2) It will also provide farmers with crop disease and insect pest solutions, introduce excellent varieties of vegetables and fruits species, and help farmers produce safe and high-quality agricultural products by integrating the crop cultivation management technologies in Sinon Supply Centers throughout Taiwan.

4. (3) Establish strategic partnerships with the multinational manufacturers in Europe, U.S. and Japan, to accelerate the licensing process and product deployment, and strive for the distribution rights of the leading brand or patented agrochemicals, so as to enhance market positioning.

5. Sales forecast and the bases

Based on actual sales in 2019 and market demand in 2020, it is estimated that the sales of crop protection products in 2020 will be 86,833 tons.

1. Critical production and marketing policies

2. (1) To accommodate with the policies, establish a pesticide sales certificate issuance system. Provide solutions with a complete product line to meet the requirements of farmers, supplemented by various business activities to increase market share. Cooperate with Agriculture and Food Agency to promote the eco-friendly cultivation policies and increase the research team and large farmers market.

3. (2) Research, develop and produce intermediate products of high value-added key specialty chemicals and agricultural chemicals, integrate productivity to produce competitive products, so as to satisfy the high-quality and low cost requirements of multinational companies, and

2019 Annual Report｜Letter to Shareholders

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service local customers directly by overseas subsidiaries to enhance business performance.

• (3) Plastics business:

• A. In cope with the trends of plastic restrictions environment in various countries, the Company has jointly developed biological packaging materials with downstream customers, and participated in overseas exhibitions to win business opportunities for export.

• B. Procure all-electric energy-saving equipment to reduce the power consumption and the pressure of rising costs

• C. Develop 3.5cc external spring pumps to extend the comprehensive product line.

Future Development Strategies of the Company

1. Aiming for producing safe agricultural products, eco-friendly farming and soil care, utilizing the professional skills of certified agronomists to serve the countryside and provide solutions for crop protection and nutrient cultivation, and taking the establishment of safe agriculture and assured agricultural products as social responsibilities, to become Taiwan's most trusted crop protection science company.

2. Develop new products and increase the overseas registration for key products. Continue to develop and promote the new type of crop protection products such as microorganisms. Through subsidiaries and regional partners, promote the Company's brand name, towards the mission of providing high-quality products and services for farmers and customers all over the world.

3. In addition to collaborate with international manufacturers to increase the product line, the Company will also expand the existing registration for product usage scope to meet farmers’ agrochemicals and fertilizers requirements and thereby improve the crop qualities and increase the farmers’ income.

4. Develop non-patent agrochemicals and maintain and explore new OEM customers.

5. Undertake the technology from the synthesis laboratory to develop mass production technology and provide the factory with stable and safe process technology. Shorten product development time to maintain the Company’s reputation and customer confidence with reasonable production price and quality.

6. Enhance the regional collaboration with international major manufacturers to increase the license registration across regions; register new products in global market and thereby explore new customers and promote overseas market share.

7. Based on agriculture, Sinon Group, in the development of new technologies in the global agricultural economy, aims at sustainable land and environment management, with the concept of innovative biotechnology and green marketing, and guided by chemical synthesis, crop protection, biological fermentation and food safety. From production to sales, the Group provides excellent agricultural ingredients to consumers, and continues to pass on.

Impacts by External Competitive Environment, Regulatory Environment and General Operating Environment

1. Crop protection market

2. (1) In addition to maintain the existing customers by increasing farmer services, the Company keeps focus on developing large farmers to expand customer base.

3. (2) The Company combines professional cultivation techniques of crop protection and nutrition cultivation to provide solutions with innovative special products to improve the farmers' product value and their profit. The Company also takes into account environmental friendliness and labor-saving management to respond to the needs of consumers and the shortage of agricultural labor.

4. (3) The Company shall continue to invest in the registration fee, so as to apply for the registration of new markets, new products and the extension of the usage scope of existing products.

5. (4) Governments of various countries are getting stricter on the environmental protection and agrochemicals regulations and the inspection for licenses. Thus, the cost of obtaining licenses is also getting higher. At the same time, many countries are imposing more and more restrictions on the usage of agrochemicals.

6. (5) Strengthen the understanding of laws and regulations and political and economic situations of various countries, in prevention of the loss of the Company due to uneasy situations or changes in laws and regulations; Timely update and research the environmental protection regulations, agriculture development and the usage of agrochemicals of various countries, and even cooperates with peer companies to comply with the increasingly strict registration management regulations of countries.

7. Others

8. (1) For external competitive environment, due to the rising cost of upstream raw materials and the fierce competition among peers, in order to maintain existing customers, without the price adjustment space in the downstream, the Company will develop towards high value-added products in the future.

9. (2) The Company will continue to develop lightweight and decomposable packaging materials which meet the requirements of environmental protection and FDA regulations, to ensure consumer safety and fulfill social responsibilities for energy conservation and carbon reduction.

10. (3) Environmental protection laws and regulations in China are getting stricter which increases the cost of raw materials, negative growth in fertilizers and pesticides, as well as lowering purchase prices and land transfer policies have led to the reduced inputs from farmers, weak demand and fierce competition in the industry.

11. (4) Global climate change affects the sales of crop protection products directly. The Company will mitigate the impact of climate change by accelerating the pace of global deployment.

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Chairman Horng, Po-Yen

2019 Annual Report｜Letter to Shareholders

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II. Company Profile

Year	Milestones
	1955 Sinon Chemical Factory incorporated
	1959 Sinon Chemical Factory was renamed Sinon Chemical Co., Ltd.
	1960 Sinon Trading Co., Ltd. incorporated
	1962 Established “powder factory”

Started 1963[Sinon Chemical Co., Ltd. was renamed Sinon Chemical Industry Co., Ltd. ] (Date of establishment: November 20, 1963) 1965 Minfeng Chemical Factory Co. Ltd. incorporated

• 1966[Established "technical material factory", "bio-research laboratory", "chemical ] research laboratory"

1967 Established “granule factory”, “hydrochloric acid factory”

1970 Dayuan Industrial Co., Ltd. incorporated

	1970 Dayuan Industrial Co., Ltd. incorporated
Expansion	1971 Fengmei Industrial Co., Ltd incorporated
	1972 Minfeng Chemical Factory Co. Ltd. incorporated
	1974 Production of “Baygon” environmental agents
	1976 Feng Nien Development Co., Ltd. incorporated

1978 Relocated Headquarters to Sinon Building

• “Sinon Chemical Factory ”, “Minfeng Chemical Factory”, “Fengmei Industrial”

• 1979 and “Feng Nien Development” merged into “Sinon Corporation”.

• Growth Established “plastics factory ”

• 1981 Established “ food factory ”

• 1982[Established Sinon Supply Centers, which allow the farmers to be the direct ] beneficiaries of the price difference.

1983 Established Knowledge and Service Information Company.

1988 Set up the first supermarket in Caotun Town, Nantou County.

Transformation Mr. Yang, Wen-Ben succeeded as chairman. 1989 Established “ household product division” Sinon Corporation was listed in the TWSE (Taiwan Stock Exchange).

Year	Milestones
Transformation	1990 Syntai Concrete Co., Ltd. incorporated
	1992 Tong Chia Corporate incorporated
	1993 Established Sinon Life Insurance Co., Ltd. and Hsing Wei Corporation
	1995 Purchased the Sinon Bulls Professional Baseball Team.
Worldwide territories	1998 “Dayuan Industrial” was renamed Feng Nien Corporation Co., Ltd.
	2000 Established Sinon Do Brazil Ltda.
	2001 Established Sinon Chemical (Shanghai) Co., Ltd.
	2002 Established Sinon (Thailand) Co., Ltd.
	2003 Established Sinon USA Inc.
	2004 Established Pt Sinon Indonesia and Sinon Eu GmbH.
	2005 Established Sinon Australia Pty Limited.
Agricultural Technology	2008Established a supermarket business division as an independent subsidiary, Funcom Supermarket
	2009Established Synjia Corporation. Established “daily products chemical factory”
	2010Sinon Chemical (Shanghai) Co., Ltd was renamed as Sinon Chemical (China) Co., Ltd
	2011 Established Zhongshan Synjia Daily Products Co., Ltd.
	2012 Established Sinon Chemical (Nantong) Co., Ltd. and YMY Biotech Co., Ltd.
	2013 Issued the domestic unsecured convertible corporate bonds. Established Yumei Yen Inspection Technology Co., Ltd and Yu Ting Plastic Co., Ltd.
	201560th anniversary of Sinon Corporation Sinon's commodities business was divested and transferred to Yumei Yen Co., Ltd.
	2016 Mr. Horng, Po-Yen succeeded as chairman.
	2020 Yumei Yen Co., Ltd. was renamed as Yumei Biotec Corporation.

2019 Annual Report｜Company Profile

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III. Corporate Governance Report

3.1 Organization

3.1.1 Organization Chart

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

Shareholders’ Meeting
Board of Director
Remuneration
Committee
Audit Office
Chairman
Audit Committee
Vice Chairman
General Manager
Plastics Division Quality Control Division Chemical Division Crop Protection Division Legal Affairs Office Management Division
Business Department Domestic Business Legal Affairs Department HR Department
General Affairs
R&D Department Overseas Business Accounting Department
Department
Finance Department
Supply Chain Department Product Department
Computers Department
Production Processing
Production Factory
Factory
----- End of picture text -----

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3.1.2 Major Corporate Functions

Department	Functions
Management Division	Including departments of finance, accounting, human resources, computers and others, responsible for resource integration and implementation of planning and management systems, business performance evaluation, information system development and security control of the Group.
Legal Affairs Office	Including departments of legal affairs and general affairs, responsible for various legal affairs processing, trademark patents, contract review and asset management of the Group.
Crop Protection Division	Including departments of production processing, product, and sales. Domestic business is mainly based on the supply centers around Taiwan. Through direct sales, specialty stores, cash transactions and professional management, promote and sell the products such as pesticides, fertilizers, seeds and seedlings, agricultural machinery and materials to farmers. Overseas business is responsible for the sale of pesticides, fertilizers and specialty chemicals in the international markets.
Chemical Division	Including departments of production factories, supply chain and R&D. The Company utilizes its excellent R&D team to develop production processes for new products such as competitive specialty chemicals and key intermediates, and to enhance OEM or ODM process acceptance and R&D capabilities to assist factories improve process conditions and control costs. In addition, it is also responsible for businesses such as industrial safety, environmental engineering and construction, including the establishment of new factories, compliance with environmental regulations, maintenance of factory operations, proper environmental protection, industrial safety, and labor protection. The supply chain department is responsible for integrating the parallel transmission of information among suppliers, manufacturers, and customers in the upstream and downstream of the supply chain, in order to save logistics time, raw material costs, and improve and shorten the delivery time, to minimize the overall cost. For the development of agrochemicals, the Company integrates existing equipment and manpower for effective integration. It implements special process technology capabilities through the inheritance of professional talents and the accumulation of core technologies, to effectively integrate and utilize production resources.
Quality Control Division	The Company has Taiwan’s first laboratory set up in accordance with the Good Laboratory Practice (GLP) of the Economic Cooperation Development Organization (OECD), and builds a strong quality assurance team to check the quality, so as to make the products comply with regulations and customer satisfaction, and continue to maintain the completeness of ISO, enhance the image of international quality certification, and strengthen the registrations in the international markets.
Plastics Division	It is responsible for production of plastic packaging materials and provides printing, labeling, hot stamping, etc. It provides practical, high-quality and creative packaging materials to meet customer needs and develop green products.

2019 Annual Report｜Corporate Governance Report

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3.2 Directors, General Managers, Vice General Managers, Assistant vice General Managers and Managers of Each Department and Subsidiary.

3.2.1 Directors

April.25, 2020

Title	Nationality/ Place of Incorporation	Name	Gender	Date Elected	Term (Years)	Date First Elected	Shareholding when Elected	Shareholding when Elected	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement
							Shares	%	Shares	%	Shares	%	Shares	%
Chairman	R.O.C	Horng, Po-Yen	Male	June 16, 2017	3	May 11, 1974	7,119,235	1.91%	7,119,235	1.69%	5,038,857	1.20%
Vice chairman	R.O.C	Chiawen Investment Ltd.		June 16, 2017	3	June 15, 2004	4,337,443	1.16%	5,444,443	1.29%
Vice chairman Representative	R.O.C	Liao, Lien-Heng	Male	June 16, 2017	3	June 15, 2004	306,919	0.08%	306,919	0.07%	634,932	0.15%
Director	R.O.C	Guo Wu, Zhun-Zhen (Note 1)	Female	June 16, 2017	3	April 11, 1989	2,624,509	0.70%	2,624,509	0.62%	183,765	0.04%
Director	R.O.C	Yu, Tse-Jen (Note 2)	Male	June 16, 2017	3	June 28, 2007	98,288	0.03%	98,288	0.02%
Director	R.O.C	Yang, Jen-Yo	Male	June 16, 2017	3	Oct. 9, 2014	2,100,892	0.56%	2,100,892	0.50%
Director	R.O.C	Yunsung Investment Ltd.		June 16, 2017	3	June 16, 2017	7,028,000	1.88%	32,788,000	7.80%
Director Representative	R.O.C	Liu, Yun-Sung	Male	June 16, 2017	3	June 16, 2017	503,189	0.13%	503,189	0.12%	11,000	0.00%	-	-
Independent Director	R.O.C	Chi, Chih-Yi	Male	June 16, 2017	3	June 21, 2013
Independent Director	R.O.C	Hsu, Jun-Ming	Male	June 16, 2017	3	June 21, 2013
Independent Director	R.O.C	Uang, Biing-Jiun	Male	June 16, 2017	3	June 18, 2015

Note 1: Directorship was discontinued from May 19, 1992 to May 28, 1998 due to the re-election of the shareholders general meeting.

Note 2: Directorship was discontinued from Oct 9, 2014 to June 15, 2017 due to the re-election of the shareholders general meeting.

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Title	Name	Primary Experience (Education)	Current Positions at the Company or Other Companies	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship
				Title	Name	Relation
Chairman	Horng, Po-Yen	Bachelor’s Degree	‧Chairman / Taiwan Fresh Supermarket Co., Ltd. ‧Chairman / Syntai Chemicals Ltd. ‧Chairman / Hsing Wei Corporation ‧Chairman / Yumei Biotec Corporation ‧Chairman / Sinon Trading Co., Ltd. ‧Chairman / Knowledge & Service Information Co., Ltd. ‧Director / Sinon Cayman Corporation ‧Legal representative / Sinon Hong Kong Co., Ltd. ‧Legal representative / Sinon Chemical (China) Co., Ltd. ‧Legal representative / Sinon Chemical (Nantong) Co., Ltd. ‧Director / Zhongshan Sinon Daily Products Co., Ltd. ‧Director / Sinon Australia Pty Limited ‧Director / PT. Sinon Indonesia ‧Director / Sinon(Thailand) o., Ltd ‧Director / Sinon Eu GmbH
Vice chairman	Chiawen Investment Ltd.	－	‧Vice chairman / Sinon Corporation
Vice chairman Representative	Liao, Lien-Heng	Bachelor’s Degree	‧Director / Taiwan Fresh Supermarket Co., Ltd. ‧Director / Yumei Biotec Corporation ‧Director / Sinon Trading Co., Ltd. ‧Director / Elon Electronics Corp. ‧Independent Director / Sweeten Real Estate Development Co., Ltd
Director	Guo Wu, Zhun-Zhen	Associate Degree	‧Director / Taiwan Fresh Supermarket Co., Ltd. ‧Director / Yumei Biotec Corporation
Director	Yu, Tse-Jen	Associate Degree	‧Director / Taiwan Fresh Supermarket Co., Ltd. ‧Director / Yumei Biotec Corporation ‧Director / Sinon Chemical (China) Co., Ltd. ‧Director/Sinon Chemical(Nantong)Co.,Ltd.
Director	Yang, Jen-Yo	Master’s Degree	‧Director / Taiwan Fresh Supermarket Co., Ltd. ‧Director / Yumei Biotec Corporation ‧Director / Taichung Golf & Country Club
Director	Yunsung Investment Ltd.	－	‧Sinon Corporation / Director
Director Representative	Liu, Yun-Sung	Associate Degree	‧Director / Taiwan Fresh Supermarket Co., Ltd. ‧Director / Yumei Biotec Corporation
Independent Director	Chi, Chih-Yi	Ph.D.	‧Independent Director / Nova Technology Corp. ‧Independent Director / Gourmet Master Co. Ltd.
Independent Director	Hsu, Jun-Ming	Ph.D.	‧Independent Director / Horizon Securities Co. Ltd. ‧Independent Director / ZengHsingIndustrial Co. Ltd.
Independent Director	Uang, Biing-Jiun	Ph.D.

Note 1: Yumei Yen Co., Ltd. has been renamed to Yumei Biotec Corporation on May 12, 2020.

Major Shareholders of the Institutional Shareholders

Name of Institutional Shareholders	Major shareholders of institutional shareholders
ChiaWen Investment Ltd.	Lan, Qing-E (25%)
YunSung Investment Ltd.	Liu, Yun-Sung (10%)

2019 Annual Report｜Corporate Governance Report

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Professional Qualifications and Independence Analysis of Directors

	Meet One of the Following Professional Qualification Requirements,	Meet One of the Following Professional Qualification Requirements,	Meet One of the Following Professional Qualification Requirements,
							Independence			Criteria (Note1)
	Together with at Least Five Years Work		Experience
																Number of
	An Instructor or Higher	A Judge, Public Prosecutor,														Other Public
	Position in a Department of	Attorney, Certified Public														Companies in
Criteria
	Commerce, Law, Finance,	Accountant, or Other	Have Work Experience in the													Which the
	Accounting, or Other	Professional or Technical	Areas of Commerce, Law,													Individual is
	Academic Department	Specialist Who has Passed a	Finance, or Accounting, or	1	2	3	4	5	6	7	8	9	10	11	12	Concurrently
Name
	Related to the Business	National Examination and	Otherwise Necessary for the													Serving as an
	Needs of the Company in a	been Awarded a Certificate in	Business of the Company													Independent
	Public or Private Junior	a Profession Necessary for														Director
	College, College or University	the Business of the Company
Horng, Po-Yen																－
ChiaWen Investment Ltd.
																1
Liao, Lien-Heng
Guo Wu, Zhun-Zhen																－
Yu, Tse-Jen																－
Yang, Jen-Yo																－
YunSung Investment Ltd.
																－
Liu, Yun-Sung
Chi, Chih-Yi																2
Hsu, Jun-Ming																2
Uang, Biing-Jiun																－

Note1: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office.

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

• (2) Not a director or supervisor of the company or any of its affiliates. 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.

• (3) Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate of one percent or more of the total number of issued shares of the company or ranking in the top 10 in holdings.

• (4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of a managerial officer under subparagraph 1 or any of the persons in the preceding two subparagraphs.

(5) Not a director, supervisor, or employee of a corporate shareholder that directly holds five percent or more of the total number of issued shares of the company, or that ranks among the top five in shareholdings, or that designates its representative to serve as a director or supervisor of the company under Article 27, paragraph 1 or 2 of the Company Act. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.

(6) If a majority of the company's director seats or voting shares and those of any other company are controlled by the same person: not a director, supervisor, or employee of that other company. Not apply to independent

2019 Annual Report｜Corporate Governance Report

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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) If the chairperson, general manager, or person holding an equivalent position of the company and a person in any of those positions at another company or institution are the same person or are spouses: not a director

• (or governor), supervisor, or employee of that other company or institution. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.

• (8) Not a 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. 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, if the specified company or institution holds 20 percent or more and no more than 50 percent of the total number of issued shares of the public company.

• (9) Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides auditing services to the company or any affiliate of the company, or that provides commercial, legal, financial, accounting or related services to the company or any affiliate of the company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof; provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Act or to the Business Mergers and Acquisitions Act or related laws or regulations.

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

• (11) Not been a person of any conditions defined in Article 30 of the Company Law.

• (12) Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law.

• Note2: Please refer to page 8 for concurrent serving situation

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3.2.2 General Managers, Vice General Managers, Assistant General Managers and Managers of Each Department and Subsidiary

													April.25, 2020	April.25, 2020	April.25, 2020
Title									Shareholding				Managers who are Spouses or Within Two Degrees of Kinship
					hhldi		Spouse & Minor		by Nominee		Primary	Current Positions at the Company or Other
	Nationality	Name	Gender	Date ffi	Sareong
							Shareholding		Arrangement		Experience (Education)	Companies	Degrees of
				Eectve
					Shares	%	Shares	%	Shares	%			Title	Name	Relation
General Manager	R.O.C	Yen, Tsu-Fang	Male	July 1, 2018	95,247	0.02%	185,859	0.04%			Bachelor’s Degree	‧Supervisor / Taiwan Fresh Supermarket Co., Ltd. ‧Supervisor / Yumei Biotec Corporation ‧Director / Sinon Chemical (China) Co., Ltd. ‧Director / Sinon Chemical (Nantong) Co., Ltd. ‧Director / Sinon USA, Inc.
Vice General Manager	R.O.C	Yu, Kuei-Ju	Male	July 1, 2018	198,000	0.05%					Master’s Degree	‧Supervisor / Taiwan Fresh Supermarket Co., Ltd. ‧Supervisor / Yumei Biotec Corporation ‧Director / Knowledge & Service Information Co., Ltd.
Assistant General Manager	R.O.C	Lin, Chin-Shan	Male	Jan. 1, 2003	176,463	0.04%	628	0.00%			Master’s Degree
Assistant General Manager	R.O.C	Li, Chien-Min	Male	Sep. 1, 2008	123,419	0.03%					Master’s Degree	‧Legal representative / Poise Packing Co., LTD./ ‧Legal representative / Zhongshan Sinon Daily Products Co., Ltd.
Assistant General Manager	R.O.C	Wang, Chi-Chou	Male	Aug.2, 2011	98,596	0.02%					Associate degree
Assistant General Manager	R.O.C	Tsai, Chih-Yung	Male	Jan. 1, 2018	100,000	0.02%					Bachelor’s Degree
Assistant General Manager	R.O.C	Shih, Neng-Chun	Male	Jan. 1, 2019	50,000	0.01%	108,000	0.03%			Master’s Degree
Assistant General Manager	R.O.C	Chen, Chien-Hsing	Male	Jan. 1, 2020							Ph.D.
Assistant General Manager	R.O.C	Feng, Tao-An	Male	Jan. 1, 2020			10,000	0.00%			Bachelor’s Degree

Note: Yumei Yen Co., Ltd. has been renamed to Yumei Biotec Corporation on May 12, 2020.

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3.2.3 Remuneration Paid to Directors, General Managers, and Vice General Managers in the Latest Fiscal Year

Remuneration of Directors

												December 31, 2019/ Unit: NT$ thousands	December 31, 2019/ Unit: NT$ thousands	December 31, 2019/ Unit: NT$ thousands	December 31, 2019/ Unit: NT$ thousands	December 31, 2019/ Unit: NT$ thousands	December 31, 2019/ Unit: NT$ thousands	December 31, 2019/ Unit: NT$ thousands	December 31, 2019/ Unit: NT$ thousands	December 31, 2019/ Unit: NT$ thousands	December 31, 2019/ Unit: NT$ thousands	December 31, 2019/ Unit: NT$ thousands
Title	Name	Remuneration								Ratio of Total Remuneration (A+B+C+D) to Net Income (%)		Relevant Remuneration Received by Directors Who are Also Employees								Ratio of Total Compensation (A+B+C+D+E+F+G) to Net Income (%)		Compensation Paid to Directors from an Invested Company Other than the Company’s Subsidiary
		Base Compensation (A)		Severance Pay (B)		Directors Compensation(C)		Allowances (D)				Salary, Bonuses, and Allowances (E)		Severance Pay (F)		Employee Compensation (G)
		The company	From All Consolidated Entities															From All Consolidated Entities		The company	From All Consolidated Entities
				co	From All	co	From All	co	From All	co	From All	co	From All	co	From All	The company
				The mpany	Consolidated Entities	The mpany	Consolidated Entities	The mpany	Consolidated Entities	The mpany	Consolidated Entities	The mpany	Consolidated Entities	The mpany	Consolidated Entities
																Cash	Stock	Cash	Stock
chairman	Horng,Po-Yen	1,620	1,620			39,088	39,088	3,676	3,676	6.58	6.58	2,632	2,632	141	141					6.99	6.99	70
Vice chairman	ChiaWen Investment Ltd. Representative Liao,Lien-Heng
Director	Guo Wu, Zhun-Zhen
Director	Yu,Tse-Jen
Director	Yang,Jen-Yo
Director	YunSung Investment Ltd. Representative Liu,Yun-Sung
Independent Director	Chi ,Chih-Yi	240	240			3,000	3,000	106	106	0.50	0.50									0.50	0.50
Independent Director	Hsu, Jun-Ming
Independent Director	Uang, Biing-Jiun
1. Please describe the policy, system, standard, and structure of remuneration to independent directors, and the correlation between duties, risk, and time input with the amount of remuneration: In addition to reference to the performance evaluation of the board of directors and functional committees, the remuneration policy, standards, and packages of the independent directors are reviewed by the Remuneration Committee, based on their business involvement, contribution and peer levels, and determined by the Board of Directors,. 2. In addition to the above remuneration, director remuneration shall be disclosed as follows when received from companies included in the consolidated financial statements in the most recent year to compensate directors for their services, such as being independent contractors: Not applicable

Note 1: The Company's standalone net profit after taxes in 2019 is around NT$ 674,855,000.

Range of Remuneration

	Name of	Name of	Directors	Directors
Range of Remuneration	Total of(A+B+C+D)		Total of(A+B+C+D+E+F+G)
	The company	From All Consolidated Entities	The company	From All Consolidated Entities
Under NT$1,000,000
NT$1,000,000～NT$1,999,999	Chi,Chih-Yi/Hsu,Jun-Ming /Uang,Biing-Jiun	Chi,Chih-Yi/Hsu,Jun-Ming /Uang,Biing-Jiun	Chi,Chih-Yi/Hsu,Jun-Ming /Uang,Biing-Jiun	Chi,Chih-Yi/Hsu,Jun-Ming /Uang,Biing-Jiun
NT$2,000,000～NT$3,499,999
NT$3,500,000～NT$4,999,999	Guo Wu,Zhun-Zhen/Yang,Jen-Yo/Liu,Yun-Sung	Guo Wu,Zhun-Zhen/Yang,Jen-Yo/Liu,Yun-Sung	Guo Wu,Zhun-Zhen	Guo Wu,Zhun-Zhen
NT$5,000,000～NT$9,999,999	Liao,Lien-Heng /Yu,Tse-Jen	Liao,Lien-Heng /Yu,Tse-Jen	Liao,Lien-Heng /Yu,Tse-Jen/Yang,Jen-Yo/Liu,Yun-Sung	Liao,Lien-Heng /Yu,Tse-Jen/Yang,Jen-Yo/Liu,Yun-Sung
NT$10,000,000～NT$14,999,999	Horng,Po-Yen	Horng,Po-Yen	Horng,Po-Yen	Horng,Po-Yen
NT$15,000,000～NT$29,999,999
NT$30,000,000～NT$49,999,999
NT$50,000,000～NT$99,999,999
Over NT$100,000,000
Total	9	9	9	9

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Remuneration of the General Managers and Vice General managers

													December 31, 2019	December 31, 2019	/ Unit: NT$ thousands
													Ratio of total
			Salary	Severance Pay		Bonuses	and Allowances	Employee Compensation							Compensation Paid
													compensation (A+B+C+D)
			(A)		(B)		(C)				(D)				to the President
													to net income (%)
															and Vice Presidents
		The company		The company		The company					From All		The comp
Title	Name														from an Invested
			From All		From All		From All							From All
								The company			Consolidated
															Company Other
			Consolidated		Consolidated		Consolidated				Entities			Consolidated
															than the Company’s
			Entities		Entities		Entities
								Cash	Stock		Cash	Stock	any	Entities	Subsidiary
General Manager	Yen, Tsu-Fang	2,892	2,892	108	108	9,617	9,617						1.87	1.87
Vice General Manager	Yu, Kuei-Ju
Note 1: The Company's standalone net profit after taxes in 2019 is around Range of Remuneration				NT$ 674,855,000.
							Name of General Managers and Vice General Managers
f
Range o Remuneration						The company				From All Consolidated Entities
Under NT$1,000,000
NT$ 1,000,000～NT$ 1,999,999
NT$ 2,000,000～NT$ 3,499,999						Yu, Kuei-Ju				Yu, Kuei-Ju
NT$ 3,500,000～NT$ 4,999,999
NT$ 5,000,000～NT$ 9,999,999						Yen, Tsu-Fang				Yen, Tsu-Fang
NT$ 10,000,000～NT$ 14,999,999
NT$ 15,000,000～NT$ 29,999,999
NT$ 30,000,000～NT$ 49,999,999
NT$ 50,000,000～NT$ 99,999,999
Over NT$ 100,000,000
Total						2				2

Note 1: A company that has posted consecutive after-tax losses for the most recent two continuous years shall disclose the remuneration paid to individual directors: Not applicable.

Note 2: A company that has had an insufficient director shareholding percentage for 3 consecutive months shall disclose the remuneration paid to individual directors: Not applicable.

• Note 3: A company that has had an average ratio of share pledging by directors or supervisors in excess of 50 percent in any 3 months during the most recent fiscal year shall disclose the remuneration paid to each individual director having a ratio of pledged shares in excess of 50 percent for each such month: Not applicable.

• Note 4: If the total amount of remuneration received by all of the directors and supervisors in their capacity as directors or supervisors of all of the companies listed in the financial reports exceeds 2 percent of the net income after tax, and the remuneration received by any individual director or supervisor exceeds NT$15 million, the company shall disclose the remuneration paid to that individual director: Not applicable.

• Note 5: A company is ranked in the lowest tier in the corporate governance evaluation for the most recent fiscal year, or the Corporate Governance Evaluation Committee has resolved that the company shall be excluded from evaluation, shall disclose the remuneration paid to individual directors: Not applicable.

Note 6: A company with average annual salary of the full-time non-supervisory employees less than NT$500,000 shall disclose remuneration paid to individual directors: Not applicable.

2019 Annual Report｜Corporate Governance Report

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December 31, 2019

Employee Profit Sharing Granted to the Executive Officers

Executive Officers
					Employee Compensation-		Employee Compensation-			Ratio of Total Amount to
	Title		Name						Total
					in Stock (Fair Market Value)		in Cash			Net Income (%)
	General Manager		Yen, Tsu-Fang
	Vice General Manager		Yu, Kuei-Ju
	Assistant General Manager		Lin, Chin-Shan
	Assistant General Manager		Li , Chien-Min
	Assistant General Manager		Wang, Chi-Chou
	Assistant General Manager		Tsai, Chih-Yung
	Assistant General Manager		Shih, Neng-Chun
	Chief Corporate Governance Officer		Chiang, Pei-Shan
3.2.4 Separately Compare and Describe Total Remuneration, as a Percentage of Net Income Stated in the Standalone Financial Statements, as Paid by this Company and by Each other Company Included in the Consolidated Financial Statements During the Past 2 fiscal years to Directors, General Manager, and Vice General Manager, and Analyze and Describe Remuneration Policies, Standards, and Packages, the Procedure for Determining Remuneration, and its Linkage to Operating Performance and Future Risk Exposure.
	2019			2018
Title	Ratio of Total Compensation to Net Income (%)			Ratio of Total Compensation to Net Income (%)				Explanation
	The company	From All Consolidated Entities		The company		From All Consolidated Entities
Directors	7.48	7.48		8.37		8.55		In 2019, profit before income tax declined, therefore remunerations reduced relatively, which is reasonable.
General Managers and Vice General Managers	1.87	1.87		2.11		2.11

1. In accordance with the Articles of Association, if there is a net profit at the end of each fiscal year, 1% of the profit shall be allocated as employees’ compensation and may be allocated 5% or less for the remuneration to directors. Remunerations should be reviewed by Remuneration Committee and approved by the Board of Directors meeting before appropriation, and reported to the shareholders meeting.

2. The Company’s remuneration policies to Directors and managerial officers are mainly based on their business involvement, contribution and peer levels. The relevant remuneration standards, policies and packages are reviewed and approved by the Remuneration Committee. Remuneration to directors also take in to account their annual performance evaluation result, which includes the director’s involvement in the Company's operation, grasp of the Company's goals and tasks and their recognition of directors' responsibilities. Remuneration to managerial officers shall be approved in accordance with HR management regulations and welfare rules. In addition, quarterly evaluates their contribution value, such as the achievement of the business plan and the growth situation, as the basis for the consideration of the remuneration. Each of these remuneration payments should have limited future risk to the Company's business performance.

2019 Annual Report｜Corporate Governance Report

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3.3 Corporate Governance Implementation

3.3.1 Board of Directors

A total of 4 (A) meetings of the Board of Directors were held in 2019. The attendance of directors was as follows:

Title	Name	Attendance in Person (B)	By Proxy	Attendance Rate (%) B/A	Remarks
Chairman	Horng, Po-Yen	4		100
Vice Chairman	ChiaWen Investment Ltd. Representative :Liao, Lien-Heng	4		100
Director	Guo Wu, Zhun-Zhen	4		100
Director	Yu, Tse-Jen	4		100
Director	Yang, Jen-Yo	4		100
Director	YunSung Investment Ltd. Representative :Liu, Yun-Sung	4		100
Independent director	Chi, Chih-Yi	4		100
Independent director	Hsu, Jun-Ming	4		100
Independent director	Uang, Biing-Jiun	3		75

1. If there are directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for avoidance and voting should be specified:

The 15th Board Date and term of the meeting The 2nd meeting of 2020 (May 6, 2020) Horng, Po-Yen ChiaWen Investment Ltd. Representative :Liao, Lien-Heng Guo Wu, Zhun-Zhen Name of Director Yu, Tse-Jen Yang, Jen-Yo YunSung Investment Ltd. Representative :Liu, Yun-Sung Uang, Biing-Jiun

The nomination of candidates of the Company’s directors Content of motion (including independent directors) of the 16th Board. Reason for recusal The motion involves with interest of the party Participation of the resolution Actively recuse the discussion and resolution of the motion.

Other Mentionable Items

1. If any of the following circumstances occur, the dates of the meetings, sessions, contents of motion,

2. all independent directors’ opinions and the company’s response should be specified:

3. (1) Matters referred to in Article 14-3 of the Securities and Exchange Act: The Company has established an Audit Committee pursuant to Article 14-5 rather than Article 14-3 of Securities and Exchange Act.

4. (2) Other matters involving objections or expressed reservations by independent directors that were

   • recorded or stated in writing that require a resolution by the board of directors: None.

2019 Annual Report｜Corporate Governance Report

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• The evaluation cycle, period, scope and method and content of evaluation for self-evaluation (or peer evaluation) of the Board of Directors:

Evaluation cycle		Once a year.
Evaluation period		January 1 ~ December 31, 2019
Scope of evaluation		Performance evaluations of Board of Directors, individual Directors and functional committees
Evaluation method		Internal self-evaluation
Evaluation items		1.The performance of the board of directors
		Evaluation items	Average score
		Participation in the operation of the company	19
		Improvement of the quality of the board of directors' decision making	27
		Composition and structure of the board of directors	18
		Election and continuing education of the directors	9
		Internal control	19
		2.The performance of the board members
		Evaluation items	Average score
		Alignment of the goals and missions of the company & Awareness of the duties of a director	37
		Participation in the operation of the company	37
		The director's professionalism and continuing education	9
		Internal control	10
		3.The performance of functional committees
		Evaluation items	Remuneration Committee Average score	Remuneration Committee Average score
		Participation in the operation of the company	10	10
		Awareness of the duties of the functional committee	30	28
		Improvement of quality of decisions made by the functional committee	39	37
		Makeup of the functional committee and election of its members	10	9
		Internal control	10	9

2019 Annual Report｜Corporate Governance Report

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4. Measures taken to strengthen the functionality of the board:

• (1) The Company has formulated the performance evaluation methods for the Board, continues to insure Directors’ liability insurance, and regularly notifies Directors of various training information, to strengthen Board functions.

(2) Directors’ education:

Title	Name	Training hours	Study period	Study period	Sponsoring Organization	Course
			From	To
Chairman	Horng, Po-Yen	6	Oct.29 ,2019	Oct.29 ,2019	Accounting Research and Development Foundation	Impacts of the Labor Incident Act on enterprises and legal compliance practices
Vice Chairman	ChiaWen Investment Ltd. Representative :Liao, Lien-Heng	3	Aug.16 ,2019	Aug.16 ,2019	Securities and Futures Institute	Seminar of legal compliance for insider equity trading
		3	Nov.8 ,2019	Nov.8 ,2019	Securities and Futures Institute	Conference for prevention of insider trading
Director	Guo Wu, Zhun-Zhen	6	Nov.19 ,2019	Nov.19 ,2019	The Institute of Internal Auditors	How the chief auditor assists the Board of Directors and its advisory services
Director	Yu, Tse-Jen	3	Aug.16 ,2019	Aug.16 ,2019	Securities and Futures Institute	Seminar of legal compliance for insider equity trading
		3	Nov.8 ,2019	Nov.8 ,2019	Securities and Futures Institute	Conference for prevention of insider trading
Director	Yang, Jen-Yo	3	Aug.16 ,2019	Aug.16 ,2019	Securities and Futures Institute	Seminar of legal compliance for insider equity trading
		3	Nov.21 ,2019	Nov.21 ,2019	Taiwan Stock Exchange Corporation	Conference for effectively exerting Directors’ functions.
Director	YunSung Investment Ltd. Representative :Liu, Yun-Sung	3	Jul.26 ,2019	Jul.26 ,2019	Securities and Futures Institute	Seminar of legal compliance for insider equity trading
		3	Nov.8 ,2019	Nov.8 ,2019	Securities and Futures Institute	Conference for prevention of insider trading
Independent director	Chi, Chih-Yi	3	Aug.16 ,2019	Aug.16 ,2019	Securities and Futures Institute	Seminar of legal compliance for insider equity trading
		3	Nov.8 ,2019	Nov.8 ,2019	Securities and Futures Institute	Conference for prevention of insider trading
Independent director	Hsu, Jun-Ming	3	Jun.20 ,2019	Jun.20 ,2019	Taiwan Securities Association	Directors, supervisors, and accounting managers' stock transfer and tax planning practices
		3	Sept.11 ,2019	Sept.11 ,2019	Taiwan Securities Association	Money Laundering Control Act and case study
Independent director	Uang, Biing-Jiun	3	Aug.2, 2019	Aug.2, 2019	Securities and Futures Institute	Seminar of legal compliance for insider equity trading
		3	Sept.4 ,2019	Sept.4 ,2019	UBS	Corporate governance/ corporate sustainability certification lecture

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3.3.2 Audit Committee

A total of 4 (A) Audit Committee meetings were held in 2019. The attendance of the independent directors was as follows:

Title	Name	Attendance in Person (B)	By Proxy	Attendance Rate (%)【B/A】	Remarks
Independent director	Chi, Chih-Yi	4		100
Independent director	Hsu, Jun-Ming	4		100
Independent director	Uang, Biing-Jiun	4		100

Meeting agenda includes reviewing the financial reports, evaluating the effectiveness of the internal control system, reviewing the execution status of internal audit, evaluating the independence of CPAs, revising the Audit Committee charter, reviewing the annual audit plan, and reviewing the amendments of internal regulations.

• ‧ Review financial reports

The board of directors has prepared the Company’s 2019 business report, financial statements (including the consolidated financial statements), and a discussion proposal for allocation of profits. The financial

statements (including the consolidated financial statements) have been audited and certified by certified public accountants, Su, Ting-Chien and Tseng, Done-Yuin, at the CPA firm of Deloitte & Touche, and the review report was issued accordingly. The above business report, financial statements (including the consolidated financial statements) and discussion proposal for allocation of profits have been reviewed and determined to be accurate by the audit committee. In accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act, we hereby submit this report; please make an approval for it.

• ‧ Evaluating the effectiveness of internal control system

Divides the internal control system into five constituent elements, in accordance with the effectiveness criteria of the internal control system stipulated in “Regulations Governing Establishment of Internal Control

Systems by Public Companies”: 1. control environment, 2. risk assessment, 3. control activities, 4. information and communications and 5. monitoring activities. According to the self-evaluation result of internal control system of each departments and the execution of annual audit plan by audit unit, the design and implementation of the Company's internal control system are both effective, and a statement of the internal control system has been prepared and approved by the Audit Committee.

• ‧ Reviewing the amendment of internal regulations

To coordinate with laws and regulations, submit the amendments of internal regulations to Audit Committee for discussion. Regulations to be amended in 2019 are: “Procedures for the Acquisition or Disposal of

Assets”, “Procedures for Making of Endorsement and Guarantee”, “Procedures for Loaning Funds to Others”, “Corporate Governance Best-Practice Principles”, “Audit Committee Charter”, “Ethical Corporate Management Best Practice Principles”, and the “Whistle-blowing System”.

Other Mentionable Items

1. If any of the following circumstances occur, the dates of meetings, sessions, contents of motion, resolutions of the Audit Committee and the Company’s response to the Audit Committee’s opinion should be specified: (1) Matters referred to in Article 14-5 of the Securities and Exchange Act:

Date and term of the meeting	Important proposals and resolutions	The Company's handling of the opinions of Audit Committee
The 2nd Audit Committee The 1st meeting of 2019 (March 22,2019)	(1)Approved the Company's 2018 financial statements (2)Approved the amendment of the Company's “Procedures for the Acquisition or Disposal of Assets” (3)Approved the amendment of the Company’s “Procedures for Making of Endorsement and Guarantee” (4)Approved the amendment of the Company’s “Procedures for Loaning Funds to Others” (5)Approved the Company's 2018 evaluation of the effectiveness of internal control system and the statement of internal control system	Submitted to the Board of Directors meeting for discussion and resolved by all Directors presented
The 2nd Audit Committee The 2nd meeting of 2019 (May10,2019)	(1)Approved the Company’s 2018 business report and surplus earnings distribution	Submitted to the Board of Directors meeting for discussion and resolved by all Directors presented

2019 Annual Report｜Corporate Governance Report

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Date and term of the meeting	Important proposals and resolutions	The Company's handling of the opinions of Audit Committee
The 2nd Audit Committee The 3rd meeting of 2019 (August 9,2019)	(1)Approved the consolidated financial statements of Sinon and its subsidiaries in Q2 of 2019	Submitted the financial statements to the Board of Directors meeting and reported to the competent authority.
The 2nd Audit Committee The 1st meeting of 2020 (March 20,2020)	(1)Approved the Company’s 2019 business report and financial statements (2)Approved the proposal of 2019 surplus earnings distribution for the Company (3)Approved the Company's 2019 evaluation of the effectiveness of internal control system and the statement of internal control system	Submitted to the Board of Directors meeting for discussion and resolved by all Directors presented

• (2) Other matters which were not approved by the Audit Committee but were approved by two-thirds or more of all directors: None.

• If there are independent directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for avoidance and voting should be specified: None.

• Communications between the independent directors, the Company's chief internal auditor and CPAs (e.g. the material items, methods and results of audits of corporate finance or operations, etc.)

• (1)Communication with chief internal auditor: chief internal auditor submits the audit report at a monthly basis to report the audit results to independent directors; Audit Committee and Boards of Directors meeting are convened quarterly to communicate the execution status of internal audit.

• (2)Communication with CPAs: The Certified Public Accountants report to the Audit Committee about the audit or recheck findings and suggestions every year.

• (3)Summary of communications between Independent Directors and chief internal auditors:

Meeting date	Communication focus	Suggestions and results
March 22,2019 Audit Committee	(1) Report for the execution status of the audit plan of 2018	Noticed without objections.
	(2) Discussions for the 2018 evaluation of the effectiveness of internal control system and the statement of internal control system	No objections. Submitted to Board of Directors for discussion, resolved by all presented Directors and reported to the competent authorities.
May 10,2019 Audit Committee	(1) Report for the execution status of the audit plan of Q1, 2019	Noticed without objections.
August 9,2019 Audit Committee	(1) Report for the execution status of the audit plan of Q2, 2019	Noticed without objections.
November 6,2019 Audit Committee	(1) Report for the execution status of the audit plan of Q3, 2019	Noticed without objections.
	(2) Discussion of 2020 audit plan	No objections. Submitted to Board of Directors for discussion, resolved by all presented Directors and reported to the competent authorities.
March 20,2020 Audit Committee	(1) Report for the execution status of the audit plan of Q4, 2019	Noticed without objections.
	(2) Discussions for the 2019 effectiveness review of internal control system and statement of internal control.	No objections. Submitted to Board of Directors for discussion, resolved by all presented Directors and reported to the competent authorities.
May 6,2020 Audit Committee	(1) Report for the execution status of the audit plan of Q1, 2020	Noticed without objections.

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(4)Summary of communications between Independent Directors and CPAs:

Meeting date	Communication focus	Suggestions and results
March 22,2019 Audit Committee	(1) Report the key audit matters of 2018 (2) Discuss the 2018 financial statements	No objections. Submitted the financial statements to Board of Directors for discussion, resolved by all presented Directors and reported to the competent authorities.
August 9,2019 Audit Committee	(1) Discuss the consolidated financial statements of Sinon and its subsidiaries in Q2 of 2019	No objection, submitted to the Board of Directors, and report to the competent authorities.
November 6,2019 Audit Committee	(1) Communicated with the CPAs regarding the 2019 audit planning matters	Noticed without objections.
March 20,2020 Audit Committee	(1) Report the key audit matters in 2019 (2) Discuss 2019 financial statements	No objections. Submitted the financial statements to Board of Directors for discussion, resolved by all presented Directors and reported to the competent authorities.

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

				Deviations from “the Corporate
			Implementation Status
				Governance Best-Practice Principles for
Evaluation Item
				TWSE/TPEx Listed Companies” and
	Yes	No	Abstract Illustration
				Reasons
1. Does the company establish and disclose the Corporate Governance Best-Practice Principles based on “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”?			Formulated the Corporate Governance Best-Practice Principles with reference to the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”, and disclosed in the Company's website (www.sinon.com.tw).	No difference
2. Shareholding structure & shareholders’ rights			In addition to appoint a stock agency to deal with relevant affairs, the Company also established a	No difference
(1)Does the company establish an internal operating			complete spokesperson system to handle the related questions and suggestions of shareholders.
procedure to deal with shareholders’ suggestions,
doubts, disputes and litigations, and implement based
on the procedure?
(2)Does the company possess the list of its major shareholders as well as the ultimate owners of those shares?			Fully master and understand the structure of major shareholders through the stock agency, ensure the stability of ownership by establishing a good interactive relationship with the Board of Directors, and regularly report the changes in the shareholdings of Directors and managerial officers. The Company will get the list of ultimate controller from the companies when needed.	No difference
(3)Does the company establish and execute the risk			The operation, business and finance of the Company and its affiliates are clearly divided and	No difference
management and firewall system within its			operated independently. The Company assigns personnel to participate in the business operation
conglomerate structure?			and provide information to the managements for decision-making; and formulates operations for
			supervising and managing its subsidiaries to implement the risk control mechanism for subsidiaries
(4)Does the company establish internal rules against insiders trading with undisclosed information?			The Company has established the “Operating Procedures for Dealing with Internal Material Information and Management of the Prevention of Insider Trading”, and disclosed it on the Company's website, to prohibit insiders from leveraging unpublished information to buy and sell securities in the market. The Company arranges training courses for insiders every year. Explains the laws and regulations to new insiders within one week after they take office, and provides legal compliance information for insiders for reference each month.	No difference
3. Composition and Responsibilities of the Board of Directors			The Company handles in accordance with the “Articles of Association”, “Procedures for Election of	No difference
(1)Does the Board develop and implement a diversified			Directors” and “Corporate Governance Best-Practice Principles”.
policy for the composition of its members?			(1) Structure of the Board: it is stipulated in the “Articles of Association” that the Board shall have
			9 directors, adopt the candidate nomination system, and the directors shall be elected from
			among the nominees listed in the roster of director candidates by shareholders meeting.
			Among the directors, there should be no less than 3 independent director members, and no
			less than one-fifth of the director seats shall be held by independent directors; all independent
			directors shall form the Audit Committee to assist the Board of Directors in making decisions
			(2) Composition of Board members: in consideration of the Company's operation and
			development requirements, it has formulated the diversity policy of the Board members in

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				Deviations from “the Corporate
			Implementation Status
				Governance Best-Practice Principles for
Evaluation Item
				TWSE/TPEx Listed Companies” and
	Yes	No	Abstract Illustration
				Reasons
			accordance with the “Corporate Governance Best-Practice Principles”, and is handled according
			to gender, age, professional background knowledge and industrial experience. The
			Management target: at least set up one seat of female director; directors concurrently serving
			as company officers not exceed one-third of the total number of the board members; a spousal
			relationship or a familial relationship within the second degree of kinship may not exist two; at
			least two independent directors have not served for three consecutive terms or more.
			(3) The Company sets up 9 seats of directors. One of which is female and 3 of them are
			independent directors. All of directors do not serve as company officers and have a spousal
			relationship or a familial relationship within the second degree of kinship. All of independent
			directors have not served for three consecutive terms or more. In terms of professional
			background and skills, including financial accounting, chemical engineering, and business
			management, etc., the directors are capable of leadership decision-making ability, rich in
			industry related knowledge and experience, and have taken in to consideration of and
			implemented the concept of diversification (Note 1).
(2)Does the company voluntarily establish other functional committees in addition to the Remuneration Committee and the Audit Committee?			The Company has established Remuneration and Audit Committee in accordance with the law. No other functional committee has been set up yet and will be set up depending on the actual business needs.	No other functional committee has been set up
(3)Does the company establish a standard to measure the			1. In order to strengthen corporate governance and improve the functions of the Board, the “Board	No difference
performance of the Board and implement it annually,			of Directors Performance Evaluation Rules” was resolved by the Board on November 6, 2019. The
and are performance evaluation results submitted to the			Company will periodically evaluate performance of the Board, individual directors and functional
Board of Directors and referenced when determining the			committees every year. The performance evaluation results are not only provide for improving
remuneration of individual directors and nominations for			the operation of the Board and functional committees, but also serve as a reference for the
reelection?			election or nomination of directors; and use the results of individual directors' performance
			evaluation as a reference for determining their respective remuneration.
			2. The Company adopted internal self-assessment for 2019 Board of Directors' performance
			evaluation. The Corporate Governance Team sent a questionnaire to each director and functional
			committee member at the end of the year. Directors evaluate the overall operation of the Board,
			functional committee members evaluate the overall operation of the committee, and directors
			evaluate their own involvement in business. The Corporate Governance Team collected the
			questionnaires, analyzed the results of the self-assessment and submitted them to the Chairman
			and the Chief Corporate Governance Officer. The average scores of internal self-evaluation of the
			Board of Directors, individual directors and functional committees in 2019 all reached 90 points
			(out of 100 points). The overall performance was good. The results have been submitted to the
			functional committees and Board of Directors on March 20, 2020.

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				Deviations from “the Corporate
			Implementation Status
				Governance Best-Practice Principles for
Evaluation Item
				TWSE/TPEx Listed Companies” and
	Yes	No	Abstract Illustration
				Reasons
(4)Does the company regularly evaluate the independence of CPAs?			The management division regularly evaluates the independence of auditing CPAs and acquires the independence statement from the CPAs. The result of 2019 evaluation has been reported to the Audit Committee and the Board meeting on March 20, 2020 (please refer to page 43). The independence of CPAs shall be undoubted.	No difference
4. Does the company appoint a suitable number of			1. The Company has resolved by the Board meeting on March 22 2019 to set up a Chief Corporate	No difference
competent personnel and a supervisor responsible for			Governance Officer, to be in charge of corporate governance affairs. The Chief Corporate
corporate governance matters (including but not limited			Governance Officer has been in a managerial position for more than three years in a public
to providing information for directors and supervisors to			company in handling stock affairs whose main jobs and responsibilities include:
perform their functions, assisting directors and			(1) Supervising and handling matters relating to Board meetings and shareholders meetings
supervisors with compliance, handling work related to			according to laws, and producing minutes of Board meetings and shareholders meetings.
meetings of the board of directors and the shareholders'			(2) Assisting directors’ on-boarding and continuous education.
meetings, and producing minutes of board meetings and			(3) Providing information required for business execution by directors.
shareholders' meetings)?			(4) Assisting directors with legal compliance.
			(5) Other matters set out in the articles or corporation or contracts
			2. Business executions:
			2019:
			(1) The meetings held and the information provided:
			A. The Company convened four Board meetings in 2019. Meeting notice and data have been
			mailed out at least 7days in advance. Where there were any interest conflicts, the directors
			were reminded in advance to avoid the interests. Meeting minutes were sent out within 20
			days of the meeting.
			B. Better than the statutory time limit, handbook of shareholder meetings was announced 30
			days before the shareholders meeting, and the annual report was announced 14 days
			before the shareholders meeting. Voting rights were exercised by electronic voting, and the
			resolutions were reported at the same day after the shareholders meeting.
			C. Improve the information disclosure in English, voluntarily prepare the shareholders
			meeting notice and handbook, mid-term financial statements and annual financial
			statements in English,
			(2) Cooperate with the amendment of laws and regulations, develop and formulate board
			performance evaluation methods, and provide the latest laws and regulations to directors;
			maintain smooth communication between directors and business executives, and assist
			directors in handling affairs.
			(3) Assist directors’ continuous education: promote training information to directors and arrange
			the training hours for the directors. All directors have completed the training hours.
			(4) Information reporting: review the Chinese/English material information to ensure the
			compliance and correctness of the content, and publish the information on Market

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				Deviations from “the Corporate
			Implementation Status
				Governance Best-Practice Principles for
Evaluation Item
				TWSE/TPEx Listed Companies” and
	Yes	No	Abstract Illustration
				Reasons
			Observation Post System (MOPS) or corporate website by regulation.
			(5) In 2019, chief corporate governance officer has taken training courses for 18 hours which
			complies with the regulations for the training hours for the newly-on-board chief corporate
			governance officer (note 2).
			2020(as of print day of the annual report)
			(1) The meetings held and the information provided:
			A. In 2020, as of the print day of the annual report, the Company has convened two Board
			meetings. Meeting notice and data have been mailed out at least seven days in advance.
			Meeting minutes were sent out within 20 days of the meeting.
			B. Handle shareholders meeting related matters in accordance with regulations, and
			announce the meeting notice, handbook, and annual report in both Chinese and English
			within the statutory deadlines.
			(2) To comply with laws and regulations, plan to amend the Company's "Corporate Governance
			Best-Practice Principles" and "Board of Directors Meeting Rules".
			(3) Improve the completeness of information disclosure:
			A. Review the Chinese/English material information to ensure the compliance and correctness
			of the content, and publish the information on Market Observation Post System (MOPS) or
			corporate website by regulation.
			B. Handle two investor conferences to enhance information transparency.
5. Does the company establish a communication channel and build a designated section on its website for stakeholders (including but not limited to shareholders, employees, customers, and suppliers), as well as handle all the issues they care for in terms of corporate social responsibilities?			The Company sets up stakeholders section on the corporate website, providing contact window and most updated information to the stakeholders for reference. Detailed information can also be found the Company's Corporate Social Responsibility Report and the corporate website (www.sinon.com.tw).	No difference
6. Does the company appoint a professional shareholder			The Company appoints Capital Securities Corporation for dealing with shareholders meeting affairs	No difference
service agency to deal with shareholder affairs?
7. Information Disclosure
(1)Does the company have a corporate website to disclose both financial standings and the status of corporate governance?			The Company set up dedicated personnel to disclose various financial standings on MPOS. The implementation of corporate governance is also disclosed on the corporate website.	No difference
(2)Does the company have other information disclosure			The Company implements a spokesperson system, and the spokesperson speaks in representing of	No difference
channels (e.g. building an English website, appointing			the Company. So as to ensure the proper and timely disclosure of information about policies that
designated people to handle information collection and			might affect the decisions of shareholders and stakeholders. The Company also sets up Chinese and
disclosure, creating a spokesman system, webcasting			English version corporate website and appoints personnel responsible for gathering and disclosing
investor conferences)?			the information. All financial and business information can be queried on the corporate website.

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				Deviations from “the Corporate
	Implementation Status
				Governance Best-Practice Principles for
Evaluation Item
				TWSE/TPEx Listed Companies” and
	Yes	No	Abstract Illustration
				Reasons
(3)Does the company announce and report annual financial statements within two months after the end of each fiscal year, and announce and report Q1, Q2, and Q3 financial statements, as well as monthly operation results, before the prescribed time limit?			The Company’s annual, first, second and third quarter financial statements and monthly operating status are all announced and declared within the regulated time limit. The Company's 2019 corporate governance implementation measures are strengthening the integrity and timeliness of information disclosure. In terms of financial statements, the electronic file of the financial statements is announced on the day of the Board of Directors’ resolution, the financial information is disclosed earlier than the regulated deadline and the English version of annual and interim financial statements are voluntarily prepared. From 2020, the financial statements are planned to be approved by or submitted to the Board of Directors seven days before the announcement period, and the electronic file will be announced on the approval date.	Although the Company did not announce and declare the annual financial statements within two months after the end of the fiscal year, The annual and quarterly financial statements have been announced and declared before the regulated time limit, and the electronic files for financial statements have been announced on the day of approval.
8. Is there any other important information to facilitate a			The Company's business concept is “Delivering Integrity and Equity, Bringing Prosperity and	No difference
better understanding of the company’s corporate			Growth”. Regardless of internal or external, all systems and measures are formulated and social
governance practices (e.g., including but not limited to			responsibilities are fulfilled based on this principle, such as employee retirement system, employee
employee rights, employee wellness, investor relations,			insurance, education and training and club activities, supplier management, environmental
supplier relations, rights of stakeholders, directors’ and			protection policy promotion and implementation. The Company's material information is all
supervisors’ training records, the implementation of risk			declared in accordance with the laws and regulations to protect shareholders' rights and interests.
management policies and risk evaluation measures, the			More detailed information about the implementation of corporate governance is also disclosed in
implementation of customer relations policies, and			the 2019 Corporate Social Responsibility Report for interest parties to read. In 2019, the Company
purchasing insurance for directors and supervisors)?			has insured director liability insurance for all directors with insurance amount of USD 5 million and
			insurance period as from November 1, 2019 to November 1, 2020. The insurance has been reported
			to the Board of Directors on November 6, 2019 and disclosed on the MOPS.
9. Please explain the improvements which have been made in accordance with the results of the Corporate Governance Evaluation System released by the Corporate Governance Center, Taiwan Stock Exchange, and provide the priority enhancement measures: The Company was ranked in 6% to 20% in the 2019 corporate governance evaluation. In 2020, the Company maintained the completeness and timeliness of information disclosure, added the information disclosure in English, and continuously strengthens corporate governance.

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Note 1: The diversification of composition of the Board (means capable of  means partially capable of)

December 31, 2019

Title/Name				Basic composition	Basic composition	Basic composition					Core capability	Core capability
	Nationality	Gender	Concurrent employee of the Company			Ages		Term/ year of independent director	Operation Management	Finance Account	Leadership Decision	Industry Knowledge	International Market view
				45-55	56-65	66-75	Over 76
Chairman Horng, Po-Yen	R.O.C	Male											
Vice Chairman ChiaWen Investment Ltd. Representative: Liao, Lien-Heng	R.O.C	Male											
Director Guo Wu, Zhun-Zhen	R.O.C	Female											
Director Yu, Tse-Jen	R.O.C	Male											
Director Yang, Jen-Yo	R.O.C	Male											
Director YunSung Investment Ltd. Representative: Liu, Yun-Sung	R.O.C	Male											
Independent director Chi, Chih-Yi	R.O.C	Male						3rd term, 6.5 years					
Independent director Hsu, Jun-Ming	R.O.C	Male						3rd term, 6.5 years					
Independent director Uang, Biing-Jiun	R.O.C	Male						2nd term, 4.5 years					

Note 2: Education status of the Chief Corporate Governance Officer

Study period	Study period	Training hours	Sponsoring Organization	Course
From	To
April 10 ,2019	April 10 ,2019	3	Securities and Futures Institute	Advanced seminar for the practice of directors, supervisors and corporate governance officers- employee remuneration strategy and application
April 10 ,2019	April 10 ,2019	3	Securities and Futures Institute	Advanced seminar for the practice of directors, supervisors and corporate governance officers- interpretation of corporate performance information
July 30 ,2019	July 31 ,2019	12	Securities and Futures Institute	Directors and supervisors and corporate governance officer practice workshop

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3.3.4 Composition, Responsibilities and Operations of the Remuneration Committee

Professional Qualifications and Independence Analysis of Remuneration Committee Members

December 31, 2019

Title	Criteria Name	Meets One of the Following Professional Qualification Requirements, Together with at Least Five Years’ Work Experience	Meets One of the Following Professional Qualification Requirements, Together with at Least Five Years’ Work Experience	Meets One of the Following Professional Qualification Requirements, Together with at Least Five Years’ Work Experience											Number of Other Public Companies in Which the Individual is Concurrently Serving as an Remuneration Committee Member	Remarks
							Independence Criteria (Note)
		An instructor or higher position in a department of commerce, law, finance, accounting, or other academic	A judge, public prosecutor, attorney, Certified Public Accountant, or other professional or technical secialist who	Has work experience in the areas of commerce, law, finance, or accounting, or otherwise necessary for the business of the										10
		department related to	p has passed a national	Company	1	2	3	4	5	6	7	8	9
		the business needs of the Company in a public or private junior college, college or university	examination and been awarded a certificate in a profession necessary for the business of the Company
Independent director	Chi, Chih-Yi														2
Independent director	Hsu, Jun-Ming														2
Other	Huang, Shen-Yi														2	August 9, 2019 On boarded
Other	Yang, Sheng-Yung														3	July 31, 2019 Resigned

Note1: Please fill in the identity as director, independent director or others.

Note2: Please tick the corresponding boxes that apply to a member during the two years prior to being elected or during the term(s) of office.

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

• (2) Not a director or supervisor of the company or any of its affiliates. 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.

• (3) Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate of one percent or more of the total number of issued shares of the company or ranking in the top 10 in holdings.

• (4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of a managerial officer under subparagraph 1 or any of the persons in the preceding two subparagraphs.

• (5) Not a director, supervisor, or employee of a corporate shareholder that directly holds five percent or more of the total number of issued shares of the company, or that ranks among the top five in shareholdings, or that designates its representative to serve as a director or supervisor of the company under Article 27, paragraph 1 or 2 of the Company Act. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.

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

• (7) If the chairperson, general manager, or person holding an equivalent position of the company and a person in any of those positions at another company or institution are the same person or are spouses: not a director

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(or governor), supervisor, or employee of that other company or institution. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.

• (8) Not a 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. 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, if the specified company or institution holds 20 percent or more and no more than 50 percent of the total number of issued shares of the public company.

• (9) Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides auditing services to the company or any affiliate of the company, or that provides commercial, legal, financial, accounting or related services to the company or any affiliate of the company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof; provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Act or to the Business Mergers and Acquisitions Act or related laws or regulations.

• (10) Not a person of any conditions defined in Article 30 of the Company Law.

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Attendance of Members at Remuneration Committee Meetings

1. There are 3 members in the Remuneration Committee.

2. The current term of the committee members: July 6, 2017 to June 15, 2020,

3. A total of 2 (A) Remuneration Committee meetings were held in 2019. The attendance record of the Remuneration Committee members was as follows:

Title	Name	Attendance in Person(B)	By Proxy	Attendance Rate (%) B/A	Remarks
Convener	Chi, Chih-Yi	2		100
Committee Member	Hsu, Jun-Ming	2		100
Committee Member	Huang, Shen-Yi	1		100	August 9, 2019 On boarded Attendance required: 1
Committee Member	Yang, Sheng-Yung	1		100	Resigned on July 31, Attendance required: 1

Other Mentionable Items

1. If the board of directors declines to adopt or modifies a recommendation of the remuneration committee, it should specify the date of the meeting, session, content of the motion, resolution by the board of directors,

2. and the Company’s response to the remuneration committee’s opinion (e.g., the remuneration passed by the Board of Directors exceeds the recommendation of the remuneration committee, the circumstances and cause for the difference shall be specified): None.

3. Resolutions of the remuneration committee objected to by members or expressed reservations and recorded or declared in writing, the date of the meeting, session, content of the motion, all members’ opinions and the response to members’ opinion should be specified: None.

3. Duties:

• (1) Periodically reviewing the “Remuneration Committee Charter” and making recommendations for amendments.

• (2) Prescribe and periodically review the performance review and remuneration policy, system, standards, and structure for directors and managerial officers.

• (3) Periodically evaluate and prescribe the remuneration of directors and managerial officers.

• Remuneration Committee meeting date, term, resolution content, resolution results, and the Company's handling of Remuneration Committee's opinion.

Date and term of the meeting	Important proposals and resolutions	The Company's handling of Remuneration Committee’s opinion.
The 4th Remuneration Committee The 1st meeting of 2019 (March 22,2019)	(1)Approved the Company's 2018 distribution of remunerations to employees and directors (2)Approved the proposal for remuneration of the Company's Chief Corporate Governance Officer	Submitted to the Board of Directors for discussion and passed by all the directors presented
The 4th Remuneration Committee The 2nd meeting of 2019 (November 6,2019)	(1)Approved the Company's 2019 bonus and remuneration to managerial officers (2)Approved the Company's “Board of Directors Performance Evaluation Policy”. (3)Approved the Company's 2020 work plan of Remuneration Committee	Submitted to the Board of Directors for discussion and passed by all the directors presented
The 4th Remuneration Committee The 1st meeting of 2020 (March 20,2020)	(1)Approved the Company's 2019 distribution of remunerations to employees and directors (2)Approved the amendment of the Company's “Articles of Association” (3)Approved the amendment of the Company's “Audit Committee Charter”	Submitted to the Board of Directors for discussion and passed by all the directors presented

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

Evaluation Item			Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	**Abstract Explanation **
1. Does the company assess ESG risks associated with its operations based on the principle of materiality, and establish related risk management policies or strategies?			The Company has conducted risk assessments on the environment and society related to the Company's business operation and corporate governance matters in accordance with the principle of materiality, and formulated countermeasures and plan implementation for identified risks. The risks identified by the Company are as below. For detail, please refer to the Company’s 2019 Corporate Social Responsibility Report. 1. Corporate governance (insider trading, corruption, and damage to intellectual property rights): the Company sets up a Chief Corporate Governance Officer. The corporate governance team is responsible for the matters related to ethical corporate management, and formulates regulations such as "Ethical Corporate Management Best Practice Principles", "Codes of Ethical Conduct", " Operating Procedures for Dealing with Internal Material Information and Management of the Prevention of Insider Trading ", the "Whistle-blowing System" and other regulations. Expense reconciliation is also conducted in accordance with internal operation procedures. The Company controls the reconciliation process through system, and masters the reasonableness of expense reconciliation by responsible managers. The management of intellectual property rights is coordinated by the legal affairs department and entrusted to professional law firms. Each department also has a trademark administrator to store trademark information in a unified manner. The legal affair personnel promote the concept of intellectual property rights to marketing personnel every year, so as to reduce the risk of infringement. 2. Information security (information system anomaly): introduce ISO27001 information security management system, to integrate and strengthen information security mechanism. Carry out information security trainings and drills, to enhance information security awareness and contingency capability. 3. Environment safety and health (environmental pollution, industrial safety accident, contingency plan): introduce ISO14001 environmental management system and ISO45001 occupational health and safety management systems. Forms the QHSE committee under the leadership of senior managements, combined with total quality management activities, and execute process improvement and energy-saving and carbon-reduction policies for environment aspect; in term of occupational safety, execute the damage prevention measures to enhance the employees’ safety awareness. 4. Climate change (electricity supply, carbon emission management, supply chain interruption): through QHSE committee and total quality management activities, promote energy-saving project, plan to replace energy-saving equipment and improve production process to reduce the electricity needs. Execute the greenhouse gas checkup voluntarily, to master the effectiveness of energy saving and carbon reduction measures, and continue to improve. In response to the risk of supply chain disruption caused by climate disasters, the Company adopts a policy to expand overseas demand market to diversify product sales risks. And seeks alternative raw materials and suppliers to establish a stable supply source. 5. Human resource (human rights protection): formulates “Human Rights Policy”, and establish internal human resource management regulations to clearlyregulate the employment,dismissal, promotion,treatment	No difference

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Evaluation Item			Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	**Abstract Explanation **
			and welfare of employees. In addition, sets up a complaint channel to maintain a smooth communication channel between labor and management, and to understand and deal with any violation of human rights timely.
2. Does the company establish exclusively (or concurrently) dedicated first-line managers authorized by the board to be in charge of proposing the corporate social responsibility policies and reporting to the board?			Senior managements lead various business departments to appoint representatives to form the CSR unit, collecting various concerns of stakeholders, as an important reference for formulating business strategies. The CSR unit discusses relevant issues and formulates countermeasures in regular meetings each year. After reviewed by senior managements and communicates and integrates with various departments, to supervise the implementation progress and implement corporate social responsibility in the organization's operations. Regularly report the implementation status to the Board and continuously devote to promotion of corporate social responsibility.	No difference
3. Environmental issues
(1)Does the company establish proper environmental management systems based on the characteristics of their industries?			The Company combines quality, safety, health, and environment systems (QHSE system, including ISO9001, ISO45001, and ISO14001). Promotes total quality management activity through integrating three systems, to create the Company's own management culture.	No difference
(2)Does the company endeavor to utilize all resources more efficiently and use renewable materials which have low impact on the environment?			The Company devotes to environment protection, energy saving, carbon reduction and greening. And invests resources in wastewater, air pollution, waste, soil and groundwater prevention, energy management, etc. The executed contents in 2019 are as below. For detailed environmental management policies and results please refer to the Company's 2019 Corporate Social Responsibility Report. ‧Promote production waste reduction plan, water consumption and process improvement: reduce the output of wastewater and production waste to lower the energy consumption generated by dealing with waste water and production waste, and reduce carbon emissions. ‧Improve resource utilization efficiency (1) Connect the cooling water tower fan to the temperature control inverter: The cooling water tower fan that had been running continuously for 24 hours was modified to set the fan to run continuously under ordinary water temperature to save power. (2) Promote the recycling of waste acid. The waste acid generated in the process is recycled and used to adjust the pH value of the washing tower to reduce the purchase of raw materials. (3) Exhaust gas from the factory is collected in a closed manner. Seal the facilities that may emit exhaust gas in the factory, and introduce them into the washing tower, RTO and other facilities for subsequent treatment, so as to reduce the emission of volatile organic compounds into the atmosphere. ‧Investment in environmental equipment (1) Methanol recovery from waste solvent: purchase waste methanol recovery equipment. Recycle and reuse the methanol in the original wastewater, reduce the energy consumption of wastewater treatment, and further reduce carbon emissions.	No difference

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Evaluation Item			Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	**Abstract Explanation **
			(2) Salt recycling from wastewater: Purchase salt recovery equipment in wastewater, recycle and regenerate the original salt from wastewater, to reduce the energy consumption of wastewater treatment, and enhance the biological treatment capacity of wastewater. (3) Purchase low-temperature ion purifying equipment: purchase low-temperature ion purifying equipment for the wastewater adjustment tank and floatation unit, to reduce the emission of volatile organic compounds and hydrogen sulfide in wastewater. (4) Investment in solar power planting: Set up solar panels to plant power. ‧Activate the value of wastes (1) Detailed garbage separation: re-separating the garbage to be incinerated in detail. Picking out reusable items and asking the recycler to ship them back to re-manufacture, so as to reduce carbon emissions from garbage incineration. (2) Continue to recycle the discarded pallets: re-organize the discarded pallets from each business units and classified them into “usable”, “unsuitable” and “unusable”. Retain and reuse the usable pallets, provide pallets with unsuitable specifications to suppliers for other companies, and hand over the unusable broken pallets to waste disposal company to generate steam with solid fuel, which can reduce the carbon emissions from incinerated waste pallets by 30% each year.
(3)Does the company evaluate the potential risks and opportunities in climate change with regard to the present and future of its business, and take appropriate action to counter climate change issues?			1.The Company identifies the risks, opportunities and potential financial impacts of climate change on the Company by referring to the structure of the "Task Force on Climate-related Financial Disclosures" issued by the Financial Stability Board (FSB). For details, please refer to the Company's 2019 Corporate Social Responsibility Report. 2. In the short term, the increasing frequency and intensity of natural disasters will impact the raw material supply, plant equipment and personnel. Therefore, it is necessary to continuously establish a global procurement platform to stabilize the source of supply chain, and formulate and revise various contingency plans in response to the damage to plant equipment and personnel casualties. In the mid/long term, in order to adapt to the pressure of low carbon economy and the increasing cost of agriculture operation due from climate change, coupled with the public emphasis on environment and food safety, the Company plans to invest in relevant environmental protection equipment to reduce energy consumption and carbon emission, develop renewable energy and produce eco-friendly crop protection products.	No difference

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Evaluation Item			Implementation Status	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	**Abstract Explanation **
(4)Does the company take inventory of its greenhouse gas emissions, water consumption, and total weight of waste in the last two years, and implement policies on energy efficiency and carbon dioxide reduction, greenhouse gas reduction, water reduction, or waste management?			1.The Company continuously promotes total quality management activities which adopts various energy saving, carbon reduction or waste reduction measures in procurement, process, equipment and supply chain, including carbon reduction measures such as using of low pollution materials, improving process equipment, establishment of energy management system, greening of plants and buildings, and reduce the electricity consumption through inspection and tracking. 2.Greenhouse gas emissions, water consumption and total waste in the past two years: Year Item 2018 2019 Greenhouse gas emissions (tons) 14,546.62 13,560.82 Water consumption (tons) 562,543 500,175 Total waste (tons) 2829.9 2511.4				No difference
				Year Item	2018	2019
				Greenhouse gas emissions (tons)	14,546.62	13,560.82
				Water consumption (tons)	562,543	500,175
				Total waste (tons)	2829.9	2511.4
4. Social issues
(1)Does the company formulate appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights?			The Company has formulated human rights policy with reference to relevant regulations and international human rights conventions, and is committed to the three indicators of environmental protection, happy workplace and happy labor. The content of the human rights policy is as follows: The Company strictly enforces laws and regulations, abides by relevant labor laws and regulations, supports and respects the United Nations Global Compact and other relevant international human rights regulations, formulates various management rules to protect the legitimate rights and interests of employees, and establishes a good workplace environment with reasonable remuneration and promotion systems. ‧Labor rights and interests Provide reasonable remuneration, working hours, training and promotion system with reference to the market salary standard and in accordance with regulations. Respect employees’ willingness and prohibit any types of forced labor. ‧No child labor Employment standards shall comply with the minimum age limit prescribed by law. ‧Anti-discrimination Strictly prohibit any type of discrimination and harassment. Clearly stipulate that there should not be different treatments by gender, race, age, marriage, religion, political stance and family status, carry out the equality of remuneration, employment requirements, trainings and promotion opportunities. ‧Create good labor-management relationship Provide smooth communication channel, devote to promote harmonious labor-management relationship. ‧Healthy and safe working environment Implement various damage preventive measures to provide employees with a safe and healthy working environment.				No difference

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Evaluation Item			Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	**Abstract Explanation **
(2)Does the company have reasonable employee benefit measures (including salaries, leave, and other benefits), and do business performance or results reflect on employee salaries?			1. The Company complies with relevant laws and regulations such as the Labor Standards Act, Act of Gender Equality in Employment, Employment Service Act, Sexual Harassment Prevention and Appeals, etc., and sets the salary, evaluation, promotion and bonuses in the Company’s management regulations. In addition to participate in labor insurance and national health insurance by regulations, employees also participate in group insurance and travel insurance for business trips. In terms of vacation, in addition to various leave rights such as annual paid leave, menstrual leave, family care, maternity/paternity leave, etc., when an employee encounters a situation such as child-rearing, injury or illness, he/she can apply for unpaid leaves and then for reinstatement after the expiry of the period. For other welfare, periodically hold domestic or overseas tours, provide travel subsidy, meals subsidy, sport resource and expense subsidies, etc. 2.The Company sets up reasonable salary remuneration based on the labor market, determines the amount according to factors such as rank and personal academic experience, professional technology, seniority, ability, workload, work performance and other factors, and provides a stable salary adjustment policy without gender differences. The Company also appropriates performance bonuses in regards of the operating performance and the achievement of employees’ performance in each quarter, to share the operating results with employees.	No difference
(3)Does the company provide a healthy and safe working environment and organize training on health and safety for its employees on a regular basis?			1. The Company has obtained the certificates of ISO9001, ISO14001, ISO45001, and TOSHMS, and participates in Taiwan Responsible Care Association (TRCA) to continuously carry out total quality management activities and strengthens corporate internal management based on 6S and QC. 2. Measures taken for employee safety and health: (1) Implement total quality management activities. Department heads and senior managements conduct monthly safety inspections, and lists and tracks the deficiencies and suggestion found during the inspections. (2) Near-miss events handling and statistical analysis, and improvement proposal. There was 524 f near-miss reporting in 2019. (3) Check the mechanical equipment before the operation, and conduct regular inspections every month or every year. For dangerous machinery and equipment, a comprehensive safety inspection is done annually. Carry out safety assessment before work and regularly conduct safety observation on employees; For the working environment in the factory, in addition to the self-inspection, the Company also outsources the working environment inspection regularly to ensure the safety of the working environment. (4) Arrange occupational safety and health training and working skill improvement for employees every year, such as CPR and AED training, general training in the marking of hazardous and harmful substances, 4RKY dangerous prediction training. Assign personnel to participate the contingency plan training and hold comprehensive drill at least once per year. Irregularly hold non-warning contingency plan tests in the factory and carry out two fire drills from time to time, and also cooperate with fire departments to hold fire drills to cultivate colleagues' contingency response and safety management	No difference

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Evaluation Item			Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	**Abstract Explanation **
			capabilities and awareness. In 2019, the Company arranged 3 disaster prevention and rescue trainings, and 180 4RKY dangerous prediction trainings. (5) In addition to conducting employee health examinations and health seminars every year, the Company also formulates and implements relevant policies for maternal health protection, the prevention of musculoskeletal diseases caused by repetitive work, the prevention of illegal violations in the workplace, and the prevention of diseases caused by abnormal workload. Promote the physical and mental health of employees. In 2019, 2,728 people participated in health promotion activities. (6) Set up nursing room, gym, health center, AED first aids equipment, etc.
(4)Does the company provide its employees with career development and training sessions?			Promote knowledge management system and E-Learning to provide employees with diversified learning channels. In addition, irregularly organize study courses of various themes and assist employees to obtain relevant professional certificates, so as to promote employee career development and ability improvement.	No difference
(5) Do the company's products and services comply with relevant laws and international standards in relation to customer health and safety, customer privacy, and marketing and labeling of products and services, and are relevant consumer protection and grievance procedure policies implemented?			The Company sets up dedicated personnel and email box to deal with the consumer rights related complaints. In addition, the Company performs customer satisfaction survey to understand customers’ problems and suggestions, so as to further achieve the win-win situation. The marketing and labeling on products and services are all conducted in accordance with the Agro-pesticides Management Act, relevant regulations and international standards.	No difference
(6) Does the company implement supplier management policies, requiring suppliers to observe relevant regulations on environmental protection, occupational health and safety, or labor and human rights? If so, describe the results.			Formulates vendors’ codes of conduct and sustainable procurement policy, and establishes relevant rules for vendor assessment and evaluation. Combined with the Company’s QHSE policy of Quality, Health, Safety and Environment, the Company evaluates vendors’ capabilities of environmental management, safety and health management and quality management through periodic survey and irregular on site visit. Only those who passed the appraisal can be the Company vendors. In 2019, no vendor was identified that has a negative impact on quality, environment, labor practices and human rights. If a substantial impact is found under the assessment, the Company will either assist the vendor to improve or terminate cooperation depending on the circumstances. For detailed vendor management policy and its effectiveness, please refer to the Company’s 2019 Corporate Social Responsibility Report. The Company conducts vendors’ assessment annually, and those who are evaluated as unqualified will be ceased trading and removed from the list of qualified vendors. If a vendor is involved in violation of its corporate social responsibility policy and has a significant impact on the environment and society, the terms of termination or cancellation of the contract at any time shall be stipulated in the contract.	No difference
5. Does the company reference internationally accepted reporting standards or guidelines, and prepare reports that disclose non-financial information of the company, such as corporate social responsibility reports? Do the reports above obtain assurance from a third party verification unit?			The Company prepared the CSR Report in accordance with GRI Standards 2016, and appointed SGS Taiwan Ltd for assurance based on AA1000 AS (2008) Type 1 moderate level of assurance and the core options of GRI Standards.	No difference

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	**Abstract Explanation **
6. If the Company has established the corporate social responsibility principles based on “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies”, please describe any discrepancy between the Principles and their implementation: No difference.
7. Other important information to facilitate better understanding of the company’s corporate social responsibility practices: The implementation of CSR in 2019 are as follow, it can also be referenced to the Company’s 2019 CSR report: (1) Promote the improvement of Taiwan's agricultural cultivation technology ‧Conduct field trials across the country: use crops and climates in counties and cities to find the most suitable crop protection formulations and cultivation management methods. A total number of 124 field trials and 61 greenhouse trials were conducted to understand the effectiveness of crop protection product, so that farmers can obtain best harvest with lowest cost and investment. ‧Conduct soil and crops health examination through practical field management demonstration: according to each farmers’ soil condition, with proper fertilizer management, to improve the soil condition. In addition, through the diagnosis of pests and diseases, assist farmers to confirm pests and diseases. Combined with education on the proper use of pesticides, crop solutions are provided, which not only reduces farmers' production costs but also improves the quality of agricultural products. 106 field demonstrations were held. ‧During the cultivation of crops, explain the precautions for crop cultivation: promote correct and precise application of pesticides to farmers to ensure the safety of agricultural products. Use low-toxic, safe and effective prevention materials, and integrate pest prevention strategies to provide a complete solution. Conducted evening seminars in cope with farmers' daily schedules. Through the actual data such as the improvement of the quality and quantity of agricultural products promoted by farmers after using products, and the reduction of environmental impact, to jointly create a high-quality living environment and agricultural food safety. (2) Encourage employees to participate in social welfare activities ‧Participated in the medical social welfare activities around central Taiwan. The Company holds blood donation activities every year in cope with the Taichung Blood Donation Station. In 2019, a total of 3 times were held, with a total of 94 participants. ‧Keep conducting road sweeping activities on the roads around the company every month. Mobilize the employees to assist in environmental cleanup after typhoon. And regularly carry out tree greening, proper fertilization and pruning to jointly maintain the community clean and tidy. (3) Continuous promotion of factory safety and employee health management ‧Health promotion activity held. In 2019, a weight loss competition was held for overweight employees. The overall weight loss rate is as high as 261%, with total weight loss of 195.7 kg, and the average weight loss per person of 7.8 kg. It drives all colleagues to pay attention to daily diet and exercise, effectively achieve the purpose of preventing chronic diseases and improving health.

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3.3.6 Fulfillment of Ethical Corporate Management and Deviations from the "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies"

				Deviations from “the Ethical
			Implementation Status
				Corporate Management Best-Practice
Evaluation Item
				Principles for TWSE/TPEx Listed
	Yes	No	Abstract Illustration
				Companies” and Reasons
1. Establishment of ethical corporate management policies and programs (1)Does the company have a Board-approved ethical corporate management policy and stated in its regulations and external correspondence the ethical corporate management policy and practices, as well as the active commitment of the Board of Directors and management towards enforcement of such policy?			The Company’s business concept of “Delivering Integrity and Equity, Bringing Prosperity and Growth” is implemented in internal management and external business activities. It has formulated various management regulations such as “Ethical Corporate Management Best Practice Principles”, “Codes of Ethical Conduct”, “Whistle-blowing System” and “Internal Audit System”. It has established a good corporate governance and risk control mechanism, prevent the occurrence of unethical conducts by the completed rules and regulations, and organizes various activities and seminars from time to time to reach team consensus and implement the concept of Ethical Corporate Management. On November 6, 2019, the Board of Directors adopted the "Ethical Corporate Management Commitment", which was signed by each directors and managerial officers. The relevant policies and regulations are placed on the company's internal website to promote and strengthen the value of employee ethical management.	No difference
(2)Does the company have mechanisms in place to assess			The Company conducts the risk assessment of unethical conducts in accordance with “Risk Management	No difference
the risk of unethical conduct, and perform regular			Policies”, and complies with “Ethical Corporate Management Best Practice Principles”. No illegal political
analysis and assessment of business activities with
			contributions and donations have been provided, nor have any external improper benefits been accepted,
higher risk of unethical conduct within the scope of
			for preventing from unethical conducts, the Company declared to the vendors that it prohibited the
business? Does the company implement programs to
prevent unethical conduct based on the above and			acceptance of gifts and entertainment, and formulated a "Code of Ethical Conducts" for directors and
ensure the programs cover at least the matters			managerial officers to comply with.
described in Paragraph 2, Article 7 of the Ethical
Corporate Management Best Practice Principles for
TWSE/TPEx Listed Companies?
(3)Does the company provide clearly the operating procedures, code of conduct, disciplinary actions, and appeal procedures in the programs against unethical conduct? Does the company enforce the programs above effectively and perform regular reviews and amendments?			The Company handles in accordance with “Ethical Corporate Management Best Practice Principles”, “Code of Ethical Conducts”, “Whistle-blowing System” and “Reward and Punishment Principles”. When an unethical conduct occurs, the Company provides independent whistleblower channels on the corporate website, with the chief auditor and legal head as the dedicated unit to handle the whistleblower cases in secret and takes appropriate protective measures to ensure the whistleblower's privacy and protects him/her from unfair treatment or retaliation. If the reported case is verified, it will be submitted to the Chairman and the whistleblower will be given appropriate rewards. Those who violate the regulations will be punished according to the Company’s “Reward and Punishment Principles.” If it is a major incident or illegal case, it will be reported to the competent authority or transferred to the judicial organ for investigation if necessary. As of now, there was not any violation of ethical corporate management occurred in 2019.	No difference

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				Deviations from “the Ethical
			Implementation Status
				Corporate Management Best-Practice
Evaluation Item
				Principles for TWSE/TPEx Listed
	Yes	No	Abstract Illustration
				Companies” and Reasons
2.Fulfill operations integrity policy
(1)Does the company evaluate business partners’ ethical			The Company conducts credit checking and evaluation for basic information of vendors and	No difference
records and include ethics-related clauses in business			counterparties. If any unethical conduct is involved and validated to be true, the contract may be
contracts?			terminated or rescinded at any time. Directors and managerial officers also comply with “Code of Ethical
			Conduct” to demonstrate the Company’s position in ethical corporate management.
(2)Does the company have a unit responsible for ethical corporate management on a full-time basis under the Board of Directors which reports the ethical corporate management policy and programs against unethical conduct regularly (at least once a year) to the Board of Directors while overseeing such operations?			The Company assigns Management Division to coordinate the formulation and implementation of ethical corporate management policies and prevention measures. In March, 2019, the Board Approved the establishment of chief Corporate Governance Officer. The ethical corporate management promoting units was transferred to be supervised by Corporate Governance Officer, and promoted by corporate governance unit, and reports the implementation status to the Board periodically. For the ethical management in 2019, it promoted the continuation of 2018 measures, organizes education and training, kept promoting ethical corporate management, and conducted self-audited regularly. The goals of 2019 were: 1. Identify and amend ethical management regulations. 2. Continue to promote ethical management training. 1.Identify regulations Amended the Company’s “Ethical Corporate Management Best Practice Principles” and “Whistle-blowing System” in accordance with “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies”. Formulated the "Ethical Corporate Management Commitment” by the Board, and had it signed by directors and managerial officers. Posted relevant policies and regulations on the corporate website. Strengthen employees’ value concept of ethical corporate management. 2.Ethical management trainings (1) Prevention of insider trading for directors and managerial officers: provided insider stock trading cautions monthly, including the formation of insider trading and the confidential operation of material information. (2) The General Manager made various speeches of ethical management issues to employees every month and communicated the value of ethical corporate management. In 2019, 66 events were held with a total of 2,756 participants. (3) The ethical management relevant trainings: planned training courses of ethical management related issues. Promoted the trainings to employees. Topics of the trainings are including case studies of Consumer Protection Act, Information security and personal information protection, trademark use, laws and regulations studies regarding management, production and marketing, audit practice, etc. There were 401 participants and total of 1,792 training hours.	No difference
(3)Does the company establish policies to prevent conflicts			The Company has an internal audit system, various management policies or guidelines, which regulate	No difference
of interest and provide appropriate communication			external business activities and monetary transactions, avoid conflicts of interest, and manage confidential
channels, and implement it?			information, and provide appropriate statement channels on the internal websites.

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				Deviations from “the Ethical
	Implementation Status
				Corporate Management Best-Practice
Evaluation Item
				Principles for TWSE/TPEx Listed
	Yes	No	Abstract Illustration
				Companies” and Reasons
(4)Does the company establish policies to prevent conflicts of interest and provide appropriate communication channels, and implement it?			The Company has established internal control system, accounting system and management policies, and exercised accordingly. Meanwhile, the auditors were responsible for inspecting the business activities of various departments of the Company, and regularly report the audit results to the audit committee and the board of directors.	No difference
(5)Does the company regularly hold internal and external			The Company meets with external parties from time to time or participates in discussion and exchange of	No difference
educational trainings on operational integrity?			opinions, and senior managements also occasionally declare the Company's policies and concepts of
			ethical management in internal business meetings, to prevent from unethical business conducts.
3.Operation of the integrity channel (1)Does the company establish both a reward/punishment system and an integrity hotline? Can the accused be reached by an appropriate person for follow-up?			The Company established the “Whistle-blowing System”. Complaint and report of internal personnel regarding violation of ethical management can be made in form of telephone, mail or directly reported to audit unit or legal affairs office. If verified to be true, it will be punished according to the Company’s regulations. The accepting unit is obliged to keep the whistle-blower confidential and must not disclose it at will.	No difference
(2)Does the company have in place standard operating			The Company has set up a system for accepting complaints, all of which are handled by designated	No difference
procedures for investigating accusation cases, as well as			personnel in confidential, and appropriate protective measures are taken to ensure the privacy of
follow-up actions and relevant post-investigation
			stakeholders.
(3)Does the company provide proper whistleblower
protection?
4.Strengthening information disclosure Does the company disclose its ethical corporate management policies and the results of its implementation on the company’s website and MOPS?			The Company has its own website (www.sinon.com.tw), and assigns dedicated personnel to disclose the financial, business, and corporate governance related information, and also disclose the Ethical Corporate Management Best Practice Principles.	No difference
5.If the company has established the ethical corporate management policies based on the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies, please describe any discrepancy
between the policies and their implementation: No difference
6 Other important information to facilitate a better understanding of the company’s ethical corporate management policies (e.g., reviews and amends its policies). Amended the Company’s “Ethical Corporate Management Best Practice Principles” and “Whistle-blowing System” in accordance with “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies”. Formulated the “Ethical Corporate Management Commitment”.

3.3.7 Corporate Governance Guidelines and Regulations: Please refer to the Company’s website at www.sinon.com.tw

3.3.8 Other Important Information Regarding Corporate Governance: None.

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Statement of Internal Control

3.3.9 Internal Control Systems

SINON CORPORATION Statement of Internal Control System

Date: March, 20 2020

Based on the findings of a self-assessment, the Company states the following with regard to its internal control system during the year 2019:

• I. The Company is aware that the establishment, implementation and maintenance of the internal control system is the responsibility of the Board and managerial officers, and the Company has set up such system. The internal control is a process designed to provide reasonable assurance over the effectiveness and efficiency of our operations (including profitability, performance and safeguarding of assets), reliability, timeliness, transparency of our reporting, and compliance with applicable rulings, laws and regulations.

• II. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing its stated objectives. Moreover, the effectiveness of an internal control system may be subject to changes due to extenuating circumstances beyond our control. Nevertheless, the Company's internal control system contains self-monitoring mechanisms, and the Company takes immediate remedial actions in response to any identified deficiencies.

• III. The Company evaluates the design and execution effectiveness of its internal control system based on the criteria provided in the “Regulations Governing the Establishment of Internal Control Systems by Public Companies” (herein below, the Regulations). The criteria adopted by the Regulations identify five key components of managerial internal control according to the management control process: (1) control environment, (2) risk assessment, (3) control activities, (4) information and communication, and (5) monitoring activities. Each criterion includes several items. For the aforementioned items, please refer to the Regulations.

• IV. The Company has evaluated the design and operating effectiveness of its internal control system according to the aforesaid Regulations.

• V. Based on the findings of such evaluation, the Company believes that, on December 31, 2019, it has maintained, in all material respects, an effective internal control system (that includes the supervision and management of our subsidiaries), to provide reasonable assurance over our operational effectiveness and efficiency, reliability, timeliness, transparency of reporting, and compliance with applicable rulings, laws and regulations.

• VI. This Statement is an integral part of the Company's annual report and prospectus, and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Law.

• VII. This statement was passed by the board of directors meeting held on March 20, 2020, with none of the 9 attending directors expressing dissenting opinions, and the remainder all affirming the content of this Statement.

SINON CORPORATION

Chairman: Horng, Po-Yen General Manager: Yen, Tsu-Fang

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Audit Report of a Special Audit of Internal Control System Conducted by CPA: None.

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3.3.10 Regulatory Authorities’ Legal Penalties to the Company or Its Employees, and the Company’s Resulting Punishment on its Employees for Violations of Internal Control System Provisions, Principal Deficiencies, and the State of Any Efforts to Make Improvements in Last Year and as of the Print Date of the Annual Report: None.

3.3.11 Major Resolutions of Shareholders’ Meeting and Board Meetings

Major Resolutions of 2019 Shareholders’ Meeting (June 14, 2019)

Item	Major resolutions	Implementation status
1	Adopted the Company's 2018 business report and financial statements	(1) A total of 287,412,681 shares in favor, accounting for 96.34% of the voting power of shareholders presented (2) It has been published on the MOPS.
2	Adopted the proposal of 2018 surplus earnings distribution for the Company	(1) A total of 289,704,631 shares in favor, accounting for 97.10% of the voting power of shareholders presented (2) Resolved the ex-dividend record date as July 4, 2019 and distribution date as July 31, 2019. The distribution of a NT$1.3 cash dividend per common share
3	Approvedthe amendment of the Company’s “Articles of Association”	(1) A total of 289,696,098 shares in favor, accounting for 97.10% of the voting power of shareholders presented (2) Approved by the MOEA to register on July 8, 2019 and published the revised “Articles of Association” on the corporate website.
4	Approvedthe amendment of the Company’s “Procedures for the Acquisition or Disposal of Assets”.	(1) A total of 289,681,014 shares in favor, accounting for 97.10% of the voting power of shareholders presented (2) The revised “Procedures for the Acquisition or Disposal of Assets” has been published on the corporate website and MOPS
5	Approvedthe amendment of the Company’s “Procedures for Making of Endorsement and Guarantee”.	(1) A total of 289,692,014 shares in favor, accounting for 97.10% of the voting power of shareholders presented (2) The revised “Procedures for Making of Endorsement and Guarantee” has been published on the corporate website and MOPS
6	Approvedthe amendment of the Company’s “Procedures for Loaning Funds to Others”.	(1) A total of 289,681,004 shares in favor, accounting for 97.10% of the voting power of shareholders presented (2) The revised “ Procedures for Loaning Funds to Others” has been published on the corporate website and MOPS

Major Resolutions of the Board of Directors Meetings of 2019 and as of the Print Date of the Annual Report

Meeting number	Date	Major resolutions
The 1st meeting of 2019	March 22, 2019	(1) Approved the Company's 2018 business report and financial statements (2) Approved the proposal of 2018 surplus earnings distribution for the Company (3) Approved the Company's 2018 distribution of remunerations to employees and directors. (4) Approved the amendment of the Company’s “Articles of Association” (5) Approved the amendment of the Company's “Procedures for the Acquisition or Disposal of Assets” (6) Approved the amendment of the Company’s “Procedures for Making of Endorsement and Guarantee” (7) Approved the amendment of the Company’s “Procedures for Loaning Funds to Others” (8) Approved the proposal of convening the Company's 2019 shareholders annual meeting (9) Approved the Company’s 2019 business plan (10) Approved the Company's 2018 evaluation of the effectiveness of internal control system and the statement of internal control system (11) Approved the amendment of the Company’s “Corporate Governance Best-Practice Principles” (12) Approved the formulation of the Company's “Operational Procedures for Handling Directors’ Requests” (13) Approved the appointment of chief corporate governance officer

2019 Annual Report｜Corporate Governance Report

• 41 -

Meeting number	Date	Major resolutions
The 3rd meeting of 2019	August 9, 2019	(1) Approved the re-appointment of member of the Remuneration Committee (2) Approved the amendment of the Company's “Audit Committee Charter”
The 4th meeting of 2019	November 6, 2019	(1) Approved the Company’s 2018 investment with unappropriated retained earnings (2) Approved the Company's 2020 audit plan (3) Approved the Company's 2019 bonus and remuneration to managerial officers (4) Approved the amendment of the Company's “Board of Directors Performance Evaluation Policy” (5) Approved the amendment of the Company’s “Ethical Corporate Management Best Practice Principles” and “Whistle-blowing System”, and the formulation of “Ethical Corporate Management Commitment”
The 1st meeting of 2020	March 20, 2020	(1) Approved the Company’s 2019 business report and financial statements (2) Approved the proposal of 2019 surplus earnings distribution for the Company (3) Approved the Company's 2019 distribution of remunerations to employees and directors. (4) Approved the amendment of the Company’s “Articles of Association” (5) Approved the re-election of all of the Company’s directors (6) Approved the announcement of accepting the proposal from shareholder(s) holding 1% or more of outstanding shares and nomination of the candidates of directors (including independent directors) related matters. (7) Approved the proposal of convening the Company's 2020 shareholders annual meeting (8) Approved the Company's 2020 business plan (9) Approved the Company's 2019 evaluation of the effectiveness of internal control system and the statement of internal control system (10) Approved the amendment of the Company's “Management Policies for Preparation Process of Financial Statements” (11) Approved the formulation of the Company’s “Risk Management Policies” (12) Approved the amendment of the Company's “Audit Committee Charter” (13) Approved the amendment of the Company’s “Corporate Governance Best-Practice Principles” (14) Approved the Company’s “Remuneration Committee Charter” (15) Approved the Company’s “Rules of Procedure for Board Meetings” (16) Approved the Company’s “Corporate Social Responsibility Best Practice Principles”
The 2nd meeting of 2020	May 6, 2020	(1) Approved the nomination of candidates of the Company’s directors (including independent directors) of the 16th Board. (2) Approved to sell all of the shares of Taichung Golf & Country Club holding by the Company.

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

• 3.3.13 Resignation or Dismissal of the Company’s Key Individuals, Including the Chairman, CEO, and Heads of Accounting, Finance, Internal Audit, Chief Corporate Governance Officer and R&D: None.

2019 Annual Report｜Corporate Governance Report

• 42 -

3.4 Information Regarding the Company’s Audit Fee and Independence

									Unit: NT$thousands
Accounting Firm	Name of CPA	Audit Fee						Period Covered by CPA’s Audit	Remarks
				Non-audit Fee
			System of Design	Company Registration	Human Resource	Others	Subtotal
Deloitte & Touche	Su, Ting-Chien Tseng, Done-Yuin	3,535	0	37	0	690	727	Jan.1 ~ Dec.31 2019	Fees of other transfer pricing report, direct deduction method report, master file report and checklist of information about salary of full-time employees who are not in a managerialposition.

Note 1: when non-audit fees paid to the certified public accountant, to the accounting firm of the certified public accountant, and/or to any affiliated enterprise of such accounting firm are one quarter or more of the audit fees paid thereto, the amounts of both audit and non-audit fees as well as details of non-audit services shall be disclosed: Not applicable.

• Note 2: When the Company changes its accounting firm and the audit fees paid for the fiscal year in which such change took place are lower than those for the previous fiscal year, the amounts of the audit fees before and after the change and the reasons shall be disclosed: Not applicable.

• Note 3: When the audit fees paid for the current fiscal year are lower than those for the previous fiscal year by 15 percent or more, the reduction in the amount of audit fees, reduction percentage, and reason(s) therefor shall be disclosed: Not applicable.

Note 4: The evaluation results of the independence of CPA:

Evaluation items	Yes	No
1. None of the audit engagement team members and their families, other partners of the firm and their families, or the accounting firm and its affiliate, have a direct financial interest or material indirect financial interest with an audit client.	
2. There is not any loan or guarantee between the Company/its directors and any of the audit engagement team members and their families, other partners of the firm and their families, or the accounting firm and its affiliate.	
3. None of the accounting firm and the audit engagement team members have a close business relationship with the Company or its affiliates.	
4. At present, there are no potential employment negotiations between the audit engagement team members and the Company.	
5. None of the audit engagement team members have been a director or an employee of the Company who is in a position to exert significant influence over the audit engagement within the last two years.	
6. The Company pays the audit fee to the accounting firm in fixed amount, rather than a contingent fee. Neither is there a delay audit fee which might affect the independence of the audit.	
7. None of the audit engagement team members are appointed for acting as an advocate in support of the Company’s position or opinions, or representing the Company to coordinate the conflict with a third party.	
8. After this year’s appointment, the service year of CPAs will reach1.5 year. It does not exceed7 years.	
9. None of the engagement team members has a close or immediate family member who is a director, managerial officer, or an employee of the Company who is in a position to exert significant influence over the audit engagement.	
10. None of the Company’s directors and managerial officers has presented gifts of great value to the engagement team members.	
11.None of the Company’s directors, managerial officers, or employees who are in positions to exert significant influence over the audit engagement, has ever been a former partner retired/disassociated from the accounting firm within one year.	
12. None of the Company's independent directors has been working for the accounting firm within two years before and during his/her tenure.	
13. The Company did not make the engagement team members suffer or feel intimidated by the Company, making them unable to act objectively and clarify professional suspicions. For example: (1) The management of the Company has improper requirements for accounting treatment or disclosure of financial statements. (2) The Company does not pressure to reduce audit fee, in order to compel the accounting firm to reduce the extent of work performed.	
14. None of the engagement team members is promoting or brokering shares or other securities issued by the Company.	

2019 Annual Report｜Corporate Governance Report

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3.5 Replacement of CPA

3.5.1 Regarding the Former CPA

	Not applicable	Not applicable	Not applicable	Not applicable	Not applicable
Replacement Date
Replacement reasons and	There was a job rotation in Deloitte & Touche
explanations
	Status \ Parties			CPA	The Company
Describe whether the
Company terminated or
	Termination of appointment			Not applicable
the CPA did not accept the
	No longer accepted (continued) appointment
appointment
Other issues (except for	Not applicable
unqualified issues) in the
audit reports within the
last two years
	Yes		Accounting principles or practices
			Disclosure of Financial Statements
Differences with the			Audit scope or steps
company			Others
	None	
	specify details	Not applicable
	None
Other Revealed Matters

3.5.3 Former CPA's Reply Letter in accordance with Article 10, Paragraph 6, Subparagraph A, B and C of Regulations Governing Information to be Published in Annual Reports of Public Companies: Not applicable.

• 3.6 Company's Chairman, General Manager, or any Managerial Officer in charge of Finance or Accounting Matters Has in the Most Recent Year Held a Position at the Accounting Firm of its Certified Public Accountant or at an Affiliated Enterprise: None.

3.5.2 Regarding the Successor CPA

3.5.2 Regarding the Successor CPA
Name of accounting firm	Deloitte & Touche
Name of CPA	Su, Ting-Chien & Tseng, Done-Yuin
Date of appointment	Not applicable
Consultation results and opinions on accounting treatments or principles with respect to specified transactions and the company's financial reports that the CPA might issue prior to the engagement.	None
Succeeding CPA’s written opinion of disagreement toward the former CPA	None

2019 Annual Report｜Corporate Governance Report

• 44 -

3.7 Changes in Shareholding of Directors, Managerial Officers and Major Shareholders

3.7.1 Change in Shareholding of Directors, Managerial Officers, and Major Shareholders

Unit: Shares

Title	Name	2018	2018	As of April 25, 2020	As of April 25, 2020
		Holding Increase (Decrease)	Pledged Holding Increase (Decrease)	Holding Increase (Decrease)	Pledged Holding Increase (Decrease)
Chairman	Horng, Po-Yen	－	－	－	－
Vice Chairman Representative	Chia-Wen Investment Ltd.	164,000	－	120,000	－
	Liao, Lien-Heng	－	－	－	－
Director	Guo Wu, Zhun-Zhen	－	－	－	－
Director	Yu, Tse-Jen	－	－	－	－
Director	Yang, Jen-Yo	－	－	－	－
Director Representative	Yun-Sung Investment Ltd.	7,117,000	－	1,620,000	－
	Liu, Yun-Sung	－	－	－	－
Independent director	Chi, Chih-Yi	－	－	－	－
Independent director	Hsu, Jun-Ming	－	－	－	－
Independent director	Uang, Biing-Jiun	－	－	－	－
General Manager	Yen, Tsu-Fang	－	－	－	－
Vice General Manager	Yu, Kuei-Ju	－	－	－	－
Assistant General Manager	Lin, Chin-Shan	－	－	－	－
Assistant General Manager	Li, Chien-Min	－	－	－	－
Assistant General Manager	Wang, Chi-Chou	－	－	－	－
Assistant General Manager	Tsai, Chih-Yung	3,000	－	－	－
Assistant General Manager	Shih, Neng-Chun	－	－	－	－
Assistant General Manager	Chen, Chien-Hsing (Note1)	－	－	－	－
Assistant General Manager	Feng, Tao-An (Note1)	－	－	－	－
Chief Corporate Governance Officer	Chiang, Pei-Shan	－	－	－	－

Note 1: New managerial officers took office on January 1, 2020.

3.7.2 Shares Trading with Related Parties: None.

3.7.3 Shares Pledge with Related Parties: None.

2019 Annual Report｜Corporate Governance Report

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April 25, 2020

3.8 Relationship among the Top Ten Shareholders

Name	Current Shareholding	Current Shareholding	Spouse’s/minor’s Shareholding	Spouse’s/minor’s Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees	Remarks
	Shares	%	Shares	%	Shares	%	Name	Relationship
YunSung Investment Ltd. Representative: Liu, Yun-Sung	32,788,000	7.80%	－	－	－	－	－	－
	503,189	0.12%	11,000	0.00%	－	－	－	－
Horng , Po-Yen	7,119,235	1.69%	5,038,857	1.20%	－	－	Ho, Hsiu-Mei Horng , Chia-Ying	Spouses Relatives Within Two Degrees
Chaoyang University of Technology Representative: Yang , Tien-Sheng	6,250,000	1.49%	－	－	－	－	－	－
	－	－	－	－	－	－	－	－
Chiawen Investment Ltd. Representative :Lan, Qing-E	5,444,443	1.30%	－	－	－	－	－	－
	634,932	0.15%	306,919	0.07%	－	－	－	－
Ho, Hsiu-Mei	5,038,857	1.20%	7,119,235	1.69%	－	－	Horng, Po-Yen Horng , Chia-Ying	Spouses Relatives Within Two Degrees
Yu, His-Ming	4,607,000	1.10%	Information not available
Citibank Managed Dimension Emerging Markets Evaluation Fund	4,540,877	1.08%	－	－	－	－	－	－
Wu Cheng, Su-Chen	3,898,495	0.93%	－	－	－	－	－	－
Horng , Chia-Ying	3,309,109	0.79%	－	－	－	－	Horng, Po-Yen Ho, Hsiu-Mei	Relatives Within Two Degrees
Wang, Sheng-Min	3,305,000	0.79%	Information not available

Note 1: All top ten shareholders should be enumerated in full. In case of juristic (corporate) person shareholders, the names of all such juristic (corporate) person shareholders and their representatives should be enumerated respectively.

Note 2: The shareholding ratios should be calculated based on the own names, names of spouses, minor children respectively.

Note 3: On the aforementioned shareholders, including juristic (corporate) persons and natural persons (individuals), the relationship among them should be disclosed based on the rules for financial statements of the issuers.

3.9 The Total Number of Shares and Total Equity Stake Held in any Single Enterprise by the Company, Its Directors, Managerial Officers, and Any Companies Controlled Either Directly or Indirectly by the Company: None.

2019 Annual Report｜Corporate Governance Report

• 46 -

IV. Capital Overview

4.1 Capital and Shares

4.1.1 Source of Capital

Issued Shares

Unit ： NT$

		Authorized Capital		Paid-in Capital		Remark
	Par						Capital
Year/ Month
	Value		Amount		Amount		Increased by
								Other
		Shares	(NT$ thousands)	Shares	(NT$ thousands)	Sources of Capital	Assets Other
							than Cash
1994/10	10	250,000,000	2,500,000,000	230,525,320	2,305,253,200	Cash capital increase 250,000,000 Capitalization of capital reserve 132,882,750 Capitalization of retained earnings 150,600,450		Note 1
1995/08	10	280,000,000	2,800,000,000	258,188,359	2,581,883,590	Capitalization of capital reserve 276,630,390		Note 2
1996/10	10	280,000,000	2,800,000,000	278,843,428	2,788,434,280	Capitalization of capital reserve 206,550,690		Note 3
1997/09	10	330,000,000	3,300,000,000	301,150,902	3,011,509,020	Capitalization of capital reserve 167,306,055 Capitalization of retained earnings 55,768,685		Note 4
1998/08	10	330,000,000	3,300,000,000	325,242,974	3,252,429,740	Capitalization of capital reserve 240,920,720		Note 5
1999/08	10	370,000,000	3,700,000,000	344,757,553	3,447,575,530	Capitalization of capital reserve 97,572,900 Capitalization of retained earnings 97,572,890		Note 6
2001/03	10	370,000,000	3,700,000,000	340,475,553	3,404,755,530	De-capitalization due to cancellation of treasury stocks 42,820,000
2001/04	10	370,000,000	3,700,000,000	337,105,553	3,371,055,530	De-capitalization due to cancellation of treasury stocks 33,700,000
2001/08	10	390,000,000	3,900,000,000	357,331,887	3,573,318,870	Capitalization of capital reserve 202,263,340		Note 7
2001/11	10	390,000,000	3,900,000,000	357,272,887	3,572,728,870	De-capitalization due to cancellation of treasury stocks 590,000
2004/08	10	390,000,000	3,900,000,000	364,418,345	3,644,183,450	Capitalization of retained earnings 71,454,580		Note 8
2005/05~2007/05	10	390,000,000	3,900,000,000	364,418,345	3,644,183,450			No change
2008/04	10	390,000,000	3,900,000,000	350,232,345	3,502,323,450	De-capitalization due to cancellation of treasury stocks 141,860,000		Note 9
2008/06	10	390,000,000	3,900,000,000	349,269,345	3,492,693,450	De-capitalization due to cancellation of treasury stocks 9,630,000		Note 10
2009/07	10	390,000,000	3,900,000,000	352,692,039	3,526,920,390	Capitalization of retained earnings 34,226,940		Note 11
2011/05	10	390,000,000	3,900,000,000	352,692,039	3,526,920,390			No change
2012/01	10	390,000,000	3,900,000,000	333,692,039	3,336,920,390	De-capitalization due to cancellation of treasury stocks 19,000,000		Note 12
2013/05	10	390,000,000	3,900,000,000	333,692,039	3,336,920,390			No change
2014/01	10	390,000,000	3,900,000,000	333,723,289	3,337,232,890	Corporate bond conversion 31,250 shares		Note 13
2014/08	10	390,000,000	3,900,000,000	335,929,667	3,359,296,670	Corporate bond conversion 2,206,378 shares		Note 14
2014/12	10	390,000,000	3,900,000,000	337,894,413	3,378,944,130	Corporate bond conversion 1,964,746 shares		Note 15

2019 Annual Report｜Capital Overview

• 47 -

		Authorized Capital		Paid-in Capital		Remark
	Par						Capital
Year/ Month
	Value		Amount		Amount		Increased by
								Other
		Shares	(NT$ thousands)	Shares	(NT$ thousands)	Sources of Capital	Assets Other
							than Cash
2015/05	10	390,000,000	3,900,000,000	343,690,731	3,436,907,310	Corporate bond conversion 5,796,318 shares		Note 16
2015/08	10	390,000,000	3,900,000,000	344,408,739	3,444,087,390	Corporate bond conversion 718,008 shares		Note 17
2015/11	10	390,000,000	3,900,000,000	344,803,202	3,448,032,020	Corporate bond conversion 394,463 shares		Note 18
2016/11	10	390,000,000	3,900,000,000	347,001,299	3,470,012,990	Corporate bond conversion 2,198,097 shares		Note 19
2017/04	10	390,000,000	3,900,000,000	356,516,774	3,565,167,740	Corporate bond conversion 9,515,475 shares		Note 20
2017/06	10	390,000,000	3,900,000,000	370,327,270	3,703,272,700	Corporate bond conversion 13,810,496 shares		Note 21
2017/08	10	390,000,000	3,900,000,000	384,347,453	3,843,474,530	Corporate bond conversion 14,020,183 shares		Note 22
2017/11	10	500,000,000	5,000,000,000	405,162,473	4,051,624,730	Corporate bond conversion 20,815,020 shares		Note 23
2018/04	10	500,000,000	5,000,000,000	414,993,411	4,149,934,110	Corporate bond conversion 9,830,938 shares		Note 24
2018/05	10	500,000,000	5,000,000,000	417,259,123	4,172,591,230	Corporate bond conversion 2,265,712 shares		Note 25
2018/08	10	500,000,000	5,000,000,000	420,492,585	4,204,925,850	Corporate bond conversion 3,233,462 shares		Note 26
2018/09~2019/12	10	500,000,000	5,000,000,000	420,492,585	4,204,925,850			No change

Note 1: 24 June 1994 (1994) Letter No. Taiwan-Finance-Securities-I-28405 Note 2: 10 June 1995 (1995) Letter No. Taiwan-Finance-Securities-I-33814 Note 3: 9 July 1996 (1996) Letter No. Taiwan-Finance-Securities-I-40319 Note 4: 24 June 1997 (1997) Letter No. Taiwan-Finance-Securities-I-49977 Note 5: 19 June 1998 (1998) Letter No. Taiwan-Finance-Securities-I-53517 Note 6: 17 June 1999 (1999) Letter No. Taiwan-Finance-Securities-I-55821-1 Note 7: 27 June 2001 (2001) Letter No. Taiwan-Finance-Securities-I-140862 Note 9: 05 July 2004 Securities-Futures-I-0930129488 Note 9: 10 March 2008 Letter No. Financial-Supervisory-Securities-III-0970009614 Note 10: 17 June 2008 Letter No. Financial-Supervisory-Securities-III-0970031534 Note 11: 08 July 2009 Letter No. Financial-Supervisory-Securities-Corporate-0980033833 Note 12: 22 December 2011 Letter No. Financial-Supervisory-Securities-Trading-1000062665 Note 13: 29 January 2014 Public Announcement No. Taiwan-Stock-Listing-I-1030002062

Note 14: 28 August 2014 Public Announcement No. Taiwan-Stock-Listing-I-1030017467 Note 15: 16 December 2014 Public Announcement No. Taiwan-Stock-Listing-I-1030026074 Note 16: 01 June 2015 Public Announcement No. Taiwan-Stock-Listing-I-10400106601 Note 17: 27 August 2015 Public Announcement No. Taiwan-Stock-Listing-I-10400174121 Note 18: 30 November 2015 Public Announcement No. Taiwan-Stock-Listing-I-10400243491 Note 19: 17 November 2016 Letter No. MOEA-Authorize-Commerce-10501267160 Note 2o: 17 April 2017 Letter No. MOEA-Authorize-Commerce-10601044970 Note 21: 01 June 2017 Letter No. MOEA-Authorize-Commerce-10601064350 Note 22: 25 August 2017 Letter No. MOEA-Authorize-Commerce-10601118060 Note 23: 20 November 2017 Letter No. MOEA-Authorize-Commerce-10601158010 Note 24: 27 April 2018 Letter No. MOEA-Authorize-Commerce-10701038960 Note 25: 24 May 2018 Letter No. MOEA-Authorize-Commerce-10701053370 Note 26: 20 August 2018 Letter No. MOEA-Authorize-Commerce-10701103900

Type of Stock

Type of Stock
				April 25,2020
		Authorized Capital
Share Type				Remarks
	Issued Shares	Un-issued Shares	Total Shares
Nominal common stock	420,492,585	79,507,415	500,000,000	Unit: share
If Approval Has Been Granted to Offer and Issue Securities by Shelf Registration, Additionally Disclose the Approved Amount and Information Regarding Securities to be Issued or
Already Issued: Not applicable.

2019 Annual Report｜Capital Overview

• 48 -

April 25, 2020

4.1.2 Status of Shareholders

				Foreign
			Other		Domestic
	Government	Financial		Institutions &
Item			Juridical		Natural	Total
	Agencies	Institutions		Natural
			Persons		Persons
				Persons
	1	3	209	135	61,383	61,731
Number of
Shareholders
	2	644,000	70,152,443	49,226,472	300,469,668	420,492,585
Shareholding
(shares)
	0.00%	0.15%	16.68%	11.71%	71.46%	100%
Percentage

4.1.3 Shareholding Distribution Status

			April 25,2020
Class of Shareholding	Number of
		Shareholding (Shares)	Percentage
(Unit: Share)	Shareholders
1 ~ 999	37,464	3,348,577	0.80%
1,005 ~ 5,000	16,891	36,827,505	8.76%
5,001 ~ 10,000	3,447	27,207,836	6.47%
10,001 ~ 15,000	1,256	15,604,765	3.71%
15,001 ~ 20,000	727	13,539,048	3.22%
20,001 ~ 30,000	605	15,418,744	3.67%
30,001 ~ 40,000	303	10,818,954	2.57%
40,001 ~ 50,000	204	9,461,449	2.25%
50,001 ~ 100,000	403	28,950,540	6.89%
100,001 ~ 200,000	195	27,391,101	6.51%
200,001 ~ 400,000	110	31,165,204	7.41%
400,001 ~ 600,000	39	19,385,869	4.61%
600,001 ~ 800,000	17	11,507,296	2.74%
800,001 ~ 1,000,000	14	12,873,889	3.06%
1,000,001 or over	56	156,991,808	37.33%
Total	61,731	420,492,585	100%

4.1.4 List of Major Shareholders: Shareholders with a Stake of 5 Percent or Greater, or Shareholders Who Rank in the Top 10 in Shareholding Percentage

April 25, 2020

Shareholder's Name	Shareholding	Shareholding
	Shares	Percentage
Yun-Sung Investment Ltd.	32,788,000	7.80%
Horng , Po-Yen	7,119,235	1.69%
Chaoyang University of Technology	6,250,000	1.49%
Chiawen Investment Ltd.	5,444,443	1.30%
Ho, Hsiu-Mei	5,038,857	1.20%
Yu, His-Ming	4,607,000	1.10%
Citibank Managed Dimension Emerging Markets Evaluation Fund	4,540,877	1.08%
Wu Cheng, Su-Chen	3,898,495	0.93%
Horng , Chia-Ying	3,309,109	0.79%
Wang, Sheng-Min	3,305,000	0.79%

2019 Annual Report｜Capital Overview

• 49 -

4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share in the Last two Years

two Years
			Unit: NT$
Items	2018	2019	As of Mar. 31, 2020 (Note 7)
(1) Market Price per Share(Note 1)
Highest Market Price	17.80	21.75	19.75
Lowest Market Price	15.75	16.50	15.65
Average Market Price	17.03	18.70	18.81
(2) Net Worth per Share(Note 2)
Before Distribution	16.65	16.72	16.86
After Distribution	15.35	15.42	15.56
(3) Earnings per Share
Weighted Average Shares (thousand shares)	418,731	420,492	420,492
Basic Earnings Per Share	1.74	1.6	0.05
(4) Dividends per Share(Note 3)
Cash Dividends	1.3	1.3	-
Stock Dividends
 Dividends from Retained Earnings	－	－	－
 Dividends from Capital Surplus	－	－	－
Accumulated Undistributed Dividends	－	－	－
(5) Return on Investment
Price / Earnings Ratio (Note 4)	9.79	11.69	-
Price / Dividend Ratio (Note 5)	13.1	14.38	-
Cash Dividend Yield Rate (Note 6)	7.6	7.0	-

Note 1: Data sourced from Taiwan Stock Exchange (TWSE).

4.1.6 Dividend Policy and Implementation Status

Dividend Policy

The business of the company has been promoted well, for pursuit of sustainable operation and continuous growth, at the present, Residual Dividend Policy is adopted. That is to reserve the surplus in order to deal with the necessary capital, and transfer the said capital as allocation of funds to the shareholders, and then the remained surplus shall be distributed to them in the way of cash dividend. The cash dividend shall be annually distributed not less than 30% of the total dividend in the current year, however, it is not limited that the distribution amount of cash dividend is less than New Taiwan Dollars one hundred million.

Distribution of Dividend

SINON CORPORATION

The Proposed Surplus Earning Distribution Table of 2019

SINON CORPORATION The Proposed Surplus Earning Distribution Table of 2019
	Unit: NT$
Items	Total amount
Undistributed surplus earnings in the beginning of the year	1,036,557,976
Plus: Net income after taxes of this year	674,854,833
Minus: Effect of retrospective application	(49,931,921)
Minus: Other comprehensive income of 2019-Remeasurement of defined benefit plan	(6,742,111)
After-tax net income and other profit items adjusted to the current year’s	618,180,801
undistributed earnings other than after-tax net income calculated by the
profit-seeking enterprise
Minus: Legal reverse set aside	(61,818,080)
Minus: Special reverse set aside	(43,200,124)
Surplus earning to be distributed	1,549,720,573
Cash dividends: NT$1.3 per share (outstanding shares: 420,492,585)	(546,640,361)
Balance of undistributed surplus earning	1,003,080,212

Note 2: Use the number of the issuing shares in the year end as the base with the distribution decision

resolved at the shareholders’ meeting held in the following year.

Note 3: Fill in dividend per share based current earnings and will be distributed in next year.

Note 4: Price / Earnings Ratio = Average Market Price / Earnings per Share

4.1.7 Effect upon Business Performance and Earnings per Share of Any Stock Dividend Distribution Proposed or Adopted at the Most Recent Shareholders' Meeting: Not applicable.

Note 5: Price / Dividend Ratio = Average Market Price / Cash Dividends per Share Note 6: Cash Dividend Yield Rate = Cash Dividends per Share / Average Market Price

Note 7: Numbers of Q1, 2020 is based on the financial statements reviewed by CPA per IFRS.

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4.1.8 Compensation of Employees and Directors

1. Information Relating to Compensation of Employees and Directors in the Articles of Association

If there is a net profit at the end of each fiscal year, 1% of the profit shall be allocated as employees’ compensation, which may be distributed in the form of shares or in cash by a resolution of the meeting of board of directors and issued include the employees of the subsidiaries of the Company meeting certain specific requirements; and may be allocated 5% or less for the remuneration to directors by a resolution of the meeting of board directors. The assigned proposal for the employees’ compensation and remuneration to directors shall be reported to the shareholders’ meeting.

The Company shall retain any profit to cover the losses while having accumulated losses. Then, the employees’ compensation and remuneration to directors may be payable in proportion based on the ratio mentioned.

2. The basis for estimating the amount of employee and director compensation, for calculating the number of shares to be distributed as employee compensation, and the accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figure, for the current period: None.

3. Distribution of Compensation of Employees and Directors for 2019 Approved in the Board of Directors Meeting

• (1) The amount of any employee compensation distributed in cash or stocks and remuneration for directors. If there is any discrepancy between that amount and the estimated figure for the fiscal year these expenses are recognized, the discrepancy, its cause, and the status of treatment shall be disclosed:

Employee’s compensation was NT$8,417,677; remuneration for directors was NT$42,088,382, both are distributed in cash, and there was not any discrepancy between the amount and the estimated figure.

• (2) The amount of any employee compensation distributed in stocks, and the size of that amount as a percentage of the sum of the after-tax net income stated in the parent company only financial reports or individual financial reports for the current period and total employee compensation: Not applicable.

4. The actual distribution of compensation of employee and directors for the previous fiscal year (with an indication of the number of shares, monetary amount, and stock price, of the shares distributed), and, if there is any discrepancy between the actual distribution and the recognized employee, director compensation, additionally the discrepancy, cause, and how it is treated:

• Total amount of NT$54,213,798 are distributed in cash (Employees’ compensation was NT$9,035,633; remuneration for directors was NT$45,178,165). There were not any discrepancies between the amount and the estimated figure.

4.1.9 Status of Repurchasing the Company's Own Shares in the Last Year and as of the Print Date of the Annual Report: None.

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4.2 Issuance of Corporate Bonds

4.2.1 Issuance of Corporate Bonds

4.2 Issuance of Corporate Bonds 4.2.1 Issuance of Corporate Bonds	4.2 Issuance of Corporate Bonds 4.2.1 Issuance of Corporate Bonds
Type of corporate bond (note 2)		1st Domestic unsecured convertible bond (Note 5)
Issuing date		August 15, 2013
Denomination		NT$100 thousand
Listing (note 3)		Taipei Exchange
Offering price		Par
Total amount		NT$1.2 billion
Coupon rate		Coupon rate 0%
Tenor		5 years Maturity: August 15, 2018
Guarantor		None
Trustee		Department of trust, Bank SinoPac Co., Ltd.
Underwriter		SinoPac Securities Co., Ltd.
Legal counsel		Handsome Attorneys-at-law Attorney Chiu, Ya-wen
Attesting CPA		Deloitte & Touche CPA Cheng, De-ren and Chiang, Shu-jing
Redemption method		Bullet repayment
Outstanding principle (As of the maturity date on August 15, 2018)		NT$9,500,000
Redemption or early repayment clause		Refer to issuance and conversion methods
Covenants (note 4)		Not applicable
Credit rating agency, rating date, corporate bond Credit rating		None
Other Rights of Bondholders	The amount of converted common stock (exchange or warrants), global depository receipts or other securities as of August 15, 2018	NT$1,190,500,000
	Issuance and conversion (exchange or subscription) method	Refer to issuance and conversion methods
Issuance and conversion, exchange or warrant method. Dilution effect and other adverse effects on existing shareholders		According to the evaluation report provided by the underwriter, under the circumstance that all bondholders of this convertible bond ask for converting to common shares, maximum dilution effect on existing shareholders is 18.35%, which is not a material adverse impact on existing shareholders.
Custodian		Not applicable

Note 1: Section “issuance of corporate bonds” includes public offering and private placement of corporate bond which are under handling. Public offering of corporate bond under handling refers to FSC effective (approved) case; private placement of corporate bond under handling refers to the Board resolved and passed cases.

Note 2: The number of fields depends on the actual number of issuances.

Note 3: Applicable to overseas corporate bond.

Note 4: Such as restrict to cash dividend, foreign investment or require a certain proportion of assets to be maintained.

Note 5: Private placement shall be marked in a notable way.

Note 6: For convertible bond, exchangeable bond, shelf registration bond, and bond with warrants, it should be presented by its nature and according to the table format, and then disclose the information of convertible bond, exchangeable bond, shelf registration bond, and bond with warrants.

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4.2.2 Convertible Bonds

Corporate bond type (Note 1)	Corporate bond type (Note 1)	1st Domestic unsecured convertible bond	1st Domestic unsecured convertible bond
Item	Year	2017	As of August 15 ,2018 (Note 4)
Market price of the convertible bond(Note 2)	Highest	142.10	134.25
	Lowest	110.00	118.00
	Average	118.85	129.75
Convertible Price		July 29, 2017 Adjusted from NT$13.83 to NT$13.02.	August 15, 2018 Adjusted from NT$13.02 to NT$12.26.
Issue date and conversion price at issuance		Issue Date: August 15 ,2013 Conversion price at issuance: NT$16
Conversion methods (Note 3)		58,476,637 Shares converted and delivered by issuing new shares	5,499,174 Shares converted and delivered by issuing new shares

Note 1: The number of fields depends on the actual number of issuance.

Note 2: If overseas corporate bonds are listed in multiple exchanges, specify by listing exchanges.

Note 3: Deliver outstanding shares or issue new shares.

Note 4: Matured on August 15, 2018 and stopped trading at TPEx.

4.2.3 Shelf Registration Bond: Not applicable.

4.2.4 Bond with Warrants: Not applicable.

4.3 Status of Preferred shares: None.

4.4 Status of Global Depository Receipts: None.

• 4.5 Status of Employee share Subscription Warrants and New Restricted Employee Shares: None.

• 4.6 Status of New Shares Issuance in Connection with Mergers and Acquisitions: None.

• 4.7 Status of Financing Plans and Implementation: None.

V. Operational Highlights

5.1 Business Activities

5.1.1 Business Scope

1. Main business activities: Pesticides, fertilizers, microbial pesticides, microbial fertilizers, chemicals, etc.

2. 2019 consolidated business proportion

onsolidated business proportion
Content	Business proportion
Crop protection	59%
Supermarket	26%
Household supplies and catering services	11%
Others	4%

1. Current products

Pesticides Fertilizers Agricultural materials Technical grade pesticide Fine chemicals and intermediate products Plastic products Microbiological fertilizers

1. New products planned to be developed New pesticide formulation types Efficient compound fertilizer New fine chemicals and intermediate products Microbiological pesticides

5.1.2 Industry Overview

1. Current status and development of the industry

In the domestic crop protection market, due to food safety issues, the government's requirements for product registration are getting stringent, and there are more and more laws and regulations on production and sales. The use of highly toxic pesticide products is prohibited year by year. Consumers' increasing attention to health and environmental issues, coupled with the continued promotion of friendly farming and the reduction of fertilizer use by the Agriculture and Food Agency, have increased the proportion of microbial preparation products year by year.

• Secondly, countries over the world pay more attention to the uniformity of pesticide specifications, so governments of all countries will be more rigorously checking environmental protection regulations, agrochemical regulations and pesticide registration and certification; therefore, investment in the development of microbial formulations and natural plant biostimulants products is a future trend. The sooner you participate, the more advantage you will have in the sales market.

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2. Relevance of upstream, midstream and downstream industries

5.1.3 Research and Development

Crop protection market in Taiwan:

1. Research and development expenditures and results in the last two years

Upstream					Midstream Production, Import				Downstream Sales
Raw material Liquid Carrier Surfactant Packaging material Technical grade pesticide
	Technical grade pesticide					Liquid				Farmers’
					Granule formulation formulation Powder	formulation				Association
	Liquid
	Carrier
	Surfactant				Formulated agro-pesticide formulation				~~Retail store~~ ~~Ditibt~~
	Packaging material									~~Ditibt~~
										~~sruor~~

3. Various development trends and competition status of products

• (1) Product development trends

• ‧ The development goal of pesticides is to develop low-toxicity, low environmental impact, easy to operate, safe and effective formulations. The developments of fertilizers tend to be soil-friendly and environment-friendly, improve nutrient absorption efficiency and are easy to use. Due to the aging problems of farmers, slow release fertilizers are developed to save labor and time; microbial formulations and natural plant biostimulants will become the focus of Company's future development domestically.

• ‧ Build a complete product line, supplemented by microbial formulations, sex pheromones and organic cultivation products to create a friendly cultivation environment and produce safe agricultural products.

(2) Product competitions

The Company has spared no effort to develop various safe formulations. It invests in the equipment and manpower required for various formulations, including laboratory test instruments, pilot equipment and automated robotic arm production equipment, thereby is a technical leader in the industry. Supplemented with perfect sales channels to provide farmers with the safest and most effective world-class quality.

Year	R&D expenditure (NT$ thousands)	Result
2018	127,697	(1) The Company has completed the trail runs of five products. The mass production will be introduced in factories in the future. (2) The Company has submitted samples of eight products. All samples have been registered in order to meet the customers’ requirements. (3) The Company has completed the process development for six items and improved the manufacturing process for thirteen items to increase the product competitiveness. (4) The Company has completed source verification of new suppliers for sixteen items of materials to ensure stable supply for materials and reduce the costs. (5) The Company has filed one patent for manufacturing process.
2019	137,384	(1) The Company has completed the trail runs of three kinds of products. It will be introduced in factories in the future. (2) The Company has submitted samples of seven kinds of products. All samples have been registered for fulfilling the customers’ requirements. (3) The Company has completed the process development for six items and improved the manufacturing process for seventeen items to increase the product competitiveness. (4) The Company has completed source verification of new suppliers for fifteen items of materials to ensure stable supply for materials and reduce the costs.

2. Future R&D plans

• (1) Carry out 9 process development and improvement projects to optimize the process, reduce costs and enhance product competitiveness.

• (2) Carry out 6 new products trial runs and introduce them into mass production in the future to expand the product scope.

• (3) Complete more than 20 product samples for registration and customer test needs to develop new customers.

3. R&D expenditure from January to March, 2020: Around NT$42,870,000

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5.1.4 Long-term and Short-term Development

1. Short-term Development

• (1) Utilize the advantages of the Company’s own GLP laboratory to accelerate the preparation of registration information. Keep strategically cooperating with foreign manufacturers to exert the synergy of procurement and sales. Expand production capacity and create economies of scale.

• (2) Own branding sales markets: for Brazil, Mainland China, Thailand and Australia, continue to grow steadily and expand local sales channels; in Europe, India, Vietnam, South American and North Africa, continue to add new products and new customers.

• (3) Focusing on the development of crop solutions of "pesticide formulations combination" and "Sinon fertilization management", to develop crop protection related products. Strengthen the brand name and comprehensive technical services, and help farmers take care of crops through crop groups and demonstrations, to increase market share.

2. Long-term Development

• (1) Development in Taiwan's pesticides and fertilizer markets: actively develop microbial, environment-friendly materials and high-efficiency protein natural stimulant products, supplemented by existing products, to achieve farmers' time and labor saving, pest management and agricultural product safety.

• (2) Development in international crop protection markets: explore global channels and provide professional crop protection solutions. Become a major partner of multinational life science companies and provide high-quality services and products to farmers worldwide. Develop key competitive products, contribute to agricultural development, and promote social welfare; carefully select strategic partners and actively develop the Company’s own channels to increase profits; establish a global procurement platform to integrate the needs of raw materials and enhance bargaining power.

5.2 Market and Sales Overview

5.2.1 Market Analysis

1. Main products sales markets

Sales (offering) area of main products (services): Taiwan, Mainland China, Europe, Japan, America,

Thailand Australia and other Southeast Asia countries. Major developments are as flows:

Countries	Major developments
Europe	‧The threshold for obtaining certificates is high, the investment amount is high, but the return is high. ‧Environmental awareness and the opinions led by green organizations are over weighted, which has become one of the uncertainties for investment. ‧Customer stickiness and their trust in Company are high; thereby any new licensed products can quickly reach the maximum controllable sales volume.
Japan	Japan is one of the most difficult countries for pesticides registration. Results of Company’s efforts are: ‧Cooperate with local companies in Japan, produce OEM products, and endeavor to lower the cost and improve process, so as to stabilize orders. ‧Existing market is still dominated by selective herbicides for rice. Due to the resistance of the weeds, various manufacturers have endeavored to develop new herbicides. The Company will continue to win new OEM products opportunity, by leveraging the OEM experience and production process development capability.
America	‧Increase products and channels through strategic partners. ‧Strengthen the main sales area and take the crop as the main product line. ‧Develop cooperative sales and product registration and planning with new customers.
Australia	‧Enhance key customers sales and customer credit management. ‧Strengthen supply chain and effect the inventory and product management, to reduce the impact from market price volatility.
Thailand	‧Continue to operate steadily.
Other Southeast Asia countries	‧Cooperate with Japanese companies to accelerate in cultivating Southeast Asia markets, such as Vietnam, Myanmar, etc. ‧Expand the operation of local company that has been licensed for herbicides in India, to increase the sales.

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2. Market share

The Company's 2019 fertilizer accounted for about 11% market share in Taiwan. Retail sales of pesticide (excluding raw materials sold in the same industry) accounts for about 17% of the Taiwan market, ranking the leading position in the Taiwan pesticide market.

3. Future market demand and supply, and growth

In 2019, the worldwide agrochemicals sales amounted to US$65 billion, of which herbicides accounted for 43%, fungicides 28%, insecticides 25%, and others 4%. The five major crops of pesticides, including fruits and vegetables, cereals, soybeans, corn, and rice, accounted for about 77% of the total global agrochemical market. In the coming 5 years, large multinational companies will have many patent-off products; non-patent agrochemicals will increase year by year as the proportion of patents expires. Agrochemicals market seems to grow slowly in the long term.

4. Competitive niches

Through comprehensive and sound crop protection sales channels experience and years of production and improvement of technical materials in Taiwan, the Company can technically cooperate with international companies to win more OEM opportunities; In the meantime, with the investment in Mainland China ( Shanghai Feng Xian factory and Yangko factory of Sinon Chemical (Nanton), produce Company’s mature products and actively invest in Mainland China market by leveraging its own technology, to enhance the competitive niches and value of Sinon. With core technology and excellent formulations, accelerate the expansion of sales in Brazil, Thailand, mainland China and Australia. Build up a management team to deepen local market and develop own brand to enter the international market. Lead sales by technology, strengthen service by action.

5. Advantages and disadvantages of development prospects and countermeasures

(1) Advantages

The factory has high mobility and coordination, and can be transformed into a professional foundry by taking the opportunity of OEM for large manufacturers; through automated production and process optimization, to achieve competitive costs, and actively research and develop products with patent going to be expired to increase product lines, win market opportunities, and thereby increase the number of new customers and market share. Coupled with the R & D technology of the complete R & D team, such as process R & D, formulation R & D, analysis method research, registration data research, and the use of GLP laboratory's superior functions, which help register in various countries to reduce costs.

(2) Disadvantages

As the global environment protection awareness rises, political direction affects existed scientific evaluation process and explanation, which in turn increase the uncertainty of product investment. In addition, raw material suppliers intend to drive up raw material quotations in the name of environmental protection. The profits of non-patent agrochemicals (Generic) companies are unreasonably compressed, even though there is not much change in the end market. Moreover, due to the rising frequency and unpredictable of extreme weather, the crop planting season and product application timing must be adjusted immediately when it occurs, making raw material preparation and market demand harder to balance.

(3) Countermeasures

Integrate the supply chain, strengthen the leading ability of bargaining for raw materials and products, and cooperate with international major manufacturers to research and develop new products and obtain agricultural certification through the development of core competitive products, so as to enhance product quality and market price competitiveness. Actively develop the Company's own channels to increase profit; In addition, by developing various potential markets around the world, establish strategic alliance relationships with overseas partners (such as OEM, sales, raw material procurement, and development) according to different market conditions, to grasp market pulse, coordinate and integrate resources, meet customer needs, maintain the Company's goodwill, expand its business territory, and take into account the revenue benefits.

5.2.2 Critical Usages and Production Processes of Main Products

Including processing and manufacturing of agricultural pesticides, fungicides, herbicides, fertilizers and other agrochemicals, as well as OEM and ODM productions of fine chemicals. The production process is mainly to self-synthesize or purchase the technical materials from external manufacturer, and then through the processes of processing, mixing, grinding, adsorption, and finally fill in to packages.

5.2.3 Supply of Main Raw Materials

In addition to self-synthetizing, the technical materials are also provided by international renowned manufacturers, coupled with domestic materials to produce best quality and safe agrochemicals.

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5.2.4 A List of any Vendors and Clients Accounting for Ten Percent or More of the Company's Total Procurement (Sales) Amount in Either of the Two Most Recent Fiscal Years

1. Information of major vendors in the most recent 2 years

Unit: NT$ thousands

Item									As of March 31, 2020	As of March 31, 2020	As of March 31, 2020
		2018				2019
	Company Name	Amount	Percent	Relation with Issuer	Company Name	Amount	Percent	Relation with Issuer	Company Name	Amount	Percent	Relation with Issuer
1	Sinon China	1,426,506	26	Investee	Sinon China	500,203	13	Investee	Sinon China	56,387	7	Investee
	Others	3,975,673	74		Others	3,252,692	87		Others	809,816	93
	Net Total Supplies	5,402,179	100		Net Total Supplies	3,752,895	100		Net Total Supplies	866,203	100

1. Information of major customers in the most recent 2 years: None.

2. Reason for Increase or Decrease: Product structure adjustment

5.2.5 An Indication of the Production Volume for the Two Most Recent Fiscal Years

Unit: NT$ millions

Year Production volume Major Products
		2019
					2018
	Production capacity	Production volume	Production value	Production capacity	Production volume	Production value
Crop Protection (tons)	75,000	－	$5,397	75,000	－	$6,012

5.2.6 An Indication of the Volume of Units Sold for the Two Most Recent Fiscal Years

Unit: NT$ millions

Year Sales Volume Major Products (or by departments)	2019	2019	2019	2019	2018	2018	2018	2018
	Local		Export		Local		Export
	Quantity	Amount	Quantity	Amount	Quantity	Amount	Quantity	Amount
Crop protection (tons)	－	$3,150	－	$6,931	－	$3,186	－	$7,613
Supermarket	－	$4,462	－	－	－	$4,511	－	－
Household supplies and catering service	－	$1,759	－	$111	－	$1,597	－	$107
Others	－	$668	－	－	－	$1,120	－	－
Total	－	$10,039	－	$7,042	－	$10,414	－	$7,720

Note: The aggregation of sales volume cannot be obtained, due to the units used by each main products (or departments) are different.

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• 5.3 The Number of Employees employed for the two Most Recent Fiscal Years, and during the Current Fiscal Year up to the Print Date of the Annual report, their Average Years of Service, Average Age, and Percentage of Employees at each Education Levels

	Year	2018	2019	As of March 31, 2020
Number of Employee	Staff	501	489	500
	Clerk	681	678	669
	Operator	198	191	191
	Total	1,380	1,358	1,360
	Average Age	42.3	42.9	43.0
Average Years of Service		9.9	10.3	10.0
Education	Ph.D.	0.1%	0.1%	0.1%
	Master’s Degree	10.3%	9.9%	10.1%
	Bachelor’s Degree	39.8%	39.3%	39.8%
	Senior High School	43.9%	44.9%	44.4%
	Below Senior High School	5.9%	5.8%	5.6%

5.4 Expenditure for Environmental Protection

• 5.4.1 Any Losses Suffered by the Company in the Most Recent Year and up to the Print Date of the Annual Report, Due to Environmental Pollution Incidents (Including any Compensation Paid and any Violations of Environmental Protection Laws or Regulations Found in Environmental Inspection), and Disclosing an Estimate of Possible Expenses that Could be Incurred Currently and in the Future and Countermeasures Being or to Be Taken: None.

5.4.2 Countermeasures

1. Continuous improvement measures planned to be taken

(1) Improvement plan

• A. Improve the production process to reduce the exhaust gas emission in the production process, so as to improve the environmental protection quality and corporate image.

• B. Design and modify to enhance the safety quality of equipment operations.

• C. Continue to educate and train dedicate environmental protection personnel to improve their professional skills and technical levels.

• (2) Planned environmental protection disbursement in the coming three years

	Planned purchase of pollution
Item			Amount
	prevention equipment or expenditure	Expected improvement
Year			(NT$ thousands)
	content
2020	Wastewater treatment facility rectification / Soil and groundwater pollution remediation project	Implementation of reducing odor escape / improving soil and groundwater pollution	79,433
2021	Wastewater treatment facility improvement / Soil and groundwater pollution remediation project	Enhance treatment capacity/ improve soil and groundwater pollution	40,000
2022	Wastewater treatment facility improvement	Enhance treatment capacity	40,000

(3) Impact after improvement

• Impact on net profit: meet environmental protection requirements and improve the product competitiveness.

2. Those without countermeasures: Not applicable.

5.5 Labor Relations

5.5.1 Implementation of Employee Benefit Plans, Continuing Education, Training, Retirement Systems

1. Employee rights and benefits

• (1) Set reasonable salary and remuneration according to the labor market standards, provide stable salary adjustment policies, and give employees due leaves according to law.

• (2) Implement employee labor insurance, employment insurance and national health insurance, as well as employee group insurance, travel insurance for business trips, and related employee integrity insurances. When an employee dies from non-occupational disasters, pensions will be paid according to the policies.

• (3) Establish Employees’ Welfare Committee. Welfare funds will be allocated according to a fixed proportion every month, including wedding and funeral gifts, children's education scholarship, maternity, hospitalization subsidies for employees and dependents, emergency payment, welfare products (vouchers) for three traditional holidays, etc.

• (4) Hold various leisure activities from time to time, such as concerts, family days, domestic and overseas tours and various associations’ activities, and set up a gym for employees’ leisure use.

• (5) Provide flexible working hours, staff dining room, nursing room, medical room, medical consultation, health examination, etc.

• (6) Encourage employees to create innovative proposals, discover work abnormalities or cost saving

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tips, and propose improvement plans. After adopted by the Company, reward will be given depending on the results.

• (7) Allocate 10% of cash capital increase for employee stock warrants.

2. Continuous education and training development

In order to provide employees with the correct knowledge, concepts and skills required for their work, the Company provides new employee training, professional technical training, management capability training, self-inspiration training, quality management training, safety and health training, etc. Provide employees with complete professional skills development and inspire their self-growth, so as to improve their work efficiency.

3. Retirement system

Implement Employee Retirement Management Policies in accordance with Labor Standards Act and Labor Pension Act. Allocate fixed amount to retirement pension monthly for employees, and award gold commemorative coins and medals to retired employees. There are also occasional reunion dinners for retired employees.

Retirement pension appropriation in accordance with Labor Standards Act (old system):

• (1) Allocate 2% of employee’s monthly salary to retirement pension and deposit to a special account with Bank of Taiwan in the name of Supervision Committee of Labor Retirement Reserve. By end of the year, if the estimated special account balance is insufficient to pay the employees who are expected to meet the retirement conditions within one year, the difference will be allocated once before March of the following year.

• (2) Retirement eligibility and pension payment: when an employee meets one of the following conditions, he or she can apply for retirement voluntarily.

• Pension of employees shall be calculated according to their years of service and the average salary for the six months before the retirement approved.

• A. Those who have worked for more than 15 years and reached the age of 55

• B. Those who have worked for more than 10 years and reached the age of 60

• C. Those who have worked for more than 25 years

Retirement pension appropriation in accordance with Labor Pension Act (new system):

Allocate 6% of each employee’s monthly salary to retirement pension and deposit to a personal account with Bureau of Labor Insurance every month. Employees can apply for retirement pension payment to the Bureau of Labor Insurance when reach the age of 60.

5.5.2 Employee Training Hours Statistics:

Accumulated Training Persons in 2019

Grade	Male	Female	Total
Manager and above	82	0	82
Managerial officers of factories/ divisions	636	121	757
Section head	2,865	556	3,421
Specialist	4,855	1,127	5,982
Others	1,423	276	1,699

Accumulated Training Hours in 2019

Grade	Male	Female	Total
Manager and above	100	0	100
Managerial officers of factories/ divisions	1,220	435	1,655
Section head	5,592	1,267	6,859
Specialist	7,849	1,974	9,823
Others	1,900	353	2,253

• 5.5.3 List any Losses Suffered by the Company in the Most Recent two Fiscal Years and up to the Print Date of the Annual Report, Due to Labor Disputes (Including any Violations of the Labor Standards Act found in labor Inspection), and Disclose an Estimate of Possible Expenses that Could be Incurred Currently and in the Future and Countermeasures Being or to Be Taken: None.

5.6 Important Contracts: None.

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VI.Financial Information

Condensed Statement of Comprehensive Income- IFRS (Consolidated)

Unit: NT$ thousands

6.1 Five-Year Financial Summary

6.1.1 Condensed Balance Sheet and Statement of Comprehensive Income

Condensed Balance Sheet- IFRS (Consolidated)

Unit: NT$ thousands

Year			Financial Summary for The Last Five Years				Jan. 1~
							Mar .31,2020
Item		2015	2016	2017	2018	2019	(Note 1)
Current assets		7,044,376	7,455,929	7,013,792	7,062,342	6,804,285	6,836,543
Property, plant and equipment		7,709,432	7,498,813	7,527,676	7,147,298	6,839,083	6,719,808
Intangible assets		－	－	－	－	－	－
Other assets		824,533	722,034	702,688	740,330	1,621,491	1,630,633
Total assets		15,578,341	15,676,776	15,244,156	14,949,970	15,264,859	15,186,984
Current liabilities	Before distribution	5,721,883	5,131,196	5,183,143	5,236,120	5,489,681	5,044,807
	After distribution (Note 2)	5,928,765	5,494,054	5,604,365	5,782,760	6,036,321	5,591,447
Non-current liabilities		4,460,937	4,701,814	3,378,303	2,661,746	2,698,483	3,002,964
Total liabilities	Before distribution	10,182,820	9,833,010	8,561,446	7,897,866	8,188,164	8,047,771
	After distribution (Note 2)	10,389,702	10,195,868	8,982,668	8,444,506	8,734,804	8,594,411
Total equity attributable to owners of the Company		5,287,790	5,741,823	6,637,770	7,001,074	7,029,429	6,542,266
Capital stock		3,448,032	3,565,168	4,149,934	4,204,926	4,204,926	4,204,926
Capital surplus		212,494	250,688	433,832	450,275	450,289	450,289
Retained earning	Before distribution	1,736,046	2,129,854	2,302,577	2,637,845	2,709,386	2,729,977
	After distribution (Note 2)	1,529,164	1,766,996	1,881,355	2,091,205	2,162,746	2,183,337
Other equityinterest		(108,782)	(203,887)	(248,573)	(291,972)	(335,172)	(296,286)
Treasurystock		－	－	－	－	－	－
Non-controllinginterest		107,731	101,943	44,940	51,030	47,266	50,307
Total equity	Before distribution	5,395,521	5,843,766	6,682,710	7,052,104	7,076,695	7,139,213
	After distribution (Note 2)	5,188,639	5,480,908	6,261,488	6,505,464	6,530,055	6,592,573

						Jan. 1 ~ Mar.
		Financial Summary for The		Last Five Years
Year
						31,2020
Item	2015	2016	2017	2018	2019
						(Note 1)
Operatingrevenue	17,731,881	16,289,119	17,284,376	18,134,087	17,081,389	4,686,678
Grossprofit	4,674,217	4,476,738	4,714,366	4,905,458	4,540,541	1,211,255
Profit from operations	673,590	644,008	890,040	940,405	885,263	310,990
Non-operating income and expenses	(230,407)	78,334	(131,520)	(47,523)	(39,571)	(255,098)
Profit before income tax	443,183	722,342	758,520	892,882	845,692	55,892
Profit from continuing operations	360,503	567,859	579,814	733,837	680,717	23,632
Netprofit for theyear	360,503	567,859	579,814	733,837	680,717	23,632
Other comprehensive income(loss) for the year, net of income tax	(125,358)	(49,475)	(88,393)	(18,929)	(49,884)	38,886
Total comprehensive income for theyear	235,145	518,384	491,421	714,908	630,833	62,518
Net profit attributable to owners of the company	352,733	554,470	578,041	726,957	674,855	20,591
Net profit attributable to non-controllinginterest	7,770	13,389	1,773	6,880	5,862	3,041
Total comprehensive income attributable to owners of the company	228,952	505,584	490,895	707,370	624,913	59,477
Total comprehensive income attributable to non-controllinginterest	6,193	12,800	526	7,538	5,920	3,041
Earningsper share(NT$)	1.03	1.60	1.50	1.74	1.60	0.05

Note 1: Refers to the CPA reviewed financial statements by adopting IFRS regulations.

Note 1: Refers to the CPA reviewed financial statements by adopting IFRS regulations.

Note 2: The above mentioned numbers after distribution are based on the resolutions of the shareholders meeting of the following year. Numbers after distribution of Q1, 2020, are based on the proposal of distribution of profit for the board of directors meeting following year. Numbers after distribution of Q1, 2020, are based on the proposal of distribution of profit for the board of directors meeting.

2019 Annual Report｜Financial Information

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Condensed Balance Sheet- IFRS (Standalone)

Unit: NT$ thousands

Year	Year		Financial Summary for The Last Five Years	Financial Summary for The Last Five Years	Financial Summary for The Last Five Years
Item		2015(Note2)	2016	2017	2018	2019
Current assets		4,249,706	4,011,920	3,763,921	4,202,569	3,904,028
Property, plant and equipment		5,443,798	5,173,909	5,034,738	4,769,221	4,566,295
Intangible assets		－	－	－	－	－
Other assets		3,727,467	3,682,157	3,813,796	3,416,717	3,432,655
Total assets		13,420,971	12,867,986	12,612,455	12,388,507	11,902,978
Current liabilities	Before distribution	4,230,736	2,905,631	2,968,586	2,999,037	3,077,650
	After distribution (Note 1)	4,437,618	3,268,489	3,389,808	3,545,677	3,624,290
Non-current liabilities		3,902,445	4,220,532	3,006,099	2,388,396	1,795,899
Total liabilities	Before distribution	8,133,181	7,126,163	5,974,685	5,387,433	4,873,549
	After distribution (Note 1)	8,340,063	7,489,021	6,395,907	5,934,073	5,420,189
Total equity attributable to owners of the Company		－	－	－	－	－
Capital stock		3,448,032	3,565,168	4,149,934	4,204,926	4,204,926
Capital surplus		212,494	250,688	433,832	450,275	450,289
Retained earning	Before distribution	1,736,046	2,129,854	2,302,577	2,637,845	2,709,386
	After distribution (Note 1)	1,529,164	1,766,996	1,881,355	2,091,205	2,162,746
Other equityinterest		(108,782)	(203,887)	(248,573)	(291,972)	(355,172)
Treasurystock		－	－	－	－	－
Non-controllinginterest		－	－	－	－	－
Total equity	Before distribution	5,287,790	5,741,823	6,637,770	7,001,074	7,029,429
	After distribution (Note 1)	5,080,908	5,378,965	6,216,548	6,454,434	6,482,789

• Note 1: The above mentioned numbers after distribution are based on the resolutions of the shareholders meeting of the following year.

Condensed Statement of Comprehensive Income- IFRS (Standalone)

Unit: NT$ thousands

		Financial Summary for The Last Five Years	Financial Summary for The Last Five Years	Financial Summary for The Last Five Years
Year
Item	2015(Note 1)	2016	2017	2018	2019
Operating revenue	9,640,775	7,782,846	8,610,013	9,091,555	8,216,128
Grossprofit	2,192,419	1,945,015	2,130,721	2,097,008	1,940,387
Profit from operations	604,804	450,789	658,331	642,428	706,837
Non-operating income and expenses	(118,193)	123,107	50,762	206,922	84,425
Profit before income tax	486,611	573,896	709,093	849,350	791,262
Net profit for the year	352,733	554,470	578,041	726,957	674,855
Other comprehensive income (loss) for the year, net of income tax	(123,781)	(48,886)	(87,146)	(19,587)	(49,942)
Total comprehensive income for theyear	228,952	505,584	490,895	707,370	624,913
Earnings per share(NT$)	1.03	1.60	1.50	1.74	1.60

Note 1: Divested and transferred to Yumei Division on December 1, 2015.

6.1.2 Independent Auditor's Names and Opinions for Recent Five Years

Year	CPA	Audit Opinion
2019	Su, Ting-Chien Tseng,Done-Yuin	Unmodified Opinion
2018	Su, Ting-Chien Tseng,Done-Yuin	Unmodified Opinion
2017	Chiang, Shu-Jing Tseng,Done-Yuin	Unmodified Opinion
2016	Chiang, Shu-Jing Tseng,Done-Yuin	Unmodified Opinion
2015	Chiang, Shu-Jing Tseng,Done-Yuin	Unmodified Opinion

Note 2: Divested and transferred to Yumei Division on December 1, 2015.

2019 Annual Report｜Financial Information

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6.2 Five-Year Financial Analysis

Financial Analysis- IFRS (Consolidated)

		Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Jan. 1 ~ May
	Year
Item (Note2)							31,2020
		2015	2016	2017	2018	2019	(Note1)
Financial structure (%)	Debt Ratio	65.4	62.7	56.2	52.8	53.6	56.6
	Ratio of long-term capital to property, plant and equipment	127.8	140.6	133.7	135.3	142.9	142.8
	Current ratio	123.1	145.3	135.3	134.9	124.0	122.3
Solvency (%)	Quick ratio	55.3	73.4	70.9	69.8	65.8	71.3
	Interest earned ratio (times)	4.8	7.3	9.6	13.5	12.4	4.3
Operating performance	Accounts receivable turnover(times)	9.6	8.5	8.3	8.2	7.9	8.7
	Average collection period	38	43	44	45	46	41.9
	Inventory turnover (times)	3.4	3.3	4.0	4.5	4.4	5.5
	Accounts payable turnover(times)	7.5	7.2	7.1	7.1	6.8	7.8
	Average days in sales	106	109	92	81	83	66.6
	Property, plant and equipment turnover (times)	2.3	2.1	2.3	2.5	2.4	2.8
	Total assets turnover (times)	1.1	1.0	1.1	1.2	1.1	1.2
Profitability	Return on total assets (%)	2.8	4.3	4.2	5.2	4.9	1.0
	Return on stockholders' equity (%)	6.7	10.1	9.3	10.7	9.6	1.4
	Pre-tax income to paid-in capital(%)	12.9	20.3	18.3	21.2	20.1	5.3
	Profit ratio (%)	2.0	3.5	3.4	4.0	4.0	0.5
	Earnings per share (NT$)	1.03	1.60	1.50	1.74	1.6	0.05
Cash flow	Cash flow ratio (%)	20.5	24.6	42.0	24.2	31.7	2.5
	Cash flow adequacy ratio(%)	29.9	40.1	74.1	109.9	171.9	(214.1)
	Cash reinvestment ratio (%)	6.0	6.9	12.1	8.5	8.3	1.0
Leverage	Operating leverage	2.0	2.1	1.7	1.7	2.0	1.7
	Financial leverage	1.2	1.2	1.1	1.1	1.1	1.1

Note 1: Refers to the CPA reviewed financial statements by adopting IFRS regulations. Note 2: The calculation formula is listed in Page 63

Financial Analysis- IFRS (Standalone)

			Financial Analysis for the Last Five Years
Year
Item (Note1)		2015(Note2)	2016	2017	2018	2019
Financial structure (%)	Debt Ratio	60.6	55.3	47.4	43.2	40.9
	Ratio of long-term capital to property, plant and equipment	168.8	192.6	191.6	195.3	193.3
	Current ratio	100.4	138.1	126.8	140.1	126.9
Solvency (%)	Quick ratio	64.5	91.3	82.6	91.2	80.8
	Interest earned ratio (times)	6.3	6.8	10.2	16.1	19.3
Operating performance	Accounts receivable turnover(times)	4.0	3.4	4.1	4.1	3.8
	Average collection period	90	107.6	88.3	88.1	96.0
	Inventory turnover (times)	5.1	4.5	5.5	5.6	4.9
	Accounts payable turnover(times)	7.7	7.1	9.1	8.7	8.3
	Average days in sales	72	81	66.5	65.0	74.8
	Property, plant and equipment turnover (times)	1.7	1.5	1.7	1.9	1.8
	Total assets turnover (times)	0.7	0.6	0.7	0.7	0.7
Profitability	Return on total assets (%)	3.2	4.8	5.0	6.2	5.9
	Return on stockholders' equity (%)	6.7	10.0	9.3	10.7	9.6
	Pre-tax income to paid-in capital(%)	14.2	16.1	17.1	20.2	18.8
	Profit ratio (%)	3.7	7.1	6.7	8.0	8.2
	Earnings per share (NT$)	1.03	1.60	1.50	1.74	1.6
Cash flow	Cash flow ratio (%)	21.3	22.9	58.6	26.5	42.5
	Cash flow adequacy ratio(%)	48.0	47.2	101.4	113.4	163.7
	Cash reinvestment ratio (%)	2.9	2.2	6.6	1.9	3.9
Leverage	Operating leverage	1.72	2.0	1.7	1.7	1.5
	Financial leverage	1.2	1.3	1.1	1.1	1.1

Note 2: The calculation formula is listed in Page 63

Note 2: Divested and transferred to Yumei Division on December 1, 2015.

2019 Annual Report｜Financial Information

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6.3 2019 Audit Committee's Review Report

A. Financial Structure

• (1)Debts to Assets Ratio = Total Liabilities / Total Assets

• (2)Ratio of Long-term Capital to Property, Plants and Equipment = (Total Equity + Noncurrent Liabilities) / Net of Properties, Plants and Equipment

B. Liquidity Analysis

• (1)Current Ratio = Current Assets / Current Liabilities

• (2)Quick Ratio = (Current Assets - Inventory - Prepaid Expense) / Current Liabilities

SINON CORPORATION

Audit Committee's Review Report

• (3)Interest Earned Ratio = (Net Income before Income Tax and Interest Expenses) / Interest Expense

C. Operating Performance

• (1)Account Receivable Turnover = Net Sales / Average Accounts Receivable (including Accounts Receivable and Notes Receivable originated from operation)

• (2)Average Collection Days = 365 / Accounts Receivable Turnover

• (3)Inventory Turnover = Costs of Good Sold / Average Inventory

• (4)Accounts Payable Turnover = Costs of Good Sold / Average Accounts Payable (including Accounts Payable and Notes Payable originated from operation)

• (5)Average Days in Sales = 365 / Inventory Turnover

• (6)Property, Plants and Equipment Turnover = Net Sales / Average of Net Properties, Plants and Equipment

• (7)Total Assets Turnover = Net Sales / Average of Total Assets

D. Profitability

• (1)Return on Assets = (Net Income +Interest Expensex (1-Tax Rate)) / Average Total Assets

• (2)Return on Equity =Net Income / Average Equity

• (3)Pre-tax income to paid-in capital = Pre-tax income / Paid-in capital

• (4)Net Income Ratio = Net Income / Net Sales

• (5)Earnings per Share = (Net Income Attributable to Stockholders of the Parent - Preferred Stock Dividend) /Weighted Average Number of Outstanding Shares

E. Cash Flow

• (1)Cash Flow Ratio = Cash Flows from Operating Activities / Current Liabilities

• (2)Cash Flow Adequacy Ratio = Net Cash Flow from Operating Activities for the most recent 5 years / (Capital Expenditure + Increase in Inventory +Cash Dividends) for the most recent 5 years

• (3)Cash Reinvestment Ratio = (Net Cash Flow from Operating Activities - Cash Dividends) / (Gross Properties, Plants and Equipment + Long-term Investment + Gross Concession + Other Noncurrent Assets + Working Capital)

F. Leverage

(1)Operating Leverage = (Net Sales - Variable Operating Costs and Expenses) / Operating Income

(2)Financial Leverage = Operating Income / (Operating Income - Interest Expenses)

To shareholders in annual shareholders’ meeting 2020

The board of directors has prepared the Company’s 2019 business report, financial statements (including the consolidated financial statements), and a discussion proposal for allocation of profits. The financial statements (including the consolidated financial statements) have been audited and certified by certified public accountants, Ting-Chien Su and Done-Yuin Tseng, at the CPA firm of Deloitte & Touche, and the review report was issued accordingly. The above business report, financial statements (including the consolidated financial statements) and discussion proposal for allocation of profits have been reviewed and determined to be accurate by the audit committee. In accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act, we hereby submit this report; please make an approval for it.

==> picture [502 x 125] intentionally omitted <==

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Article 219 of the Company Act, we hereby submit this report; please make an approval for it.
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Convener of Audit of Committee

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Hsu, Jun-Ming May 6, 2020

2019 Annual Report｜Financial Information

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6.4 Consolidated Financial Statements for the Years Ended December

31, 2019 and 2018, and Independent Auditors’ Report: Please refer to page 74 to page 138, Appendix.

VII. Review of Financial Conditions, Financial Performance, and Risk Management

7.1 Financial Status

7.1.1 Analysis of Financial Status

• 6.5 Standalone Financial Statements for the Years Ended December 31, 2019 and 2018, and Independent Auditors’ Report:

• Please refer to page 139 to page 212, Appendix.

• 6.6 Occurrence of Financial Distress on the Company and Affiliates for the Most Recent Year and up to the print Date of the Annual Report: None.

Unit: NT$ thousands

			Difference
Year
	2019	2018
item
			Amount	%
Current Assets	6,804,285	7,062,342	(258,057)	(4)
Property, plant and equipment	6,839,083	7,147,298	(308,215)	(4)
Other non-current assets	1,621,491	740,330	881,161	119
Total Assets	15,264,859	14,949,970	314,889	2
Current Liabilities	5,489,681	5,236,120	253,561	5
Non-current liabilities	2,698,483	2,661,746	36,737	1
Total Liabilities	8,188,164	7,897,866	290,298	4
Capital stock	4,204,926	4,204,926	－	－
Capital surplus	450,289	450,275	14	－
Retained Earnings	2,709,386	2,637,845	71,541	3
Total Equity	7,076,695	7,052,104	24,591	－
Analysis of changes in financial ratios: 1. Increase in Other Non-current Assets and Liabilities: The increase was mainly due to the adoption of IFRS 16 in 2019 which resulted to the increase in Right-of-use asset and Lease liabilities.

2019 Annual Report｜Review of Financial Conditions, Financial Performance, and Risk Management

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7.2 Financial Performance

7.2.1 Analysis of Financial Performance

Unit: NT$ thousands

Year Item	2019	2018	Variance Amount	Variance（％）
Operating Revenue	17,081,389	18,134,087	(1,052,698)	(6)
Operating Cost	12,540,848	13,228,629	(687,781)	(5)
Gross Profit	4,540,541	4,905,458	(364,917)	(7)
Operating Expenses	3,655,278	3,965,053	(309,775)	(8)
Profit from Operations	885,263	940,405	(55,142)	(6)
Total non-operating expenses	(39,571)	(47,523)	7,952	17
Income Before Tax	845,692	892,882	(47,190)	(5)
Tax Benefit (Expense)	164,975	159,045	5,930	4
Net Profit for the Year	680,717	733,837	(53,120)	(7)
Other Comprehensive Income(Loss)	(49,884)	(18,929)	(30,955)	(164)
Total Comprehensive Income for the Year	630,833	714,908	(84,075)	(12)
Net Profit Attributable to Owners of the Company	674,855	726,957	(52,102)	(7)
Total Comprehensive Income Attributable to Owners of the Company	624,913	707,370	(82,457)	(12)
Analysis of changes in financial ratios: 1. Decrease in Other Comprehensive Income: The decrease was mainly due to the decrease in number of items not being reclassified to comprehensive income, comparing to last year.

7.2.1 Analysis of Financial Performance: Not applicable.

7.3 Cash Flow

7.3.1 Remedy for Cash Deficit and Liquidity Analysis

Year Item
			Variance（%）
	2019	2018
Cash Flow Ratio (%)	31.7	24.2	7.5
Cash Flow Adequacy Ratio (%)	171.9	117.6	54.3
Cash Reinvestment Ratio (%)	8.3	8.5	(0.2)
Analysis of financial ratio change: 1. Cash flow ratio: The cash flow from current period operating activities increased by 470 million compared with the previous period. It was mainly due to the collection of 486 million receivables and depreciation and amortization expenses which resulted in the increase in cash flow from operating activities in the current period and the increase in cash flow ratio. 2. Cash flow adequacy ratio: It was mainly due to the increase of cash flow from the business activities, decrease of inventories and stable capital expenditure, which resulted in the cash flow adequacy ratio rise. 3. Cash flow reinvestment ratio: Since the long-term borrowing due within one year increased, the current liabilities rose, which resulted in a working capital drop, as such the cash flow reinvestment ratio decreased slightly.

7.3.2 Cash Flow Analysis for the Current Year

Unit: NT$ millions

Cash and Cash Equivalents, Beginning of Year 	Net Cash Flow			Leverage of Cash Deficit	Leverage of Cash Deficit
			Cash Surplus
	from Operating	Cash Outflow
			(Deficit)
	Activities			Investment Plans	Financing
			＋－
					Plans
1,494	1,700	(1,776)	1,418	－	－
1.Cash flow change analysis for next year: (1) Business activities: It is expected that business activities will generate net cash inflows in 2020, mainly due to the occurrence of net profit after tax and depreciation and amortization expenses. (2) Investments: It is expected that investments in 2020 will generate net cash flow outflows, mainly due to plant and equipment maintenance, and new product investments. (3) Financing activities: It is expected that financing activities will generate net cash flow outflows in 2020, mainly due to disbursements of cash dividends and loan repayments. 2. Remedial actions for projected cash shortfalls and liquidity analysis: There is not any expected liquidity shortfalls.

2019 Annual Report｜Review of Financial Conditions, Financial Performance, and Risk Management

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7.4 Major Capital Expenditure Items

7.3.1 Major Capital Expenditure Items and Source of Capital

Unit: NT$ millions

	Actual or	Actual or
			Total	Actual or Expected Capital Expenditure
Project	Planned Source	Planned Date of
	of Capital	Completion	Capital	2018	2019	2020	2021	2022	2023
Plant and equipment investments	Cash flow generated from operations	December, 2021	$336	$57	$89	$75	$115	$0	$0
New product investments	Cash flow generated from operations	December, 2022	$282	$39	$27	$54	$54	$54	$54

7.3.2 Expected Benefits

Estimated Increase in Production, Sales, and Gross Profits

					Unit: NT$millions
		Quantity of	Quantity of
				Amount of
Item	Year	Production	Sales		Gross Profit
				Sales
		(tons)	(tons)
Plant and equipment investments	2020	120	120	53	14
	2021	120	120	53	14
	2022	140	140	102	28
	2023	260	260	148	40
	2024	260	260	148	40
New product investments	2020	735	1,644	456	123
	2021	447	2,932	545	147
	2022	589	3,682	666	180
	2023	293	3,299	613	166
	2024	293	3,299	613	166

7.5 Reinvestment Policies, Reasons for Gains or Losses, Improvement Plans in Recent Years, and Investment Plans in the Coming Year

7.5.1 Investment Policies in Recent Years and Their Profits

The Company's reinvestment policy focuses on investing in related industries. Research and develop core competitive products and purchase new equipment to enhance product quality and price competitiveness. Apply for registration of new products in the global market and establish own brands and channels to increase the market share in overseas chemical product markets.

In 2019, the Company’s investment income recognized under the equity method was around NT$92,585,000, which was a decrease of NT$11,957,000 from the investment income recognized in 2018 of around NT$104,542,000.

7.5.2. Investment Plan in Next Year

The Company will take into account the global economic situation and business requirements for future investment, and make prudent assessments to reduce risks and ensure investment efficiency.

7.5.3 Reinvestment Analysis: Not applicable.

Other Benefits:

In addition to improve global supply efficiency and reduce shipping costs, expanding production and sales bases can also increase overall customer satisfaction.

2019 Annual Report｜Review of Financial Conditions, Financial Performance, and Risk Management

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7.6 Risk Analysis and Assessment

7.6.1 The Effect upon the Company's Profits (Losses) of Interest and Exchange Rate Fluctuations and Changes in the Inflation Rate, and Countermeasures to Be Taken in the Future

1. The currency and amount of the company's import and export transactions are equivalent, and the foreign currency positions are mostly mutual offset, thus the net foreign currency positions are not large. In addition, the finance department collects information about exchange rate changes at any time, and adjusts the foreign currency positions held according to the actual capital requirements and exchange rate fluctuations, so the effect of exchange rate changes is small.

2. The Company's financial liability is not large, and the export price of agrochemicals with a longer collection term can be adjusted according to the trend of market interest rates, therefore the effect of interest rate changes is small.

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

The Company's loans to other parties, endorsements and guarantees are all conducted in accordance with the “Procedures for Loaning of Funds to others” and “Procedures for Making of Endorsement and Guarantee”, and there are not significant profits and losses generated. In addition, the Company engages in derivatives to hedge for exchange rate fluctuations of foreign currency assets and liabilities, and there are not any high-risk or highly-leveraged operations or investments.

7.6.3 Future Research & Development Projects and Corresponding Budget

The Company plans to conduct 8 process development and improvement projects to optimize costs and enhance market competitiveness. Expected R&D expenditures: around NT$ 117,603,000

7.6.4 Effects of and Response to Changes in Policies and Regulations Relating to Corporate Finance and Sales: None.

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

In face of rapidly changing network environment, the Company will endeavor to build an appropriate, safe and reliable information system and network environment in information security. The Company passed the certification of ISO27001, Information Security Management System, in 2019. The scope of the certification includes software development and maintenance, MIS information system, information server room and the computer division working environment related information processing operations. The Company uses ISO27001 as the information security framework to carry out the implementation of the information security system.

The Company establishes the Information and Communication Security Management Committee to formulate annual information security plans, policies, objectives, processes and resources, and regularly holds management review meetings to ensure the effectiveness of the implementation of the information security management system. Follows the Plan-Do-Check-Act (PDCA) management cycle to maintain the confidentiality, integrity, and availability of data. Continuously reviews and improves the effectiveness of the implementation of information security systems and carries out various security protection measures to strengthen the protection of customer data and confidential and sensitive operational data. There were not any material information security incidents occurred in 2019.

Organization Chart of the Information and Communication Security Management Committee

==> picture [349 x 224] intentionally omitted <==

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

Senior managements
Chief Information Security
Officer (CISO)
Information Security
Consultant
Information Security
Management Representative
Information Security
Internal Audit Unit
Handling Unit
----- End of picture text -----

2019 Annual Report｜Review of Financial Conditions, Financial Performance, and Risk Management

• 67 -

• ‧ Host information vulnerability scanning

• Every year, engage external units to conduct host information vulnerability scanning for the host of information system and repair the high-risk vulnerability of the host system according to the scanning results. If it cannot be repaired, a replacement/update schedule shall be planned. Relevant scanning and repair results are reported to the Information and Communication Security Management Committee every year.

• ‧ Information security incident drill

• The Company conducts drill in accordance with the Information Business Continuity Plan to simulate each departments’ backup and response measures for emergency situation when an information security incident occurs. Exercises internal and external audit, carries out remediations in prevention according to the audit findings, and report the audit findings and the information security trend to the Information and Communication Security Management Committee every year.

• ‧ Information security training

• In order to effectively implement the Company's information security policy, employees are scheduled to participate in ISO27001 information security training in 2019, so as to strengthen the information security concept in their working process. In 2019, the information security training hour reached 204 hours. Since 2020, the Company will conduct information security training for the group colleagues.

7.6.10 Effects of Risks Relating to and Response to Large Share Transfers or Changes in Shareholdings by Directors, Supervisors, or Shareholders with Shareholdings of over 10% None.

7.6.11 Effects of Risks Relating to and Response to the Changes in Management Rights: Not applicable.

7.6.12 Litigation or Non-litigation Matters: None.

7.6.13 Other Major Risks: None.

7.7 Other Important Matters: None.

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

7.6.7 Expected Benefits from, Risks Relating to and Response to Merger and Acquisition Plans: Not applicable

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

7.6.9 Risks Relating to and Response to Excessive Concentration of Purchasing Sources and Excessive Customer Concentration

The Company does not have any consolidation of sales or purchasing operations.

2019 Annual Report｜Review of Financial Conditions, Financial Performance, and Risk Management

• 68 -

VIII. Special Disclosure

8.1 Information Related to the Affiliates

Organization Structure

December 31, 2019 Unit: NT$ thousands ; Share

Percentage of Ownership (%) Number of Shares Original Investment Amount Investments accounted for using the equity method	Percentage of Ownership (%) Number of Shares Original Investment Amount Investments accounted for using the equity method	Percentage of Ownership (%) Number of Shares Original Investment Amount Investments accounted for using the equity method	Percentage of Ownership (%) Number of Shares Original Investment Amount Investments accounted for using the equity method	Percentage of Ownership (%) Number of Shares Original Investment Amount Investments accounted for using the equity method			Investments accounted for using the equity method	Investments accounted for using the equity method	Investments accounted for using the equity method	Investments accounted for using the equity method		Reinvestment of the investee accounted for using equity method	Reinvestment of the investee accounted for using equity method	Reinvestment of the investee accounted for using equity method	Reinvestment of the investee accounted for using equity method	Reinvestment of the investee accounted for using equity method		Reinvestment of the investee	Reinvestment of the investee	Original Investment Amount accounted for using equity method	Original Investment Amount accounted for using equity method
		Percentage of Ownership (%)	Number of Shares				Percentage of Ownership (%)	Number of Shares	Original Investment Amount			Percentage of Ownership (%)	Number of Shares	Original Investment Amount				Percentage of Ownership (%)	Number of Shares	Original Investment Amount
		100% 100%	32,316,471 6,100,000	510,379 174,548			100% 100%	33,000,000 33,000,000	269,095 25,609												Weightstone Vineyard Estate & Winery Co., Ltd.
Sinon Do Brazil Ltda										Syntai Chemicals Ltd.
Sinon Australia Pty Limited										Hsing Wei Corporation
Sinon (Thailand) Co.,Ltd.		100%	20,000	17,109			88%	26,379,500	264,793	Taiwan Fresh Supermarket Co., Ltd.		100%	1,420,000	47,271	Feng Nien Corporation			100%	1,200,000	30,000	Weightstone Vineyard Estate & Winery Co., Ltd.
		100% 100% 100%	50,000 25,000 3,500,000	1,689 1,049 106,555	Sinon Corporation		100% 100% 100%	20,030,000 100,000 44,280,000	400,167 1,001 1,394,195			100% 92%		USD 37,980 USD 3,400				100% 100% 8%	－ － －	RMB 255,000 USD 8,000 USD 300	100% RMB 11,000 Sinon Chemical (China) Co., Ltd. Poise Packing Co., Ltd. Sinon Chemical (Nantong) Co., Ltd.
Sinon USA, Inc.										Yumei Yen Co., Ltd.
Sinon Eu GmbH										Sinon Trading Co., Ltd.
PT. Sinon Indonesia
										Sinon Cayman Corporation					Sinon Hong Kong Co., Ltd.
															Zhongshan Sinon Daily Products Co., Ltd.

2019 Annual Report｜Special Disclosure

• 69 -

8.2 Basic Information of Affiliates

Unit: in each currency

Company	Date of Incorporation	Address	Paid-in Capital	Main Businesses and Products
Taiwan Fresh Supermarket Co., Ltd.	2008/04/23	1F., No. 183, Fuxing Rd., Xitun Dist., Taichung City 407, Taiwan (R.O.C.)	NT$ 300,000,000	Supermarket
Feng Nien Corporation	1967/03/02	1F., No. 59, Nanrong Rd., Dadu Dist., Taichung City 432, Taiwan (R.O.C.)	NT$ 14,200,000	Supermarket
Weightstone Vineyard Estate & Winery Co., Ltd.	1955/05/02	1F., No. 59, Nanrong Rd., Dadu Dist., Taichung City 432, Taiwan (R.O.C.)	NT$ 12,000,000	Food and special crops; Retail sale of tobacco and alcoholic drinks
Syntai Chemicals Ltd.	1990/11/08	No. 107, Nanrong Rd., Dadu Dist., Taichung City 432, Taiwan (R.O.C.)	NT$ 330,000,000	Pharmaceuticals
Hsing Wei Corporation	1993/04/01	No. 56, Gongyequ 21st Rd., Nantun Dist., Taichung City 408, Taiwan (R.O.C.)	NT$ 330,000,000	Manufacture and sale of cement
Sinon Trading Co., Ltd.	1978/01/19	1F., No. 101, Nanrong Rd., Dadu Dist., Taichung City 432, Taiwan (R.O.C.)	NT$ 1,000,000	Trading
Yumei Yen Co., Ltd. (Note 1)	2012/06/29	No. 50, Gongyequ 21st Rd., Nantun Dist., Taichung City 408, Taiwan (R.O.C.)	NT$ 200,300,000	Houseware, catering services and retail of agricultural products
Sinon Cayman Corporation	1998/11/24	The Grand Pavilion Commercial Centre, Oleander Way, 802 West Bay Road, P.O. Box 32052,Grand Cayman KY1-1208, Cayman Islands	US$ 44,280,000	Holding company
Sinon Hong Kong Co., Ltd.	2010/02/23	Room 2702-03, CC Wu Building, 302-8 Hennessy Road, Wanchai, Hong Kong	－	Holding company
Sinon Chemical (China) Co., Ltd.	2001/05/11	28 Beicun Road, Zhelin Town, Fengxian District, Shanghai (201416)	US$ 8,000,000	Manufacture and sale of various chemicals
Sinon Chemical (Nantong) Co., Ltd.	2012/05/23	28, Haibin 4th Rd., Rudong Coastal Economic Development Zone, Jiangsu Province.	RMB 255,000,000	Manufacture and sale of various chemicals
Poise Packing Co., Ltd.	2013/02/06	Building 16, No. 28, Beicun Road, Zhelin Town, Fengxian District, Shanghai	RMB 11,000,000	Import and export of plastic products
Zhongshan Sinon Daily Products Co., Ltd.	1999/01/04	2nd Floor, Front Building of Guanlan "Houfengwei", Lisheng Community, Dongsheng Town, Zhongshan City, Guangdong Province	US$ 3,700,000	Manufacture and sale of grocery, pesticide and plastics
Sinon Do Brazil Ltda.	1999/09/14	Av. Carlos Gomes, 1340 Conj. 1001 CEP90480-001-Porto Alegre - RS-Brazil	BRL 32,320,000	Manufacture and import and export of medical and chemical products
Sinon Australia Pty Limited	2002/11/06	‘LEVEL 7, 60 YORK STREET, SYDNEY NSW 2000, Australia	AUD 6,100,000	Import and export of chemical products
PT. Sinon Indonesia	2010/09/02	Menara Kadin Indonesia Lt.30, JL.HR. Rasuna Said Blok X5 KAV.2-3, Kelurahan Kuningan Timur, Kecamatan Setiabudi, Jakarta Selatan 12950	US$ 3,500,000	Import and export of chemical products
Sinon (Thailand) Co.,Ltd.	2003/11/19	26/56 TPI Tower F1.20, Chantatmai Road, Thungmahamek, Sathorn, Bangkok 10120, Thailand	THB 10,000,000	Import and export of chemical products
Sinon USA, Inc.	2003/06/02	1080 Carol Lane, Suite 264 Lafayette, CA 94549 USA	US$ 50,000	Import and export of chemical products
Sinon Eu GmbH	2003/12/22	Im Alten Dorfe 37 (Volksdorf) D-22359 Hamburg/Germany	EUR 25,000	Import and export of chemical products

Note 1: Yumei Yen Co., Ltd. has been renamed to Yumei Biotec Corporation on May 12, 2020.

2019 Annual Report｜Special Disclosure

• 70 -

• 8.3 Affiliates with Deemed Control and Subordination according to Article 369-3 of the Company Act: Please refer to the previous paragraph.

• 8.4 Business scope of All Affiliates: Please refer to the previous paragraph.

• 8.5 Rosters of Directors, Supervisors, and General Manager of the affiliates

affiliates
		Dec. 31 2019 Unit: Share, %
Company	Title	Name or Representative	Shareholding (Note 1)
			Shares	%
Taiwan Fresh Supermarket Co., Ltd	Director (Representative) (Representative) (Representative) (Representative) (Representative) (Representative) (Representative) Supervisor Supervisor General Manager	Sinon Corporation Horng, Po-Yen Liao, Lien-Heng Guo Wu, Zhun-Zhen Yu, Tse-Jen Yang, Chung-Hsin Yang, Jen-Yo Liu, Yun-Sung Yen, Tsu-Fang Yu, Kuei-Ju Yang,Chung-Hsin	26,379,500 0 0 0 0 0 0 0 0 0 100,000	87.9% ─ ─ ─ ─ ─ ─ ─ ─ ─ 0.33%
Feng Nien Corporation (Note2)	Director (Representative)	Taiwan Fresh Supermarket Co., Ltd Yang, Chung-Hsin	1,420 0	100% ─
Weightstone Vineyard Estate & Winery Co., Ltd.	Director (Representative)	Feng Nien Corporation Yang, Chung-Hsin	1,200,000 0	100% ─
Syntai Chemicals Ltd.	Director (Representative)	Sinon Corporation Horng, Po-Yen	33,000,000 0	100% ─
Hsing Wei Corporation	Director (Representative)	Sinon Corporation Horng, Po-Yen	33,000,000 0	100% ─
Sinon Trading Co., Ltd.	Director (Representative) (Representative) (Representative) (Representative) (Representative) (Representative) (Representative) (Representative) Supervisor (Representative) (Representative)	Sinon Corporation Horng, Po-Yen Liao, Lien-Heng Huang, Chao-Chin Yang, Tien-Cheng Yang, Tien-Chun Chen,Cheng-Lang Wang, Chung-Cheng Wu Cheng, Su-Chen Sinon Corporation Lee, Chiu-Fen Zhang,Mao-Zhang	100,000 0 0 0 0 0 0 0 0 100,000 0 0	100% ─ ─ ─ ─ ─ ─ ─ ─ 100% ─ ─

Company	Title	Name or Representative	Shareholding (Note 1)	Shareholding (Note 1)
			Shares	%
Yumei Yen Co., Ltd. ( Note 3)	Director (Representative) (Representative) (Representative) (Representative) (Representative) (Representative) (Representative) Supervisor (Representative) (Representative)	Sinon Corporation Horng, Po-Yen Liao, Lien-Heng Guo Wu, Zhun-Zhen Yu, Tse-Jen Yang , Chung-Hsin Yang, Jen-Yo Liu, Yun-Sung Sinon Corporation Yen, Tsu-Fang Yu,Kuei-Ju	20,030,000 0 0 0 0 0 0 0 20,030,000 0 0	100% ─ ─ ─ ─ ─ ─ ─ 100% ─ ─
Sinon Cayman Corporation	Director	Horng, Po-Yen	0	─
Sinon Hong Kong Co., Ltd	Legal representative	Horng, Po-Yen	0	─
Sinon Chemical (China) Co., Ltd.	Legal representative Director Director	Horng, Po-Yen Yu, Tse-Jen Yen,Tsu-Fang	0 0 0	─ ─ ─
Sinon Chemical (Nantong) Co., Ltd	Legal representative Director Director	Horng, Po-Yen Yu, Tse-Jen Yen,Tsu-Fang	0 0 0	─ ─ ─
Poise Packing Co., Ltd.	Legal representative / Executive Director	Li, Chien-Min	0	─
Zhongshan Sinon Daily Products Co., Ltd	Legal representative Director Director	Li, Chien-Min Horng, Po-Yen Yao,Chung-Ming	0 0 0	─ ─ ─
Sinon Do Brazil Ltda.	Legal representative	David Huang Simon Suhwen Cheng HarryCho	0 0	─ ─
Sinon Australia Pty Limited	Director Director Director	Kevin Douglas Horng, Po-Yen Chang,Min-Chih	0 0 0	─ ─ ─
PT. Sinon Indonesia	Director Director Director Representative	Horng, Po-Yen Lee, Szu-Chiang Shih, Neng-Chun Mario Laurentius Pangestu	0 0 0 0	─ ─ ─ ─
Sinon (Thailand) o.,Ltd.	Director Director	Horng, Po-Yen Nongluk Kanjanakriengkri	100 4,800	0.5% 24%
Sinon USA, Inc.	Director	Yen, Tsu-Fang	0	─
Sinon Eu GmbH	Director Director	Horng, Po-Yen Shih, Neng-Chun Hans Brandt	0	─

• Note 1: If the investee is a joint stock limited company, it shall be filled with the number of shares hold and the shareholding percentage; otherwise, the amount and proportion of investment shall be indicated.

• Note 2: Feng Nien Corporation denomination of NT$10,000 per share.

Note 3: Yumei Yen Co., Ltd. has been renamed to Yumei Biotec Corporation on May 12, 2020.

2019 Annual Report｜Special Disclosure

• 71 -

8.6 Overview of the Operations of the Affiliates

Unit: NT$ millions

	Capital			Net	Operating	Profit (Loss)	Net Profit
Company		Assets	Liabilities
	stock			worth	revenue	from operations	for the Year
Taiwan Fresh Supermarket Co., Ltd
	300	2,233	1,841	392	4,421	47	49
Yumei Yen Co., Ltd. (Note 2)
	200	929	447	482	1,765	75	71
Hsing Wei Corporation
	330	610	174	436	668	38	30
Sinon Chemical (China) Co., Ltd.
	273	1,458	961	497	1,883	96	117
Sinon Do Brazil Ltda.
	510	950	994	(44)	1,164	(30)	(62)
Sinon (Thailand) o.,Ltd.
	8	56	61	(5)	124	(7)	(1)
Sinon Australia Pty Limited
	175	46	116	(70)	94	(41)	(41)

IX Other Supplementary Information

In the most recent year and as of the date of the annual report, any matter which has had a significant impact on shareholders rights or the price for the securities that is defined by Article 36, paragraph 3, subparagraph 2 of the Securities and Exchange Act: None.

Note 1: Only major operating companies are listed.

Note 2: Yumei Yen Co., Ltd. has been renamed to Yumei Biotec Corporation on May 12, 2020.

8.7 Consolidated Financial Statements, Declaration and the Review Report of the affiliates

Please refer to page 75, Appendix.

• 8.8 Private Placement Securities in the Most Recent Year and up to the Print Date of the Annual Report: None.

• 8.9 The Company's Shares Held or Disposed by Subsidiaries in the Most Recent Year and up to the Print Date of the Annual Report: None.

8.10 Other Supplementary Information: None

2019 Annual Report｜Other Supplementary Information

• 72 -

X Appendix

Appendix
Item	Page
Consolidated Financial Statements and Independent Auditors’ Report	74
Representation Letter	75
Independent Auditors’ Report	76
Consolidated Balance Sheets	80
Consolidated Statements of Comprehensive Income	81
Consolidated Statements of Changes in Equity	83
Consolidated Statements of Cash Flows	84
Notes to Consolidated Financial Statements	86
Standalone Financial Statements and Independent Auditors’ Report	139
Independent Auditors’ Report	140
Standalone Balance Sheets	144
Standalone Statements of Comprehensive Income	145
Standalone Statements of Changes in Equity	147
Standalone Statements of Cash Flows	148
Standalone Notes to Financial Statements	150
The Contents of Statements of Major Accounting Items	201

2019 Annual Report｜Appendix

• 73 -

Sinon Corporation and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2019 and 2018 and Independent Auditors’ Report

2019 Annual Report｜Appendix-Consolidated Financial Statements

• 74 -

2019 Annual Report｜Appendix-Consolidated Financial Statements - 75 -

2019 Annual Report｜Appendix-Consolidated Financial Statements - 76 -

Recognition of revenue

For related accounting policies and detailed information on revenue recognition, refer to Notes 4 and 30 to the consolidated financial statements. The Group’s operating revenue mainly comes from the sale of crop protection agents. Aside from supplying its department of crop protection, supermarkets and others, its main operating income comes from export sales. Thus, any changes in international trade of crop protection agents can significantly affect the Group’s major operating income and such revenue is significant to the consolidated financial statements; therefore, we identified the recognition of revenue as a key audit matter.

The audit procedures that we performed in respect of revenue recognition included the following:

1. We assessed the appropriateness of the design of the relevant operating procedures for revenue recognition from export sales and tested the Group’s operating effectiveness of the relevant controls for the year.

2. We understood and analyzed the changes in export sales transactions with customers and performed substantive procedures by sample-testing the customers’ export subsidiary ledger, checking the sales receipts and shipping records to confirm the validity of the sales revenue.

Impairment assessment of trade receivables

For the related accounting policies and detailed information on revenue recognition, refer to Notes 4, 5 and 8 to the consolidated financial statements.

The impairment assessment of trade receivables is based on the management’s consideration of possible recoverability and for known issues with a yet-unrecovered state.

Such impairment assessment involved management’s subjective judgment, and the balance of the Group’s trade receivables is significant; therefore, we identified the impairment of trade receivables as a key audit matter.

The audit procedures that we performed in respect of trade receivables included the following:

1. We understood management’s policies on the allowance for impairment and assessed the relevant operations for the year.

2. We tested the correctness and completeness of the aging of trade receivables and reviewed the allowance for impairment to confirm the appropriateness of the accounting estimates..

Other Matter

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

In preparing the consolidated financial statements, 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.

2019 Annual Report｜Appendix-Consolidated Financial Statements

• 77 -

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

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:

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

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

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

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the 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.

5. 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.

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

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

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

2019 Annual Report｜Appendix-Consolidated Financial Statements

• 78 -

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 Ting-Chien Su and Done-Yuin Tseng.

Deloitte & Touche Taipei, Taiwan Republic of China

March 20, 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.

2019 Annual Report｜Appendix-Consolidated Financial Statements

• 79 -

SINON CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 AND 2018

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss - current (Notes 4 and 7) Notes receivable (Notes 4, 5 and 8) Trade receivables from unrelated parties (Notes 4, 5, 8 and 19) Trade receivables from related parties (Notes 19 and 25) Other receivables (Note 25) Inventories (Notes 4 and 9) Prepayments Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current (Notes 4 and 7) Investments accounted for using the equity method (Notes 4 and 11) Property, plant and equipment (Notes 4, 12, 25, 26 and 27) Right-of-use assets (Notes 3, 4 and 13) Deferred tax assets (Notes 4 and 21) Prepayments for equipment Refundable deposits (Note 26) Other non-current assets (Note 14) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 15 and 26) Short-term bills payable (Note 15) Contract liabilities - current (Notes 4, 19 and 27) Notes payable Trade payables Trade payables to related parties (Note 25) Lease liabilities - current (Notes 3, 4 and 13) Current tax liabilities (Note 21) Other payables (Note 16) Current portion of long-term borrowings (Notes 15 and 26) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 15 and 26) Deferred tax liabilities (Notes 4 and 21) Lease liabilities - non-current (Notes 3, 4 and 13) Net defined benefit liabilities - non-current (Notes 4 and 17) Guarantee deposits Other non-current liabilities Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Other equity Total equity attributable to owners of the Company NON-CONTROLLING INTERESTS Total equity TOTAL		2019 Amount % $ 1,494,351 10 - - 132,575 1 1,892,045 12 1,967 - 78,101 1 2,760,593 18 436,960 3 7,693 - 6,804,285 45 23,253 - 37,489 - 6,839,083 45 993,418 6 113,454 1 17,445 - 93,734 1 342,698 2 8,460,574 55 $ 15,264,859 100 $ 1,100,766 7 20,000 - 419,919 3 91,141 1 1,661,629 11 1,374 - 243,397 2 94,913 1 1,146,941 7 682,203 4 27,398 - 5,489,681 36 1,065,000 7 248,453 2 711,609 5 492,501 3 140,286 1 40,634 - 2,698,483 18 8,188,164 54 4,204,926 27 450,289 3 762,674 5 291,972 2 1,654,740 11 (335,172) (2) 7,029,429 46 47,266 - 7,076,695 46 $ 15,264,859 100		2018
				Amount % $ 1,266,232 9 1,184 - 180,543 1 2,137,085 14 - - 57,164 - 2,968,302 20 446,174 3 5,658 - 7,062,342 47 23,253 - 35,570 - 7,147,298 48 - - 108,923 1 22,850 - 104,566 1 445,168 3 7,887,628 53 $ 14,949,970 100 $ 1,334,795 9 - - 409,808 3 115,089 1 1,797,385 12 1,453 - - - 138,936 1 1,170,876 8 223,642 1 44,136 - 5,236,120 35 1,747,203 12 243,020 2 - - 499,929 3 131,890 1 39,704 - 2,661,746 18 7,897,866 53 4,204,926 28 450,275 3 689,979 5 248,574 2 1,699,292 11 (291,972) (2) 7,001,074 47 51,030 - 7,052,104 47 $ 14,949,970 100

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

2019 Annual Report｜Appendix-Consolidated Financial Statements

• 80 -

SINON 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 (Notes 4, 19 and 25) OPERATING COSTS (Notes 9, 20 and 25) GROSS PROFIT OPERATING EXPENSES (Notes 20 and 25) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Other income (Notes 20 and 25) Other losses (Note 20) Foreign exchange loss, net (Note 4) Finance costs (Note 20) Share of profit of associates (Notes 4 and 11) Total non-operating expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 21) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) (Note 4) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans (Note 17) Share of other comprehensive loss of associates accounted for using the equity method (Note 11) Income tax relating to items that will not be reclassified subsequently to profit or loss (Note 21)		2019 Amount % $ 17,081,389 100 12,540,848 73 4,540,541 27 3,263,468 19 254,426 2 137,384 1 3,655,278 22 885,263 5 96,258 - (28,824) - (37,209) - (74,013) - 4,217 - (39,571) - 845,692 5 164,975 1 680,717 4 (8,213) - (113) - 1,642 - (6,684) -		2018
				Amount % $ 18,134,087 100 13,228,629 73 4,905,458 27 3,581,328 20 256,028 1 127,697 1 3,965,053 22 940,405 5 77,647 - (11,617) - (46,266) - (71,341) - 4,054 - (47,523) - 892,882 5 159,045 1 733,837 4 29,648 - (61) - (5,117) - 24,470 - (Continued)

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SINON 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 Share of other comprehensive income (loss) of associates accounted for using the equity method (Note 11) 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 22) Basic Diluted		2019 Amount % $ (44,877) - 1,677 - (43,200) - (49,884) - $ 630,833 4 $ 674,855 4 5,862 - $ 680,717 4 $ 624,913 4 5,920 - $ 630,833 4 $ 1.60 $ 1.60		2018
				Amount % $ (43,287) - (112) - (43,399) - (18,929) - $ 714,908 4 $ 726,957 4 6,880 - $ 733,837 4 $ 707,370 4 7,538 - $ 714,908 4 $ 1.74 $ 1.73

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

(Concluded)

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SINON CORPORATION AND SUBSIDIARIES

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

BALANCE AT JANUARY 1, 2018 Effect of retrospective application and retrospective restatement BALANCE AT JANUARY 1, 2018 AS RESTATED Appropriation of 2017 earnings Legal reserve Special reserve Cash dividends distributed by the Company Other changes in capital surplus 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 Convertible bonds converted to ordinary shares Cash dividends distributed by subsidiaries BALANCE AT DECEMBER 31, 2018 Effect of retrospective application and retrospective restatement BALANCE AT JANUARY 1, 2019 AS RESTATED Appropriation of 2018 earnings Legal reserve Special reserve Cash dividends distributed by the Company Other changes in capital surplus 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 Cash dividends distributed by subsidiaries BALANCE AT DECEMBER 31, 2019					Equity Attributable to Owners of the Company	Equity Attributable to Owners of the Company	Equity Attributable to Owners of the Company	Total $ 6,637,770 5,721 6,643,491 - - (421,222 ) 15 726,957 (19,587) 707,370 71,420 - 7,001,074 (49,932) 6,951,142 - - (546,640 ) 14 674,855 (49,942) 624,913 - $ 7,029,429	Non-controlling Interests $ 44,940 - 44,940 - - - - 6,880 658 7,538 - (1,448) 51,030 (6,787) 44,243 - - - - 5,862 58 5,920 (2,897) $ 47,266	Total Equity $ 6,682,710 5,721 6,688,431 - - (421,222 ) 15 733,837 (18,929) 714,908 71,420 (1,448) 7,052,104 (56,719) 6,995,385 - - (546,640 ) 14 680,717 (49,884) 630,833 (2,897) $ 7,076,695
		Share Capital (Note 18) $ 4,149,934 - 4,149,934 - - - - - - - 54,992 - 4,204,926 - 4,204,926 - - - - - - - - $ 4,204,926	Capital Surplus (Note 18) $ 433,832 - 433,832 - - - 15 - - - 16,428 - 450,275 - 450,275 - - - 14 - - - - $ 450,289		Retained Earnings (Note 18) Unappropriated Legal Reserve Special Reserve Earnings $ 632,175 $ 203,887 $ 1,466,515 - - 5,721 632,175 203,887 1,472,236 57,804 - (57,804 ) - 44,687 (44,687 ) - - (421,222 ) - - - - - 726,957 - - 23,812 - - 750,769 - - - - - - 689,979 248,574 1,699,292 - - (49,932) 689,979 248,574 1,649,360 72,695 - (72,695 ) - 43,398 (43,398 ) - - (546,640 ) - - - - - 674,855 - - (6,742) - - 668,113 - - - $ 762,674 $ 291,972 $ 1,654,740		Other Equity (Notes 4and 18) Unrealized Gain Exchange (Loss) on Financial Differences on Unrealized Gain Assets at Fair Translating (Loss) on Value through the Financial Available-for-sale Other Statements of Financial Comprehensive Foreign Operations Assets Income $ (253,277 ) $ 4,704 $ - - (4,704) 4,704 (253,277) - 4,704 - - - - - - - - - - - - - - - (43,287) - (112) (43,287) - (112) - - - - - - (296,564 ) - 4,592 - - - (296,564) - 4,592 - - - - - - - - - - - - - - - (44,877) - 1,677 (44,877) - 1,677 - - - $ (341,441) $ - $ 6,269
							Exchange Differences on Unrealized Gain Translating (Loss) on the Financial Available-for-sale Statements of Financial Foreign Operations Assets $ (253,277 ) $ 4,704 - (4,704) (253,277) - - - - - - - - - - - (43,287) - (43,287) - - - - - (296,564 ) - - - (296,564) - - - - - - - - - - - (44,877) - (44,877) - - - $ (341,441) $ -
					Legal Reserve $ 632,175 - 632,175 57,804 - - - - - - - - 689,979 - 689,979 72,695 - - - - - - - $ 762,674	Special Reserve $ 203,887 - 203,887 - 44,687 - - - - - - - 248,574 - 248,574 - 43,398 - - - - - - $ 291,972

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

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SINON 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 Expected credit loss recognized (reversed) on trade receivables Net loss on fair value changes of financial assets designated at fair value through profit or loss Financial costs Interest income Dividend income Share of loss of associates Loss (gain) on disposal of property, plant and equipment Gain on disposal of investments Impairment loss recognized on non-financial assets Write-downs inventories Net loss (gain) on unrealized foreign currency exchange Net gains on modification of leasing arrangement Changes in operating assets and liabilities Notes receivable Trade receivables Other receivables Inventories Prepayments Other current assets Contract liabilities Notes payable Trade payables Other payables Other current liabilities Net defined benefit liabilities Cash generated from operations Interest received Dividends received Interest paid Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of investments accounted for using the equity method Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease (increase) in refundable deposits	2019 $ 845,692 847,705 (23,902) 1,184 74,013 (10,342) (388) (4,217) 1,180 (67) 6,392 10,136 28,345 (62) 47,968 190,939 (20,527) 149,945 644 (2,133) 10,111 (23,948) (68,528) (27,724) (3,362) (15,641) 2,013,413 10,342 3,990 (76,264) (209,533) 1,741,948 304 (319,032) 6,314 10,832	2018 $ 892,882 669,796 4,656 754 71,341 (16,100) (1,163) (4,054) (4,633) - 2,600 3,836 (11,429) - 4,629 (294,774) 12,313 (110,293) (27,238) 1,954 (11,538) (67,913) 293,148 129,160 (22,862) (51,174) 1,463,898 16,100 3,602 (69,134) (145,433) 1,269,033 - (419,160) 69,811 (15,706) (Continued)

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SINON CORPORATION AND SUBSIDIARIES

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

Decrease in other non-current assets Decrease (increase) in prepayments for equipment Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from (repayments of) short-term borrowings Repayments of short-term bills payable Repayments of bonds payable Proceeds from long-term borrowings Repayments of long-term borrowings Proceeds from guarantee deposits received Repayments of lease liabilities Decrease in non-current liabilities Dividends paid to owners of the Company Dividends paid to non-controlling interests 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 $ 2,882 (36,188) (334,888) (226,646) 20,000 - 120,000 (343,642) 8,396 (220,900) 930 (546,626) (2,897) (1,191,385) 12,444 228,119 1,266,232 $ 1,494,351	2018 $ 12,722 12,726 (339,607) 41,673 (250,000) (9,500) 1,250,000 (1,732,642) 10,155 - 1,099 (421,207) (1,448) (1,111,870) (2,338) (184,782) 1,451,014 $ 1,266,232

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

(Concluded)

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SINON CORPORATION AND SUBSIDIARIES

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

1. GENERAL INFORMATION

Sinon Corporation (the “Company”) was incorporated in November 1963. It mainly manufactures and sells various chemicals and fertilizer.

The Company’s shares have been listed on the Taiwan Stock Exchange (TWSE) since December 14, 1989.

The consolidated financial statements 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 20, 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 SIC Interpretations (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 and its subsidiaries (the Group) accounting policies:

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 reassessed and are accounted for in accordance with the transitional provisions under IFRS 16.

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The Group as lessee

The Group recognizes right-of-use assets 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 operating activities. Prior to the application of IFRS 16, payments under operating lease contracts were recognized as expenses on a straight-line basis. Prepaid lease payments for land use rights in China were recognized as prepayments for leases. 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 Group elects to apply IFRS 16 retrospectively with the cumulative effect of the initial application of this standard recognized in retained earnings on January 1, 2019. Comparative information is not restated.

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 an amount equal to the lease liabilities, adjusted by the amount of any prepaid or accrued lease payments the Group applies IAS 36 to all right-of-use assets.

The Group also applies the following practical expedients:

• 1) The Group applies a single discount rate to a portfolio of leases with reasonably similar characteristics to measure lease liabilities.

• 2) The Group accounts for those leases for which the lease term ends on or before December 31, 2019 as short-term leases.

• 3) The Group excludes initial direct costs from the measurement of right-of-use assets on January 1, 2019.

• 4) The Group uses hindsight, such as in determining lease terms, to measure lease liabilities.

For leases previously classified as finance leases under IAS 17, the carrying amounts of right-of-use assets and lease liabilities on January 1, 2019 are determined as at the carrying amounts of the respective leased assets and finance lease payables on December 31, 2018.

The lessee’s weighted average incremental borrowing rate applied to lease liabilities recognized on January 1, 2019 is 1.639%. The difference between the (i) lease liabilities recognized and (ii) 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 Less: Recognition exemption for leases of low-value assets Undiscounted amounts on January 1, 2019 Discounted amounts using the incremental borrowing rate on January 1, 2019 Lease liabilities recognized on January 1, 2019	$ 1,073,553 (51,745) (1) $ 1,021,807 $ 998,910 $ 998,910

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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:

is set out as follows:
			Adjustments
	As Originally		Arising from
		Stated on		Initial	Restated on
	January 1, 2019		Application		January 1, 2019
Prepayments	$	446,174	$	(2,210)	$	443,964
Other non-current assets		445,168		(93,197)		351,971
Right-of-use assets		-		1,037,598		1,037,598
Total effect on assets	$	891,342	$	942,191	$	1,833,533
Lease liabilities - current	$	-	$	202,526	$	202,526
Lease liabilities - non-current		-		796,384		796,384
Total effect on liabilities	$	-	$	998,910	$	998,910
Retained earnings	$	2,637,845	$	(49,932)	$	2,587,913
Non-controlling interests		51,030		(6,787)		44,243
Total effect on equity	$	2,688,875	$	(56,719)	$	2,632,156

• b. The IFRSs endorsed by the FSC for application starting from 2020

The IFRSs endorsed by the FSC for application starting from 2020
New IFRSs Amendments to IFRS 3 “Definition of a Business” Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark Reform” 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) January 1, 2020 (Note 3)

• 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 retrospectively for annual reporting periods beginning on or after January 1, 2020.

• Note 3: The Group shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

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.

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

Effective Date New IFRSs Announced by IASB (Note 1) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” January 1, 2021 Amendments to IAS 1 “Classification of Liabilities as Current or January 1, 2022 Non-current”

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

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.

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.

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

• 1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

• 2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

• 3) Level 3 inputs are unobservable inputs for an asset or liability.

• 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 12 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 12 months after the reporting period.

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Current liabilities include:

• 1) Liabilities held primarily for the purpose of trading;

• 2) Liabilities due to be settled within 12 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 consolidated financial statements are authorized for issue; and

• 3) Liabilities for which the Group does not have an unconditional right to defer settlement for at least 12 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. 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 Group interests 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.

When the Group loses control of a subsidiary, a gain or loss is recognized in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and any investment retained in the former subsidiary at its fair value at the date when control is lost and (ii) the assets and liabilities and any non-controlling interests of the former subsidiary at their carrying amounts at the date when control is lost. The Group accounts for all amounts recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Group had directly disposed of the related assets or liabilities.

See Note 10, Table 7 and Table 8 for the detailed information of subsidiaries (including the percentage of ownership and main business).

• 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.

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

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

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

For the purpose of presenting consolidated financial statements, the functional currencies of the Company and its foreign operations (including subsidiaries, associates in other countries that use currency different from the currency of the Company) are translated into the presentation currency, the New Taiwan dollars, 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 (attributed to the owners of the Company and non-controlling interests as appropriate).

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, or a partial disposal of an interest in an associate that includes a foreign operation of which the retained interest becomes a financial asset), all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Company are reclassified to profit or loss.

In relation to a partial disposal of a subsidiary that does not result in the Company losing control over the subsidiary, the proportionate share of accumulated exchange differences is re-attributed to the non-controlling interests of the subsidiary and 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.

f. Inventories

Inventories consist of raw materials, work in progress, finished goods, merchandise and inventories in transit 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. Investment in associates

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

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

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

When the Group subscribes for additional new shares of the associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Group’s proportionate interest in the associate. The Group records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in the Group’s shares of equity of associates. If the Group’s ownership interest is reduced due

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to the additional subscription of the new shares of the associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate is reclassified to profit or loss on the same basis as would be required if the investee had directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for by the equity method is insufficient, the shortage is debited to retained earnings.

The entire carrying amount of the investment is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

When a Group entity transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the Group’ consolidated financial statements only to the extent that interests in the associate are not related to the Group.

h. Property, plant and equipment

Property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment loss.

Property, plant and equipment in the course of construction are measured 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.

Except for freehold land which is not depreciated, the depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. If 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 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.

i. Impairment of tangible assets

At the end of each reporting period, the Group reviews the carrying amounts of its tangible 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. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation.

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.

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• j. Financial instruments

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

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

Financial assets

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

• 1) Measurement categories

Financial assets are classified into the following categories: Financial assets at FVTPL and financial assets at amortized cost.

• a) 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 and debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria.

Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss does not incorporate any dividends or interest earned on such a financial asset. Fair value is determined in the manner described in Note 24.

• b) 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 and trade receivables, other receivables, and refundable deposits at amortized cost, are measured at amortized cost, which equals to gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

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

• i. Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit adjusted effective interest rate to the amortized cost of such financial assets; and

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

A financial asset is credit impaired when one or more of the following events have occurred:

• i. Significant financial difficulty of the issuer or the borrower;

• ii. Breach of contract, such as a default;

• iii. It is becoming probable that the borrower will enter bankruptcy or undergo a financial reorganization; or

• iv. The disappearance of an active market for that financial asset because of financial difficulties.

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

• 2) Impairment of financial assets

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

The Group always recognizes lifetime Expected Credit Loss (ECLs) for trade 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 the 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 represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECL represents 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.

For internal credit risk management purposes, the Group determines that the following situations indicate that a financial asset is in default (without taking into account any collateral held by the Group):

• a) Internal or external information show that the debtor is unlikely to pay its creditors.

• b) When a financial asset is more than 90 days past due unless the Group has reasonable and corroborative information to support a more lagged default criterion.

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

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• 3) Derecognition of financial assets

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

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss.

Financial liabilities

• 1) Subsequent measurement

Except for the financial liabilities classified as at FVTPL, all the financial liabilities are measured at amortized cost using the effective interest method.

The financial liabilities classified as at FVTPL are held for trading, with any gain or loss arising on remeasurement recognized in profit or loss.

• 2) Derecognition of financial liabilities

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

Derivative financial instruments

The Group enters into derivative financial instruments to manage its exposure to foreign exchange rate risks, including foreign exchange forward contracts.

Derivatives are initially recognized at fair value at the date on which the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument; in which event, the timing of the recognition in profit or loss depends on the nature of the hedging relationship. When the fair value of a derivative financial instrument is positive, the derivative is recognized as a financial asset; when the fair value of a derivative financial instrument is negative, the derivative is recognized as a financial liability.

k. Provisions

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

• l. Revenue recognition

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

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

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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 receivable is recognized concurrently. The transaction price received is recognized as a contract liability until the goods have been controlled by the customer.

The Group does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control.

• m. 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.

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

• 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.

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, in-substance fixed payments, less any lease incentives receivable. 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 a lease term, a change in the amounts expected to be payable under a residual value guarantee, a change in the assessment of an option to purchase an underlying asset, or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, 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.

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2018

Leases are classified as finance leases whenever the terms of the 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

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

• 2) The Group as lessee

Operating lease payments are recognized as an expense on a straight-line basis over the lease term. Contingent rents is recognized as expenses in the period in which they are incurred.

• n. 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.

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.

• o. Employee benefits

• 1) Short-term employee benefits

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

• 2) Retirement benefits

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

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

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

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• p. 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 as income tax in the year the shareholders approve to retain earnings.

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

• 2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences and unused loss carryforwards to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

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

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the 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 liabilities are settled or the assets are realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

3) Current and deferred taxes

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

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5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

The 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.

Key Sources of Estimation Uncertainty

Estimated impairment of financial assets

The provision for impairment of trade receivables, investments in debt instruments, and financial guarantee contracts is based on assumptions about risk of default and expected loss rates. The Group uses judgement in making these assumptions and in selecting the inputs to the impairment calculation, based on the Group’s historical experience, existing market conditions as well as forward looking estimates as of the end of each reporting period. For details of the key assumptions and inputs used, see Note 8. Where the actual future cash inflows are less than expected, a material impairment loss may arise.

6. CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS
Cash on hand Checking accounts and demand deposits Cash equivalents Commercial paper FINANCIAL INSTRUMENTS AT FVTPL Financial assets at FVTPL-current Financial assets mandatorily classified as at FVTPL Derivative financial assets Foreign exchange forward contracts Financial assets at FVTPL-non-current Financial assets mandatorily classified as at FVTPL Non-derivative financial assets Domestic unlisted shares		**December 31 **
		2019 2018 $ 37,689 $ 79,875 1,311,792 1,146,435 144,870 39,922 $ 1,494,351 $ 1,266,232 December 31
		2019 $ - $ 23,253	2018 $ 1,184 $ 23,253

7. FINANCIAL INSTRUMENTS AT FVTPL

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The Group entered into foreign exchange forward contracts to manage exposures to exchange rate fluctuations of foreign currency denominated assets and liabilities.

Outstanding foreign exchange forward contracts were as follows:

Maturity Date

Notional Amount(In Thousands)

	Maturity Date	Notional Amount(In Thou
December 31, 2018
Sell BRL/BUY USD	May 2019	BRL2,190/USD600

8. NOTES RECEIVABLE AND TRADE RECEIVABLES

NOTES RECEIVABLE AND TRADE RECEIVABLES
Notes receivable At amortized cost Gross carrying amount Trade receivables At amortized cost Gross carrying amount Less: Allowance for impairment loss		December 31
		2019 $ 132,575 $ 2,001,492 (109,447) $ 1,892,045	2018 $ 180,543 $ 2,286,659 (149,574) $ 2,137,085

a. Notes receivable

In determining the recoverability of the notes receivable, the Group considered any change in the credit quality of the notes receivable from the date credit was initially granted to the end of the reporting period. The Group continuously accesses, monitors and refers to past default experience of its counterparties and the analyses its current financial position to access if the credit risk has increased significantly after the initial recognition.

b. Trade receivables

The Group determines the credit period of sales of goods based on the counterparty’s credit rating, location and transaction terms. No interest was charged on trade receivables. When determining the recoverability of trade receivable, the Group considers any change in the receivables from the original credit date to the credit quality of the balance sheet. Allowance for impairment loss was recognized against trade receivables based on the estimated irrecoverable amounts determined by reference to past default experience of the counterparties and an analysis of their current financial position.

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 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. For account receivables that are past due 150 days without collaterals or guarantees the Company recognized loss allowance at full amount. In this regard, the management believes the Group’s credit risk was significantly reduced.

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For some trade receivables balances that were past due at the end of the reporting period, the Group did not recognize an allowance for impairment loss because there was no significant change in credit quality and the amounts were still considered recoverable. The Group did not hold any collateral or other credit enhancements for these balances.

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.

The aging of receivables was as follows:

Not past due Past due 1-90 days 91-180 days More than 180 days		December 31,	December 31,
		2019 $ 1,776,372 110,420 5,253 109,447 $ 2,001,492	2018 $ 2,085,520 35,503 1,829 163,807 $ 2,286,659

The above aging schedule was based on the past due date.

The movements of the allowance for doubtful trade receivables were as follows:

Balance at January 1 Add: Impairment losses recognized (reversed) on receivables Less: Amounts written off Foreign exchange gains and losses Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 149,574 (23,902) (1,025) (15,200) $ 109,447	2018 $ 180,648 4,656 (2,753) (32,977) $ 149,574

9. INVENTORIES

NVENTORIES
Merchandise Finished goods Work in progress Raw materials and supplies Inventory in transit		**December 31 **
		2019 $ 787,914 798,918 405,848 754,456 13,457 $ 2,760,593	2018 $ 878,774 928,236 332,274 815,217 13,801 $ 2,968,302

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2019 and 2018 was $12,540,848 thousand and $13,228,629 thousand, respectively.

The cost of goods sold included inventory write-downs of $10,136 thousand and $3,836 thousand.

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10. SUBSIDIARIES

Subsidiaries included in the consolidated financial statements are as follows:

Investor Investee Functional Currencies Sinon Corporation Hsing Wei Corporation (“Hsing Wei”) TWD Syntai Chemicals Ltd. (“Syntai Chemicals”) TWD Sinon Do Brazil Ltda. (“Sinon Brazil”) BRL Sinon Cayman Corporation (“Sinon Cayman”) USD Sinon Trading Co., Ltd. (“Sinon Trading”) TWD Taiwan Fresh Supermarket Co., Ltd. (“TFS”) TWD Yumei Yen Co., Ltd. (“Yumei Yen”) TWD Sinon (Thailand) Co., Ltd. (“Sinon Thailand”) THB Sinon Eu GmbH (“Sinon Germany”) EUR Sinon USA, Inc. (“Sinon USA”) USD Sinon Australia Pty Limited (“Sinon Australia”) AUD Pt Sinon Indonesia (“Sinon Indonesia”) IDR TFS Feng Nien Corporation (“Feng Nien”) TWD Feng Nien Weightstone Vineyard Estate & Winery Co., Ltd. (“Weightstone”) TWD Sinon Cayman Zhongshan Sinon Daily Products Co., Ltd. (“Sinon Zhongshan”) CNY Zhongshan Synjia Daily Products Co., Ltd. (“Synjia Zhongshan”) CNY Sinon Hong Kong Co., Ltd. (“Sinon Hong Kong”) USD Sinon Hong Kong Sinon Chemical (China) Co., Ltd. (“Sinon China”) CNY Sinon Chemical (Nantong) Co., Ltd. (“Sinon Nantong”) CNY Sinon China Sinon Zhongshan CNY Poise Packing Co., Ltd. (“Poise Packing”) CNY

% of Ownership December 31, 2019 December 31, 2018 Remark 100 100 100 100 100 100 100 100 100 100 88 88 100 100 100 100 1 100 100 100 100 100 100 100 100 100 100 100 100 92 70 2 - 100 2 100 100 100 100 100 100 8 30 2 100 100

Remarks:

• 1) Due to certain restrictions to foreign investors in Thailand, 51% of the shares of Sinon Thailand are held by the local investors. However, the Company has effective control over Sinon Thailand.

• 2) Sinon Zhongshan gained control of Syjia Zhongshan from Sinon Cayman through a share swap arrangement in September 2019. Syjia Zhongshan was merged with Sinon Zhongshan. Sinon Zhongshan was the surviving company.

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11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Knowledge & Service Information Co., Ltd. (“K&S”) Taiwan Agriculture and Food Health Testing Co., Ltd. (“TAFHT”) K&S TAFHT		December 31
		2019 2018 $ 37,489 $ 35,151 - 419 $ 37,489 $ 35,570 Proportion of Ownership and Voting Rights
		December 31
		2019 2018 49% 49% - 30%

See Table 7 for the nature of activities, principal place of business and country of incorporation of the associates.

The summarized financial information in respect of the Group’s associates is set out below:

Total assets Total liabilities Revenue Profit for the year Other comprehensive income (loss)		December 31	December 31
	2019 2018 $ 126,312 $ 128,198 $ 49,487 $ 54,768 For the Year Ended December 31
		2019 $ 113,831 $ 9,129 $ 3,158	2018 $ 127,609 $ 8,434 $ (338)

Except for TAFHT, investments accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments were calculated based on financial statements that have been audited. Management believes that there would be no material impact on the equity method accounting or the calculation of the share of profit or loss and other comprehensive income were the financial statements of TAFHT to have been audited.

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12. PROPERTY, PLANT AND EQUIPMENT

December 31, 2019

Assets used by the Group Assets leased under operating leases	$ 6,724,415 114,668 $ 6,839,083

• a. Assets used by the Group - 2019

Cost Land Buildings Machinery and equipment Transportation equipment Leasehold improvements Other equipment Property under construction Accumulated depreciation Buildings Machinery and equipment Transportation equipment Leasehold improvements Other equipment Accumulated impairment Buildings			For t	he year Ended D	ecember 31, 201	9
		Beginning Balance Adjustments on Initial Application of IFRS 16 $ 3,246,173 $ (40,164 ) 1,692,829 (110,277 ) 2,816,515 (10,300 ) 118,733 - 932,104 - 2,899,627 (9,752 ) 723,342 - 12,429,323 $ (170,493) 623,207 $ (40,260 ) 1,890,495 (5,187 ) 87,874 - 722,220 - 1,955,629 (5,851) 5,279,425 $ (51,298) 2,600 $ - $ 7,147,298	Beginning Balance (Restated) $ 3,206,009 1,582,552 2,806,215 118,733 932,104 2,889,875 723,342 12,258,830 582,947 1,885,308 87,874 722,220 1,949,778 5,228,127 2,600 $ 7,028,103	Additions $ 406 4,220 60,173 5,512 7,512 129,311 113,911 $ 321,045 $ 79,017 242,223 7,846 28,833 267,049 $ 624,968 $ -	Reclassified Amount $ 607 557,885 125,512 50 (12,439 ) 47,746 (677,768) $ 41,593 $ - - - - - $ - $ -	Disposals $ (201 ) (8,300 ) (44,788 ) (4,563 ) - (266,411 ) - $ (324,263) $ (6,446 ) (44,209 ) (3,950 ) - (262,164) $ (316,769) $ -	Effect of Foreign Currency Exchange Differences $ - (27,385 ) (10,658 ) (587 ) - (7,429 ) 975 $ (45,084) $ (3,495 ) (3,631 ) (356 ) - (3,738) $ (11,220) $ -	Ending Balance $ 3,206,821 2,108,972 2,936,454 119,145 927,177 2,793,092 160,460
								12,252,121
								652,023 2,079,691 91,414 751,053 1,950,925
								5,525,106
								2,600
								$ 6,724,415

The above items of property, plant and equipment used by the Groups are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings
Main buildings	4-61 years
Mechanical and electrical facilities	8-21 years
Others	4-31 years
Machinery and equipment	3-25 years
Transportation equipment	4-21 years
Leasehold improvements	2-30 years
Other equipment	2-30 years

The amount of property, plant and equipment pledged as collateral for bank borrowings are set out in Note 26.

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b. Assets leased under operating leases - 2019

Cost Land Buildings Machinery and equipment Other equipment Accumulated depreciation Buildings Machinery and equipment Other equipment	Beginning Balance Adjustments on Initial Application of IFRS 16 $ - $ 40,164 - 110,277 - 10,300 - 9,752 - $ 170,493 - $ 40,260 - 5,187 - 5,851 - $ 51,298 $ -	Beginning Balance (Restated) $ 40,164 110,277 10,300 9,752 170,493 40,260 5,187 5,851 51,298 $ 119,195	Additions $ - - - - $ - $ 2,967 778 782 $ 4,527	Disposals $ - - - - $ - $ - - - $ -	Ending Balance $ 40,164 110,277 10,300 9,752
					170,493
					43,227 5,965 6,633
					$ 55,825
					$ 114,668

Operating leases relate to lease of land, buildings, machinery and equipment, and other equipment with lease terms between 2019 and 2022. All operating lease contracts contain market review clauses in the event that the lessees exercise their options to extend. The lessees do not have bargain purchase options to acquire the assets at the expiry of the lease periods.

The maturity analysis of lease payments receivable under operating lease payments was as follows:

Year 1 Year 2 Year 3	December 31, 2019 $ 6,727 6,499 4,785 $ 18,011

c. 2018

Cost Land Buildings Machinery and equipment Transportation equipment Leasehold improvements Other equipment Property under construction Accumulated depreciation Buildings Machinery and equipment Transportation equipment Leasehold improvements Other equipment Accumulated impairment Buildings			For the Year Ended December 31, 2018	For the Year Ended December 31, 2018	For the Year Ended December 31, 2018
		Beginning Balance $ 3,197,228 1,617,748 2,754,511 118,023 931,918 3,064,184 730,039 12,413,651 565,066 1,733,468 84,375 692,931 1,842,155 4,917,995 - $ 7,495,656	Additions $ 586 8,470 113,537 7,441 186 97,258 191,682 $ 419,160 $ 68,148 239,289 7,699 29,289 325,371 $ 669,796 $ 2,600	Reclassified Amount $ 58,292 83,995 84,347 285 - (45,624 ) (183,236) $ (1,941) $ - - - - - $ - $ -	Disposals $ (9,933 ) (9,784 ) (129,401 ) (6,541 ) - (209,691 ) - $ (365,350) $ (7,847 ) (79,856 ) (3,923 ) - (208,546) $ (300,172) $ -	Translation Adjustments $ - (7,600 ) (6,479 ) (475 ) - (6,500 ) (15,143) $ (36,197) $ (2,160 ) (2,406 ) (277 ) - (3,351) $ (8,194) $ -	Ending Balance $ 3,246,173 1,692,829 2,816,515 118,733 932,104 2,899,627 723,342 12,429,323 623,207 1,890,495 87,874 722,220 1,955,629 5,279,425 2,600 $ 7,147,298

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The above items of property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows

estimated useful lives as follows
Buildings
Main buildings	7-61 years
Mechanical and electrical facilities	8-21 years
Others	4-56 years
Machinery and equipment	3-25 years
Transportation equipment	4-21 years
Leasehold improvements	2-30 years
Other equipment	2-30 years

Refer to Note 26 for the carrying amount of property, plant and equipment pledged by the Company to secure borrowings/general banking facilities granted to the Company.

13. LEASE ARRANGEMENTS

• a. Right-of-use assets - 2019

b.

December 31, 2019 Carrying amounts Land $ 147,228 Buildings 827,690 Transportation equipment 18,500 $ 993,418 For the Year Ended December 31, 2019 Additions to right-of-use assets $ 178,441 Depreciation charge for right-of-use assets Land $ 26,854 Buildings 180,587 Transportation equipment 10,769 $ 218,210 Lease liabilities - 2019 December 31, 2019 Carrying amounts Current $ 243,397 Non-current $ 711,609

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Range of discount rate for lease liabilities was as follows:

	December 31,
	2019
Land	1.43%-3.3%
Buildings	1.43%-3.3%
Transportation equipment	0.9%-3.3%

• c. Material lease-in activities and terms

The Group leases land and buildings for the use of plants, offices and retail stores with lease terms of 2 to 20 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.

The Company has the right to land use rights, income transfer rights, lease rights and mortgage rights for assets which are located in mainland China. All acquired lots are used for building factories and office buildings. The period of the land use rights is 50 years. The rights were acquired by Sinon China in 2001 and Sinon Nantong in 2013. Before the end of the lease period, the Group may renew the contract, unless it has to be withdrawn due to violation of regulations or due to national public interest.

d. Other lease information

Lease arrangements under operating leases for leasing out investment properties and freehold property, plant and equipment are set out in Notes 12.

2019

2019
	For the Year
		Ended
	December 31,
		2019
Expenses relating to short-term leases	$	40,895
Expenses relating to low-value asset leases	$	353
Expenses relating to variable lease payments not included in
measurement of lease liabilities	$	14,772
Total cash outflow for leases	$	(293,056)

The Group leases certain buildings and transportation equipment which qualify as short-term leases and certain other equipment which qualify as 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.

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2018

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

	December 31,	December 31,
		2018
Not later than 1 year	$	226,514
Later than 1 year and not later than 5 years		565,315
Later than 5 years		281,724
	$	1,073,553

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

	For the Year
	Ended
	December 31,
	2018
Minimum lease payments	$ 312,688

14. NON-CURRENT ASSETS - OTHER

NON-CURRENT ASSETS - OTHER
Land Prepaid lease payments Long-term receivables Others		December 31
		2019 $ 315,005 - 27,693 - $ 342,698	2018 $ 315,612 93,197 35,864 495 $ 445,168

The above-mentioned land, which is restricted to agricultural use, is registered in the name of another person. However, the Group retains control over the land. The land being used as roads was also reclassified as other assets.

15. BORROWINGS

• a. Short-term borrowings

Loans for purchasing raw material Secured borrowings Unsecured borrowings Export billing loans		December 31	December 31
		2019 $ 108,080 49,643 943,043 - $ 1,100,766	2018 $ 17,580 514,784 779,830 22,601 $ 1,334,795 (Continued)

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Interest (%) Loans for purchasing raw material Secured borrowings Unsecured borrowings Export billing loans	**December 31 **
	2019 2018 1.55-3.24 2.90-3.33 4.57-4.79 1.36-4.79 0.73-4.35 0.73-4.79 - 2.81-3.02 (Concluded)

b. Short-term bills payable

Short-term bills payable were commercial paper due within one year. These instruments were issued with a range of annual interest rates of 0.99% in 2019.

c. Long-term borrowings

Unsecured borrowings Secured borrowings Less: Current portions Long-term borrowings Interest rate (%) Unsecured borrowings Secured borrowings		December 31	December 31
		2019 $ 1,747,203 - 1,747,203 (682,203) $ 1,065,000 1.30-1.55 -	2018 $ 1,670,845 300,000 1,970,845 (223,642) $ 1,747,203 1.36-1.57 1.30

16. OTHER PAYABLES

OTHER PAYABLES
Accrued salary and bonus Bonus for employees and remuneration of directors and supervisors Others		December 31
		2019 $ 470,794 52,331 623,816 $ 1,146,941	2018 $ 458,153 63,534 649,189 $ 1,170,876

17. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company and its 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.

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The employees of the Group’s subsidiaries in China are members of a state-managed retirement benefit plan operated by the government of China. The subsidiaries are required to contribute amounts at a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the Group with respect to the retirement benefit plan is to make the specified contributions.

Sinon Brazil contribute certain percentages of salaries for medication and retirement benefits.

Sinon Thailand and Sinon Australia contribute certain percentages of salaries for medication and retirement benefits.

Sinon USA, Sinon Germany and Sinon Indonesia have no pension plans.

Sinon Cayman and Sinon Hong Kong, are investment holding companies that have no pension plans.

• b. Defined benefit plans

The defined benefit plan adopted by the Company and its domestic subsidiaries in accordance with the Labor Standards Law is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. Pension contributions are deposited in the Bank of Taiwan in the committee’s name.

The Company, Yumei Yen and TFS make monthly contributions equal to 2% of salaries to a pension fund. The funds are administered by pension fund monitoring committees and deposited in the committees’ name in the Bank of Taiwan. Pension costs and contributions of other companies in the Group are calculated at amounts equal to certain percentage of salaries. The percentage rates are: Syntai Chemicals, Hsing Wei and Sinon Trading contribution 3% and Feng Nien accrual 4%.

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.

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

were as follows:
Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities		December 31
		2019 $ 1,013,088 (520,587) $ 492,501	2018 $ 1,001,884 (501,955) $ 499,929

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

Present Value of the Defined Benefit Obligation Fair Value of the Plan Assets Balance at January 1, 2018 $ 1,053,038 $ (472,287) Service cost Current service cost 12,922 - Past service cost and loss (gain) on settlements (56) - Net interest expense (income) 10,416 (4,655) Recognized in profit or loss 23,282 (4,655) Remeasurement Return on plan assets (excluding amounts included in net interest) - (15,079) Actuarial loss - changes in demographic assumptions 549 - Actuarial loss - changes in financial assumptions 254 - Actuarial gain - experience adjustments (15,372) - Recognized in other comprehensive income (14,569) (15,079) Contributions from the employer - (69,801) Benefits paid (59,867) 59,867 Balance at December 31, 2018 1,001,884 (501,955) Service cost Current service cost 10,868 - Past service cost and loss (gain) on settlements - - Net interest expense (income) 9,895 (4,940) Recognized in profit or loss 20,763 (4,940) Remeasurement Return on plan assets (excluding amounts included in net interest) - (18,073) Actuarial loss - changes in demographic assumptions 339 - Actuarial loss - changes in financial assumptions 27,528 - Actuarial gain - experience adjustments (1,581) - Recognized in other comprehensive income 26,286 (18,073) Contributions from the employer - (31,289) Benefits paid (35,845) 35,670 Balance at December 31, 2019 $ 1,013,088 $ (520,587)

Net Defined Benefit Liabilities (Assets) $ 580,751 12,922 (56) 5,761 18,627 (15,079) 549 254 (15,372) (29,648) (69,801) - 499,929 10,868 - 4,955 15,823 (18,073) 339 27,528 (1,581) 8,213 (31,289) (175) $ 492,501

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.

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• 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.

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 rate(s) Expected rate(s) of salary increase Turnover rate(s)	December 31
	2019 2018 0.75% 1% 3% 3% 0.46% 0.46%

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 rate(s) 0.25% increase 0.25% decrease Expected rate(s) of salary increase 0.25% increase 0.25% decrease Turnover rate 10% increase 10% decrease		December 31	December 31
		2019 $ (27,542) $ 28,606 $ 27,901 $ (27,016) $ (185) $ 185	2018 $ (28,392) $ 29,535 $ 28,879 $ (27,918) $ (310) $ 311

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 **	**December 31 **
		2019 $ 8,859 10 to 12 years	2018 $ 8,948 10 to 13 years

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18. EQUITY

a. Ordinary shares

Ordinary shares
Number of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Convertible bonds (in thousands) Shares issued		**December 31 **
		2019 500,000 $ 5,000,000 420,492 - $ 4,204,926	2018 500,000 $ 5,000,000 420,492 5,499 $ 4,204,926

A holder of issued ordinary share with par value of NT$10 is entitled to vote and receive dividends.

• b. Capital surplus

Capital surplus
May be used to offset a deficit, distributed as cash dividends, or transferred to share capital Arising from conversion of bonds Arising from treasury share transactions Arising from the difference between consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition May only be used to offset a deficit Others		December 31
		2019 $ 394,097 51,819 3,430 943 $ 450,289	2018 $ 394,097 51,819 3,430 929 $ 450,275

• c. Retained earnings and dividend policy

Under the dividend policy as set forth in the amended Articles, where the Company made a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for distribution of dividends and bonuses to shareholders.

The Articles also provide that, in line with the Company’s continuing growth, cash dividends payable may not be lower than 30% of the total dividends distributed. If total dividends to be distributed are under NT$100,000 thousand, the limitation can be waived.

The appropriation of earnings to a legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. The legal reserve may be used to offset a 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.

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Items referred to under Rule No. 1010012865, 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.

The appropriation of earnings and dividends per share for 2018 and 2017 as approved in the shareholders’ meetings in June 2019 and 2018, respectively, was as follows:

Legal reserve Special reserve Cash dividends	Appropriation of Earnings For the Year Ended December 31 2018 2017 $ 72,695 $ 57,804 43,398 44,687 546,640 421,222	Dividends Per Share (NT$)
		For the Year Ended December 31
		2018 2017 $ 1.3 $ 1

The appropriation of earnings and dividends per share for 2019 was proposed by the Company’s board of directors in March 2020. The appropriation and dividends per share were as follows:

	Appropriation	Appropriation	Dividends Per
	of	Earnings	Share (NT$)
Legal reserve	$	61,818
Special reserve		43,200
Cash dividends		546,640	$ 1.3

The appropriation of earnings for 2019 is subject to resolution in the shareholders’ meeting to be held in June 2020.

19. REVENUE

REVENUE
Revenue from contracts with customers Revenue from sale of goods a. Contact balances Trade receivables (Note 8) Contract liabilities - current Sale of goods	For the Year Ended December 31
		2019 2018 $ 17,081,389 $ 18,134,087 December 31
		2019 $ 1,894,012 $ 419,919	2018 $ 2,137,085 $ 409,808

The changes in the contract liability balances primarily result from the timing difference between the Group’s performance and the customer’s payment.

b. Disaggregation of revenue

Refer to Note 30 for information about disaggregation of revenue.

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20. COMPREHENSIVE INCOME FOR THE YEAR

a. Other income

Rental income Interest income Dividends Others	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2019 $ 6,379 10,342 388 79,149 $ 96,258	2018 $ 4,709 16,100 1,163 55,675 $ 77,647

• b. Other gains and losses

Other gains and losses
Gain (loss) on disposal of property, plant and equipment Impairment loss Others	For the Year Ended December 31
		2019 $ (1,180) (6,392) (21,252) $ (28,824)	2018 $ 4,633 (2,600) (13,650) $ (11,617)

• c. Finance costs

Interest on bank loans Interest on convertible bonds Interest on lease liabilities Other finance costs	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2019 $ 56,053 - 16,136 1,824 $ 74,013	2018 $ 68,906 466 - 1,969 $ 71,341

Information about capitalized interest was as follows:

Capitalized interest amount Capitalization rate d. Depreciation An analysis of depreciation 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 $ 2,013 $ 2,524 1.4392% 1.656% For the Year Ended December 31
		2019 $ 415,829 431,876 $ 847,705	2018 $ 420,998 248,798 $ 669,796

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e. Employee benefits expense

Employee benefits expense
	Operating		Operating
		Costs	Expenses	Total
For the year ended December 31, 2019
Salary and wages	$	472,865	$ 1,597,303	$ 2,070,168
Labor and health insurance costs		89,035	190,204	279,239
Post-employment benefits
Defined contribution plan		17,458	57,679	75,137
Defined benefit plans		4,286	11,537	15,823
Other employee benefits		29,295	64,716	94,011
For the year ended December 31, 2018
Salary and wages		452,280	1,662,839	2,115,119
Labor and health insurance costs		86,309	188,198	274,507
Post-employment benefits
Defined contribution plan		16,345	58,022	74,367
Defined benefit plans		4,376	14,251	18,627
Other employee benefits		39,173	62,161	101,334

• f. Employees’ compensation and remuneration of directors

The Company accrued employees’ compensation and remuneration of directors at the rates of 1% and no higher than 5%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors. The employees’ compensation and remuneration of directors for the years ended December 31, 2019 and 2018, which have been approved by the Company’s board of directors in March 2020 and 2019, respectively, were as follows:

Employees’ compensation Remuneration of directors	**For the Year Ended December 31 **	**For the Year Ended December 31 **
	2019 Accrual Rate Amount 1% $ 8,418 5% 42,088	2018
		Accrual Rate Amount 1% $ 9,036 5% 45,178

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 employees’ compensation and remuneration of directors paid and the amounts recognized in the consolidated financial statements for the years ended December 31, 2018 and 2017.

Information on the employees’ compensation 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.

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21. INCOME TAXES

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

Current tax In respect of the current year Income tax on unappropriated earnings Adjustments for prior years Deferred tax In respect of the current year Adjustments to deferred tax attributable to changes in tax rates and laws 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 $ 175,491 - (13,060) 2,544 - $ 164,975	2018 $ 164,542 1,187 14,969 (13,643) (8,010) $ 159,045

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

Profit before tax from continuing operations Income tax expense calculated at the statutory rate Nondeductible expenses in determining taxable income Tax-exempt income Income tax on unappropriated earnings Unrecognized loss carryforwards/deductible temporary differences 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 $ 845,692 $ 211,439 97 (36,751) - 3,250 - (13,060) $ 164,975	2018 $ 892,882 $ 266,502 360 (132,369) 1,187 16,679 (8,010) 14,696 $ 159,045

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%.

In July 2019, the President of the ROC announced the amendments to the Statute for Industrial Innovation, which stipulate that the amounts of unappropriated earnings in 2018 and thereafter that are reinvested in the construction or purchase of certain assets or technologies are allowed as deduction when computing the income tax on unappropriated earnings. The Group has already deducted the amount of capital expenditure from the unappropriated earnings in 2018 that was reinvested when calculating the tax on unappropriated earnings for the year ended December 31, 2019.

As the status of the 2020 appropriations of earnings is uncertain, the potential income tax consequences of the 2019 unappropriated earnings are not reliably determinable.

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• b. 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 Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income Temporary differences Provisions for inventory write-downs $ 12,318 $ 1,879 $ - Unrealized gross profit 10,678 (7,415) - Defined benefit obligation 69,126 6,229 1,642 Tax losses 10,984 (2,163) - Others 5,817 4,359 - $ 108,923 $ 2,889 $ 1,642 Temporary differences Land appreciation tax $ 203,497 $ - $ - Foreign investment income 37,093 7,226 - Others 2,430 (1,793) - $ 243,020 $ 5,433 $ - For the year ended December 31, 2018 Deferred Tax Assets Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income Temporary differences Provisions for inventory write-downs $ 10,365 $ 1,953 $ - Unrealized gross profit 5,901 4,777 - Defined benefit obligation 54,903 19,340 (5,117) Investment credits 11,498 (514) - Others 18,063 (12,246) - $ 100,730 $ 13,310 $ (5,117) Temporary differences Land appreciation tax $ 205,637 $ (2,140) $ - Foreign investment income 45,445 (8,352) - Others 281 2,149 - $ 251,363 $ (8,343) $ -

Closing Balance $ 14,197 3,263 76,997 8,821 10,176 $ 113,454 $ 203,497 44,319 637 $ 248,453 Closing Balance $ 12,318 10,678 69,126 10,984 5,817 $ 108,923 $ 203,497 37,093 2,430 $ 243,020

Deferred Tax Assets Temporary differences Provisions for inventory write-downs Unrealized gross profit Defined benefit obligation Investment credits Others Temporary differences Land appreciation tax Foreign investment income Others

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• c. Deductible temporary differences which no deferred tax assets have been recognized in the consolidated balance sheets

December 31 2019 2018 Deductible temporary differences $ 169,446 $ 162,367 d. Income tax assessments Income tax returns through 2017 of the Company and the Group’s subsidiaries located in Taiwan have been assessed by the tax authorities. EARNINGS PER SHARE Number of Shares Amounts Denominator (Numerator) (In Thousands) EPS (NT$) For the year ended December 31, 2019 Basic EPS Net income available to ordinary shareholders of the parent $ 674,855 420,492 $ 1.60 Effect of potentially dilutive ordinary shares Employees’ compensation - 558 Diluted EPS Net income available to ordinary shareholders of the parent(including effect of potentially dilutive ordinary shares) $ 674,855 421,050 $ 1.60 For the year ended December 31, 2018 Basic EPS Profit for the year attributable to owners of the Company $ 726,957 418,731 $ 1.74 Effect of potentially dilutive ordinary shares Employees’ compensation - 636 Convertible bonds 373 - Diluted EPS Net income available to ordinary shareholders of the parent(including effect of potentially dilutive ordinary shares) $ 727,330 419,367 $ 1.73		December 31

22. EARNINGS PER SHARE

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

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23. CAPITAL MANAGEMENT

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.

The capital structure of the Group consists of net debt (borrowings offset by cash and cash equivalents) and equity of the Group (comprising share capital, capital surplus, retained earnings and other equity).

Key management personnel of the Group review the capital structure on a quarterly basis. As part of this review, the key management personnel consider the cost of capital and the risks associated with each class of capital. Based on recommendations of the key management personnel, in order to balance the overall capital structure, the Group may adjust the amount of dividends paid to shareholders, the number of new shares issued or repurchased, and the amount of new debt issued or existing debt redeemed.

24. FINANCIAL INSTRUMENTS

• a. Fair value of financial instruments measured at fair value on recurring basis

• 1) Fair value hierarchy

December 31, 2019 Financial assets measured at cost Shares not listed in the ROC December 31, 2018 Financial assets measured at cost Shares not listed in the ROC Foreign exchange forward contractors	Level 1 Level 2 Level 3 Total $ - $ - $ 23,253 $ 23,253 $ - $ - $ 23,253 $ 23,253 - 1,184 - 1,184 $ - $ 1,184 $ 23,253 $ 24,437	Total $ 23,253
		$ 24,437

There were no transfers between Level 1 and Level 2 in 2019 and 2018.

• 2) Valuation techniques and inputs applied for Level 2 fair value measurement

Financial Instruments Derivatives - foreign exchange forward contracts	Valuation Techniques and Inputs
	Discounted cash flows. Future cash flows are estimated based on observable forward exchange rates at the end of the reporting period and contract forward rates, discounted at a rate that reflects the credit risk of various counterparties.

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

The fair values of unlisted equity securities in the ROC were determined using the income approach. In this approach, the discounted cash flow method was used to capture the present value of the expected future economic benefits to be derived from the ownership of these investees.

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• b. Categories of financial instruments

Categories of financial instruments
Financial assets Mandatorily classified as at FVTPL Financial assets at amortized cost (1) Financial liabilities Amortized cost (2)	December 31
	2019 2018 $ 23,253 $ 24,437 3,692,773 3,745,590 5,909,340 6,522,333

• 1) The balances include financial assets measured at amortized cost, which comprise cash and cash equivalents, notes receivable, trade receivables, other receivables and refundable deposits.

• 2) The balances include financial liabilities at amortized cost, which comprise short-term and long-term borrowings, short-term bills payable, notes payable, trade payables (include related parties), other payables and guarantee deposits received.

• c. Financial risk management objectives and policies

The Group’s major financial instruments include trade receivables, trade payables, lease liabilities and borrowings. The Group’s Corporate Treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk and interest rate risk), credit risk and liquidity risk.

The Group seeks to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives was governed by the Group’s policies approved by the Company’s board of directors. Compliance with policies and exposure limits was reviewed by the internal auditors on a continuous basis.

1) Market risk

The Group’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.

There had been no change to the Group’s exposure to market risks or the manner in which these risks were managed and measured.

a) Foreign currency risk

Several subsidiaries of the Company had foreign currency sales and purchases, which expose the Group to foreign currency risk.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are listed in Note 28.

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Sensitivity analysis

For a 1% weakening of U.S. dollars against the functional currency, there would be opposite impact on pre-tax profit as follows:

impact on pre-tax profit as follows:
Functional Currency NTD BRL	For the Year Ended December 31
	2019 2018 $ 13,602 $ 13,683 (9,673) (11,237)

This was mainly attributable to the exposure of outstanding receivables and payables denominated in USD, which were not hedged at the end of the reporting period. The above table details the Group’s sensitivity to a 1% increase and decrease in U.S. dollars against the relevant functional currencies. The sensitivity rate of 1% is 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.

In management’s opinion, the sensitivity analysis was unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period did not reflect the exposure during the period.

b) Interest rate risk

The Group is exposed to interest rate risk because entities in the Group deposit and borrow funds at both fixed and floating interest rates.

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

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities	December 31 2019 2018 $ 208,443 $ 55,829 1,785,090 322,601 1,103,349 1,090,607 2,037,885 2,983,039

Sensitivity analysis

For financial assets and liabilities, assuming all other variables were held constant, a hypothetical increase in interest rates of 25 basis point (0.25%) would have resulted in an increase in the interest expense before tax by approximately $3,534 thousand and $4,893 thousand for the years ended December 31, 2019 and 2018, respectively. A sensitivity rate of 0.25% increase or decrease was used when reporting interest rate risk internally to the directors and represents the directors’ assessment of the reasonably possible change in interest rates.

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2) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. At the end of the year, 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 and financial guarantees provided by the Group could arise from the carrying amount of the respective recognized financial assets as stated in the balance sheets.

The Group’s concentration of credit risk by geographical location was in Brazil, which accounted for 30% and 28% of the total trade receivable as of December 31, 2019 and 2018, respectively.

3) Liquidity risk

Ultimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate liquidity risk management framework for the Group’s short-, medium- and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities and continuously monitoring forecasted and actual cash flows as well as matching the maturity profiles of financial assets and liabilities. As of December 31, 2019 and 2018, the Group had available unutilized short-term bank loan facilities in the amounts of $5,033,020 thousand and $4,439,589 thousand, respectively.

The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The table was 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 includes both interest and principal cash flows. Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on the agreed repayment dates.

Non-derivative Financial Liabilities December 31, 2019 Non-interest bearing liabilities Lease liabilities Variable interest rate liabilities Fixed interest rate liabilities December 31, 2018 Non-interest bearing liabilities Variable interest rate liabilities Fixed interest rate liabilities	Less Than 3 Months $ 2,901,085 63,625 421,393 281,127 $ 3,667,230 $ 3,084,803 927,704 17,794 $ 4,030,301	3 Months to 1 Year $ - 164,580 651,492 448,957 $ 1,265,029 $ - 608,132 4,807 $ 612,939	1+Year $ - 772,029 965,000 100,000 $ 1,837,029 $ - 1,447,203 300,000 $ 1,747,203

Additional information about the maturity analysis for lease liabilities:

Lease liabilities	Less than 1 Year $ 228,205	1-5 Years $ 577,260	5-10 Years $ 179,966	10+ Years $ 14,803

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25. 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. Details of transactions between the Group and other related parties are disclosed below.

• a. Related party names and categories

Related Party Names Related Party Categories K&S Associates TAFHT Associates (Disposed at December, 2019)

b. Sales For the Year Ended December 31 Related Party Categories 2019 2018 Associates $ 536 $ 508

There was no material difference in sales prices and terms between related and third parties. The general credit term was 30 to 60 days.

• c. Receivables from related parties

December 31 Related Party Categories 2019 2018 Associates $ 1,967 $ - Payables to related parties December 31 Related Party Categories 2019 2018 Associates $ 1,374 $ 1,453

• d. Payables to related parties

The outstanding trade payables to related parties are unsecured. No expense was recognized for the years ended December 31, 2019 and 2018 for allowance for impairment of trade receivables with respect to the amounts owed by related parties.

• e. Acquisitions of property, plant and equipment

Associates

Related Party Categories

Purchase Price For the Year Ended December 31 $ 3,398 $ 12,844

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f. Others

1) Manufacturing and operating expenses Associates 2) Rental income Associates 3) Other income Associates 4) Other receivables Associates	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 2018 $ 9,795 $ 6,986 $ 1,680 $ 2,323 $ - $ 2,535 **December 31 **
		2019 $ 189	2018 $ 3,448

g. Compensation of key management personnel

The Compensation to directors and other key management personnel were as follows:

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 $ 24,106 357 $ 24,463	2018 $ 27,490 411 $ 27,901

The compensation to directors and other key management personnel were determined by the compensation committee having regard to the performance of individuals and market trends.

26. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral for securing commercial paper, performance guarantees, letters of credit, and bank borrowings:

Property, plant and equipment Refundable deposits		December 31	December 31
		2019 $ 90,579 13,800 $ 104,379	2018 $ 1,154,648 13,800 $ 1,168,448

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27. 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 and 2018 were as follows:

• a. Significant commitments

• 1) As of December 31, 2019 and 2018, unused letters of credit for purchases of raw materials and machinery and equipment amounted to $24,590 thousand and $23,413 thousand, respectively.

• 2) TFS issued coupons and performance guarantees to banks in the amounts of $31,850 thousand and $34,767 thousand as of December 31, 2019 and 2018, respectively.

• b. Unrecognized commitments

Unrecognized commitments
Acquisition of property, plant and equipment		December 31
		2019 $ 3,988	2018 $ 73,031

28. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The following information was aggregated by the foreign currencies other than functional currencies of the Group and the exchange rates between foreign currencies and respective functional currencies were disclosed. The significant assets and liabilities denominated in foreign currencies were as follows:

Financial assets Monetary items USD (USD/NTD) USD (USD/CNY) AUD (AUD/NTD) GBP (GBP/NTD) JPY (JPY/NTD) Financial liabilities Monetary items USD (USD/NTD) USD (USD/BRL) USD (USD/THB) JPY (JPY/NTD)	December 31, 2019 Foreign Currencies (In Thousands) Exchange Rate Carrying Amount $ 64,267 30.1060 $ 1,934,830 788 6.9610 23,732 5,291 21.1123 111,703 878 39.8230 34,977 276,141 0.2770 76,491 19,104 30.1060 574,623 32,131 4.0187 967,324 1,679 29.7100 50,555 100,971 0.2770 27,969	December 31, 2018
		Foreign Currencies (In Thousands) Exchange Rate Carrying Amount $ 71,695 30.7330 $ 2,203,393 3,407 6.8754 104,719 4,873 21.6406 105,461 2,662 39.1706 102,713 394,580 0.2803 110,600 27,174 30.7330 835,133 36,564 3.8663 1,123,709 2,997 32.3200 92,095 71,777 0.2803 20,119

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The Group is mainly exposed to 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:

Foreign Currencies NTD BRL CNY	For the Year Ended December 31	For the Year Ended December 31
	2019 Exchange Rate Net Foreign Exchange Gain (Loss) 1 (NTD:NTD) $ (14,260) 7.491 (BRL:NTD) (32,366) 4.321 (CNY:NTD) 3,999	2018
		Exchange Rate Net Foreign Exchange Gain (Loss) 1 (NTD:NTD) $ 49,655 7.949 (BRL:NTD) (110,370) 4.562 (CNY:NTD) 14,852

29. SEPARATELY DISCLOSED ITEMS

• a. Information about significant transactions and investees

• 1) Financing provided to others: Table 1

• 2) Endorsements/guarantees provided: Table 2

• 3) Marketable securities held: Table 3

• 4) Marketable securities acquired and disposed of at costs or prices at least NT$300 million or 20% of the paid-in capital: None

• 5) Acquisitions of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital: None

• 6) Disposals 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: Table 4

• 8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 5

• 9) Trading in derivative instruments: Note 7

10) Intercompany relationships and significant intercompany transactions: Table 6

11) Information on investees: Table 7

• b. Information on investments in mainland China

• 1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area: Table 8

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• 2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses:

• a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period: Table 4

• b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period: Table 4

• c) The amount of property transactions and the amount of the resultant gains or losses: None

• d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes: Table 2

• e) The highest balance of the period, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds: Table 1

• f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receiving of services: None

30. 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 goods or services delivered or provided. Specifically, the Group’s reportable segments under IFRS 8 “ Operating Segments“ were as follows:

Crop protection - manufacture chemicals and fertilizer

Supermarket - supermarket and general retail industry

• a. Department revenue and results

The following was an analysis of the Group’s revenue and results from continuing operations by reportable segment.

reportable segment.
Crop protection Supermarket Others Total from continuing operations Share of profit of associates Finance costs Unallocated Profit before tax		For the Year Ended December 31
		Segment Revenue 2019 2018 $ 10,081,122 $ 10,799,309 4,461,718 4,511,016 2,538,549 2,823,762 $ 17,081,389 $ 18,134,087		Segment Profit
		2019 $ 10,081,122 4,461,718 2,538,549 $ 17,081,389		2019 $ 829,581 74,032 74,581 978,194 4,217 (74,013) (62,706) $ 845,692	2018 $ 718,043 53,675 252,952 1,024,670 4,054 (71,341) (64,501) $ 892,882

Segment profit represented the profit before tax earned by each segment without allocation of central administration costs and directors’ salaries, share of profit of associates, rental revenue, interest income, gain or loss on disposal of property, plant and equipment, gain or loss on disposal of financial instruments, foreign exchange gain or loss, gain or loss on fair value changes of financial assets designated at fair value through profit or loss, finance costs and income tax expense. This was the

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measure reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance.

• b. Department total assets and liabilities

Department assets Continuing operations Crop protection Supermarket Others Consolidated total assets Department liabilities Continuing operations Crop protection Supermarket Others Consolidated total liabilities		December 31	December 31
		2019 $ 11,535,048 2,318,940 1,410,871 $ 15,264,859 $ 5,739,784 1,915,469 532,911 $ 8,188,164	2018 $ 12,218,101 1,399,133 1,332,736 $ 14,949,970 $ 6,422,303 963,028 512,535 $ 7,897,866

For the purpose of monitoring department performance and allocating resources between departments:

• 1) All assets were allocated to reporting departments other than interests in associates accounted for using the equity method, other financial assets and current and deferred tax assets. Assets used jointly by reporting departments were allocated on the basis of the revenue earned by individual reporting departments; and

• 2) All liabilities were allocated to reportable departments other than borrowings, other financial liabilities and current and deferred tax liabilities. Liabilities for which reporting departments are jointly liable were allocated in proportion to department assets.

• c. Revenue from major products and services

The following is an analysis of the Group’s revenue from continuing operations from its major products and services.

Crop protection Supermarket Household supplies and mission catering Others	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2019 $ 10,081,122 4,461,718 1,870,477 668,072 $ 17,081,389	2018 $ 10,799,309 4,511,016 1,704,379 1,119,383 $ 18,134,087

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• d. Geographical information

The Group operates in three principal geographical areas - Asia, Americas, and Europe.

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

Asia Americas Europe Others		Revenue from External Customers For the Year Ended December 31 2019 2018 $ 13,713,146 $ 14,600,363 2,278,622 2,540,335 961,483 810,662 128,138 182,727 $ 17,081,389 $ 18,134,087		Non-current Assets	Non-current Assets
				December 31,
		2019 $ 13,713,146 2,278,622 961,483 128,138 $ 17,081,389		2019 $ 8,251,504 33,731 68 1,075 $ 8,286,378	2018 $ 7,677,819 41,908 - 155 $ 7,719,882

Non-current assets exclude financial instruments, investments accounted for using the equity method and deferred tax assets.

• f. Information about major customers

No single customer contributed 10% or more to the Group’s revenue for both years ended December 31, 2019 and 2018.

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TABLE 1

SINON CORPORATION AND SUBSIDIARIES

FINANCING PROVIDED TO RELATED PARTIES FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars and Renminbi in Thousands)

No.	Lender	Borrower	Financial Statement Account	Related Parties	Highest Balance for the Period	Ending Balance	Actual Borrowing Amount	Range of Interest Rate (%)	Nature of Financing	Business Transaction Amount	Reasons for Short-term Financing	Allowance for Bad Debt	Collateral	Collateral	Financing Limits for Each Borrowing Company (Note 1)	Financing Company’s Total Financing Amount Limits (Note 2)
													Item	Value
1	Sinon China	Sinon Zhongshan Poise Packing Sinon Nantong	Other receivables Other receivables Other receivables	Yes Yes Yes	$ 18,389 (RMB 4,000) 55,166 (RMB 12,000) 91,944 (RMB 20,000)	$ 17,284 (RMB 4,000) 51,852 (RMB 12,000) - (RMB -)	$ 17,284 (RMB 4,000) 21,605 (RMB 5,000) - (RMB -)	6 5 -	Short-term financing Short-term financing Short-term financing	$ - - -	Operation Operation Operation	$ - - -	- - -	$ - - -	$ 248,446 (RMB 57,497) 248,446 (RMB 57,497) 248,446 (RMB 57,497)	$ 496,892 (RMB 114,995) 496,892 (RMB 114,995) 496,892 (RMB 114,995)

Note 1: The financing amount of the Company should not exceed 10% of the Company’s shareholders’ equity; that of subsidiaries should not exceed 50% of the subsidiaries’ shareholders’ equity.

Note 2: The financing amount of the Company should not exceed 20% of the Company’s shareholders’ equity; that of subsidiaries should not exceed 100% of the subsidiaries’ shareholders’ equity.

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TABLE 2

SINON CORPORATION AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Endorser/Guarantor	Endorsed/Guaranteed Party	Endorsed/Guaranteed Party	Limits on Endorsement/ Guarantee Given on Behalf of Each Party	Maximum Amount Endorsed/ Guaranteed During the Period	Outstanding Endorsement/ Guarantee at the End of the Period	Actual Borrowing Amount	Amount Endorsed/ Guaranteed by Collaterals	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Aggregate Endorsement/ Guarantee Limit (Note 2)	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China
		Name	Nature of Relationship (Note 1)
0	Sinon Corporation	Sinon China Yumei Yen	2. 1.	(Note 2) (Note 2)	$ 347,732 508,600	$ 331,166 500,530	$ 87,307 -	None None	4.71 7.12	$ 2,811,772 2,811,772	Yes Yes	No No	Yes No

Note 1: The relationship between guarantor and guaranteed party:

1. Subsidiary which is directly held over 50% of the issued share capital. 2. Companies that directly or indirectly hold more than 50% of the issued share capital.

Note 2: Domestic subsidiary is based on 20% of issued capital of the guarantor; overseas subsidiary is based on 30% of issued capital of the guarantor; total guarantee is based on 40% of issued capital of guarantor.

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TABLE 3

SINON CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD DECEMBER 31, 2019

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

Holding Company	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		December 31, 2019	December 31, 2019		Note
				Number of Shares	Carrying Amount	Percentage of Ownership (%)	Market Value or Net Asset Value
Sinon Corporation	Ordinary shares TGCC	The Corporation is the director of TGCC	Financial assets measured at FVTPL - non-current	1,937,792	$ 23,253	9.9	$ 23,253

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TABLE 4

SINON CORPORATION AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2019

(In Thousands of New Taiwan Dollars)

Purchaser or Seller	Related Party	Nature of the Relationship		Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase/Sale	Amount	% of Total	Payment/Collection Terms	Unit Price	Collection Terms	Ending Balance	% of Total
Sinon Corporation	Sinon China Syntai Chemicals Sinon Thailand	Subsidiary Subsidiary Subsidiary	Purchase Purchase Sale	$ 500,203 100,368 (730,665)	13 3 (9)	30-60 days after the transaction date 30-60 days after the transaction date T/T 180-270 days after the transaction date	$ - - -	- - -	$ (820) (10,243) 967,324	- (1) 51

Note: Significant intercompany accounts and transactions have been eliminated.

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TABLE 5

SINON CORPORATION AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF PAID-IN CAPITAL DECEMBER 31, 2019

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

Company Name	Related Party	Nature of the Relationship	Ending Balance (Note)	Turnover Rate	Overdue	Overdue	Amounts Received in Subsequent Period	Allowance for Doubtful Accounts
					Amount	Action Taken
Sinon Corporation	Sinon Brazil	Subsidiary	$ 967,324	0.70	$ -	-	$ 13,656	$ -

Note: Significant intercompany accounts and transactions have been eliminated.

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TABLE 6

SINON CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2019

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

No.	Company Name	Counterparty	Relationship (Note 1)		Transaction Details	Transaction Details
				Financial Statements Accounts	Amount	Payment Terms	Percentage of Consolidated Net Revenue or Total Assets (%)
0	Sinon Corporation	Sinon Brazil Sinon Brazil Sinon China	1 1 1	Sales Accounts receivable Purchases	$ 730,665 967,324 500,203	T/T 180-270 days T/T 180-270 days O/A 30-60 days	4 6 3

Note 1: Relationship of counterparty: (1) parent company to subsidiary; (2) subsidiary to parent company; and (3) subsidiary to subsidiary.

Note 2: The criteria of the disclosures above are (a) for the assets and liabilities, at least 1% of the consolidated total assets; and (b) for the income and expenses, at least 1% of the consolidated gross sales. The significant intercompany accounts and transactions have been eliminated.

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TABLE 7

SINON CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTEES

FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars and U.S. Dollars)

Investor Company	Investee Company (Note 2)	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	As of December 31, 2019	As of December 31, 2019	As of December 31, 2019	Net Income (Loss) of the Investee	Share of Profit (Loss) (Note 1)	Note
				December 31, 2019	December 31, 2018	Number of Shares	Percentage of Ownership (%)	Carrying Amount
Sinon Corporation TFS Feng Nien Yumei Yen Sinon Cayman K&S	Sinon Cayman Yumei Yen Sinon Brazil Syntai Chemicals Hsing Wei TFS K&S Sinon Australia Sinon Thailand Sinon Indonesia Sinon USA Sinon Germany Sinon Trading Feng Nien Weightstone TAFHT Sinon Hong Kong K3 Systems Sdn. Bhd.	British Cayman Islands Taichung, ROC Alegre, Brazil Taichung, ROC Taichung, ROC Taichung, ROC Taichung, ROC Sydney, Australia Bangkok, Thailand Jakarta, Indonesia California, USA Hamburger, Germany Taichung, ROC Taichung, ROC Taichung, ROC Taichung, ROC Wanchai, Hong Kong Malaysia	Holding company Houseware, catering services and retail of agricultural products Manufacture and import and export of medical and chemical products Pharmaceuticals Manufacture and sale of cement Supermarket Design and sale of software Import and export of chemical products Import and export of chemical products Import and export of chemical products Import and export of chemical products Import and export of chemical products Trading Supermarket Food and special crops; Retail sale of tobacco and alcoholic drinks Inspection of environment and medication Holding company Software design and information security maintenance	$ 1,394,195 400,167 510,379 269,095 25,609 264,793 18,086 174,548 17,109 106,555 1,689 1,049 1,001 47,271 30,000 - 1,178,975 (US$ 37,980) 2,856	$ 1,394,195 400,167 510,379 269,095 25,609 264,793 18,086 174,548 17,109 106,555 1,689 1,049 1,001 47,271 30,000 304 1,167,239 (US$ 37,980) 2,856	44,280,000 20,030,000 32,316,471 33,000,000 33,000,000 26,379,500 1,951,900 6,100,000 20,000 3,500,000 50,000 25,000 100,000 1,420,000 1,200,000 - - 337,500	100 100 100 100 100 88 49 100 100 100 100 100 100 100 100 - 100 45	$ 1,454,713 482,669 (58,251) 275,625 436,427 334,540 37,489 (69,745) (6,651) 45 582 1,195 914 24,639 31,903 - 1,372,414 ( US$ 45,554) 4,241	$ 35,979 70,974 (61,681) 10,368 29,642 42,708 8,833 (40,528) (1,003) (686) (57) 153 104 6,085 834 (308) 36,081 ( US$ 1,167) 1,178	$ 35,979 71,402 (61,681) 10,368 30,210 44,014 4,310 (40,528) (1,003) (686) (57) 153 104 6,085 834 (93) 36,081 ( US$ 1,167) 530	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Investments accounted for using the equity method Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Indirectly owned subsidiary Indirectly owned subsidiary Investments accounted for using the equity method Indirectly owned subsidiary Investments accounted for using the equity method

Note 1: The equity-method investees’ financial statements, which were used to determine the carrying amount of the Company’s investments, have been audited, except those of Sinon Indonesia, Sinon Thailand, Sinon Germany, Sinon Trading, Feng Nien, Weightstone, K3 Systems Sdn. Bhd. and TAFHT. The Group believes that, had those companies’ financial statements been audited, any adjustments would have no material effect on the Company’s financial statements.

Note 2: Except for K&S and TAFHT, significant intercompany accounts and transactions have been eliminated.

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TABLE 8

SINON CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, U.S. Dollars and Renminbi)

Investee Company	Main Businesses and Products	Paid-in Capital	Paid-in Capital	Method of Investment	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2019	Remittance of Funds	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2019	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss) (Note 1)	Carrying Amount as of December 31, 2019	Accumulated Repatriation of Investment Income as of December 31, 2019
						Outward	Inward
Sinon Zhongshan Sinon China Poise Packing Sinon Nantong Synjia Zhongshan (Note 2)	Manufacture and sale of grocery, pesticide and plastics Manufacture and sale of various chemicals Import and export of plastic products Manufacture and sale of various chemicals Manufacture and sale of grocery, pesticide and plastics	$ 113,083 (US$ 3,700) (Note 2) 271,113 (US$ 8,000) 50,426 (RMB 11,000) 1,216,938 (RMB 255,000) - (US$ -)		The investment was made through a subsidiary incorporated in a third area which in turn makes direct investments in companies in mainland China The investment was made through a subsidiary incorporated in a third area which in turn makes direct investments in companies in mainland China The investment was made by the subsidiary located in mainland China directly The investment was made through a subsidiary incorporated in a third area which in turn makes direct investments in companies in mainland China The investment was made through a subsidiary incorporated in a third area which in turn makes direct investments in companies in mainland China	$ 25,364 (US$ 700) (Note 2) 271,113 (US$ 8,000) - 923,714 (US$ 29,980) 79,990 (US$ 2,700)	$ - - - - -	$	- - - - -	$ 25,364 (US$ 700) 271,113 (US$ 8,000) - 923,714 (US$ 29,980) 79,990 (US$ 2,700)	$ (23,449) 117,507 16,251 (62,664) 5,138	100% (Note 3) 100% 100% 100% -	$ (23,449) 117,057 16,251 (62,664) 5,138	$ (15,365) 497,347 65,630 889,478 -	$ - - - -
Investor Company			Accumulated Outward Remittance for Investment in Mainland China as of December 31 31, 2019		Investment Amounts Authorized by Investment Commission, MOEA			Upper Limited on the Amount of Investment Stipulated by Investment Commission, MOEA
The Company			$ 1,300,181		US$ 41,380			No limit (Note 4)

Note 1: The Group recognized its investment gain (loss) based on the audited financial statements as of and for the year ended December 31, 2019.

Note 2: Synjia Zhongshan was merged with Sinon Zhongshan in September 2019. Refer to Note 10.

Note 3: The ownership of Sinon Cayman and Sinon China was 92% and 8%, respectively.

Note 4: According to the “Regulations for Screening of Application to Engage in Technical Cooperation in Mainland China” issued by the Investment Commission of the Ministry of Economic Affairs on August 29, 2008, there is no limit on the investment in mainland China since Sinon Corporation acquired the approval from the Industrial Development Bureau the establishment of the Company’s operating headquarters in Taiwan.

Note 5: Significant intercompany accounts and transactions have been eliminated.

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Sinon Corporation

Financial Statements for the Years Ended December 31, 2019 and 2018 and Independent Auditors’ Report

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Recognition of revenue

For related accounting policies and detailed information on revenue recognition, refer to Notes 4 and 18 to the financial statements. The Company’s operating revenue mainly comes from the sale of crop protection agents. Aside from supplying its department of crop protection, its main source of operating income comes from export sales. Thus, any changes in international trade of crop protection agents can significantly affect the Company’s major operating income and such revenue is significant to the financial statements; therefore, we identified the recognition of revenue as a key audit matter.

The audit procedures that we performed in respect of revenue recognition included the following:

1. We assessed the appropriateness of the design of the relevant operating procedures for revenue recognition from export sales and tested the Company’s operating effectiveness of the relevant controls for the year.

2. We understood and analyzed the changes in export sales transactions with customers and performed substantive procedures by sample-testing the customers’ export subsidiary ledger, checking the sales receipts and shipping records to confirm the validity of the sales revenue.

Impairment assessment of trade receivables

For related accounting policies and detailed information on revenue recognition, refer to Notes 4, 5 and 8 to the financial statements.

The impairment assessment of trade receivables is based on the management’s consideration of possible recoverability and for known issues with a yet-unrecovered state.

Such impairment assessment involved management’s subjective judgment, and the balance of the Company’s trade receivables is significant; therefore, we identified the impairment of trade receivables as a key audit matter.

The audit procedures that we performed in respect of trade receivables included the following:

1. We understood management’s policies on the allowance for impairment and assessed the relevant operations for the year.

2. We tested the correctness and completeness of the aging of trade receivables and reviewed the allowance for impairment to confirm the appropriateness of the accounting estimates.

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.

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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 the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

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

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

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

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient and appropriate audit evidence regarding the financial information of 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 company audit. We remain solely responsible for our audit opinion.

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

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

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

The engagement partners on the audit resulting in this independent auditors’ report are Ting-Chien Su and Done-Yuin Tseng.

Deloitte & Touche Taipei, Taiwan Republic of China

March 20, 2020

Notice to Readers

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

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

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SINON CORPORATION

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

ASSETS CURRENT ASSETS Cash (Notes 4 and 6) Notes receivable (Notes 4 and 8) Trade receivables (Notes 4, 5, 8, 18 and 24) Receivables from related parties (Notes 18 and 24) Other receivables (Notes 4 and 24) Inventories (Notes 4 and 9) Prepayments (Note 24) Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current (Notes 4 and 7) Investments accounted for using the equity method (Notes 4 and 10) Property, plant and equipment (Notes 4, 11, 24 and 25) Right-of-use assets (Note 12) Deferred tax assets (Notes 4 and 20) Prepayments for equipment Refundable deposits (Note 25) Other non-current assets (Note 13) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 14 and 25) Short-term bills payable (Note 14) Contract liabilities - current (Notes 4 and 18) Notes payable Trade payables Trade payables to related parties (Note 24) Current tax liabilities (Note 4 and 20) Other payables (Note 15) Lease liabilities - current (Note 12) Current portion of long-term borrowings (Notes 14 and 25) Other current liabilities (Note 24) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 14 and 25) Lease liabilities - non-current (Note 12) Deferred tax liabilities (Notes 4 and 20) Net defined benefit liabilities - non-current (Notes 4 and 16) Guarantee deposits Investments accounted for using the equity method - credit balance (Notes 4 and 10) Other non-current liabilities Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Other equity Total equity TOTAL		2019 Amount % $ 496,063 4 25,880 - 766,394 6 1,134,268 10 59,966 1 1,232,074 10 184,698 2 4,685 - 3,904,028 33 23,253 - 3,024,199 26 4,566,295 38 15,613 - 50,996 1 12,226 - 23,383 - 282,985 2 7,998,950 67 $ 11,902,978 100 $ 857,529 7 20,000 - 4,312 - 7,000 - 670,895 6 12,343 - 73,752 1 730,842 6 8,399 - 682,203 6 10,375 - 3,077,650 26 1,065,000 9 7,366 - 247,816 2 253,566 2 74,523 1 134,647 1 12,981 - 1,795,899 15 4,873,549 41 4,204,926 35 450,289 4 762,674 6 291,972 3 1,654,740 14 (335,172) (3) 7,029,429 59 $ 11,902,978 100		2018
				Amount % $ 299,031 3 35,422 - 1,038,214 8 1,320,964 11 36,944 - 1,338,744 11 128,788 1 4,462 - 4,202,569 34 23,253 - 3,018,614 25 4,769,221 39 - - 41,014 - 17,848 - 32,396 - 283,592 2 8,185,938 66 $ 12,388,507 100 $ 1,069,109 9 - - 18,561 - 3,990 - 781,359 6 44,924 - 107,570 1 744,819 6 - - 218,042 2 10,663 - 2,999,037 24 1,747,203 14 - - 243,020 2 240,210 2 72,107 - 73,038 1 12,818 - 2,388,396 19 5,387,433 43 4,204,926 34 450,275 4 689,979 5 248,574 2 1,699,292 14 (291,972) (2) 7,001,074 57 $ 12,388,507 100

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

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SINON 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 (Notes 4, 18 and 24) OPERATING COSTS (Notes 9, 19 and 24) GROSS PROFIT REALIZED (UNREALIZED) GAIN ON TRANSACTIONS WITH SUBSIDIARIES AND ASSOCIATES (Note 4) REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 19 and 24) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Other income (Notes 19 and 24) Other gains and losses (Note 19) Finance costs (Note 19) Share of profit of subsidiaries and associates (Notes 4 and 10) Total non-operating expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 20) NET PROFIT FOR THE YEAR		2019 Amount % $ 8,216,128 100 6,275,741 76 1,940,387 24 38,713 - 1,979,100 24 1,006,944 12 160,352 2 104,967 1 1,272,263 15 706,837 9 60,373 1 (25,238) - (43,295) (1) 92,585 1 84,425 1 791,262 10 116,407 2 674,855 8		2018
				Amount % $ 9,091,555 100 6,994,547 77 2,097,008 23 (19,229) - 2,077,779 23 1,173,335 13 149,194 2 112,822 1 1,435,351 16 642,428 7 56,117 1 102,509 1 (56,246) (1) 104,542 1 206,922 2 849,350 9 122,393 1 726,957 8 (Continued)

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SINON CORPORATION

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

OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Share of other comprehensive income (loss) of subsidiaries and associates accounted for using the equity method Income tax relating to 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 Share of other comprehensive income (loss) of subsidiaries and associates accounted for using the equity method Other comprehensive loss for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR EARNINGS PER SHARE (Note 21) Basic Diluted		2019 Amount % $ (7,953) - (379) - 1,590 - (6,742) - (44,877) - 1,677 - (43,200) - (49,942) - $ 624,913 8 $ 1.60 $ 1.60		2018
				Amount % $ 23,951 - 4,441 - (4,580) - 23,812 - (43,287) - (112) - (43,399) - (19,587) - $ 707,370 8 $ 1.74 $ 1.73

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

(Concluded)

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SINON CORPORATION

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

BALANCE AT JANUARY 1, 2018 Effect of retrospective application and retrospective restatement BALANCE AT JANUARY 1, 2018 AS RESTATED Appropriation of 2017 earnings Legal reserve Special reserve Cash dividends distributed by the Company Other changes in capital surplus 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 Convertible bonds converted to ordinary shares BALANCE AT DECEMBER 31, 2018 Effect of retrospective application and retrospective restatement BALANCE AT JANUARY 1, 2019 AS RESTATED Appropriation of 2018 earnings Legal reserve Special reserve Cash dividends distributed by the Company Other changes in capital surplus 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	Ordinary Shares (Note 17) $ 4,149,934 - 4,149,934 - - - - - - - 54,992 4,204,926 - 4,204,926 - - - - - - - $ 4,204,926	Capital Surplus (Note 17) $ 433,832 - 433,832 - - - 15 - - - 16,428 450,275 - 450,275 - - - 14 - - - $ 450,289		Retained Earnings (Note 17) Unappropriated Legal Reserve Special Reserve Earnings $ 632,175 $ 203,887 $ 1,466,515 - - 5,721 632,175 203,887 1,472,236 57,804 - (57,804) - 44,687 (44,687) - - (421,222) - - - - - 726,957 - - 23,812 - - 750,769 - - - 689,979 248,574 1,699,292 - - (49,932) 689,979 248,574 1,649,360 72,695 - (72,695) - 43,398 (43,398) - - (546,640) - - - - - 674,855 - - (6,742) - - 668,113 $ 762,674 $ 291,972 $ 1,654,740	Retained Earnings (Note 17) Unappropriated Legal Reserve Special Reserve Earnings $ 632,175 $ 203,887 $ 1,466,515 - - 5,721 632,175 203,887 1,472,236 57,804 - (57,804) - 44,687 (44,687) - - (421,222) - - - - - 726,957 - - 23,812 - - 750,769 - - - 689,979 248,574 1,699,292 - - (49,932) 689,979 248,574 1,649,360 72,695 - (72,695) - 43,398 (43,398) - - (546,640) - - - - - 674,855 - - (6,742) - - 668,113 $ 762,674 $ 291,972 $ 1,654,740	Other Equity (Notes 4 and 17) Unrealized Gain Exchange (Loss) on Financial Differences on Unrealized Gain Assets at Fair Translating (Loss) on Value through the Financial Available-for-sale Other Statements of Financial Comprehensive Foreign Operations Assets Income $ (253,277) $ 4,704 $ - - (4,704) 4,704 (253,277) - 4,704 - - - - - - - - - - - - - - - (43,287) - (112) (43,287) - (112) - - - (296,564) - 4,592 - - - (296,564) - 4,592 - - - - - - - - - - - - - - - (44,877) - 1,677 (44,877) - 1,677 $ (341,441) $ - $ 6,269	Total Equity $ 6,637,770 5,721 6,643,491 - - (421,222) 15 726,957 (19,587) 707,370 71,420 7,001,074 (49,932) 6,951,142 - - (546,640) 14 674,855 (49,942) 624,913 $ 7,029,429
						Exchange Differences on Unrealized Gain Translating (Loss) on the Financial Available-for-sale Statements of Financial Foreign Operations Assets $ (253,277) $ 4,704 - (4,704) (253,277) - - - - - - - - - - - (43,287) - (43,287) - - - (296,564) - - - (296,564) - - - - - - - - - - - (44,877) - (44,877) - $ (341,441) $ -
				Legal Reserve $ 632,175 - 632,175 57,804 - - - - - - - 689,979 - 689,979 72,695 - - - - - - $ 762,674	Special Reserve $ 203,887 - 203,887 - 44,687 - - - - - - 248,574 - 248,574 - 43,398 - - - - - $ 291,972

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

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SINON 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 Expected credit loss reversed on trade receivables Net loss on fair value changes of financial assets designated at fair value through profit or loss Financial costs Interest income Dividend income Share of profit of subsidiaries and associates Gain on disposal of property, plant and equipment Write-downs of inventories Impairment loss recognized on non-financial assets Unrealized loss (gain) on transactions with subsidiaries and associates Net loss (gain) on unrealized foreign currency exchange Net gains on modification of leasing arrangement Changes in operating assets and liabilities Notes receivable Trade receivables Other receivables Inventories Prepayments Other current assets Contract liabilities Notes payable Trade payables Other payables Other current liabilities Net defined benefit liabilities Cash generated from operations Interest received Dividends received Interest paid Income tax paid Net cash generated from operating activities	2019 $ 791,262 383,131 (28,254) - 43,295 (3,082) (388) (92,585) (424) 6,142 - (38,713) 28,345 (56) 9,542 450,026 (23,022) 100,528 (55,910) (223) (14,249) 3,010 (138,859) (13,182) (288) 5,403 1,411,449 3,082 94,301 (46,103) (153,821) 1,308,908	2018 $ 849,350 436,603 (3,938) 1,938 56,246 (1,795) (1,163) (104,542) (63,393) 1,597 2,600 19,228 (11,429) - 3,159 (388,003) 14,185 (189,141) 31,496 527 (11,544) (13,653) 71,608 37,461 (1,734) (40,882) 694,781 1,795 81,938 (52,805) (115,944) 609,765 (Continued)

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SINON CORPORATION

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

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from return of capital from investments accounted for using the equity method Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease (increase) in refundable deposits Decrease in other non-current assets Increase in prepayments for equipment Net cash generated from (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from (repayments of) short-term borrowings Repayments of short-term bills payable Repayments of bonds payable Proceeds from long-term borrowings Repayments of long-term borrowings Proceeds from guarantee deposits received Repayment of the principal portion of lease liabilities Increase in non-current liabilities Dividends paid to owners of the Company Net cash used in financing activities NET INCREASE (DECREASE) IN CASH CASH AT THE BEGINNING OF THE YEAR CASH AT THE END OF THE YEAR	2019 $ - (127,688) 1,932 9,013 607 (38,134) (154,270) (207,366) 20,000 - 120,000 (338,042) 2,416 (8,151) 163 (546,626) (957,606) 197,032 299,031 $ 496,063	2018 $ 500,010 (159,633) 15,695 (14,554) 1,026 (17,203) 325,341 74,096 (200,000) (9,500) 1,250,000 (1,723,042) 13,991 - 1,336 (421,207) (1,014,326) (79,220) 378,251 $ 299,031

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

(Concluded)

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

SINON CORPORATION AND SUBSIDIARIES

1. GENERAL INFORMATION

Sinon Corporation (the “Company”) was incorporated in November 1963. It mainly manufactures and sells various chemicals and fertilizer.

The Company’s shares have been listed on the Taiwan Stock Exchange (“TWSE”) since December 14, 1989.

2. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Company’s board of directors on March 20, 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 SIC Interpretations (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:

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 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 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 and lease liabilities for all leases on the company 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 company 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. On the Company 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 operating activities.

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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 company statements of cash flows. Leased assets and finance lease payables were recognized on the company balance sheets for contracts classified as finance leases.

The Company elects to apply IFRS 16 retrospectively with the cumulative effect of the initial application of this standard recognized in retained earnings on January 1, 2019. Comparative information is not restated.

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 an amount equal to the lease liabilities, adjusted by the amount of any prepaid or accrued lease payments the Company applies IAS 36 to all right-of-use assets.

The Company also applies the following practical expedients:

• 1) The Company applies a single discount rate to a portfolio of leases with reasonably similar characteristics to measure lease liabilities.

• 2) The Company accounts for those leases for which the lease term ends on or before December 31, 2019 as short-term leases.

• 3) The Company excludes initial direct costs from the measurement of right-of-use assets on January 1, 2019.

• 4) The Company uses hindsight, such as in determining lease terms, to measure lease liabilities.

For leases previously classified as finance leases under IAS 17, the carrying amounts of right-of-use assets and lease liabilities on January 1, 2019 are determined as at the carrying amounts of the respective leased assets and finance lease payables on December 31, 2018.

The lessee’s weighted average incremental borrowing rate applied to lease liabilities recognized on January 1, 2019 is 3.211%. The difference between the (i) lease liabilities recognized and (ii) 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 Less: Recognition exemption for leases of low-value assets Undiscounted amounts on January 1, 2019 Discounted amounts using the incremental borrowing rate on January 1, 2019 Lease liabilities recognized on January 1, 2019	$ 32,430 (20,979) (1) $ 11,450 $ 11,450 $ 10,057

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.

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

is set out as follows:
			Adjustments
	As Originally		Arising from
		Stated on		Initial	Restated on
	January 1, 2019		Application		January 1, 2019
Investments accounted for using the equity
method	$	2,980,160	$	(49,829)	$	2,930,331
Right-of-use assets		-		9,954		9,954
Total effect on assets	$	2,980,160	$	(39,875)	$	2,940,285
Lease liabilities - current	$	-	$	10,057	$	10,057
Total effect on liabilities	$	-	$	10,057	$	10,057
Retained earnings	$	2,637,845	$	(49,932)	$	2,587,913
Total effect on equity	$	2,637,845	$	(49,932)	$	2,587,913

• b. The IFRSs endorsed by the FSC for application starting from 2020

New IFRSs Amendments to IFRS 3 “Definition of a Business” Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark Reform” 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) January 1, 2020 (Note 3)

• 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 retrospectively for annual reporting periods beginning on or after January 1, 2020.

• Note 3: The Company shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

As of the date the company 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.

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• c. New IFRSs in issue by the International Accounting Standard Board (IASB) but not yet endorsed and issued into effect by the FSC

Effective Date New IFRSs Announced by IASB (Note 1) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” January 1, 2021 Amendments to IAS 1 “Classification of Liabilities as Current or January 1, 2022 Non-current”

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

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

• a. Statement of compliance

The financial statements 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 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.

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

• 1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

• 2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

• 3) Level 3 inputs are unobservable inputs for an asset or liability.

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

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• 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 12 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 12 months after the reporting period.

Current liabilities include:

• 1) Liabilities held primarily for the purpose of trading;

• 2) Liabilities due to be settled within 12 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 12 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.

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

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

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

For the purpose of presenting financial statements, the functional currencies of the Company and its foreign operations (including subsidiaries, associates in other countries that use currencies which are different from the currency of the Company) are translated into the presentation currency, the New Taiwan dollars, 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.

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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, or a partial disposal of an interest in an associate that includes a foreign operation of which the retained interest becomes a financial asset), 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 control over the subsidiary, the proportionate share of accumulated exchange differences is included in the calculation of equity transactions but 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, work in progress, finished goods, merchandise and inventories in transit and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at the weighted-average cost on the balance sheet date.

f. Investments accounted for using the equity method

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

1) Investments in subsidiaries

A subsidiary is an entity (including a structured entity) that is controlled by the Company.

Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the subsidiary. The Company also recognizes the changes in the Company’s share of equity of subsidiaries 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 using the equity method and long-term interests that, in substance, form part of the Company’s net investment in the subsidiary), the Company continues recognizing its share of further 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.

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

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

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

2) Investment in associates

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

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

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

The entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

The Company discontinues the use of the equity method from the date on which its investment ceases to be an associate and a joint venture. Any retained investment is measured at fair value at that date, and the fair value is regarded as the investment’s fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate and the joint venture attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate and the joint venture. The Company accounts for all amounts previously recognized in other comprehensive income in relation to that associate and joint venture on the same basis as would be required had that associate directly disposed of the related assets or liabilities. If an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the Company continues to apply the equity method and does not remeasure the retained interest.

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

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g. Property, plant and equipment

Property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment loss.

Property, plant and equipment in the course of construction are measured 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.

Except for freehold land which is not depreciated, the depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. 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 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. Impairment of tangible assets

At the end of each reporting period, the Company reviews the carrying amounts of its tangible 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. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation.

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.

i. Financial instruments

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

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

Financial assets

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

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• 1) Measurement categories

Financial assets are classified into the following categories: Financial assets at FVTPL and financial assets at amortized cost.

• a) 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 and debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria.

Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss does not incorporate any dividends or interest earned on such a financial asset. Fair value is determined in the manner described in Note 23.

• b) 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 and trade receivables, other receivables, and refundable deposits at amortized cost, are measured at amortized cost, which equals to 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.

• A financial asset is credit impaired when one or more of the following events have occurred:

• i. Significant financial difficulty of the issuer or the borrower;

• ii. Breach of contract, such as a default;

• iii. It is becoming probable that the borrower will enter bankruptcy or undergo a financial reorganization; or

• iv. The disappearance of an active market for that financial asset because of financial difficulties.

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• 2) Impairment of financial assets

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

The Company always recognizes lifetime Expected Credit Loss (ECLs) for trade 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 the financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

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

For internal credit risk management purposes, the Company determines that the following situations indicate that a financial asset is in default (without taking into account any collateral held by the Company):

• a) Internal or external information show that the debtor is unlikely to pay its creditors.

• b) When a financial asset is more than 90 days past due unless the Company has reasonable and corroborative information to support a more lagged default criterion.

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

• 3) Derecognition of financial assets

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

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss.

Financial liabilities

• 1) Subsequent measurement

Except for the financial liabilities classified as at FVTPL, all the financial liabilities are measured at amortized cost using the effective interest method.

The financial liabilities classified as at FVTPL are held for trading, with any gain or loss arising on remeasurement recognized in profit or loss.

• 2) Derecognition of financial liabilities

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

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j. Provisions

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

k. Revenue recognition

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

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

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 receivable is recognized concurrently. The transaction price received is recognized as a contract liability until the goods have been controlled by the customer.

The Company does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control.

l. Leases

2019

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

• 1) The Company as lessor

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

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

• 2) The Company as lessee

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

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

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

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Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments, in-substance fixed payments, less any lease incentives receivable. 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, a change in the amounts expected to be payable under a residual value guarantee, a change in the assessment of an option to purchase an underlying asset, or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the company balance sheets.

2018

Leases are classified as finance leases whenever the terms of the 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

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 an expense on a straight-line basis over the lease term. Contingent rents is recognized as expenses in the period in which they are incurred.

• m. 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.

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.

• 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 services.

• 2) Retirement benefits

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

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

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

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 as income tax in the year the shareholders approve to retain earnings.

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

• 2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences and unused loss carry forward to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

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

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the 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 liabilities are settled or the assets are realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

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• 3) Current and deferred taxes

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

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 about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The 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.

Key Sources of Estimation Uncertainty

Estimated impairment of financial assets

The provision for impairment of trade receivables, investments in debt instruments, and financial guarantee contracts is based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and in selecting the inputs to the impairment calculation, based on the Company’s historical experience, existing market conditions as well as forward looking estimates as of the end of each reporting period. For details of the key assumptions and inputs used, see Note 8. Where the actual future cash inflows are less than expected, a material impairment loss may arise.

6. CASH

Cash on hand Checking accounts and demand deposits		**December 31 **	**December 31 **
		2019 $ 2,556 493,507 $ 496,063	2018 $ 4,588 294,443 $ 299,031

7. FINANCIAL INSTRUMENTS AT FVTPL

FINANCIAL INSTRUMENTS AT FVTPL
Financial assets at FVTPL-non-current Financial assets mandatorily classified as at FVTPL Non-derivative financial assets Domestic unlisted shares		December 31
		2019 $ 23,253	2018 $ 23,253

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8. NOTES RECEIVABLE AND TRADE RECEIVABLES

NOTES RECEIVABLE AND TRADE RECEIVABLES
Notes receivable At amortized cost Gross carrying amount Trade receivables At amortized cost Gross carrying amount Less: Allowance for impairment loss		December 31
		2019 $ 25,880 $ 768,187 (1,793) $ 766,394	2018 $ 35,422 $ 1,068,261 (30,047) $ 1,038,214

a. Notes receivable

In determining the recoverability of the notes receivable, the Company considered any change in the credit quality of the notes receivable since the date credit was initially granted to the end of the reporting period. The Company continuously accessed and monitored the reference to past default experience of its counterparties and the analysis of their current financial position to access if the credit risk increase after the initial recognition.

b. Trade receivables

The Company determines the credit period of sales of goods based on the counterparty’s credit rating, location and transaction terms. No interest was charged on trade receivables. When determining the recoverability of trade receivable, the Company considers any change in the receivables from the original credit date to the credit quality of the balance sheet. Allowance for impairment loss was recognized against trade receivables based on the estimated irrecoverable amounts determined by reference to past default experience of the counterparties and an analysis of their current financial position.

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. For accounts receivables that are past due 150 days without collaterals or guarantees, the Company recognized loss allowance at full amount. In this regard, the management believes the Company’s credit risk was significantly reduced.

For some trade receivables balances that were past due at the end of the reporting period, the Company did not recognize an allowance for impairment loss because there was no significant change in credit quality and the amounts were still considered recoverable. The Company did not hold any collateral or other credit enhancements for these balances.

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.

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The aging of receivables was as follows:

The aging of receivables was as follows:
Not past due Past due 1-90 days 91-180 days More than 180 days		December 31
		2019 $ 721,971 45,387 - 829 $ 768,187	2018 $ 1,038,214 - - 30,047 $ 1,068,261

The above aging schedule was based on the past due date.

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

Balance at January 1 Less: Net remeasurement of loss allowance Less: Amounts written off Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 30,047 (28,254) - $ 1,793	2018 $ 35,526 (3,938) (1,541) $ 30,047

9. INVENTORIES

NVENTORIES
Merchandise Finished goods Work in progress Raw materials and supplies Inventory in transit		**December 31 **
		2019 $ 131,294 295,289 336,412 457,607 11,472 $ 1,232,074	2018 $ 260,701 271,488 266,641 526,113 13,801 $ 1,338,744

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2019 and 2018 was $6,275,741 thousand and $6,994,547 thousand, respectively.

The cost of goods sold included inventory write-downs of $6,142 thousand and $1,597 thousand.

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10. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investment in subsidiaries- unlisted companies Sinon Cayman Corporation (“Sinon Cayman”) Yumei Yen Co., Ltd. (“Yumei Yen”) Hsing Wei Corporation (“Hsing Wei”) Taiwan Fresh Supermarket Co., Ltd. (“TFS”) Syntai Chemicals Ltd. (“Syntai Chemicals”) Sinon Eu GmbH (“Sinon Germany”) Sinon Trading Co., Ltd. (“Sinon Trading”) Sinon USA, Inc. (“Sinon USA”) Pt Sinon Indonesia (“Sinon Indonesia”) Sinon (Thailand) Co., Ltd. (“Sinon Thailand”) Sinon Do Brazil Ltda. (“Sinon Brazil”) Sinon Australia Pty Limited (“Sinon Australia”) Investment in associates- unlisted companies Knowledge & Service Information Co., Ltd. (“K&S”) Add: Investments accounted for using the equity method -credit balance		December 31 2019 2018 Carrying Amount % of Ownership Carrying Amount % of Ownership Remark $ 1,454,713 100 $ 1,466,601 100 482,669 100 470,075 100 436,427 100 409,438 100 334,540 88 360,651 88 275,651 100 273,451 100 1,195 100 1,088 100 1) 914 100 810 100 1) 582 100 651 100 45 100 698 100 1) (6,651) 100 (8,027) 100 1) 2) (58,251) 100 (34,374) 100 (69,745) 100 (30,637) 100 2,852,063 2,910,425 37,489 49 35,151 49 2,889,552 2,945,576 134,647 73,038 $ 3,024,199 $ 3,018,614	December 31 2019 2018 Carrying Amount % of Ownership Carrying Amount % of Ownership Remark $ 1,454,713 100 $ 1,466,601 100 482,669 100 470,075 100 436,427 100 409,438 100 334,540 88 360,651 88 275,651 100 273,451 100 1,195 100 1,088 100 1) 914 100 810 100 1) 582 100 651 100 45 100 698 100 1) (6,651) 100 (8,027) 100 1) 2) (58,251) 100 (34,374) 100 (69,745) 100 (30,637) 100 2,852,063 2,910,425 37,489 49 35,151 49 2,889,552 2,945,576 134,647 73,038 $ 3,024,199 $ 3,018,614
		2019 Carrying Amount % of Ownership $ 1,454,713 100 482,669 100 436,427 100 334,540 88 275,651 100 1,195 100 914 100 582 100 45 100 (6,651) 100 (58,251) 100 (69,745) 100 2,852,063 37,489 49 2,889,552 134,647 $ 3,024,199

1) The financial statement of insignificant subsidiaries had not been audited. However, the Company believes that had those companies’ financial statements been audited, any adjustments would have no material effect on the Company’s financial statements.

• 2) Due to certain restrictions to foreign investors in Thailand, 51% of the shares of Sinon Thailand are held by the local investors. However, the Company has effective control over Sinon Thailand.

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See Table 6 for the nature of activities, principal place of business and country of incorporation of the associates.

The summarized financial information in respect of the Company’s associates is set out below:

Total assets Total liabilities Revenue Profit for the year Other comprehensive income		December 31	December 31
	2019 2018 $ 126,312 $ 125,423 $ 49,487 $ 53,389 For the Year Ended December 31
		2019 $ 110,213 $ 8,833 $ 3,158	2018 $ 123,722 $ 8,104 $ (338)

11. PROPERTY, PLANT AND EQUIPMENT

Assets used by the Company Assets leased under operating leases	December 31, 2019 $ 4,490,999 75,296
	$ 4,566,295

• a. Assets used by the Company - 2019

Cost Land Buildings Machinery and equipment Transportation equipment Leasehold improvements Other equipment Property under construction Accumulated depreciation Buildings Machinery and equipment Transportation equipment Leasehold improvements Other equipment Accumulated impairment Buildings				For the Year	**Ended December **	31, 2019
		Beginning Balance $ 2,900,929 1,086,617 2,281,938 35,875 24,864 1,463,773 130,872 7,924,868 433,115 1,644,566 27,353 24,864 1,023,149 3,153,047 2,600 $ 4,769,221	Adjustments on Initial Application of IFRS 16 $ (40,164 ) (65,835 ) - - - - - $ (105,999) $ (29,525 ) - - - - $ (29,525) $ -	Beginning Balance (Restated) $ 2,860,765 1,020,782 2,281,938 35,875 24,864 1,463,773 130,872 7,818,869 403,590 1,644,566 27,353 24,864 1,023,149 3,123,522 2,600 $ 4,692,747	Additions $ 406 402 28,680 1,361 - 36,737 62,115 $ 129,701 $ 40,267 192,768 3,110 - 137,552 $ 373,697 $ -	Disposals $ - (5,300 ) (40,007 ) (895 ) - (144,745 ) - $ (190,947) $ (5,300 ) (39,760 ) (895 ) - (143,484) $ (189,439) $ -	Reclassified Amount $ 607 4,634 65,824 - - 38,930 (66,239) $ 43,756 $ - - - - - $ - $ -	Ending Balance $ 2,861,778 1,020,518 2,336,435 36,341 24,864 1,394,695 126,748 7,801,379 438,557 1,797,574 29,568 24,864 1,017,217 3,307,780 2,600 $ 4,490,999

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The above items of property, plant and equipment used by the Company are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings
Main buildings	7-61 years
Mechanical and electrical facilities	8-21 years
Others	5-56 years
Machinery and equipment	3-18 years
Transportation equipment	4-8 years
Leasehold improvements	2-7 years
Other equipment	3-25 years

The amount of property, plant and equipment pledged as collateral for bank borrowings are set out in Note 25.

b. Assets leased under operating leases - 2019

Cost Land Buildings Accumulated depreciation Buildings	Beginning Balance Adjustments on Initial Application of IFRS 16 $ - $ 40,164 - 65,835 - $ 105,999 - $ 29,525 - $ -	Beginning Balance (Restated) $ 40,164 65,835 $ 105,999 29,525 $ 76,474	Additions $ - - $ - $ 1,178	Disposals $ - - $ - $ -	Ending Balance $ 40,164 65,835 $ 105,999 30,703 30,703 $ 75,296

Operating leases relate to lease of land and buildings with lease terms between 2019 and 2022. All operating lease contracts contain market review clauses in the event that the lessees exercise their options to extend. The lessees do not have bargain purchase options to acquire the assets at the expiry of the lease periods.

The maturity analysis of lease payments receivable under operating lease payments was as follows:

Year 1 Year 2 Year 3	December 31, 2019 $ 2,077 1,849 135
	$ 4,061

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c. 2018

2018
Cost Land Buildings Machinery and equipment Transportation equipment Leasehold improvements Other equipment Property under construction Accumulated depreciation Buildings Machinery and equipment Transportation equipment Leasehold improvements Other equipment Accumulated impairment Buildings			For the Year Ended December 31, 2018
		Beginning Balance $ 2,909,997 1,008,101 2,250,597 34,125 24,864 1,508,831 187,739 7,924,254 399,956 1,498,372 24,989 24,864 941,335 2,889,516 - $ 5,034,738	Additions $ - 4,303 24,998 2,212 - 28,529 99,591 $ 159,633 $ 41,006 200,118 3,111 - 192,368 $ 436,603 $ 2,600	Disposals Reclassified and Other Ending Balance $ (9,068) $ - $ 2,900,929 (9,783) 83,996 1,086,617 (53,934) 60,277 2,281,938 (747) 285 35,875 - - 24,864 (110,720) 37,133 1,463,773 - (156,458) 130,872 $ (184,252) $ 25,233 7,924,868 $ (7,847) $ - 433,115 (53,924) - 1,644,566 (747) - 27,353 - - 24,864 (110,554) - 1,023,149 $ (173,072) $ - 3,153,047 $ - $ - 2,600 $ 4,769,221

The above items of property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:

estimated useful lives as follows:
Buildings
Main buildings	7-61 years
Mechanical and electrical facilities	8-21 years
Others	5-56 years
Machinery and equipment	3-18 years
Transportation equipment	4-8 years
Leasehold improvements	2-7 years
Other equipment	3-25 years

Refer to Note 25 for the carrying amount of property, plant and equipment pledged by the Company to secure borrowings/general banking facilities granted to the Company.

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12. LEASE ARRANGEMENTS

• a. Right-of-use assets - 2019

b.	Carrying amounts Land Buildings Transportation equipment Additions to right-of-use assets Depreciation charge for right-of-use assets Land Buildings Transportation equipment Lease liabilities - 2019 Carrying amounts Current Non-current	December 31, 2019 $ 10,078 371 5,164 $ 15,613 For the Year Ended December 31, 2019 $ 15,240 $ 4,202 463 3,591 $ 8,256 December 31, 2019 $ 8,399 $ 7,366

Range of discount rate for lease liabilities was as follows:

	December	31,
	2019
Land	3.21%
Buildings	3.21%
Transportation equipment	3.21%

c. Other lease information

Lease arrangements under operating leases for leasing out investment properties and freehold property, plant and equipment are set out in Notes 11.

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2019

2019
	For the Year
		Ended
	December 31,
		2019
Expenses relating to short-term leases	$	25,490
Expenses relating to low-value asset leases	$	8
Expenses relating to variable lease payments not included in
measurement of lease liabilities	$	839
Total cash outflow for leases	$	(34,960)

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

2018

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

Not later than 1 year Later than 1 year and not later than 5 years	December 31, 2018 $ 17,329 15,101 $ 32,430

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

Minimum lease payments	For the Year Ended December 31, 2018 $ 33,267

13. NON-CURRENT ASSETS - OTHER

Land is restricted to agricultural use, is registered in the name of another person. However, the Company retains control over the land. The land being used as roads was also reclassified as other assets.

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14. BORROWINGS

a. Short-term borrowings

Loans for purchasing raw material Secured borrowings Unsecured borrowings Export billing loans Interest (%) Loans for purchasing raw material Secured borrowings Unsecured borrowings Export billing loans		**December 31 **	**December 31 **
		2019 $ 84,527 - 773,002 - $ 857,529 2.60-3.24 - 0.73-1.26 -	2018 $ 17,580 368,928 660,000 22,601 $ 1,069,109 3.30-4.23 1.36-3.75 0.73-1.26 2.81-3.02

• b. Short-term bills payable

Short-term bills payable were commercial paper due within one year. These instruments were issued with a range of annual interest rates of 0.990% in 2019.

c. Long-term borrowings

Long-term borrowings
Secured borrowings Unsecured borrowings Less: Current portion Long-term borrowings Interest rate (%) Secured borrowings Unsecured borrowings		December 31
		2019 $ - 1,747,203 1,747,203 (682,203) $ 1,065,000 - 1.30-1.55	2018 $ 300,000 1,665,245 1,965,245 (218,042) $ 1,747,203 1.30 1.36-1.57

15. OTHER PAYABLES

OTHER PAYABLES
Accrued salary and bonus Bonus for employees and remuneration of directors and supervisors Others		December 31
		2019 $ 322,047 50,506 358,289 $ 730,842	2018 $ 296,898 59,992 387,929 $ 744,819

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16. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

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 plans

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

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

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities		December 31	December 31
		2019 $ 588,592 (335,026) $ 253,566	2018 $ 580,308 (340,098) $ 240,210

Movements in net defined benefit liabilities were as follows:

Present Value of the Defined Benefit Obligation Fair Value of the Plan Assets Balance at January 1, 2018 $ 630,905 $ (325,862) Service cost Current service cost 9,074 - Past service cost and loss (gain) on settlements 6,221 (3,195) Recognized in profit or loss 15,295 (3,195) Remeasurement Return on plan assets (excluding amounts included in net interest) - (10,638) Actuarial loss - changes in demographic assumptions 194 - Actuarial gain - experience adjustments (13,507) - Recognized in other comprehensive income (13,313) (10,638)

Net Defined Benefit Liabilities (Assets) $ 305,043 9,074 3,026 12,100 (10,638) 194 (13,507) (23,951) (Continued)

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Present Value of the Defined Benefit Obligation Fair Value of the Plan Assets Contributions from the employer $ - $ (51,623) Benefits paid (52,579) 51,220 (52,579) (403) Balance at December 31, 2018 580,308 (340,098) Service cost Current service cost 7,471 - Past service cost and loss (gain) on settlements 5,733 (3,355) Recognized in profit or loss 13,204 (3,355) Remeasurement Return on plan assets (excluding amounts included in net interest) - (12,259) Actuarial loss - changes in demographic assumptions 184 - Actuarial loss - experience adjustments 4,593 - Actuarial loss - changes in financial assumptions 15,435 - Recognized in other comprehensive income 20,212 (12,259) Contributions from the employer - (4,271) Benefits paid (25,132) 24,957 (25,132) 20,686 Balance at December 31, 2019 $ 588,592 $ (335,026)

Net Defined Benefit Liabilities (Assets) $ (51,623) (1,359) (52,982) 240,210 7,471 2,378 9,849 (12,259) 184 4,593 15,435 7,953 (4,271) (175) (4,446) $ 253,566 (Concluded)

Through the defined benefit plans 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.

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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 rate(s) Expected rate(s) of salary increase Turnover rates(s)	**December 31 **
	2019 2018 0.75% 1% 3% 3% 0.46% 0.46%

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 rate(s) 0.25% increase 0.25% decrease Expected rate(s) of salary increase 0.25% increase 0.25% decrease Turnover rate 10% increase 10% decrease		December 31	December 31
		2019 $ (15,443) $ 16,023 $ 15,628 $ (15,147) $ (84) $ 85	2018 $ (15,890) $ 16,522 $ 16,155 $ (15,634) $ (136) $ 136

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 **	**December 31 **
		2019 $ 4,634 10 years	2018 $ 4,641 11 years

17. EQUITY

• a. Ordinary shares

Number of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Convertible bonds (in thousands) Shares issued		**December 31 **	**December 31 **
		2019 500,000 $ 5,000,000 420,492 - $ 4,204,926	2018 500,000 $ 5,000,000 420,492 5,499 $ 4,204,926

A holder of issued ordinary share with par value of NT$10 is entitled to vote and receive dividends.

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b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital Arising from conversion of bonds Arising from treasury share transactions Arising from the difference between consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition May only be used to offset a deficit Others		December 31	December 31
		2019 $ 394,097 51,819 3,430 943 $ 450,289	2018 $ 394,097 51,819 3,430 929 $ 450,275

• c. Retained earnings and dividend policy

Under the dividends policy as set forth in the amended Articles, where the Company made a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as a legal reserve 10% of the remaining profit, setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for the distribution of dividends and bonuses to shareholders.

The Articles also provide that, in line with the Company’s continuing growth, cash dividends payable may not be lower than 30% of the total dividends distributed. If total dividends to be distributed are under NT$100,000 thousand, the limitation can be waived.

The appropriation of earnings to a legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. The legal reserve may be used to offset a 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.

Items referred to under Rule No. 1010012865, Rule No. 1010047490 and Rule No. 1030006415 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.

The appropriation of earnings and dividends per share for 2018 and 2017 as approved in the shareholders’ meetings in June 2019 and 2018, respectively, was as follows:

Legal reserve Special reserve Cash dividends	Appropriation of Earnings For the Year Ended December 31 2018 2017 $ 72,695 $ 57,804 43,398 44,687 546,640 421,222	Dividends Per Share (NT$)
		For the Year Ended **December 31 **
		2018 2017 $ 1.3 $ 1

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The appropriation of earnings and dividends per share for 2019 was proposed by the Company’s board of directors in March 2020. The appropriation and dividends per share were as follows:

	Appropriation	Appropriation	Dividends Per
	of	Earnings	Share (NT$)
Legal reserve	$	61,818
Special reserve		43,200
Cash dividends		546,640	$ 1.3

The appropriation of earnings for 2019 is subject to resolution in the shareholders’ meeting to be held in June 2020.

18. REVENUE

REVENUE
Revenue from contracts with customers Revenue from sale of goods a. Contact balances Trade receivables (Note 8) Contract liabilities - current Sale of goods	For the Year Ended December 31
		2019 2018 $ 8,216,128 $ 9,091,555 December 31
		2019 $ 1,900,662 $ 4,312	2018 $ 2,359,178 $ 18,561

The changes in the contract liability balances primarily result from the timing difference between the Company’s performance and the customer’s payment.

• b. Disaggregation of revenue

Corp protection Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 7,758,095 458,033 $ 8,216,128	2018 $ 8,663,180 428,375 $ 9,091,555

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19. COMPREHENSIVE INCOME FOR THE YEAR

a. Other income

Rental income Interest income Dividends Others	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2019 $ 39,054 3,082 388 17,849 $ 60,373	2018 $ 37,584 1,795 1,163 15,575 $ 56,117

b. Other gains and losses

Gain on disposal of property, plant and equipment Net foreign exchange gain (loss) Valuation loss on financial assets at fair value through profit or loss Impairment loss Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 424 (14,260) - - (11,402) $ (25,238)	2018 $ 63,393 49,655 (1,938) (2,600) (6,001) $ 102,509

c. Finance costs

Interest on bank loans Interest on convertible bonds Interest on lease liabilities Other finance costs	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2019 $ 41,388 - 472 1,435 $ 43,295	2018 $ 54,108 466 - 1,672 $ 56,246

Information about capitalized interest was as follows:

Information about capitalized interest was as follows:
Capitalized interest Capitalization rate	**For the Year Ended December 31 **
	2019 2018 $ 2,013 $ 2,524 1.4392% 1.656%

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d. Depreciation

An analysis of depreciation 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 $ 314,795 68,336 $ 383,131	2018 $ 337,869 98,734 $ 436,603

e. Employee benefits expense

Employee benefits expense
	Operating		Operating
		Costs		Expenses		Total
For the year ended December 31, 2019
Salary and wages	$	283,725	$	648,146	$	931,871
Labor and health insurance costs		27,629		58,877		86,506
Post-employment benefits
Defined contribution plans		11,138		21,170		32,308
Defined benefit plans		3,382		6,467		9,849
Remuneration of directors		-		47,730		47,730
Other employee benefits		7,141		24,985		32,126
For the year ended December 31, 2018
Salary and wages		283,719		671,720		955,439
Labor and health insurance costs		27,083		56,691		83,774
Post-employment benefits
Defined contribution plans		11,026		20,199		31,225
Defined benefit plans		3,464		8,636		12,100
Remuneration of directors		-		51,513		51,513
Other employee benefits		7,157		24,699		31,856

For the years ended December 31, 2019 and 2018, the Company had average 1,379 and 1,383 employees, respectively, which included 7 and 6 non-employee directors, respectively. Average labor cost for the years ended December 31, 2019 and 2018 was 796 thousand and 809 thousand, respectively, average salary and bonus were 679 thousand and 694 thousand, respectively. The average salary and bonus decreased by 2% year over year.

• f. Employees’ compensation and remuneration of directors

The Company accrued employees’ compensation and remuneration of directors at the rates of 1% and no higher than 5%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors. The employees’ compensation and remuneration of directors for the years ended December 31, 2019 and 2018, which have been approved by the Company’s board of directors in March 2020 and 2019, respectively, were as follows:

Cash Employees’ compensation Remuneration of directors	**For the Year Ended December 31 **	**For the Year Ended December 31 **
	2019 Accrual Rate Amount 1% $ 8,418 5% 42,088	2018
		Accrual Rate Amount 1% $ 9,036 5% 45,178

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If there is a change in the amounts after the annual 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 employees’ compensation 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 employees’ compensation 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.

20. INCOME TAXES

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

Current tax In respect of the current year Income tax on unappropriated earnings Adjustments for prior years Deferred tax In respect of the current year Adjustments to deferred tax attributable to changes in tax rates and laws 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 $ 129,313 - (9,310) (3,596) - $ 116,407	2018 $ 119,820 1,187 10,310 (9,135) 211 $ 122,393

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

Income tax expense calculated at the statutory rate Nondeductible expenses in determining taxable income Tax-exempt income Income tax on unappropriated earnings Unrecognized loss deductible temporary differences 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 $ 158,252 89 (35,875) - 3,251 - (9,310) $ 116,407	2018 $ 169,870 318 (85,149) 1,187 25,646 211 10,310 $ 122,393

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%.

In July 2019, the President of the ROC announced the amendments to the Statute for Industrial Innovation, which stipulate that the amounts of unappropriated earnings in 2018 and thereafter that are reinvested in the construction or purchase of certain assets or technologies are allowed as deduction when computing the income tax on unappropriated earnings. The Company has already deducted the amount of capital expenditure from the unappropriated earnings in 2018 that was reinvested when calculating the tax on unappropriated earnings for the year ended December 31, 2019.

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As the status of the 2020 appropriation of earnings is uncertain, the potential income tax consequences of the 2019 unappropriated earnings are not reliably determinable.

• b. 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 Provisions for inventory write-downs Unrealized gross profit Defined benefit obligation Unrealized exchange loss Others Deferred Tax Liabilities Temporary differences Land appreciation tax Foreign investment income Others	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income $ 10,903 $ 1,229 $ - 10,644 (7,598) - 17,182 10,438 1,590 - 5,669 - 2,285 (1,346) - $ 41,014 $ 8,392 $ 1,590 $ 203,497 $ - $ - 37,093 7,226 - 2,430 (2,430) - $ 243,020 $ 4,796 $ -	Closing Balance $ 12,132 3,046 29,210 5,669 939 $ 50,996 $ 203,497 44,319 - $ 247,816

For the year ended December 31, 2018

Deferred Tax Assets Temporary differences Provisions for inventory write-downs Unrealized gross profit Defined benefit obligation Others	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income $ 8,996 $ 1,907 $ - 5,901 4,743 - 20,743 1,019 (4,580) 9,223 (6,938) - $ 44,863 $ 731 $ (4,580)	Closing Balance $ 10,903 10,644 17,182 2,285 $ 41,014

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For the year ended December 31, 2018

Deferred Tax Liabilities Temporary differences Land appreciation tax Foreign investment income Others	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income $ 205,637 $ (2,140) $ - 45,445 (8,352) - 131 2,299 - $ 251,213 $ (8,193) $ -	Closing Balance $ 203,497 37,093 2,430
		$ 243,020

c. Deductible temporary differences which no deferred tax assets have been recognized in the balance sheets

sheets
Deductible temporary differences		December 31
		2019 $ 169,446	2018 $ 162,367

• d. Income tax examinations

The tax returns of the Company through 2017 have been assessed by the tax authorities.

21. EARNINGS PER SHARE

For the year ended December 31, 2019 Basic EPS Net income available to ordinary shareholders of the parent Effect of potentially dilutive ordinary shares Employees’ compensation Diluted EPS Net income available to ordinary shareholders of the parent (including effect of potentially dilutive ordinary shares)	Number of Shares Amounts (Denominator) (Numerator) (In Thousands) EPS (NT$) $ 674,855 420,492 $ 1.60 - 558 $ 674,855 421,050 $ 1.60

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For the year ended December 31, 2018 Basic EPS Net income available to ordinary shareholders of the parent Effect of potentially dilutive ordinary shares Employees’ compensation Convertible bonds Diluted EPS Net income available to ordinary shareholders of the parent (including effect of potentially dilutive ordinary shares)	Number of Shares Amounts Denominator (Numerator) (In Thousands) EPS (NT$) $ 726,957 418,731 $ 1.74 - 636 373 - $ 727,330 419,367 $ 1.73

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

22. CAPITAL MANAGEMENT

The Company manages its capital to ensure that entities in the Company will be able to continue as going concerns while maximizing the return to shareholders through the optimization of the debt and equity balance.

The capital structure of the Company consists of net debt (borrowings offset by cash and cash equivalents) and equity of the Company (comprising share capital, capital surplus, retained earnings and other equity).

Key management personnel of the Company review the capital structure on a quarterly basis. As part of this review, the key management personnel consider the cost of capital and the risks associated with each class of capital. Based on recommendations of the key management personnel, in order to balance the overall capital structure, the Company may adjust the amount of dividends paid to shareholders, the number of new shares issued or repurchased, and the amount of new debt issued or existing debt redeemed.

23. FINANCIAL INSTRUMENTS

• a. Fair value of financial instruments measured at fair value on recurring basis

• 1) Fair value hierarchy

December 31, 2019 Financial assets measured at cost Shares not listed in the ROC	Level 1 $ -	Level 2 $ -	Level 3 $ 23,253	Total $ 23,253

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December 31, 2018 Financial assets measured at cost Shares not listed in the ROC	Level 1 $ -	Level 2 $ -	Level 3 $ 23,253	Total $ 23,253

There were no transfers between Level 1 and Level 2 in 2019 and 2018.

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

The fair values of unlisted equity securities in the ROC were determined using the income approach. In this approach, the discounted cash flow method was used to capture the present value of the expected future economic benefits to be derived from the ownership of these investees.

• b. Categories of financial instruments

Categories of financial instruments
Financial assets Financial assets at FVTPL Mandatorily classified as at FVTPL Financial assets at amortized cost (1) Financial liabilities Financial liabilities measured at amortized cost (2)	December 31
	2019 2018 $ 23,253 $ 23,253 2,505,954 2,762,971 4,120,335 4,681,553

• 1) The balances include financial assets measured at amortized cost, which comprise cash and cash equivalents, notes receivable, trade receivables, other receivables and refundable deposits.

• 2) The balances include financial liabilities measured at amortized cost, which comprise short-term and long-term borrowings, short-term bills payable, notes payable, trade payables (include related parties), other payables and guarantee deposits received.

• d. Financial risk management objectives and policies

The Company’s major financial instruments include trade receivables, trade payables, borrowings and lease liabilities. The Company’s Corporate Treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk and interest rate risk), credit risk and liquidity risk.

The Company sought to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives was governed by the Company’s policies approved by the Company’s board of directors. Compliance with policies and exposure limits was reviewed by the internal auditors on a continuous basis.

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1) Market risk

The Company’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.

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

a) Foreign currency risk

Several subsidiaries of the Company had foreign currency sales and purchases, which expose the Company to foreign currency risk.

The carrying amounts of the Company’s foreign currency-denominated monetary assets and monetary liabilities at the end of the reporting period are listed in Note 27.

Sensitivity analysis

For a 1% weakening of U.S. dollars against the functional currency, there would be opposite impact on pre-tax profit as follows:

impact on pre-tax profit as follows:
Functional Currency NTD	**For the Year Ended December 31 **
	2019 2018 $ 13,404 $ 13,418

This was mainly attributable to the exposure of outstanding receivables and payables denominated in USD, which were not hedged at the end of the reporting period. The above table details the Company’s sensitivity to a 1% increase and decrease in U.S. dollars against the relevant functional currencies. The sensitivity rate of 1% is 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.

In management’s opinion, the sensitivity analysis was unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period did not reflect the exposure during the period.

b) Interest rate risk

The Company is exposed to interest rate risk because entities in the Company deposit and borrow funds at both fixed and floating interest rates.

The carrying amount of the Company’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period was as follows.

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities	December 31 2019 2018 $ 45,846 $ 53,759 649,597 559,701 447,661 240,684 1,990,900 2,474,653

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Sensitivity analysis

For financial assets and liabilities, assuming all other variables were held constant, a hypothetical increase in interest rates of 25 basis point (0.25%) would have resulted in an increase in the interest expense before tax by approximately $4,722 thousand and $6,181 thousand for the years ended December 31, 2019 and 2018, respectively. A sensitivity rate of 0.25% increase or decrease was used when reporting interest rate risk internally to the directors and represents the directors’ assessment of the reasonably possible change in interest rates.

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 financial guarantees provided by the Company could arise from the carrying amount of the respective recognized financial assets as stated in the balance sheets.

The Company adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The company uses publicly available financial information and its own trading records to rate its major customers. The Company’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the risk management committee annually.

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 debt at the end of the reporting period to ensure that adequate allowances are made for irrecoverable amounts. In this regard, management believes the company’s credit risk was significantly reduced.

The Company did transactions with a large number of unrelated customers and, thus, no concentration of credit risk was observed.

Ongoing credit evaluation is performed on the financial condition of trade receivables and, where appropriate, credit guarantee insurance cover is purchased.

The Company’s concentration of credit risk by geographical location was in Brazil, which accounted for 51% and 47% of the total trade receivable as of December 31, 2019 and 2018, respectively.

3) Liquidity risk

Ultimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate liquidity risk management framework for the Company’s short-, medium- and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities and continuously monitoring forecasted and actual cash flows as well as matching the maturity profiles of financial assets and liabilities. As of December 31, 2019 and 2018, the Company had available unutilized short-term bank loan facilities in the amounts of $3,345,980 thousand and $3,075,860 thousand, respectively.

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

Non-derivative Financial Liabilities Less Than 3 Months 3 Months to 1 Year December 31, 2019 Non-interest bearing liabilities $ 1,421,080 $ - Lease liabilities 3,926 4,804 Variable interest rate liabilities 421,393 604,508 Fixed interest rate liabilities 135,076 398,756 $ 1,981,475 $ 1,008,068 December 31, 2018 Non-interest bearing liabilities $ 1,575,092 $ - Variable interest rate liabilities 574,084 453,366 Fixed interest rate liabilities 254,894 4,807 $ 2,404,070 $ 458,173 Additional information about the maturity analysis for lease liabilities: Less than 1 Year 1-5 Years 5-10 Years Lease liabilities $ 8,730 $ 7,510 $ -

1+Year $ - 7,510 965,000 100,000 $ 1,072,510 $ - 1,447,203 300,000 $ 1,747,203 10+ Years $ -

24. TRANSACTIONS WITH RELATED PARTIES

Besides information disclosed elsewhere in the other notes, details of transactions between the Corporation and other related parties are disclosed below.

• a. Related party names and categories

Related Party Names TFS Feng Nien Corporation (“Feng Nien”) Weightstone Vineyard Estate & Winery Co., Ltd. (“Weightstone”) Syntai Chemicals Hsing Wei Sinon Trading Yumei Yen	Related Party Categories Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary (Continued)

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Related Party Names Taiwan Agriculture and Food Health Testing Co., Ltd. (“TAFHT”) K&S Sinon Brazil Sinon Australia Sinon Thailand Sinon USA Zhongshan Sinon Daily Products Co., Ltd. (“Sinon Zhongshan”) Sinon Chemical (China) Co., Ltd. (“Sinon China”) Poise Packing Co., Ltd. (“Poise Packing”) Sinon Chemical (Nantong) Co. Ltd. (“Sinon Nantong”)	Related Party Categories
	Associate Associate Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary (Concluded)

• b. Sales

Related Party Category/Name Subsidiaries Sinon Brazil Others	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2019 $ 730,665 258,769 $ 989,434	2018 $ 1,170,145 122,890 $ 1,293,035

There was no material difference in sales prices and terms between related and third parties. The general credit term was T/T 180 to 270 days.

c. Purchases of goods

Related Party Category/Name Subsidiaries Sinon China Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 500,203 103,543 $ 603,746	2018 $ 1,426,506 61,965 $ 1,488,471

There was no significant difference between related and third parties.

The term on purchases of goods was 30-60 days after the transaction date.

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d. Receivables from related parties (excluding loans to related parties)

December 31 Related Party Category/Name 2019 2018 Subsidiaries Sinon Brazil $ 967,324 $ 1,123,709 Sinon Australia 99,403 97,536 Others 67,541 99,719 $ 1,134,268 $ 1,320,964 Payables to related parties (excluding loans from related parties) December 31 Related Party Categories 2019 2018 Subsidiaries $ 12,081 $ 44,292 Associates 262 632 $ 12,343 $ 44,924 Prepayments December 31 Related Party Categories 2019 2018 Associates $ 336 $ 168 Subsidiaries - 5 $ 336 $ 173 Acquisitions of property, plant and equipment Purchase Price For the Year Ended December 31 Related Party Categories 2019 Associates $ 595 $ 8,481 Disposals of property, plant and equipment Proceeds Gain (Loss) on Disposal For the Year Ended December 31 For the Year Ended December 31 Related Party Categories 2019 2018 2019 2018 Subsidiaries $ - $ 1,936 $ - $ -		December 31	December 31	December 31
		2019 2018 $ 967,324 $ 1,123,709 99,403 97,536 67,541 99,719 $ 1,134,268 $ 1,320,964 December 31
		2019 2018 $ 12,081 $ 44,292 262 632 $ 12,343 $ 44,924 December 31
		2019 2018 $ 336 $ 168 - 5 $ 336 $ 173 Purchase Price
	For the Year Ended December 31
		2019 $ 595 $ 8,481 Gain (Loss) on Disposal
			For the Year Ended December 31
			2019 $ -	2018 $ -

• e. Payables to related parties (excluding loans from related parties)

• f. Prepayments

• g. Acquisitions of property, plant and equipment

• h. Disposals of property, plant and equipment

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• i. Endorsements and guarantees

Endorsements and guarantees provided by the Company

Related Party Categories Subsidiaries j. Others 1) Manufacturing and operating expenses Subsidiaries Associates 2) Rental income Subsidiaries Associates 3) Other receivables Subsidiaries Associates 4) Other income Subsidiaries Associates		December 31	December 31
	2019 2018 $ 87,307 $ 586,409 **For the Year Ended December 31 **
		2019 2018 $ 91,008 $ 31,551 6,293 4,109 $ 97,301 $ 35,660 $ 34,315 $ 33,512 1,703 2,323 $ 36,018 $ 35,835 December 31
	2019 2018 $ 5,686 $ 7,779 189 844 $ 5,875 $ 8,623 For the Year Ended December 31
		2019 $ 5,363 - $ 5,363	2018 $ 2,565 55 $ 2,620

• k. Compensation of key management personnel

The Compensation to directors and other key management personnel were as follows:

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 $ 17,595 249 $ 17,844	2018 $ 22,206 303 $ 22,509

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The compensation to directors and other key management personnel were determined by the compensation committee having regard to the performance of individuals and market trends.

25. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral for securing commercial paper, performance guarantees, letters of credit and bank borrowings:

Property, plant and equipment Trade receivables Refundable deposits		December 31	December 31
		2019 $ - - 13,800 $ 13,800	2018 $ 670,884 391,529 13,800 $ 1,076,213

26. 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 and 2018 were as follows:

a. Significant commitments

As of December 31, 2019 and 2018, unused letters of credit for purchases of raw materials and machinery and equipment amounted to $24,590 thousand and $23,413 thousand, respectively.

• b. Unrecognized commitments

Acquisition of property, plant and equipment		December 31	December 31
		2019 $ -	2018 $ 7,115

27. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The following information was aggregated by the foreign currencies other than functional currencies of the Company and the exchange rates between foreign currencies and respective functional currencies were disclosed. The significant assets and liabilities denominated in foreign currencies were as follows:

Financial assets Monetary items USD (USD/NTD) AUD (AUD/NTD) GBP (GBP/NTD) JPY (JPY/NTD)	December 31, 2019 Foreign Currencies (In Thousands) Exchange Rate Carrying Amount $ 62,830 30.1060 $ 1,891,575 5,291 21.1123 111,703 878 39.8230 34,977 272,321 0.2770 75,433	December 31, 2018
		Foreign Currencies (In Thousands) Exchange Rate Carrying Amount $ 70,353 30.7330 $ 2,162,168 4,873 21.6406 105,461 2,662 39.1706 102,713 388,404 0.2803 108,870 (Continued)

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Investments accounted for using the equity method USD (USD/NTD) BRL (BRL/NTD) Financial liabilities Monetary items USD (USD/NTD) JPY (JPY/NTD) Investments accounted for using the equity method BRL (BRL/NTD)	December 31, 2019 Foreign Currencies (In Thousands) Exchange Rate Carrying Amount $ 48,339 30.1060 $ 1,455,295 - - - 18,308 30.1060 551,193 15,942 0.2770 4,416 5,918 7.4915 44,335	December 31, 2018
		Foreign Currencies (In Thousands) Exchange Rate Carrying Amount $ 47,742 30.7330 $ 1,467,252 1,948 7.9489 15,488 26,693 30.7330 820,363 44,000 0.2803 12,333 - - - (Concluded)

The significant realized and unrealized foreign exchange gains (losses) were as follows:

For the Year Ended December 31

Foreign Currencies USD	2019 Exchange Rate Net Foreign Exchange Gain (Loss) 30.1060 (USD:NTD) $ (15,760)	2018
		Exchange Rate Net Foreign Exchange Gain (Loss) 30.1886 (USD:NTD) $ 36,710

28. SEPARATELY DISCLOSED ITEMS

• a. Information about significant transactions and investees

• 1) Financing provided to others: Table 1

• 2) Endorsements/guarantees provided: Table 2

• 3) Marketable securities held: Table 3

• 4) Marketable securities acquired and disposed of at costs or prices at least NT$300 million or 20% of the paid-in capital: None

• 5) Acquisitions of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital: None

• 6) Disposals 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: Note 4

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• 8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 5

• 9) Trading in derivative instruments: Note 7

• 10) Information on investees: Table 6

• b. Information on investments in mainland China

• 1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area: Table 7

• 2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses:

  • a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period: Table 4

  • b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period: Table 4

  • c) The amount of property transactions and the amount of the resultant gains or losses: None

  • d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes: Table 2

  • e) The highest balance of the period, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds: Table 1

  • f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receiving of services: None

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TABLE 1

SINON CORPORATION AND SUBSIDIARIES

FINANCING PROVIDED TO RELATED PARTIES FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars and Renminbi)

No.	Lender	Borrower	Financial Statement Account	Related Parties	Highest Balance for the Period	Ending Balance	Actual Borrowing Amount	Range of Interest Rate (%)	Nature of Financing	Business Transaction Amount	Reasons for Short-term Financing	Allowance for Bad Debt	Collateral	Collateral	Financing Limits for Each Borrowing Company (Note 1)	Financing Company’s Total Financing Amount Limits (Note 2)
													Item	Value
1	Sinon China	Sinon Zhongshan Poise Packing Sinon Nantong	Other receivables Other receivables Other receivables	Yes Yes Yes	$ 18,389 (RMB 4,000) 55,166 (RMB 12,000) 91,944 (RMB 20,000)	$ 17,284 (RMB 4,000) 51,852 (RMB 12,000) - (RMB -)	$ 17,284 (RMB 4,000) 21,605 (RMB 5,000) - (RMB -)	6 5 -	Short-term financing Short-term financing Short-term financing	$ - - -	Operation Operation Operation	$ - - -	- - -	$ - - -	$ 248,446 (RMB 57,497) 248,446 (RMB 57,497) 248,446 (RMB 57,497)	$ 496,892 (RMB 114,995) 496,892 (RMB 114,995) 496,892 (RMB 114,995)

Note 1: The financing amount of the Company should not exceed 10% of the Company’s shareholders’ equity; that of subsidiaries should not exceed 50% of the subsidiaries’ shareholders’ equity.

Note 2: The financing amount of the Company should not exceed 20% of the Company’s shareholders’ equity; that of subsidiaries should not exceed 100% of the subsidiaries’ shareholders’ equity.

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TABLE 2

SINON CORPORATION AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Endorser/Guarantor	Endorsed/Guaranteed Party	Endorsed/Guaranteed Party	Limits on Endorsement/ Guarantee Given on Behalf of Each Party	Maximum Amount Endorsed/ Guaranteed During the Period	Outstanding Endorsement/ Guarantee at the End of the Period	Actual Borrowing Amount	Amount Endorsed/ Guaranteed by Collaterals	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Aggregate Endorsement/ Guarantee Limit (Note 2)	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China
		Name	Nature of Relationship (Note 1)
0	Sinon Corporation	Sinon China Yumei Yen	2. 1.	(Note 2) (Note 2)	$ 347,732 508,600	$ 331,166 500,530	$ 87,307 -	None None	4.71 7.12	$ 2,811,772 2,811,772	Yes Yes	No No	Yes No

Note 1: The relationship between guarantor and guaranteed party:

1. Subsidiary which is directly held over 50% of the issued share capital. 2. Companies that directly or indirectly hold more than 50% of the issued share capital.

Note 2: Domestic subsidiary is based on 20% of issued capital of the guarantor; overseas subsidiary is based on 30% of issued capital of the guarantor; total guarantee is based on 40% of issued capital of guarantor.

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TABLE 3

SINON CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD DECEMBER 31, 2019

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

Holding Company	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		December 31, 2012	December 31, 2012		Note
				Number of Shares	Carrying Amount	Percentage of Ownership (%)	Market Value or Net Asset Value
Sinon Corporation	Ordinary shares TGCC	The Corporation is the director of TGCC	Financial assets measured at FVTPL - non-current	1,937,792	$ 23,253	9.9	$ 23,253

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TABLE 4

SINON CORPORATION AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2019

(In Thousands of New Taiwan Dollars)

Purchaser or Seller	Related Party	Nature of the Relationship		Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase/Sale	Amount	% of Total	Payment/Collection Terms	Unit Price	Collection Terms	Ending Balance	% of Total
Sinon Corporation	Sinon China Syntai Chemicals Sinon Brazil	Subsidiary Subsidiary Subsidiary	Purchase Purchase Sale	$ 500,203 100,368 (730,665)	13 3 (9)	30-60 days after the transaction date 30-60 days after the transaction date T/T 180-270 days after the transaction date	$ - - -	- - -	$ (820) (10,243) 967,324	- (1) 51

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TABLE 5

SINON CORPORATION AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF PAID-IN CAPITAL DECEMBER 31, 2019

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

Company Name	Related Party	Nature of the Relationship	Ending Balance	Turnover Rate	Overdue	Overdue	Amounts Received in Subsequent Period	Allowance for Doubtful Accounts
					Amount	Action Taken
Sinon Corporation	Sinon Brazil	Subsidiary	$ 967,324	0.70	$ -	-	$ 13,656	$ -

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TABLE 6

SINON CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars and U.S. Dollars)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	As of December 31, 2019	As of December 31, 2019	As of December 31, 2019	Net Income (Loss) of the Investee	Share of Profit (Loss) (Note)	Note
				December 31, 2019	December 31, 2018	Number of Shares	Percentage of Ownership (%)	Carrying Amount
Sinon Corporation TFS Feng Nien Yumei Yen Sinon Cayman K&S	Sinon Cayman Yumei Yen Sinon Brazil Syntai Chemicals Hsing Wei TFS K&S Sinon Australia Sinon Thailand Sinon Indonesia Sinon USA Sinon Germany Sinon Trading Feng Nien Weightstone TAFHT Sinon Hong Kong K3 Systems Sdn. Bhd.	British Cayman Islands Taichung, ROC Alegre, Brazil Taichung, ROC Taichung, ROC Taichung, ROC Taichung, ROC Sydney, Australia Bangkok, Thailand Jakarta, Indonesia California, USA Hamburger, Germany Taichung, ROC Taichung, ROC Taichung, ROC Taichung, ROC Wanchai, Hong Kong Malaysia	Holding company Houseware, catering services and retail of agricultural products Manufacture and import and export of medical and chemical products Pharmaceuticals Manufacture and sale of cement Supermarket Design and sale of software Import and export of chemical products Import and export of chemical products Import and export of chemical products Import and export of chemical products Import and export of chemical products Trading Supermarket Food and special crops; Retail sale of tobacco and alcoholic drinks Inspection of environment and medication Holding company Software design and information security maintenance	$ 1,394,195 400,167 510,379 269,095 25,609 264,793 18,086 174,548 17,109 106,555 1,689 1,049 1,001 47,271 30,000 - 1,178,975 (US$ 37,980) 2,856	$ 1,394,195 400,167 510,379 269,095 25,609 264,793 18,086 174,548 17,109 106,555 1,689 1,049 1,001 47,271 30,000 304 1,167,239 (US$ 37,980) 2,856	44,280,000 20,030,000 32,316,471 33,000,000 33,000,000 26,379,500 1,951,900 6,100,000 20,000 3,500,000 50,000 25,000 100,000 1,420,000 1,200,000 - - 337,500	100 100 100 100 100 88 49 100 100 100 100 100 100 100 100 - 100 45	$ 1,454,713 482,669 (58,251) 275,625 436,427 334,540 37,489 (69,745) (6,651) 45 582 1,195 914 24,639 31,903 - 1,372,414 ( US$ 45,554) 4,241	$ 35,979 70,974 (61,681) 10,368 29,642 42,708 8,833 (40,528) (1,003) (686) (57) 153 104 6,085 834 (308) 36,081 ( US$ 1,167) 1,178	$ 35,979 71,402 (61,681) 10,368 30,210 44,014 4,310 (40,528) (1,003) (686) (57) 153 104 6,085 834 (93) 36,081 ( US$ 1,167) 530	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Investments accounted for using the equity method Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Indirectly owned subsidiary Indirectly owned subsidiary Investments accounted for using the equity method Indirectly owned subsidiary Investments accounted for using the equity method

Note: The equity-method investees’ financial statements, which were used to determine the carrying amount of the Company’s investments, have been audited, except those of Sinon Indonesia, Sinon Thailand, Sinon Germany, Sinon Trading, Feng Nien, Weightstone, K3 Systems Sdn. Bhd. and TAFHT. The Company believes that, had those companies’ financial statements been audited, any adjustments would have no material effect on the Company’s financial statements.

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TABLE 7

SINON CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, U.S. Dollars and Renminbi)

Investee Company	Main Businesses and Products	Paid-in Capital	Paid-in Capital	Method of Investment	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2018	Remittance of Funds	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2019	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss) (Note 1)	Carrying Amount as of December 31, 2019	Accumulated Repatriation of Investment Income as of December 31, 2019
						Outward	Inward
Sinon Zhongshan Sinon China Poise Packing Sinon Nantong Synjia Zhongshan (Note 2)	Manufacture and sale of grocery, pesticide and plastics Manufacture and sale of various chemicals Import and export of plastic products Manufacture and sale of various chemicals Manufacture and sale of grocery, pesticide and plastics	$ 113,083 (US$ 3,700) (Note 2) 271,113 (US$ 8,000) 50,426 (RMB 11,000) 1,216,938 (RMB 255,000) - (US$ -)		The investment was made through a subsidiary incorporated in a third area which in turn makes direct investments in companies in mainland China The investment was made through a subsidiary incorporated in a third area which in turn makes direct investments in companies in mainland China The investment was made by the subsidiary located in mainland China directly The investment was made through a subsidiary incorporated in a third area which in turn makes direct investments in companies in mainland China The investment was made through a subsidiary incorporated in a third area which in turn makes direct investments in companies in mainland China	$ 25,364 (US$ 700) (Note 2) 271,113 (US$ 8,000) - 923,714 (US$ 29,980) 79,990 (US$ 2,700)	$ - - - - -	$	- - - - -	$ 25,364 (US$ 700) (Note 2) 271,113 (US$ 8,000) - 923,714 (US$ 29,980) 79,990 (US$ 2,700)	$ (23,449) 117,507 16,251 (62,664) 5,138	100% (Note 3) 100% 100% 100% -	$ (23,449) 117,057 16,251 (62,664) 5,138	$ (15,365) 497,347 65,630 889,478 -	$ - - - -
Investor Company			Accumulated Outward Remittance for Investment in Mainland China as of December 31 31, 2019		Investment Amounts Authorized by Investment Commission, MOEA			Upper Limited on the Amount of Investment Stipulated by Investment Commission, MOEA
The Company			$ 1,300,181		US$ 41,380			No limit (Note 4)

Note 1: The Company recognized its investment gain (loss) based on the audited financial statements as of and for the year ended December 31, 2019.

Note 2: Synjia Zhongshan was merged with Sinon Zhongshan in September 2019. Refer to Note 10.

Note 3: The ownership of Sinon Cayman and Sinon China was 92% and 8%, respectively.

Note 4: According to the “Regulations for Screening of Application to Engage in Technical Cooperation in Mainland China” issued by the Investment Commission of the Ministry of Economic Affairs on August 29, 2008, there is no limit on the investment in mainland China since Sinon Corporation acquired the approval from the Industrial Development Bureau the establishment of the Company’s operating headquarters in Taiwan.

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THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

ITEM STATEMENT INDEX

MAJOR ACCOUNTING ITEMS IN ASSETS, LIABILITIES AND
EQUITY
STATEMENT OF CASH	1
STATEMENT OF NOTES RECEIVABLE	2
STATEMENT OF TRADE RECEIVABLES	3
STATEMENT OF INVENTORIES	4
STATEMENT OF PREPAYMENTS	5
STATEMENT OF CHANGES IN INVESTMENTS	6
ACCOUNTED FOR USING THE EQUITY METHOD
STATEMENT OF CHANGES IN PROPERTY, PLANT AND	Note 11
EQUIPMENT
STATEMENT OF DEFERRED TAX ASSETS (LIABILITIES)	Note 20
STATEMENT OF OTHER NON-CURRENT ASSETS	Note 13
STATEMENT OF SHORT-TERM BORROWINGS	Note 14
STATEMENT OF TRADE PAYABLES	7
STATEMENT OF OTHER PAYABLES	Note 15
STATEMENT OF LONG-TERM BORROWINGS	8
MAJOR ACCOUNTING ITEMS IN PROFIT OR LOSS
STATEMENT OF OPERATING REVENUE	9
STATEMENT OF OPERATING COSTS	10
STATEMENT OF OPERATING EXPENSES	11
STATEMENT OF OTHER REVENUE AND EXPENSE	Note 19
SUMMARY STATEMENT OF CURRENT PERIOD	Note 19
EMPLOYEE BENEFITS EXPENSES, DEPRECIATION
AND AMORTIZATION EXPENSES BY FUNCTION

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STATEMENT 1

SINON CORPORATION

STATEMENT OF CASH DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Item Foreign Currency Exchange Rate Cash in banks Checking accounts Demand deposits Foreign currency deposits AUD 96 21.1123 USD 10,293 30.1060 JPY 78,050 0.2770 GBP 43 39.8230 EUR 39 33.7527 CNY 2,867 4.3210 Cash on hand	Amount $ 45,846 98,712 2,028 309,883 21,620 1,717 1,311 12,390 493,507 2,556 $ 496,063

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STATEMENT 2

SINON CORPORATION

STATEMENT OF NOTES RECEIVABLE DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Client Name Non-related parties IBL Pharmaceutical Co., Ltd. Nice Enterprise Co., Ltd. Fulon Chemical Industrial Co., Ltd. Iwantchem Co., Ltd. Shen Hsinan Tang Co., Ltd. HongHeng Industrial Co., Ltd. Chia Yi Chemical Industry Co., Ltd. Lvlin Biotech Co., Ltd. Others (Note)	Amount $ 3,773 2,124 1,675 1,674 1,629 1,440 1,372 1,324 10,869 $ 25,880

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

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STATEMENT 3

SINON CORPORATION

STATEMENT OF TRADE RECEIVABLES DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Client Name Non-related parties ADAMA BRASIL S/A SDS Biotech k.k. Bayer Health Care DUPONT DO BRASIL S.A. KAKEN PHAMACEUTICAL Co., Ltd. EI DU PONT DE NEMOURS AND COMPANY Others (Note) Less: Allowance for impairment loss	Amount $ 59,017 38,842 49,177 63,295 47,210 43,955 466,691 768,187 (1,793) $ 766,394

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

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STATEMENT 4

SINON CORPORATION

STATEMENT OF INVENTORIES DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Item Merchandise Finished goods Work in process Raw materials and supplies Inventory in transit		Amount
		Cost Market Price (Note 1) $ 131,294 $ 194,063 295,289 556,691 336,412 431,237 457,607 504,460 11,472 11,472 $ 1,232,074 $ 1,697,923

Note 1: Net realizable value is used in the valuation of inventories.

Note 2: Inventories have not been provided as a collateral.

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STATEMENT 5

SINON CORPORATION

STATEMENT OF PREPAYMENTS DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Item Prepayment for purchases Prepaid expenses	Amount $ 153,204 31,494 $ 184,698

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TABLE 6

SINON CORPORATION

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Investees Investment in subsidiaries Sinon Cayman Yumei Yen Hsing Wei TFS Syntai Chemicals Sinon Germany Sinon Trading Sinon USA Sinon Indonesia Sinon Thailand Sinon Brazil Sinon Australia Investment in associates K&S Add: Investments accounted for using the equity method-credit balance	Balance, January 1, 2019	Amount $ 1,466,601 470,075 409,438 360,651 273,451 1,088 810 651 698 (8,027 ) (34,374 ) (30,637) 2,910,425 35,151 2,945,576 73,038 $ 3,018,614	Additions in Investments Shares Amount - $ - - - 19,200,0000 - - - - - - - - - - - - - - - - - - - - - - - - $ -	Exchange Differences on Translating the Financial Statements of Foreign Operations Share of Profit (Loss) of Subsidiaries and Associates Decrease in Investments (Note 1) Shares Amount - $ - $ 35,979 $ (47,867 ) - 58,739 71,402 - - 2,396 30,210 - - 21,104 44,014 - - 8,161 10,368 - - - 153 (45 ) - - 104 - - - (57 ) (12 ) - - (686 ) 33 - - (1,003 ) (283 ) - - (61,681 ) 1,858 - - (40,528) 1,462 90,400 88,275 (44,854 ) - 3,513 4,310 (23) 93,913 92,585 (44,877 ) - - - $ 93,913 $ 92,585 $ (44,877)	Others Realized (Unrealized) (Note 2) Gain on Sale $ - $ - (69 ) - (825 ) - (49,021 ) - (33 ) - (1 ) - - - - - - - (105 ) 2,767 - 35,946 (42) - (50,096 ) 38,713 1,564 - (48,532 ) 38,713 61,609 - $ 13,077 $ 38,713	Balance, December 31, 2019 Shares Ownership % Amount 44,280,000 100 $ 1,454,713 20,030,000 100 482,669 33,000,000 100 436,427 26,379,500 88 334,540 33,000,000 100 275,625 25,000 100 1,195 100,000 100 914 50,000 100 582 3,500,000 100 45 20,000 100 (6,651 ) 32,316,471 100 (58,251 ) 6,100,000 100 (69,745) 2,852,063 1,951,900 49 37,489 2,889,552 134,647 $ 3,024,199	Net Assets Value $ 1,454,713 482,241 435,859 344,329 378,886 1,195 914 582 45 (5,338 ) (44,335 ) (69,745) 2,979,346 37,489 3,016,835 - $ 3,016,835
	Shares Ownership % 44,280,000 100 20,030,000 100 13,800,000 100 26,379,500 88 33,000,000 100 25,000 100 100,000 100 50,000 100 3,500,000 100 20,000 100 32,316,471 100 6,100,000 100 1,951,900 49		Shares - - 19,200,0000 - - - - - - - - - -	Shares - - - - - - - - - - - - -		Shares Ownership % 44,280,000 100 20,030,000 100 33,000,000 100 26,379,500 88 33,000,000 100 25,000 100 100,000 100 50,000 100 3,500,000 100 20,000 100 32,316,471 100 6,100,000 100 1,951,900 49

Note 1: The reasons for the decrease in investments are due to the investee’s return of capital to its shareholders, the Company received cash dividends and disposal of interests in subsidiary.

Note 2: The Company recognized the investee’s retrospective application and retrospective restatement, unrealized gain and loss on financial assets, and the remeasurement of the defined benefit plans based on the share of equity of investees attributable to the Company.

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STATEMENT 7

SINON CORPORATION

STATEMENT OF TRADE PAYABLES DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Vendor Name Non-related parties NANJING RED SUN CO., LTD. SDS BIOTECH K.K. ANHUI DONGZHI GUANGXIN AGROCHEMICAL CO., LTD. Others (Note)	Amount $ 47,747 62,620 46,534 513,994 $ 670,895

Note: The amount to each individual vendor in others does not exceed 5% of the account balance.

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STATEMENT 8

SINON CORPORATION

STATEMENT OF LONG-TERM BORROWINGS DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Borrowing Types and Banks Maturity Date Repayment Method Interest Rates (%) Unsecured borrowings KGI Commercial Bank 2019.08-2020.08 Starting from August 2019, interest is paid once a month, monthly interest rate is based on TAIBOR+0.85%, principal is paid in full upon maturity. (Note) Mizuho Bank 2017.11-2020.11 From November 2017 to May 2018, monthly interest rate is based on TAIBOR+0.7%; From May 2018 to November 2020, interest rate will be a fixed rate of 1.55%, principal is paid in full upon maturity. (Note) HSBC Bank 2018.08-2021.08 Starting from August 2018, interest is paid once a month, interest rate is based on COST+1% and is subject to daily changes, interest can be repaid in full prior to maturity, borrowings can be used as revolving credit prior to maturity. (Note) Mega International Commercial Bank 2018.09-2021.08 Starting from September 2018, interest is paid on the 25thday of each month, interest rate is flexible, the order will be changed every 180 days, borrowings can be used as revolving credit. (Note) Hua Nan Commercial Bank 2018.09-2023.09 Starting from September 2018, interest is paid once a month, interest rate is deposit interest rate index+0.37, the order does not require to be changed, average amortization principal amount of NT$15 million will be paid off quarterly. (Note) O-Bank 2013.08-2020.03 Starting from August 2013, each month is one period and there are 44 periods in total, interest and principal will be amortized on average and will be paid on each period. (Note) 2014.06-2020.06 Starting from June 2017, principal will be paid with quarterly, with 13 periods in total, interest is calculated monthly. (Note) 2019.10-2021.06 Starting from October 2019, interest is paid once a month, monthly interest rate is based on TAIBOR+0.75%, principal is paid in full upon maturity. (Note) Yuanta Commercial Bank 2019.01-2021.12 Starting from January 2019, interest is paid once a month, interest rate is deposit interest rate index+0.93%, the order can be changed every month or quarterly, interest can be repaid in full prior to maturity. (Note) Taishin International Bank 2018.08-2020.08 Starting from August 2018, interest is paid once a month, interest is negotiated every term, the order can be changed every month or quarterly, interest can be repaid prior to maturity, borrowing cannot be used as revolving credit prior to the maturity date. (Note)

Total $ 300,000 300,000 150,000 250,000 225,000 6,818 15,385 100,000 100,000 300,000

$ 1,747,203

Note: The annual interest rate is between 1.30% and 1.55%.

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STATEMENT 9

SINON CORPORATION

STATEMENT OF OPERATING REVENUE FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Item Corp protection Other Gross sales Less: Sales returns Sales discounts and allowances Net sales	Amount $ 7,974,942 459,422 8,434,364 (6,269) (211,967) $ 8,216,128

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STATEMENT 10

SINON CORPORATION

STATEMENT OF OPERATING COSTS FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Item Raw material and supplies, beginning of year Raw material and supplies purchased Raw material and supplies, end of year Sale of raw material and supplies Other adjustments Raw material and supplies used Direct labor Manufacturing expenses Manufacturing cost Work in process, beginning of year Work in process purchased Inter-department transfer in Work in process, end of year Other adjustments Cost of finished goods Finished goods, beginning of year Finished goods purchased Finished goods, end of year Inter-department transfer out Other adjustments Cost of finished goods Merchandise, beginning of year Merchandise purchased Merchandise, end of year Other adjustments Cost of merchandise Add: Sales of raw material and supplies Write-downs of inventories Cost of operating costs

Amount $ 562,728 2,965,027 (497,459) (172,034) (38,922) $ 2,819,340 234,583 940,282 3,994,205 286,230 1,508 7,694 (356,152) 33,424 3,966,909 272,641 668 (297,617) (7,694) (5,027) 3,929,880 271,662 785,692 (141,506) 1,251,837 6,097,565 172,034 6,142 $ 6,275,741

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STATEMENT 11

SINON CORPORATION

STATEMENT OF OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Item Payroll and annual bonus Advertisement Shipping expense Travel expense Insurance expense Fuels/oils expense Depreciation expense Rent expense Others Total	Selling and Marketing Expenses General and Administrative Expenses $ 602,699 $ 69,648 30,646 57 100,811 - 44,325 2,137 64,304 4,537 44,267 322 15,513 36,155 18,340 841 86,039 46,655 $ 1,006,944 $ 160,352	Research and Development Expenses $ 51,167 - 5 797 6,731 191 16,668 213 29,195 $ 104,967	Total $ 723,514 30,703 100,816 47,259 75,572 44,780 68,336 19,394 161,889 $ 1,272,263

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No. 101, Nanrong Rd., Dadu Dist., Taichung City 43245, Taiwan (R.O.C.) TEL: 886-4-2693-3841 www.sinon.com.tw

- SINON CORPORATION Horng, Po Yen

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