SUNKO - Annual Report 2021 | FinancialReports.eu

Stock Code: 1721

SUNKO INK CO., LTD

2020 Annual Report

Taiwan Stock Exchange Market Observation Post System: http://mops.twse.com.tw 2020 Annual report is available at MOPS: http://mops.twse.com.tw Printed on 18 May 2021.

I. Spokesperson and Deputy spokesperson Spokesperson: SU, YOU-JUN

Title: Executive Assistant Tel: (04) 2321-5616 ext. 305 E-mail: [email protected]

Deputy spokesperson: HUNG, TING-YI

Title: Manager, Managing Department Tel: (04) 2321-5616 ext. 302 E-mail: [email protected]

II. Corporate Headquarters, Branches and Plants

Corporate Headquarter: 5F, No. 229, Zhongxing St., West Dist., Taichung, Taiwan Tel: +886-4-2321-5616 Dali Plant: No. 158, Renmei Rd., Dali Dist., Taichung, Taiwan Tel: +886-4-2495-2389 Pingjhen Plant: No. 62, Ln. 246, Sec. 1, Kuaisu Rd., Pingzhen Dist., Taoyuan, Taiwan

Tel: +886-3-450-1643

Dajia Plant: No. 140, Qingnian Rd., Youth Industrial Park, Dajia Dist., Taichung, Taiwan

Tel: +886-4-2681-9092

Chuangsing Plant: No. 5, Gong 1st Rd., Hemei Township, Changhua County, Taiwan

Tel: +886-47-977-858

Nan’gang Plant: No. 16, Gongye N. Rd., Nan’gang Industrial Park, Nantou City, Nantou County, Taiwan

Tel: +886-49-225-9946

Industrial Park Branch: 4F., No. 16, Kedong 3rd Rd., Zhunan Township, Miaoli County, Taiwan Tel: +886-37-586-352

III. Stock Transfer Agent

Company: SinoPac Securities Limited

Address: 3F, No. 17, Bo’ai Rd., Zhongzheng Dist., Taipei, Taiwan Website: http://www.sinopacsecurities.com

Tel: +886-2-2381-6288

IV. CPA of the most recent financial report

Accountant: TU, CHIN-YUAN and YEN, WEN-PI Accounting Firm: Ernst & Young Address: 7F, No. 239, Minquan Rd., Taichung, Taiwan Website: http://www.ey.com/tw/zh_tw Tel: +886-4-2305-5500 V. Name of overseas exchange where securities are listed, and the methods for inquiring the foreign-listed securities: None.

VI. Corporate Website http://www.sunko.com.tw

SUNKO INK CO., LTD

I.	LETTER TOSHAREHOLDERS................................................................................................................... 4	LETTER TOSHAREHOLDERS................................................................................................................... 4
	1	The 2020 Business Report ................................................................................................................. 4
	2	Overview of 2020 Operation Plan ..................................................................................................... 6
	3	Overview of Technology and R&D ................................................................................................... 8
	4	Estimated product sales of 2021 ........................................................................................................ 9
	5	The Impact from the external competition, regulatory environment, and business operation .......... 9
II.	COMPANYPROFILE................................................................................................................................ 11
	1	Date of Incorporation ....................................................................................................................... 11
	2	Company History ............................................................................................................................. 11
III.	CORPORATEGOVERNANCEREPORT.................................................................................................... 12
	1	Organization ..................................................................................................................................... 12
	2	Directors, Supervisors and Management Team ............................................................................... 14
	3	Remuneration to Directors, General Manager and Deputy General Manager in 2020 ................... 18
	4	Implementation of Corporate governance ....................................................................................... 23
	5	Information on CPA Professional Fees ............................................................................................ 45
	6	Information of Changing CPAs: None. ............................................................................................ 46
	7	The Chairman, President and Financial or Accounting Manager of the Company who has, in the
	most recent year, held a position at the accounting firm of its CPA or at an affiliated company: None. 46
	8	Equity transfer or changes in equity pledged by the Company's Directors, Supervisors, managerial
	officers or shareholders with shareholding percentage exceeding 10% in the most recent fiscal year up to
	the publication date of this Annual Report: ............................................................................................. 47
	9	Information of the shareholder whose shareholding ratio ranks top 10, mutual relation of related
	person or spouse, a relative within the second degree of kinship of another: ......................................... 48
	10	Number of shares hold for the same reinvestment business by the company’s directors, supervisors,
	manager and the company's directly or indirectly controlled business, and combined calculation of the
	comprehensive shareholding ratio: .......................................................................................................... 49
IV.	CAPITALOVERVIEW.............................................................................................................................. 50
	1	Source of Capital.............................................................................................................................. 50
	2	Shareholder structure ....................................................................................................................... 52
	3	Shareholding Distribution Status ..................................................................................................... 52
	4	List of Major shareholders: .............................................................................................................. 52
	5	Share prices, net value, earnings, dividends, and other relevant information in the past two years 53
	6	Dividend policy and implementation status ..................................................................................... 53
	7	The impacts of issuing stock grants in this shareholder’s meeting on the Company’s operational
	performance and earnings per share: None. ............................................................................................. 54

	8	Employee compensation and directors’ and supervisors’ remuneration .......................................... 54
	9	Company Share Repurchase Status ................................................................................................. 55
	10	Status of Corporate Bonds: None. ................................................................................................... 55
	11	Status of Preferred Stocks: None. .................................................................................................... 55
	12	Status of Global Depositary Receipts: None. .................................................................................. 55
	13	Status of Employee Stock Options: None. ....................................................................................... 55
	14	Restriction on new employee shares: Hone. .................................................................................... 55
	15	Status of New Shares Issuance in Connection with Mergers and Acquisitions: None. ................... 55
	16	Financing Plans and Implementation: None. ................................................................................... 55
V.	OPERATIONHIGHLIGHTS...................................................................................................................... 56
	1	Business Activities ........................................................................................................................... 56
	2	Market and Sales Overview ............................................................................................................. 61
	3	Employee Information ..................................................................................................................... 66
	4	Expenditures on Environmental Protection ..................................................................................... 67
	5	Labor relations ................................................................................................................................. 68
	6	Important contracts: None. ............................................................................................................... 69
VI.	FINANCIALINFORMATION..................................................................................................................... 70
	1	Condensed Balance Sheet, Income Statement, Names of the CPAs and their audit opinions ......... 70
	2	Financial analysis for the recent five years ...................................................................................... 74
	3	Audit Committee’s Review Report for the recent years .................................................................. 78
	4	Consolidated Financial Statements of the Most Recent Year with Independent Auditors’ Report
	with Independent Auditors’ Report .......................................................................................................... 79
	5	Parent Only Financial Statements of the Most Recent Year with Independent Auditors’ Report.. 178
	6	Impact on the Company's financial status due to financial difficulties experienced by the Company
	and its affiliate companies in the most recent year and as of the publication date of this Annual Report:
	None. ...................................................................................................................................................... 271
VII.	REVIEW ANDANALYSIS ONFINANCIALSTATUS, FINANCIALPERFORMANCE, ANDRISKS............ 271
	1	Analysis of Financial Status........................................................................................................... 271
	2	Analysis of Financial Performance ................................................................................................ 273
	3	Analysis of Cash Flow ................................................................................................................... 275
	4	Major Capital Expenditures and Impact on Financial and Business during recent years:............. 275
	5	Reinvestment policies, main reasons for profits/ losses generated thereby, improvement plans, and
	investment plans for the coming year: ................................................................................................... 276
	6	Risk Assessment............................................................................................................................. 276
	7	Other Material Matters: None. ....................................................................................................... 278
VIII.		SPECIALNOTES............................................................................................................................ 279
	1	Summary of Affiliated Companies ................................................................................................ 279
	2	Private Placement of Securities in 2020 and as of the Date of this Annual Report: None ............ 280
	3	Holding or disposal of the Company's shares by the subsidiaries of the most recent year as of the
	publication date of this Annual Report: None........................................................................................ 280

4 Other necessary supplementary matters to be included: None. ..................................................... 280 IX. ANY EVENTS IN 2020 AND AS OF THE PUBLICATION DATE OF THIS ANNUAL REPORT THAT HAD MATERIAL IMPACTS ON SHAREHOLDERS’ INTERESTS OR SECURITIES PRICES AS STATED IN ARTICLE 36-2-2 OF SECURITIES AND EXCHANGE LAW OF TAIWAN: NONE. ........................................................... 280

1 The 2020 Business Report

I. LETTER TO SHAREHOLDERS

Both the Parent Only Revenue and Consolidated Revenue amounted to $2,752,601 thousand. The Company’s consolidated after-tax earnings was $524,306 thousand, of which $524,404 thousand was attributed to shareholders of the parent company. After tax, the consolidated basic and diluted EPS were, respectively, $2.43 and $2.42.

The decrease of 15% in consolidated operating revenue between 2020 and 2019 was $491,367 thousand, was mainly triggered by the following two factors:

(1) The COVID-19 pandemic led to a drop in market demand in the first half of 2020. Not until the second half of 2020 did the business activities gradually return to normal.
(2) The US currency devalued as the Federal Reserve engaged in “Quantitative Easing” policy to overcome the COVID-19 hardships. A relative devaluation on US dollar led to the decline in foreign exchange value.

Besides, expected order transferring from China didn’t occur, due to China’s quick recovery from the COVID-19 pandemic. Price competition from China is still existing.

The operating profitability this year dropped due to the decrease in revenues, decline in production capacity utilization, and the devaluation of exchange rate with US currency. Meanwhile, operating expense increased in 2020 compared to 2019 mainly because of recording total expenditures of $105 million for pollution remediation based on the “Enhancement of soil and groundwater remediation” projects in Pingjhen and Dali factories, and the compensation distribution to directors (0.8%) and employees (3%). An operating result was concluded at operating loss in the amount of $243,755 thousand. In combining the gains from sales of a property (land in Taiping factory and Taiping factory II worth $740 million), the overall after-tax earnings was $524,306 thousand.

The table below shows our implementation results of 2020, compared with the data from 2019:

1.1 Implementation Results of Operation Plan

Unit: NT$ (in thousands)

Implementation Results of Operation Plan	Unit: NT$(in thousands)	Unit: NT$(in thousands)
Item 2020 2019	Increase (Decrease)
	Difference	Rate
Operating Revenue (net) 2,752,601 3,243,968 Operating Costs 2,613,246 2,961,831 Operating Profit 139,355 282,137 Operating Expense 383,110 264,814 Operating Gains (Losses) (243,755) 17,323 Other profits and losses (net) 727,049 (26,408) Pre-tax Earnings (losses) 483,294 (9,085) After-tax Earnings(losses) 524,306 (6,877)	(491,367) (348,585) (142,782) 118,296 (261,078) 753,457 492,379 531,183	(15.15) (11.77) (50.61) 44.67 (1,507.12) 2,853.14 5,419.69 7,724.05

1.2 Forecast and Implementation

The Company didn’t publish the 2020 Operating Forecast. Therefore, no information regarding implementation is available.

1.3 Financial Income and Expenditure and Profitability Analysis

	Item	2020	2019
Profitability	Return on asset (%)	11.88	0.21
	Return on equity (%)	22.05	(0.30)
	Pre-tax income to paid-in capital (%)	25.57	(0.42)
	Profit margin (%)	19.05	(0.21)
	Earnings per share (NT$)	2.43	(0.03)
	Diluted Earnings per share (NT$)	2.42	(0.03)

1.4 Research and Development progress 1.4.1 R&D Expenses

R&D Expenses Ratio to operating revenues	Unit: NT$ (in thousands) For theyears ended 31 December
	2020 2019 2018
	54,464 56,390 57,391 1.98% 1.74% 1.66%

1.4.2 Recent Research and Development Results

Classification	Item	R&D results
Fine Chemical Series	1. Development and promotion of Non-halogenated Flame Retardant derivatives	⚫ New phosphorus-based-structure polyester-diol monomer, patented in 2020 in Taiwan. ⚫ Phenol Sewage Treatment of flame retardant.
	2. Development and research application of nucleatingagent	⚫ Replace Aromatic Heterocyclic Phosphate Nucleating Agent: K21. ⚫ K21 ton-scale trial run and testing
	3. Curing Agent	⚫ Filed out both domestic and foreign patent applications on the high-dispersibility Metal (Methyl) Acrylates and its related application technology development. ⚫ Curing agent (339G) ton-scale trial run and testing ⚫ Optimized the curing agent (339) production process: advance the quality, increase the First Pass Yield, and make storage and logistics convenient
Polymer Series	1. Product development and application research of TPU and PUD	⚫ Glass-transition-temperature TPU structure and its related application, patented in 2020 in Taiwan. ⚫ Developed melt-spinningspecified

Elastomer (TPU)

⚫ Formulation of water-based Polyurethane (K-FEEL504, 602)

Ultra-film ETPV foam material (EPTV)

 - ⚫ Composition of Expanded TPV and its relevant application technology patented in the U.S.

 - ⚫ Formulation of high-rebound, low-compression-set, and light-weight ETPV and its related application.

 - ⚫ Chemical foaming and ultra-foam technology

2 Overview of 2020 Operation Plan
2.1 Operation Strategy and Policy
- Going through the COVID-19 outbreak, many nations implemented policies such as lockdowns and mobility restrictions to prevent further spread of the virus. This outbreak has also triggered a severe economic downturn around the globe. In the meantime, Taiwan handled the pandemic quite well and the business activities carried out as normal. However, we, as a manufacturing industry, still need to import raw materials as well as export our products from and to foreign countries. Looking back on the pros and cons upon implementation during 2019, and looking ahead to the

future trends of the coming year, we make our operation plan as follows:

  - (1) Develop key raw materials

  - (2) Develop new products and try out new application on the products we have

  - (3) Optimize the MIC manufacturing process

  - (4) Mass produce phosphorus PP

  - (5) Save energy and decarbonize

  - (6) Automate labor intensive manufacturing process evaluation

  - (7) Advance the process via computer systems

  - (8) Lower the risk of materials shortage and price volatility.

  - (9) Propose our optimized human resources arrangement according to business volume

  - (10) Evaluate the competition on the current market situation and improve our manufacturing process accordingly.

2.2 Future development strategies
2.2.1 Fine Chemicals
- (1) Strengthen the relationship with clients, increase both sales and the market share
- (2) Optimize manufacturing processes with energy saving and decarbonization to lower the manufacturing costs
- (3) Stabilize material sourcing channels
- (4) Develop new specifications, new products to meet the customer demands
- (5) Develop our own patents and create unique-selling-points (USP) to expand the markets
- (6) Strengthen the product quality and stabilize the material sourcing channels to increase customer satisfaction

2.2.2 Polymer

  - (1) Develop unique material

  - (2) Patent materials manufacturing and related applications

  - (3) Develop medical and fiber market

  - (4) Be certified by the brand dealers and end users

  - (5) Develop and promote ETPU and ETPV footwear materials

  - (6) Develop ETPU shoes

2.2.3 Plant and environment protection drugs
- (1) Stabilize material sourcing channels
- (2) Develop new products to meet the customer demands
- (3) Optimize manufacturing process with energy saving and decarbonization to lower the manufacturing costs
- (4) Research and develop low-pollution and low-energy-consumption manufacturing
  - process
2.3 Short-term and Long-term Business Development Plan
2.3.1 Short-term Plan
- (1) Strengthen the cooreration with international manufacturers and increase the market share.
- (2) Develop and promote new products: curing agent (339G), PP clarifier (K21), TPU yarn, TPV flame retardants, polymer footwear materials, hair dye, chloride PP.
- (3) Be certified by the brand dealers on Expanded Elastomer footwear materials
- (4) Develop secondary supplier to reduce the risk of raw materials shortage
- (5) Optimize the MIC manufacturing process
- (6) Automate the production lines that are labor intensive
2.3.2 Long-term Plan
- 2.3.2.1 Key trends and strategies on industrial transformation
  - Under such shortcomings as strict environmental regulations, limited natural resources, and increasing environmental costs, high-emission industries gradually lost their positions in the competitive market. To successfully navigate this changing landscape, chemical industry will need to develop toward low-pollution and

high-economies-of-scale orientation.

2.3.2.2 Research and development and technical services
(1) Self-develop and form patent applications
(2) Provide technical services to meet customer demands
(3) Assist customers in developing customized products and grab the preemptive opportunities in the market
2.3.2.3 Diversification Strategies

Well utilize the Company’s know-hows in chemicals and manufacturing products. For instance:

(1) Produce personal sanitization products (special cosmetic) using cGMP qualifications from Chuansing Factory
(2) Given the recyclable character of polymer, develop footwear using 100% polymer

then recycle and reuse

(3) Seek out businesses that are chemical-related and supported by the government
2.3.2.4 “Save Energy, Save Earth”

In response to the “Save Energy, Save Earth” campaign, our future manufacturing

process design will take action to promote energy saving, decarbonization, recycle and reuse, and to exploit the decarbonization technology.

3 Overview of Technology and R&D
3.1 Technical Level
- The Company values novelty, inventive steps as well as industrial applicability. We mainly target chemicals that are highly demanded in the market and create technical barriers.

The Company’s main research and development team are organic synthesis and polymer chemistry technology experts. They cooperate with a production team with more than 20 years of chemical manufacturing experience, together with trading professionals of great acuity on market development, to invest in research, development, production, OEM and marketing on polymer and fine chemical products.

3.2 Product development plan
More specifically speaking, the Company’s products include PU, POLYOL, TPU, TPV, special plastic material, plant and environmental protection drugs, active pharmaceutical ingredients, cosmetic materials, antioxidant, anti-UV agent, polyolefin synthesis, PCB reducing agent, curing agent and graphene oxide, etc.

To improve the process efficiency, go green, and to recycle, reuse and reduce the energy consumption are the key concepts of polymer material development. As for product development on fine chemicals, the research aims at new structures, new manufacturing processes, new formulations and new applications. To develop low-pollution and low-energy-consumption manufacturing process techniques is deemed as our corporate social responsibility.

Classification	Item
Fine Chemical Series	- K-CLEAR:New product development and application research of plastic nucleating agent and transparent agent - K-NOX:New product development, continuous improvement and application research of rubber and plastic antioxidants - K-SORB:Research on industrialization technology of new Triazine UV absorbent products - K-CURE:Improve and develop applications of rubber and plastic cross-linking curing agent - Research on formulation of hair dye and evaluate the feasibility of OEM - Continuously develop techniques on energy saving and decarbonization

Classification

Item

Fine
Chemical
Series

- K-CLEAR:New product development and application research of plastic
nucleating agent and transparent agent
- K-NOX:New product development, continuous improvement and application
research of rubber and plastic antioxidants
- K-SORB:Research on industrialization technology of new Triazine UV
absorbent products
- K-CURE:Improve and develop applications of rubber and plastic cross-linking
curing agent
- Research on formulation of hair dye and evaluate the feasibility of OEM
- Continuously develop techniques on energy saving and decarbonization

Polymer Research on polymer product application (footwear materials and anti-vibration Series materials)
- New product development, continuous improvement and application research on TPV, TPE elastomer
- New product development, continuous improvement and application research on ETPU and ETPV expanded elastomer
4 Estimated product sales of 2021

Estimated product sales of 2021
Main Product	Classification	Annual Budget Sales Quantity
		Tons
Antioxidants	Fine Chemicals		8,390
Thermoplastic Elastomer (TPV, TPU)	Polymer		3,473
POLYOL and PU	Polymer		1,916
Agrochemicals	Plants and environmental protection drugs		523
Other fine chemicals (crosslinking curing agents, halogen-free flame retardants, electronic chemicals, nucleating agents)	Fine Chemicals		3,088
Others	Others		581
Total			17,971

Notes: Sales of other fine chemicals is forecasted to decrease in comparison with the result of this year. Considering the disposal of flame retardants factories and production line adjustments, sales volume is estimated to reduce.

5 The Impact from the external competition, regulatory environment, and business operation From the perspective of macroeconomics, the declining demand was mainly attributed to the COVID-19 pandemic. According to IMF statistics in 2020, the global GDP growth rate was -3.3%. Though the pandemic infections appeared to ease slightly in the beginning of 2021, the global impact of the outbreak remains to be seen.

Threatened by the severe storm in Texas this February and the disorganized global shipping lines, we are now facing the supply and demand imbalance causing significant price fluctuations of raw materials. Not to mention that China does a better job in retaining its place in the price war thanks to its faster production rate. Coupled with the strict environmental regulations in Taiwan, we still need to cope with a lot of uncertainties and challenges on the way.

Looking ahead to the future, we will proactively invest in R&D and work with our clients to accelerate the launch of our new products, so we can avoid the meaningless price war with other countries. Furthermore, in order to tackle the environmental issues, we will continue to optimize our manufacturing process, as well as energy-saving and decarbonization.

Chairman: General Manager: Accounting Supervisor: HUANG, TING-DI HUANG, TING-DI WANG, SHENG-HUI

II. COMPANY PROFILE

1 Date of Incorporation
31 December 1974
2 Company History
Year Important History
1974 SUNKO INK CO., LTD. was founded. The Company specialized in inks and paints.
1977 Acquired Taiping factory and Taiping branch factory to expand production items to primers and adhesives.
1985 Expanded production items to coatings and synthetic resins.
1987 Acquired Dali factory.
1988 Invested Ekiko Resin Co., Ltd. to produce TPU, which was the first professional manufacturer producing TPU in Taiwan.
1990 Expanded production items to antioxidant 168.
1993 Introduced automated equipment to produce wet PU synthetic leather
1995 Renamed the Company’s Chinese name to “Sunko Co., Ltd”. (hereinafter “the Company”)
1996 Publicly listed on the Taiwan Stock Exchange.
2003 Established Sunko Company to indirectly invest in Sunko Fushan Co., Ltd..
2005 Introduced automated continuous production systems to produce TPU.
2006 Merged with Ekiko Resin Co., Ltd. and invested in Sunko Biotech Company, Ltd.
2009 Expanded antioxidant 168 production line.
2013 Sunko Fushan Co., Ltd. closed business.
2014 Expanded production items to antioxidant 3114 and special polymer materials.
2016 Acquired shares of Kuo Ching Chemical Co., Ltd by the issuance of new shares on 30 March 2016. After the merger, the amount of paid-in capital increased to $2,223,473,440.

III. CORPORATE GOVERNANCE REPORT

1 Organization
1.1 Organizational Chart

==> picture [541 x 210] intentionally omitted <==

1.2 Responsibilities and functions of major departments

Department		Functions
General Manager’s Office		- Assist the general manager to amend and implement the Company's internal control system and various administrative measures.
Audit Office		- Implement, audit, and inspect the internal control system of the Company; exercise and promote the Company’s self-inspection; and report the implementation of internal audit to the Securities and Futures Bureau.
R&D Department		- Develop new products and conduct research on process improvement.
Sales Department		- Deal with the Company’s product sales and OEM cooperation matters. - Conduct market research and intelligence gathering. - Review the contracts and orders. - Manage quotations. - Formulate and execute the market strategies.
Production Department		Pingjhen Factory, Dajia Factory, Dali Factory, Nangang Factory, Chuansing Factory. - Schedule the production and raw materials demanding arrangement and assist R&D dept. in commissioning and other assignments. - Carry out new product commissioning, process improvement, and SOP revision reporting matters. - Conduct quality control and laboratory analysis. - Responsible for warehouse management, purchase acceptance, shipment registration and other general administrative matters. - Responsible for industrial safety and environmental protection matters. - Responsible for project design, construction acceptance, equipment maintenance.
Procurement Department		- Responsible for the inquiry, price comparison and negotiation of the Company’s various raw materials, procurement and contracting matters.

Accounting Division, Finance Division, Administrative Division, and IT Division

Management Accounting Division, Finance Division, Administrative Division, and IT Division -
Department Responsible for the registration, summary and tabulation of various accounting books.
Manage the funding budget, bank transactions, cash, notes receivables and note payables.
Responsible for attendance, recruitment, education, training and salary management.
Responsible for administrative miscellaneous affairs and document management.
Plan and manage various computer-related software and hardware, information security maintenance and data backup.

2 Directors, Supervisors and Management Team

2.1 Directors

2.1.1 Information on directors and supervisors

12 April 2021

Title	Nationality or Registration location	Name	Gender	Date Elected	Term (Years)	Date First Elected	Shareholding percentage when Elected (Note 1)	Shareholding percentage when Elected (Note 1)	Current Shareholding percentage	Current Shareholding percentage	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other Position	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	Remark (Note 3)
							Shares	%	Shares	%	Shares	%	Shares	%			Title	Name	Relation
Chairman	Republic of China	KT Investment Co., Ltd. (Note 1)	-	2019.6.13	3 years	2016.5.4	11,808,600	5.31	10,209,010	5.40	-	-	-	-	-	-	-	-	-
Representative of Chairman	Republic of China	Representative of KT Investment Co., Ltd.: HUANG, HUANG-TI (Note 1)	M	2019.6.13	3 years	2016.5.4	3,920	0.00	3,332	0.00	3,223,446	1.71	-	-	Master, The Hong Kong Polytechnic University	Supervisor, KT Investment Co., Ltd. Director, Chiaoli Investment Co., Ltd. Director, Macy Investment Co., Ltd. Legal representative, Power Hero Corp. Chairman of Giant Way Inc. Director, Power Rich International Ltd.	Director	HUANG, TING-KAI	Brother	Plan to increase the number of independent ~~d~~irector seats and more than half of all directors not concurrently serving as employees or executive officers in 2022.
																	Director	HUANG, YI-RUNG	Father
Director (Note 2)	Republic of China	Fulilu Investment Co., Ltd.	-	2019.6.13	3 years	2013.6.24	8,596,011	3.87	8,012,109	4.24	-	-	-	-	-	-	-	-	-
Director Representative	Republic of China	Representative of Fulilu Investment Co., Ltd.: HUANG, TING-KAI	M	2019.6.13	3 years	2013.6.24	869,000	0.39	738,650	0.39	13,027	0.01	-	-	PhD., National Taiwan University	Researcher, GM Office, Sunko Ink Co., Ltd. Director, Macy Investment Co., Ltd.	Chairman	HUANG, TING-DI	Brother
																	Director	HUANG, YI-RUNG	Father
Director	Republic of China	Chiaoli Investment Co., Ltd. (Note 1)	-	2019.6.13	3 years	2013.6.24	7,521,650	3.38	6,503,902	3.44	-	-	-	-	-	-	-	-	-
Director Representative	Republic of China	Representative of Chiaoli Investment Co., Ltd.: HUANG, YI-RUNG	M	2019.6.13	3 years	2019.6.13	7,045,512	3.17	5,988,685	3.17	1,717,855	0.91	-	-	National ~~C~~heng Kung University	Director, KT Investment Co., Ltd. Director, Macy Investment Co., Ltd.	Chairman	HUANG, TING-DI	Son
																	Director	HUANG, TING-KAI	Son
Director	Republic of China	HSIAO, JUNG-FU	M	2019.6.13	3 years	2016.5.4	368,994	0.17	313,645	0.17	170,000	0.09	-	-	Master, Utah State University, USA	Supervisor, SIN HUN CHEMICAL CO., LTD.	-	-	-

Title	Nationality or Registration location	Name	Gender	Date Elected	Term (Years)	Date First Elected	Shareholding percentage when Elected (Note 1)	Shareholding percentage when Elected (Note 1)	Current Shareholding percentage	Current Shareholding percentage	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other Position	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
							Shares	%	Shares	%	Shares	%	Shares	%			Title	Name	Relation
Independent Director	Republic of China	LI, SHIH-JEN	M	2019.6.13	3 years	2016.5.4	-	-	-	-	41,809	0.02	-	-	PhD., University of Southern California, USA	Chairman, TAHO Pharmaceuticals Ltd. Chairman, Transwell Biotech Co., Ltd. Director, Easywell Biomedicals, Inc. Independent Director, Member of Remuneration Committee and Audit Committee, Genovate Biotechnology Co., Ltd. Independent Director, Member of Remuneration Committee and Audit Committee, Taimed Biologics Inc. Director, Industrial Technology Investment Corporation Director, Amphastar Pharmaceuticals,Inc. Director, CapsoVision,Inc.	-	-	-
Independent Director	Republic of China	TSOU, YEN-CHUNG	M	2019.6.13	3 years	2016.5.4	-	-	-	-	-	-	-	-	National Cheng Kung University	Representative of Sun Young CPAs Firm Independent Director, Member of Remuneration Committee and Audit Committee, Universal Microelectronics Co., Ltd. Independent Director, Member of Remuneration Committee, Liton Technology Corp.	-	-	-
Independent Director	Republic of China	LIN, YEN-TING	F	2019.6.13	3 years	2016.5.4	-	-	-	-	-	-	-	-	EMBA of Tunghai University	CEO of Plan-Wise International Corporation Representative, Tiding Golden International Intelligent Management Consulting Co., Ltd. Shareholder and manager of Fubo International Enterprise Co., Ltd. Director, Jin Wan Man Co., Ltd. Supervisor, JUE-FENG Co., Ltd	-	-	-
Note:

The Company fully reelected the Board of Directors on 13 June 2019. On 4 May 2016, an Audit Committee was established while the supervisor system was abolished. The percentage of shareholdings was calculated considering the total outstanding shares of 188,995,242 shares.
Fulilu Investment Co., Ltd. (and Representative HUANG, TING-KAI) did not serve as a director starting from 16 March 2021.
Where the chairman and president or equivalent position (highest level executive officer) is the same person, the spouse, or a first-degree relative, the reason, reasonableness, necessity, and response measures (such as increasing the number of independent director seats and more than half of all directors not concurrently serving as employees or executive officers) must be disclosed.
Power Hero Corp.’s registration was cancelled on 29 July 2020.

2.1.2 Major corporate shareholders

12 April 2021

	12 April 2021
Name of corporate shareholders	Main shareholders of corporate shareholders
KT Investment Co., Ltd.	TUNG, CHING-MEI 82.22%, HUANG, TING-KAI 8.89%, LIN, YU-PIN 8.89%
Fulilu Investment Co., Ltd.	WANG, PAO-LING 52%, HUANG, TING-KAI 34.58%, TUNG,CHING-MEI 1.06%, HUANG, YU-JUN 4.24%, HUANG, YU-HSUAN 4.06%, HUANG, YU-MING 4.06%
Chiaoli Investment Co.,Ltd.	LIN, YU-PIN 86.89%, HUANG, YU-HSI 9.06%, HUANG, TING-DI 1.85%, HUANG,LI-YI 1.64%,TUNG,CHING-MEI 0.56%

2.1.3 Major shareholders of main corporate shareholders: None.

2.1.4 Professional qualifications and independence of the Directors and Supervisors

12 April 2021

Item Name	Has over 5 years of work experience and the below professional qualifications	Has over 5 years of work experience and the below professional qualifications	Has over 5 years of work experience and the below professional qualifications	Independence Ranking (Note 1)	Independence Ranking (Note 1)	Independence Ranking (Note 1)	Independence Ranking (Note 1)	Independence Ranking (Note 1)	Independence Ranking (Note 1)	Independence Ranking (Note 1)	Independence Ranking (Note 1)	Independence Ranking (Note 1)	Independence Ranking (Note 1)	Independence Ranking (Note 1)	Independence Ranking (Note 1)	Number of independent directorships held in other public companies
	Holds the position of lecturer (or above) at public or private college or university in business, law, finance, accounting or company operations	Holds a license, obtained through national examination, for the position of judge, district attorney, lawyer, accountant, or similar	Work experience in business, law, finance, accounting or company operations	1	2	3	4	5	6	7	8	9	10	11	12
Director Representative of KT Investment Co., Ltd.: HUANG, TING-DI	-	-	✓	-	-	✓	-	-	✓	✓	-	✓	-	✓	-	0
Representative of Fulilu Investment Co., Ltd.: HUANG, TING-KAI	-	-	✓	-	-	✓	-	✓	✓	✓	-	✓	-	✓	-	0
Representative of Chiaoli Investment Co., Ltd.: HUANG, YI-RUNG	-	-	✓	-	-	-	-	-	✓	✓	-	✓	-	✓	-	0
HSIAO, JUNG-FU	-	-	✓	✓	-	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	0
LI, SHIH-JEN	✓	-	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	2
TSOU, YEN-CHUNG	-	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	2
LIN, YEN-TING	-	-	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	0

Note 1: All board members met with the following conditions for the two years leading up to assuming their posts and while they held their posts. Please place a tick mark "V" in the box under number that represents their situation.

(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;

(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 amount of one percent or more of the total number of issued shares of the company or ranks as one of its top ten shareholders;

(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the officer in the preceding 1 subparagraph, or of any of the above persons in the preceding subparagraphs 2 and 3;

(5) Not a director, supervisor, or employee of a corporate/institutional shareholder that directly holds five percent or more of the total number of issued shares of the company, ranks as of its top five shareholders, or has representative director(s) serving on the company's board based on Article 27 of the Company Act. (6) Not a director, supervisor, or employee of a company of which the majority of board seats or voting shares is controlled by a company that also controls the same of the company;

(7) Not a director, supervisor, or employee of a company of which the chairman or CEO (or equivalent) themselves or their spouse also serve as the Company’s chairman or CEO (or equivalent);

(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;

(9) Other than serving as a compensation committee member of the company, not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting services or consultation to the company or to any affiliate of the company, or a spouse thereof, and the service provided is an "audit service" or a "non-audit service which total compensation within the recent two years exceeds NTD500,000"

(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 Act; and

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

2.2 Information on the Company General Manager, Deputy General Manager, Managers of departments or division

12 April 2021

Title	Nationality	Name	Gender	Date Assumed Current Position	Current Shareholdings	Current Shareholdings	Shares Held by Spouse or Minor Children	Shares Held by Spouse or Minor Children	Shareholding by Nominee Arrangements	Shareholding by Nominee Arrangements	Education and Experience	Positions Held Concurrently at Other Companies	Spouse or Relatives Within the Second-Degree of Consanguinity also Holding Management, Directorial, or Supervisory Positions	Spouse or Relatives Within the Second-Degree of Consanguinity also Holding Management, Directorial, or Supervisory Positions	Spouse or Relatives Within the Second-Degree of Consanguinity also Holding Management, Directorial, or Supervisory Positions	Remark (Note 2)
					Shares	%	Shares	%	Shares	%			Title	Name	Relationship
General Manager	Republic of China	HUANG, TING-DI	M	2016.5.12	3,332	0.00	3,223,446	1.71	-	-	Master; General Manager, Kuo Ching Chemical Co., Ltd.	Supervisor, KT Investment Co., Ltd. Director, Chiaoli Investment Co., Ltd. Director, Macy Investment Co., Ltd. Legal representative, Power Hero Corp. Chairman of Giant Way Inc. Director, Power Rich International Ltd.	-	-	-	Plan to increase the number of independent director seats and more than half of all directors not concurrently serving as employees or executive officers in 2022.
Deputy General Manager	Republic of China	ZHANG, JUN-PIN	M	2016.5.12	377,564	0.20	-	-	-	-	Bachelor; General Manager, Sunko Ink Co., Ltd.	President, Blessingthoughts Co. Ltd.	-	-	-
Managing Department Manager	Republic of China	HUNG, TING-YI	M	2019.1.1	652	0.00	-	-	-	-	Bachelor; Accounting Manager, Kuo Ching Chemical Co., Ltd.	Director, BNKC Biochemical Technology Co.,Ltd.	-	-	-
Finance Office Supervisor	Republic of China	WANG, TING-YU	F	2019.1.1	4,000	0.00	-	-	-	-	Bachelor; Deputy section supervisor, Finance Section,Sunko Ink Co.,Ltd.	-	-	-	-
Accounting Office Manager	Republic of China	WANG, SHENG-HUI	F	2016.11.9	-	-	-	-	-	-	Master; Assistant Vice President, Ernst & Young	-	-	-	-
Audit Office Supervisor	Republic of China	HSIEH, CHUN-FU	M	2014.8.11	-	-	-	-	-	-	Bachelor; Ardentec Corporation	-	-	-	-
R&D Department Supervisor	Republic of China	TSOU, CHIOU-PENG	F	2016.5.12	408,079	0.22	-	-	-	-	Doctor; Manager, R&D Department, Kuo ChingChemical Co.,Ltd.	Director, Blessingthoughts Co. Ltd.	-	-	-
Minister of Production	Republic of China	LIN, CHAO-YUAN	M	2016.5.12	216,574	0.11	-	-	-	-	Junior College; Minister of Production, Kuo Ching Chemical Co.,Ltd.	Director, Blessingthoughts Co. Ltd.	-	-	-
Minister of Production	Republic of China	SHEN, CHI-YUNG	M	2016.5.12	-	-	-	-	-	-	Master; Minister of Production, Kuo Ching Chemical Co.,Ltd.	Director, Blessingthoughts Co. Ltd.	-	-	-
Minister of Production	Republic of China	HUANG, SHUEN-HSIEN	M	2018.1.1	2,431,701	1.29	101,864	0.05	-	-	Junior College; Deputy Factory Director, Pingzhen Factory, Kuo Ching Chemical Co., Ltd.	-	-	-	-

Note:

Where the chairman and president or equivalent position (highest level executive officer) is the same person, the spouse, or a first-degree relative, the reason, reasonableness, necessity, and response measures (such as increasing the number of independent director seats and more than half of all directors not concurrently serving as employees or executive officers) must be disclosed.
Power Hero Corp.’s registration was cancalled on 29 July 2020.

3 Remuneration to Directors, General Manager and Deputy General Manager in 2020

3.1 Remuneration to Directors and Independent Directors

Unit: NT$ (in thousands)

Title	Name	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Ratio of total remuneration (A+B+C+D+E+ F+G) to net income (%)	Ratio of total remuneration (A+B+C+D+E+ F+G) to net income (%)	Remuneration to concurrent	Remuneration to concurrent	Remuneration to concurrent	Remuneration to concurrent	employees	employees	employees	employees	Ratio of total compensation (A+B+C+D+E+ F+G) to net income (%)	Ratio of total compensation (A+B+C+D+E+ F+G) to net income (%)	Compensation paid to directors from reinvested companies other than subsidiary
		Compensation (A)		Severance pay (B)		Bonus to directors (C)		Allowance (D)				Salary, bonus, allowance (E)		Severance pay (F)		Profit sharing-employee bonus (G)
		The company	Companie s in the financial report	The company	Com pani es in the finan cial repor t	The company	Compa nies in the financi al report	The company	Com pani es in the finan cial repo rt	The company	Companie s in the financial report	The company	Companies in the financial report	The company	Companies in the financial report	The company		Companies in the financial report		The company	Companies in the financial report
																Cash	Stock	Cash	Stock
Chairman	Representative of KT Investment Co, Ltd.:HUANG, TING-DI	1,440	1,440	55	55	4,020	4,020	195	195	1.09	1.09	5,923	5,923	-	-	7	-	7	-	2.22	2.22	--
Director	Representative of Fulilu Investment Co., Ltd.: HUANG,TING-KAI
Director	Representative of Chiaoli Investment Co., Ltd.`：`HSIAO, JUNG-FU(Note 1)
Director	Representative of Chiaoli Investment Co., Ltd.`：`HUANG, YI-RUNG(Note 2)
Director	HSIAO, JUNG-FU (Note 2)
Independent Director	LI, SHIH-JEN
Independent Director	TSOU, YEN-CHUNG
Independent Director	LIN, YEN-TING
Aside from what is disclosed in the above table, the remuneration earned by Directors providing services (e. g. consultant as a non-employee) to the Company: none. Note 1: Fulilu Investment Co.,Ltd.(and Representative HUANG,TING-KAI)did not serve as a Director startingfrom 16 March 2021.

Table of Remuneration Ranges

	Table of Remuneration Ranges	Table of Remuneration Ranges
Remuneration Range for each Director of the Company	Names of Directors
	Total of (A+B+C+D)		Total of (A+B+C+D+E+F+G)
	The company	Companies in the financial report	The company	Companies in the financial report
Less than NT$1,000,000
NT$1,000,000 (inclusive) to NT$2,000,000 (exclusive)	Representative of KT Investment Co., Ltd.: HUANG, TING-DI; Representative of Fulilu Investment Co., Ltd.: HUANG, TING-KAI; Representative of Chiaoli Investment Co., Ltd.: HUANG, YI-RUNG; HSIAO, JUNG-FU; LI, SHIH-JEN; TSOU, YEN-CHUNG; LIN, YEN-TING	Representative of KT Investment Co., Ltd.: HUANG, TING-DI; Representative of Fulilu Investment Co., Ltd.: HUANG, TING-KAI; Representative of Chiaoli Investment Co., Ltd.: HUANG, YI-RUNG; HSIAO, JUNG-FU; LI, SHIH-JEN; TSOU, YEN-CHUNG; LIN, YEN-TING	Representative of Chiaoli Investment Co., Ltd.: HUANG, YI-RUNG; HSIAO, JUNG-FU; LI, SHIH-JEN; TSOU, YEN-CHUNG; LIN, YEN-TING	Representative of Chiaoli Investment Co., Ltd.: HUANG, YI-RUNG; HSIAO, JUNG-FU; LI, SHIH-JEN; TSOU, YEN-CHUNG; LIN, YEN-TING
NT$2,000,000(inclusive) to NT$3,500,000(exclusive)
NT$3,500,000 (inclusive) to NT$5,000,000 (exclusive)			Representative of KT Investment Co., Ltd.: HUANG, TING-DI; Representative of Fulilu Investment Co., Ltd.: HUANG, TING-KAI	Representative of KT Investment Co., Ltd.: HUANG, TING-DI; Representative of Fulilu Investment Co., Ltd.: HUANG, TING-KAI
NT$5,000,000 (inclusive) to NT$10,000,000(exclusive)
NT$10,000,000 (inclusive) to NT$15,000,000(exclusive)
NT$15,000,000 (inclusive) to NT$30,000,000(exclusive)
NT$30,000,000 (inclusive) to NT$50,000,000(exclusive)
NT$50,000,000 (inclusive) to NT$100,000,000(exclusive)
NT$100,000,000 or above
Total	7	7	7	7

3.2 Remuneration to supervisors

The Company fully reelected the Board of Directors on 13 June 2019. On 4 May 2016, an Audit Committee was established while the supervisor system was abolished. Therefore, this remuneration is not applicable.

3.3 Remuneration to general managers and deputy managers

												Unit: NT$ (in thousands)	Unit: NT$ (in thousands)	Unit: NT$ (in thousands)
Title	Name	Salary (A)		Severance pay (B)		Bonus and allowance (C)		Profit sharing-employee bonus (D)				Ratio of total compensation (A+B+C+D) to net income(%)		Compensation paid to GM and Deputy GM from reinvested companies other than subsidiary
		The company	Companies in the financial report	The company	Companies in the financial report	The company	Companies in the financial report	The company		Companies in the financial report		The company	Companies in the financial report
								Cash	Stock	Cash	Stock
General Manager	HUANG, TING-DI	3,791	3,791	87	87	748	748	7	-	7	-	0.88	0.88	-
Deputy General Manager	CHANG, JUN-PIN

Remuneration Range of General Manager and Deputy General Manager

Remuneration Range	of General Manager and DeputyGeneral Manager	of General Manager and DeputyGeneral Manager
Remuneration Range	Names of General Manager and Deputy General Manager
	The company	Companies in the financial report
Less than NT$ 1,000,000
NT$1,000,000 to NT$2,000,000(exclusive)	CHNAG,JUN-PIN	CHANG,JUN-PIN
NT$2,000,000 to NT$3,500,000(exclusive)	HUANG,TING-DI	HUANG,TING-DI
NT$3,500,000 to NT$5,000,000(exclusive)
NT$5,000,000 to NT$10,000,000(exclusive)
NT$10,000,00 to NT$15,000,000(exclusive)
NT$15,000,000 to NT$30,000,000 (exclusive)

NT$30,000,000 to NT$50,000,000(exclusive)
NT$50,000,000 to NT$100,000,000(exclusive)
NT$100,000,000 or above
Total	2	2

3.4 Name of management to which employees' compensation are distributed, and the status of distribution

Unit: NT$ (in thousands)

					Unit:	NT$ (in thousands)
	Title	Name	Stock	Cash	Total	Raito of total amount to net income (%)
Executive officers	General Manager	HUANG, TING-DI	-	325	325	0.06%
	Deputy General Manager	CHANG, JUN-PIN
	Manager of Management Department	HUNG, TING-YI
	Finance Office Supervisor	WANG, TING-YU
	Accounting Office Manager	WANG, SHENG-HUI
	Audit Office Supervisor	HSIEH, CHUN-FU
	R&D Department Supervisor	TSOU, CHIOU-PENG
	Minister of Production	LIN, CHAO-YUAN
	Minister of Production	SHEN, CHI-YUNG
	Minister of Production	HUANG, SHUN-HSIEN

3.5 Comparison of remuneration paid by the Company and all the consolidated entities in the last two years to the Company's Directors, Supervisors, General Managers and Deputy General Managers as a ratio to the net profit after tax. Explanation on remuneration policies, standards and procedures for determining remuneration, and association with business performance and future risks:

Title	Ratio oftotal remunerationtonetincome	Ratio oftotal remunerationtonetincome	Ratio oftotal remunerationtonetincome	Ratio oftotal remunerationtonetincome
	2020		2019
	The company	Companies in the financial report	The company	Companies in the financial report
Director	3.10	3.10	(181.70)	(179.87)
Supervisor
General Manager and Deputy General Manager

Note: The Company’s remuneration for directors are determined to be no more than 1% of the profit pursuant to the Articles of Incorporation. The general manager's remuneration policy is based on the salary level of the position in the industry market, the responsibilities of the position in the company, and the contribution to the company's operating goals. With regard to the procedures for determining the amount of compensation, the Company considers personal performance achievement rates and the level of contribution to the Company, while taking into account the Company's overall performance to provide a reasonable level of compensation.

4 Implementation of Corporate governance
4.1 Operations of the Board of Directors

The Company convened a total of 8 (A) Board of Directors meetings in 2020. The attendance was

as follows:

Title	Name	Attendance in person (B)	Attendance by proxy	Attendance Rate (%) [B/A]
Chairman	Representative of KT Investment Co., Ltd.: HUANG YING-TI	8	0	100%
Director	Representative of Fulilu Investment Co., Ltd.: HUANG,TING-KAI	0	5	0%
Director	Representative of Chiaoli Investment Co., Ltd.: HUANG,YI-RUNG	0	8	0%
Director	HSIAO, JUNG-FU	7	0	87.5%
Independent Director	LI, SHIH-JEN	8	0	100%
Independent Director	TSOU, YEN-CHUNG	8	0	100%
Independent Director	LIN, YEN-TING	8	0	100%

Other disclosures:

4.1.1 For the operation of the Board of Directors in any of the following circumstances, the date

and term of the meetings, the content of the proposal, all Independent Directors’ opinions and the Company’s response to such opinions should be specified.

4.1.1.1 On issues stated in Article 14-3 of the Securities and Exchange Act.

BoardMeeting	Proposaldetails andfollow-ups
The 17thBoard of Directors The 7thMeeting (2020.01.20)	1. Disposal of Taiping Factory and Taiping Factory II. 2. Acquisition of air pollution treatment system. Independent director opinions: Approved without any dissent. Independent director opinions handled by the Company: Not applicable.
The 17thBoard of Directors The 8thMeeting (2020.02.26)	1. Disposal of Dajia Factory. Independent director opinions: Approved without any dissent. Independent director opinions handled by the Company: Not applicable.
The 17thBoard of Directors The 9thMeeting (2020.03.16)	1. Renewal of directors’ and managers’ liability insurance. 2. Amendments to the “Regulations and procedures for The Board Meeting”. 3. Amendments to the “Operational Procedures for Loaning Funds to Others” and “Regulations and Procedures for Endorsements”. 4. Consultant contract renewal. Independent director opinions: Approved without any dissent. Independent director opinions handled bythe Company: Not applicable.

The 17thBoard of Directors The 10thMeeting (2020.05.08)	1. Review of employed CPA independence and capability; appointment of 2020 financial and taxation audit. 2. Changes of the CPAs. 3. Budget on the renovation of Pingjhen factory and Dali factory. Independent director opinions: Approved without any dissent. Independent director opinions handled bythe Company: Not applicable.
The 17thBoard of Directors The 11thMeeting (2020.08.11)	1. Amendments to the “Management Rules of the Computerized Information System Cycle”. 2. Amendments to the “Regulations of Performance Assessment for the Board”. 3. Amendments to the “Management Rules of the Procedures of Directors’ Election”. 4. Formulation of the “Management Rules of the Duties and Responsibilities of Independent Directors”. 5. Disposal of shares of Ching-Feng Co. Independent director opinions: Approved without any dissent. Independent director opinions handled bythe Company: Not applicable.
The 17thBoard of Directors The 12thMeeting (2020.09.10)	1. Proposal of capital reduction. Independent director opinions: Approved without any dissent. Independent director opinions handled by the Company: Not applicable.
The 17thBoard of Directors The 14thMeeting (2020.12.17)	1. Amendments to the “Management Rules of the Computerized Information System Cycle”. Independent director opinions: Approved without any dissent. Independent director opinions handled by the Company: Not applicable.
The 17thBoard of Directors The 15thMeeting (2021.01.14)	1. Adoption of treasury stock. Independent director opinions: Approved without any dissent. Independent director opinions handled by the Company: Not applicable. Extraordinary motion: 1. Creating mortgage on the No. 1416 farm on Hsin-de-lung Rd for $4 million. Independent director opinions: Approved without any dissent. Independent director opinions handled bythe Company: Not applicable.
The 17thBoard of Directors The 17thMeeting (2021.03.16)	1. Renewal of directors’ and managers’ liability insurance. 2. Consultant contract renewal. Independent director opinions: Approved without any dissent. Independent director opinions handled by the Company: Not applicable.

4.1.1.2 Except for the aforementioned matters, resolutions with the objections or reservations of

the independent directors documented or declared in writing: None.

4.1.2 With respect to the avoidance of conflicting interest agendas, describe the names of directors, details of the relevant agendas, reasons for avoiding conflicting interest, and the voting decisions:
(1) On the 17[th] Board of Directors’ 9[th] Meeting: During the discussion on renewing contracts with consults, Director HUANG, YI-RUNG, HUANG, TING-KAI, and HUANG, TING-DI recused themselves from participating in the discussion and voting process to avoid conflict of interests. The rest of the directors agreed and passed the proposal without any dissent.
(2) On the 17[th] Board of Directors’ 15[th] Meeting: During the discussion on creating a mortgage on No. 1416 farm land on Hsin-de-lung Rd for $4 million, Chairman HUANG, TING-DI recused himself from participating in the voting process to avoid conflict of interests. The rest of the directors agreed and passed the proposal without any dissent.
(3) On the 17[th] Board of Directors’ 17[th] Meeting: During the discussion on renewing contracts with the consultants, Director HUANG, YI-RUNG and HUANG, TING-DI recused themselves from participating in the discussion and voting process to avoid conflict of interests. The rest of the directors agreed and passed the proposal without any dissent.

4.1.3 Evaluation of the implementation of the board of directors

Assessment Assessment Assessment Assessment Method Assessment Content Cycle Period Scope Once every 1 January The Board, 1. Evaluation on performance 1. Improvement on the degree of year 2020 to 31 individual by the board of directors: The participation in the Company’s operations. December Board degree of participation in the Suggestions: Encourage the directors to 2020 members, Company's operations, the actively attend the Board meetings and and every quality of decision-making of shareholders’ meetings so as to make the other the board of directors, the directors more familiar with the functional composition and structure of Company’s operations and to ensure the committee the board of directors, the shareholders’ rights. selection and continuous 2. Improvement on the recognition of the training of directors and committees’ responsibilities. internal control system, etc. Suggestions: The Board set up the 2. Evaluation on performance administrative measures on Risk by the individual Board Management Policy and regularly members: The Company’s examine the policy on directors’ and objectives and tasks, the managers’ performance assessments and recognition of directors' remuneration to strengthen the link. responsibilities, the degree of 3. Improvement on the quality of participation in the decision-making of the functional committee.

Evaluation on performance by the individual Board members: The Company’s objectives and tasks, the recognition of directors' responsibilities, the degree of participation in the Company's operations,

internal relationship Suggestions: Conduct assessment on management and internal Board’s performance once a year, communication, the and on external Board’s performance once professional and continuous every three years to improve the quality of training of directors, internal decision-making as well as the control, etc. understanding of objectives and tasks. 3. Evaluation on performance 4. Improvement on selection and by functional committees: continuous training of directors. The degree of participation in Suggestions: Arrange study and advanced the Company's operations, development plan or provide directors the recognition of the with incoming courses for them to choose. committees' responsibilities, Introduce courses to the directors based on the quality of their specialties, draft the diversification decision-making, the policy and establish selection procedures composition and structure of to make communication channels smooth. the committees, the selection of members and internal

control system, etc.

4.1.4 Assessment of the objectives and implementation status in the area of strengthening the powers of the Board of Directors (such as setting of an audit committee and improvement of information transparency, etc.) for the current and most recent years: The Company already established the Audit Committee in 2016, and constantly strengthen the substantial disclosures on the Company’s website to improve information transparency.
4.2 The operation of the audit committee or the participation of the supervisor in the operation of the board of directors
4.2.1 Operations of the Audit Committee

The Company’s audit committee consists of 3 independent directors. The purpose of the Audit Committee is to assist the Board with the execution of its duties to supervise the Company on accounting, internal audit, financial reporting progress and the quality and integrity of internal control.

Matters reviewed mainly listed below:

(1) Financial statements, auditing and accounting policies and procedures.
(2) Internal control system and related policies and procedures.
(3) Significant asset or derivative transaction.
(4) Significant fund lending and endorsements or guarantees.
(5) Place or issue securities.
(6) Derivatives financial instruments and cash investment.
(7) Regulatory compliance.

(8) Whether the manager and the director have related party transactions and possible conflicts of interest.
(9) Complaint report.
(10) Fraud prevention plan and fraud investigation report.
(11) Information Security.
(12) Corporate risk management.
(13) Appraisal of qualifications, independence and performance of certified accountants.
(14) Appointment, dismissal or remuneration of certified accountants.
(15) Appointment and removal of financial, accounting or internal audit supervisors.
(16) Performance of Audit Committee's duties.
4.2.2 Meetings of the Audit Committee

The Company convened a total of 7 (A) meetings of the Audit Committee over the past fiscal year. The attendance was as follows:

Title	Name	Meetings Attended (B)	Meeting attend by Proxy	Attendance Rate (%) (B/A)
Independent director	LI, SHIH-JEN	7	0	100%
Independent director	TSOU, YEN-CHUNG	7	0	100%
Independent director	LIN, YEN-TING	7	0	100%
Other disclosures: 1. In any of the following circumstances, the date and term of the meetings, the content of the proposal, all auditors’ opinions and the Company’s response to such opinions should be specified. a. Issues listed in Article 14-5 of the Securities and Exchange Act: Meeting Proposal details and follow-ups The 2ndAudit Committee The 6thMeeting (2020.01.20) 1. Disposal of Taiping Factory and Taiping Factory II. 2. Acquisition of air pollution treatment system. Auditors’ opinions: Approved without any dissent. Auditors’ opinions handled by the Company: Not applicable. The 2ndAudit Committee The 7thMeeting (2020.02.26) 1. Disposal of Dajia Factory. Auditors’ opinions: Approved without any dissent. Auditors’ opinions handled by the Company: Not applicable.

	The 2ndAudit Committee The 8thMeeting (2020.03.16)	1. Review of the 2019 parent only and consolidated financial reports. 2. 2019 Statement of Declaration on Internal control system. 3. Report on internal control audit. 4. Renewal of directors’ and managers’ liability insurance. 5. Amendments to the Regulations and Procedures for the Board Meeting. 6. Amendments to the Operational Procedures for Loaning Funds to Others and Regulations and Procedures for Endorsements. Auditors’ opinions: Approved without any dissent. Auditors’ opinions handled bythe Company: Not applicable.
	The 2ndAudit Committee The 9thMeeting (2020.05.08)	1. Report on internal control audit. 2. Review of CPA independence; appointment of 2020 financial and tax audit. 3. Changes of the CPAs. 4. Budget on the renovation of Pingjhen factory and Dali factory. Auditors’ opinions: Approved without any dissent. Auditors’ opinions handled by the Company: Not applicable.
	The 2ndAudit Committee The 10thMeeting (2020.08.11)	1. Report on internal control audit. 2. Amendments to the Management Rules of the Computerized Information System Cycle”. 3. Amendments to the Regulations of Performance Assessment for the Board. 4. Amendments to the Rules and Procedures of the Audit Committee. 5. Amendments to the Management Rules of the Procedures of the Directors’ Election. 6. Formulation of the Management Rules of the Duties and Responsibilities of Independent Directors. Auditors’ opinions: Approved without any dissent. Auditors’ opinions handled by the Company: Not applicable.
	The 2ndAudit Committee The 11thMeeting (2020.11.10)	1. Report on internal control audit. Auditors’ opinions: Approved without any dissent. Auditors’ opinions handled by the Company: Not applicable.
	The 2ndAudit Committee The 12thMeeting (2020.12.17)	1. Internal audit planning for 2021. 2. Amendments t the Management Rules of the Computerized Information System Cycle”. Auditors’ opinions: Approved without any dissent. Auditors’ opinions handled by the Company: Not applicable.
	The 2ndAudit Committee	1. Adoption of treasury stock. Auditors’ opinions: Approved without any dissent. Auditors’ opinions handled bythe Company: Not applicable.

2. 3.	The 13thMeeting (2021.14)	Extraordinary motion: 1. Creating mortgage on the No. 1416 farm on Hsin-de-lung Rd for $4 million Auditors’ opinions: The first case was proposed to postpone and hold a meeting when necessary. The second case was approved without any dissent. Auditors’ opinions handled bythe Company: Postpone asproposed.
	The 2ndAudit Committee The 14thMeeting (2021.03.16)	1. Review of the 2020 parent only and consolidated financial reports. 2. Report on internal control audit. 3. 2020 Statement of Declaration on Internal control 4. Renewal of directors’ and managers’ liability insurance. Auditors’ opinions: Approved without any dissent. Auditors’opinions handled by the Company: Not applicable.

4.2.3 Supervisor’s participation in the Board of Directors

The Company fully reelected the Board of Directors on 13 June 2019. On 4 May 2016, an Audit Committee was established while the supervisor system was abolished. Therefore, it is not applicable.

4.3 Differences between Company policy and Corporate Governance Best-Practice Principles for TSE/ GTSM Listed Companies and reasons for differences

differences
Items Evaluated	Status			Variations (if any) with the Corporate Governance Best Practice Principles for TWSE/ GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
1. Does the Company formulate and discloses the Corporate Governance Best Practice based on “Corporate Governance Best Practice Principles for Listed Companies”?			The Company has already formulated the corporate governance code and disclose it in accordance with Corporate Governance Best Practice Principles for Listed Companies.	No deviation.
2. Corporate equity structure and shareholders’ equity (1) Does the company formulate the internal operation procedure to handle shareholder proposal, doubt, dispute and litigation and implements it in accordance with the procedure? (2) Does the company master the principal shareholders actually controlling the company and the final controller list of principal shareholders? (3) Does the company establish and executes the risk control and firewall mechanism with the affiliated enterprise? (4) Does the company formulate the internal specification to prohibit the corporate insiders to buy or sell negotiable securities by using the information undisclosed in market?	   		1. The Company has a spokesperson to accept shareholders’ suggestions and to make clarifications and to have an in-depth understanding of shareholders’ suggestions or concerns to evaluate and respond. The website also has stakeholder contact information to deal with related matters. 2. The Company shall keep abreast of any changes to the shareholders’ ownership of more than 5% of the shares and directors’ shareholding percentage. Information of ownership of directors and shareholders holding more than 10% of the shares are publicly disclosed on the information reporting website designated by the FSC every month in accordance with regulations. 3. The Company has set up “Subsidiary Management Measures”, “Regulations and Procedures for Endorsements” , Operational Procedures for Loaning Funds to Others” and`“`Procedures on Acquisition or Disposal of Assets” to implement the risk control. 4. The Company has established operating procedures to prevent insider trading.	No deviation. No deviation. No deviation. No deviation.
3. Composition and responsibilities of the Board of Directors (1) Does the board of directors draft the diversification policy and implements it in terms of the member composition?			1. The composition of the board of directors of the Company focuses on diversification, and generally possesses the knowledge, skills and accomplishments	No deviation.

Items Evaluated	Status	Status	Status	Variations (if any) with the Corporate Governance Best Practice Principles for TWSE/ GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
(2) Does the company voluntarily set other functional committees apart from the Remuneration committee and Audit Committee? (3) Does the company formulate the performance evaluation method and evaluation way of the board of directors, and regularly carries out performance evaluation each year? (4) Does the company regularly evaluate the independence of CPAs?	 		necessary for performing duties. 2. The Company has established remuneration committee and audit committee in accordance with the law and has not established other functional committees. 3. The Company has formulated performance evaluation regulations and will regularly review the effectiveness and report the evaluation to the Board starting from 2021. 4. The Company confirms that the accountant and the company have no other financial interests and business relationships except for certification and taxation expenses, and members of the accountant family do not violate the independence requirements, the accountant’s appointment will be reviewed. The Company periodically evaluates the independence and competency of CPAs and obtains the CPAs’ Statement of Independence. The appointment and compensation of certification and taxation was passed on 8 May 2020 in the Board Meeting.	No deviation. No deviation. No deviation.
4. Does the Company have a suitable number of competent corporate governance personnel, and has it appointed a corporate governance supervisor responsible for corporate governance matters (including but not limited to providing information for directors and supervisors to perform their duties, assisting directors and supervisors with regulatory compliance, handling matters related to Board meetings and shareholders' meetings, and preparing proceedings for Board meetings and shareholders' meetings)?			The Company has set up a dedicated unit to be responsible for corporate governance matters such as the board of directors, the shareholders' meeting, and the preparation of the minutes of the board of directors and shareholders' meetings.	At planning stage.
5. Does the Company establish communication channels with stakeholders (including, but not limited to, shareholders, employees, customers, and suppliers) and set up an area dedicated to stakeholders on the Company website and does the			The Company has established an area for stakeholders in the Company’s website in accordance with the regulations in order to build the communication channel.	No deviation.

Items Evaluated	Status	Status	Status	Variations (if any) with the Corporate Governance Best Practice Principles for TWSE/ GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
Company respond appropriately to corporate social responsibility issues that stakeholders consider important?
6. Does the Company commission a professional stock affair agency to manage shareholders' meetings and other relevant affairs?			The Company has designated the SinoPac Securities Corp. Stock Registration Division to handle shareholder meeting affairs.	No deviation.
7. Information Disclosure (1) Does the Company establish a public website to disclose operational, financial, and corporate governance information? (2) Does the Company adopt other means of information disclosure (such as establishing an English language website, delegating a professional to collect and disclose company information, implement a spokesperson system, and disclosing the process of investor conferences on the company website)? (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 sales results, before the prescribed time limit?	 		1. The Company has established corporate website and designated personnel to be responsible for disclosing operational, financial, and corporate governance information. 2. The Company has spokespersons and acting spokespersons, and designated persons responsible for the collection and disclosure of company information and provide it to the spokesperson and relevant business departments to answer the inquiries of interested parties and competent authorities. 3. The Company filed the first, second and third quarter financial reports before the required deadline.	No deviation. No deviation. The Company will continue to improve the timeliness of operations in order to file the annual financial report and the operating results each month as early as possible.
8. Does the Company disclose other important information to facilitate better understanding of the Company’s corporate governance practices (including, but not limited to current status of employee rights, employee care, investor relations, supplier relations, stakeholder rights, director and supervisor training regimes, risk management policies, and risk measurement standards as well as the implementation of client policies and the Company’s purchase of liability insurance for its directors and supervisors)?			1. Employee Rights: The Company and its employees maintain a smooth communication channel, and respect and protect their legitimate rights and interests; when the legitimate rights and interests are infringed, the Company will handle them appropriately based on the principle of justice. 2. Employee Care: The Company has established employee communication channels to encourage employees to communicate directly with management, and appropriately reflect employees' opinions on the Company's business and financial status or major	No deviation. No deviation.

Items Evaluated	Status	Status	Status	Variations (if any) with the Corporate Governance Best Practice Principles for TWSE/ GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
			decisions involving employees' interests. 3. Investor Relations: In addition to respecting and safeguarding the legitimate rights and interests of investors, the Company shall perform its business in accordance with the principle of good faith and properly handle transaction disputes. 4. Supplier Relations: The Company cherishes, values and is long-term partners with suppliers. We believe that only partnerships with similar ideas can last. Any supplier or contractor who delivers goods or provides services to the Company must perform in good faith and shall not damage the Company's corporate interests and image. The Company also asks employees to avoid any unethical behavior and conflicts of interest with manufacturers at any time. 5. Stakeholder's Rights: Proposals that concern the interests of directors are conducted with proper recusal procedure. 6. Director’s Further Study: Directors of the Company have professional background, and the majority of the directors are currently engaged in their professional field. In addition, the Company provides related information on corporate governance to directors periodically to remind them of their responsibilities. 7. Implementation of Risk Management Policies and Risk Measurement Standards: The Company has established administration regulations for important management indicators and implemented in accordance with the regulations. 8. Implementation of Customer Policy: The Company passed the ISO9001 Quality System Certification and has a dedicated department to implement the overall operation to ensure the results of the Company’s customer policy implementation. 9. The Company continues to purchase liability insurance for directors.	No deviation. No deviation. No deviation. No deviation. No deviation. No deviation. No deviation.

Items Evaluated	Status	Status	Status	Variations (if any) with the Corporate Governance Best Practice Principles for TWSE/ GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
9. Improvements made in the most recent fiscal year in response to the results of corporate governance evaluation conducted by the Corporate Governance Center of the Taiwan Stock Exchange Corporation, and improvement measures and plans for items yet to be improved.			According to the results of the latest Corporate Governance Evaluation, the Company has made major improvements which are explained below: 1. Does the company upload the English version of the financial statements for the meeting 7 days before the meeting of shareholders? 2. Does the company upload the English version of the proceedings manual and supplementary materials for the meeting 30 days before the meeting of shareholders?	Expected to be implemented from 2021. Expected to be implemented from 2021.

Note 1: Evaluation on the independence of CPAs

Note 1: Evaluation on the independence of CPAs
Evaluation item	Yes	No
1. Direct or indirect material financial interests between the CPAs and the Company?	V
2. Financing or endorsements with the Company’s Directors?	V
3. Close business relations with the Company?	V
4. Are CPAs or members in the audit team in positions that could seriously impact the audit during these two years?	V
5. Provide Non-audit services that may directly impact auditing tasks?	V
6. Serve as an agent in between to issue stocks and other securities?	V
7. Serve as the Company's defense counsel or represent the Company in mediating conflicts with third parties?	V
8. Are family members or relatives of the Company's Directors, Supervisors, or other individuals in positions that could seriously impact the audit?	V
9. Are the CPAs in line with the independence stated in Article 10 of the Accountant Ethical Codes and do they provide with Independence Declaration”?	V

4.4 Composition, responsibilities, and operation of the Remuneration Committee

4.4.1 Remuneration Committee members

Identity (Note 1)	Condition Name	Has over 5 years of work experience and the below professional qualifications	Has over 5 years of work experience and the below professional qualifications	Has over 5 years of work experience and the below professional qualifications	Independence Ranking (Note 2)	Independence Ranking (Note 2)	Independence Ranking (Note 2)	Independence Ranking (Note 2)	Independence Ranking (Note 2)	Independence Ranking (Note 2)	Independence Ranking (Note 2)	Independence Ranking (Note 2)	Independence Ranking (Note 2)	Independence Ranking (Note 2)	Number of Remuneration Committee memberships held in other public companies	Remarks (Note 3)
		Holds the position of lecturer (or above) at public or private college or university in business, law, finance, accounting or company operations	Holds a license, obtained through national examination, for the position of judge, district attorney, lawyer, accountant, or similar	Work experience in business, law, finance, accounting or company operations	1	2	3	4	5	6	7	8	9	10
Independent Director	LI, SHIH-JEN	✓	-	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	2	-
Independent Director	TSOU, YEN-CHU NG	-	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	2	-
Independent Director	LIN, YEN-TING	-	-	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	0	-

Note 1: Please fill in board director, independent director or other in the column of identity.

Note 2: For committee members who met any of the following circumstances during the past two years before being elected or during the term of office , please tick the appropriate corresponding boxes:

(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;

(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 amount of one percent or more of the total number of issued shares of the company or ranks as one of its top ten shareholders;

(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the officer in the preceding subparagraph 1, or of any of the above persons in the preceding subparagraphs 2 and 3;

(6) Not a director, supervisor, or employee of a company of which the majority of board seats or voting shares is controlled by a company that also controls the same of the company;

(7) Not a director, supervisor, or employee of a company of which the chairman or CEO (or equivalent) themselves or their spouse also serve as the company’s chairman or CEO (or equivalent);

(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 (circumstances when a specified company or institution holding 20% or more and less than 50% of the outstanding shares, and at the same time served as independent directors mutually at company or parent company, or subsidiary not included)

(9) Other than serving as a compensation committee member of the company, not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting services or consultation to the company or to any affiliate of the company, or a spouse thereof, and the service provided is an “audit service” or a “non-audit service which total compensation within the recent two years exceeds $500,000”;

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

Note 3: In the event that the person is a director, please specify if he/ she qualifies under Article 6-5 of “Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Taiwan Stock Exchange or the Taipei Exchange”.

4.4.2 Operations of the Remuneration Committee

(1) The Company’s Remuneration Committee is composed of three members.
(2) The term of office for current members runs from 27 June 2019 through 26 June 2022.
The Company convened a total of 2 (A) meetings of the Remuneration Committee over the
past fiscal year. The attendance was as follows:

Title	Name	Meetings Attended Personally (B)	Personal Attendance Rate (B/A)	Remarks
Convener	LIN, YEN-TING	2	100%	-
Member	LI-SHIH-JEN	2	100%	-
Member	TSOU, YEN-CHUNG	2	100%	-

Other disclosures:

If the Board does not adopt or amend the suggestions of the Remuneration committee, it shall state the date, term, proposal content, resolution results of the Board of Directors and the Company’s response to the Remuneration Committee (such as the remuneration approved by the Board of Directors is better than the suggestions of the Remuneration committee, should explain the discrepancy and its reasons): None.
Should a committee member oppose or retain their opinion regarding any decision made by the Remuneration Committee and their opinion has been recorded or submitted in a written statement, the committee meeting date, session, content of the resolution, opinions of all members, and the response to the opinions shall be recorded.
Remuneration Committee functions and powers:
(1) Set the remuneration of directors.
(2) Set the remuneration of Chairman, vice president, chief executive officer, and general manager.
(3) Other cases referred to by the board of directors for deliberation.

4.4.3 The proposals and results of the meeting and the company's handling of members' opinions

Date and Term	Proposal details and follow-ups
The 4th Remuneration Committee The 4thMeeting (2020.01.20)	1. 2019 year-end Bonus distribution of managers. Resolution: Unanimously approved. 2. 2020 Remuneration for Managers. Resolution: Unanimously approved. Handlingof the Remuneration Committee: not applicable.
The 4th Remuneration Committee The 5thMeeting (2020.12.17)	1. Discuss 2021 Remuneration for Managers. Resolution: Plan to discuss thy remuneration plan in the meeting at the beginning of 2021, after the discussion of implementation in 2020. Handlingof the Remuneration Committee: not applicable.
The 4th Remuneration Committee The 6thMeeting (2021.01.26)	1. Settle Year-End Bonus Distribution for managers in 2020. Resolution: Unanimously approved. 2. Discuss Remuneration for Managers in 2021. Resolution: Unanimously approved. Handlingof the Remuneration Committee: not applicable.
The 4th Remuneration Committee The 7thMeeting (2021.03.16)	1. Remuneration distribution for directors and employees in 2020. Resolution: Unanimously approved. Distribution guidelines will be discussed in the next meeting. Handlingof the Remuneration Committee: not applicable.

4.5 Implementation of Corporate Social Responsibility

Items Evaluated	Status	Status	Status	Variations (if any) with the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
1. Does the Company conduct risk assessments on environmental, social and corporate governance issues related to the company’s operations in accordance with the principle of materiality, and formulate relevant risk management policies or strategies?			The Company communicates with shareholders through diversified channels, summarizes the issues of concern, and draws up main management policies and implementation plans accordingly.	No deviation.
2. Does the Company set up a full-time (part-time) unit that promotes corporate social responsibility, and the board of directors authorizes senior management to deal with it, and reports the situation to the board?			For the promotion of corporate social responsibility, although the Company does not have a dedicated office, each department is still committed to the implementation of corporate social responsibility according to the scope of work.	The Company has not yet set up a dedicated office to promote corporate social responsibility, and each department implements some corporate social responsibility affairs according to the scope of work.
3. Environmental Topic (1) Does the Company establish applicable environmental management system based on its industrial characteristics? (2) Is the Company dedicated to improving utilization efficiency of various resources and making use of renewable materials with low environmental load impact? (3) Does the company assess the present and future risks and opportunities climate change poses on the company? (4) Does the company count greenhouse gas emissions, water consumption and total weight of waste in the	   		(1) The Company set out management rules for air pollution, water pollution, waste and toxic treatment. The Company also promotes the ISO14001 environmental management system and formulates related environment policies and has been certified by SGS. (2) The Company constructs fractionators to recycle and reuse solvents, and minimizes the purchase of solvents. Moreover, the Company promotes paperless operations to gradually digitize documents, reduce paper consumption and cooperate with government policies to carry out garbage classification, recycling and reduction activities. (3) The Company continues to pay attention to issues related to climate change and develops green products in response to possible future opportunities. (4) The Company conducts reporting and control of greenhouse gases every year, and carries out	No deviation. No deviation. No deviation. No deviation.

Items Evaluated	Status	Status	Status	Variations (if any) with the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
past two years, and formulate policies for energy saving and carbon reduction, greenhouse gas reduction, water use reduction or other waste management?			process improvement, energy saving and waste reduction to reduce energy and resource use.	.
4. Social Welfare Topic (1) Does the Company set up management policy and procedures in accordance with relevant laws and regulations and international human rights conventions? (2) Does the Company establish appropriately managed employee welfare measures (including salary, leave, and other benefits), and is its operational performance and achievements reflected in their pay? (3) Does the Company provide employees with a safe and healthy work environment and regularly implement safety and health education programs for employees? (4) Does the Company establish an effective competency development career training program for employees? (5) Does the Company comply with relevant regulations and international standards in customer health and safety, customer privacy, marketing and labeling of products and services, and does it	    		(1) The Company abides by the Labor Standards Act and respects the internationally recognized basic labor human rights principles, and establishes management methods to protect the legitimate rights and interests of employees and employment policies without discrimination. (2) The employees’ compensation and leaves are stipulated pursuant to the Labor Standards Act. According to Article 30 of the Articles of Incorporation, the Company shall set aside 3% of the profits as employee bonuses and nor more than 1% of the profit as director compensation. Performance bonus and year-end bonus will be distributed based on the performance assessment. (3) Implement three-in-one safety education and training regularly at least once a year, cooperate with the Environmental Protection Bureau and the Fire Bureau to conduct ad-hoc drills and hold an annual employee health check. For related instructions, please refer to Chapter 5.4 Friendly Working Environment in the Company’s corporate social responsibility report. (4) The Company regularly sends employees to participate in training courses held by competent authority for more opportunities for colleagues to acquire relevant professional knowledge. (5) The marketing and labeling of the Company’s products and services are in compliance with relevant laws and regulations and international standards.	No deviation. No deviation. No deviation. No deviation. No deviation.

Items Evaluated	Status	Status	Status	Variations (if any) with the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and reasons for such discrepancies	Variations (if any) with the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
establish consumer rights protection policies and complaint procedures? (6) Has the Company established supplier management that requires that suppliers adhere to regulations dealing with such issues as the environment, workplace safety and health, worker rights and, if so, what is the status of implementation?			(6) The Company requires suppliers to follow relevant regulations in terms of corporate governance, quality, environment and society, and through evaluation and assessment, effectively guide suppliers to follow relevant policies.	No deviation.
5. Does the Company follow international recognized reporting criteria or guides when disclosing non-financial Corporate Social Responsibility reports? Did it obtain assurance or verification statements from third-party certification bodies for previously disclosed reports?			The Company referred to the core options of the GRI Standards as the basis for compiling the corporate social responsibility report.	No deviation.
6. If PCSC has drawn up a code for CSR based on the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies, please describe any differences between said code and the Best Practice Principles: The company has not yet formulated Rules for the Practice of Corporate Social Responsibility.
7. Other important information for facilitating the understanding of CSR and its implementation: Relevant information of the company is disclosed on the Market Observation Post System.
4.6 Compliance with ethical corporate management and measures implemented:
Items Evaluated	Status				Variations (if any) with the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
1. Establishment of ethical operation policies and programs (1) Does the Company clearly specify the policy, practice of ethical management in the regulations and external files, and does the board of directors, management level actively implement the commitment of ethical management? (2) Does the Company implement prevention measures	 		(1) The Company has formulated the "Code of Integrity Management", clearly indicating the policy of integrity management, and the commitment to actively implement the management policy. (2) The Company has formulated related specifications		No deviation. No deviation.

Items Evaluated	Status	Status	Status	Variations (if any) with the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
for the business activities with high risk of dishonest behaviors in each clause of Article 7-2 of “Code of Ethical Management of the Listed and Over-the Counter Companies” or within the other business scope? (3) Does the Company formulate the operation procedure, behavior guidelines, punishments, and compliance policy? Does the Company also periodically review and revise the said programs?			and evaluation mechanisms in the "Code of Integrity Management", and designated a dedicated unit to be responsible for implementation. (3) The Company has formulated specifications and evaluation mechanisms in the "Code of Integrity Management", and designated a dedicated unit to be responsible for implementing the "Integrity Management Operating Procedures and Behavior Guidelines" that the Company has formulated, which regulates operating procedures, behavior guidelines, violations of regulations, and punishment and appeal system to show honest operation and prevent dishonest behavior.	No deviation
2. Implementing ethical corporate management (1) Does the Company evaluate the ethical records of the businesses with which it has dealings and include clear ethical corporate behavior provisions in contracts with such counterparties? (2) Does the Company set up a special unit under the board of directors to promote the integrity management of the enterprise, and regularly (at least once a year) report to the board of directors on its integrity management policies and plans to prevent dishonesty and supervision and implementation? (3) Does the Company formulate the policy of preventing conflict of interest, provide the proper statement channel, and carry out the implementation? (4) Has the Company established the effective accounting system, internal control system to	   		(1) Before establishing a business relationship, the Company will evaluate the legitimacy of the counterparty to ensure that its business operations are transparent and will not request, provide or accept bribes. (2) The Company has clearly designated a dedicated unit responsible for the formulation and supervision of the integrity management policy and precaution plan, and regularly (once a year) reports the implementation to the management. (3) The Company has formulated the "Code of Integrity Management", which clearly sets out a policy to prevent conflicts of interest and provides appropriate channels for voicing opinions. (4) The Company has established an effective accounting system and internal control system. In addition to	No deviation. No deviation. No deviation. No deviation.

Items Evaluated	Status	Status	Status	Variations (if any) with the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies and reasons for such discrepancies
	Yes	No	Brief Explanation
implement the ethical management, and are these systems regularly checked by the internal audit unit, or by the CPA? (5) Does the Company hold internal and external ethical corporate behavior training regularly?			regular audits by internal auditing office, Ernst & Young also conducts regular financial report and internal control reviews. (5) Depending on the actual management needs, the Company organizes internal and external education training on integrity management at least once a year.	No deviation.
3. Status for enforcing whistle-blowing system (1) Does the Company establish a specific whistleblowing and reward system, set up convenient channels, and designate appropriate personnel to handle the investigations, depending on the identity of the person being reported? (2) Does the Company established standard investigation procedures, follow-up measures, and relevant mechanisms to ensure confidentiality? (3) Does the Company adopt protection against possible mistreatment arising from reporting violations?	  		(1) The Company has formulated the "Code of Integrity Management", clearly defining reporting channels and assigning appropriate specialists. (2) The Company has formulated the "Code of Integrity Management", which clearly stipulates that the identity of the informant and the content of the report shall be kept confidential. (3) The Company has formulated the "Code of Integrity Management" to govern related measures.	No deviation. No deviation. No deviation.
4. Enhancing information disclosure Does the Company disclose the content of its Best Practice Principles and its effectiveness on their website and the TWSE market observation post system?			The Company has made relevant disclosures on the Company website and Market Observation Post System.	No deviation.
5. If the Company has established a code of ethical corporate management based on the Ethical Corporate Management Best Practice Principles for TWSE/GTSMListed Companies, please discuss the specifics of the code and implementation below: The Company will plan and handle different items according to actual management needs.
6. Other information that facilitate the understanding of Company ethical corporate management practices: None.

4.7 If the Company has established corporate governance principles and related guidelines, the means of accessing this information should be disclosed: None.

4.8 The Company should also disclose other significant information which may improve the understanding of its governance and operation: None.

4.9 Status of implementation of internal control system

4.9.1 Statement of Declaration on Internal Control System

SUNKO INK CO., LTD

Statement of Declaration on Internal Control System

Date: 16 March 2021

The internal control system of this Company in 2020 is hereby stated as follows according to the self-assessment results.

I.

II.

III.

IV.

V.

VI.

VII.

The Company acknowledges that to establish, implement and maintain the internal control system is the responsibility of the Company’s board of directors and manger, and this Company has established such system. Its purpose is to provide reasonable assurance for reaching the goals of effective and efficient operation (including making profits, achieving performance and ensuring the safety of assets, etc.), reliable, timely, transparent guidance and conforming to relevant specification, namely relevant laws and regulations, etc.

The internal control system has inherent constraints, and no matter how comprehensive its design may be, an effective internal control system is only capable of providing adequate assurance for achieving the above-mentioned three objectives. Moreover, the effectiveness of the internal control system may be altered as the environment changes and under different situations. Nevertheless, the Company's internal control system contains self-monitoring mechanisms, and the company takes immediate remedial actions in response to any identified deficiencies.

The Company assesses for the effectiveness of the internal control system's design and practices through the effectiveness of internal control system, as stated in the "Regulations Governing the Establishment of Internal Control System in Publicly Listed Companies" (hereinafter referred to as "the Regulations"). The criteria adopted by the Regulations identify five key components of managerial internal control: (1) Control Environment;(2) Risk Assessment; (3) Control Activities;(4) Information and Communication; and (5) Monitoring Activities. Each constituent element includes a number of categories. Please refer to "The Regulations" for the aforementioned categories.

The Company has already adopted the aforementioned internal control system assessment items to evaluate the effectiveness of internal control system design and implementation.

Based on the findings of the evaluation, the Company believes that, on 31 December 2020, it has maintained, in all material respects, an effective internal control system (including the supervision and management toward its subsidiaries), to provide reasonable assurance over our operational effectiveness and efficiency, reliability of financial reporting, and compliance with applicable regulations.

This statement of declaration shall be the primary content of the Company's Annual Report and prospectus and shall be made available to the public. 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 Act.

This Statement was approved by the Board on 16 March 2021 where all 6 attending directors hereby stating their consenting opinions.

SUNKO INK CO., LTD

Chairman: HUANG, TING-DI General Manager: HUANG, TING-DI

4.9.2 If the CPAs are entrusted for review of internal control system, the audit report prepared by the CPAs shall be disclosed: None.
4.10 From the most recent fiscal year up until the date of publication of the Annual Report, explain any legal penalty against the company or its internal personnel, or any disciplinary actions by the company against its personnel for violation of the internal control system, where the result of such penalty could have a material effect on shareholder equity or securities prices, the penalty, material deficiencies, and condition of improvement shall be disclosed: None.
4.11 Material resolutions adopted by the Shareholders' Meetings and the Board meetings in the most recent fiscal year up to the publication date of this Annual Report:
4.11.1 Material resolutions at the 2020 Board Meeting

Date	Term of Meeting	Material Resolutions
20 Jan 2020	The 17thBoard of Directors The 7thMeeting	1. Settlement of 2019 year-end bonus distribution of managers. 2. Review of 2020 remuneration proposal for managers. 3. Disposal of Taiping Factory and Taiping Factory II. 4. Acquisition of airpollution treatment system.
26 Feb 2020	The 17thBoard of Directors The 8thMeeting	1. Disposal of Dajia Factory.
16 Mar 2020	The 17thBoard of Directors The 9thMeeting	1. Review of the 2019 Parent Only and Consolidated financial reports. 2. Review of 2019 Business Report. 3. 2019 Earnings Appropriation proposal. 4. 2019 Statement of Declaration on Internal Control System. 5. Renewal of directors’ and managers’ liability insurance. 6. Application to banks for the loan credit line. 7. Amendments to the Company headquarters’ business address registration. 8. Amendments to the Regulations and procedures for the Board Meeting. 9. Amendments to the Operational Procedures for Loaning Funds to Others and Regulations and Procedures for Endorsements. 10. Renewal of consultant contracts. 11. Setting the date, venue and reasons for convening the 2020 shareholders’ meeting. 12. Matters related to the venue and session of the 2020 general shareholders’ meeting.
08 May 2020	The 17thBoard of Directors The 10thMeeting	1. Matters related to the business establishment of Chuansing Factory. 2. Review of CPA independence; appointment of 2020 financial and tax audit CPA. 3. Changes of the CPAs. 4. Application to banks for the loan credit line.

Date	Term of Meeting	Material Resolutions
		5. Budget on the renovation of Pingjhen factory and Dali factory. 6. Changes of the venue of the 2020 general shareholders’ meeting.
11 Aug 2020	The 17thBoard of Directors The 11thMeeting	1. Amendments to the Management Rules of the Computerized Information System Cycle. 2. Amendments to the Ethical Codes of Conduct. 3. Amendments to the Regulations of Performance Assessment for the Board. 4. Amendments to the Rules and Procedures of the Audit Committee. 5. Amendments to the Management Rules of the Procedures of the Election of Directors. 6. Formulation of the Management Rules of the Duties and Responsibilities of Independent Directors. 7. Formulation of the Management Rules of the Corporate Governance Best Practice Principles. 8. Formulation of the Management Rules of the Corporate Social Responsibility Best Practice Principles. 9. Application to banks for the loan credit line. 10. Disposal of shares of Ching-FengCo.
10 Sep 2020	The 17thBoard of Directors The 12thMeeting	1. Proposal of capital reduction. 2. Setting the date, venue and reasons for convening of the first provisional shareholders’ meetingin 2020.
10 Nov 2020	The 17thBoard of Directors The 13thMeeting	1. Renewal of consultant contracts.
17 Dec 2020	The 17thBoard of Directors The 14thMeeting	1. 2021 Operation Plan 2. 2021 Budget Plan 3. 2021 Table of Internal Audit planning 4. Approval of 2021 Remuneration for Managers. 5. Amendments to the Management Rules of the Computerized System Cycle.
14 Jan 2021	The 17thBoard of Directors The 15thMeeting	1. Adoption of treasury stock. Extraordinary motion: 1. Creating mortgage on the No. 1416 farm on Hsin-de-lung Rd for$4 million.
26 Jan 2021	The 17thBoard of Directors The 16thMeeting	1. Settlement of 2020 year-end bonus distribution of managers. 2. Review of 2021 Remuneration for Managers.
16 Mar 2021	The 17thBoard of Directors The 17thMeeting	1. Review of the 2020 parent only and consolidated financial reports. 2. Review of 2020 Business Report. 3. 2020 Earnings Appropriation proposal. 4. 2020 employees and directors remuneration distribution reviewed by the Remuneration Committee. 5. 2020 Statement of Declaration on Internal control system.

Date	Term of Meeting	Material Resolutions
		6. Renewal of directors’ and managers’ liability insurance. 7. Renewal of consultant contracts. 8. Application to banks for the loan credit line. 9. Setting the date, venue and reasons for convening of the 2021 general shareholders’ meeting. 10. Matters related to the venue and session of the 2021 general shareholders’ meeting.

4.11.2 Material resolutions at the 2020 shareholders meeting

Date	Name of Meeting	Material resolutions	Implementations
11 Jun 2020	2020 general shareholders’ meeting	1. Ratification of 2019 business report and financial reports.	Passed upon voting.
		2. Ratification of the 2019 Earnings Appropriation Report.	Passed upon voting and shall be distributed in line with the resolution in the meeting.
		3. Discussion on the amendments to the Operational Procedures for Loaning Funds to Others and Regulations and Procedures for Endorsements.	Passed upon voting and shall be implemented in line with the resolution in the meeting.
10 Nov 2020	2020 first provisional shareholders meeting	1. Adoption of capital reduction.	Passed upon voting and shall be implemented in line with the resolution in the meeting.

4.12 Major contents of any dissenting opinions on record or stated in a written statement made by Directors or Supervisors regarding material resolutions of the Board Meeting in the most recent year up to the publication date of this Annual Report: None.
4.13 Resignation or dismissal of the company’s key individuals, including the chairman, general manager, and heads of accounting, finance, internal audit and R&D in the most recent fiscal year up to the publication date of this Annual Report: None.
5 Information on CPA Professional Fees

Accounting Firm	Name of CPA	Name of CPA	Duration of audit	Remark
Ernst & Young	CHEN, MING-HONG	YEN, WEN-PI	2020/1/1 – 2020/3/31
Ernst & Young	TU, CHIN-YUAN	YEN, WEN-PI	2020/4/1 – 2020/12/31

Class interval table of information for CPA professional fees

Class interval table of information for CPA professional fees	Class interval table of information for CPA professional fees	Class interval table of information for CPA professional fees	Class interval table of information for CPA professional fees	Class interval table of information for CPA professional fees
Unit: NT$(in thousands)
Fee category Amount Range		Audit fee	Non-audit fee	Total
1	Less than NT$2,000 thousand	-	✓	✓
2	NT$2,000 thousand(inclusive)to NT$4,000 thousand	✓	-	✓
3	NT$4,000 thousand(inclusive)to NT$6,000 thousand	-	-	-
4	NT$6,000 thousand(inclusive)to NT$8,000 thousand	-	-	-
5	NT$8,000 thousand(inclusive)to NT$10,000 thousand	-	-	-
6	More than NT$10,000 thousand(inclusive)	-	-	-

5.1 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 equivalent to 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:

Unit: NT$ (in thousands) Accounting Non-audit fee Name of CPAs Firm Item Amount Registration of the CHEN, MING-HONG & Ernst & Young changes in the 18 YEN, WEN-PI Company’s address

5.2 If accounting firm was replaced and if the audit fees paid for the fiscal year in which such replacement took place are lower than those for the previous year, the reduction in the amount of audit fees, percentage of reduction and the reason(s) should be disclosed: None.
5.3 If the audit fees paid for the current year are lower than those for the previous fiscal year by 10 percent or more, the reduction in the amount of audit fees, reduction percentage, and reason(s) should be disclosed: None.
6 Information of Changing CPAs: None.
7 The Chairman, President and Financial or Accounting Manager of the Company who has, in the most recent year, held a position at the accounting firm of its CPA or at an affiliated company: None.

8 Equity transfer or changes in equity pledged by the Company's Directors, Supervisors, managerial officers or shareholders with shareholding percentage exceeding 10% in the most recent fiscal year up to the publication date of this Annual Report:

8.1 Circumstance of changes in equity of directors, supervisors, managers and major shareholders:

Title	Name	2020	2020	As of 12 April,2021	As of 12 April,2021
		Holding Increase (decrease)	Pledged Holding Increase (decrease)	Holding Increase (decrease) (Note2)	Pledged Holding Increase (decrease)
Chairman	KT Investment Co., Ltd.	43,000	-	(1,801,590)	-
	Representative of KT Investment Co., Ltd.:HUANG,TING-DI	-	-	-	-
Director (Note 1)	Fulilu Investment Co., Ltd.	-	-	(1,413,902)	-
	Representative of Fulilu Investment Co.,Ltd.:HUANG,TING-KAI	-	-	-	-
Director	Chiaoli Investment Co., Ltd.	-	-	(1,147,748)	-
	Representative of Chiaoli Investment Co.,Ltd.:HUANG,YI-RUNG	-	-	-	-
Director	HSIAO, JUNG-FU	-	-	(55,349)	-
Independent Director	LI, SHIH-JEN	-	-	-	-
Independent Director	TSOU, YEN-CHUNG	-	-	-	-
Independent Director	LIN, YEN-TING	-	-	-	-
General Manager	HUANG, TING-DI	-	-	(588)	-
Deputy General Manager	CHANG, JUN-PIN	-	-	(66,630)	-
Minister of Production	LIN, CHAO-YUAN	-	-	(38,219)	-
Minister of Production	SHEN, CHI-YUNG	-	-	-	-
Minister of Production	HUANG, SHUN-HSIEN	1,112,000	-	(429,124)	-
Manager of Management Department	HUNG, TING-YI	-	-	(116)	-
R&D Department Supervisor	TSOU, CHIOU-PENG	-	-	(72,014)	-
Finance Office Supervisor	WANG, TING-YU	-	-	(676)	-
Accounting Office Manager	WANG, SHENG-HUI	-	-	-	-

Note:

Fulilu Investment Co., Ltd. (and Representative HUANG, TING-KAI) ceased to serve as a director on 16 March 2021.
Approved by the Financial Supervisory Commission on 15 December 2020 (Jin-Guan-Cheng-Fa-Zi No. 1090376896), and was approved for the application for capital reduction and registration of changes by Letter Jing-Shou-Shang-Zi No. 10901243830. The effect from the capital reduction was stated in the column.

8.2 Stock transfers or pledge of stock rights to related parties: None.

9 Information of the shareholder whose shareholding ratio ranks top 10, mutual relation of related

person or spouse, a relative within the second degree of kinship of another:

Name	Shares Held Personally	Shares Held Personally	Shares Held by Spouse or Minor Children	Shares Held by Spouse or Minor Children	Shares Held by Nominee Agents	Shares Held by Nominee Agents	Names of Spouse or other relatives within two degrees of consanguinity who are also among Sunko’s top 10 largest shareholders	Names of Spouse or other relatives within two degrees of consanguinity who are also among Sunko’s top 10 largest shareholders
	Shares	%	Shares	%	Shares	%	Title(or Name)	Relationship
Macy Investment Co., Ltd.	16,838,191	8.91	-	-	(Note 1)	-	HUANG, YI-RUNG HUANG, TING-DI LIN, YU-PING WANG,PAO-LING	Director Director Director Supervisor
Representative of Macy Investment Co., Ltd.: CHIU, CHI-CHIH	-	-	(Note 1)	-	(Note 1)		KT Investment Co., Ltd.	Same representative
KT Investment Co., Ltd.	10,209,010	5.40	-	-	-	-	HUANG,YI-RUNG	Director
							HUANG,TING-DI	Supervisor
							SUNKO INK CO., LTD.	Director from theCompany
Representative of KT Investment Co., Ltd.: CHIU, CHI-CHIH	-	-	(Note 1)		(Note 1)	-	Macy Investment Co., Ltd.	Same representative
Fulilu Investment Co.,Ltd.	8,012,109	4.24	(Note 2)	-	(Note 2)	-	SUNKO INK CO., LTD.	Director from theCompany
Representative of Fulilu Investment Co., Ltd.: WANG, PAO-LING	-	-	(Note 1)	-	(Note 1)	-	Macy Investment Co., Ltd.	Supervisor
Chiaoli Investment Co., Ltd.	6,503,902	3.44	-	-	-	-	LIN, YU-PING HUANG, TING-DI SUNKO INK CO., LTD.	Director Director Director from the Company
Representative of Chiaoli Investment Co., Ltd.: KAO, CHING-MEI	-	-	(Note 1)		(Note 1)	-	LIN, YU-PING HUANG, TING-DI	Daughter Son-in-law
HUANG, YI-RUNG	5,988,685	3.17	1,717,855	0.91	-	-	Macy Investment Co., Ltd. KT Investment Co., Ltd. LIN, YU-PING HUANG,TING-DI	Director Director Daughter-in-law Son
Hsiang-ningCo., Ltd	4,946,693	2.62	(Note 1)	-	(Note 1)	-	(Note 1)	-
Representative of Hsiang-ning Co., Ltd: CHIU, SHAO-PIN	8,500	-	(Note 1)	-	(Note 1)	-	(Note 1)	-
SUNKO INK CO., LTD.	4,521,150	2.39	-	-	-	-	KT Investment Co., Ltd.	Director
							Fulilu Investment Co.,Ltd.	Director
							Chiaoli Investment Co.,Ltd.	Director
							HUANG, SHUEN-HSIEN	Head of production
Representative of SUNKO INK CO., LTD: HUANG,	3,332	0.00	3,223,446	1.71	-	-	Macy Investment Co., Ltd. KT InvestmentCo.,	Director Supervisor

TING-DI							Ltd. Chiaoli Investment Co., Ltd. HUANG, YI-RUNG LIN, YU-PING KAO, CHIN-MEI	Director Father Wife Daughter-in-law
LIN, YU-PING	3,146,718	1.66	80,060	0.04	-	-	Macy Investment Co., Ltd. Chiaoli Investment Co., Ltd. HUANG, YI-RUNG KAO, CHING-MEI HUANG,TING-DI	Director Director Father-in-law Mother Husband
Investment Account of Sinopac Holdings entrusted by Bank Sinopac	2,474,939	1.31	(Note 1)	-	(Note 1)	-	(Note 1)	-
HUANG, SHUEN-HSIEN	2,431,701	1.29	101,864	0.05		-	SUNKO INK CO., LTD.	Head of production

Note:

The shareholder is not an insider of the Company. Therefore, information about his/ her spouses, minor children, or other persons holding the shares is not available.
Fulilu Investment Co., Ltd. (and Representative HUANG, TING-KAI) ceased to serve as a director on 16 March 2021.
10 Number of shares hold for the same reinvestment business by the company’s directors, supervisors, manager and the company's directly or indirectly controlled business, and combined calculation of the comprehensive shareholding ratio:

	Unit: thousand shares; %	Unit: thousand shares; %	Unit: thousand shares; %	Unit: thousand shares; %	Unit: thousand shares; %	Unit: thousand shares; %
Affiliated Enterprise	Investments by SUNKO		Investments of Directors, Supervisors, managerial officers and directly or indirectly controlled businesses		Combined Investment
	Shares	%	Shares	%	Shares	%
Sunko Biotech Company, Ltd.	1,674	22.32	-	-	1,674	22.32
CHEN CHI TECHNOLOGY CO.,LTD.	1,640	41.00	-	-	1,640	41.00
Power Hero Corp. (Note 1)	686	100.00	-	-	686	100.00
Blessingthoughts Co. Ltd.	1,520	83.52	-	-	1,520	83.52
BNKC BIOCHEMICAL TECHNOLOGY CO.,LTD.	49	49.00	-	-	49	49.00
Power Rich International LTD.	990	30.00	-	-	990	30.00

Note 1: Power Hero Corp.’s registration was cancelled on 29 July 2020.

1 Source of Capital

IV. CAPITAL OVERVIEW

1.1 Shares issued

Units: NT$; Shares

						Units: NT$; Shares	Units: NT$; Shares	Units: NT$; Shares
Year/ Month	Issuance price	AuthorizedCapital		Paid-inCapital		Remarks
		Shares	Amount	Shares	Amount	Source of Capital	Capital Increased by Assets other thanCash	Other
1989/09	10.0	19,900,000	199,000,000	19,900,000	199,000,000	Capital Increase by Cash of 30,000,000 Capital Increase byRetained Earnings of 39,000,000	None
1991/12	10.0	22,885,000	228,850,000	22,885,000	228,850,000	Capital Increase by Retained Earnings of 29,850,000	None	Note 1
1992/11	10.0	30,208,200	302,082,000	30,208,200	302,082,000	Capital Increase by Retained Earnings of 73,232,000	None	Note 2
1993/12	10.0	35,343,594	353,435,940	35,343,594	353,435,940	Capital Increase by Retained Earnings of 51,353,940	None	Note 3
1994/10	10.0	42,000,000	420,000,000	42,000,000	420,000,000	Capital Increase by Cash of 20,617,390 Capital Increase byRetained Earnings of 45,946,670	None	Note 4
1995/06	10.0	46,200,000	462,000,000	46,200,000	462,000,000	Capital Increase by Retained Earnings of 42,000,000	None	Note 5
1996/03	10.0	73,900,000	739,000,000	53,130,000	531,300,000	Capital Increase by Retained Earnings of 69,300,000	None	Note 6
1997/07	10.0	73,900,000	739,000,000	71,062,600	710,626,00f0	Capital Increase by Cash of 115,570,000 Capital Increase byRetained Earnings of 63,756,000	None	Note 7
1998/06	10.0	150,000,000	1,500,000,000	95,934,510	959,345,100	Capital Increase by Retained Earnings of 106,593,900 Capita Increase byCapital surplus of 142,125,200	None	Note 8
2007/08	7.6	150,000,000	1,500,000,000	125,934,510	1,259,345,100	Private placement of 300,000,000	None	Note 9
2009/10	10.0	150,000,000	1,500,000,000	73,676,977	736,769,770	Capital reduction to cover losses of 522,575,330	None	Note 10
2012/11	6.0	150,000,000	1,500,000,000	78,676,977	786,769,770	Private placement of 50,000,000	None	Note 11
2012/12	5.95	150,000,000	1,500,000,000	83,676,977	836,769,770	Private placement of 50,000,000	None	Note 12
2016/04	10.0	250,000,000	2,500,000,000	222,347,344	2,223,473,440	Increase by issuance of new shares due to merger of 1,438,903,670 Reduction due to merger of 52,200,000	None	Note 13
2020/12	10.0	250,000,000	2,500,000,000	188,995,242	1,889,952,420	Capital reduction of 333,521,020.	None	Note 14

Note:

(1) Approved by the Securities and Futures Commission, Ministry of Finance with Letter (80) Tai-Cai-Cheng (1) No. 03297 on 27 November 1991.
(2) Approved by the Securities and Futures Commission, Ministry of Finance with Letter (81) Tai-Cai-Cheng (1) No. 02945 on 13 November 1992.
(3) Approved by the Securities and Futures Commission, Ministry of Finance with Letter (82) Tai-Cai-Cheng (1) No. 44324 on 1 December 1993.
(4) Approved by the Securities and Futures Commission, Ministry of Finance with Letter (83) Tai-Cai-Cheng (1) No. 32308 on 30 July 1994.
(5) Approved by the Securities and Futures Commission, Ministry of Finance with Letter (84) Tai-Cai-Cheng (1) No. 37871 on 29 June 1995.
(6) Approved by the Securities and Futures Commission, Ministry of Finance with Letter (85) Tai-Cai-Cheng (1) No. 18743 on 7 March 1996.
(7) The Financial Supervisory Commission approved a capital increase by Retained Earnings of 63,756,000 and capital increase by cash of 115,570,000 on 28 July 1997. (Letter Tai-Cai-Cheng(1) No. 51554)
(8) Approved by the Securities and Futures Commission, Ministry of Finance with Letter (87) Tai-Cai-Cheng (1) No. 51527 on 15 June 1998.
(9) 30,000,000 privately placed ordinary shares, with a face value of NT$10, issued at a discount of NT$7.6 per share.
(10) The Financial Supervisory Commission of the Executive Yuan approved a capital reduction of NT$522,575,330 by Letter Jin-Guan-Cheng-FA-Zi No. 0980043460 on 18 September 2009. On 23 October 2009, the Ministry of Economic Affairs approved on the application for capital reduction and the registration of changes to the Articles of Association by Letter Jing-Shou-Shang-Zi No. 09801239000.
(11) 5,000,000 privately placed ordinary shares, with a face value of NT$10, issued at a discount of NT$6 per share. On 15 November 2012, the Ministry of Economic Affairs approved on the application for the registration of changes in the issuance of new shares by Letter Jing-Shou-Shang-Zi No. 10101236030.
(12) 5,000,000 privately placed ordinary shares, with a face value of NT$10, issued at a discount of NT$5.95 per share. On 24 December 2012, the Ministry of Economic Affairs approved on the application for the registration of changes in the issuance of new shares by Letter Jing-Shou-Shang-Zi No. 10101260990.
(13) Approved by the Financial Supervisory Commission on 4 March 2016 (Letter Jin-Guan-Cheng-FA-Zi No. 1050005429) on the issue of 143,890,367 ordinary shares with a face value of NT$ 10 due to the merger, and was approved for the registration of changes by Letter Jing-Shou-Shang-Zi No. 10501066910.
(14) Approved by the Financial Supervisory Commission on 15 December 2020 (Letter Jin-Guan-Cheng-FA-Zi No. 1090376896), and was approved for the application for capital reduction and registration of changes by Letter Jing-Shou-Shang-Zi No. 10901243830.

	12 April 2021	12 April 2021	12 April 2021	12 April 2021
Type of Stock	Authorized Capital			Remarks
	OutstandingShares	Non-Issued Shares	Total
Common Stock	Public:169,826,722 Private:19,168,520	61,004,758	250,000,000	-

Note: The Company doesn’t issue any preferred stock.

Information related to the Declaration Policy

Estimated shares of Objective and estimated gains of the Estimated issuance date of the Issued Shares Remarks Class of Securities issuance issued shares non-issued shares Total Shares Amount Shares Price - - - - - - - -

2 Shareholder structure

2 Shareholder structure	2 Shareholder structure	2 Shareholder structure
			12 April 2021
Shareholder Quantity	Government Agencies	Financial Institutions	Other Juridical Persons	Individuals	Foreign Institutions and Individuals	Total
Number of Shareholders	0	2	141	16,416	38	16,597
Shares Held	0	33,328	56,590,404	126,725,630	5,645,880	188,995,242
Holding Percentage	0	0.02%	29.94%	67.05%	2.98%	100.00%
As of 12 April 2021,the Companydid not have anyequityholdings from China.

3 Shareholding Distribution Status

12 April 2021

hareholding Distribution Status			12 April 2021
Tiers of Shareholding	Number of Shareholders	Total Shares Held	Holding Percentage
1 to 999	12,467	1,543,602	0.82%
1,000 to 5,000	2,316	5,996,358	3.17%
5,001 to 10,000	691	5,363,804	2.84%
10,001 to 15,000	190	2,344,438	1.24%
15,001 to 20,000	204	3,580,211	1.89%
20,001 to 30,000	179	4,527,419	2.40%
30,001 to 50,000	166	6,552,675	3.47%
50,001 to 100,000	176	12,354,368	6.54%
100,001 to 200,000	79	11,133,560	5.89%
200,001 to 400,000	59	17,026,512	9.01%
400,001 to 600,000	19	9,375,424	4.96%
600,001 to 800,000	18	12,604,898	6.67%
800,001 to1,000,000	1	969,116	0.51%
1,000,001 and above	32	95,622,857	50.60%
Total	16,597	188,995,242	100.00%

Note: The Company does not issue any preferred stock.

4 List of Major shareholders:

12 April 2021

ist of Major shareholders:		12 April 2021
Shares Shareholders	Number of Shares Held	Holding Percentage
MacyInvestment Co., Ltd.	16,838,191	8.91%
KT Investment Co., Ltd.	10,209,010	5.40%
Fulilu Investment Co., Ltd.	8,012,109	4.24%
Chiaoli Investment Co., Ltd.	6,503,902	3.44%
HUANG, YI-RUNG	5,988,685	3.17%
Hsiang-ning Co., Ltd.	4,946,693	2.62%
SUNKO INK CO., LTD.	4,521,150	2.39%
LIN, YU-PING	3,146,718	1.66%
Investment Account of Sinopac Holdings entrusted by Bank Sinopac	2,474,939	1.31%
HUANG, SHUEN-HSIEN	2,431,701	1.29%

5 Share prices, net value, earnings, dividends, and other relevant information in the past two years

Unit: NT$

					Unit: NT$
Item	Year		2019	2020	As of 31 March 2021
Market Price per Share (Note 1)	Highest		10.05	12.35	11.05
	Lowest		8.40	8.00	9.72
	Average		9.21	10.15	10.40
Net Value per Share (Note 2)	Before Distribution		10.47	13.43	13.22
	After Distribution		-	-	-
Earnings per Share	Weighted Average Number ofShares (Shares)		217,047,462	215,779,688	184,474,092
	Earnings per Share	Before adjustment	(0.03)	2.43	(0.22)
		After adjustment (Note 3)	(0.03)	2.43	(0.22)
Dividend per Share	Cash	dividend	-	0.5	-
	Stock Dividends	Dividends from Retained Earnings	-	-	-
		Dividends from CapitalSurplus	-	-	-
	Accumulated Undistributed Dividends (Note4)		-		-
Return on Investment	Price-to-earnings Ratio (Note 5)		(307.00)	4.18	(47.27)
	Price-to-dividend Ratio (Note 6)		-	20.30	-
	Cash Dividend Yield (Note 7)		-	4.93	-

Note:

(1) The highest and lowest market price of the shares for each fiscal year are listed and the average market price for each fiscal year is calculated based on trading value and volume in each fiscal year.

(2) Please fill these rows based on the number of shares issued at the end of the fiscal year and the distribution plan approved at the shareholders' meeting in the subsequent fiscal year.

(3) If there are any retroactive adjustments needed due to stock grants, earnings per share before and after the adjustment should be listed.

(4) If there are any retroactive adjustments needed due to stock grants, earnings per share before and after the adjustment should be listed.

(5) Price/Earnings Ratio= Average closing price per share for the current fiscal year / earnings per share.

(6) Price/Dividend Ratio= Average closing price per share of the year/cash dividends per share.

(7) Cash Dividend Yield =cash dividend per share / current year average per share closing price.

(8) The net value of each share, surplus of each share shall be filled in with the data checked (checked and approved) by the CPA in the nearest quarter by the end of print date of annual report, while the rest of the fields shall be filled in with the data of current year by the end of print date of annual report.

6 Dividend policy and implementation status

6.1 Dividend policy as outlined in the Company’s Articles of Incorporation

The general final accounts shall be distributed according to the following order in case of surplus:

(1) Income tax obligation
(2) Offsetting accumulated deficits, if any
(3) Set aside 10% as legal reserve. However, when the legal reserve amounts to the authorized capital, this shall not apply.

(4) Set aside or reserve special reserve in accordance with law and regulations.
(5) In combining the balance with the accumulated undistributed surplus of the previous period, the Board shall prepare a proposal for earnings distribution and submit it to the shareholders’ meeting for a resolution distributing dividends to shareholders.

To adhere to the principle of sustainable operation, the Board of Directors shall, pursuant to the Company Act and the Company’s Articles of Incorporation, make the dividend distribution proposal (including cash and share bonus) annually prior to the shareholders’ meeting based on the Company’s operation, financials and capital planning. At least 20% of the dividends must be paid in the form of cash.

6.2 The Company shall distribute the dividends based on the Company’s earnings status, taking future capital needs and the impact of the tax policy on the company and shareholders into accounts. The Company determines the type, the amount and timing of dividend while maintaining stable dividends.
6.3 The proposal for dividends distribution this year

The proposal approved by the Board of Directors on 16 March 2021 is as follows:

Legal reserve Special reserve Cash dividends	Appropriation of earnings $53,692 5,624 92,237	Dividendper share
		$0.5

7 The impacts of issuing stock grants in this shareholder’s meeting on the Company’s operational performance and earnings per share: None.
8 Employee compensation and directors’ and supervisors’ remuneration
8.1 The amount or scope of the remuneration of employees, directors and supervisors stated in the Articles of Incorporation: According to the Articles of Incorporation, in case of surplus, at least 3% of profit of the current year shall be appropriated as employees’ compensation, and no higher than 1% of profit of the current year shall be appropriated as remuneration to board directors. However, the accumulated deficits, if any, shall first be made up for. The Company may, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, have the profit distributed to employees in the form of stock or cash; and in addition thereto a report of such distribution is submitted to the shareholders’ meeting.
8.2 The accounting treatment when there is a discrepancy between the calculation basis of the amount of compensation for employees, directors and supervisors, and the calculation basis of the number of shares for employee compensation distributed by stocks and the actual distribution amount in the current period.
- Based on earnings as of 31 December 2020 and for the year then ended, the Company appropriated amounts of the employees’ compensation and remuneration to directors as 3% and

0.8% of earnings for 2020, respectively. The employees’ compensation and remuneration to directors for the year ended of 31 December 2020 amounted to $15,075 thousand and $4,020 thousand, respectively, which were reported in Employee benefits expenses.

8.3 Remuneration distribution approved by the Board of Directors: The Company approved to pay the 2020 employees’ compensation and directors’ remuneration amounted to $15,075 thousand and $4,020 thousand respectively. There is no difference between the amount stated as expenses in the 2020 financial report.
8.4 Status of actual distribution of remuneration of employees , directors and supervisors of the previous year (including the number, amount and share price of shares distributed), any discrepancies with the recognized remuneration of employees, directors and supervisors, and detailed description of amount, reason and treatment of discrepancy: None.
9 Company Share Repurchase Status

Company Share Repurchase Status	Company Share Repurchase Status
18 May2021
Repurchase time	First (Period)
Repurchasepurpose	Transfer shares to employees
Repurchaseperiod	14 November 2018 ~ 10 January2019
Price range	$6.5 to $14
Type andquantityof shares that repurchased	5,319,000 common shares
Amount of shares that repurchased	$52,768,285
Ratio of the quantity of shares that are repurchased to thequantityexpected to be repurchased	88.65%
Number of shares cancelled and transferred	`－`
Accumulated number of company shares held	4,521,150 shares (Note)
Percentage of total company shares held (%)	2.39%

Note: Approved by the Financial Supervisory Commission on 15 December 2020 (Jin-Guan-Cheng-Fa-Zi No.

1090376896) and was approved by Letter Jing-Shou-Shang-Zi No. 10901243830 for capital reduction and registration of changes from 5,319,000 shares to 4,521,150 shares.

10 Status of Corporate Bonds: None.
11 Status of Preferred Stocks: None.
12 Status of Global Depositary Receipts: None.
13 Status of Employee Stock Options: None.
14 Restriction on new employee shares: Hone.
15 Status of New Shares Issuance in Connection with Mergers and Acquisitions: None.
16 Financing Plans and Implementation: None.

V. OPERATION HIGHLIGHTS

1 Business Activities
1.1 Business Scope
- 1.1.1 Main Businesses
  - (1) Active Pharmaceutical Ingredients of Agrochemicals
  - (2) Rubber and polymer additives
  - (3) Cosmetic raw materials
  - (4) Elastomer (TPV), and Elastomer (TPU)
  - (5) Synthetic resin, primer, adhesive, hardening agent, accelerant
  - (6) Other chemicals
- 1.1.2 Major Product Lines and the breakdowns

Items/Year		Unit: NT$ (in thousands) For the years ended 31December
		2019 2020
		Amount % Amount % 2,291,903 70.65 1,969,398 71.55 433,925 13.38 396,896 14.42 411,070 12.67 302,225 10.98 101,408 3.13 76,757 2.79 5,662 0.17 7,325 0.26 3,243,968 100.00 2,752,601 100.00
Fine chemicals Agrochemicals Elastomer Resin Others Total

1.1.3 Current Products and New Products Planned

Category Product Name New Products Planned Antioxidant Fine Curing Agent Increasing existing product Non-halogenated Flame Retardant Chemicals item Electronic Chemicals Nucleating Agent TPU TPV TPU Fabric Polymer Polyol Footwear material PU products Chlorinated PP Others Others Hair Dye

1.2 Industry Overview

1.2.1 The present and the future
(1) Chemical industry is the cornerstone of consumer products and technology industry. It can be divided into two broad categories which include commodity chemicals and fine chemicals. Fine chemicals are complex substances that are produced in batches, lesser volumes and at a higher unit price. Prone to variations from different composition, the products have diverse characteristics. As the chemicals are significantly smaller in scale of production, the cost only accounts for an insignificant portion in the total product costs. Considering the fine chemicals’ low ratio in the end-use costs, the users

don’t usually take risks changing their suppliers. As a result, fine chemicals customer loyalty is greater than that of commodity chemicals.

	Output	Composition	Application	Life Cycle	Added Value
Commodity Chemicals	High	Simple	Wide	Long	Low
Fine
Chemicals	low	Complex	Narrow	Short	High

Source: 2020 Petrochemical and Specialty Chemical Industry Yearbook

Widely used in the industry, fine chemicals are a class of specialized products used for various purposes. Therefore, it is ambiguous to state what defines fine chemicals. polymer additives, adhesives, and coatings are the three categories in which fine chemicals are mainly used. Take our products for example: antioxidant, nucleating agent and non-halogenated flame retardants lie in the “polymer additives” category, while curing agent and electronic chemicals are found with applications such as golf ball core, PCB and etc.

Industrial output of Polymer Additives		Unit: US$ million Forthe years ended 31 December,
	2018 2019 2020 2021 2022 42,208 43,263 41,532 43,609 44,481

Source: 2020 Petrochemical and Specialty Chemical Industry Yearbook

(2) Polymers maintains a certain hardness in room temperature and can be softened and reshaped after heating. Thanks to its excellent physical properties, polymer is gradually replacing the easily-broken rubber and PVC that’s prohibited in phases. Some areas where this chemical is used include: pipe material, membrane, footwear materials, textile, medical devices and adhesives.
Polymer is faced with the fluctuating raw material costs and environmental protection policies as its challenges. As the upstream raw material is trending toward self-manufacturing, we can reduce our costs. Moreover, the downstream processing market gradually switched from China to Southeast Asia and other regions. Due to the competitive market and the price war on general products, the industry is shifting towards functional or customized products, as well as eco-friendly products, such as expanded elastomer. This development is beneficial to market segmentation and helps maintain profit.
(3) Agrochemicals are particularly important as the population grows and the demand for food increases. According to statistics from the Food and Agriculture Organization of the UN, if every country around the globe fails to exercise plant protection, 60% of the crops will not be harvested, which may immediately cause global famine. Under the future development of the international division of labor and supply chain integration, the Company benefits from its deep OEM relationships with world-class manufacturers in this industry.

(4) Other technical developments such as flame retardants used in PCB: restricted by the EU regulations, phosphorus flame retardants are relatively low in toxicity. Therefore, they will extensively replace brominated flame retardants and become the key selling item in the future.
1.2.2 Correlation with upstream, midstream, and downstream of the industry

Taiwan’s petrochemical industry develops in a reverse integration manner. First, the downstream processing industry is established, and then the petrochemical processing raw materials imported from abroad form a midstream system. Finally, a naphtha cracking plant is built to supply petrochemical basic raw materials to form a complete upstream, midstream, and downstream petrochemical system.

The upstream of the petrochemical and plastic rubber industry chain includes: crude oil, naphtha, gasoline, diesel, kerosene, fuel oil, and lubricants refined from crude oil, and related mining and drilling equipment. The midstream is the basic petrochemical raw materials produced by the cracking of upstream raw materials, such as ethylene, propylene, butadiene, benzene, phenol, etc., as well as plastics, rubber, and man-made fibers made from the above raw materials through chemical reactions such as polymerization, esterification and alkylation. These materials are roughly divided into general-purpose and special-purpose chemicals according to their use. As for downstream, application varies from all kinds of daily necessities made of plastic, rubber, man-made fibers to other chemical raw materials, such as plastic products, rubber products, detergents, man-made fibers, dyes, adhesives, plasticizers, pesticides and cosmetics. The Company’s main products are fine chemicals, thermoplastic elastomers and agrochemicals, which are in the mid and downstream of the industry. The correlation among upper, middle, and downstream are listed as follows:

Upstream Midstream Downstream

Raw materials from the upstream in oil industry and related drilling equipment

Plastic products Rubber products Raw materials from the Cleaning products Artificial fiber midstream in oil Dyestuff Adhesive (Synthetic Resin) industry (Ethylene, Propylene, Plasticizer Agrochemicals Butadiene, Benzol, Phenol, etc.) Cosmetics

1.2.3 Trends in product development and competition

(1) Fine chemicals – plastic additives

Trends in product development: Develop green and non-toxic products to use in biodegradable polymer additives and the recycled polymer additives.

Competition: During recent years, major international manufacturers have continued to integrate the resources from upstream to downstream. China, South Korea and other manufacturers have joined the antioxidant market. Moreover, the industry leader BASF lowered its selling price to maintain the market share. In addition, the price of raw materials is sensitive and easily affected by the international situation, price of crude oil and policies on environmental protection and industrial safety. Therefore, additives manufacturers in Taiwan are still in severe competitions.

(2) Polymer products

Trends in product development: Develop recyclable, eco-friendly, low-VOC and solvent-free products that feature weather resistance and temperature tolerance. Competition: Polymer products include TPUs and TPVs. However, there are many competitors in this industry. Most major manufacturers have already integrated with their upstream raw material suppliers. As a consequence, it is unfavorable for small factories like us to achieve raw materials at a decent price. In the future, we will develop high value-added products with differentiated and customized specifications to overcome the competition.

(3) Agrochemicals

Competition: As a result of the worldwide food shortages and the need for prevention of vector-borne diseases, the demand for agrochemicals is not affected by the economy. Nevertheless, factors such as the advocation on eco-friendly and pesticides reduction policies are what led to the gradual decrease on the demand of agrochemicals. In the past two years, China has been rectifying its environmental protection and industrial safety. Also, the China-United States trade war has caused many manufacturers shutting down their production lines. It turned out that we received an increasing order due to the order-transfer effects. Yet, it is still unpredictable how long this situation will last.

1.3 The Overview of Technology and R&D
1.3.1 Research and development expenses

R&D Expense in 2020: $54,464 thousand.

R&D Expense as of 31 March 2021: $12,644 thousand.

1.3.2 Successfully developed technologies and products
(1) PP clarifier (K21)
(2) Solvent resistant water-borne PU (K-FEEL504; 621)
(3) TPV foam material (EL342; E30G)

1.4 Short-term and Long-term Business Development Plan

1.4.1 Short-term Plan

(1) Strengthen the cooperation with international manufacturers and increase the market share.
(2) Develop and promote new products: curing agent (339G), PP clarifier (K21), TPU yarn, TPV flame retardants, polymer footwear materials, hair dye, chloride PP.
(3) Be certified by the brand dealers on Expanded Elastomer footwear materials
(4) Develop secondary supplier to reduce the risk of raw materials shortage
(5) Optimize the MIC manufacturing process
(6) Automate the production lines that are labor intensive

1.4.2 Long-term Plan

(1) Key trends and strategies on industrial transformation

Under such shortcomings as strict environmental regulations, limited natural resources, and increasing environmental costs, high-emission industries gradually lost their positions in the competitive market. To successfully navigate this changing landscape, chemical industry will need to develop toward low-pollution and high-economies-of-scale orientation.

(2) Research and development and technical services
a. Self-develop and form patent applications
b. Provide technical services to meet customer demands
c. Assist customers in developing customized products and grab the preemptive opportunities in the market
(3) Diversification Strategies

Well utilize the Company’s know-hows in chemicals and manufacturing products. For instance:

a. Produce personal sanitization products (special cosmetics) using cGMP qualifications from Chuansing Factory
b. Given the recyclable character of polymer, develop footwear using 100% polymer then recycle and reuse
c. Seek out businesses that are chemical-related and supported by the government
(4) “Save Energy, Save Earth”

In response to the “Save Energy, Save Earth” campaign, our future manufacturing process design will take action to promote energy saving, decarbonization, recycle and reuse, and to exploit the decarbonization technology.

2 Market and Sales Overview

2.1 Market Analysis

2.1.1 Sales region of Main Products

Unit: NT$ (in thousands)

		Unit: NT$(in thousands)	Unit: NT$(in thousands)	Unit: NT$(in thousands)	Unit: NT$(in thousands)
Year Region		For theyears ended 31 December
		2019		2020
		Amount	%	Amount	%
Domestic sales		2,312,005	71.27	2,008,856	72.98
Export	America	184,011	5.67	155,139	5.64
	Asia	502,406	15.49	398,457	14,48
	Europe	242,724	7.48	156,384	5,68
	Others	2,822	0.09	33,765	1,22
	Sub-total	931,963	28.73	743,745	27.02
Total		3,243,968	100.00	2,752,601	100.00

2.1.2 Market supply and demand and market growth in the future

Items	Description
Fine chemicals	1. Polymer additives are affected by the petrochemical industry and the global economic trend. The COVID-19 pandemic has resulted in the declining production output. As the developing countries’ growing needs on plastics, it is expected that the global market of additives is steadily growing. 2. Despite the ebbing growth in the mobile phone industry, market demand on electronic chemicals in the PCB industry are still steady, thanks to the growth of automotive electronics, wearable devices and notebooks.
Polymer Products	The COVID-19 pandemic in 2020 caused a drastically decrease in the demand of TPU and TPV in the end-user market. Still, it is expected that the demand of polymer products remains growing thanks to the products’ wide application on the staple merchandise and the rising awareness on environmental protection. However, quotation request and willingness to produce are affected by the fluctuated price of raw materials such as MDI and AA. But still, given the adequate manufacturers, the supply is higher than the demand in the short run.
Agrochemicals	Considering the price war and policy to eliminate agrochemicals usage, we keep conducting strategic cooperation agreements with major factories to stabilize our sales. In the meantime, we also work with our clients to develop low-toxic products which are less harmful to the environment.

2.1.3 Sales Volume Forecast and Related Information

For additional details, please refer to page 9.

2.1.4 Competitive niches, favorable and unfavorable factors for long-term growth and

countermeasures

(a) Competitive niches and favorable factors
① Varied product specifications are conducive to risk diversification and broaden the market.
② Considering cost reduction, major foreign manufacturers seek out OEM factories with high productivity. The Company has abundant experiences in chemicals synthesis and leads an excellent R&D team. We keep improving and optimizing our manufacturing process to make our products more competitive in the market. Moreover, our R&D team is able to provide what the international manufacturers need.
③ Master the high-quality and highly-effective formulation, set up our technical threshold to customize our products and meet our clients’ needs.
④ As for the polymer applications in the market, we keep developing light-weight and high-rebound products such as expanded polymer composite. The increasing demand, advanced production techniques, and our marketing strategies help increasing our market share.
⑤ Agricultural development relies on agrochemicals to ensure the amount harvested. The Company has experience and know-hows on agrochemicals manufacturing.
(b) Unfavorable factors and Countermeasures
① Affected by the global economy, the amount and price of raw materials that rely heavily on importing is not easy to control.
- Countermeasures: Develop secondary supplier to reduce the risk; the sales and purchase departments must keep in close contact to stabilize the costs of raw materials.
② The price rivalry to gain customer preference among entities at the same level/ Horizontal competition in price
- Countermeasures: Maintain the high quality of our products in avoidance of price wars with inferior products; Strengthen our cooperative relationship with major international manufacturers; Optimize manufacturing processes with energy saving and decarbonization to lower the manufacturing costs.
③ Increasing demand on polymer attracts more competitors into the market. Thus, the highly-competitive market is one issue we need to address.
- Countermeasures: Develop patents on manufacturing process and applications; Develop unique materials; Customize products to increase customer loyalty.
④ Both domestic and foreign regulations on environmental protection are becoming stricter.

Countermeasures: Keep improving manufacturing processes and decarbonizing.

2.2 Important Applications and Manufacturing Processes of Main Products

2.2.1 Important Applications of Major Products

Items	Description
Fine chemicals	(1) Antioxidants: The specifications of the antioxidant produced by the Company are mainly used in various plastic products, which can slow down the oxidation of plastic products. The antioxidants are widely used in areas such as: polyolefins (such as polyethylene, polypropylene) and olefin copolymers, polycarbonate, PS resin, PVC, engineering plastics, rubber and petroleum products, ABS resin and other polymer materials. It can also be used in adhesives, natural or synthetic adhesive resins. (2) Flame Retardant: It is mainly used in the technological development of PCB. Due to the restrictions of EU regulations, the substrate material must be halogen-free and heat resistance and stability must be improved to meet the process requirement. This type of product has low toxicity, good processability and good compatibility with resin. (3) Electronic Chemicals: It is used as a reducing agent for printed circuit boards. (4) Nucleating Agent: Mainly added to PP to enhance its transparency and rigidity, and its end products are used in food containers and packaging films.
Polymer Products	TPUs and TPVs are high-performance elastomer. Due to the rising awareness of global environmental protection, PVC has been gradually banned in the European and American market. Instead, polymer becomes the substitute for PVC. Polymer has characteristics of wear resistance, with high mechanical strength and durability, tensile property, excellent performance against repetitive stress and decent cold resistance. Some areas where this chemical is used include: footwear material market, sporting goods market, medical devices, conveyor belt material, pipe material, roller material, fiber, and membrane. Primer: used in synthetic leather of PVC and PU series for surface treatment purposes. Crosslinker: For synthetic leather lamination application. The physical property of PU resin is used in application of additives and coatings. Polycoat: Synthetic leather of coating materials for manufacturing purses, leathershoes,furniture, and clothes.
Agrochemicals	The products are non-hormonal and contact herbicides. This quick-active chemical behaves inactivated in the soil and affects insignificantly to the roots of crops. Herbicides include Lannate and Furadan, etc. They’re mainly used to deal with pests such as nephotettix cincticeps uhler, nilaparvata lugens, sorghum aphid, corn leaf aphid, etc.

2.2.2 Manufacturing Process of main products

(1) Fine chemicals

Antioxidants:

Raw Material → Reaction → Neutralization → Crystallization → Filtration → Dry → End Product

Flame Retardant:

Raw Material → Reaction → Filtration → Dry → End Product

Electronic Chemicals:

Raw Material → Reaction → Filtration → Washing → Curing → End Product

Nucleating Agent:

Raw Material → Reaction → Purification → Filtration → Dry → End Product

(2) Polymer Products

Thermoplastic Elastomers (TPU)

Raw Material → Polymerization → Pelletization → Ripening → End Product

Thermoplastic Elastomers (TPV)

Raw Material → Synthesis → Dry → Extrusion → End Product

(3) Agrochemicals

Raw Material → Reaction → Crystallization → Filtration → Dry → End Product

(4) Other Products

Crosslinking Agent:

Raw Material → Reaction → Titration → End Product

Primer:

Raw Material → Stir and heat → Reaction → Grinding→ Filtration → End Product Polycoat:

Raw Material → Stir and heat → Prepolymerization → Polymerization → Viscosity adjustment → End Product

2.2.3 Supply Status of Main Materials

a. Adipic acid (AA): Mainly purchased from Japan, South Korea, and China.
b. Toluene (TOL): 100% purchased from dealers.
c. Dimethylformamide (DMF): 100% purchased from dealers.
d. Methyl Ethyl Ketone (MEK): 100% purchased from dealers.
e. Butylene glycol (1.4 BG): 100% domestically purchased.
f. Ehylene Glycol (EG): 100% purchased from traders.
g. Isocyanate (MDI): Mainly purchased from Japan, South Korea, and China.
h. Phosphorus trichloride: Mainly purchased from Europe and India.
i. 2,4 di-tert-butyl phenol: 100% domestically purchased.
j. Potassium borohydride (KBH): 100% purchased from China.
k. 3,4-Dimethylbenzaldehyde (3.4DMBA): 90% purchased from China.

2.2.4 Names of customers who contributed to more than 10% of total purchase (or sales) amount in one of the most recent two years and the corresponding purchase (or sales) amounts and percentages, as well as reasons for their changes (if applicable):

(1) List of major customers

Unit: NT$ (in thousands)

	(1) List of major customers	(1) List of major customers	(1) List of major customers	(1) List of major customers	(1) List of major customers	(1) List of major customers	(1) List of major customers	(1) List of major customers	Unit: NT$(in thousands)	Unit: NT$(in thousands)	Unit: NT$(in thousands)	Unit: NT$(in thousands)
	For the years ended 31 December								2021, as of the end of previous quarter
	2019				2020
Item	Name	Amount	As a percentage of net sales (%)	Relations hip with issuer	Name	Amount	As a percentage of net sales (%)	Relati onshi p with issuer	Name	Amount	As a percentage of net sales (%)	Relation ship with issuer
1	Client A	595,915	18.37	None	Client A	445,211	16.16	None	Client A	95,117	13.09	None
2	Others	2,648,053	81.63		Others	2,307,390	83.84		Others	631,541	86.91
	Net sales	3,243,968	100.00		Net sales	2,752,601	100.00		Net sales	726,658	100.00

Reasons for changes:

The COVID-19 pandemic resulted to the deduction in orders. Therefore, our sales to Client A decreased.

(2) List of major suppliers

Unit: NT$ (in thousands)

	(2) List of major suppliers	(2) List of major suppliers	(2) List of major suppliers	(2) List of major suppliers	(2) List of major suppliers	(2) List of major suppliers	(2) List of major suppliers	(2) List of major suppliers	Unit: NT$(in thousands)	Unit: NT$(in thousands)	Unit: NT$(in thousands)	Unit: NT$(in thousands)
	As of 31 December,								2021, as of the end of previous quarter
	2019				2020
Item	Name	Amount	As a percentage of net purchase (%)	Relation ship with issuer	Name	Amount	As a percentag e of net purchase (%)	Relatio nship with issuer	Name	Amount	As a percentag e of net purchase (%)	Relation ship with issuer
1	10243	291,362	15.18	None	10243	273,589	18.42	None	10243	83,487	24.97	None
	Others	1,627,559	84.82		Others	1,212,008	81.58		Others	250,816	75.03
	Net purchase	1,918,921	100.00		Net purchase	1,485,597	100.00		Net purchase	334,303	100.00

Reasons for changes:

Due to the COVID-19 situation, our demand was in a lower position. Thus, the purchasing amount decreased in 2020.

2.2.5 The Production Volume and Value for the recent two years

Unit: Ton/NT$ thousands

2.2.5 The Production	Volume and Value for the recent two years Unit: Ton/NT$ thousands	Volume and Value for the recent two years Unit: Ton/NT$ thousands	Volume and Value for the recent two years Unit: Ton/NT$ thousands	Volume and Value for the recent two years Unit: Ton/NT$ thousands	Volume and Value for the recent two years Unit: Ton/NT$ thousands	Volume and Value for the recent two years Unit: Ton/NT$ thousands
Year Primary Product	As of 31 December,
	2019			2020
	Production capacity	Yield	Output value	Production capacity	Yield	Output value
Fine chemicals	15,198	14,309	1,988,994	15,559	14,304	1,803,431
Agrochemicals	715	625	297,523	1,086	732	270,942
TPU	3,653	4,025	367,600	3,092	3,135	266,629
Resin	1,572	1,298	117,669	2,388	1,178	105,023
Others	-	4,113	154,122	-	1,520	21,906
Total	21,138	24,370	2,925,908	22,125	20,869	2,467,931

2.2.6 The Sales Volume and Value for the recent two years

Unit: Ton/NT$ thousands

	Unit: Ton/NT$ thousands	Unit: Ton/NT$ thousands	Unit: Ton/NT$ thousands	Unit: Ton/NT$ thousands	Unit: Ton/NT$ thousands	Unit: Ton/NT$ thousands	Unit: Ton/NT$ thousands	Unit: Ton/NT$ thousands
Year PrimaryProduct	As of31 December,
	2019				2020
	Domestic Sales		Exports		Domestic Sales		Exports
	Quantity	Value	Quantity	Value	Quantity	Value	Quantity	Value
Fine chemicals	14,165	1,728,910	2,842	562,993	11,327	1,518,073	2,463	451,325
Agrochemicals	308	131,756	418	302,169	271	133,419	435	263,477
TPU	3,621	375,762	313	35,308	2,991	292,709	96	9,516
Resin	955	70,701	533	30,707	802	57,330	398	19,427
Others	31	4,876	5	786	1,082	7,325	-	-
Total	19,080	2,312,005	4,111	931,963	16,473	2,008,856	3,392	743,745

3 Employee Information

Of recent two years as of the publication date of this Annual Report, number of employee, average years of service, average age and education distribution ratio.

18 May 2021

vice, average age and education	distribution ratio.		18 May2021
Year	2019	2020	Current fiscal year up toApril302021
Direct labor	244	236	231
Indirect labor	189	182	175
R&D personnel	36	32	32
Management and Administrative staff	79	76	75
Total	548	526	513
Average age	39.37	39.84	39.89
	8.14	8.59	9.16
Ph.D.	1.28%	1.5%	1.56%
Masters	6.02%	5.7%	5.85%

	Bachelor's degree	53.10%	53.8%	54.77%
	Senior high school	29.20%	29.17%	29.24%
	Below senior high school	10.40%	9.83%	8.58%

4 Expenditures on Environmental Protection
4.1 For the loss suffered in the most recent year and up to the publication date of this Annual Report due to environmental pollution incidents (including any compensation occurred and any violations of environmental protection regulations found under inspection, specify the disposition dates, disposition reference numbers, the articles and content of regulation violated, and the content of dispositions):
4.1.1 15 May 2020, Chung-Shi-Huan-Ji-Zi No. 1090002084
- Violation of Article 24-2 of the Air Pollution Control Act (performing operation prior to the issuance of permit), with a fine of $200,000.
4.1.2 13 February 2020, Zhong-Shi-Hsiao-Yu-Zi No. 10900065551 Violation of Article 9-1 of the Fire Services Act (Failure to report the service findings within the given time to the local fire department), with a fine of $10,000.
4.1.3 10 March 2020, Fu-Shou-Lao-Jian-Zi No. 1090051735 Violation of Article 6-1 of the Occupational Safety and Health Act (Injuries posed while operating the machinery), with a fine of $60,000.
4.1.4 25 May 2020, Chung-Shi-Huan-Kong-Zi No. 1090070376
- Violation of Article 20-1 of the Air Pollution Control Act (Exceeding the emission limit of odor from channel P901), with a fine of $100,000.
4.2 An estimate of possible expenditures that could be incurred currently and in the future and countermeasures being or to be taken. If a reasonable estimation cannot be provided, an explanation shall be disclosed:
4.2.1 While establishing a new wastewater treatment plant, the Company applied for permission for operation prior to receiving permission for a trial run. During the installation, operation, and inspection of the air pollution control equipment, the environment protection bureau found that we performed operations before the permission was granted. Later we received the permission and our operation went back to normal.
4.2.2 We demolished all our fire protection equipment when disposing of the Taiping factory, therefore we did not report our service findings to the local fire department. However, the fire department imposed a penalty as the factory was not delisted from operation. We later completed filing the service findings to the authorities.
4.2.3 We installed safety devices onto the machinery to avoid injuries.
4.2.4 The dirty Raschig ring in the wet scrubber resulted in the excessive emission of odor from channel P901. The estimated expense was around $160,000. We’ve already improved the cleaning and inspections. As of now we have replaced all the Raschig rings in the wet scrubber.

5 Labor relations
5.1 The Company's employee benefits for studying, training, pension systems and its implementation status as well as labor agreements and measures for preserving employee rights

Items	Implementations
	Annual health checks, injury and emergency assistance, children's education
Employee Benefits	scholarships, wedding and funeral subsidies, pregnancy subsidies, festival benefits,
Measures	birthday cash gifts, staff travel activities; parental leave and paternity leave handled in
	accordance with the Act Of Gender Equality In Employment.
Personnel Service	New Year's allowance and cash gift.
Emergency Relief	The employee’s incident, financial aid approved by the welfare committee, weddings
and Subsidies	and funerals subsidies, injury and sickness subsidies, employee maternity subsidies.
Training and Continuing education	In addition to new employees’ training, employees are selected from time to time to participate in training, and advance study. Hours of 2020 internal training: 1469 hours. Hours of 2020 external training: 2755.5 hours.
Educational Scholarships	Labor education and scholarships for children.
	In order to ensure employees’ livelihood after retirement, pension regulations are
	established in accordance with the Labor Standards Act and Labor Pension Act.
Pension system	Retirement reserves are allocated on a monthly basis. Also, a retirement reserve
	supervision committee is set up for the purpose of management, supervision and
	implementation.
Labor agreement	A labor-management meeting is held every quarter.
Measures to protect	Through labor-management meeting, both parties are able to communicate with each
employee rights	other and protect the rights and interests of employees.

5.2 Losses suffered in the most recent year and up to the publication date of this Annual Report due to labor disputes (including any violations of the Labor Standards Act found under inspection, specify the disposition dates, disposition reference numbers, the articles and content of regulation violated, and the content of dispositions):
5.2.1 The lawsuit was about whether the employment relationship existed between the two parties. After the Supreme Court rejected the appeal on 25 November 2020 (Tai-Shang-Zi No. 603 Trial in 2020), the said relationship is assured to be present. The two parties met for mediation at the Taiwan High Court Taichung Branch Court. The dispute was settled by paying the counterparty NT$4,750,000. Both parties agreed to terminate the employment contract.
5.2.2 On 26 January 2021, a penalty of $50,000 was paid pursuant to Article 32-2, Article 79-1-1 and Article 80-1-1 of the Labor Standards Act. (Fu-Lao-Jian-Zi No. 1100019121)
5.3 Countermeasures:
If any dispute occurs between the labor and management, the representatives of both parties can fully express their opinions and communicate in a labor-management coordination meeting to find the best solution. The relationship between labor and management is harmonious, and problems can be resolved through coordination. There were no labor disputes or losses in the

most recent three years. In addition to the uniform given to the production staff, the Company also offers birthday benefits, festival benefits, emergency relief and subsidies, wedding and funeral subsidies and other welfare. The Company also hold labor trainings and team-building activities to ensure employees’ both mental and physical health.

6 Important contracts: None.

VI. FINANCIAL INFORMATION

1 Condensed Balance Sheet, Income Statement, Names of the CPAs and their audit opinions 1.1 Condensed Balance Sheet and Income Statement for the recent five years

Condensed Balance Sheet (Consolidated)

Unit: NT$ (in thousands)

Year Item	Year Item	Financial information for the recent fiveyears(Note 1)	Financial information for the recent fiveyears(Note 1)	Financial information for the recent fiveyears(Note 1)	Financial information for the recent fiveyears(Note 1)	Financial information for the recent fiveyears(Note 1)	As of the first quarter of 2021 (Note 2)
		2016 Retrospective Restatement (Note 4)	2017	2018	2019	2020
Current assets		2,430,449	2,318,223	2,131,091	2,073,670	2,654,855	2,286,648
Property, Plant, and Equipment		1,612,138	1,689,810	1,708,859	1,773,778	1,702,885	1,719,853
Intangible assets		11,164	11,164	11,164	11,164	14,914	14,107
Other assets		231,953	218,922	252,489	386,838	426,767	417,229
Total assets		4,285,704	4,238,119	4,103,603	4,245,450	4,799,421	4,437,837
Current Liabilities	Before distribution	1,045,960	962,708	1,099,769	1,056,740	1,474,762	1,186,355
	After distribution	1,201,603	1,007,177	(Note 3)	1,056,740	(Note 3)	(Note 3)
Long-term liabilities		792,699	920,380	729.203	911,373	847,282	812,448
Total liabilities	Before distribution	1,838,659	1,883,088	1,828,972	1,968,113	2,322,044	1,998,803
	After distribution	1,994,302	1,927,557	1,099,769	1,968,113	(Note 3)	(Note 3)
Equity Attributable to the Parent company		2,438,942	2,350,425	2,270,336	2,272,871	2,477,198	2,438,856
Capital-Common Stock		2,223,473	2,223,473	2,223,473	2,223,473	1,889,952	1,889,952
Capital Surplus		35,888	35,888	37,785	37,785	37,848	37,848
Retained Earnings	Before distribution	186,820	86,245	68,305	62,953	599,874	559,880
	After distribution	31,177	41,776	68,305	62,953	(Note 3)	(Note 3)
Other Equity		(7,239)	4,819	(14,519)	1,428	(5,623)	(3,971)
TreasuryStock		-	-	(44,708)	(52,768)	(44,853)	(44,853)
Prior interests under joint control		-	-	-	-	-	-
Non-controllingInterest		8,103	4,606	4,295	4,466	179	178
Total Equity	Before distribution	2,447,045	2,355,031	2,274,631	2,277,337	2,477,377	2,439,034
	After distribution	2,291,402	2,310,562	2,274,631	2,277,337	(Note 3)	(Note 3)

Note 1: The financial information above have been audited and certified by the CPAs. Note 2: The financial information above have been audited by the CPAs. Note 3: The amount after distribution shall refer to the amount determined after the resolution in the shareholders’ meeting in the following fiscal year.

Note 4: Due to the merger of Guoqing Chemical Co., Ltd. on 30 March 2016, it was restated retrospectively in accordance with the relevant letter interpretation.

Condensed Balance Sheet (Parent Only)

Unit: NT$ (in thousands)

Year Item	Year Item	Financial information for the recent fiveyears(Note 1)	Financial information for the recent fiveyears(Note 1)	Financial information for the recent fiveyears(Note 1)	Financial information for the recent fiveyears(Note 1)	Financial information for the recent fiveyears(Note 1)	As of the first quarter of 2021
		2016 Retrospective Restatement (Note 3)	2017	2018	2019	2020
Current assets		2,387,183	2,290,283	2,116,098	2,057,881	2,653,798	-
Property, Plant, and Equipment		1,607,340	1,687,974	1,707,813	1,773,348	1,702,853	-
Intangible assets		11,164	11,164	11,164	11,164	14,914	-
Other assets		263,963	234,578	263,918	398,583	427,676	-
Total assets		4,269,650	4,223,999	4,098,993	4,240,976	4,799,241	-
Current Liabilities	Before distribution	1,038,009	953,194	1,099,454	1,056,732	1,474,761	-
	After distribution	1,193,652	997,663	(Note 2)	1,056,732	(Note 2)	-
Long-term liabilities		792,699	920,380	729,203	911,373	847,282	-
Total liabilities	Before distribution	1,830,708	1,873,574	1,828,657	1,968,105	2,322,043	-
	After distribution	1,986,351	1,918,043	1,828,657	1,968,105	(Note 2)	-
Capital-Common Stock		2,223,473	2,223,473	2,223,473	2,223,473	1,889,952	-
Capital Surplus		35,888	35,888	37,785	37,785	37,848	-
Retained Earnings	Before distribution	186,820	86,245	68,305	62,953	599,874	-
	After distribution	31,177	41,776	68,305	62,953	(Note 2)	-
Other Equity		(7,239)	4,819	(14,519)	1,428	(5,623)	-
TreasuryStock		-	-	(44,708)	(52,768)	(44,853)	-
Prior interests under joint control		-	-	-	-	-	-
Non-jointly controlled equitybefore the merger		-	-	-	-	-	-
Total Equity	Before distribution	2,438,942	2,350,425	2,270,336	2,272,871	2,477,198	-
	After distribution	2,283,299	2,305,956	2,270,336	2,272,871	(Note 2)	-

Note 1: The financial information above have been audited and certified by the CPAs. Note 2: The amount after distribution shall refer to the amount determined after the resolution in the shareholders’ meeting in the following fiscal year. Note 3: Due to the merger of Guoqing Chemical Co., Ltd. on 30 March 2016, it was retrospectively restated in accordance with the relevant letter interpretation.

Condensed Income Statement (Consolidated)

Unit: EPS expressed in NT$; others in NT$ thousands

Year Item	Financial information for the recent five years (Note 1)	Financial information for the recent five years (Note 1)	Financial information for the recent five years (Note 1)	Financial information for the recent five years (Note 1)	Financial information for the recent five years (Note 1)	As of the first quarter of 2021 (Note 2)
	2016 Retrospective Restatement (Note 4)	2017	2018	2019	2020
OperatingRevenue	3,579,226	3,408,905	3,451,774	3,243,968	2,752,601	726,658
Gross Profit	676,777	381,618	250,793	282,137	139,355	23,474
Income (Loss) from Operation	337,443	110,020	(36,391)	17,323	(243,755)	(33,837)
Non-operating Income and Expenses	(8,233)	(41,837)	48,253	(26,408)	727,049	(4,708)
Income (loss) from continuing operation before income tax	329,210	68,183	11,862	(9,085)	483,294	(38,545)
Income Tax Benefits (Expenses)	(43,424)	886	2,857	2,208	41,012	(1,450)
Net Income (Loss) from ContinuingOperations	285,786	69,069	14,719	(6,877)	524,306	(39,995)
Income (Loss) from Discontinued Operations	-	-	-	-	-	-
Net Income(Loss)	285,786	69,069	14,719	(6,877)	524,306	(39,995)
Other Comprehensive Income (Loss) (after Tax)	(5,790)	(637)	(5,780)	17,643	5,466	1,652
Total Comprehensive Income (Loss)	279,996	68,432	8,939	10,766	529,772	(38,343)
Net Income Attributable to the parent company	209,115	70,042	16,123	(6,808)	524,404	(39,994)
Net Income Attributable to Non-jointly controlled equity before the merger	21,959	-	-	-	-	-
Net Income Attributable to Non-ControllingInterests	54,712	(973)	(1,404)	(69)	(98)	(1)
Total Comprehensive Income Attributable to stockholder of theparent	203,598	69,474	10,353	10,595	529,870	(38,342)
Total Comprehensive Income Attributable to Non-jointly controlled equity before the merger	21,959	-	-	-	-	-
Total Comprehensive Income Attributable to Non-ControllingInterests	54,439	(1,042)	(1,414)	171	(98)	(1)
Earnings per Share (NT$) (Note 3)	1.17	0.32	0.07	(0.03)	2.43	(0.22)

Note 1: The financial information above have been audited and certified by the CPAs. Note 2: The financial information above have been audited by the CPAs.

Note 3: Earnings per share is calculated retrospectively based on the weighted average number of shares outstanding in the current year.

Note 4: Due to the merger of Guoqing Chemical Co., Ltd. on 30 March 2016, it was retrospectively restated in accordance with the relevant letter interpretation.

Condensed Income Statement (Parent Only)

Unit: EPS expressed in NT$; others in NT$ thousands

Year Item	Financial information for the recent five years (Note 1)	Financial information for the recent five years (Note 1)	Financial information for the recent five years (Note 1)	Financial information for the recent five years (Note 1)	Financial information for the recent five years (Note 1)	As of the first quarter of 2021
	2016 Retrospective Restatement (Note 3)	2017	2018	2019	2020
OperatingRevenue	3,553,246	3,374,463	3,417,297	3,228,494	2,752,601	-
Gross Profit	660,315	378,021	245,761	280,761	139,355	-
Income (Loss) from Operation	331,893	117,260	(26,937)	17,813	(243,686)	-
Non-operating Income and Expenses	(6,061)	(48,104)	40,203	(26,829)	727,078	-
Income (loss) from continuing operation before income tax	325,832	69,156	13,266	(9,016)	483,392	-
Income Tax Benefits (Expenses)	(41,539)	886	2,857	2,208	41,012	-
Net Income (Loss) from ContinuingOperations	231,074	70,042	16,123	(6,808)	524,404	-
Income (Loss) from Discontinued Operations	-	-	-	-	-	-
Net Income (Loss)	231,074	70,042	16,123	(6,808)	524,404	-
Other Comprehensive Income (Loss) (after Tax)	(5,517)	(568)	(5,770)	17,403	5,466	-
Total Comprehensive Income (Loss)	225,557	69,474	10,353	10,595	529,870	-
Earnings per Share (NT$) (Note 2)	1.17	0.32	0.07	(0.03)	2.43	-

Note 1: The financial information above have been audited and certified by the CPAs. Note 2: Earnings per share is calculated retrospectively based on the weighted average number of shares outstanding in the current year.

Note 3: Due to the merger of Guoqing Chemical Co., Ltd. on 30 March 2016, it was retrospectively restated in accordance with the relevant letter interpretation.

1.2 Names of the CPAs and their audit opinions for the recent five years

Year	Accounting Firm	Name of the CPA	Audit Opinion
2016	Ernst & Young	YEN, WEN-PI/ TU, CHIN-YUAN	Unqualified plus other matters paragraph
2017	Ernst & Young	YEN, WEN-PI/ TU, CHIN-YUAN	Unqualified
2018	Ernst & Young	CHEN, MING-HONG/ YEN, WEN-PI	Unqualified plus other matters paragraph
2019	Ernst & Young	CHEN, MING-HONG/ YEN, WEN-PI	Unqualified plus other matters paragraph
2020	Ernst & Young	TU, CHIN-YUAN/ YEN, WEN-PI	Unqualified

2 Financial analysis for the recent five years

2.1 Financial analysis (Consolidated)

Item	Year	Financial analysis for the recent five years (Note 1)	Financial analysis for the recent five years (Note 1)	Financial analysis for the recent five years (Note 1)	Financial analysis for the recent five years (Note 1)	Financial analysis for the recent five years (Note 1)	As of the first quarter of 2021 (Note 2)
		2016	2017	2018	2019	2020
Financial Structure	Debt to Assets Ratio(%)	42.90	44.43	44.57	46.36	48.38	45.04
	Long-Term Capital to Property, Plant and Equipment Ratio (%)	200.96	193.83	175.78	179.77	195.24	189.06
Liquidity	Current Ratio (%)	232.37	240.80	193.78	196.23	180.02	192.75
	Quick Ratio (%)	168.61	163.10	119.71	113.04	128.73	137.95
	Interest Coverage	17.93	5.27	1.62	0.54	30.92	(11.07)
Operating Performance	Accounts Receivable Turnover (times)	4.52	4.69	4.83	4.86	4.63	4.76
	Average Collection Days	80	78	76	75	79	77
	Inventory Turnover (times)	4.05	4.15	4.43	3.41	3.07	3.73
	Accounts Payable Turnover (times)	8.09	8.75	9.35	8.87	8.47	9.62
	Average Inventory Turnover Days	90	88	82	107	119	98
	Property, Plant and Equipment Turnover (times)	2.22	2.06	2.03	1.86	1.58	1.7
	Total Assets Turnover (times)	0.83	0.80	0.83	0.78	0.61	0.63
Profitability	ROA (%)	6.99	1.93	0.72	0.21	11.88	(3.24)
	ROE (%)	12.37	2.88	0.64	(0.30)	22.05	(6.51)
	Ratio of Pre-tax Profit to Paid-in Capital (%)	14.81	3.07	(1.64)	(0.41)	25.57	(8.16)
	Net Margin (%)	7.98	2.03	0.43	(0.21)	19.05	(5.5)
	Earnings per Share (NT$) (Note 3)	1.17	0.32	0.07	(0.03)	2.43	(0.22)
Cash Flow	Cash Flow Ratio (%)	87.62	19.16	16.67	20.69	16.92	1.06
	Cash Flow Adequacy (%)	382.13	196.76	140.21	117.52	116.57	52.01
	Cash Flow Reinvestment Ratio (%)	18.53	0.56	2.78	4.27	4.62	0.06
Leverage	Operating Leverage	1.71	3.25	(5.36)	15.54	(0.11)	(100)
	Financial Leverage	1.06	1.17	0.66	(7.80)	(0.94)	(0.91)
The reasons for changes in financial ratios above 20% over the past two years: 1. The increase in interest coverage was mainly due to the increase in net income before tax. 2. The decrease in ROA was mainly due to the decrease in operating revenue. 3. The increase in each profitability ratio was mainly due to the increase in net income after tax. 4. The decrease in the operating leverage was mainly due to the decrease in operating profits and the increase in variable operating costs and expenses. 5. The decrease in the financial leverage was mainly due to the decrease in operating profits.

The increase in each profitability ratio was mainly due to the increase in net income after tax. 4. The decrease in the operating leverage was mainly due to the decrease in operating profits and the increase in variable operating costs and expenses. 5. The decrease in the financial leverage was mainly due to the decrease in operating profits. Note 1: The financial information above have been audited and certified by the CPAs. Note 2: The financial information above have been audited by the CPAs. Note 3: Earnings per share was calculated retrospectively based on the weighted average number of shares outstanding in the current year.

2.2 Financial analysis (Parent Only)

Item	Year	Financial analysis for the recent five years (Note 1)	Financial analysis for the recent five years (Note 1)	Financial analysis for the recent five years (Note 1)	Financial analysis for the recent five years (Note 1)	Financial analysis for the recent five years (Note 1)	As of the first quarter of 2021
		2016	2017	2018	2019	2020
Financial Structure	Debt to Assets Ratio(%)	42.88	44.36	44.61	46.41	48.38	-
	Long-Term Capital to Property, Plant and Equipment Ratio (%)	201.06	193.77	175.64	179.56	195.24	-
Liquidity	Current Ratio (%)	229.98	240.27	192.47	194.74	179.95	-
	Quick Ratio (%)	165.88	162.66	118.44	111.58	128.68	-
	Interest Coverage	17.76	5.33	1.70	0.54	30.93	-
Operating Performance	Accounts Receivable Turnover (times)	4.77	4.65	4.78	4.84	4.63	-
	Average Collection Days	77	79	76	75	79	-
	Inventory Turnover (times)	4.04	4.13	4.41	3.39	3.07	-
	Accounts Payable Turnover (times)	8.12	8.71	9.27	8.82	8.47	-
	Average Inventory Turnover Days	90	88	83	108	119	-
	Property, Plant and Equipment Turnover (times)	2.21	2.05	2.01	1.85	1.58	-
	Total Assets Turnover (times)	0.83	0.79	0.82	0.77	0.61	-
Profitability	ROA (%)	5.74	1.96	0.75	0.21	11.89	-
	ROE (%)	10.05	2.92	0.70	(0.30)	22.08	-
	Ratio of Pre-tax Profit to Paid-in Capital (%)	14.65	3.11	0.60	(0.41)	25.58	-
	Net Margin (%)	6.50	2.08	0.47	(0.21)	19.05	-
	Earnings per Share (NT$) (Note2)	1.17	0.32	0.07	(0.03)	2.43	-
Cash Flow	Cash Flow Ratio (%)	87.60	19.68	17.58	20.64	16.92	-
	Cash Flow Adequacy (%)	386.52	200.11	141.92	118.72	117.33	-
	Cash Flow Reinvestment Ratio (%)	18.42	0.62	2.99	4.27	4.62	-
Leverage	Operating Leverage	1.72	3.10	(7.65)	15.11	(0.10)	-
	Financial Leverage	1.06	1.16	0.59	(10.28)	(0.94)	-
The reasons for changes in financial ratios above 20% over the past two years: 1. The increase in interest coverage was mainly due to the increase in net income before tax. 2. The decrease in ROA was mainly due to the decrease in operating revenue. 3. The increase in each profitability ratio was mainly due to the increase in net income after tax. 4. The decrease in operating leverage was mainly due to the decrease in operating profits and increase in variable operating costs and expenses. 5. The decrease in financial leverage was mainly due to the decrease in operating profits.

The increase in each profitability ratio was mainly due to the increase in net income after tax. 4. The decrease in operating leverage was mainly due to the decrease in operating profits and increase in variable operating costs and expenses. 5. The decrease in financial leverage was mainly due to the decrease in operating profits. Note 1: The financial information above have been audited and certified by the CPAs.

Note 2: Earnings per share was calculated retrospectively based on the weighted average number of shares outstanding in the current year.

Note I. The formulas are as follows:

Financial Structure
6.1.1 Debt to Assets Ratio = total liabilities / total assets
6.1.2 Long-term Capital to Property, Plant and Equipment Ratio = (total shareholders’ equity + non-current liabilities) / net property, plant and equipment
Liquidity
(1) Current Ratio = current assets / current liabilities
(2) Quick Ratio = (current assets – inventory – prepaid expenses) / current liabilities
(3) Interest Coverage = earnings before interest and taxes / interest expenses
Operating Performance
(1) Accounts Receivables turnover rate (including bills receivable resulting from accounts receivable and business operations) = Net sales / average accounts receivable in various periods (including bills receivable resulting from accounts receivable and business operations).
(2) Average collection days = 365 / receivables turnover ratio
(3) Inventory turnover rate = cost of goods sold / average inventory
(4) Accounts Payables turnover rate (including bills payable resulting from accounts payable and business operations) = Cost of sales / Average accounts payable in various periods (including bills payable resulting from accounts payable and business operations).
(5) Average inventory turnover days = 365 / inventory turnover rate.
(6) Property, Plant and Equipment turnover rate = net sales / average net property, plant and equipment
(7) Total asset turnover rate = net sales / average total assets.
Profitability
(1) Return on Assets = [after-tax net income + interest expense × (1 – effective tax rate)] / average total assets
(2) Return on Equity = after-tax net income / average equity
(3) Net Margin = after-tax net income / net sales
(4) Earnings per Share = (net income attributable to the parent company – preferred stock dividends) / weighted average number of shares outstanding (Note II)
Cash Flow
(1) Cash Flow Ratio = net cash flows from operating activities / current liabilities
(2) Cash Flow Adequacy Ratio = net cash flows from operating activities for the recent five years/ sum of (capital expenditures+ increase in inventory + cash dividends) of the recent five years.
(3) Cash Flow Reinvestment Ratio = (net cash flows from operating activities – cash dividends) / (gross property, plant and equipment + long-term investments + other non-current assets + working capital) (Note III)
Leverage
(1) Operating Leverage = (net operating revenue – variable operating costs and expenses) / operating profit. (Note IV)
(2) Financial Leverage = operating profit / (operating profit – interest expenses)

Note II. When calculating the Earnings Per Share, the following matters shall be noted:

Based on the weighted average outstanding shares, not the outstanding shares at year-end.
Under circumstances of capital increase by cash or transactions of treasury stock, the outstanding period shall be taken into consideration while calculating the weighted average outstanding shares.
Under circumstances of capital increase by retained earnings or capital increase by capital surplus, the annual and semi-annual EPS shall be adjusted retrospectively based on the ratio of increased capital. The outstanding period is not included.
If the preferred stocks are non-convertible and cumulative, the dividends (whether distributed or not) shall be deducted from the after-tax net income or added to the after-tax net loss. If the preferred stocks are non-cumulative, the dividends shall be deducted from the after-tax net income if applicable; no adjustment needed if net losses occur.

Note III. When analyzing cash flow, the following matters shall be noted:

Net cash flows from operating activities is the amount of cash inflows from operating activities on the Statement of Cash Flows.
Capital expenditure is the amount of cash outflows from annual capital investment.
State the increase in inventory only when the ending inventory is greater than the beginning inventory. If the ending inventory decreases, take 0 into calculation.
Cash dividends include dividends from common stocks and preferred stocks.
Gross property, plant and equipment shall refer to the total amount of property, plant, and equipment prior to the deduction of accumulated depreciation.

Note IV. The issuer shall classify both operating costs and expenses as fixed and variable. If estimation or subjective judgements take place, one shall be aware of the reasonableness and consistency.

Note V. When the stock has no par value or the par value is less than NT$10, the aforementioned ratios to paid-in capital shall be calculated based on the equity attributable to the parent company on the Balance Sheet.

3 Audit Committee’s Review Report for the recent years

SUNKO INK CO., LTD. Audit Committee’s Review Report

The Board of Directors has prepared the Company’s 2020 Business Report, Consolidated and Parent Only Financial Statements, and proposal of Earnings Appropriation. Both the Consolidated and Parent Only Financial Statements were audited and issued with an audit report by CPA TU, CHIN-YUAN and CPA YEN, WEN-PI from Ernst & Young, Taiwan. The Audit Committee had concluded the aforementioned Business Report, Financial Statements and proposal of Earnings Appropriation complied with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act. We hereby submit this report for your review.

Regards,

2021 General Shareholders’ Meeting

SUNKO INK CO., LTD Convener of the Audit Committee: TSOU, YEN-CHUNG 16 March 2021

4 Consolidated Financial Statements of the Most Recent Year with Independent Auditors’ Report with Independent Auditors’ Report

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SUNKO INK CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the years Ended 31 December 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars, unless Otherwise Stated)

1. General

Sunko Ink Co., Ltd. (hereinafter “the Company”) was incorporated in December 1974. The Company is engaged in manufacturing and trading of certain chemicals or industrial materials. Major product lines are as follows:

a. Argochemicals

b.Fine Chemicals: curing agent, non-halogenated flame retardant, reducing agent, antioxidant

c. Polymer: PU Based surface treating agent, Polymer-TPU, Polymer-TPV

d. UV Absorbers

In May 1996, the Company’s shares were listed on the Taiwan Stock Exchange (TWSE), when the registered office was located at No. 139, Renmei Rd., Dali Dist., Taichung City 412036, Taiwan (R.O.C.). On 30 April 2020, as approved by Ministry of Economic Affairs, the Company’s registered operating office address was changed to 5F, No. 229, Zhongxing St., West Dist., Taichung City 403022, Taiwan (R.O.C.).

On 30 March 2016, the Company merged with Kuo Ching Chemical Co., Ltd. (hereinafter “Kuo Ching”). Kuo Ching was incorporated in April 1977, mainly engaged in production and trading of agrochemicals, fine chemicals, and other polymer materials. In October 2009, Kuo Ching’s shares was listed on the Emerging Stock Board. To improve efficiency and competitive capabilities, the Company merged with Kuo Ching on 30 March 2015 to integrate both entities’ production capacities, research resources, marketing and product lines. The Company was the surviving company which acquired all Kuo Ching’s assets, liabilities, rights, and obligations.

2. Date and procedures of authorization of financial statements for issue

The consolidated financial statements of the Company and its subsidiaries (hereinafter referred to as “the Group”) for the years ended 31 December 2020 and 2019 were approved to release in accordance with a resolution of the board of directors’ meeting on 16 March 2021.

Newly issued or revised standards and interpretations
(1) Changes in accounting policies resulting from applying for the first-time certain standards and amendments

The Group applied for the first time International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are recognized by Financial Supervisory Commission (“FSC”) and become effective for annual periods beginning on or after 1 January 2020. The adoption new standard and amendment is described, had no material impact on the Group.

(2) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) which are endorsed by FSC, but not yet adopted by the Group as at the end of the reporting period are listed below.

Items	New, Revised or Amended Standards and Interpretations	Effective Date issued by IASB
a	Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)	1 January 2021

(a) Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

The final phase amendments mainly relate to the effects of the interest rate benchmark reform on the companies’ financial statements:

A. A company will not have to derecognize or adjust the carrying amount of financial instruments for changes to contractual cash flows as required by the reform, but will instead update the effective interest rate to reflect the change to the alternative benchmark rate;
B. A company will not have to discontinue its hedge accounting solely because it makes changes required by the reform, if the hedge meets

other hedge accounting criteria; and

C. A company will be required to disclose information about new risks arising from the reform and how it manages the transition to alternative benchmark rates.

The abovementioned amendments that are applicable for annual periods beginning on or after 1 January 2021 have no material impact on the Group.

(3) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) which are not endorsed by FSC, and not yet adopted by the Group as at the end of the reporting period are listed below.

Items	New, Revised or Amended Standards and Interpretations	Effective Date issued by IASB
a	IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures	To be determined by IASB
b	IFRS 17 “Insurance Contracts”	1 January 2023
c	Classification of Liabilities as Current or Non-current – Amendments to IAS 1	1 January 2023
d	Narrow-scope amendments of IFRS, including Amendments to IFRS 3, Amendments to IAS 16, Amendments to IAS 37 and the Annual Improvements	1 January 2022
e	Disclosure Initiative - Accounting Policies – Amendments to IAS 1	1 January 2023
f	Definition of Accounting Estimates – Amendments to IAS 8	1 January 2023

(a) IFRS 10“Consolidated Financial Statements” and IAS 28“Investments in Associates and Joint Ventures” — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures

The amendments address the inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures , in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and loss arising from contributions of non-monetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint ventures. IFRS 10 requires full profit or loss recognition on the loss of control of the subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized in full.

IFRS 10 was also amended so that the gains or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors’ interests in the associate or joint venture.

(b) IFRS 17 “Insurance Contracts”

IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects (including recognition, measurement, presentation and disclosure requirements). The core of IFRS 17 is the General (building block) Model, under this model, on initial recognition, an entity shall measure a group of insurance contracts at the total of the fulfilment cash flows and the contractual service margin. The fulfilment cash flows comprise of the following:

(1) estimates of future cash flows;

(2) discount rate: an adjustment to reflect the time value of money and the financial risks related to the future cash flows, to the extent that the financial risks are not included in the estimates of the future cash flows; and
(3) a risk adjustment for non-financial risk.

The carrying amount of a group of insurance contracts at the end of each reporting period shall be the sum of the liability for remaining coverage and the liability for incurred claims. Other than the General Model, the standard also provides a specific adaptation for contracts with direct participation features (the Variable Fee Approach) and a simplified approach (Premium Allocation Approach) mainly for short-duration contracts.

IFRS 17 was issued in May 2017 and it was amended in June 2020. The amendments include deferral of the date of initial application of IFRS 17 by two years to annual beginning on or after 1 January 2023 (from the original effective date of 1 January 2021); provide additional transition reliefs; simplify some requirements to reduce the costs of applying IFRS 17 and revise some requirements to make the results easier to explain. IFRS 17 replaces an interim Standard – IFRS 4 Insurance Contracts – from annual reporting periods beginning on or after 1 January 2023.

These are the amendments to paragraphs 69-76 of IAS 1 Presentation of Financial statements and the amended paragraphs related to the classification of liabilities as current or non-current.

(d) Narrow-scope amendments of IFRS, including Amendments to IFRS 3, Amendments to IAS 16, Amendments to IAS 37 and the Annual Improvements
A. Updating a Reference to the Conceptual Framework (Amendments to IFRS 3)

The amendments updated IFRS 3 by replacing a reference to an old version of the Conceptual Framework for Financial Reporting with a reference to the latest version, which was issued in March 2018. The amendments also added an exception to the recognition principle of IFRS 3 to avoid the issue of potential “day 2” gains or loss arising for liabilities and contingent liabilities. Besides, the amendments clarify existing guidance in IFRS 3 for contingent assets that would not be affected by replacing the reference to the Conceptual Framework.

B. Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
The amendments prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or loss.
C. Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)

The amendments clarify what costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous.

D. Annual Improvements to IFRS Standards 2018 - 2020

Amendment to IFRS 1

The amendment simplifies the application of IFRS 1 by a subsidiary that becomes a first-time adopter after its parent in relation to the measurement of cumulative translation differences.

Amendment to IFRS 9 Financial Instruments

The amendment clarifies the fees a company includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability.

Amendment to Illustrative Examples Accompanying IFRS 16 Leases The amendment to Illustrative Example 13 accompanying IFRS 16 modifies the treatment of lease incentives relating to lessee’s leasehold improvements.

Amendment to IAS 41

The amendment removes a requirement to exclude cash flows from taxation when measuring fair value thereby aligning the fair value measurement requirements in IAS 41 with those in other IFRS Standards.

(e) Disclosure Initiative - Accounting Policies – Amendments to IAS 1

The amendments improve accounting policy disclosures that to provide more useful information to investors and other primary users of the financial statements.

(f) Definition of Accounting Estimates – Amendments to IAS 8

The amendments introduce the definition of accounting estimates and included other amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to help companies distinguish changes in accounting estimates from changes in accounting policies.

The abovementioned standards and interpretations issued by IASB have not yet endorsed by FSC at the date when the Group’s financial statements were authorized for issue, the local effective dates are to be determined by FSC. The standards and interpretations have no material impact on the Group.

4. Summary of significant accounting policies

(1) Statement of Compliance

The consolidated financial statements of the Group for the years ended 31 December 2020 and 2019 have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”) and International Financial Reporting Standards, International Accounting Standards, and Interpretations developed by the International Financial Reporting Interpretations Committee, which are endorsed by FSC (TIFRSs).

(2) Basis of Preparation

The consolidated financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The consolidated financial statements are expressed in thousands of New Taiwan Dollars (NTD) unless otherwise stated.

(3) Basis of Consolidation

Preparation principle of consolidated financial statement

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:

A. power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)
B. exposure, or rights, to variable returns from its involvement with the investee, and
C. the ability to use its power over the investee to affect its returns

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

A. the contractual arrangement with the other vote holders of the investee
B. rights arising from other contractual arrangements
C. the Group’s voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.

Subsidiaries are fully consolidated from the acquisition date, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using uniform accounting policies. All intra-group balances, income and expenses, unrealized gains and loss and dividends resulting from intra-group transactions are eliminated in full.

A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction.

Total comprehensive income of the subsidiaries is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

If the Group loses control of a subsidiary, it:

A. derecognizes the assets (including goodwill) and liabilities of the subsidiary;
B. derecognizes the carrying amount of any non-controlling interest;
C. recognizes the fair value of the consideration received;
D. recognizes the fair value of any investment retained;
E. recognizes any surplus or deficit in profit or loss;
F. reclassifies the parent’s share of components previously recognized in other comprehensive income as changes in profit or loss.

The consolidated entities are as follows:

Investor The Company The Company Power Hero Corp. Giant Way Corp.	Subsidiary Power Hero Corp (Power Hero) (Note1) Blessingthoughts Co. Ltd. (Blessingthoughts) Giant Way Inc. (Giant Way) (Note1) Eehung Trading (Shanghai) Ltd. (Eehung) (Note2)	Main business Holding company Drinks, and food vending Holding company Trading of Chemicals, materials or machinery components	Percentage of ownership (%)	Percentage of ownership (%)
			31 December 2020 -% 83.52% -% -%	31 December 2019
				100.00% 83.52% 71.42% -%

Note:

The company was liquidated in accordance with local laws on 2 June 2020, and remitted the share funds on 28 July 2020, and the foreign investment was cancelled on 13 August 2020 by the Investment Committee of the Ministry of Economic Affairs.
Eehung closed business and completed asset liquidation on 25 February 2019. The relevant investment approval was authorized to be cancelled on 5 July 2019 per the review letter from the Investment Committee, Ministry of Economic Affairs (MOEAIC).

(4) Foreign currency transactions

The Group’s consolidated financial statements are presented in New Taiwan Dollars (NTD), which is also the Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

Transactions in foreign currencies are initially recorded by the Group entities at their respective functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency closing rate of exchange ruling at the reporting date. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.

All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following:

A. Exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.
B. Foreign currency items within the scope of IFRS 9 Financial Instruments are accounted for based on the accounting policy for financial instruments.
C. Exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.

(5) Translation of Foreign Currency Financial Statements

The assets and liabilities of foreign operations are translated into NT$ at the closing rate of exchange prevailing at the reporting date and their income and expenses are translated at an average rate for the period. The exchange differences arising on the translation are recognized in other comprehensive income. On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on disposal is recognized.

On the partial disposal of a subsidiary that includes a foreign operation that does not result in a loss of control, the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is re-attributed to the non-controlling interests in that foreign operation. In partial disposal of an associate or joint arrangement that includes a foreign operation that does not result in a loss of significant influence or joint control, only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is reclassified to profit or loss.

Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and expressed in its functional currency.

(6) Current and Non-current Distinction

An asset is classified as current when:

A. The Group expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;
B. The Group holds the asset primarily for the purpose of trading;
C. The Group expects to realize the asset within twelve months after the

reporting period;

D. The asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is classified as a current when:

A. The Group expects to settle the liability in normal operating cycle;
B. The Group holds the liability primarily for the purpose of trading;
C. The liability is due to be settled within twelve months after the reporting period;
D. The Group does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. Term 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.

All other liabilities are classified as non-current.

(7) Cash and cash equivalent

Cash and cash equivalents comprise cash on hand, demand deposits and short-term, highly liquid time deposits (including ones that have maturity within 3 months) or investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(8) Financial Instruments

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

Financial assets and financial liabilities within the scope of IFRS 9 Financial Instruments are recognized initially at fair value plus or minus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

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A. Financial instruments: Recognition and Measurement

The Group accounts for regular way purchase or sales of financial assets on the trade date.

The Group classified financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss considering both factors below:

(a) the Group’s business model for managing the financial assets (b) the contractual cash flow characteristics of the financial asset.

Financial assets measured at amortized cost

A financial asset is measured at amortized cost if both of the following conditions are met and presented as note receivables, trade receivables financial assets measured at amortized cost and other receivables etc., on balance sheet as at the reporting date:

(a)the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
(b)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.

Such financial assets are subsequently measured at amortized cost (the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount and the maturity amount and adjusted for any loss allowance) and is not part of a hedging relationship. A gain or loss is recognized in profit or loss when the financial asset is derecognized, through the amortization process or in order to recognize the impairment gains or loss.

Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

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(a)purchased or originated credit-impaired financial assets. For those financial assets, the Group applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
(b)financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Group applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

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Financial asset measured at fair value through other comprehensive income

A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:

(a) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and
(b) 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.

Recognition of gain or loss on a financial asset measured at fair value through other comprehensive income are described as below:

(a)A gain or loss on a financial asset measured at fair value through other comprehensive income recognized in other comprehensive income, except for impairment gains or loss and foreign exchange gains and loss, until the financial asset is derecognized or reclassified.
(b)When the financial asset is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.
(c)Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:
(i) Purchased or originated credit-impaired financial assets. For those financial assets, the Group applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
(ii) Financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Group applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

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Besides, for certain equity investments within the scope of IFRS 9 that is neither held for trading nor contingent consideration recognized by an acquirer in a business combination to which IFRS 3 applies, the Group made an irrevocable election to present the changes of the fair value in other comprehensive income at initial recognition. Amounts presented in other comprehensive income shall not be subsequently transferred to profit or loss (when disposal of such equity instrument, its cumulated amount included in other components of equity is transferred directly to the retained earnings) and these investments should be presented as financial assets measured at fair value through other comprehensive income on the balance sheet. Dividends on such investment are recognized in profit or loss unless the dividends clearly represents a recovery of part of the cost of investment.

Financial asset measured at fair value through profit or loss

Financial assets were classified as measured at amortized cost or measured at fair value through other comprehensive income based on aforementioned criteria. All other financial assets were measured at fair value through profit or loss and presented on the balance sheet as financial assets measured at fair value through profit or loss.

Such financial assets are measured at fair value, the gains or loss resulting from remeasurement is recognized in profit or loss which includes any dividend or interest received on such financial assets.

B. Impairment of financial assets

The Group recognizes a loss allowance for expected credit loss on debt instrument investments measured at fair value through other comprehensive income and financial asset measured at amortized cost. The loss allowance on debt instrument investments measured at fair value through other comprehensive income is recognized in other comprehensive income and not reduce the carrying amount in the balance sheet.

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The Group measures expected credit loss of a financial instrument in a way that reflects:

(a)an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes
(b)the time value of money
(c)reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions

The loss allowance is measured as follows:

(a)At an amount equal to 12-month expected credit loss: the credit risk on a financial asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Group measures the loss allowance at an amount equal to lifetime expected credit loss in the previous reporting period, but determines at the current reporting date that the credit risk on a financial asset has increased significantly since initial recognition is no longer met.
(b)At an amount equal to the lifetime expected credit loss: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial asset.
(c)For trade receivables or contract assets arising from transactions within the scope of IFRS 15, the Group measures the loss allowance at an amount equal to lifetime expected credit loss.
(d)For lease receivables arising from transactions within the scope of IFRS 16, the Group measures the loss allowance at an amount equal to lifetime expected credit loss.

At each reporting date, the Group needs to assess whether the credit risk on a financial asset has increased significantly since initial recognition by comparing the risk of a default occurring at the reporting date and the risk of default occurring at initial recognition. Please refer to Note 12 for further details on credit risk.

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C. Derecognition of financial assets

A financial asset is derecognized when:

(a) The rights to receive cash flows from the asset have expired.
(b)The Group has transferred the asset and substantially all the risks and rewards of the asset have been transferred.
(c) The Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the consideration received or receivable including any cumulative gain or loss that had been recognized in other comprehensive income, is recognized in profit or loss.

D. Financial liabilities and equity

Classification between liabilities or equity

The Group classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The transaction costs of an equity transaction are accounted for as a deduction from equity (net of any related income tax benefit) to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.

Compound instruments

The Group evaluates the terms of the convertible bonds issued to determine whether it contains both a liability and an equity component. Furthermore, the Group assesses if the economic characteristics and

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risks of the put and call options contained in the convertible bonds are closely related to the economic characteristics and risk of the host contract before separating the equity element.

For the liability component excluding the derivatives, its fair value is determined based on the rate of interest applied at that time by the market to instruments of comparable credit status. The liability component is classified as a financial liability measured at amortized cost before the instrument is converted or settled.

For the embedded derivative that is not closely related to the host contract (for example, if the exercise price of the embedded call or put option is not approximately equal on each exercise date to the amortized cost of the host debt instrument), it is classified as a liability component and subsequently measured at fair value through profit or loss unless it qualifies for an equity component. The equity component is assigned the residual amount after deducting from the fair value of the instrument as a whole the amount separately determined for the liability component. Its carrying amount is not remeasured in the subsequent accounting periods. If the convertible bond issued does not have an equity component, it is accounted for as a hybrid instrument in accordance with the requirements under IFRS 9 Financial Instruments.

Transaction costs are apportioned between the liability and equity components of the convertible bond based on the allocation of proceeds to the liability and equity components when the instruments are initially recognized.

On conversion of a convertible bond before maturity, the carrying amount of the liability component being the amortized cost at the date of conversion is transferred to equity.

Financial liabilities

Financial liabilities within the scope of IFRS 9 Financial Instruments are classified as financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost upon initial recognition.

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Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated as at fair value through profit or loss.

A financial liability is classified as held for trading if:

(a) it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term;
(b) on initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking;
(c) it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

If a contract contains one or more embedded derivatives, the entire hybrid (combined) contract may be designated as a financial liability at fair value through profit or loss; or a financial liability may be designated as at fair value through profit or loss when doing so results in more relevant information, because either:

(a) it eliminates or significantly reduces a measurement or recognition inconsistency; or
(b) a group of financial liabilities or financial assets and financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the group is provided internally on that basis to the key management personnel.

Gains or loss on the subsequent measurement of liabilities at fair value through profit or loss including interest paid are recognized in profit or loss.

Financial liabilities at amortized cost

Financial liabilities measured at amortized cost include interest bearing loans and borrowings that are subsequently measured using the effective

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interest rate method after initial recognition. Gains and loss are recognized in profit or loss when the liabilities are derecognized as well as through the effective interest rate method amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs.

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor), such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

E. Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

(9) Derivative instruments

The Group uses derivative instruments to hedge its foreign currency risks and interest rate risks. A derivative is classified in the balance sheet as assets or liabilities at fair value through profit or loss except for derivatives that are designated effective hedging instruments which are classified as derivative financial assets or liabilities for hedging.

Derivative instruments are initially recognized at fair value on the date on

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which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. The changes in fair value of derivatives are taken directly to profit or loss, except for the effective portion of hedges, which is recognized in either profit or loss or equity according to types of hedges used.

When the host contracts are either non-financial assets or liabilities, derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not designated at fair value though profit or loss.

(10) Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

A. In the principal market for the asset or liability, or
B. In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible to by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the

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circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

(11) Inventories

Inventories are valued at lower of cost and net realizable value item by item.

Costs incurred in bringing each inventory to its present location and condition are accounted for as follows:

Raw materials – Purchase cost under weighted average cost method. Finished goods and work in progress – Cost of direct materials and labor and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Rendering of services is accounted in accordance with IFRS 15 and not within the scope of inventories.

(12) Investments accounted for under the equity method

The Group’s investment in its associate is accounted for using the equity method other than those that meet the criteria to be classified as held for sale. An associate is an entity over which the Group has significant influence.

Under the equity method, the investment in the associate is carried in the balance sheet at cost and adjusted thereafter for the post-acquisition change in the Group’s share of net assets of the associate. After the interest in the associate is reduced to zero, additional loss are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. Unrealized gains and loss resulting from transactions between the Group and the associate are eliminated to the extent of the Group’s related interest in the associate.

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When changes in the net assets of an associate occur and not those that are recognized in profit or loss or other comprehensive income and do not affects the Group’s percentage of ownership interests in the associate, the Group recognizes such changes in equity based on its percentage of ownership interests. The resulting capital surplus recognized will be reclassified to profit or loss at the time of disposing the associate on a pro-rata basis.

When the associate issues new stock, and the Group’s interest in an associate is reduced or increased as the Group fails to acquire shares newly issued in the associate proportionately to its original ownership interest, the increase or decrease in the interest in the associate is recognized in additional paid-in capital and investment accounted for using the equity method. When the interest in the associate is reduced, the cumulative amounts previously recognized in other comprehensive income are reclassified to profit or loss or other appropriate items. The aforementioned capital surplus recognized is reclassified to profit or loss on a pro rata basis when the Group disposes the associate.

The financial statements of the associate are prepared for the same reporting period as the Group. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired in accordance with IAS 28 Investments in Associates . If this is the case the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount in the ‘share of profit or loss of an associate’ in the statement of comprehensive income in accordance with IAS 36 Impairment of Assets . In determining the value in use of the investment, the Group estimates:

(a) Its share of the present value of the estimated future cash flows expected to be generated by the associate, including the cash flows from the operations of the associate and the proceeds on the ultimate disposal of the investment; or
(b) The present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate

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disposal.

Because goodwill that forms part of the carrying amount of an investment in an associate is not separately recognized, it is not tested for impairment separately by applying the requirements for impairment testing goodwill in IAS 36 Impairment of Assets .

Upon loss of significant influence over the associate, the Group measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss.

(13) Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment loss, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognized such parts as individual assets with specific useful lives and depreciation, respectively. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 “Property, plant and equipment”. When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Items Land improvements Buildings Machinery and equipment	Estimated economic lives
	7`～`20 years 2`～`60 years 2`～`25 years

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Items Transportation equipment Other equipment	Estimated economic lives
	5`～`8 years 2`～`20 years

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognized in profit or loss.

The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate, and are treated as changes in accounting estimates.

(14) Leases

The Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of time, the Group assesses whether, throughout the period of use, has both of the following:

(a) the right to obtain substantially all of the economic benefits from use of the identified asset; and

(b) the right to direct the use of the identified asset.

For a contract that is, or contains, a lease, the Group accounts for each lease component within the contract as a lease separately from non-lease components of the contract. For a contract that contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The relative stand-alone price of lease and non-lease components shall be determined on the basis of the price the lessor, or a similar supplier, would charge the Group for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Group estimates the stand-alone price, maximising the use of observable information.

Group as a lessee

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Except for leases that meet and elect short-term leases or leases of low-value assets, the Group recognizes right-of-use asset and lease liability for all leases which the Group is the lessee of those lease contracts.

At the commencement date, the Group measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses its incremental borrowing rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:

(a) fixed payments (including in-substance fixed payments), less any lease incentives receivable;
(b) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
(c) amounts expected to be payable by the lessee under residual value guarantees;
(d) the exercise price of a purchase option if the Group is reasonably certain to exercise that option; and
(e) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

After the commencement date, the Group measures the lease liability on an amortised cost basis, which increases the carrying amount to reflect interest on the lease liability by using an effective interest method; and reduces the carrying amount to reflect the lease payments made.

At the commencement date, the Group measures the right-of-use asset at cost. The cost of the right-of-use asset comprises:

(a)the amount of the initial measurement of the lease liability;
(b)any lease payments made at or before the commencement date, less any lease incentives received;
(c)any initial direct costs incurred by the lessee; and
(d)an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

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For subsequent measurement of the right-of-use asset, the Group measures the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment loss. That is, the Group measures the right-of-use applying a cost model.

If the lease transfers ownership of the underlying asset to the Group by the end of the lease term or if the cost of the right-of-use asset reflects that the Group will exercise a purchase option, the Group depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Group depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

The Group applies IAS 36 “Impairment of Assets” to determine whether the right-of-use asset is impaired and to account for any impairment loss identified.

Except for those leases that the Group accounted for as short-term leases or leases of low-value assets, the Group presents right-of-use assets and lease liabilities in the balance sheet and separately presents lease-related interest expense and depreciation charge in the statements comprehensive income.

For short-term leases or leases of low-value assets, the Group elects to recognize the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis.

Group as a lessor

At inception of a contract, the Group classifies each of its leases as either an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset. At the commencement date, the Group recognizes assets held under a finance lease in its balance sheet and present them as a receivable at an amount equal to the net investment in the lease.

For a contract that contains lease components and non-lease components,

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the Group allocates the consideration in the contract applying IFRS 15.

The Group recognizes lease payments from operating leases as rental income on either a straight-line basis or another systematic basis. Variable lease payments for operating leases that do not depend on an index or a rate are recognized as rental income when incurred.

(15) Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment loss, if any. Internally generated intangible assets which fail to meet the recognition criteria are not capitalized and the expenditures are reflected in profit or loss in the period incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible assets may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each fiscal year. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and is treated as changes in accounting estimates.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or loss arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss when the asset is derecognized.

(16) Impairment of non-financial assets

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The Group assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 Impairment of Assets may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (“CGU”) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment loss may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

A cash generating unit, or groups of cash-generating units, to which goodwill has been allocated is tested for impairment annually at the same time, irrespective of whether there is any indication of impairment. If an impairment loss is to be recognized, it is first allocated to reduce the carrying amount of any goodwill allocated to the cash generating unit (group of units), then to the other assets of the unit (group of units) pro rata on the basis of the carrying amount of each asset in the unit (group of units). Impairment loss relating to goodwill cannot be reversed in future periods for any reason.

An impairment loss of continuing operations or a reversal of such impairment loss is recognized in profit or loss.

(17) Post-employment benefits

All regular employees of the Company and its domestic subsidiaries are entitled to a pension plan that is managed by an independently administered pension fund committee. Fund assets are deposited under the committee’s name in the specific bank account and hence, not associated with the Company and its domestic subsidiaries. Therefore, fund assets are not included in the Group’s consolidated financial statements. Pension benefits

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for employees of the overseas subsidiaries and the branches are provided in accordance with the respective local regulations.

For the defined contribution plan, the Company and its domestic subsidiaries will make a monthly contribution of no less than 6% of the monthly wages of the employees subject to the plan. The Company recognizes expenses for the defined contribution plan in the period in which the contribution becomes due. Overseas subsidiaries and branches make contribution to the plan based on the requirements of local regulations.

Post-employment benefit plan that is classified as a defined benefit plan uses the Projected Unit Credit Method to measure its obligations and costs based on actuarial assumptions. Re-measurements, comprising of the effect of the actuarial gains and loss, the effect of the asset ceiling (excluding net interest) and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur. Past service costs are recognized in profit or loss on the earlier of:

(a) the date of the plan amendment or curtailment, and

(b) the date that the Group recognizes restructuring-related costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset, both as determined at the start of the annual reporting period, taking account of any changes in the net defined benefit liability (asset) during the period as a result of contribution and benefit payment.

(18) Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probably that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

(19) Treasury shares

The Group buys back its parent company’s equity instruments (treasury

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shares) that are recognized at cost as a deduction item under equity. The valuation difference resulted from transactions of treasury shares is reported under equity.

(20) Revenue recognition

The Group’s revenue arising from contracts with customers are primarily related to sale of goods and rendering of services. The accounting policies are explained as follows:

Sale of goods

The Group manufactures and sells fitness equipment. Sales are recognized when control of the goods is transferred to the customer and the goods are delivered to the customers (the customer obtains the right and carrying value of the goods). The sales of goods transactions of the revenue is recognized based on the consideration stated in the contract. For certain sales of goods transactions, they are usually accompanied by volume discounts (based on the accumulated total sales amount for a specified period). Therefore, revenue from these sales is recognized based on the price specified in the contract, net of the estimated volume discounts.

The credit period of the Group’s sale of goods is from 30 to 150 days. For most of the contracts, when the Group transfers the goods to customers and has a right to an amount of consideration that is unconditional, these contracts are recognized as trade receivables. The Group usually collects the payments shortly after transfer of goods to customers; therefore, there is no significant financing component to the contract. For some of the contracts, the Group collects the payments when contracts signed-off and has the obligations to transfer the goods or provide the services, these contracts should be presented as contract liabilities.

The period between the transfers of contract liabilities to revenue is usually within one year, thus, no significant financing component has arisen.

(21) Borrowing cost

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respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

(22) Income Tax

Income tax expense (benefit) is the aggregate amount included in the determination of profit or loss for the period in respect of current income tax and deferred income tax.

Current income tax

Current income tax assets and liabilities for the current period and prior periods are measured using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Current income tax relating to items recognized directly in other comprehensive income or equity is recognized in other comprehensive income or equity and not in profit or loss.

The income tax for undistributed earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the Shareholders’ meeting.

Deferred income tax

Deferred income tax is a temporary difference between the tax bases of assets and liabilities and their carrying amounts in financial statement at the reporting date.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

A. where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss
B. in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, where the timing of the reversal of the temporary differences can be controlled and

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it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and any unused tax loss, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax loss can be utilized, except:

A. where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
B. in respect of deductible temporary differences associated with investments in subsidiaries, associates and joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax assets and deferred tax liabilities 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.

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets are reassessed at each reporting date and are recognized accordingly.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

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(23) Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The consideration transferred, the identifiable assets acquired and liabilities assumed are measured at acquisition date fair value. For each business combination, the acquirer measures any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are accounted for as expenses in the periods in which the costs are incurred and are classified under administrative expenses.

When the Group acquires a business, it assesses the assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. The aquiree’s embedded derivatives in host contracts is separately assessed and valued.

If the business combination is achieved in stages, on final acquisition date, acquiree’s equity interests that have been previously acquired by acquirer is required to be remeasured at fair value on the acquisition date, and respective remeasurement gain or loss shall be recorded as current periodical profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognized at the acquisition-date fair value. Subsequent changes to the fair value of the contingent consideration, which is deemed to be an asset or liability, will be recognized in accordance with IFRS 9 Financial Instruments either in profit or loss or as a change to other comprehensive income. However, if the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity.

Goodwill is initially measured as the amount of the excess of the aggregate of the consideration transferred and the non-controlling interest over the net fair value of the identifiable assets acquired and the liabilities assumed. If this aggregate is lower than the fair value of the net assets acquired, the difference is recognized in profit or loss.

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assets or liabilities of the acquiree are assigned to those units. Each unit or group of units to which the goodwill is so allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purpose and is not larger than an operating segment before aggregation.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation. Goodwill disposed of in this circumstance is measured based on the relative recoverable amounts of the operation disposed of and the portion of the cash-generating unit retained.

5. Significant accounting judgements, estimates and assumptions

In preparation of the Group’s consolidated financial statements, the Group’s management is required to make judgments, estimates and assumptions at the end of the reporting period that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities. Uncertainties from these assumption and estimate may result in a material adjustment to the carrying amount of relevant assets or liabilities in future periods.

Major resources or factors that are the bases of estimates or assumptions are with uncertainties. Significant risks may exist that may result in material adjustments on the carrying amounts of assets or liabilities in future reporting periods. Major estimate factors are listed as follows:

A. Accounts receivables–estimate of impairment loss

The Group estimates the impairment loss of accounts receivables at an amount equal to lifetime expected credit loss. The credit loss is the present value of the difference between the contractual cash flows that are due under the contract (carrying amount) and the cash flows that are expected to receive (by evaluating forward looking information). However, as the impact from the discounting of short-term receivables is not material, the credit loss is measured by the undiscounted cash flows. Where the actual future cash flows

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are lower than expected, a material impairment loss may arise. Please refer to Note 6 for more details.

B. Inventories

Estimates of net realizable value of inventories take into consideration that inventories may be damaged, wholly or partially obsolete, or with downward selling prices. The estimates are based on the most reliable evidence available at the time the estimates are made. Refer to Note 6 for details.

C. The Fair Value of Financial Instruments

Where the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be derived from active markets, they are determined using valuation Techniques including the income approach (for example the discounted cash flows model) or market approach. Changes in assumptions about these factors could affect the reported fair value of the financial instruments. Please refer to Note 12 for more details.

D. Pension Benefits

The cost of post-employment benefit and the present value of the pension obligation under defined benefit pension plans are determined using actuarial valuations. An actuarial valuation involves making various assumptions, including the discount rate and expected salary raise/cut or changes. Please refer to Note 6 for more details.

E. Income Tax

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Company make provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective counties in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by different jurisdictional tax authorities. Such differences of

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interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective Group entities’ domicile.

Deferred tax assets are recognized to the extent where tax loss carryforward, tax credits and deductible temporary differences that are probable with foreseeable taxable profit being available, can be utilized. The amount of deferred tax assets is estimated based upon the likely timing of utilizing taxable temporary differences and forecasted taxable profits as well as future tax planning strategies.

6. Contents of significant accounts

(1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand Petty cash Demand deposits Time deposits Total	As of 31 December
	2020 $103 245 459,708 300,000 $760,056	2019
		$101 245 471,696 50,000
		$522,042

(2) Financial assets measured at amortized cost

Financial assets measured at amortized cost
Time deposits with maturity over three months Pledged time deposits Subtotal Less: loss allowance Total Current Non-current Total	As of 31 December
	2020 $600,000 2,800 602,800 - $602,800 $600,000 2,800 $602,800	2019
		$50,000 2,800
		52,800 -
		$52,800
		$50,000 2,800
		$52,800

For further information on financial assets measured at amortized cost pledged as collateral and on credit risk, please refer to Notes 8 and 12, respectively.

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(3) Trade receivables, net

rade receivables, net
Accounts receivable Less: loss allowance Total	As of 31 December
	2020 $513,233 (17,046) $496,187	2019
		$605,391 (17,536)
		$587,855

Accounts receivables were not pledged.

The collection period is generally net 30~150 days. The total receivables of carrying amount are $552,481 and $636,992 as of December 31, 2020 and 2019, respectively. Please refer to Note 6 (13) for more details regarding loss allowance of accounts receivables for the year periods ended December 2020 and 2019. Please refer to Note 12 for more details on credit risk management.

100% credit loss provision is reserved for account receivables which are deemed with least possibility to be collected. As of 31 December 2020, and 2019, the receivables with 100% loss allowances being reserved amounted to $13,679 without differences.

(4) Inventories, net

Inventories, net
Raw materials Work in progress Finished goods Merchandise Total	As of 31 December
	2020 $262,987 20,512 398,212 26,672 $708,383	2019
		$234,497 49,510 492,681 15,681
		$792,369

The cost of inventories recognized as cost of sales for the years ended 31 December 2020 and 2019 amounted to $2,613,246 and $2,961,831, respectively. The expenses resulted from inventory write-downs were recorded as $2,815 and $1,495 for the years ended 31 December 2020, and 2019 respectively.

No inventories were pledged.

(5) Investments accounted for under the equity method

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Details of investments accounted for under the equity method are as follows:

As of 31 December	As of 31 December	As of 31 December
2020 Carrying amount Percentage of ownership (%) $ - 22.32% - 41.00% 1,301 49.00% - -% 13,890 30.00% $15,191	2019
Carrying amount $ - - 1,301 - 13,890 $15,191	Carrying amount $ - - 1,785 - 19,269 $21,054	Percentage of ownership (%)
		22.32% 41.00% 49.00% -% 30.00%

The Group's share of loss of Sunko Biotech Co. and Chen Chi Technology Co. equaled its interest in Sunko Biotech Co. and Chen Chi Technology Co. Therefore, the Group is not obliged to recognize its share of further loss.

The Group sold its stake in Hui An Shing Trading Co. in June 2019 for $2,772.

(1) The details of investments recognized as profit and loss in 2020 and 2019 are as follows:

are as follows:
Hui An Shing Trading Co. Bnkc Biochemical Technology Co. Power Rich `合` `計`	For the years ended 31 December
	2020 $ - 590 (4,578) $(3,988)	2019
		$(972) 1,178 (6,104)
		$(5,898)

(2) The details of the exchange differences on translation of foreign financial statements in 2020 and 2019 are as follows:

For the years ended 31 December

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Power Rich	2020 $(801)	2019
		$(434)

(3) Investments in associates

The Group’s investments in Bnkc Biochemical Technology Co. and Power Rich are not significant. The investments are valued based on the investee’s financial statements within the same fiscal accounting period. The investments in associates had no contingent liabilities or capital commitments as of 31 December 2020 and 2019. The investments have not been pledged as collaterals.

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(6) Property, plant and equipment

Land	Land improvements	Buildings	Transportation equipment	Total
$543,082 - (77,973) - $465,109 $ - - - $ - $543,082 - - - $812,324 $ - - - $ - $465,109 $543,082	$2,887 196 - - $3,083 $1,796 119 - $1,915 $3,088 - (201) - $2,887 $1,904 93 (201) $1,796 $1,168 $1,091	$908,494 23,602 (4,571) 23,387 $950,912 $408,471 54,465 (4,223) $458,713 $761,828 24,948 (67,676) 189,394 $908,494 $423,603 46,058 (61,190) $408,471 $492,199 $500,023	$16,004 700 (921) - $15,783 $10,594 971 (921) $10,644 $14,983 2,011 (1,006) 16 $16,004 $10,519 1,081 (1,006) $10,594 $5,139 $5,410	$4,077,722 96,574 (112,713) 140,954
				$4,202,537
				$2,303,944 228,789 (33,081)
				$2,499,652
				$3,925,218 113,387 (137,198) 176,315
				$4,077,222
				$2,216,359 216,199 (128,614)
				$2,303,944
				$1,702,885
				$1,773,778

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(a) There is no capitalization of interest due to purchase of property, plant and equipment for the years ended 31 December 2020 and 2019.
(b) Components of buildings that have different useful lives are the main building structure and air condition equipment and elevators, which are depreciated over 60 years and 5 years and 15 years, respectively. Machinery and equipment that have different useful lives are new reaction equipment, piping equipment, and production equipment for expansion, etc., which are depreciated over 10 years and 5 years and 7 years, respectively.
(c) As of 31 December 2020, and 2019, due to legal restrictions, part of the lands belonging to agricultural lands were recorded in the Group's accounts and the amount temporarily registered in the name of another person amounted to $7,011 and $7,150, respectively. The Group obtained the certificates of other rights for each of the lands.
(d) The Company adopted the resolution of the Board of Directors on 26 February 2020, to dispose of the land, plant, and equipment of the Dajia Factory. This project was signed on 28 May 2020. However, both parties to the transaction were still preparing the related cooperation procedures. Currently, the factory maintains normal production and operation and is not yet available for immediate sale, so the property was recorded under property, plant and equipment. It is expected that the disposal transaction will be completed in 2021. For transaction related information, please refer to Note 13.
(e) Please refer to Note 8 for property, plant and equipment pledged as collateral.

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(7) Short-term loans

) Short-term loans
Unsecured bank loans Interest rates applied for unsecured bank loans	As of 31 December
	2020 2019 $226,246 $291,628 As of 31 December	2019
		$291,628
	2020 0.63%~1.07%	2019
		1.15%~2.93%

The Group’s open short-term lines of credit facilities were $1,061,505 and $849,282, as of 31 December 2020 and 2019, respectively.

(8) Other payables

ther payables
Accrued capital reduction Accrued expense of pollution remediation Accrued payroll Accrued employee compensation Payables on equipment Accrued directors and supervisor’s compensation expense Other expense Total	As of 31 December
	2020 $325,543 105,812 70,945 15,075 12,922 4,020 56,647 $590,964	2019
		$ - 11,611 76,371 - 9,864 - 76,401
		$174,247

(1) On 10 November 2020, the Group adopted the resolution of the shareholders’ meeting to reduce capital by cash and redeemed 33,352 thousand shares of shareholders’ share capital, each with a par value of $10. Treasury shares were cancelled 798 shares accordingly due to capital reduction in accordance with the shareholding ratio. A total of $325,543 was refunded as a result of the capital reduction. Please refer to Note 6.11 for details of the aforementioned capital reduction and refund to shareholders.
(2) On 8 May 2020, the Board resolved and approved the total forecasted possible expenditures for remedying pollution in soil and underwater in the Group’s Pingjhen and Dali plants. The total budget was estimated for $105 million, and accrued pollution remediation expenditures are recorded in full.

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(9) Long-term loans

(1) Details of long-term loans as at 31 December 2020 and 2019 are as follows:

Lenders
As of 31
December 2020
As of 31
December 2019
Mega International
Commercial Bank
secured bank loans
$119,850
$133,450
First Commercial Bank
secured bank loans
100,000
100,000
First Commercial Bank
secured bank loans
100,000
-
Taiwan Cooperative Bank
secured bank loans
-
15,536
Hua Nan Bank
secured bank loans
-
50,000
Chang Hwa Commercial Bank
unsecured Revolving Loan
90,000
-
O-Bank
unsecured Revolving Loan
-
77,600
Hua Nan Ban
unsecured Revolving Loan
37,500
62,500
Mega International
Commercial Bank
unsecured Revolving Loan
91,650
102,050
Taipei Fubon Bank
unsecured Revolving Loan
47,500
-

Redemption
Repayable quarterly from 26 December 2016 to 26 December 2024. Principle is repaid in 33 quarterly
intstallments.
Repayable quarterly from 24 March 2022 to 24 December 2024. Principle is repaid in 12 quarterly
installments.
Repayable quarterly from 5 August 2022 to 5 May 2025. Principle is repaid in 12 quarterly
installments.
Repayable quarterly from 30 June 2013 to 30 March 2027. Principle is repaid in 56 quarterly
installments. On 8 May 2020, an early repayment of the remaining balance was done in full.
A lump-sum repayment of the principal on 25 September 2020.
Repayable quarterly from 24 June 2021 to 24 March 2025. Principle is repaid in 16 quarterly
intsallments.
Repayable quarterly from 15 September 2019 to 15 September 2021. Principle is repaid in 9 quarterly
payments. On 20 July 2020, an early repayment of the remaining balance was done in full.
Repayable quarterly from 11 August 2018 to 11 May 2022. Principle is repaid in 16 quarterly
installments.
Repayable quarterly from 26 December 2016 to 26 December 2024. Principle is repaid in 33 quarterly
installments.
Repayable quarterly from 1 December 2018 to 1 September 2025. Principle is repaid in 20 quarterly
installments.

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Lenders O-Bank unsecured Revolving Loan O-Bank unsecured Revolving Loan Taiwan Cooperative Bank unsecured Revolving Loan E.SUN Bank unsecured Revolving Loan E.SUN Bank unsecured Revolving Loan Chang Hwa Commercial Bank unsecured Revolving Loan Subtotal Less: current portion Total Interest rates applied	As of 31 December 2020 As of 31 December 2019 Redemption 16,400 38,800 Repayable quarterly from 15 September 2019 to 15 September 2021. Principle is repaid in 9 quarterly installments. 89,000 - Repayable quarterly from 15 July 2022 to 15 July 2025. Principle is repaid in 13 quarterly installments. 106,000 200,000 From 21 March 2020 to 21 December 2023, an advance repayment of the current period was $5,500, and remaining balance was divided into sixteen installments with three months being one installment. Principle is repaid in 16 quarterly installments. - 100,000 Repayable quarterly from 26 February 2020 to 25 November 2022. Principle is repaid in 12 quarterly installments. Advance repayments were made in full on 31 March 2020. - - Repayable quarterly from 21 February 2019 to 21 November 2022. Principle is repaid in 8 quarterly payments. Advance repayments were made in full on 26 November 2019. - - Repayable quarterly from 15 February 2017 to 15 November 2019. Principle is repaid in 12 quarterly payments. 797,901 919,936 (127,609) (221,676) $670,292 $698,260 As of 31 December 2020 2019 1.09%~1.40% 1.38%~1.45%	As of 31 December 2020 As of 31 December 2019 Redemption 16,400 38,800 Repayable quarterly from 15 September 2019 to 15 September 2021. Principle is repaid in 9 quarterly installments. 89,000 - Repayable quarterly from 15 July 2022 to 15 July 2025. Principle is repaid in 13 quarterly installments. 106,000 200,000 From 21 March 2020 to 21 December 2023, an advance repayment of the current period was $5,500, and remaining balance was divided into sixteen installments with three months being one installment. Principle is repaid in 16 quarterly installments. - 100,000 Repayable quarterly from 26 February 2020 to 25 November 2022. Principle is repaid in 12 quarterly installments. Advance repayments were made in full on 31 March 2020. - - Repayable quarterly from 21 February 2019 to 21 November 2022. Principle is repaid in 8 quarterly payments. Advance repayments were made in full on 26 November 2019. - - Repayable quarterly from 15 February 2017 to 15 November 2019. Principle is repaid in 12 quarterly payments. 797,901 919,936 (127,609) (221,676) $670,292 $698,260 As of 31 December 2020 2019 1.09%~1.40% 1.38%~1.45%	As of 31 December 2020 As of 31 December 2019 Redemption 16,400 38,800 Repayable quarterly from 15 September 2019 to 15 September 2021. Principle is repaid in 9 quarterly installments. 89,000 - Repayable quarterly from 15 July 2022 to 15 July 2025. Principle is repaid in 13 quarterly installments. 106,000 200,000 From 21 March 2020 to 21 December 2023, an advance repayment of the current period was $5,500, and remaining balance was divided into sixteen installments with three months being one installment. Principle is repaid in 16 quarterly installments. - 100,000 Repayable quarterly from 26 February 2020 to 25 November 2022. Principle is repaid in 12 quarterly installments. Advance repayments were made in full on 31 March 2020. - - Repayable quarterly from 21 February 2019 to 21 November 2022. Principle is repaid in 8 quarterly payments. Advance repayments were made in full on 26 November 2019. - - Repayable quarterly from 15 February 2017 to 15 November 2019. Principle is repaid in 12 quarterly payments. 797,901 919,936 (127,609) (221,676) $670,292 $698,260 As of 31 December 2020 2019 1.09%~1.40% 1.38%~1.45%	Redemption




		2020 1.09%~1.40%	2019

(2) Please refer to Note 8 for property, plant and equipment pledged as collateral for long-term loans.

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(10) Post-employment benefits

Defined contribution plan

The Group adopt a defined contribution plan in accordance with the Labor Pension Act of the R.O.C. Under the Labor Pension Act, the Group will make monthly contributions of no less than 6% of the employees’ monthly wages to the employees’ individual pension accounts. The Group has made monthly contributions of 6% of each individual employee’s salaries or wages to employees’ pension accounts.

Pension expenses under the defined contribution plan for the years ended 31 December 2020 and 2019 were $17,339 and $18,183 respectively.

Defined benefits plan

The Group adopt a defined benefit plan in accordance with the Labor Standards Act of the R.O.C. The pension benefits are disbursed based on the units of service years and the average salaries in the last month of the service year. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year. The total units shall not exceed 45 units. Under the Labor Standards Act, the Group contribute an amount equivalent to 6.6% of the employees’ total salaries and wages on a monthly basis to the pension fund deposited at the Bank of Taiwan in the name of the administered pension fund committee. Before the end of each year, the Group assess the balance in the designated labor pension fund. If the amount is inadequate to pay pensions on the assumption that workers meeting retirement terms will be retiring within the coming year, the Group shall make one-time contribution to the fund to eliminate the difference before the end of March in the following year.

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targeted return without over-exposure of risk. With regard to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with paragraph 142 of IAS 19. The Group expects to contribute $514 to its defined benefit plan during the 12 months beginning after 31 December 2020.

The average duration of the defined benefits plan obligation as at 31 December 2020, is 9 years.

Pension costs recognized in profit or loss are as follows:

Current service costs Interest expense Service cost Total	For the years ended 31 December	For the years ended 31 December
	2020	2019
	$463 169 -	$506 327 (3,739)
	$632	$(2,906)

Reconciliations of liabilities (assets) of the defined benefit obligation and plan assets at fair value are as follows:

plan assets at fair value are as follows:
Defined benefit obligation Plan assets at fair value Other non-current liabilities - defined benefit obligation	As of 31 December
	2020	2019
	$92,596 (70,170)	$89,992 (63,906)
	$22,426	$26,086

Reconciliation of liability (assets) of the defined benefit plan are as follows:

As of 1 January 2019 Current period service costs Net interest expense (income)	Defined benefit obligation	Fair value of plan assets $(63,407) - (646)	Benefit liability (asset) $34,781 506 327
	$98,188 506 973

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Service cost Subtotal Remeasurement of defined benefit liability (asset): Actuarial gains and loss arising from changes in demographic assumptions Actuarial gains and loss arising from changes in financial assumptions Experience adjustments Remeasurements of the defined benefit assets Subtotal Benefits paid Contributions by employer As of 31 December 2019 Current period service costs Net interest expense (income) Service cost Subtotal Remeasurements of the defined benefit liability (asset): Actuarial gains and loss arising from changes in demographic assumptions Actuarial gains and loss arising from changes in financial assumptions Experience adjustments Remeasurements of the defined benefit assets Subtotal Benefits paid Contributions by employer As of 31 December 2020	Defined benefit obligation (3,739) 95,928 369 2,765 (2,735) - 399 (6,335) - 89,992 463 624 - 91,079 33 3,452 (1,831) - 1,654 (137) - $92,596	Fair value of plan assets - (64,053) - - - (2,219) (2,219) 6,335 (3,969) (63,906) - (455) - (64,361) - - - (2,195) (2,195) 137 (3,751) $(70,170)	Benefit liability (asset)
			(3,739)
			31,875
			369 2,765 (2,735) (2,219)
			(1,820)
			- (3,969)
			26,086 463 169 -
			26,718
			33 3,452 (1,831) (2,195)
			(541)
			- (3,751)
			$22,426

The following significant actuarial assumptions are used to determine the present value of the defined benefit obligation:

Discount rate Expected rate of salary increases	As of31 December	As of31 December
	2020	2019 0.70% 2.00%
	0.30% 2.00%

A sensitivity analysis for significant assumption as at 31 December 2020 and 2019 is as shown below:

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Effect onthe defined benefit obligation	Effect onthe defined benefit obligation	Effect onthe defined benefit obligation	Effect onthe defined benefit obligation
2020		2019
Increase defined benefit obligation	Decrease defined benefit obligation	Increase defined benefit obligation	Decrease defined benefit obligation
$ - - 894 2,259 2,215 -	$2,181 882 - - - 2,151	$ - - - 2,320 2,285 -	$2,238 - - - - 2,215

The sensitivity analyses above are based on a change in a significant assumption (for example: change in discount rate or future salary), keeping all other assumptions constant. The sensitivity analyses may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another.

The methods and assumptions for preparing sensitivity analyses was consistent with those in the prior fiscal period.

(11)Equity

A. Common stock

As at 1 January 2019 the Company’s authorized capital was $2,500,000, divided into 250,000,000 shares with par value of $10 each. The issued and outstanding capital stocks were $2,223,473.

To increase return on shareholder's equity and improve various financial ratios, in utilizing financial leverage, on 10 November 2020, the Shareholders’ meeting resolved an approval on a capital reduction amounted to $333,521, that 33,352 thousand shares were eliminated which represent 15% of total contributed capital. The above capital reduction case was approved by the governing authority on 15 December 2020, and the Board of Directors decided to set 17 December 2020 as the base date for the capital reduction. In addition, an amendment on corporation registration by the Department of Commerce of the Ministry of Economic Affairs was completed and filed.

138

The Company’s authorized and issued capital was $2,500,000 as at 31 December 2020, and 31 December 2019, each at a par value of $10. The number of issued shares is 188,995 thousand shares and 222,347 thousand shares, and the paid-in capital is $1,889,952 and $2,223,473 respectively.

In August 2007, May and December 2012, the Company issued 30,000 thousand shares, 5,000 thousand shares and 5,000 thousand shares of private placement, respectively, in accordance with Article 43-6 of the Securities Exchange Act. The closing dates of the capital increase were August 7, 2007, October 30 and 5 December 2012. The above private shares were canceled in October 2009 as a result of a capital reduction to offset the accumulated loss, with 12,449 thousand shares canceled in proportion to the shareholding ratio. In March 2016, 5,000 thousand private shares were canceled due to the merger. In December 2020, 3,383 thousand shares were canceled as a result of the capital reduction in cash refund to the shareholders.

The above private shares and their subsequent allocations are based on the delivery date of the private securities in accordance with the third paragraph of Article 43-8 of the Securities Exchange Act (26 October 2007; 5 December 2012; 10 January 2013). After three years of holding such shares, the holders may apply for approval to the governing authority under Securities Exchange Act and other relevant regulations. The shares may be freely transferred in the open market after obtaining said approval.

As of 31 December 2020, the number of outstanding private 19,168 thousand shares with par value is 10 per share, and the public offering process has not yet been processed.

B. Capital surplus

According to the Company Act, the capital reserve shall not be used except for making good the deficit of the company. When a company incurs no loss, it may distribute the capital reserves related to the income derived from the issuance of new shares at a premium or income from endowments received by the company. The distribution could be made in cash or in the form of dividend shares to its shareholders in proportion to the number of shares being held by each of them.

139

Treasury share transactions Premium from merger Adjustments arising from changes in percentage of ownership in subsidiaries Total	As of 31 December	As of 31 December
	2020 $20,763 15,188 1,897 $37,848	2019
		$20,700 15,188 1,897
		$37,785

C. Treasury stock

As of 31 December 2020, and 31 December 2019, the treasury stock held by the Company was $44,853, and $52,768, respectively, and the number of treasury stock held by the Company was 4,521 thousands and 5,319 thousands respectively.

From 14 November 2018 to 10 January 2019, the Company repurchased 5,319 thousand shares. The purpose of the repurchase is to transfer the shares to the employees, and the shares are to be transferred to the employees all at once or in installments within three years from the date of the repurchase of the shares. The above treasury shares were canceled for 798 thousand shares in proportion to the total issued capital in December 2020 due to the capital reduction in cash refund to the equity shareholders. The Group's treasury shares have not been transferred to employees as of 31 December 2020.

D. Distribution of retained earnings and dividend policies

According to the Company’s Articles of Incorporation, current year’s earnings, if any, shall be appropriated in the following order:

(a) Income tax obligation
(b) Offsetting accumulated deficits, if any
(c)Set aside 10% as legal reserve. However, when the legal reserve amounts to the authorized capital, this shall not apply.
(d)Set aside or reserve special reserve in accordance with law and regulations.

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(e)In combining the balance with the accumulated undistributed surplus of the previous period, the board of directors shall prepare a proposal for earnings distribution and submit it to the shareholders' meeting for a resolution distributing dividends to shareholders.

The policy of dividend distribution should reflect factors such as the current and future investment environment, fund requirements, domestic and international competition and capital budgets; as well as the interest of the shareholders, share bonus equilibrium and long-term financial planning etc. The Board of Directors shall make the distribution proposal annually and present it at the shareholders’ meeting. The Company’s Articles of Incorporation further provide that no more than 80% of the dividends to shareholders, if any, could be paid in the form of share dividends. Accordingly, at least 20% of the dividends must be paid in the form of cash.

According to the Company Act, the Company needs to set aside amount to legal reserve unless where such legal reserve amounts to the total paid-in capital. The legal reserve can be used to make good the deficit of the Company. When the Company incurs no loss, it may distribute the portion of legal serve which exceeds 25% of the paid-in capital by issuing new shares or by cash in proportion to the number of shares being held by each of the shareholders.

Following the adoption of TIFRS, the FSC on 6 April 2012 issued Order No. Jin-Guan-Cheng-Fa-Zi-1010012865, which sets out the following provisions for compliance:

On a public company's first-time adoption of the TIFRS, for any unrealized revaluation gains and cumulative translation adjustments (gains) recorded to shareholders’ equity that the company elects to transfer to retained earnings by application of the exemption under IFRS 1, the company shall set aside an equal amount of special reserve. Following a company’s adoption of the TIFRS for the preparation of its financial reports, when distributing distributable earnings, it shall set aside to special reserve, from the profit/loss of the current period and the undistributed earnings from the previous period, an amount equal to “other net deductions from shareholders’ equity for the current fiscal

141

year, provided that if the company has already set aside special reserve according to the requirements in the preceding point, it shall set aside supplemental special reserve based on the difference between the amount already set aside and other net deductions from shareholders’ equity. For any subsequent reversal of other net deductions from shareholders’ equity, the amount reversed may be distributed. The Company’s special reserve resulted from first-time adoption of IFRS on 1 January 2012 (adoption date) was $0.

Details of the 2020 and 2019 earnings distribution and dividends per share as approved and resolved by the Board of Directors’ meeting and shareholders’ meeting on 16 March 2021 and 11 June 2020, respectively, are as follows:

Legal reserve Recognition (reversal) of special reserve Common stock cash dividend	Appropriation of earnings 2020 2019 $53,692 $ - 5,624 (14,519) 92,237 -	Dividend per share(NTD)	Dividend per share(NTD)
	2020 $53,692 5,624 92,237	2020 $0.5	2019
			$ -

Please refer to Note 6 (15) for further details on employees’ compensation and remuneration to directors and supervisors.

E. Non-controlling interests

Non-controlling interests
Beginning balance In attributable to non-controlling interests Other comprehensive income, attributable to non-controlling interests, net of tax: Exchange differences resulting from translating the financial statements of a foreign operation Changes in subsidiaries’ ownership Ending balance	As of 31 December
	2020 $4,466 (98) - (4,189) $179	2019
		$4,295 (69) 240 - $4,666

(12) Operating revenue

The Group’s revenue mainly come from selling products the Group

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manufactured. Analysis of revenue from contracts with customers during the years ended 31 December 2020 and 2019 are as follows:

A. Disaggregation of revenue

Disaggregation of revenue
Sale of goods	For the years ended 31 December 2020 2019 $2,752,601 $3,243,968
	2020 $2,752,601
		$3,243,968

The Group recognizes revenues when control of the products is transferred to customers. Revenues are earned and reported at the time that respective contract criteria are met.

B. Contract balance

Contract liabilities – current

Sales of goods		As of
	31 December 2020 $18,752	31 December2019 $20,384	1 January2019
			$1,007

The movement in the Group’s balances of contract liabilities for the years ended December 31, 2020 and 2019 are as follows:

	For theyears ended 31 December 2020 2019 $(20,384) $(1,077) 18,752 20,384	For theyears ended 31 December 2020 2019 $(20,384) $(1,077) 18,752 20,384
		2019
Revenue recognized from opening balance Increase in advance receipt within the period (excluding the amount being recognized as periodical revenues)		$(1,077) 20,384

C. Transaction price allocated to unfulfilled contract obligations

None.

D. Assets recognized from costs to fulfil a contract with customers

None.

(13) Expected credit gains

For the years ended
31 December,
2020 2019

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Operating expenses – Expected credit gains Trade receivables $490 $2,419

Please refer to Note 12 for more details on credit risk.

The Group measures the loss allowance of its trade receivables (including note receivables and trade receivables) at an amount equal to lifetime expected credit loss. The assessment of the Group’s loss allowance as at 31 December 2020 and 2019 are as follows:

31 December 2020

Not yet due (note)			Overdue	Overdue		Total
	<=30 days	31-90 days	91-180 days	181-365 days	>=365 days
$533,814 -%	$1,804 5-10%	$ - 15-20%	$ - 40-60%	$ - 70-90%	$16,863 100%	$552,481
-	(183)	-	-	-	(16,863)	(17,046)
$533,814	$1,621	$-	$-	$-	$-	$535,435

31 December 2019

Not yet due (note)			Overdue	Overdue		Total
	<=30 days	31-90 days	91-180 days	181-365 days	>=365 days
$619,015 -%	$464 5-10 %	$ - 15-20 %	$ - 40-60 %	$ - 70-90 %	$17,513 100%	$636,992
-	(23)	-	-	-	(17,513)	(17,536)
$619,015	$441	$-	$-	$-	$-	$619,456

Note: The Group’s note receivables are not overdue.

The movement in the impairment provision of note receivables and trade receivables for the years ended 31 December 2020 and 2019 is as follows:

As of 1 January 2020 Provision (Reversal) As of 31 December 2020 As of 1 January 2019 Provision (Reversal) As of 31 December 2019	Note receivables $ - - $- $ - -	Trade receivables
		$17,536 (490)
		$17,046
		$19,955 (2,419)
	$-	$17,536

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(14) Leases

A. The Group is a lessee (Adoption of the related disclosure in IFRS 16)

The Group leases various properties, including land, buildings, transportation equipment and other equipment. The lease terms range from 2 to 10 years.

The impact of Group’s leases on the financial position, financial performance and cash flows is as follows:

(a) Amounts recognized in the balance sheet
(i) Right-of-use asset

Cost:

Cost:
Land As of 1 January 2020 $83,082 Additions Disposals - - As of 31 December 2020 $83,082 Depreciation and impairment: Land As of 1 January 2020 $ 7,811 Depreciation 8,521 Disposals - As of 31 December 2020 $16,332	Land	Buildings	Transportation equipment $4,678 533 - $5,211 Transportation equipment	Other equipment	Total
	$83,082 - -	$50,859 11,013 -		$1,568 - (273)	$140,187 11,546 (273)
	$83,082	$61,872		$1,295	$151,460
		Buildings		Other equipment	Total
	$ 7,811 8,521 -	$11,007 15,879 -	$2,197 1,912 -	$473 449 (176)	$21,488 26,761 (176)
	$16,332	$26,886	$4,109	$746	$48,073

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Cost:

Cost:
As of 1 January 2019 Additions Disposals As of 31 December 2019 Depreciation and impairment: As of 1 January 2019 Depreciation Disposals As of 31 December 2019 Net carrying amount: As of 31 December 2020 As of 31 December 2019	Land	Buildings	Transportation equipment	Other equipment $948 620 - $1,568 Other equipment $ - 473 - $473 $549	Total
	$83,082 - -	$31,924 18,935 -	$4,369 1,102 (793)		$120,323 20,657 (793)
	$83,082	$50,859	$4,678		$140,187
	Land	Buildings	Transportation equipment		Total
	$ - 7,811 -	$ - 11,007 -	$ - 2,603 (406)		$ - 21,894 (406)
	$7,811	$11,007	$2,197		$21,488
	$66,750 $75,271	$34,986	$1,102 $2,481		$103,387
		$39,852		$1,095	$118,699

(ii) Lease liabilities

Lease liabilities
Current Non-Current Total	As of31 December
	2020	2019
	$23,047 79,484	$24,084 93,090
	$102,531	$117,174

Please refer to Note 6(14)(d) for the interest expense regarding with lease liabilities recognized during the years ended 31 December 2020 and 2019. Please refer to Note 12 (5) Liquidity risk management for the maturity analysis on lease liabilities as at 31 December 2020 and 2019.

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B. Amounts recognized in the statement of profit or loss

Depreciation on right-of-use assets

Land Buildings Transportation equipment Other equipment Total	Forthe years ended 31 December	Forthe years ended 31 December
	2020 $8,521 15,879 1,912 449 $26,761	2019
		$7,811 11,007 2,603 473
		$21,894

C. Income (gain) or expense (loss) relating with leases

The expenses relating to short-term leases	For theyears ended 31 December 2020 2019 $13,065 $14,416
	2020 $13,065

D. Cash outflow related to lessee and lease activity

During the year ended 31 December 2020 and 2019, the Group’s total cash outflows for leases amounting to $40,735 and $39,530.

(15) Summary of employee benefits, depreciation and amortization expenses by function for the years ended 31 December 2020 and 2019:

Function Nature		For the years ended 31 December	For the years ended 31 December	For the years ended 31 December	For the years ended 31 December
		2020			2019
	Operating costs	Operating expenses	Total amount	Operating costs	Operating expenses	Total amount
Employee benefits expenses
Salaries	$278,094	$115,046	$393,140	$309,843	$105,250	$415,093
Labor and health insurance	27,581	8,676	36,257	28,898	9,305	38,203
Pension	13,607	4,364	17,971	14,374	903	15,277
Other employee benefits	18,180	5,050	23,230	20,106	5,629	25,735
Depreciation	238,241	17,309	255,550	221,197	16,896	238,093
Amortization	4,213	7,778	11,991	6,632	7,095	13,727

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According to the Articles of Incorporation, at least 3% of profit of the current year shall be appropriated as employees’ compensation, and no higher than 1% of profit of the current year shall be appropriated as remuneration to board directors, however, the accumulated deficits, if any, shall first be made up for. The Company may, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, have the profit distributable as employees’ compensation in the form of shares or cash; and in addition thereto a report of such distribution is submitted to the shareholders’ meeting. Information on the Board of Directors’ resolution regarding the employees’ compensation and remuneration to directors and supervisors can be obtained from the “Market Observation Post System” on the website of the TWSE.

Based on earnings as of 31 December 2020 and for the year then ended, the company appropriated amounts of the employees’ compensation and remuneration to directors as 3% and 0.8% of earnings for 2020, respectively. The employees’ compensation and remuneration to directors for the year ended of 31 December 2020 amounted to $15,075 and $4,020 respectively, which were reported in employee benefit expenses. The company's board of directors resolved on 16 March 2021 to pay the 2020 employees’ compensation and remuneration to directors and supervisors in cash. There is no difference between the amounts stated as expenses in the 2020 financial report.

As of 31 December 2019, and for the year then ended, the Company concluded as net operating loss, and accordingly no employees’ compensation and remuneration to board directors have been appropriated.

(16) Non-operating income and expenses

A. Interest income

terest income
Financial assets measured at amortized cost	For the years ended 31 December 2020 2019 $2,390 $863
	2020 $2,390

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B. Other income

Other income
Dividend income Rental income Others Total Other gains and loss Foreign exchange loss, net Gains (loss) on disposal of property, plant and equipment Gains (loss) on disposal of investments Gains (loss) on valuation of financial assets at fair value through profit or loss (Note) Others expense Total	For the years ended 31 December
	2020 2019 $3,254 $3,896 763 1,017 20,605 8,952 $24,622 $13,865 For the years ended 31 December	2019
		$3,896 1,017 8,952
		$13,865
	2020 $(11,635) 741,298 428 97 (10,012) $720,176	2019
		$(6,236) (7,779) (1,151) (16) (511)
		$(15,693)

C. Other gains and loss

Note: Generated as financial assets or liabilities were measured at fair value through profit or loss.

D. Finance costs

Interest on bank loans Interest on lease liabilities Total	For the years ended 31 December	For the years ended 31 December
	2020 $(14,571) (1,580)	2019
		$(17,886) (1,659)
	$(16,151)	$(19,545)

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(17) Components of other comprehensive income (loss)

A. For the year ended 31 December 2020

A. For the year ended 31 December 2020
Arising during the period Reclassification adjustments duringtheperiod Items not to be reclassified to profit or loss subsequently: Remeasurements of defined benefit plans $540 $ - Unrealized gains from equity instruments investments measured at fair value through other comprehensive income 5,799 - Items that may be reclassified to profit or loss subsequently: Exchange differences resulting from translating the financial statements of a foreign operation (182) - Share of other comprehensive income of associates accounted for under the equity method (801) - Total of other comprehensive income $5,356 $- B. For the year ended 31 December 2019 Arising during the period Reclassification adjustments duringtheperiod Items not to be reclassified to profit or loss subsequently: Remeasurements of defined benefit plans $1,820 $ - Unrealized gains from equity instruments investments measured at fair value through other comprehensive income 15,814 - Items that may be reclassified to profit or loss subsequently: Exchange differences resulting from translating the financial statements of a foreign operation 840 - Share of other comprehensive income of associates accounted for under the equity method (434) - Total of other comprehensive income $18,040 $-	Other comprehensive income (loss), before tax $540 5,799 (182) (801) $5,356 Other comprehensive income (loss), before tax $1,820 15,814 840 (434) $18,040	Income tax effect $(108) - 58 160 $110 Income tax effect $(364) - (120) 87 $(397)	Other comprehensive income (loss), net of tax
			$432 5,799 (124) (641)
			$5,466
			Other comprehensive income (loss), net of tax
			$1,456 15,814 720 (347)
			$17,643

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(18) Income tax

For the year ended 31 December 2020 and 2019 the major components of income tax (expense) benefit are as follows:

A. Income tax recognized in profit or loss

. Income tax recognized in profit or loss
Current income tax (expense) benefit: Current income tax charge Land value increment tax Deferred tax (expense) benefit: Deferred tax (expense) benefit relating to origination and reversal of temporary differences Deferred tax relating to origination and reversal of tax loss and tax credit Reversal the land value incremental tax liability due from property sale Total income tax benefit	For the years ended 31 December
	2020	2019
	$ - (34,586) 21,466 34,941 19,191	$(320) - 7,054 (4,526) -
	$41,012	$2,208

B. Income tax related to components of other comprehensive income

Deferred income tax (expense) benefit: Exchange differences on translation of foreign operation Share of other comprehensive income of associates accounted for under the equity method Remeasurements of defined benefit plans Income tax related to components of other comprehensive income	For the years ended 31 December	For the years ended 31 December
	2020	2019
	$58 160 (108)	$(120) 87 (364)
	$110	$(397)

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C. Reconciliation between tax expense (benefit) and accounting profit at the Company’s applicable tax rates is as follows:

Company’s applicable tax rates is as follows:
Accounting profit (loss) before tax from continuing operations At the Company’s statutory income rate Tax effect of tax-exempt income Tax effect of non-deductible expenses Adjustments of deferred tax assets/liabilities for write-downs or reversals Other adjustments according to tax law Reversal of the land value incremental tax liability due from property sale Total income tax benefit recognized in profit or loss	For the years ended 31 December
	2020	2019
	$483,392	$(9,085)
	$(96,678) 149,739 (114) 3,460 - (15,395)	$1,817 2,264 (270) (1,589) (14) -
	$41,012	$2,208

D. Significant components of deferred tax assets (liabilities) are as follows:
(a) For the year ended 31 December 2020

Balance as of 1 January	Recognized in profit or loss	Recognized in other comprehensive income	Balance as of 31 December
$(2,232) 17,413 3,434 (91,705) 11,017 (58) 47 - 3,592	$ - 3,053 - 19,191 21,012 - - 34,941 (2,599)	$ - - (108) - - 58 160 - -	$(2,232) 20,466 3,326 (72,514) 32,029 - 207 34,941 993
$(58,493)	$75,598	$110	$17,216

$35,444			$92,221
$(93,937)			$(75,005)

(b) For the year ended December 31 2019

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Balance as of 1 January	Recognized in profit or loss	Recognized in other comprehensive income	Balance as of 31 December
$(2,232) 17,114 3,798 (91,705) 11,252 62 (40) (5,549) 4,526 2,151	$ - 299 - - (235) - - 5,549 (4,526) 1,441	$ - - (364) - - (120) 87 - - -	$(2,232) 17,413 3,434 (91,705) 11,017 (58) 47 - - 3,592
$(60,623)	$2,528	$(397)	$(58,493)

$38,863			$35,444
$(99,486)			$(93,937)

E. The following table provides the information of the unused loss carry-forward:

Year 2018 2020 Total	Tax loss for theperiod $22,632 167,436 $190,068	Unused tax loss as of 31 December 2020 31 December 2019 $7,270 $7,270 167,436 - $174,706 $7,270	Unused tax loss as of 31 December 2020 31 December 2019 $7,270 $7,270 167,436 - $174,706 $7,270	Expiration Year
			$7,270 -	2028 2030
			$7,270

F. Deferred assets with least possibility to be realized

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As of 31 December 2020, and 2019, deductible temporary differences for which no deferred income tax assets have been recognized in amounted to $15,234 and $18,590, respectively.

G. Status of income tax returns assessment

As of 31 December 2020, the status of the Group’s income tax returns which have been assessed by tax authorities is as follows:

The Company The Subsidiary -Blessingthoughts	The assessment of income tax returns
	Assessed and approved up to 2018 Assessed and approved up to 2018

(19) Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the years attributable to ordinary equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

No diluted earnings per share in 2019 shall be accounted for due to that net loss operating loss was concluded for the fiscal.

loss operating loss was concluded for the fiscal.
(1) Basic earnings per share Net income (loss) attributable to the parent company (in thousands of NTD) Weighted average number of ordinary shares outstanding for basic earnings per share (thousand shares) Basic earnings(loss) per share (NTD) (2) Diluted earnings per share Net income (loss) attributable to the parent company Effect of dilution on net income (loss) attributable to ordinary stockholders of the Company after dilution	For theyears ended 31 December
	2020	2019
	$524,404	$(6,808)
	215,780	217,047
	$2.43	$(0.03)
	2020	2019
	$524,404	$(6,808)
	$524,404	$(6,808)

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Weighted average number of ordinary shares outstanding for basic earnings per share (thousand shares) Effect of dilution: Employees’ compensation (thousand shares) Weighted average number of ordinary shares outstanding after dilution (thousand shares) Diluted earnings(loss) per share (NTD)	215,780 1,364	217,047 -
	217,144	217,047
	$2,42	$(0.03)

There were no transactions which may significantly change the number of the outstanding ordinary shares from the financial statement date to the date of releasing financial statements.

7. Related party transactions

Information of the related parties that had transactions with the Group during the financial reporting period is as follows:

Name and nature of relationship of the related parties

Name oftherelated parties	Nature of relationship oftherelated parties
KT Investment Company, Limited Macy Investment Company, Limited Chiaoli Investment Company, Limited Hui An Shing Trading Company, Limited	The Company’s director The Company’s director The Company’s director Associate (derecognized as the related party due to disposal of all holding shares)

Significant transactions with the related parties

A. Lease - related parties

(a) Rental income

a) Rental income
KT Investment Company, Limited	For the years ended 31 December
	2020 $549	2019
		$549

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The Group leased its plant and building to the said related party, from which rental income and collection were set at arm’s length range.

(b) Right-of-use assets Macy Investment Company, Limited (c) Lease liabilities Macy Investment Company, Limited (d) Interest expenses Macy Investment Company, Limited B. Sales Hui An Shing Trading Company, Limited	As of31 December	As of31 December
	2020 2019 $66,749 $75,271 As of31 December	2019
		$75,271
	2020 2019 $66,983 $75,090 As of 31 December	2019
		$75,090
	2002 2019 $1,035 $1,152 For the years ended 31 December	2019
		$1,152
	2020 $-	2019
		$38

Selling prices to the above related parties was set through agreement with reference to market prices. The open receivable as of 31 December 2020 and 2019 were unsecured, non-interest bearing and shall be settled in cash.

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C. Other income

C. Other income
Chiaoli Investment Company, Limited Key management personnel compensation Short-term employee benefits Post-employment benefits Total	For the years ended 31,December
	2020 2019 $ - $12 For the years ended 31,December	2019
		$12
	2020 $13,256 142 $13,398	2019
		$9,371 96
		$9,467

8. Assets pledged as collaterals

The following table lists assets of the Group pledged as collaterals:

Property, plant and equipment – buildings, machinery and equipment Financial assets measured at amortized cost Total	Carrying	Amount As of 31 December 2019 $505,116 2,800 $507,916	Purpose ofpledges
	As of 31 December 2020 $451,608 2,800 $454,408
			Long and short-term loans Energy resources guarantee

Significant contingencies and derecognized contract commitments

The following items are the contingencies which have not been accrued and recorded on the balance sheet as on 31 December 2020

As of 31 December 2020, the amount available under unused letter of credit was $23,507.
As of 31 December 2020, the Group entered several construction contracts for which the development is in progress. The following provides significant details:

details:
Supplier Counterparty A	Contract Subject Instrument construction	Total Contract Amount $12,857	Equipment Payment Made $9,000	Unpaid amount as of December 31 2020
				$3,857

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Counterparty B	Equipment purchase	23,150	16,205	6,945
Counterparty C	Wastewater construction	21,810	17,448	4,362
Counterparty D	Construction purchase	28,095	4,214	23,881
Counterparty E	Equipment Purchase	11,700	4,095	7,605

10. Significant disaster loss

None.

11. Significant subsequent events

None.

12. Others

(1) Categories of financial instruments

Financial Assets Financial assets at fair value through profit or loss: Financial assets at fair value through profit or loss, current (Other current assets) Amortized cost of a financial asset: Cash and cash equivalents (excluding cash on hand) Measured at amortized cost financial assets Notes receivables Trade receivables Other receivables (Other current assets) Subtotal Total Financial Liabilities Financial liabilities at amortized cost: Short-term loans Notes and accounts payable Other payable Long-term loans (including current portion) Lease liability Subtotal	As of 31 December	As of 31 December
	2020	2019
	$93,266 81 759,708 602,800 39,248 496,187 918	$66,664 - 521,696 52,800 31,601 587,855 768
	1,898,861
	$1,992,208
	2020	2019
	$226,246 297,041 590,964 797,901 102,531	$291,628 319,800 174,247 919,936 117,174
	2,014,683	1,822,785

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Financial liabilities at fair value through profit or loss: (Other current assets) Total

$2,014,683 $1,822,801

(2) Financial risk management objectives

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

The Group has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant activities, approval process by the board of directors and audit committee must be carried out based on related protocols and internal control procedures. The Group complies with its financial risk management policies at all times.

(3) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risks comprise currency risk, interest rate risk and other price risk (such as equity risk).

In practice, it is rarely the case that a single risk factor varies independently from other risk factors. A correlation normally exist among risk factors. However, the following sensitivity analyses do not disclose the correlations among these risk factors.

Foreign currency risk

The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenue or expenses are denominated in a different currency from the Group’s functional currency) and the Group’s net investments in foreign subsidiaries.

The Group applies natural hedges on the foreign currency risk arising from purchases or sales as certain portion of receivables or payables are denominated

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as the same currencies, and utilizes spot or forward exchange contracts to manage foreign currency risk. The Group designates certain forward currency contracts as balance sheet hedges to hedge its exposure to foreign currency exchange risk associated with certain balance sheet assets or liabilities. Hedge accounting is not applied as the aforesaid natural hedges or designated forward contracts to hedge currency risk are deemed ineffective hedges. Furthermore, the currency risk exposures due from investments in oversea associates are not hedges as the investments are set for certain operating strategies.

The foreign currency sensitivity analysis of the possible change in foreign exchange rates on the Group’s profit is performed on significant monetary items denominated in foreign currencies as at the end of the reporting period. The Group’s foreign currency risk mainly resulted from the volatility of exchanging USD, CNY, EUR or JPY to NTD, and vice versa. The information of the sensitivity analysis is as follows:

a. When NTD strengthens/weakens against USD by 1%, the profit for the years ended 31 December 2020 and 2019 is decreased by $1,177 and $2,547, respectively; and no impact on the equity.
b. When NTD strengthens/weakens against CNY by 1%, the profit for the years ended 31 December 2020 and 2019 is increased by $190 and decreased by $135, respectively; and no impact on the equity.
c. When NTD strengthens/weakens against EUR by 1%, the profit for the years ended 31 December 2020 and 2019 is increased by $42 and $34, respectively; and no impact on the equity.
d. When NTD strengthens/weakens against JPY by 1%, the profit for the years ended 31 December 2020 and 2019 is increased by $63 and $25, respectively; and no impact on the equity.

Interest rate risk

The Group is exposed to interest rate risk arising from borrowing at floating interest rates. Interest rate risk is the risk that the fair value or forecasted cash flows of a financial instrument fluctuates due to the volatility in market interest rates.

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The sensitivity analysis of interest rate fluctuation is performed on items exposed to interest rate risk as at the end of the reporting period, including borrowings with variable interest rates. At the reporting dates, a change of 10 basis points of interest rate in a reporting period could cause the profit for the years ended 31 December 2020 and 2019 to increase/decrease by $1,024 and $1,212, respectively.

Equity price risk

The Group’s listed and unlisted equity securities are susceptible to market price risk arising from uncertainties about future performance of equity markets. The Company’s equity investments are classified as financial assets at fair value through other comprehensive income. The equity investment portfolio is submitted to the Group’s senior management on a regular basis. The Group’s Board of Directors reviews and approves changes on the equity investment portfolio.

At the reporting date, for equity investments in the listed companies which are recorded as financial assets at fair value through other comprehensive income, an increase/decrease of 10% in the share price could increase/decrease $610 and $2,645 for the years ended 31 December 2020 and 2019, respectively.

Please refer to Note 12.9 for sensitivity analysis information of other equity instruments or derivatives that are linked to such equity instruments whose fair value measurement is categorized under Level 3.

(4) Credit risk management

Credit risk is the risk that a financial loss may be triggered when a counterparty defaults its obligations. The Group is exposed to credit risk from operating activities (primarily for, accounts receivables and notes receivables) and from its financing activities, including bank deposits and other financial instruments.

The Group mitigates credit risks by implementing the Group’s credit policy, procedures and controls. Credit limits are set for all counter parties based on their financial positions, credit ratings, historical experience, prevailing

161

economic condition and the Group’s internal rating criteria etc. For dealing with some counterparties with less credit, certain financial instruments of credit enhancement, such as advance receipts or a letter of credit, may be required to be provided to mitigate possible credit risk exposures.

As of 31 December 2020 and 2019 accounts receivables from top ten customers represent 51% and 53% of the total accounts receivables of the Group, respectively. The credit concentration risk of other trade receivables is insignificant.

Credit risk from deposits in banks, fixed income securities and other financial instruments is managed by the Group’s treasury division in accordance with the Group’s policy. The Group only deals with counterparties that are approved through internal control procedures; therefore, the counterparties are limited to banks, financial institutions, companies or government entities with good credit standing.

The Group would write down or write off values of financial assets if these are forecasted to be least possible to be collected in the case of the issuer or debtor being insolvent or in financial distress.

(5) Liquidity risk management

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of cash and cash equivalents, highly liquid equity investments and bank borrowings. The table below summarizes the maturity profile of the Group’s financial liabilities based on the contractual undiscounted payments and contractual maturity, including contractual interests. The undiscounted interest payment due from borrowings with variable interest rates is extrapolated based on the estimated interest rate yield curve as of the end of the reporting period.

Non-derivative financial instruments

As of 31 December 2020 Short-term loans Notes and accounts payable Long-term loans	Less than 1year	2 to 3years	4 to 5years	>= 5years	Total
	$228,211 297,041 129,121	$ - - 364,499	$ - - 333,167	$ - - -	$228,211 297,041 826,787

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Non-derivative financial instruments

Lease liabilities As of 31 December 2019 Short-term loans Notes and accounts payable Long-term loans Lease liabilities	Less than 1year	2 to 3years	4 to 5years	>= 5years	Total
	24,346 $297,628 319,800 224,773 25,603	35,910 $ - - 423,298 37,450	21,709 $ - - 302,308 25,769	25,143 $ - - 5,158 34,286	107,108 $297,628 319,800 955,537 123,109

(6) Reconciliation of liabilities arising from financing activities

Reconciliation of liabilities for the year ended 31 December 2020:

As of 1 January 2020 Cash flows Non-cash changes As of 31 December 2020	Short-term loans $291,628 (65,382) - $226,246	Long-term loans (including current portion) $919,936 (122,035) -	Lease liabilities $117,174 (26,090) 11,447	Deposit margin $ - 75 - $75	Total liabilities from financing activities $1,328,738 (213,432) 11,447
		$797,901	$102,531		$1,126,753

Reconciliation of liabilities for the year ended 31 December 2019:

As of 1 January 2019 Cash flows Non-cash changes As of 31 December 2019	Short-term loans $317,801 (26,173) - $291,628	Long-term loans (including current portion)	Lease liabilities $120,323 (23,455) 20,306	Total liabilities from financing activities $1,234,928 73,504 20,306
		$796,804 123,132 -
		$919,936	$117,174	$1,328,738

(7) Fair value of financial instruments

A. Valuation methodology and assumptions for fair values:

163

taken by the Group to measure or disclose the fair values of financial assets and financial liabilities:

(a)The carrying amount of cash and cash equivalents, accounts receivables, accounts payable and other current liabilities approximate their fair value due to their short maturities.
(b)For financial assets and liabilities traded in an active market with standard terms and conditions, their fair value is determined based on market quoted prices (including listed equity securities) at the reporting date.
(c) Fair value of equity instruments without market quoted prices (including private placement of listed equity securities, unquoted public company and private company equity securities) are valued by market approach which takes industrial comparable entities’ quoted market prices or other relevant information as reference to estimate probable fair values.
(d)Fair value of debt instruments without market quoted prices, bank loans, and other non-current liabilities are determined based on the counterparties’ prices or valuation method. The valuation method uses DCF method as a basis, and the assumptions such as interest rates and discount rate are primarily based on relevant information of equivalent instruments (such as yield curves published by the Taipei Exchange, average prices and credit risks for Fixed Rate Commercial Paper published by Reuters, etc.)
B. Fair value of financial instruments measured at amortized cost

The carrying amount of the Group’s financial instruments, financial assets and liabilities measured at amortized cost approximate their fair value.

C. Fair value measurement hierarchy for financial instruments

Please refer to Note 12(9) for fair value measurement hierarchy for financial instruments of the Group.

(8) Derivative financial instruments

The Group’s derivative financial instruments include forward currency

164

contracts and embedded derivatives. The related information for derivative financial instruments not qualified for hedge accounting and not yet settled as of 31 December 2020 and 2019 is as follows:

Forward currency contracts

The Group entered into forward currency contracts to mitigate its exposure to financial risk, but these contracts are not designated as hedging instruments. The table below lists the information related to forward currency contracts:

Items (by contract) Contract Amount Contract Period As at 31 December 2020 Forward currency contract Sell foreign currency USD 48 thousand Sell foreign currency USD 115 thousand Sell foreign currency USD 136 thousand Sell foreign currency USD 67 thousand Sell foreign currency USD 86 thousand Sell foreign currency USD 94 thousand Sell foreign currency USD 176 thousand Sell foreign currency USD 134 thousand Sell foreign currency USD 67 thousand Sell foreign currency USD 94 thousand Sell foreign currency USD 33 thousand Sell foreign currency USD 45 thousand As at 31 December 2019 Forward currency contract Sell foreign currency EUR 120 thousand

From 2020.11.04 to 2021.02.19 From 2020.11.19 to 2021.03.16 From 2020.11,23 to 2021.03.12 From 2020.12.16 to 2021.04.09 From 2020.12.16 to 2021.03.30 From 2020.12.16 to 2021.02.19 From 2020.12.16 to 2021.05.07 From 2020.12.28 to 2021.04.29 From 2020.12.28 to 2021.05.07 From 2020.12.28 to 2021.03.23 From 2020.12.31 to 2021.04.13 From 2020.12.30 to 2021.04.01

From 2019.12.16 to 2020.03.24

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(9) Fair value measurement hierarchy

A. Fair value measurement hierarchy

All asset and liabilities for which fair values are measured or disclosed in the financial statements are categorized within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole. Level 1, 2 and 3 inputs are described as follows:

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities;

Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable;

Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period.

B. Fair value measurement hierarchy of the Group’s assets and liabilities

The Group does not have assets that are measured at fair value on a non-recurring basis. Fair values of the Group’s assets and liabilities are measured at fair value on a recurring basis as follows:

As of 31 December 2020

As of 31 December 2020
Financial assets: Financial assets at fair value through profit or loss Forward currency contract Financial assets at fair value through other comprehensive income Equity instrument measured at fair value Financial liabilities: Financial liabilities at fair value through profit or loss Forward currency contracts	Level 1	Level 2	Level3	Total
	$ - $6,097	$81 $ -	$ - $87,169	$81 $93,266
	$ -	$ -	$ -	$ -

166

As of 31 December 2019 Financial assets: Financial assets at fair value through profit or loss Equity instrument measured at fair value Financial liabilities: Financial liabilities at fair value through profit or loss Forward currency contracts	Level 1	Level 2	Level3	Total
	$26,448	$-	$40,216	$66,664
	$ -	`＄`16	$ -	`＄`16

Re-classifications between Level 1 and Level 2 during the period

During the years ended 31 December 2020 and 2019, there were no re-classifications between Level 1 and Level 2 fair value measurements.

Reconciliation for fair value measurements in Level 3 of the fair value hierarchy for movements during the period is as follows:

Reconciliation for fair value measurements in Level 3 hierarchy for movements during the period is as follows:	of the fair value
	Assets
	At fair value through
	other comprehensive
	income
	Stocks
Beginning balances as of 1 January 2020	$40,216
Total gains and loss recognized for the
year ended 31 December 2020:
Amount recognized in OCI (presented in	4,453
“Unrealized gains (loss) from equity instruments investments
measured at fair value through other comprehensive income)
Acquire in 2020	42,500
Ending balances as of 31 December 2020	$87,169
Beginning balances as of 1 January 2019	$39,180
Total gains and loss recognized for the
year ended 31 December 2019:
Amount recognized in OCI (presented in	1,036
“Unrealized gains (loss) from equity instruments investments
measured at fair value through other comprehensive income)
Ending balances as of 31 December 2019	$40,216
Information on significant unobservable inputs of fair value measurement
in Level 3 fair value hierarchy

Significant unobservable inputs of fair value measurement in Level 3 fair

167

value hierarchy are as follows:

As of 31 December 2020

Significant Valuation unobservable Quantitative Correlation between Sensitivity Analysis of correlation techniques inputs information inputs and fair value between inputs and fair value Financial assets: Financial assets at fair value through other comprehensive income Stocks Asset discount for 30% The greater 10% increase (decrease) in the approach lack of degree of lack discount for lack of marketability marketability of marketability, would result in (decrease) increase in the lower the the Group’s profit or loss by $8,717 estimated fair value is determined.

As of 31 December 2019

168

Valuation process used for fair value measurements categorized within Level 3 of the fair value hierarchy

The Group’s treasury division is responsible for validating the fair value measurements and ensuring that the results of the valuation are in line with market conditions, based on independent and reliable inputs which are consistent with other information, and represent reasonable prices. The team analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Group’s accounting policies at each reporting date.

(10) Significant assets and liabilities denominated in foreign currencies

Information regarding the significant assets and liabilities denominated in foreign currencies is listed below:

As of 31 December

Financial assets Monetaryitem: USD CNY EUR JPY Financial liabilities Monetaryitem: USD		2020	NTD $311,144 19,049 4,272 6,184 $193,436		2019
	Foreign Currency $10,925 4,349 122 22,407 $6,792	Exchange rate 28.48 4.38 35.02 0.28 28.48		Foreign Currency $15,525 3,149 100 8,759 $7,029	Exchange rate 29.98 4.30 33.60 0.28 29.98	NTD
						$465,440 13,541 3,360 2,453 $210,729

The Group had $11,635 and $6,236 foreign exchange loss for the years ended 31 December 2020 and 2019, respectively.

(11) Capital management

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize the shareholder value. To maintain or adjust the capital structure, the Group may adjust dividend payment to shareholders, return capital to shareholders or issue new shares.

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13. Other disclosures

(1) Information at significant transactions
A. Financing provided: None.

B. Endorsement/Guarantee provided: None.

C. Securities held as at end of the period (excluding subsidiaries and associates):

Holding Company	Type andname ofsecurities	"Relationship	Financialstatement account		As of 31 December,2020	As of 31 December,2020
				Shares	Carrying amount	"Percen tage of	Shares
SUNKO INK CO., LTD.	Stock CHING FENG HOME FASHIONS. CO. LTD LINCO TECHNOLOGY CO. LTD THE FIRST LEASING CORPORATION TOTAL ACRYLIC POLYMER INDUSTRY (TAPI) CORPORATION GLOBAL GRAPHENE GROUP, INC. J NANO TECHNOLOGY CO., LTD. YAYI CO., LTD. SAR TECHNOLOGY INC. KING SHINE EE TECHNOLOGY ENTERPRISE CO., LTD.	Unrelated party Unrelated party Unrelated party Unrelated party Unrelated party Unrelated party Unrelated party Unrelated party Unrelated party	Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Less: Unrealized gains (loss) from investments in equity instruments Total	214,309 422,734 2,852,325 100,000 6,155 11,474 368,898 4,250,000 1,000	$3,365 3,963 25,930 1,000 16,405 115 4,883 42,500 10 (4,905)	0.13% 0.80% 12.96% 2.00% 0.87% 5.22% 1.85% 5.18% 0.01%	$6,097 3,714 26,017 14,938 - - - 42,500 -
					$93,266

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D. Individual securities acquired or disposed of with accumulated amount exceeding the lower of $300 million or 20% of the capital stock for the period: None
E. Acquisition of individual real estate with amount exceeding the lower of $300 million or 20% of the capital stock for the period: None
F. Disposal of individual real estate with amount exceeding the lower of $300 million or 20% of the capital stock for the period: None

Companies disposing of realestate	Property name	Date of occurrence	Acquisition date	Carrying amount	Transaction amount	Collection cost	Loss (gain) on disposal	Trading counterparties	Related or non-related party	Purpose of disposal	Methods of price determination	Other terms
SUNKO	Land in Taiping District, Taichung City	20 January 2020	December 1977	$77,835	$860,000	Fully collected	$741,989 (after deducting transaction-related fees and taxes)	SITRON CO., LTD	Unrelated party	Improving asset turnovers and working capital	Referencing appraisal report and market conditions	None
SUNKO	Land, plant and equipment in Dajia District, Taichung City	26 February 2020	September 2005	approximately $165,000	$465,000	$186,000 has been collected as of 31 December 2020	Disposal process has not been completed and disposal of gain (loss) are estimated to be approximately $300,000.	CHINA PETROCHEMICAL DEVELOPMENT CORPORATION	Unrelated party	Improving the working capital and financial structure	Referencing appraisal report and market conditions	None

G. Related party transactions for purchases and sales amounts exceeding the lower of $100 million or 20% of the capital stock for the period: None.
H. Receivables from related parties with amounts exceeding the lower of $100 million or 20% of capital stock as at end of the period: None.
I. Transaction of derivative financial instruments:

Please refer to Note 12(8).

J. Significant intercompany transactions among consolidated entities are as follows:

None.

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(2) Information on investees

Investees’ names, locations, main businesses and products, original investment amount, investment as at end of the period, net income (loss) of the investees and investment income (loss) recognized for the period:

Investor company	Investee company	Address	Main businesses and products	Initial investment amount	Initial investment amount	Investment as at end of the period	Investment as at end of the period	Investment as at end of the period	Net income (loss) of investee company	Investment income (loss) recognized
				Ending balance	Beginning balance	Number of shares (thousands)	Percentage of ownership (%)	Carrying value
The Company	Power Hero	Mauritius	Investment Services	$20,317 (USD 685,700)	$20,317 (USD 685,700)	-	-%	$ -	$7	$7
The Company	Blessingthoughts	Taiwan	Drinks, and food vending	$15,200	$15,200	1,520,000	83.52%	$909	$(296)	$(247)
The Company	Sunko Biotech Co.	Taiwan	Biotechnology Services	$60,000	$60,000	1,674,044	22.32%	$ -	$ -	$ -
The Company	Chen Chi Technology Co.	Taiwan	Synthetic resin and plastic manufacturing	$14,360	$14,360	1,640,000	41.00%	$ -	$ -	$ -
The Company	Bnkc Biochemical Technology Co.	Taiwan	Wholesale of Chemical Raw Material, wholesale of Cosmetics, and Retail of Cosmetics	$490	$490	49,000	49.00%	$1,301	$1,204	$590
The Company	Power Rich	Anguilla	Investment Services	$28,195 (USD 990,000)	28,195 (USD 990,000)	990,000	30.00%	13,890	$(15,260)	$(4,578)
Power Hero	Giant Way	Mauritius	Investment Services	$20,316 (USD 685,650)	$20,316 (USD 685,650)	-	-%	$ -	$(172)	None

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(3) Information on investments in Mainland China

(Amounts in thousands; Currency denomination in NTD or in foreign currencies)

Investee company	Main businesses and products	Main businesses and products	Total amount of paid-in capital	Method of investment (Note 1)	Beginning accumulated outflow of investment from Taiwan	Investment flows for the period	Investment flows for the period	Investment flows for the period	Ending accumulat ed outflow of investment from Taiwan	Net income (loss) of investee company	Percentage of ownership	Investment income (loss) recognized (Note 2)	Carrying value as at end of the period	Accumulated inward remittance of earnings as at end of the period
						Outflow	Inflow
Eehung (Note1)	Trading of chemical goods, raw materials, mechanical equipment and spare parts, electronic equipment and spare parts		$15,883 (RMB 3,513,896)	Investment in Mainland China was through indirect oversea investee that is invested through direct oversea investee company.	$8,871 (USD 285,600)	$ -	$1,890 (USD 61,279.88)		$8,871 (USD 285,600)	$ -	- %	$ -	$ -	$ -

		Accumulated investment in Mainland China as of 31 December 2020			Investment Amounts Authorized by Investment Commission, MOEA				Upper Limit		on Investment
								The parent company’s netaccount values × 60%
		NT$8,871 (USD285,600)			NT$6,981 (USD224,320.12)			NT$1,486,319 (Note2)

Note 1: Approved by the Investment Committee, Power Hero has invested in Giant Way and indirectly invested in Eehung in Mainland China. Eehung was liquidated on 25 February 2019, and a notification letter from the Investment Committee of the Ministry of Economic Affairs was received to state that the investment amount has been returned by Giant Way on 13 August 2020.

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Note 2: According to the regulations of Investment Commission, Ministry of Economic Affairs, the

parent company’s investment upper limit in Mainland China is 60% of its net value.

Significant transactions with investee companies in Mainland China directly or indirectly through third parties: None.

(4) Information on major shareholders

Shares Names of major shareholders	Number of shares held	Shareholding ratio
Macy Investment Company, Limited	19,809,637	8.90 %
KT Investment Company, Limited	12,010,600	5.40 %

14. Operating segment information

For the purpose of operation, the Company separates operating segments based on diversified strategic business units, and two segments are identified as follows:

Taiwan segment: production and trading of argochemicals, fine chemicals, polymer- PU based surface treating agent, polymer-TPU, polymer-TPV

China segment: trading of chemicals, industrial materials, machinery, and accessories

The above-mentioned reportable operating segment did not summarize more than one operating segment into one segment

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which is measured consistently with operating profit or loss in the consolidated financial statements.

Transfer pricing between operating segments is on an arm’s length basis equivalently of transactions with third parties.

The China operating segment was liquidated in February 2019. The Group

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considered that the Group was operating as one single entity. The details of profits and loss, assets and liabilities of the reportable segments in 2020 are attached for reference purposes only.

(1) Information of the reportable segments’ profit and loss are listed as follows:
(a) For the year ended 31 December 2020

Revenue: External customers Total revenue Segment profit or loss	Taiwan segment $2,752,601 $2,752,601 $483,294	Reportable segment $2,752,601 $2,752,601 $483,294	Adjustment and eliminations $- $ - $ -	Consolidated
				$2,752,601
				$2,752,601
				$483,294

(b) For the year ended 31 December 2019

Revenue: External customers Total revenue Segment profit or loss	Taiwan segment $3,243,968 $3,243,968 $(9,309)	China segment $- $ - $ 224	Reportable segments $3,243,968 $3,243,968 $(9,085)	Adjustment and eliminations	Consolidated
				$-	$3,243,968
				$ -	$3,243,968
				$ -	$(9,085)

The related information of operating segment asset and liability as of 31 December 2020 and 2019 are listed as follows:

Operating segment assets:

Segment assets: 31 December 2020	Taiwan segment	Reportable segment $4,799,421	Adjustments and eliminations	Consolidated $4,799,421
	$4,799,421		$ -

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Segment assets: Taiwan segment 31 December 2019 $4,245,450 Operating segment liabilities:	China segment $ -	Reportable segments $4,245,450	Adjustments and eliminations $ -	Consolidated
				$4,245,450

Adjustments and eliminations $ - Reportable segments	Consolidated	Consolidated
	$2,322,044
	Adjustments and eliminations $ -
$1,968,113		$1,968,113

(2) Reconciliations of the reportable segment revenues, profit and loss, assets, liabilities and other major items: None.
(3) Geographic information
(i) As of 31 December 2020 and 2019 the Group’s external sales are listed as follows:

Area Taiwan United States Asia Europe Other Total	For the years ended 31 December	For the years ended 31 December
	2020 $2,008,856 155,139 398,457 156,384 33,765 $2,752,601	2019
		$2,312,005 184,011 502,406 242,724 2,822
		$3,243,968

Sales by region are grouped based on the regions where the customers are located at.

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(ii) Non-current asset:

Area Taiwan	As of 31 December 2020 2019 $1,941,088 $2,045,818	As of 31 December 2020 2019 $1,941,088 $2,045,818
		2019
		$2,045,818

(c) Information about major customers

Company A	As of 31 December	As of 31 December
	2020 $445,211	2019
		$595,915

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5 Parent Only Financial Statements of the Most Recent Year with Independent Auditors’ Report

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1SUNKO INK CO., LTD.

Notes to Parent Company Only Financial Statements

For the years Ended 31 December 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars, unless Otherwise Stated)

1. General

Sonko Ink Co., Ltd. (hereinafter “the Company”) was incorporated in December 1974. The Company is engaged in manufacturing and trading of certain chemicals or industrial materials. Major product lines are as follows:

a. Argochemicals

b.Fine Chemicals: curing agent, non-halogenated flame retardant, reducing agent, antioxidant

c. Polymer: PU Based surface treating agent, Polymer-TPU, Polymer-TPV

d. UV Absorbers

In May 1996, the Company’s shares were listed on the Taiwan Stock Exchange (TWSE), when the registered office was located at No. 139, Renmei Rd., Dali Dist., Taichung City 412036, Taiwan (R.O.C.). On 30 April 2020, as approved by Ministry of Economic Affairs, the Company’s registered operating office address was changed to 5F., No. 229, Zhongxing St., West Dist., Taichung City 403022, Taiwan (R.O.C.).

On 30 March 2016, the Company merged with Kuo Ching Chemical Co., Ltd. (hereinafter “Kuo Ching”). Kuo Ching was incorporated in April 1977, mainly engaged in production and trading of agrochemicals, fine chemicals, and other polymer materials. In October 2009, Kuo Ching’s shares was listed on the Emerging Stock Board. To improve efficiency and competitive capabilities, the Company merged with Kuo Ching on 30 March 2015 to integrate both entities’ production capacities, research resources, marketing and product lines. The Company was the surviving Company which acquired all of Kuo Ching’s assets, liabilities, rights or obligations.

Date and procedures of authorization of financial statements for issue

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The parent Company only financial statements of the Company for the years ended 31 December 2020 and 2019 were approved to release in accordance with a resolution of the board of directors’ meeting on 16 March 2021.

3. Newly issued or revised standards and interpretations

(1) Changes in accounting policies resulting from applying for the first-time certain standards and amendments

The Company applied for the first time International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are recognized by Financial Supervisory Commission (“FSC”) and become effective for annual periods beginning on or after 1 January 2020. The adoption new standard and amendment is described, had no material impact on the Company.

(2) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) which are endorsed by FSC, but not yet adopted by the Company as at the end of the reporting period are listed below.

elow.
Items	New, Revised or Amended Standards and Interpretations	Effective Date issued by IASB
a	Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)	1 January 2021

(a) Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

The final phase amendments mainly relate to the effects of the interest rate benchmark reform on the companies’ financial statements:

A. A Company will not have to derecognize or adjust the carrying amount of financial instruments for changes to contractual cash flows as required by the reform, but will instead update the effective interest rate to reflect the change to the alternative benchmark rate;
B. A Company will not have to discontinue its hedge accounting solely because it makes changes required by the reform, if the hedge meets other hedge accounting criteria; and
C. A Company will be required to disclose information about new risks arising from the reform and how it manages the transition to alternative benchmark rates.

189

The abovementioned amendments that are applicable for annual periods beginning on or after 1 January 2021 have no material impact on the Company.

(3) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) which are not endorsed by FSC, and not yet adopted by the Company as at the end of the reporting period are listed below.

Items	New, Revised or Amended Standards and Interpretations	Effective Date issued by IASB
a	IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures	To be determined by IASB
b	IFRS 17 “Insurance Contracts”	1 January 2023
c	Classification of Liabilities as Current or Non-current – Amendments to IAS 1	1 January 2023
d	Narrow-scope amendments of IFRS, including Amendments to IFRS 3, Amendments to IAS 16, Amendments to IAS 37 and the Annual Improvements	1 January 2022
e	Disclosure Initiative - Accounting Policies – Amendments to IAS 1	1 January 2023
f	Definition of Accounting Estimates – Amendments to IAS 8	1 January 2023

(a) IFRS 10“Consolidated Financial Statements” and IAS 28“Investments in Associates and Joint Ventures” — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures

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(b) IFRS 17 “Insurance Contracts”

IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects (including recognition, measurement, presentation and disclosure requirements). The core of IFRS 17 is the General (building block) Model, under this model, on initial recognition, an entity shall measure a Company of insurance contracts at the total of the fulfilment cash flows and the contractual service margin. The fulfilment cash flows comprise of the following:

(1) estimates of future cash flows;
(2)discount rate: an adjustment to reflect the time value of money and the financial risks related to the future cash flows, to the extent that the financial risks are not included in the estimates of the future cash flows; and
(3)a risk adjustment for non-financial risk.

The carrying amount of a Company of insurance contracts at the end of each reporting period shall be the sum of the liability for remaining coverage and the liability for incurred claims. Other than the General Model, the standard also provides a specific adaptation for contracts with direct participation features (the Variable Fee Approach) and a simplified approach (Premium Allocation Approach) mainly for short-duration contracts.

191

These are the amendments to paragraphs 69-76 of IAS 1 Presentation of

Financial statements and the amended paragraphs related to the classification of liabilities as current or non-current.

(d) Narrow-scope amendments of IFRS, including Amendments to IFRS 3, Amendments to IAS 16, Amendments to IAS 37 and the Annual Improvements
A. Updating a Reference to the Conceptual Framework (Amendments to IFRS 3)

B. Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)

The amendments prohibit a Company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the Company is preparing the asset for its intended use. Instead, a Company will recognise such sales proceeds and related cost in profit or loss.

C. Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)

The amendments clarify what costs a Company should include as the cost of fulfilling a contract when assessing whether a contract is onerous.

192

D. Annual Improvements to IFRS Standards 2018 - 2020

Amendment to IFRS 1

The amendment simplifies the application of IFRS 1 by a subsidiary that becomes a first-time adopter after its parent in relation to the measurement of cumulative translation differences.

Amendment to IFRS 9 Financial Instruments

The amendment clarifies the fees a Company includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability.

Amendment to Illustrative Examples AcCompanying IFRS 16 Leases The amendment to Illustrative Example 13 acCompanying IFRS 16 modifies the treatment of lease incentives relating to lessee’s leasehold improvements.

Amendment to IAS 41

(e) Disclosure Initiative - Accounting Policies – Amendments to IAS 1

The amendments improve accounting policy disclosures that to provide more useful information to investors and other primary users of the financial statements.

(f) Definition of Accounting Estimates – Amendments to IAS 8

The abovementioned standards and interpretations issued by IASB have not yet endorsed by FSC at the date when the Company’s financial statements were authorized for issue, the local effective dates are to be determined by FSC. The standards and interpretations have no material impact on the Company.

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4. Summary of significant accounting policies

(1) Statement of Compliance

The parent Company only financial statements of the Company for the years ended 31 December 2020 and 2019 have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”).

(2) Basis of Preparation

The Company prepared the parent Company only financial statements in accordance with the Regulations. According to the Article 21 of the Regulation, which provided that the profit or loss and other comprehensive income for the period presented in the parent Company only financial statements shall be the same as the profit or loss and other comprehensive income attributable to stockholders of the parent presented in the consolidated financial statements for the period, and the total equity presented in the parent Company only financial statements shall be the same as the equity attributable to the parent Company presented in the consolidated financial statements. Therefore, the Company accounted for its investments in subsidiaries using equity method and, accordingly, made necessary adjustments.

The parent Company only financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The parent Company only financial statements are expressed in thousands of New Taiwan Dollars (“NT$”) unless otherwise stated.

(3) Foreign currency transactions

The Company’s parent Company only financial statements are presented in its functional currency, New Taiwan Dollars (NT$). Items included in the financial statements are measured using that functional currency.

Transactions in foreign currencies are initially recorded by the Company at the respective functional currency rates prevailing at the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rates of exchange at the reporting date. Non-monetary items measured at fair value in foreign currencies are translated using the exchange rates at the date when the fair value is

194

determined. Non-monetary items that are measured at historical cost in foreign currencies are translated using the exchange rates as at the dates of the initial transactions.

All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following:

(a) Exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.
(b) Foreign currency items within the scope of IFRS 9 Financial Instruments are accounted for based on the accounting policy for financial instruments.
(c) Exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.

(4) Translation of Foreign Currency Financial Statements

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(5) Current and Non-current Distinction

An asset is classified as current when:

(a) The Company expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;
(b) The Company holds the asset primarily for the purpose of trading;
(c) The Company expects to realize the asset within twelve months after the reporting period;
(d) The asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is classified as a current when:

A. The Company expects to settle the liability in normal operating cycle;
B. The Company holds the liability primarily for the purpose of trading;
C. The liability is due to be settled within twelve months after the reporting period;
D. The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. Term of a liability that could, at the option of the counterparty, result in its settlement

196

by the issue of equity instruments do not affect its classification.

All other liabilities are classified as non-current.

(6) Cash and cash equivalent

(7) Financial Instruments

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

A. Financial instruments: Recognition and Measurement

The Company accounts for regular way purchase or sales of financial assets on the trade date.

The Company classified financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss considering both factors below:

(a)the Company’s business model for managing the financial assets

(b)the contractual cash flow characteristics of the financial asset.

Financial assets measured at amortized cost

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

Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

(a)purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
(b)financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Financial asset measured at fair value through other comprehensive income

A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:

(a)the financial asset is held within a business model whose objective is

198

achieved by both collecting contractual cash flows and selling financial assets and

(b)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.

Recognition of gain or loss on a financial asset measured at fair value through other comprehensive income are described as below:

(a) A gain or loss on a financial asset measured at fair value through other comprehensive income recognized in other comprehensive income, except for impairment gains or loss and foreign exchange gains and loss, until the financial asset is derecognized or reclassified.
(b) When the financial asset is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.
(c) Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:
(iii) Purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
(iv) Financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

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profit or loss (when disposal of such equity instrument, its cumulated amount included in other components of equity is transferred directly to the retained earnings) and these investments should be presented as financial assets measured at fair value through other comprehensive income on the balance sheet. Dividends on such investment are recognized in profit or loss unless the dividends clearly represents a recovery of part of the cost of investment.

Financial asset measured at fair value through profit or loss

B. Impairment of financial assets

The Company recognizes a loss allowance for expected credit loss on debt instrument investments measured at fair value through other comprehensive income and financial asset measured at amortized cost. The loss allowance on debt instrument investments measured at fair value through other comprehensive income is recognized in other comprehensive income and not reduce the carrying amount in the balance sheet.

The Company measures expected credit loss of a financial instrument in a way that reflects:

(a)an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes
(b)the time value of money
(c)reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions

200

The loss allowance is measured as follows:

(a) At an amount equal to 12-month expected credit loss: the credit risk on a financial asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Company measures the loss allowance at an amount equal to lifetime expected credit loss in the previous reporting period, but determines at the current reporting date that the credit risk on a financial asset has increased significantly since initial recognition is no longer met.
(b)At an amount equal to the lifetime expected credit loss: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial asset.
(c)For trade receivables or contract assets arising from transactions within the scope of IFRS 15, the Company measures the loss allowance at an amount equal to lifetime expected credit loss.
(d)For lease receivables arising from transactions within the scope of IFRS 16, the Company measures the loss allowance at an amount equal to lifetime expected credit loss.

At each reporting date, the Company needs to assess whether the credit risk on a financial asset has increased significantly since initial recognition by comparing the risk of a default occurring at the reporting date and the risk of default occurring at initial recognition. Please refer to Note 12 for further details on credit risk.

C. Derecognition of financial assets

A financial asset is derecognized when:

(a) The rights to receive cash flows from the asset have expired.
(b) The Company has transferred the asset and substantially all the risks and rewards of the asset have been transferred.
(c) The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

201

D. Financial liabilities and equity

Classification between liabilities or equity

The Company classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, and an equity instrument.

Equity instruments

Compound instruments

The Company evaluates the terms of the convertible bonds issued to determine whether it contains both a liability and an equity component. Furthermore, the Company assesses if the economic characteristics and risks of the put and call options contained in the convertible bonds are closely related to the economic characteristics and risk of the host contract before separating the equity element.

202

residual amount after deducting from the fair value of the instrument as a whole the amount separately determined for the liability component. Its carrying amount is not remeasured in the subsequent accounting periods. If the convertible bond issued does not have an equity component, it is accounted for as a hybrid instrument in accordance with the requirements under IFRS 9 Financial Instruments.

On conversion of a convertible bond before maturity, the carrying amount of the liability component being the amortized cost at the date of conversion is transferred to equity.

Financial liabilities

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated as at fair value through profit or loss.

A financial liability is classified as held for trading if:

(a) it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term;
(b) on initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking;
(c) it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

If a contract contains one or more embedded derivatives, the entire hybrid (combined) contract may be designated as a financial liability at fair value

203

through profit or loss; or a financial liability may be designated as at fair value through profit or loss when doing so results in more relevant information, because either:

(d) it eliminates or significantly reduces a measurement or recognition inconsistency; or
(e) a group of financial liabilities or financial assets and financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the Company is provided internally on that basis to the key management personnel.

Gains or loss on the subsequent measurement of liabilities at fair value through profit or loss including interest paid are recognized in profit or loss.

Financial liabilities at amortized cost

Financial liabilities measured at amortized cost include interest bearing loans and borrowings that are subsequently measured using the effective interest rate method after initial recognition. Gains and loss are recognized in profit or loss when the liabilities are derecognized as well as through the effective interest rate method amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs.

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

204

assumed, is recognized in profit or loss.

E. Offsetting of financial instruments

(8) Derivative instruments

The Company uses derivative instruments to hedge its foreign currency risks and interest rate risks. A derivative is classified in the balance sheet as assets or liabilities at fair value through profit or loss except for derivatives that are designated effective hedging instruments which are classified as derivative financial assets or liabilities for hedging.

Derivative instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. The changes in fair value of derivatives are taken directly to profit or loss, except for the effective portion of hedges, which is recognized in either profit or loss or equity according to types of hedges used.

(9) Fair value measurement

C. In the principal market for the asset or liability, or
D. In the absence of a principal market, in the most advantageous market for

205

the asset or liability

The principal or the most advantageous market must be accessible to by the Company.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

(10) Inventories

Inventories are valued at lower of cost and net realizable value item by item.

Costs incurred in bringing each inventory to its present location and condition are accounted for as follows:

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Rendering of services is accounted in accordance with IFRS 15 and not within the scope of inventories.

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(11) Investments accounted for under the equity method

According to Article 21 of the Regulation, the Company’s investment in subsidiaries was presented as “Investments accounted for using equity method” and made necessary adjustments. The profit or loss during the period and other comprehensive income presented in the parent Company only financial statements shall be the same as the allocations of profit or loss during the period and of other comprehensive income attributable to shareholders of the parent presented in the financial statements prepared on a consolidated basis, and the shareholders’ equity presented in the parent Company only financial statements shall be the same as the equity attributable to shareholders of the parent presented in the financial statements prepared on a consolidated basis. The adjustment was considered the difference between investment in subsidiaries in consolidated financial statements according to IFRS 10 “Consolidated financial statements” and application of IFRS to different reporting entities, debit/credit “Investment accounted for using equity method”, “Share of profit or loss of subsidiaries, associates and joint ventures” or “Share of other comprehensive profit or loss of subsidiaries, associates and joint ventures” etc.

The Company’s investment in its associate is accounted for using the equity method other than those that meet the criteria to be classified as held for sale. An associate is an entity over which the Company has significant influence.

Under the equity method, the investment in the associate is carried in the balance sheet at cost and adjusted thereafter for the post-acquisition change in the Company’s share of net assets of the associate. After the interest in the associate is reduced to zero, additional loss are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate. Unrealized gains and loss resulting from transactions between the Company and the associate are eliminated to the extent of the Company’s related interest in the associate.

When changes in the net assets of an associate occur and not those that are recognized in profit or loss or other comprehensive income and do not affects the Company’s percentage of ownership interests in the associate, the Company recognizes such changes in equity based on its percentage of ownership interests. The resulting capital surplus recognized will be

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reclassified to profit or loss at the time of disposing the associate on a pro-rata basis.

When the associate issues new stock, and the Company’s interest in an associate is reduced or increased as the Company fails to acquire shares newly issued in the associate proportionately to its original ownership interest, the increase or decrease in the interest in the associate is recognized in additional paid-in capital and investment accounted for using the equity method. When the interest in the associate is reduced, the cumulative amounts previously recognized in other comprehensive income are reclassified to profit or loss or other appropriate items. The aforementioned capital surplus recognized is reclassified to profit or loss on a pro rata basis when the Company disposes the associate.

The financial statements of the associate are prepared for the same reporting period as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Company.

The Company determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired in accordance with IAS 28 Investments in Associates . If this is the case the Company calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount in the ‘share of profit or loss of an associate’ in the statement of comprehensive income in accordance with IAS 36 Impairment of Assets . In determining the value in use of the investment, the Company estimates:

(a) Its share of the present value of the estimated future cash flows expected to be generated by the associate, including the cash flows from the operations of the associate and the proceeds on the ultimate disposal of the investment; or
(b) The present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal.

Upon loss of significant influence over the associate, the Company measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant

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influence and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss.

(12) Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment loss, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Company recognized such parts as individual assets with specific useful lives and depreciation, respectively. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 “Property, plant and equipment”. When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Items Land improvements Buildings Machinery and equipment Transportation equipment Other equipment	Estimated economic lives
	7`～`20 years 2`～`60 years 2`～`25 years 5`～`8 years 2`～`20 years

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Leases

The Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of time, the Company assesses whether, throughout the period of use, has both of the following:

(a) the right to obtain substantially all of the economic benefits from use of the identified asset; and
(b) the right to direct the use of the identified asset.

For a contract that is, or contains, a lease, the Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract. For a contract that contains a lease component and one or more additional lease or non-lease components, the Company allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The relative stand-alone price of lease and non-lease components shall be determined on the basis of the price the lessor, or a similar supplier, would charge the Company for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Company estimates the stand-alone price, maximising the use of observable information.

Company as a lessee

Except for leases that meet and elect short-term leases or leases of low-value assets, the Company recognizes right-of-use asset and lease liability for all leases which the Company is the lessee of those lease contracts.

At the commencement date, the Company measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses its incremental borrowing rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:

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(a) fixed payments (including in-substance fixed payments), less any lease incentives receivable;
(b) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
(c) amounts expected to be payable by the lessee under residual value guarantees;
(d) the exercise price of a purchase option if the Company is reasonably certain to exercise that option; and
(e) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

After the commencement date, the Company measures the lease liability on an amortised cost basis, which increases the carrying amount to reflect interest on the lease liability by using an effective interest method; and reduces the carrying amount to reflect the lease payments made.

At the commencement date, the Company measures the right-of-use asset at cost. The cost of the right-of-use asset comprises:

(a) the amount of the initial measurement of the lease liability;
(b) any lease payments made at or before the commencement date, less any lease incentives received;
(c) any initial direct costs incurred by the lessee; and
(d) an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

For subsequent measurement of the right-of-use asset, the Company measures the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment loss. That is, the Company measures the right-of-use applying a cost model.

If the lease transfers ownership of the underlying asset to the Company by the end of the lease term or if the cost of the right-of-use asset reflects that the Company will exercise a purchase option, the Company depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Company depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

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The Company applies IAS 36 “Impairment of Assets” to determine whether the right-of-use asset is impaired and to account for any impairment loss identified.

Except for those leases that the Company accounted for as short-term leases or leases of low-value assets, the Company presents right-of-use assets and lease liabilities in the balance sheet and separately presents lease-related interest expense and depreciation charge in the statements comprehensive income.

For short-term leases or leases of low-value assets, the Company elects to recognize the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis.

Company as a lessor

At inception of a contract, the Company classifies each of its leases as either an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset. At the commencement date, the Company recognizes assets held under a finance lease in its balance sheet and present them as a receivable at an amount equal to the net investment in the lease.

For a contract that contains lease components and non-lease components, the Company allocates the consideration in the contract applying IFRS 15.

The Company recognizes lease payments from operating leases as rental income on either a straight-line basis or another systematic basis. Variable lease payments for operating leases that do not depend on an index or a rate are recognized as rental income when incurred.

(13) Intangible assets

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meet the recognition criteria are not capitalized and the expenditures are reflected in profit or loss in the period incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

(14) Impairment of non-financial assets

The Company assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 Impairment of Assets may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (“CGU”) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or Company’s of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

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A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

A cash generating unit, or Company’s of cash-generating units, to which goodwill has been allocated is tested for impairment annually at the same time, irrespective of whether there is any indication of impairment. If an impairment loss is to be recognized, it is first allocated to reduce the carrying amount of any goodwill allocated to the cash generating unit (Company of units), then to the other assets of the unit (Company of units) pro rata on the basis of the carrying amount of each asset in the unit (Company of units). Impairment loss relating to goodwill cannot be reversed in future periods for any reason.

An impairment loss of continuing operations or a reversal of such impairment loss is recognized in profit or loss.

(15) Post-employment benefits

All regular employees of the Company are entitled to a pension plan that is managed by an independently administered pension fund committee. Fund assets are deposited under the committee’s name in the specific bank account and hence, not associated with the Company and its domestic subsidiaries. Therefore, fund assets are not included in the Company’s parent Company only financial statements.

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earnings in the period in which they occur. Past service costs are recognized in profit or loss on the earlier of:

(a) the date of the plan amendment or curtailment, and

(b) the date that the Company recognizes restructuring-related costs

(16) Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probably that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Company expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

(17) Treasury shares

The Company buys back its parent Company’s equity instruments (treasury shares) that are recognized at cost as a deduction item under equity. The valuation difference resulted from transactions of treasury shares is reported under equity.

(18) Revenue recognition

The Company’s revenue arising from contracts with customers are primarily related to sale of goods and rendering of services. The accounting policies are explained as follows:

Sale of goods

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The Company manufactures and sells fitness equipment. Sales are recognized when control of the goods is transferred to the customer and the goods are delivered to the customers (the customer obtains the right and carrying value of the goods). The sales of goods transactions of the revenue is recognized based on the consideration stated in the contract. For certain sales of goods transactions, they are usually accompanied by volume discounts (based on the accumulated total sales amount for a specified period). Therefore, revenue from these sales is recognized based on the price specified in the contract, net of the estimated volume discounts.

The credit period of the Company’s sale of goods is from 30 to 150 days. For most of the contracts, when the Company transfers the goods to customers and has a right to an amount of consideration that is unconditional, these contracts are recognized as trade receivables. The Company usually collects the payments shortly after transfer of goods to customers; therefore, there is no significant financing component to the contract. For some of the contracts, the Company collects the payments when contracts signed-off and has the obligations to transfer the goods or provide the services, these contracts should be presented as contract liabilities.

The period between the transfers of contract liabilities to revenue is usually within one year, thus, no significant financing component has arisen.

(19) Borrowing cost

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

(20) Income Tax

Income tax expense (benefit) is the aggregate amount included in the determination of profit or loss for the period in respect of current income tax and deferred income tax.

Current income tax

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The income tax for undistributed earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the Shareholders’ meeting.

Deferred income tax

Deferred income tax is a temporary difference between the tax bases of assets and liabilities and their carrying amounts in financial statement at the reporting date.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

A. where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss
B. in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

A. where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;

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B. in respect of deductible temporary differences associated with investments in subsidiaries, associates and joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax assets and deferred tax liabilities 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.

(21) Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The consideration transferred, the identifiable assets acquired, and liabilities assumed are measured at acquisition date fair value. For each business combination, the acquirer measures any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are accounted for as expenses in the periods in which the costs are incurred and are classified under administrative expenses.

When the Company acquires a business, it assesses the assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. The aquiree’s embedded derivatives in host contracts is

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separately assessed and valued.

If the business combination is achieved in stages, on final acquisition date, acquiree’s equity interests that have been previously acquired by acquirer is required to be remeasured at fair value on the acquisition date, and respective remeausrement gain or loss shall be recorded as current periodical profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment loss. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Company’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Each unit or Company of units to which the goodwill is so allocated represents the lowest level within the Company at which the goodwill is monitored for internal management purpose and is not larger than an operating segment before aggregation.

5. Significant accounting judgements, estimates and assumptions

In preparation of the Company’s consolidated financial statements, the Company’s management is required to make judgments, estimates and assumptions at the end of the reporting period that affect the reported amounts of revenues, expenses,

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assets and liabilities, and the disclosure of contingent liabilities. Uncertainties from these assumption and estimate may result in a material adjustment to the carrying amount of relevant assets or liabilities in future periods.

A. Accounts receivables–estimate of impairment loss

The Company estimates the impairment loss of accounts receivables at an amount equal to lifetime expected credit loss. The credit loss is the present value of the difference between the contractual cash flows that are due under the contract (carrying amount) and the cash flows that are expected to receive (by evaluating forward looking information). However, as the impact from the discounting of short-term receivables is not material, the credit loss is measured by the undiscounted cash flows. Where the actual future cash flows are lower than expected, a material impairment loss may arise. Please refer to Note 6 for more details.

B. Inventories

C. The Fair Value of Financial Instruments

D. Pension Benefits

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E. Income Tax

Deferred tax assets are recognized to the extent where tax loss carryforward, tax credits and deductible temporary differences that are probable with foreseeable taxable profit being available, can be utilized. The amount of deferred tax assets is estimated based upon the likely timing of utilizing taxable temporary differences, and forecasted taxable profits as well as future tax planning strategies. Please refer to Note 6 for more details on unrecognized deferred tax assets as of 31 December 2020.

6. Contents of significant accounts

(1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand	As of 31 December
	2020 $103	2019
		$101

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Petty cash Demand deposits Time deposits Total	245 459,115 300,000 $759,463	245 456,424 50,000
		$506,770

(2) Financial assets measured at amortized cost

inancial assets measured at amortized cost
Time deposits with maturity over three months Pledged time deposits Subtotal Less: loss allowance Total Current Non-current Total	As of 31 December
	2020	2019
	$600,000 2,800	$50,000 2,800
	602,800 -	52,800 -
	$602,800	$52,800
	$600,000 2,800	$50,000 2,800
	$602,800	$52,800

For further information on financial assets measured at amortized cost pledged as collateral and on credit risk, please refer to Notes 8 and 12, respectively.

(3) Trade receivables, net

Trade receivables, net
Accounts receivable Less: loss allowance Total	As of 31 December
	2020 $513,233 (17,046) $496,187	2019
		$605,391 (17,536)
		$587,855

Accounts receivables were not pledged.

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(4) Inventories, net

Inventories, net
Raw materials Work in progress Finished goods Merchandise Total	As of 31 December
	2020 $262,987 20,512 398,212 26,672 $708,383	2019
		$234,497 49,510 492,681 15,681
		$792,369

The cost of inventories recognized as cost of sales for the years ended 31 December 2020 and 2019 amounted to $2,613,246 and $2,947,733 respectively. The expenses resulted from inventory write-downs were recorded as $2,815 and $1,495 for the years ended 31 December 2020 and 2019 respectively.

No inventories were pledged.

(5) Investments accounted for under the equity method

Details of investments accounted for under the equity method are as follows:

As of 31 December	As of 31 December	As of 31 December
2020 Carrying amount Percentage of ownership (%) $ - 22.32% - 41.00% 1,301 49.00% - -% 13,890 30.00% 15,191	2019
	Carrying amount $ - - 1,785 - 19,269 21,054	Percentage of ownership (%)
		22.32% 41.00% 49.00% -% 30.00%

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Power Hero Corp. Power Hero Blessingthoughts Company, Limited (Blessingthoughts) Subtotal Total	- -% 909 83.52% 909 $16,100	10,589 100% 1,156 83.52% 11,745 $32,799

The Company's share of loss of Sunko Biotech Co. and Chen Chi Technology Co. equaled its interest in Sunko Biotech Co. and Chen Chi Technology Co. Therefore, the Company is not obliged to recognize its share of further loss.

The Company sold its stake in Hui An Shing Trading Co. in June 2019 for $2,772.

(2) The details of investments recognized as profit and loss in 2020 and 2019 are as follows:

2019 are as follows:
Blessingthoughts Power Hero Hui An Shing Trading Co. Bnkc Biochemical Technology Co. Power Rich Total	For the years ended 31 December
	2020 $(247) 7 - 590 (4,578) $(4,228)	2019
		$(431) 39 (972) 1,178 (6,104)
		$(6,290)

(3) The details of the exchange differences on translation of foreign financial statements in 2020 and 2019 are as follows:

Power Rich Power Hero Total	For the years ended 31 December	For the years ended 31 December
	2020 $(801) (182) $(983)	2019
		$(434) 600
		$166

(4) Investments in associates

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The Company’s investment in subsidiaries is expressed in “Investments Accounted for Using Equity Method” in the individual financial report and necessary evaluation adjustments are made. Since the investment had no significant impact on the Company’s financial statements, it was recognized based on the investee Company’s financial statements within the same fiscal accounting period, that have not been audited by an independent auditor.

(5) Investments in associates

The Company’s investments in Bnkc Biochemical Technology Co., and Power Rich are not significant. The investments are valued based on the investee’s financial statements within the same fiscal accounting period. The investments in associates had no contingent liabilities or capital commitments as of 31 December 2020 and 2019. The investments have not been pledged as collaterals.

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(6) Property, plant and equipment

Land	Land improvements $2,887 196 - - $3,083 $1,796 119 - $1,915 $3,088 - (201) -	Transportation equipment	Total
$543,082 - (77,973) -		$16,004 700 (921) - $15,783 $10,594 971 (921) $10,644 $14,983 2,011 (1,006) 16 $16,004	$4,076,203 96,574 (111,350) 140,954
$465,109			$4,202,381
$ - - -			$2,302,855 228,640 (31,967)
$ -			$2,499,528
$543,082 - - -			$3,923,229 113,387 (136,728) 176,315
$543,082	$2,887		$4,076,203

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Land	Land improvements $1,904 93 (201)	Buildings	Total $2,215,416 215,770 (128,331)
$ - - -		$423,603 46,058 (61,190) $408,471 $492,199 $500,023
$ -	$1,796		$2,302,855
$465,109	$1,168		$1,702,853
$543,082	$1,091		$1,773,348

(f) There is no capitalization of interest due to purchase of property, plant and equipment for the years ended 31 December 2020 and 2019.

(g)Components of buildings that have different useful lives are the main building structure and air condition equipment and elevators, which are depreciated over 60 years and 5 years and 15 years, respectively. Machinery and equipment that have different useful lives are new reaction equipment, piping equipment, and production equipment for expansion, etc., which are depreciated over 10 years and 5 years and 7 years, respectively.

(h)As of 31 December 2020, and 2019, due to legal restrictions, part of the lands belonging to agricultural lands were recorded in the Company's accounts and the amount temporarily registered in the name of another person amounted to $7,011 and $7,150, respectively. The Company obtained the certificates of other rights for each of the lands.

(i) The Company adopted the resolution of the Board of Directors on 26 February 2020, to dispose of the land, plant, and equipment of the Dajia Factory. This project was signed on 28 May 2020. However, both parties to the transaction were still preparing the related cooperation procedures. Currently, the factory maintains normal production and operation and is not yet available for immediate sale, so the property was recorded under property, plant and equipment. It is expected that the disposal transaction will be completed in 2021. For transaction related information, please refer to Note 13.

(j) Please refer to Note 8 for property, plant and equipment pledged as collateral.

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(7) Short-term loans

) Short-term loans
Unsecured bank loans Interest rates applied for unsecured bank loans	As of 31 December
	2020 2019 $226,246 $291,628 As of 31 December,	2019
		$291,628
	2020 0.63%~1.07%	2019
		1.15%~2.93%

The Company’s open short-term lines of credit facilities were $1,061,505 and $849,282, as of 31 December 2020 and 2019, respectively.

(8) Other payables

Other payables
Accrued capital reduction Accrued expense of pollution remediation Accrued payroll Accrued employee compensation Payables on equipment Accrued directors and supervisor’s compensation expense Other expense Total	As of 31 December
	2020 $325,543 105,812 70,945 15,075 12,922 4,020 56,647 $590,964	2019
		$ - 11,611 76,371 - 9,864 - 76,393
		$174,239

(1) On 10 November 2020, the Company adopted the resolution of the shareholders’ meeting to reduce capital by cash and redeemed 33,352 thousand shares of shareholders’ share capital, each with a par value of $10. Treasury shares were cancelled 798 shares accordingly due to capital reduction in accordance with the shareholding ratio. A total of $325,543 was refunded as a result of the capital reduction. Please refer to Note 6.11 for details of the aforementioned capital reduction and refund to shareholders.
(2) On 8 May 2020, the Board resolved and approved the total forecasted possible expenditures for remedying pollution in soil and underwater in the Company’s Pingjhen and Dali plants. The total budget was estimated for $105 million, and accrued pollution remediation expenditures are recorded in full.

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(9) Long-term loans

(1) Details of long-term loans as at 31 December 2020 and 2019 are as follows:

Lenders Mega International Commercial Bank secured bank loans First Commercial Bank secured bank loans First Commercial Bank secured bank loans Taiwan Cooperative Bank secured bank loans Hua Nan Bank secured bank loans Chang Hwa Commercial Bank unsecured Revolving Loan O-Bank unsecured Revolving Loan Hua Nan Ban unsecured Revolving Loan Mega International Commercial Bank unsecured Revolving Loan Taipei Fubon Bank	As of 31 December 2020 $119,850 100,000 100,000 - - 90,000 - 37,500 91,650 47,500	As of 31 December 2019 $133,450 100,000 - 15,536 50,000 - 77,600 62,500 102,050 -	Redemption Repayable quarterly from 26 December 2016 to 26 December 2024. Principle is repaid in 33 quarterly intstallments. Repayable quarterly from 24 March 2022 to 24 December 2024. Principle is repaid in 12 quarterly installments. Repayable quarterly from 5 August 2022 to 5 May 2025. Principle is repaid in 12 quarterly installments. Repayable quarterly from 30 June 2013 to 30 March 2027. Principle is repaid in 56 quarterly installments. On 8 May 2020, an early repayment of the remaining balance was done in full. A lump-sum repayment of the principal on 25 September 2020. Repayable quarterly from 24 June 2021 to 24 March 2025. Principle is repaid in 16 quarterly intsallments. Repayable quarterly from 15 September 2019 to 15 September 2021. Principle is repaid in 9 quarterly payments. On 20 July 2020, an early repayment of the remaining balance was done in full. Repayable quarterly from 11 August 2018 to 11 May 2022. Principle is repaid in 16 quarterly installments. Repayable quarterly from 26 December 2016 to 26 December 2024. Principle is repaid in 33 quarterly installments. Repayable quarterly from 1 December 2018 to 1 September 2025. Principle is repaid in 20 quarterly

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Lenders unsecured Revolving Loan O-Bank unsecured Revolving Loan O-Bank unsecured Revolving Loan Taiwan Cooperative Bank unsecured Revolving Loan E.SUN Bank unsecured Revolving Loan E.SUN Bank unsecured Revolving Loan Chang Hwa Commercial Bank unsecured Revolving Loan Subtotal Less: current portion Total Interest rates applied	As of 31 December 2020 As of 31 December 2019 16,400 38,800 89,000 - 106,000 200,000 - 100,000 - - - - 797,901 919,936 (127,609) (221,676) $670,292 $698,260 As of 31 December 2020 2019 1.09%~1.40% 1.38%~1.45%	Redemption
		installments. Repayable quarterly from 15 September 2019 to 15 September 2021. Principle is repaid in 9 quarterly installments. Repayable quarterly from 15 July 2022 to 15 July 2025. Principle is repaid in 13 quarterly installments. From 21 March 2020 to 21 December 2023, an advance repayment of the current period was $5,500, and remaining balance was divided into sixteen installments with three months being one installment. Principle is repaid in 16 quarterly installments. Repayable quarterly from 26 February 2020 to 25 November 2022. Principle is repaid in 12 quarterly installments. Advance repayments were made in full on 31 March 2020. Repayable quarterly from 21 February 2019 to 21 November 2022. Principle is repaid in 8 quarterly payments. Advance repayments were made in full on 26 November 2019. Repayable quarterly from 15 February 2017 to 15 November 2019. Principle is repaid in 12 quarterly payments.
	2020 1.09%~1.40%

(2) Please refer to Note 8 for property, plant and equipment pledged as collateral for long-term loans.

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(10) Post-employment benefits

Defined contribution plan

The Company adopt a defined contribution plan in accordance with the Labor Pension Act of the R.O.C. Under the Labor Pension Act, the Company will make monthly contributions of no less than 6% of the employees’ monthly wages to the employees’ individual pension accounts. The Company has made monthly contributions of 6% of each individual employee’s salaries or wages to employees’ pension accounts.

Pension expenses under the defined contribution plan for the years ended 31 December 2020 and 2019 were $17,339 and $18,183 respectively.

Defined benefits plan

The Company adopt a defined benefit plan in accordance with the Labor Standards Act of the R.O.C. The pension benefits are disbursed based on the units of service years and the average salaries in the last month of the service year. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year. The total units shall not exceed 45 units. Under the Labor Standards Act, the Company contribute an amount equivalent to 6.6% of the employees’ total salaries and wages on a monthly basis to the pension fund deposited at the Bank of Taiwan in the name of the administered pension fund committee. Before the end of each year, the Company assess the balance in the designated labor pension fund. If the amount is inadequate to pay pensions on the assumption that workers meeting retirement terms will be retiring within the coming year, the Company shall make one-time contribution to the fund to eliminate the difference before the end of March in the following year.

The Ministry of Labor is in charge of establishing and implementing the fund utilization plan in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund. The pension fund is invested in-house or under mandate, based on a passive-aggressive investment strategy for long-term profitability. The Ministry of Labor establishes checks and risk management mechanism based on the assessment of risk factors including market risk, credit risk and liquidity risk, in order to maintain adequate manager flexibility to achieve targeted return without over-exposure of risk. With regard to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with paragraph 142 of IAS 19. The Company expects to contribute $514 to its defined benefit plan during the 12 months beginning after 31 December 2020.

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The average duration of the defined benefits plan obligation as at 31 December 2020, is 9 years.

Pension costs recognized in profit or loss are as follows:

Pension costs recognized in profit or loss are as follows:
Current service costs Interest expense Service cost Total	For the years ended 31 December
	2020 $463 169 - $632	2019
		$506 327 (3,739)
		$(2,906)

Reconciliations of liabilities (assets) of the defined benefit obligation and plan assets at fair value are as follows:

plan assets at fair value are as follows:
Defined benefit obligation Plan assets at fair value Other non-current liabilities - defined benefit obligation	As of 31 December 2020 2019 $92,596 $89,992 (70,170) (63,906) $22,426 $26,086
	2020
	$92,596 (70,170)
	$22,426

Reconciliation of liability (assets) of the defined benefit plan are as follows:

As of 1 January 2019 Current period service costs Net interest expense (income) Service cost Subtotal Remeasurement of the defined benefit liability (asset): Actuarial gains and loss arising from changes in demographic assumptions Actuarial gains and loss arising from changes in financial assumptions Experience adjustments Remeasurements of the defined benefit assets Subtotal Benefits paid	Defined benefit obligation	Fair value of plan assets $(63,407) - (646) - (64,053) - - - (2,219) (2,219) 6,335	Benefit liability (asset) $34,781 506 327 (3,739) 31,875 369 2,765 (2,735) (2,219) (1,820) -
	$98,188 506 973 (3,739) 95,928 369 2,765 (2,735) -
	399
	(6,335)

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Contributions by employer As of 31 December 2019 Current period service costs Net interest expense (income) Service cost Subtotal Remeasurements of the defined benefit liability (asset): Actuarial gains and loss arising from changes in demographic assumptions Actuarial gains and loss arising from changes in financial assumptions Experience adjustments Remeasurements of the defined benefit assets Subtotal Benefits paid Contributions by employer As of 31 December 2020	Defined benefit obligation - 89,992 463 624 - 91,079 33 3,452 (1,831) - 1,654 (137) - $92,596	Fair value of plan assets (3,969) (63,906) - (455) - (64,361) - - - (2,195) (2,195) 137 (3,751) $(70,170)	Benefit liability (asset)
			(3,969)
			26,086 463 169 -
			26,718
			33 3,452 (1,831) (2,195)
			(541)
			- (3,751)
			$22,426

The following significant actuarial assumptions are used to determine the present value of the defined benefit obligation:

Discount rate Expected rate of salary increases	As of31 December	As of31 December
	2020	2019
	0.30% 2.00%	0.70% 2.00%

A sensitivity analysis for significant assumption as at 31 December 2020 and 2019 is as shown below:

A sensitivity analysis for significant 2019 is as shown below:	assumption as at 31 December 2020 and	assumption as at 31 December 2020 and	assumption as at 31 December 2020 and	assumption as at 31 December 2020 and
Discount rate increase by 0.25% Discount rate increase by 0.10% Discount rate decrease by 0.10% Discount rate decrease by 0.25% Future salary increase by 0.25% Future salary decrease by 0.25%	Effect onthe defined benefit obligation
	2020		2019
	Increase defined benefit obligation	Decrease defined benefit obligation	Increase defined benefit obligation $ - - - 2,320 2,285 -	Decrease defined benefit obligation
	$ - - 894 2,259 2,215 -	$2,181 882 - - - 2,151		$2,238 - - - - 2,215

The sensitivity analyses above are based on a change in a significant assumption (for example: change in discount rate or future salary), keeping all

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other assumptions constant. The sensitivity analyses may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another.

The methods and assumptions for preparing sensitivity analyses was consistent with those in the prior fiscal period.

(11) Equity

A. Common stock

As at 1 January 2019 the Company’s authorized capital was $2,500,000, divided into 250,000,000 shares with par value of $10 each. The issued and outstanding capital stocks were $2,223,473.

To increase return on shareholder's equity and improve various financial ratios, in utilizing financial leverage, on 10 November 2020, the shareholders’ meeting resolved an approval on a capital reduction amounted to $333,521, that 33,352 thousand shares were eliminated which represent 15% of total contributed capital. The above capital reduction case was approved by the governing authority on 15 December 2020, and the Board of Directors decided to set 17 December 2020 as the base date for the capital reduction. In addition, an amendment on corporation registration by the Department of Commerce of the Ministry of Economic Affairs was completed and filed

In August 2007, May and December 2012, the Company issued 30,000 thousand shares, 5,000 thousand shares and 5,000 thousand shares of private placement, respectively, in accordance with Article 43-6 of the Securities Exchange Act. The closing dates of the capital increase were 7 August 2007, 30 October, and 5 December 2012. The above private shares were canceled in October 2009 as a result of a capital reduction to offset the accumulated loss, with 12,449 thousand shares canceled in proportion to the shareholding ratio. In March 2016, 5,000 thousand private shares were canceled due to the merger. In December 2020, 3,383 thousand shares were canceled as a result of the capital reduction in cash refund to the shareholders.

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2007; 5 December 2012; 10 January 2013). After three years of holding such shares, the holders may apply for approval to the governing authority under Securities Exchange Act and other relevant regulations. The shares may be freely transferred in the open market after obtaining said approval.

As of 31 December 2020, the number of outstanding private 19,168 thousand shares with par value is 10 per share, and the public offering process has not yet been processed.

B. Capital surplus

According to the Company Act, the capital reserve shall not be used except for making good the deficit of the Company. When a Company incurs no loss, it may distribute the capital reserves related to the income derived from the issuance of new shares at a premium or income from endowments received by the Company. The distribution could be made in cash or in the form of dividend shares to its shareholders in proportion to the number of shares being held by each of them.

Treasury share transactions Premium from merger Adjustments arising from changes in percentage of ownership in subsidiaries Total	As of 31 December	As of 31 December
	2020 $20,763 15,188 1,897 $37,848	2019
		$20,700 15,188 1,897
		$37,785

C. Treasury stock

From 14 November 2018 to 10 January 2019, the Company repurchased 5,319 thousand shares. The purpose of the repurchase is to transfer the shares to the employees, and the shares are to be transferred to the employees all at once or in installments within three years from the date of the repurchase of the shares. The above treasury shares were canceled for 798 thousand shares in proportion to the total issued capital in December 2020 due to the capital reduction in cash refund to the equity shareholders. The Company's treasury shares have not been transferred to employees as of 31 December 2020.

D. Distribution of retained earnings and dividend policies

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According to the Company’s Articles of Incorporation, current year’s earnings, if any, shall be appropriated in the following order:

(a) Income tax obligation
(b) Offsetting accumulated deficits, if any
(c)Set aside 10% as legal reserve. However, when the legal reserve amounts to the authorized capital, this shall not apply.
(d)Set aside or reserve special reserve in accordance with law and regulations.
(e)In combining the balance with the accumulated undistributed surplus of the previous period, the board of directors shall prepare a proposal for earnings distribution and submit it to the shareholders' meeting for a resolution distributing dividends to shareholders.

Following the adoption of TIFRS, the FSC on 6 April 2012 issued Order No. Jin-Guan-Cheng-Fa-Zi-1010012865, which sets out the following provisions for compliance:

On a public Company's first-time adoption of the TIFRS, for any unrealized revaluation gains and cumulative translation adjustments (gains) recorded to shareholders’ equity that the Company elects to transfer to retained earnings by application of the exemption under IFRS 1, the Company shall set aside an equal amount of special reserve. Following a Company’s adoption of the TIFRS for the preparation of its financial reports, when distributing distributable earnings, it shall set aside to special reserve, from the profit/loss of the current period and the undistributed earnings from the previous period,

236

an amount equal to “other net deductions from shareholders’ equity for the current fiscal year, provided that if the Company has already set aside special reserve according to the requirements in the preceding point, it shall set aside supplemental special reserve based on the difference between the amount already set aside and other net deductions from shareholders’ equity. For any subsequent reversal of other net deductions from shareholders’ equity, the amount reversed may be distributed. The Company’s special reserve resulted from first-time adoption of IFRS on 1 January 2012 (adoption date) was $0.

Legal reserve Recognition (reversal) of special reserve Common stock cash dividend	Appropriation of earnings 2020 2019 $53,692 $ - 5,624 (14,519) 92,237 -	Dividend per share(NTD)	Dividend per share(NTD)
	2020 $53,692 5,624 92,237	2020 $0.5	2019
			$ -

Please refer to Note 6 (15) for further details on employees’ compensation and remuneration to directors and supervisors.

(12) Operating revenue

The Company’s revenue mainly come from selling products the Company manufactured. Analysis of revenue from contracts with customers during the years ended 31 December 2020 and 2019 are as follows:

A. Disaggregation of revenue

Sale of goods	For the years ended 31 December 2020 2019 $2,752,601 $3,228,494	For the years ended 31 December 2020 2019 $2,752,601 $3,228,494
	2020 $2,752,601
		$3,228,494

The Company recognizes revenues when control of the products is transferred to customers. Revenues are earned and reported at the time that respective contract criteria are met.

B. Contract balance

Contract liabilities – current

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Sales of goods		As of
	31 December2020 $18,752	31 December2019 $20,384	1 January2019
			$1,007

The movement in the Company’s balances of contract liabilities for the years ended 31 December 2020 and 2019 are as follows:

	For theyears ended 31 December 2020 2019 $(20,384) $(1,077) 18,752 20,384	For theyears ended 31 December 2020 2019 $(20,384) $(1,077) 18,752 20,384
		2019
Revenue recognized from opening balance Increase in advance receipt within the period (excluding the amount being recognized as periodical revenues)		$(1,077) 20,384

C. Transaction price allocated to unfulfilled contract obligations

None.

D. Assets recognized from costs to fulfil a contract with customers

None.

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(13) Expected credit gains

Expected credit gains
Operating expenses – Expected credit gains Trade receivables	For the years ended 31 December
	2020 $490	2019
		$2,419

Please refer to Note 12 for more details on credit risk.

The Company measures the loss allowance of its trade receivables (including note receivables and trade receivables) at an amount equal to lifetime expected credit loss. The assessment of the Company’s loss allowance as at 31 December 2020 and 2019 are as follows:

31 December 2020

Not yet due (note)			Overdue	Overdue		Total
	<=30 days	31-90 days	91-180 days	181-365 days	>=365 days
$533,814 -%	$1,804 5-10%	$ - 15-20%	$ - 40-60%	$ - 70-90%	$16,863 100%	$552,481
-	(183)	-	-	-	(16,863)	(17,046)
$533,814	$1,621	$-	$-	$-	$-	$535,435

31 December 2019

Not yet due (note)			Overdue	Overdue		Total
	<=30 days	31-90 days	91-180 days	181-365 days	>=365 days
$619,015 -%	$464 5-10%	$ - 15-20%	$ - 40-60%	$ - 70-90 %	$17,513 100%	$636,992
-	(23)	-	-	-	(17,513)	(17,536)
$619,015	$441	$-	$-	$-	$-	$619,456

Note: The Company’s note receivables are not overdue.

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The movement in the impairment provision of note receivables and trade receivables for the years ended 31 December 2020 and 2019 is as follows:

As of 1 January 2020 Provision (Reversal) As of 31 December 2020 As of 1 January 2019 Provision (Reversal) As of 31 December 2019	Note receivables $ - - $- $ - -	Trade receivables $17,536 (490)
		$17,046
		$19,955 (2,419)
	$-	$17,536

(14) Leases
A. The Company is a lessee (Adoption of the related disclosure in IFRS 16)

The Company leases various properties, including land, buildings, transportation equipment and other equipment. The lease terms range from 2 to 10 years.

The impact of Company’s leases on the financial position, financial performance and cash flows is as follows:

(a) Amounts recognized in the balance sheet
(i) Right-of-use asset

Cost:

Cost:
As of 1 January 2020 Additions Disposals As of 31 December 2020	Land	Buildings	Transportation equipment	Other equipment	Total
	$83,082 - -	$50,859 11,013 -	$4,678 533 -	$1,568 - (273)	$140,187 11,546 (273)
	$83,082	$61,872	$5,211	$1,295	$151,460

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Depreciation and impairment:

impairment:
As of 1 January 2020 Depreciation Disposals As of 31 December 2020 Cost: As of 1 January 2019 Additions Disposals As of 31 December 2019 Depreciation and impairment: As of 1 January 2019 Depreciation Disposals As of 31 December 2019 Net carrying amount: As of 31 December 2020 As of 31 December 2019	Land	Buildings	Transportation equipment	Other equipment $473 449 (176) $746 Other equipment $948 620 - $1,568 Other equipment $ - 473 - $473 $549 $1,095	Total
	$ 7,811 8,521 -	$11,007 15,879 -	$2,197 1,912 -		$21,488 26,761 (176)
	$16,332	$26,886	$4,109		$48,073
	Land	Buildings	Transportation equipment		Total
	$83,082 - -	$31,924 18,935 -	$4,369 1,102 (793)		$120,323 20,657 (793)
	$83,082	$50,859	$4,678		$140,187
	Land	Buildings	Transportation equipment		Total $ - 21,894 (406) $21,488 $103,387 $118,699
	$ - 7,811 -	$ - 11,007 -	$ - 2,603 (406)
	$7,811	$11,007	$2,197
	$66,750 $75,271	$34,986	$1,102
		$39,852	$2,481

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(iii) Lease liabilities

Lease liabilities
Current Non-Current Total	As of December31
	2020	2019
	$23,047 79,484	$24,084 93,090
	$102,531	$117,174

B. Amounts recognized in the statement of profit or loss

Depreciation on right-of-use assets

Land Buildings Transportation equipment Other equipment Total	For theyears ended31 December	For theyears ended31 December
	2020 $8,521 15,879 1,912 449 $26,761	2019
		$7,811 11,007 2,603 473
		$21,894

C. Income (gain) or expense (loss) relating with leases

The expenses relating to short-term leases	For theyears ended 31 December 2020 2019 $13,065 $14,416
	2020
	$13,065

D. Cash outflow related to lessee and lease activity

During the year ended 31 December 2020 and 2019, the Company’s total cash outflows for leases amounting to $40,735 and $39,352.

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(15) Summary of employee benefits, depreciation and amortization expenses by function for the years ended 31 December 2020 and 2019:

Function Nature		For the years ended 31 December	For the years ended 31 December	For the years ended 31 December	For the years ended 31 December
		2020			2019
	Operating costs	Operating expenses	Total amount	Operating costs	Operating expenses	Total amount
Employee benefits expenses
Salaries	$278,094	$109,391	$387,485	$309,843	$103,810	$413,653
Labor and health insurance	27,581	8,676	36,257	28,898	9,307	38,205
Pension	13,607	4,364	17,971	14,374	903	15,277
Directors' remuneration	-	5,655	5,655	-	1,440	1,440
Other employee benefits expense	18,180	5,050	23,230	20,106	5,629	25,735
Depreciation	238,241	17,160	255,401	221,197	16,467	237,664
Amortization	4,213	7,778	11,991	6,632	7,069	13,701

The number of employees of the Company in 2020 and 2019 were 540 and 580 respectively, of which the number of directors who were not concurrently employees was 5.

The Company's average employee benefit expenses for 2020 and 2019 were $869 and $857, respectively.

The Company's average employee salary expenses for 2020 and 2019 were $724 and $719, respectively.

The Company's average employee salary expenses in 2020 increased by approximately 0.70%, compared to 2019.

The Company has set up an audit committee to replace the supervisor in accordance with the regulations.

Article 19 of the Company's articles of incorporation stipulates that when directors perform their duties in the Company, regardless of the Company's operating profit or loss, the Company shall pay remuneration to the directors. The board shall determine the remuneration according to the industry level and negotiated according to the value of their participation in the Company's operations and contribution. Article 30 of the Company’s articles of association provides that the director’s remuneration shall be determined at a rate of no more than 1% when profits are made in the current year and refer to the results of director’s performance evaluation as the basis for individual remuneration. The amount of director’s remuneration shall be submitted to the general meeting of shareholders after the resolution of the board of directors is passed.

The Company’s remuneration principle is to provide market-competitive remuneration to attract and cultivate talents in the long term. The Company

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formulates "Salary Management Measures" and "Employee Performance Appraisal Procedures" as the basis for evaluation by mainly referring to the salary level in the inter-industry market. Furthermore, the Company considers the overall operating conditions and profitability levels to determine reasonable remuneration based on the results of performance appraisals. The related performance appraisal results and remuneration reasonableness are reported to the compensation committee and the board of directors for review.

Based on earnings as of 31 December 2020 and for the year then ended, the Company appropriated amounts of the employees’ compensation and remuneration to directors as 3% and 0.8% of earnings for 2020, respectively. The employees’ compensation and remuneration to directors for the year ended of 31 December 2020 amounted to $15,075 and $4,020 respectively, which were reported in employee benefit expenses. The Company's board of directors resolved on 16 March 2021 to pay the 2020 employees’ compensation and remuneration to directors and supervisors in cash. There is no difference between the amounts stated as expenses in the 2020 financial report.

(16) Non-operating income and expenses

A. Interest income

terest income
Financial assets measured at amortized cost	For the years ended 31 December
	2020 $2,386	2019
		$846

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B. Other income

Other income
Dividend income Rental income Others Total	For the years ended 31 December 2020 2019 $3,254 $3,896 725 957 20,591 7,541 $24,570 $12,394
		2019
		$3,896 957 7,541
		$12,394

C. Other gains and loss

Foreign exchange loss, net Gains (loss) on disposal of property, plant and equipment Loss on disposal of investments Gains (loss) on valuation of financial assets at fair value through profit or loss (Note) Others expense Total	For the years ended 31 December 2020 2019 $(11,085) $(5,766) 741,464 (7,868) (78) (351) 97 (16) (9,897) (233) $720,501 $(14,234)	For the years ended 31 December 2020 2019 $(11,085) $(5,766) 741,464 (7,868) (78) (351) 97 (16) (9,897) (233) $720,501 $(14,234)
		2019
		$(5,766) (7,868) (351) (16) (233)
		$(14,234)

Note: Generated as financial assets or liabilities were measured at fair value through profit or loss.

D. Finance costs

Interest on bank loans Interest on lease liabilities Total	For the years ended 31 December	For the years ended 31 December
	2020 $(14,571) (1,580)	2019
		$(17,886) (1,659)
	$(16,151)	$(19,545)

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(17) Components of other comprehensive income (loss)

A. For the year ended 31 December 2020

Items not to be reclassified to profit or loss subsequently: Remeasurements of defined benefit plans Unrealized gains from equity instruments investments measured at fair value through other comprehensive income Items that may be reclassified to profit or loss subsequently: Exchange differences resulting from translating the financial statements of a foreign operation Share of other comprehensive income of associates accounted for under the equity method Total of other comprehensive income	Arising during the period $540 5,799 (182) (801) $5,356	Reclassificatio n adjustments during the period $ - - - - $ -	Other comprehensiv e income (loss), before tax $540 5,799 (182) (801) $5,356	Income tax effect $(108) - 58 160 $110	Other comprehensiv e income (loss), net of tax
					$432 5,799 (124) (641)
					$5,466

B. For the year ended 31 December 2019

Items not to be reclassified to profit or loss subsequently: Remeasurements of defined benefit plans Unrealized gains from equity instruments investments measured at fair value through other comprehensive income Items that may be reclassified to profit or loss subsequently: Exchange differences resulting from translating the financial statements of a foreign operation Share of other comprehensive income of associates accounted for under the equity method	Arising during the period $1,820 15,814 600 (434)	Reclassificatio n adjustments during the period $ - - - -	Other comprehensiv e income (loss), before tax $1,820 15,814 600 (434)	Income tax effect $(364) - (120) 87	Other comprehensiv e income (loss), net of tax
					$1,456 15,814 480 (347)

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$17,800

Total of other comprehensive income

$ -

$17,800 $(397) $17,403

(18) Income tax

For the year ended 31 December 2020 and 2019 the major components of income tax (expense) benefit are as follows:

A. Income tax recognized in profit or loss

. Income tax recognized in profit or loss
Current income tax (expense) benefit: Current income tax charge Land value increment tax Deferred tax (expense) benefit: Deferred tax (expense) benefit relating to origination and reversal of temporary differences Deferred tax relating to origination and reversal of tax loss and tax credit Reversal the land value incremental tax liability due from property sale Total income tax benefit	For the years ended 31 December
	2020	2019
	$ - (34,586) 21,466 34,941 19,191	$(320) - 7,054 (4,526) -
	$41,012	$2,208

B. Income tax related to components of other comprehensive income

Deferred income tax (expense) benefit: Exchange differences on translation of foreign operation Share of other comprehensive income of associates accounted for under the equity method Remeasurements of defined benefit plans Income tax related to components of other comprehensive income	For the years ended 31 December	For the years ended 31 December
	2020	2019
	$58 160 (108)	$(120) 87 (364)
	$110	$(397)

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C. Reconciliation between tax expense (benefit) and accounting profit at the Company’s applicable tax rates is as follows:

Company’s applicable tax rates is as follows:
Accounting profit (loss) before tax from continuing operations At the Company’s statutory income rate Tax effect of tax exempt income Tax effect of non-deductible expenses Adjustments of deferred tax assets/liabilities for write-downs or reversals Reversal of the land value incremental tax liability due from property sale Total income tax benefit recognized in profit or loss	For the years ended 31 December
	2020	2019
	$483,392	$(9,016)
	$(96,678) 149,739 (114) 3,460 (15,395)	$1,803 2,264 (270) (1,589) -
	$41,012	$2,208

D. Significant components of deferred tax assets (liabilities) are as follows:

(a) For the year ended 31 December 2020

Balance as of 1 January	Recognized in profit or loss	Recognized in other comprehensive income	Balance as of 31 December
$(2,232) 17,413 3,434 (91,705) 11,017 (58) 47 - 3,592	$ - 3,053 - 19,191 21,012 - - 34,941 (2,599)	$ - - (108) - - 58 160 - -	$(2,232) 20,466 3,326 (72,514) 32,029 - 207 34,941 993
$(58,493)	$75,598	$110	$17,216

$35,444			$92,221
$(93,937)			$(75,005)

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(b) For the year ended 31 December 2019

Balance as of January1	Recognized in profit or loss	Recognized in other comprehensive income	Balance as of 31 December
$(2,232) 17,114 3,798 (91,705) 11,252 62 (40) (5,549) 4,526 2,151	$ - 299 - - (235) - - 5,549 (4,526) 1,441	$ - - (364) - - (120) 87 - - -	$(2,232) 17,413 3,434 (91,705) 11,017 (58) 47 - - 3,592
$(60,623)	$2,528	$(397)	$(58,493)

$38,863			$35,444
$(99,486)			$(93,937)

E. The following table provides the information of the unused loss carry-forward:

Year 2018 2020 Total	Tax loss for theperiod $22,632 167,436 $190,068	Unused tax loss as of 31 December 2020 31 December 2019 $7,270 $7,270 167,436 - $174,706 $7,270	Unused tax loss as of 31 December 2020 31 December 2019 $7,270 $7,270 167,436 - $174,706 $7,270	Expiration Year
			$7,270 -	2028 2030
			$7,270

F. Deferred assets with least possibility to be realized

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As of 31 December 2020, and 2019, deductible temporary differences for which no deferred income tax assets have been recognized in amounted to $15,234 and $18,590, respectively.

G. Status of income tax returns assessment

As of 31 December 2020, the status of the Company’s income tax returns through 2018 have been assessed by tax authorities.

(19) Earnings per share

No diluted earnings per share in 2019 shall be accounted for due to that net loss operating loss was concluded for the fiscal

(1) Basic earnings per share Net income (loss) attributable to the parent Company (in thousands of NTD) Weighted average number of ordinary shares outstanding for basic earnings per share (thousand shares) Basic earnings(loss) per share (NTD)	For theyears ended 31 December	For theyears ended 31 December
	2020	2019
	$524,404	$(6,808)
	215,780	217,047
	$2.43	$(0.03)

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(2) Diluted earnings per share Net income (loss) attributable to the parent Company Effect of dilution on net income (loss) attributable to ordinary stockholders of the Company after dilution Weighted average number of ordinary shares outstanding for basic earnings per share (thousand shares) Effect of dilution: Employees’ compensation (thousand shares) Weighted average number of ordinary shares outstanding after dilution (thousand shares) Diluted earnings(loss) per share (NTD)	$524,404	$(6,808)
	$524,404	$(6,808)
	215,780 1,364	217,047 -
	217,144	217,047
	$2,42	$(0.03)

There were no transactions which may significantly change the number of the outstanding ordinary shares from the financial statement date to the date of releasing financial statements.

7. Related party transactions

Information of the related parties that had transactions with the Company during the financial reporting period is as follows:

Name and nature of relationship of the related parties

Name oftherelated parties KT Investment Company, Limited Macy Investment Company, Limited Chiaoli Investment Company, Limited Hui An Shing Trading Company, Limited	Nature of relationship oftherelated parties
	The Company’s director The Company’s director The Company’s director Associate (derecognized as the related party due to disposal of all holding shares)

Significant transactions with the related parties

A. Lease - related parties
(a) Rental income

Rental income
KT Investment Company, Limited	For the years ended 31 December
	2020 $549	2019
		$549

The Company’s leased its plant and building to the said related party, from which rental income and collection were set at arm’s length range.

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(b) Right-of-use assets

Macy Investment Company, Limited	As of31 December	As of31 December
	2020 $66,749	2019
		$75,271

Macy Investment Company, Limited (d) Interest expenses Macy Investment Company, Limited B. Sales Hui An Shing Trading Company, Limited	As of31 December	As of31 December
	2020 2019 $66,983 $75,090 As of31 December	2019
		$75,090
	2020 2019 $1,035 $1,152 For the years ended 31 December	2019
		$1,152
	2020 $ -	2019
		$38

C. Other income

Chiaoli Investment Company, Limited	For the years ended 31 December	For the years ended 31 December
	2020 $ -	2019
		$12

Key management personnel compensation

management personnel compensation
Short-term employee benefits Post-employment benefits Total	For the years ended 31 December 2020 2019 $13,256 $9,371 142 96 $13,398 $9,467
		2019
		$9,371 96
		$9,467

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8. Assets pledged as collaterals

The following table lists assets of the Company pledged as collaterals:

Property, plant and equipment – buildings, machinery and equipment Financial assets measured at amortized cost Total	Carrying	Amount As of 31 December 2019 $505,116 2,800 $507,916	Purpose ofpledges
	As of 31 December 2020 $451,608 2,800 $454,408
			Long and short-term loans Energy resources guarantee

9. Significant contingencies and derecognized contract commitments

The following items are the contingencies which have not been accrued and recorded on the balance sheet as on 31 December 2020

As of 31 December 2020, the amount available under unused letter of credit was $23,507.
As of 31 December 2020, the Company entered into several construction contracts for which the development is in progress. The following provides significant details:

Supplier Counterparty A Counterparty B Counterparty C Counterparty D Counterparty E	Contract Subject Instrument construction Equipment purchase Wastewater construction Construction purchase Equipment Purchase	Total Contract Amount $12,857 23,150 21,810 28,095 11,700	Equipment Payment Made $9,000 16,205 17,448 4,214 4,095	Unpaid amount as of December 31 2020
				$3,857 6,945 4,362 23,881 7,605

Significant disaster loss

None.

Significant subsequent events

None.

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12. Others

(1) Categories of financial instruments

Financial Assets Financial assets at fair value through profit or loss: Financial assets at fair value through profit or loss, current (Other current assets) Amortized cost of a financial asset: Cash and cash equivalents (excluding cash on hand) Measured at amortized cost financial assets Notes receivables Trade receivables Other receivables (Other current assets) Subtotal Total Financial Liabilities Financial liabilities at amortized cost: Short-term loans Notes and accounts payable Other payable Long-term loans (including current portion) Lease liability Subtotal Financial liabilities at fair value through profit or loss: (Other current assets) Total	As of 31 December	As of 31 December
	2020	2019
	$93,266 81 759,115 602,800 39,248 496,187 693	$66,664 - 506,424 52,800 31,601 587,855 503
	1,898,043	1,179,183
	$1,991,390	$1,245,847
	2020	2019
	$226,246 297,041 590,964 797,901 102,531	$291,628 319,800 174,239 919,936 117,174
	2,014,683	1,822,777
	-	16
	$2,014,683	$1,822,793

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(2) Financial risk management objectives

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

The Company has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant activities, approval process by the board of directors and audit committee must be carried out based on related protocols and internal control procedures. The Company complies with its financial risk management policies at all times.

(3) Market risk

Foreign currency risk

The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expenses are denominated in a different currency from the Company’s functional currency) and the Company’s net investments in foreign subsidiaries.

The Company applies natural hedges on the foreign currency risk arising from purchases or sales as certain portion of receivables or payables are denominated as the same currencies, and utilizes spot or forward exchange contracts to manage foreign currency risk. The Company designates certain forward currency contracts as balance sheet hedges to hedge its exposure to foreign currency exchange risk associated with certain balance sheet assets or liabilities. Hedge accounting is not applied as the aforesaid natural hedges or designated forward contracts to hedge currency risk are deemed ineffective hedges. Furthermore, the currency risk exposures due from investments in oversea associates are not hedges as the investments are set for certain operating strategies.

The foreign currency sensitivity analysis of the possible change in foreign

255

exchange rates on the Company’s profit is performed on significant monetary items denominated in foreign currencies as at the end of the reporting period. The Company’s foreign currency risk mainly resulted from the volatility of exchanging USD, CNY, EUR or JPY to NTD, and vice versa. The information of the sensitivity analysis is as follows:

a. When NTD strengthens/weakens against USD by 1%, the profit for the years ended 31 December 2020 and 2019 is decreased by $1,177 and $2,547, respectively; and no impact on the equity.
b. When NTD strengthens/weakens against CNY by 1%, the profit for the years ended 31 December 2020 and 2019 is increased by $190 and decreased by $135, respectively; and no impact on the equity.
c. When NTD strengthens/weakens against EUR by 1%, the profit for the years ended 31 December 2020 and 2019 is increased by $42 and $34, respectively; and no impact on the equity.
d. When NTD strengthens/weakens against JPY by 1%, the profit for the years ended 31 December 2020 and 2019 is increased by $63 and $25, respectively; and no impact on the equity.

Interest rate risk

The Company is exposed to interest rate risk arising from borrowing at floating interest rates. Interest rate risk is the risk that the fair value or forecasted cash flows of a financial instrument fluctuates due to the volatility in market interest rates.

256

Equity price risk

The Company’s listed and unlisted equity securities are susceptible to market price risk arising from uncertainties about future performance of equity markets. The Company’s equity investments are classified as financial assets at fair value through other comprehensive income. The equity investment portfolio is submitted to the Company’s senior management on a regular basis. The Company’s Board of Directors reviews and approves changes on the equity investment portfolio.

(4) Credit risk management

Credit risk is the risk that a financial loss may be triggered when a counterparty defaults its obligations. The Company is exposed to credit risk from operating activities (primarily for, accounts receivables and notes receivables) and from its financing activities, including bank deposits and other financial instruments.

The Company mitigates credit risks by implementing the Company’s credit policy, procedures and controls. Credit limits are set for all counter parties based on their financial positions, credit ratings, historical experience, prevailing economic condition and the Company’s internal rating criteria etc. For dealing with some counterparties with less credit, certain financial instruments of credit enhancement, such as advance receipts or a letter of credit, may be required to be provided to mitigate possible credit risk exposures.

As of 31 December 2020, and 2019, accounts receivables from top ten customers represent 51% and 53% of the total accounts receivables of the Company, respectively. The credit concentration risk of other trade receivables is insignificant.

257

Credit risk from deposits in banks, fixed income securities and other financial instruments is managed by the Company’s treasury division in accordance with the Company’s policy. The Company only deals with counterparties that are approved through internal control procedures; therefore, the counterparties are limited to banks, financial institutions, companies or government entities with good credit standing.

The Company would write down or write off values of financial assets if these are forecasted to be least possible to be collected in the case of the issuer or debtor being insolvent or in financial distress.

(5) Liquidity risk management

The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of cash and cash equivalents, highly liquid equity investments and bank borrowings. The table below summarizes the maturity profile of the Company’s financial liabilities based on the contractual undiscounted payments and contractual maturity, including contractual interests. The undiscounted interest payment due from borrowings with variable interest rates is extrapolated based on the estimated interest rate yield curve as of the end of the reporting period.

Non-derivative financial instruments

As of 31 December 2020 Short-term loans Notes and accounts payable Long-term loans Lease liabilities As of 31 December 2019 Short-term loans Notes and accounts payable Long-term loans Lease liabilities	Less than 1 year	2 to 3 years	4 to 5 years	>=5 years	Total
	$228,211 297,041 129,121 24,346 $297,628 319,800 224,773 25,603	$ - - 364,499 35,910 $ - - 423,298 37,450	$ - - 333,167 21,709 $ - - 302,308 25,769	$ - - - 25,143 $ - - 5,158 34,286	$228,211 297,041 826,787 107,108 $297,628 319,800 955,537 123,109

258

(6) Reconciliation of liabilities arising from financing activities

Reconciliation of liabilities for the year ended 31 December 2020:

As of 1 January 2020 Cash flows Non-cash changes As of 31 December 2020	Short-term loans $291,628 (65,382) - $226,246	Long-term loans (including current portion) $919,936 (122,035) -	Lease liabilities $117,174 (26,090) 11,447	Deposit margin $ - 75 -	Total liabilities from financing activities $1,328,738 (213,432) 11,447
		$797,901	$102,531	$75	$1,126,753

Reconciliation of liabilities for the year ended 31 December 2019:

As of 1 January 2019 Cash flows Non-cash changes As of 31 December 2019	Short-term loans $317,801 (26,173) -	Long-term loans (including current portion)	Lease liabilities $120,323 (23,455) 20,306	Total liabilities from financing activities $1,234,928 73,504 20,306
		$796,804 123,132 - $919,936
	$291,628		$117,174	$1,328,738

(7) Fair value of financial instruments
A. Valuation methodology and assumptions for fair values

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction among market participants at the measurement date. The following are the methodology and assumptions taken by the Company to measure or disclose the fair values of financial assets and financial liabilities:

(a)The carrying amount of cash and cash equivalents, accounts

259

receivables, accounts payable and other current liabilities approximate their fair value due to their short maturities.

(b)For financial assets and liabilities traded in an active market with standard terms and conditions, their fair value is determined based on market quoted prices (including listed equity securities) at the reporting date.
(c) Fair value of equity instruments without market quoted prices (including private placement of listed equity securities, unquoted public Company and private Company equity securities) are valued by market approach which takes industrial comparable entities’ quoted market prices or other relevant information as reference to estimate probable fair values.
(d)Fair value of debt instruments without market quoted prices, bank loans, and other non-current liabilities are determined based on the counterparties prices or valuation method. The valuation method uses DCF method as a basis, and the assumptions such as interest rates and discount rate are primarily based on relevant information of equivalent instruments (such as yield curves published by the Taipei Exchange, average prices and credit risks for Fixed Rate Commercial Paper published by Reuters, etc.)
B. Fair value of financial instruments measured at amortized cost

The carrying amount of the Company’s financial instruments, financial assets and liabilities measured at amortized cost approximate their fair value.

C. Fair value measurement hierarchy for financial instruments

Please refer to Note 12(9) for fair value measurement hierarchy for financial instruments of the Company.

260

(8) Derivative financial instruments

The Company’s derivative financial instruments include forward currency contracts and embedded derivatives. The related information for derivative financial instruments not qualified for hedge accounting and not yet settled as of 31 December 2020 and 2019 is as follows:

Forward currency contracts

The Company entered into forward currency contracts to mitigate its exposure to financial risk, but these contracts are not designated as hedging instruments. The table below lists the information related to forward currency contracts:

Items (by contract) Contract Amount

Contract Period

As at 31 December 2020

Forward currency contract Sell foreign currency USD 48 thousand

Sell foreign currency USD 115 thousand Sell foreign currency USD 136 thousand Sell foreign currency USD 67 thousand Sell foreign currency USD 86 thousand Sell foreign currency USD 94 thousand Sell foreign currency USD 176 thousand Sell foreign currency USD 134 thousand Sell foreign currency USD 67 thousand Sell foreign currency USD 94 thousand Sell foreign currency USD 33 thousand Sell foreign currency USD 45 thousand

As at 31 December 2019 Forward currency contract Sell foreign currency EUR 120 thousand

From 2019.12.16 to 2020.03.24

(9) Fair value measurement hierarchy

A. Fair value measurement hierarchy

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities;

261

Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable;

Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period.

B. Fair value measurement hierarchy of the Company’s assets and liabilities

The Company does not have assets that are measured at fair value on a non-recurring basis. Fair values of the Company’s assets and liabilities are measured at fair value on a recurring basis as follows:

As of 31 December 2020

As of 31 December 2020
Financial assets: Financial assets at fair value through profit or loss Forward currency contract Financial assets at fair value through other comprehensive income Equity instrument measured at fair value Financial liabilities: Financial liabilities at fair value through profit or loss Forward currency contracts As of 31 December 2019 Financial assets: Financial assets at fair value through profit or loss Equity instrument measured at fair value Financial liabilities: Financial liabilities at fair value through profit or loss Forward currency contracts	Level 1	Level 2	Level3	Total
	$ - $6,097	$81 $ -	$ - $87,169	$81 $93,266
	$ -	$ -	$ -	$ -
	Level 1	Level 2	Level3	Total
	$26,448	$-	$40,216	$66,664
	$-	`＄`16	$-	`＄`16

Re-classifications between Level 1 and Level 2 during the period

262

During the years ended 31 December 2020 and 2019, there were no re-classifications between Level 1 and Level 2 fair value measurements.

Reconciliation for fair value measurements in Level 3 of the fair value hierarchy for movements during the period is as follows:

Beginning balances as of 1 January 2020 Total gains and loss recognized for the year ended 31 December 2020: Amount recognized in OCI (presented in “Unrealized gains (loss) from equity instruments investments measured at fair value through other comprehensive income) Acquire in 2020 Ending balances as of 31 December, 2020 Beginning balances as of 1 January, 2019 Total gains and loss recognized for the year ended 31 December 2019: Amount recognized in OCI (presented in “Unrealized gains (loss) from equity instruments investments measured at fair value through other comprehensive income) Ending balances as of 31 December, 2019	Assets
	At fair value through other comprehensive income
	Stocks
	$40,216 4,453 42,500
	$87,169
	$39,180 1,036
	$40,216

Information on significant unobservable inputs of fair value measurement in Level 3 fair value hierarchy

Significant unobservable inputs of fair value measurement in Level 3 fair value hierarchy are as follows:

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As of 31 December 2020

Financial assets: Financial assets at fair value through other comprehensive income Stocks Financial assets: Financial assets at fair value through other comprehensive income Stocks	Valuation techniques	Significant unobservable inputs	Quantitative information	Correlation between inputs and fair value	Sensitivity Analysis of correlation between inputs and fair value
	Asset approach As of 31 Valuation techniques	discount for lack of marketability 30% December 2019 Significant unobservable inputs Quantitative information		The greater degree of lack of marketability, the lower the estimated fair value is determined. Correlation between inputs andfairvalue	10% increase (decrease) in the discount for lack of marketability would result in (decrease) increase in the Company’s profit or loss by $8,717 Sensitivity Analysis of correlation between inputs andfairvalue
	Asset approach	discount for lack of marketability	30%	The greater degree of lack of marketability, the lower the estimated fair value is determined.	10% increase (decrease) in the discount for lack of marketability would result in (decrease) increase in the Company’s profit or loss by NT$4,022 thousand

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Valuation process used for fair value measurements categorized within Level 3 of the fair value hierarchy

The Company’s treasury division is responsible for validating the fair value measurements and ensuring that the results of the valuation are in line with market conditions, based on independent and reliable inputs which are consistent with other information, and represent reasonable prices. The team analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Company’s accounting policies at each reporting date.

(10) Significant assets and liabilities denominated in foreign currencies

Information regarding the significant assets and liabilities denominated in foreign currencies is listed below:

As of 31 December

Financial assets Monetaryitem: USD CNY EUR JPY Financial liabilities Monetaryitem: USD		2020	NTD $311,144 19,049 4,272 6,184 $193,436		2019
	Foreign Currency $10,925 4,349 122 22,407 $6,792	Exchange rate 28.48 4.38 35.02 0.28 28.48		Foreign Currency $15,525 3,149 100 8,759 $7,029	Exchange rate 29.98 4.30 33.60 0.28 29.98	NTD
						$465,440 13,541 3,360 2,453 $210,729

The Company had $11,085 and $5,766 foreign exchange loss for the years ended 31 December 2020 and 2019, respectively.

(11) Capital management

The primary objective of the Company’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize the shareholder value. To maintain or adjust the capital structure, the Company may adjust dividend payment to shareholders, return capital to shareholders or issue new shares.

13. Other disclosures

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(1) Information at significant transactions

A. Financing provided: None.
B. Endorsement/Guarantee provided: None
C. Securities held as at end of the period (excluding subsidiaries and associates):

Holding Company	Type andname ofsecurities	"Relationship	Financialstatement account		As of 31 December 2020	As of 31 December 2020
				Shares	Carrying amount	"Percen tage of	Shares
SUNKO INK CO., LTD.	Stock CHING FENG HOME FASHIONS. CO. LTD LINCO TECHNOLOGY CO. LTD THE FIRST LEASING CORPORATION TOTAL ACRYLIC POLYMER INDUSTRY (TAPI) CORPORATION GLOBAL GRAPHENE GROUP, INC. J NANO TECHNOLOGY CO., LTD. YAYI CO., LTD. SAR TECHNOLOGY INC. KING SHINE EE TECHNOLOGY ENTERPRISE CO., LTD.	Unrelated party Unrelated party Unrelated party Unrelated party Unrelated party Unrelated party Unrelated party Unrelated party Unrelated party	Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Less: Unrealized gains (loss) from investments in equity instruments Total	214,309 422,734 2,852,325 100,000 6,155 11,474 368,898 4,250,000 1,000	$3,365 3,963 25,930 1,000 16,405 115 4,883 42,500 10 (4,905)	0.13% 0.80% 12.96% 2.00% 0.87% 5.22% 1.85% 5.18% 0.01%	$6,097 3,714 26,017 14,938 - - - 42,500 -
					$93,266

D. Individual securities acquired or disposed of with accumulated amount exceeding the lower of $300 million or 20% of the capital stock for the period: None

266

E. Acquisition of individual real estate with amount exceeding the lower of $300 million or 20% of the capital stock for the period: None
F. Disposal of individual real estate with amount exceeding the lower of $300 million or 20% of the capital stock for the period: None

Companies disposing of real estate	Property name	Date of occurrence	Acquisition date	Carrying amount	Transaction amount	Collection cost	Loss (gain) on disposal	Trading counterparties	Related or non-related party	Purpose of disposal	Methods of price determination	Other terms
SUNKO	Land in Taiping District, Taichung City	20 January 2020	December 1977	$77,835	$860,000	Fully collected	$741,989 (after deducting transaction-related fees and taxes)	SITRON CO., LTD	Unrelated party	Improving asset turnovers and working capital	Referencing appraisal report and market conditions	None
SUNKO	Land, plant and equipment in Dajia District, Taichung City	26 February 2020	September 2005	approximately $165,000	$465,000	$186,000 has been collected as of 31 December 2020	Disposal processes have not been completed and disposal of gain (loss) are estimated to be approximately $300,000.	CHINA PETROCHEMICAL DEVELOPMENT CORPORATION	Unrelated party	Improving the working capital and financial structure	Referencing appraisal report and market conditions	None

G. Related party transactions for purchases and sales amounts exceeding the lower of $100 million or 20% of the capital stock for the period: None.
H. Receivables from related parties with amounts exceeding the lower of $100 million or 20% of capital stock as at end of the period: None.
I. Transaction of derivative financial instruments:

Please refer to Note 12(8).

J. Significant intercompany transactions among consolidated entities are as follows:

None.

267

(2) Information on investees

Investor Company	Investee Company	Address	Main businesses and products	Initial investment amount	Initial investment amount	Investment as at end of the period	Investment as at end of the period	Investment as at end of the period	Net income (loss) of investee Company	Investment income (loss) recognized
				Ending balance	Beginning balance	Number of shares (thousands)	Percentage of ownership (%)	Carrying value
The Company	Power Hero	Mauritius	Investment Services	$20,317 (USD 685,700)	$20,317 (USD 685,700)	-	-%	$ -	$7	$7
The Company	Blessingthoughts	Taiwan	Drinks, and food vending	$15,200	$15,200	1,520,000	83.52%	$909	$(296)	$(247)
The Company	Sunko Biotech Co	Taiwan	Biotechnology Services	$60,000	$60,000	1,674,044	22.32%	$ -	$ -	$ -
The Company	Chen Chi Technology Co.	Taiwan	Synthetic resin and plastic manufacturing	$14,360	$14,360	1,640,000	41.00%	$ -	$ -	$ -
The Company	Bnkc Biochemical Technology Co..	Taiwan	Wholesale of Chemical Raw Material, wholesale of Cosmetics, and Retail of Cosmetics	$490	$490	49,000	49.00%	$1,301	$1,204	$590
The Company	Power Rich	Anguilla	Investment Services	$28,195 (USD 990,000)	28,195 (USD 990,000)	990,000	30.00%	13,890	$(15,260)	$(4,578)
Power Hero	Giant Way	Mauritius	Investment Services	$20,316 (USD 685,650)	$20,316 (USD 685,650)	-	-%	$ -	$(172)	None

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(3) Information on investments in Mainland China

(Amounts in thousands; Currency denomination in NTD or in foreign currencies)

Investee Company	Main businesses and products	Total amount of paid-in capital	Method of investment (Note 1)	Beginning accumulated outflow of investment from Taiwan	Investment flows for the period	Investment flows for the period	Ending accumulated outflow of investment from Taiwan	Net income (loss) of investee Company	Percentage of ownership	Investment income (loss) recognized (Note 2)	Carrying value as at end of the period	Accumulate d inward remittance of earnings as at end of the period
					Outfl ow	Inflow
Eehung (Note1)	Trading of chemical goods, raw materials, mechanical equipment and spare parts, electronic equipment and spare parts	$15,883 (RMB 3,513,896)	Investment in Mainland China was through indirect oversea investee that is invested through direct oversea investee Company.	$8,871 (USD 285,600)	$ -	$1,890 (USD 61,279.88)	$8,871 (USD 285,600)	$ -	- %	$ -	$ -	$ -

Accumulated investment in Mainland China as of 31 December 2020	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
		The Company’s net account values × 60%
NT$8,871 (USD285,600)	NT$6,981 (USD224,320.12)	NT$1,486,319 (Note2)

Note 1: Approved by the Investment Committee, Power Hero has invested in Giant Way and indirectly invested in the establishment of Eehung in Mainland China. Eehung was liquidated on 25 February 2019 and received the notification letter from the Investment Committee of the Ministry of Economic Affairs to state that the investment amount has been returned by Giant Way on 13 August 2020.
Note 2: According to the regulations of Investment Commission, Ministry of Economic Affairs, the Company’s investment upper limit in Mainland China is 60% of its net value.

269

Significant transactions with investee companies in Mainland China directly or indirectly through third parties: None.

(4) Information on major shareholders

Shares Names of major shareholders	Number of shares held	Shareholding ratio
Macy Investment Company, Limited	19,809,637	8.90 %
KT Investment Company, Limited	12,010,600	5.40 %

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6 Impact on the Company's financial status due to financial difficulties experienced by the Company and its affiliate companies in the most recent year and as of the publication date of this Annual Report: None.

VII. REVIEW AND ANALYSIS ON FINANCIAL STATUS, FINANCIAL PERFORMANCE, AND RISKS

1 Analysis of Financial Status
1.1 Consolidated (IFRS)

Unit: NT$ (in thousands)

Year Item	As of 31 December,	As of 31 December,	Differences	Differences
	2020	2019	Amount	%
Current Assets Property, plant, equipment Intangible Assets Other Assets Total Assets Current Liabilities Non-current Liabilities Other Liabilities Total Liabilities Common Stock Additional paid-in capital Retained Earnings Other equity Treasury Stock Non-controlling Interest Total Equity	$2,654,855 1,702,885 14,914 426,767 4,799,421 1,474,762 670,292 176,990 2,322,044 1,889,952 37,848 599,874 (5,623) (44,853) 179 2,477,377	$2,073,670 1,773,778 14,742 383,260 4,245,450 1,056,740 698,260 213,113 1,968,113 2,223,473 37,785 62,953 1,428 (52,768) 4,466 2,277,337	$581,185 (70,893) 172 43,507 553,971 418,022 (27,968) (36,123) 353,931 (333,521) 63 536,921 (7,051) 7,915 (4,287) 200,040	28.03 (4.00) 1.17 11.35 13.05 39.56 (4.01) (16.95) 17.98 (15.00) 0.17 852.89 (493.77) 15.00 (95.99) 8.78

Analysis of deviation over 20% and amount over $10,000 thousand:
(1) Increase in current assets: The increase was mainly because of increase in cash and cash equivalents and financial assets measured at amortized cost.
(2) Increase in current liabilities: The increase was mainly due to increase in other payables and other current liabilities.
(3) Increase in retained earnings: The increase was mainly due to sales of land in Taiping generating gain from disposal in the amount of $741,989 thousand.
Possible major impacts on the Company’s future business:

The above deviations had no major impact on SUNKO’s financial position and future business.

Future responsive measures: not applicable.

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1.2 Parent Only

Unit: NT$ (in thousands)

Year Item	As of 31 December,	As of 31 December,	Differences	Differences
	2020	2019	Amount	%
Current Assets Property, plant, equipment Intangible Assets Other Assets Total Assets Current Liabilities Non-current Liabilities Other Liabilities Total Liabilities Common Stock Additional paid-in capital Retained Earnings Other equity Treasury Stock Total Equity	$2,653,798 1,702,853 14,914 427,676 4,799,241 1,474,761 670,292 176,990 2,322,043 1,889,952 37,848 599,874 (5,623) (44,853) 2,477,198	$2,057,881 1,773,348 14,742 395,005 4,240,976 1,056,732 698,260 213,113 1,968,105 2,223,473 37,785 62,953 1,428 (52,768) 2,272,871	$595,917 (70,495) 172 32,671 558,265 418,029 (27,968) (36,123) 353,938 (333,521) 63 536,921 (7,051) 7,915 204,327	28.96 (3.98) 1.17 8.27 13.16 39.56 (4.01) (16.95) 17.98 (15.00) 0.17 852.89 (493.77) 15.00 8.99

Analysis of deviation over 20% and amount over $10,000 thousand:
(1) Increase in current assets: The increase was mainly because of increase in cash and cash equivalents and financial assets measured at amortized cost.
(2) Increase in current liabilities: The increase was mainly due to increase in other payables and other current liabilities.
(3) Increase in retained earnings: The increase was mainly due to sales of Taiping Land with gain from disposal in the amount of $741,989 thousand.
Possible major impacts on the Company’s future business:

The above deviations had no major impact on SUNKO’s financial position and future business.

Future responsive measures: not applicable.

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2 Analysis of Financial Performance

2.1 Analysis of Financial Performance in the last two years 2.1.1 Consolidated

Unit: NT$ (in thousands)

Year Item	For theyears ended 31 December	For theyears ended 31 December	Differences	Differences
	2020	2019	Amount	%
Operating Revenues Operating Costs Gross Profit Operating Expenses Other Operating Gains or Losses Operating Income Non-operating Income Non-operating Expenses Income (Loss) before Income Tax Income Tax Benefit Net Income (Loss) Other Comprehensive Income, net of tax Total Comprehensive Income	$2,752,601 2,613,246 139,355 383,110 - (243,755) 747,188 20,139 483,294 41,012 524,306 5,466 529,772	$3,243,968 2,961,831 282,137 264,814 - 17,323 (965) 25,443 (9,085) 2,208 (6,877) 17,643 10,766	$(491,367) (348,585) (142,782) 118,296 (261,078) 748,153 (5,304) 492,379 38,804 531,183 (12,177) 519,006	(15.15) (11.77) (50.61) 44.67 (1,507.12) 77,528.80 (20.85) 5,419.69 1,757.43 7,724.05 (69.02) 4,820.79

Analysis of significant changes in financial ratios in the last two years:
(1) Decrease in gross profit: The decrease was mainly attributed to the declining operating revenues and sales price due to the COVID-19 pandemic and the volatility of currency exchange.
(2) Increase in operating expenses: The increase was mainly due to higher managerial expenses. Because of the revise on renovation project, Taoyuan and Taichung Environmental Protection Bureau audited and concluded that the Company should make an estimated renovation expense in the amount of 105 million yuan.
(3) Decrease in operating income: The decrease was mainly due to decrease in gross profit and increase in operating expenses.
(4) Increase in non-operating income: The increase was mainly due to sales of Taiping Land with a gain on disposal in the amount of $741,989 thousand.
(5) Increase in Income Tax benefit: The increase was mainly due to the recognition of increasing deferred tax assets.
(6) Decrease in other comprehensive income: The decrease was mainly due to decrease in unrealized gain on equity instruments investments measured at fair value through other comprehensive gains and losses.

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2.1.2 Parent Only

Unit: NT$ (in thousands)

Year Item	For theyears ended 31 December	For theyears ended 31 December	Differences	Differences
	2020	2019	Amount	%
Operating Revenues Operating Costs Gross Profit Operating Expenses Other Operating Gains or Losses Operating Income Non-operating Income Non-operating Expenses Income (Loss) before Income Tax Income Tax Benefit Net Income (Loss) Other Comprehensive Income, net of tax Total Comprehensive Income	$2,752,601 2,613,246 139,355 383,041 - (243,686) 747,457 20,379 483,392 41,012 524,404 5,466 529,870	$3,228,494 2,947,733 280,761 262,948 - 17,813 (994) 25,835 (9,016) 2,208 (6,808) 17,403 10,595	$(475,893) (334,487) (141,406) 120,093 (261,499) 748,451 (5,456) 492,408 38,804 531,212 (11,937) 519,275	(14.74) (11.35) (50.37) 45.67 (1,468.02) 75,296.90 (21.12) 5,461.49 1,757.43 7,802.76 (68.59) 4,901.13

Analysis of significant changes in financial ratios in the last two years:
(1) Decrease in gross profit: The decrease was mainly attributed to the declining operating revenues and sales price due to the COVID-19 pandemic and the volatility of currency exchange.
(2) Increase in operating expenses: The increase was mainly due to higher managerial expenses. Because of the modification of the renovation project, the Taoyuan and Taichung Environmental Protection Bureaus approved and concluded that the Company should make an estimated renovation expense in the amount of 105 million yuan.
(3) Decrease in operating income: The decrease was mainly due to decrease in gross profit and increase in operating expenses.
(4) Increase in non-operating income: The increase was mainly due to sales of land in Taiping with a gain from disposal in the amount of $741,989 thousand.
(5) Increase in Income Tax benefit: The increase was mainly due to the recognition of increasing deferred tax assets.
(6) Decrease in other comprehensive income: The decrease was mainly due to decrease in unrealized gain on equity instruments investments measured at fair value through other comprehensive gains and losses.
2.2 Sales Volume Forecast and Related Information
For additional details, please refer to page 9.

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3 Analysis of Cash Flow

3.1 Liquidity analysis

Unit: %

Analysis of Cash Flow 3.1 Liquidity analysis		Unit: %
Item	As of 31 December, 2020 2019	Increase or decrease ratio(%)
Cash flow ratio Net cash flow adequacy ratio Cash reinvestment ratio	16.92 20.69 116.57 117.52 4.62 4.27	(18.22) (0.81) 8.20

Explanation:

(1) Cash flow ratio: The decrease was mainly due to increase in current liabilities.
(2) Net cash flow adequacy ratio: The decrease was mainly due to capital expenditure and decrease in inventories.
(3) Cash reinvestment ratio: The increase was mainly due to increase in cash and current assets in operating activities.
3.2 Remedial Actions for Liquidity Shortfall: not applicable.
3.3 Cash Flow Liquidity Projection for the coming year

Unit: NT$ (in thousands)

	Unit: NT$(in thousands)
Cash Balance 2019.12.31 (1) Projected net cash provided by operating activities throughout 2021(2) Projected cash outflow in 2021 (3) Projected cash surplus (deficit) (1)+(2)-(3)	Remedyfor LiquidityShortfall
	Investment Plan Financing Plan
838,761 159,048 (418,651) 579,158	- -

Explanation:

(1) Operating activities: Cash inflows as operating activities take place under normal operating condition.

(2) Investment activities: Cash inflows mainly due to activities such as disposal of property, plant, and equipment.

(3) Financing activities: Cash outflows mainly because the Company conducts capital reduction to repurchase shares.
4 Major Capital Expenditures and Impact on Financial and Business during recent years :

Factory Plan	Impact
Chuansing New construction on production line expansion Dali Exhaust gas treatment system Pingjhen Exhaust gas treatment system	Expected to increase the revenue in 2021. Environmental regulations strictly require the installation of effluent treatment system. Environmental regulations strictly require the installation of effluent treatment system.

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5 Reinvestment policies, main reasons for profits/ losses generated thereby, improvement plans, and investment plans for the coming year:

Reinvestments	Policies		Profits/	Profits/	Main Reasons	Main Reasons		Improvement	Improvement		Investment
			losses					plans			plans for the
			in 2020								coming year
Power Hero	Sales of chemicals	fine		7	Recognition gains/ losses		of on	The Company’s registration was cancelled on 29			-
					reinvestment
								July2020.
	The purpose of
	the beverage				Sales	revenue
Blessingthoughts Co. Ltd.	kiosk is to help the minority		(247)		failed to achieve the economies of			-			-
	group’s				scale.
	employment.
BNKC
	Sales of active				Promotion of new
BIOCHEMICAL
TECHNOLOGY	ingredient	for	590		sunscreen			-			-
CO.,LTD.	cosmetics.				product.
	Promotion	on			Sales	revenue		Continually	seeking
Power Rich	using polymer pellets as shoe		(4,578)		failed to achieve the economies of			cooperation internationally famous		with shoe	-
	materials.				scale.
								factories.
Subtotal			(4,228)

6 Risk Assessment

6.1 Impacts of changes in interest rates, foreign exchange rates and inflation on the Company's profit and loss and the corresponding countermeasures:
6.1.1 Interest Rate

The rates of short-term and long-term borrowings change as the market rate alters, and accordingly, affecting the profits of the Company. When the market rate increases/ decreases in 1%, the income before tax goes up/ down in the amount of $1,024 thousand. The Company maintains a good relationship with bank institutions to obtain better exchange rate quotes.

6.1.2 Exchange Rate

The loss on foreign currency exchange was $11,635 thousand in 2020, mainly due to the fluctuating USD exchange rate. When the rate of NTD to USD fluctuates by 1%, the income before tax goes up/ down in the amount of $1,177 thousand. Due to the complex circumstances around the globe, the Company may pay up the purchasing expenses with sales revenue using the same functional currency, engage in forward contracts to hedge risks

276

to currency exposure in its net asset positions, and enhance the currency fluctuation risk management. For instance: take the fluctuating exchange rates into consideration while inquiring and quoting prices and make foreign currency exchange at the appropriate time to minimize the foreign exchange loss.

6.1.3 Inflation:

According to the statistics from the Directorate-General of Budget, Accounting and Statistics, Executive Yuan, the accumulative average consumer price index was 102.31% in 2020. Therefore, there is no significant impact on the Company’s business operation.

6.2 Policies for high-risk, high-leverage investments, capital lending, endorsements, guarantees, and derivatives transaction, main reasons for the profits or losses generated thereby, and the corresponding countermeasures:
6.2.1 The Company did not engage in any high-risk and high-leverage investments, endorsements, or guarantees in 2020.
6.2.2 The Company engaged in derivatives transactions in the total amount of $115,486 thousand, with a realized gain of $75 thousand in 2020. The Company mainly conducted forward exchange transactions, targeting actual foreign currency revenue as hedging instruments, to avoid currency fluctuation risks generated by exports.
6.3 Future Research and development (R&D) projects and estimated R&D expenditures: The R&D department mainly works on developing new products and improving the production process to advance the products’ quality. The Company estimates to invest $54,183 thousand in the continuous R&D process.
6.4 Impacts of changes in domestic and foreign important policies and laws on the Company’s financial operations, and the corresponding countermeasures: The Company undertook appropriate measures in accordance with applicable regulations and so far there has not been any significant impact on the Company’s financial operation.
6.5 Impacts of industry and technology changes to the Company’s financial operations, and the corresponding countermeasures: None.
6.6 Impacts of changes in corporate image on corporate crisis management and the corresponding countermeasures: None.
6.7 Expected benefits and potential risks related to mergers and acquisitions: Not applicable.
6.8 Expected benefits and potential risks of capacity expansion: Not applicable.
6.9 Risks relating to and future countermeasures for the excessive concentration of incoming goods or sales:
6.9.1 Sales: In 2020, the main clients accounted for 16.16% of the entire client base who have already cooperated with us for a long period of time. During recent years, the number of orders steadily grew, and the receivable turnovers were also stable. In addition, the Company formulated strategies on preservation policy to monitor risks. Except as described, there’s no other clients who accounted for over 10% of the sales revenue.
6.9.2 Purchases: The Company has a stable relationship with its raw materials suppliers. For each raw material, we have at least two different suppliers. The main suppliers made up 18.42% of the entire suppliers in 2020. Those main suppliers have long standing relationship with the Company; therefore, the related risk is low.

277

6.10 Impacts, risks arising from, and future countermeasures for major large share transfers or changes in shareholdings by Directors, supervisors or major shareholders with shareholding of over 10%: None.
6.11 Effects of, risks relating to and future countermeasures for changes in management rights: None.
6.12 Litigation or non-litigation matters:
For litigations, non-litigations or administrative disputes already judged or currently being judged as to the publication date of this Annual Report, the litigation expense are measured along with the Company’s earnings and capital of the past few years. The overall litigation expenses have insignificant impact on the shareholders’ interest and the price of the securities.
6.13 Other major risks and future countermeasures:

Assessment on risk of information security: Personnel, process, and technology are the three factors on information security management. The Company implements the following measures: Personnel: Provide personnel with adequate training to minimize the occurrence of unintentional events from the Company or external intentional events.

Process: The Company has an enhanced internal audit system. Internal auditor and external auditor from the accounting firms examine the effectiveness and reliability of the process each year.

Technology: With the assistance of double-generator room to process the system services, we manage the internet in a centralized organization, as well as conducting integrated threat management on the firewall, endpoint security system and enterprise-class antivirus software.

Through the effective implementation on the measures stated above, the Company can take good control of the information security.

7 Other Material Matters: None.

278

VIII. SPECIAL NOTES

1 Summary of Affiliated Companies
1.1 Organizational chart of the affiliated companies

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

SUNKO INK CO., LTD
83.52% 100.00%
Blessingthoughts Power Hero
Co. Ltd. Corp
71.42%
Giant Way
Inc.
----- End of picture text -----

Note 1: Pursuant to Article 369-2 of the Company Act, the controlling and affiliation relationship is substantially recognized.

Note 2: The registrations of Power Hero Corp. and Giant Way Inc. were cancelled on 29 July 2020.

1.2 Basic information of affiliated companies

CompanyName Date of Incorporation	(Unit expressed in thousands) Address Capital Stock Business Activities
Blessingthoughts Co. Ltd. (Note) March 31, 2016 Power Hero Corp (Note) March 5, 2000 Giant Way Inc. (Note) March 17, 2000	Taichung, Taiwan NT$ 18,200 Beverage kiosk Mauritius US$ 686 Reinvestment Mauritius US$ 960 Reinvestment, wholesale and retail of chemical materials

Note: Both Power Hero Corp.’s and Giant Way Inc.’s registration were cancelled on 29 July 2020.

1.3 Directors, Supervisors, and Managers of all affiliated companies

Company Name Title	Name or Representative Shareholdings (Note1) Shares %	Name or Representative Shareholdings (Note1) Shares %
Blessingthoughts Co. Ltd. Chairman Power Hero Corp (Note 2) Chairman Giant Way Inc. (Note 2) Chairman	Representative of SUNKO INK CO., LTD: CHANG, JUN-PIN 1,520,000 Representative of SUNKO INK CO., LTD: HUANG, TING-DI - Representative of Power Hero Corp.: HUANG, TING-DI -	83.52% - -

279

Note 1: The shareholding percentage of limited companies is calculated based on the investment ratio.

Note 2: Both Power Hero Corp.’s and Giant Way Inc.’s registration were cancelled on 29 July 2020.

1.4 Operational highlights of affiliated companies

(Expressed in Thousands of New Taiwan Dollars, Except for EPS)

Company Name Capital	Total Assets Total Liabilities Net Value Operating Income Operating Profit	Net Loss EPS (NT$) (After-Tax)
Blessingthoughts Co. Ltd. 18,200 Power Hero Corp (Note) - Giant Way Inc. (Note) -	1,088 - 1,088 - (67) - - - - - - - - - -	(296) (0.88) - - - -

Note: Both Power Hero Corp.’s and Giant Way Inc.’s registration were cancelled on 29 July 2020.

1.5 Consolidated Financial Statements of the affiliated companies: Pursuant to the Disclosure Guidelines of the Consolidated Operating Report, Financial Statements And Affiliation Report Of The Affiliated Companies, the companies that should be incorporated in the consolidated financial statements of affiliated companies are the same as those that should be incorporated in the consolidated financial statements of parent and subsidiary companies in accordance with IFRS 10. In addition, the related information that must be disclosed in the consolidated financial report of affiliated companies has been fully disclosed in the consolidated financial statements of parent and subsidiary companies. Therefore, the Company is not required to prepare a consolidated financial statements of affiliated companies.
1.6 Reports on affiliated companies: None.
2 Private Placement of Securities in 2020 and as of the Date of this Annual Report: None
3 Holding or disposal of the Company's shares by the subsidiaries of the most recent year as of the publication date of this Annual Report: None.
4 Other necessary supplementary matters to be included: None.

IX. ANY EVENTS IN 2020 AND AS OF THE PUBLICATION DATE OF THIS ANNUAL REPORT THAT HAD MATERIAL IMPACTS ON SHAREHOLDERS’ INTERESTS OR SECURITIES PRICES AS STATED IN ARTICLE 36-2-2 OF SECURITIES AND EXCHANGE LAW OF TAIWAN: NONE

280

SUNKO INK CO., LTD

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Chairman: HUANG, TING-DI

==> picture [48 x 51] intentionally omitted <==

281

AI assistant

SUNKO — Annual Report 2021

51901_rns_2021-07-28_229e5735-0175-4a06-9195-110ddc4ae366.pdf

SUNKO INK CO., LTD

2020 Annual Report

I. Spokesperson and Deputy spokesperson Spokesperson: SU, YOU-JUN

Deputy spokesperson: HUNG, TING-YI

II. Corporate Headquarters, Branches and Plants

III. Stock Transfer Agent

SUNKO INK CO., LTD

Table of Contents

I. LETTER TO SHAREHOLDERS

1.3 Financial Income and Expenditure and Profitability Analysis

1.4 Research and Development progress 1.4.1 R&D Expenses

1.4.2 Recent Research and Development Results

2.2.2 Polymer

II. COMPANY PROFILE

III. CORPORATE GOVERNANCE REPORT

2 Directors, Supervisors and Management Team

2.1 Directors

2.1.1 Information on directors and supervisors

2.1.3 Major shareholders of main corporate shareholders: None.

2.1.4 Professional qualifications and independence of the Directors and Supervisors

Note:

3 Remuneration to Directors, General Manager and Deputy General Manager in 2020

3.1 Remuneration to Directors and Independent Directors

3.2 Remuneration to supervisors

3.3 Remuneration to general managers and deputy managers

4.1.3 Evaluation of the implementation of the board of directors

4.2.3 Supervisor’s participation in the Board of Directors

Note 1: Evaluation on the independence of CPAs

4.4.1 Remuneration Committee members

4.4.2 Operations of the Remuneration Committee

4.4.3 The proposals and results of the meeting and the company's handling of members' opinions

4.5 Implementation of Corporate Social Responsibility

4.9.1 Statement of Declaration on Internal Control System

SUNKO INK CO., LTD

Statement of Declaration on Internal Control System

I.

II.

III.

IV.

V.

VI.

VII.

4.11.2 Material resolutions at the 2020 shareholders meeting

IV. CAPITAL OVERVIEW

1.1 Shares issued

Note:

Information related to the Declaration Policy

6 Dividend policy and implementation status

1.2 Industry Overview

Upstream Midstream Downstream

1.4.1 Short-term Plan

1.4.2 Long-term Plan

2.1 Market Analysis

2.1.1 Sales region of Main Products

2.1.2 Market supply and demand and market growth in the future

2.1.3 Sales Volume Forecast and Related Information

2.2 Important Applications and Manufacturing Processes of Main Products

2.2.1 Important Applications of Major Products

2.2.2 Manufacturing Process of main products

2.2.3 Supply Status of Main Materials

(1) List of major customers

(2) List of major suppliers

2.2.5 The Production Volume and Value for the recent two years

2.2.6 The Sales Volume and Value for the recent two years

3 Employee Information

VI. FINANCIAL INFORMATION

Condensed Balance Sheet (Consolidated)

Condensed Income Statement (Consolidated)

Condensed Income Statement (Parent Only)

2.1 Financial analysis (Consolidated)

Note I. The formulas are as follows:

SUNKO INK CO., LTD. Audit Committee’s Review Report

Notes to Consolidated Financial Statements

1. General

a. Argochemicals

2. Date and procedures of authorization of financial statements for issue

(1) estimates of future cash flows;

SUNKO Annual Report 2021