sanitar co., ltd

sStock Code: 1817

SANITAR Co., Ltd.

2020 Annual Report

Notice to readers

This English-version annual report is a summary translation of the Chinese version and

is not an official document of the shareholders’ meeting. If there is any discrepancy

between the English and Chinese versions, the Chinese version shall prevail.

Taiwan Stock Exchange Market Observation Post System:

http://mops.twse.com.tw

SANITAR’s Annual Report is available at: http://www.caesar.com.tw

Printed on April 27th, 2021

I. Name, title, contact telephone number and e-mail address of the spokesperson and

spokesperson-in-charge

Name of Spokesperson：Chen Yu Cuan

Title: Deputy General Manager of Finance

Contact number: (02)8512-3712

E-mail address: [email protected]

Name of Proxy Spokesperson: Lee Ching Rong

Title: Special Assistant to the General Manager

Contact number: (02)8512-3712

E-mail address: [email protected]

II. Address and number of head office, branch and factory

Head Office Address: 7F, No. 111-8, Xingde Road, Sanchong District, New Taipei

City, Taiwan

Tel: (02)8512-3712

Addresses and telephone numbers of branch offices and factories: Not applicable

III. Name, address, website and telephone number of the transfer agent

Name: Stock Agency Department of Fubon Securities Co.

Address: 6F, No. 6, Sec. 1, Zhongxiao West Road, Zhongzheng District, Taipei City,

Taiwan

Website: http://www.gfortune.com.tw

Telephone: (02)2371-1658

IV. Name, address, website and telephone number of the accountant who issued the

most recent annual financial report

Name of Accountant: Connie Y. Su, CPA, and Bo-Jen Weng, CPA

Name of Firm: Deloitte Taiwan

Address: 20F, No. 100, Songren Road, Xinyi District, Taipei City, Taiwan

Website: http://www.deloitte.com.tw

Tel: (02)2725-9988

V. The name of the exchange where the overseas marketable securities are listed and

the way to inquire the information of the overseas marketable securities

None

VI. Company website

http://www.caesar.com.tw

http://www.caesar.com.tw/

Table of Contents

I. Letter to Shareholders.................................................................................................................. 1

II. Company Profile ......................................................................................................................... 6

1. Date of Incorporation ........................................................................................................... 6

2. Company History.................................................................................................................. 6

III. Corporate Governance Report ................................................................................................ 8

1. Organization .......................................................................................................................... 8

2. Directors, Supervisors, President, Vice President, Assistant Managers and

Heads of Departments and Branch Organizations .................................................... 11

3. Remuneration of Directors, President, and Vice President in the Most Recent

Fiscal Year……25

4. Implementation of Corporate Governance ..................................................................... 31

5. Information Regarding the Company’s Audit Fee and Independence ................................. 122

6. Replacement of CPA............................................................................................................ 123

7. Where the company's chairperson, president, or any managerial officer in charge of

finance or accounting matters has in the most recent year held a position at the

accounting firm of its CPAs or at an affiliated enterprise of such accounting firm ........ 123

8. Any transfer of equity interests and/or pledge of or change in equity interests (during

the most recent fiscal year or during the current fiscal year up to the date of

publication of the annual report) by a director, supervisor, managerial officer, or

shareholder with a stake of more than 10 percent during the most recent fiscal

year or during the current fiscal year up to the date of publication of the annual

report ................................................................................................................................ 124

9. Relationship information, if among the 10 largest shareholders any one is a related

party, or is the spouse or a relative within the second degree of kinship of another ....... 126

10. The total number of shares and total equity stake held in any single enterprise by

the company, its directors and supervisors, managerial officers, and any

companies controlled either directly or indirectly by the company ................................. 128

IV. Capital Overview................................................................................................................... 129

1. Capital and Shares ............................................................................................................ 129

2. Corporate Bonds .............................................................................. 錯誤! 尚未定義書籤。

3. Preferred Shares ................................................................................................................ 136

4. Global Depository Receipts ................................................................ 錯誤! 尚未定義書籤。

5. Employee Stock Options...................................................................................................... 136

6. Status of New Shares Issuance in Connection with Mergers and Acquisitions .................. 136

7. Financing Plans and Implementation ................................................................................... 136

V. Operational Highlights ......................................................................... 錯誤! 尚未定義書籤。

1. Business Activities ............................................................................................................... 138

2. Market and Sales Overview ................................................................................................. 149

3. The Number, Average Years of Service, Average Age and Educational Attainment

of the Employees of the Company in the Last Two Years and by the Print Date of

the Annual Report ............................................................................................................ 158

4. Environmental Protection Expenditure ................................................................................ 158

5. Labor Relations .................................................................................................................. 159

6. Important Contracts.......................................................................................................... 161

VI. Financial Information ........................................................................................................... 162

1. Condensed Balance Sheet and Statement of Comprehensive Income of the Last Five

Years ................................................................................................................................ 162

2. Five-Year Financial Analysis .............................................................................................. 169

3. Audit Committee’s Report for the Most Recent Year ......................................................... 177

4. Financial statements for the most recent year ...................................................................... 178

5. Parent company only financial statements audited by CPAs for the most recent year ........ 361

6. If the Company and its associates have experienced financial difficulties in the most

recent year and by the print date of the annual report, the impact on the financial

position of the Company shall be specified ..................................................................... 362

VII. Review of Financial Conditions, Financial Performance, and Risk Management . 363

1. Financial Conditions ............................................................................................................ 363

2. Financial Performance ...................................................................................................... 364

3. Analysis of Cash flow .......................................................................................................... 365

4. The Impact of Major Capital Expenditures on Financial Operations .................................. 366

5. Investment Policy in the Most Recent Year, Main Causes for Profits or Losses,

Improvement Plans and Investment Plans for the Coming Year ..................................... 366

6. Analysis and Assessment of Risks ....................................................................................... 368

7. Other important matters .................................................................................................. 373

VIII. Special Disclosure .............................................................................................................. 374

1. Information of the Associates .............................................................................................. 374

2. Private Placement Securities in the Most Recent Years ...................................................... 376

3. Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent

Year .................................................................................................................................. 376

4. Other Necessary Items to Be Supplemented ........................................................................ 376

IX. Matters that Have Significant Effect on Shareholders' Equity or the Price of

Securities ................................................................................................................................ 378

1

I. Report to Shareholders

Dear shareholders,

We would like to thank you for attending our annual shareholders' meeting and

would like to express our sincere welcome on behalf of Caesar Sanitary Ware. The

following is a report of the Company's operating results for the year ended December 31,

2020 and its operating plan for the year ended December 31, 2021.

1. Operating Performance in 2020

(1) Business Plan Implementation Results

For the year ended December 31, 2020, the Company's consolidated

operating revenues were NT$2,306,521 thousand, a decrease of 1.22%

compared to NT$2,334,926 thousand for the year ended December 31, 2009;

consolidated net income was NT$220,056 thousand, an increase of 22.35%

compared to NT$179,852 thousand for the year ended December 31, 2009;

consolidated earnings per share was NT$3.04. Consolidated operating income

remained at the same level as the same period last year. Many retail stores in

Vietnam were temporarily closed due to the impact of the epidemic, which

affected operating income and gross profit. In Taiwan, Taichung and

Kaohsiung sales offices were established to further develop the local market,

resulting in an increase in consolidated net income compared to the same

period last year.

(2) Budget implementation

The Company did not publicly disclose its financial forecast in 2020.

(3) Financial situation and profitability analysis

Unit: NT$ thousands

Fiscal year

Item FY2019 FY2020

Percentage

increase

(decrease)

Financial

situation

Operating revenue 2,334,926 2,306,521 -1.22

Gross operating profit 701,683 734,168 4.63

Net operating profit 246,713 289,046 17.16

Net profit before tax 245,543 289,575 17.93

Profitability

Return on assets (%) 7.73 8.92 15.39

Return on equity (%) 10.60 12.91 21.79

Ratio to

paid-in

capital (%)

Operating

profit 33.98 39.81 17.16

Pretax

profit

margin

33.82 39.89 17.95

2

Profit margin (%) 7.70 9.54 23.90

Earnings per share (NT$) 2.48 3.04 22.58

(4) Research and development status

Our research and development can be divided into two main areas, one is

the improvement of production process and the other is the development of

new products.

1. Production process improvement

(1) The single toilet and medium and large toilets are glazed inside the

lead-in pipe to make the inside of the pipe less dirty and to improve the

flushing efficiency.

(2) Optimize the glaze of porcelain to improve the surface anti-pollution

efficiency and the brightness of porcelain glaze.

(3) Complete automatic embryo feeding system from high pressure

production to oil inspection section.

2. New Product Development

(1) For example, the toilet combines the new generation of intelligent ion

sensor technology, ozone sterilization and deodorization technology,

Microbubble micro bubble shower to achieve deep skin cleansing and

moisturizing effect, and the development of computer toilet and

computer toilet cover with advanced functions. In the future, we will

work together with Biophysical to develop a series of long-lasting

germ-killing and cleaning related products for the development of

technological sanitary ware.

(2) In response to the development of the epidemic and the improvement of

people's quality of life, we have developed a series of ozone sterilization

products (toilet flush and sensor faucet) for public spaces to improve the

quality of public hygiene.

(3) The product design is developing towards the concept of serialization

and overall bathroom space supporting, and the product items are

streamlined, eliminating old styles and moving towards a fashionable

and simple style.

(4) In response to the mainstream market trend of bathroom storage and

basin cabinet set in the future, our company has developed various new

FFC cabinet basins with FFC technology in 2018. After the production of

the bath cabinet factory, the modular design has the advantage of

lowering the cost and speeding up the development of styles and speed.

The development of new products will continue to develop new

products that meet the needs of the market through the concepts of color

diversification, combination and matching, and space expansion.

3

2. Business Plan for 2021

(1) Business objectives

1. We continue to refine our production technology and actively develop new

products and innovative designs to enhance product quality and value.

2. To increase customer satisfaction, we combine product advantages, flexible

combination solutions and prompt service to become the best choice for

consumers.

3. We attach importance to talent training, create a good working environment

and development system, and cultivate talents as the cornerstone of

sustainable management.

4. We care about environmental protection, use green technology to reduce the

consumption of electricity and water resources, improve the product

manufacturing process to reduce the impact on the environment, protect the

health of consumers, and do our part for the earth.

5. The company operates with integrity and pragmatism, and upholds the

business philosophy of "quality first and customer satisfaction",

continuously investing in product development and innovation to bring

consumers affordable luxury bathing experience, and sharing the business

results with shareholders, employees and the public, gradually enhancing

corporate value.

(2) Sales forecast and its basis

The Company did not publicly disclose its financial forecast for FY2021.

(3) Important Production and Marketing Policies

1. The bath cabinet factory and the faucet factory have been completed and

opened. When the production capacity is gradually put in place, the benefits

are expected to ferment and further increase the sales revenue of the

porcelain and water categories.

2. By utilizing FFC's technological advantages, we are able to manufacture

high-end technology products and increase the price range of our products

in order to position ourselves in the high-priced market.

3. We also set up production plans, coordinate with sales policies and sales

forecasts, effectively control the quantity and amount of inventory, provide

sufficient safe inventory, and eliminate ineffective and stagnant inventory in

a timely manner.

4. Through media advertisements and the establishment of physical

showrooms, the Company has been able to showcase its achievements in

manufacturing technology in recent years and has developed a wide range

of high quality basins, custom-made bath cabinets and technological bath

products to boost consumers' desire to purchase Caesar bath products and

stimulate the growth of sales revenue.

3. Future development strategy for the Company

4

The Company has been developing its production, sales and research and

development capabilities in a stable and sound manner under the important

premise of risk control. Vietnam is a member of the non-tariff organization of the

Association of Southeast Asian Nations (ASEAN) and has actively signed economic

cooperation agreements with other countries around the world. The ASEAN Free

Trade Area has gradually entered into zero tariff since 2014.

We will continue to expand into the Southeast Asian market. Currently, we

have local agents in Cambodia, the Philippines and Malaysia to operate our brand

business, and we will continue to develop agents in Singapore, Indonesia and

Myanmar, and we are planning to expand our OEM business in Europe and the

U.S., so that we can develop our brand and OEM business in a dual way to gain a

larger market share.

4. The impact of the external competitive environment, regulatory environment and

macroeconomic conditions

Although the VND has been depreciated in recent years due to the influence of

the U.S. monetary policy, the international political and economic situation is

expected to become more stable in the future, and the VND will slowly appreciate

slightly, which is expected to reduce the impact of exchange rate differences. The

Vietnamese government has also been actively promoting regional economic

integration in recent years, and the overall economic environment has been

improving year by year, and the national income has been increasing year by year.

Looking at the overall environment in Taiwan, real estate sales are growing

steadily, and the recovery of the construction industry is driving demand for

bathroom equipment and the momentum of the repair market.

In recent years, the Company has continued to focus on the development of

energy-saving and carbon-reducing green energy products and long-lasting

anti-bacterial cleaning technologies, increasing the number of products in the

environmental protection and technology categories, and applying innovative

technologies in the field of life, in order to increase business revenue and fulfill

social responsibility.

In view of the increasingly fierce competition in the bathroom industry,

enterprises that fail to keep up with the changes of the times will certainly face

elimination. Therefore, the company will always respond to changes in the

environment, laws and regulations, and the overall economy by pursuing more

rapid response capabilities, strengthening the development of high-value products,

improving product quality, reducing competition from inferior products at reduced

prices, and deepening customers' trust in the brand image so that Caesar will

become a sustainable enterprise, and strive to achieve a sustainable business in

2021.

5

Finally, we would like to thank our shareholders once again for their support and

encouragement to Sanitar Co., Ltd. and send our best wishes.

Best wishes

Good health, all the best

Chairperson HSIAO,

CHUN-HSIANG

6

II. Company Profile

1. Date of Incorporation

Jan. 26, 1988

2. Company History

1988 Established as San Yuh Industrial Co., Ltd., the former company of

Sanitar Co., Ltd., with a paid-in capital of NT 1,200 thousand.

1996 Investment in 18.75% of Vietnam Caesar Sanitary Wares Joint Stock

Company’s shares, with the main businesses on the production and

sales of sanitary equipment.

1997 Establishment and operation commencement of Porcelain Phase I of

Vietnam Caesar Sanitary Wares Joint Stock Company.

1999 Establishment of the Ho Chi Minh branch and Hanoi branch of

Vietnam Caesar Sanitary Wares Joint Stock Company.

Attainment of ISO-9001 certification.

Cash capital increase of NT$105,000 thousand, amounting paid-in

capital to NT$160,000 thousand after the capital increase.

2002 Establishment of Da Nang Branch of Vietnam Caesar Sanitary Wares

Joint Stock Company.

2003 Name changed to Sanitar Co., Ltd.

Establishment of the Bathtub Plant of Vietnam Caesar Sanitary Wares


2004 Establishment of Bronze Plant of Vietnam Caesar Sanitary Wares


2007 Transfer of surplus to the capital increase of NT 40,000 thousand

amounting paid-in capital to NT$160,000 thousand after the capital

increase.

2008 Inauguration of the new office building of Ho Chi Min Head Office.

Inauguration of the new office building of Da Nang Branch Office.

2009 Cash capital increase of NT 300,000 thousand amounting paid-in capital

to NT 500,000 thousand after the capital increase.

Investment in 99.99% of Vietnam Caesar Sanitary Wares Joint Stock

Company’s shares, with the main businesses on the production and

sales of sanitary equipment.

2010 Transfer of surplus to the capital increase of NT 145,000 thousand

amounting paid-in capital to NT 645,000 thousand after the capital

increase.

2011 The Financial Supervisory Commission of the Executive Yuan

approved the first public offering of stocks and the listing on the

Taiwan Stock OTC market.

Vietnam Caesar Sanitary Wares Joint Stock Company had a capital

increase of about NT 101,219 thousand, amounting paid-in capital to

NT 476,419thousand after the capital increase.

2012 Vietnam Caesar Sanitary Wares Joint Stock Company had a capital

7


NT 573,140 thousand after the capital increase.

Establishment of the Porcelain Phase II Plant of Vietnam Caesar

Sanitary Wares Joint Stock Company, with German energy-saving

and environmentally friendly furnaces as the main equipment.

2013 Cash capital increase of NT 81,000 thousand amounting paid-in capital to


Stock listed approved by Taiwan Stock Exchange Corporation.

2014

2018

2019

Vietnam Caesar Sanitary Wares Joint Stock Company had a capital



Inauguration of Zaoqiao Logistics Center.

Expansion of Bronze Plant of Vietnam Caesar Sanitary Wares Joint

Stock Company.

Establishment of Wardrobe Plant of Vietnam Caesar Sanitary Wares


Inauguration of the new office building of Hanoi Branch Office.

2020 Investment in 18.20% of shares of Amsalp Biomedical Corporation,

with main business on the authorization of sterilization technology

for sanitary equipment.

Investment in 51% of shares of Kaisheng Sanitary Ware Co., Ltd.,

with main business on the sales of various sanitary ware.

8

Shareholders' Meeting

Board of Directors

Monitor

Audit Office

Salary and Compensation

Committee

Nominating Committee

Chairman of the Board

Corporate Social

Responsibility Group

General Manager

Administration Office Sales Management

Office

Research and

Development Division

Financial Management

Division

III. Corporate Governance Report 1. Organization

(1) Organizational Structure

9

(2) Major Corporate Functions

Department Main businesses

Auditing Office

1. To help the Board and management to inspect and review the

deficiencies of the internal control system and to measure the

effectiveness and efficiency of operations.

2. To offer suggestions regarding the improvement of the internal

control system so that the system can be implemented effectively.

3. To conduct annual audit plans, internal control self-assessment,

and project auditing.

Research &

Development

Department

1. To have a comprehensive understanding of the applications of new

technologies and to assist with the updates of process technology and

product optimization.

2. To collect and analyze market and product tendencies and to plan

and develop related new products according to the company's brand

positioning.

3. To coordinate product design, management, and development.

4. To execute and maintain various patents, certifications, labels, etc.

5. To develop and assess the new suppliers, and to assist in finding

products with advantageous pricing.

Business

Management

Department

1. To formulate and execute the annual business goals and policies for

the domestic and foreign markets.

2. To develop domestic and foreign markets and promote business.

3. To formulate product sets, product profit rate, and sales pricing.

4.To build brand reputation, formulate advertisement plans, and

prepare marketing copywriting and catalogs for the domestic and

foreign markets.To establish online business strategies and set the

overall planning for the e-commerce cash flow, logistics, and

after-sales service.

Financial

Management

Department

1. Budget preparation and management.

2. Accounting affairs, as well as the preparation and analysis of the

consolidated financial statements.

3. Financial management, capital planning and control, and foreign

exchange operation management.

4. Tax affairs and operations.

5. Stocks, corporate governance, announcement, declaration, and

major information release.

6. Relationship maintenance between the Company spokespersons

and investors.

7. Information security planning and execution, information system

writing and maintenance, and computer software/hardware

purchase and maintenance.

10

Administrative

Management

Department

1. Product quality evaluation, as well as enhancement, suggestion,

and tracking of deficiencies.

2. Control and management of the procurement, sales, delivery, etc.,

and inventory record management.

3. Product maintenance services, maintenance data collection, and

data statistical analysis.

4. Personnel and general affairs.

11

2. Directors, Supervisors, President, Vice President, Assistant Managers and Heads of Departments and Branch Organizations (1) Directors and Supervisors

1. Information of Directors and Supervisors March 29, 2021

Title

Nationality/ Country of

Origin

Name Sex Date

Elected Term

Date First Elected

Shareholding when Elected

Current Shareholding

Spouse & Minor Shareholding

Shareholding by Nominee

Arrangement Experience (Education)

Other Positions

Executives, Directors or Supervisors who are

spouses or within two degrees of kinship

Note

Shares % Shares % Shares % Shares % Title Name Relation

Chairperson

ROC HSIAO, CHUN-

HSIANG Male 107.06.13

3 year

s 78.06.05

5,013,581 (Note 1)

6.91 5,013,581 6.91 1,010,069 1.39 0 0

Bachelor of International Business, Tunghai University

Chairman of the Board, legal representative of Vietnam Caesar Sanitary Wares Joint Stock Company. Chairman of the Board, legal representative of Kaisheng Sanitary Ware Co., Ltd. Director, legal representative of Amsalp Biomedical Corporation Representative Director of the Board of Slide Mei Yao International Co., Ltd.

Director TSAI,

MING-HSI

wife's

younger brother

No

Director ROC

CHANG,

YUNG-NAN

Male 107.06.13 3

years

88.06.30 2,881,975 3.97 2,881,975 3.97 174,491 0.24 0 0

Owner of Zhan-xin Ceramic Co., Ltd.

None No No No No

Director ROC TSAI,

MING-HSI

Male 107.06.13 3

years

104.06.17 1,336,195 1.84 1,573,195 2.17 495,067 0.68 0 0

Master of Applied Statistics, Fu Jen Catholic University

None Chairper

son

HSIAO, CHUN-

HSIANG

elder sister's

husband

No

12

Director ROC YU,

CHIH-HSIN

Male 107.06.13 3

years

101.06.20 41,000 0.06 25,000 0.03 0 0 0

0

Banking and Insurance Division, Takming Business School

Chairman of the Board of Yu’s Electric Co., Ltd.

No No No No

Independent

Director ROC

CHEN, SHIH-HSIUNG

Male 107.06.13 3

years

101.06.20 0 0 0 0 0 0 0 0

Master of Accounting, Shanghai University of Finance and Economics Department of Electrical Engineering, Provincial Taipei Institute of Technology

Associate Accountant of Quancheng Accounting & Associates

No No No No

Independent

Director ROC

HSU, FENG-Y

UAN Male 107.06.13

3 year

s 101.06.20 0 0 0 0 0 0 0 0

Bachelor of Law, National Taiwan University

Director of Fa-yu Law Firm

No No No No

Supervisor

ROC LI,

WEN-YAO

Male 107.06.13 3

years

90.06.30 193,302 0.27 193,302 0.27 135,745 0.19 0 0

Business Administration Division of Tamsui Institute of Business Administration

Owner of Wen-yao Land Administration Agency

No No No No

Supervisor

ROC LIN,

KUO-HUA

Male 107.06.13 3

years

96.06.30 2,572,574 3.54 2,572,574 3.54 685,409 0.94 0 0

Ph. D. of Law, East China University of Political Science and Law Master of Science, Chinese Culture University

General Manager of Shanghai Archie Industrial Co., Ltd.

No No No No

Supervisor

ROC LIANG, HSIN-Y

UNG Male 107.06.13

3 year

s 92.06.30 1,504,159 2.07 1,504,159 2.07 0 0 0 0

Civil Engineering Division of Nanya Institute of Technology

None No No No No

Note 1: 2,000,000 shares of "HSIAO, CHUN-HSIANG Trust Property Account", a delivery trust with reserved application rights. Note 2: As of the printing date of the annual report, none of the above-mentioned persons have been terminated.

13

The major shareholders of corporate shareholders Not applicable.

2. The major shareholders of the corporate shareholders of which the major shareholders are corporations Not applicable.

3. Professional qualifications and independence analysis of directors and supervisors March 29, 2020

Criteria

Name

Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience

Independence Criteria (Note) Number of

Other Public Companies in

Which the Individual is Concurrently Serving as an Independent

Director

An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University

A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company

Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company

1 2 3 4 5 6 7 8 9 10 11 12

HSIAO, CHUN-H

SIANG

0

CHANG, YUNG-N

AN

0

TSAI, MING-HS

I

0

YU, CHIH-HSI

N

0

CHEN, SHIH-HSI

UNG

0

HSU, FENG-YU

AN

0

LI, WEN-YA

O

0

LIN, KUO-HU

A

0

14

LIANG, HSIN-YU

NG

0

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

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

（2）Not a director or supervisor of the Company or any of its affiliates (not applicable in cases where the person is an independent director of the Company, its parent company, or

any subsidiary in which an independent director can also be the independent director) Not a director or supervisor of the Company or any of its affiliates (not applicable in cases

where the person is an independent director of the Company, its parent company, or any subsidiary in which an independent director can also be the independent (not

applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which an independent director can also be the

independent director these companies mentioned above in accordance with the Act or local laws and regulations).

（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 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.

（4）Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three subparagraphs.

（5）Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of outstanding shares of the Company, or who holds shares

ranking in the top five holdings, or who appoints a representative to be outstanding shares of the Company, or who holds shares ranking in the top five holdings, or who

appoints a representative to be the director or supervisor of the Company in accordance with Paragraph 1 or 2, Article 27 of the Company Act (not applicable in cases where the

person is an independent director) cases where the person is an independent director of the Company, its parent company, or any subsidiary in which an independent director

can also be the independent director these (not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which

an independent director can also be the independent director these companies mentioned above in accordance with the Act or local laws and regulations). regulations).

(6) A majority of the Company's director seats or voting shares are not controlled by the same person: a director, supervisor, or employee of any other company (not applicable in cases

where the person is an independent director of the Company, its parent employee of any other company (not applicable in cases where the person is an independent director of

the Company, its parent company, or any subsidiary in which an independent director can also be the independent director these companies mentioned) (not applicable in cases

where the person is an independent director of the Company, its parent company, or any subsidiary in which an independent director can also be the independent director these

companies mentioned above) in accordance with the Act or local laws and regulations).

(7) The chairperson, president, or person holding an equivalent position of the Company are not the same person or spouses: a director (or governor), supervisor, or employee of any

other company or institution (not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which an independent

director can also be an independent director of the Company, its parent company, or any subsidiary in which an independent director can also be the (not applicable in cases

where the person is an independent director of the Company, its parent company, or any subsidiary in which an independent director can also be the independent director these

companies mentioned above in accordance with the Act or local laws and regulations).

(8) Not a director, supervisor, managerial officer, or shareholder holding 5% or more of the shares, of a specified company or institution that has a financial or business relationship

with the Company (this limit does not apply to where a specified company or institution holds 20% or more but not more than 50% of the total number of issued shares of or

institution holds 20% or more but not more than 50% of the total number of issued shares of the Company nor apply to independent directors appointed in accordance with the

Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.)

(9) Not a professional individual who, or an owner, partner, director, supervisor, or managerial officer of a sole proprietorship, partnership, company, or institution that, provides

auditing services to the Company or any affiliate of the Company, or that provides commercial, legal, financial, accounting or related services to the Company or any affiliate of

the Company for which the provider in the past 2 years has received provider in the past 2 years has received cumulative compensation not more than NT$500,000, or a spouse

thereof; provided, this restriction does not apply to a member restriction does not apply to a member of the remuneration committee, public tender offer review committee, or

special committee for merger/consolidation and acquisition for merger/consolidation and acquisition, who exercises powers pursuant to the Securities and Exchange Act or to

the Business Mergers and Acquisitions Act or related laws or regulations.

15

(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.

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

16

(2) President, Vice President, Senior Manager, Heads of Departments March 29, 2021

Title

Nationality/

Country of

Origin

Name Sex Date

Elected

Shareholding Spouse & Minor

Shareholding Shareholding by

Nominee Arrangement Experience (Education) Other Positions

Managers who are Spouses or

Within Two Degrees of

Kinship

Note

Shares % Shares % Shares % Title Name

Relation

President ROC CHEN,

WEI-CHIH

Male

105.01.01 866,489 1.19 314,000 0.43 0 0

Deputy General

Manager of Vietnam

Caesar Sanitary Wares

Joint Stock Company

(subsidiary).

Bachelor of Physics,

Tamkang University

General Manager of

Vietnam Caesar

Sanitary Wares Joint

Stock Company

(subsidiary).

Director, legal

representative of

Kaisheng Sanitary

Ware Co., Ltd.

Director of Bodok

Trading Co., Ltd.

No No No No

Vice President ROC YEN,

WEN-HUNG

Male

96.01.01 345,000 0.48 114,419 0.16 0 0

Manager of Material

Department of Sanitar

Co., Ltd.

High school

None No No No No

COO ROC KU,

FENG-KUEI

Male

97.03.10 115,892 0.16 0 0 0 0

Associate Manager of

STG

Bachelor of Chinese

Language, Fu Jen

Catholic University

None No No No No

CFO and Senior Corporate

Governance Officer

ROC CHEN,

YU-CHUAN

Female

104.03.18

108.11.08 143,222 0.20 0 0 0 0

Manager of Finance

Department of Sanitar

Co., Ltd.

Master of Advanced

Management Graduate

Schol, National

None No No No No

17

Chengchi University

Chief internal auditor (Note 1)

ROC CHEN, CHIEN-HSUN

Male

2020.12.24

0 0 0 0 0 0

Certified accountant in

Taiwan

Audit Supervisor of

AC&C International

Co., Ltd.

Investment Associate

Manager of AC&C

International Co., Ltd.

Audit Manager of

Louisa Professional

Coffee Ltd.

Audit

supervisor of

Vietnam Caesar

Sanitary Wares

Joint Stock

Company

(subsidiary).

No No No No

Note 1: Passed by the Board in the board meeting held on Dec. 24, 2020. 3.

18

3. Remuneration of Directors, Supervisors, President, and Vice President in the Most Recent Fiscal Year (1) Remuneration of Directors and Independent Directors

Unit: NT$ thousands

Title Name

Remuneration of Directors Ratio of Total Remuneration (A+B+C+D) to Net Income (%)

Relevant Remuneration Received by Directors Who are Also Employees Ratio of Total

Compensation (A+B+C+D+E+

F+G) To Net Income (%)

Compensatio

n Paid to Director

s from an Investe

d Company Other

than

the Company'

s Subsidiary

Base Compensation

(A)

Severance Pay (B)

Bonus to Directors

(C)

Allowances (D)

Salary, Bonuses, and Allowances

(E)

Severance Pay

(F) (Note) Employee Bonus (G)

The company

All companies

in the consolidated

financial statements

The company

All companies

in the consolidated financial statements

The company

All companies


The company

All companies


The company

All companies


The company

All companies


The company

All companies


The Company

Companies in the consolidated


The Comp

any

All companies in

the consolidated financi

al statem

ents

Cash Stock Cash Stock

Chairpers

on

HSIAO,

CHUN-HSI

ANG

3,361 4,024 0 0 1,167 1,167 70 70 2.09 2.39 0 0 0 0 0 0 0 0 2.09 2.39 No

Director

CHANG,

YUNG-NA

N

240 240 0 0 583 583 60 60 0.40 0.40 0 0 0 0 0 0 0 0 0.40 0.40 No

Director TSAI,

MING-HSI 240 240 0 0 583 583 70 70 0.41 0.41 0 0 0 0 0 0 0 0 0.41 0.41 No

Director YU, 240 240 0 0 583 583 70 70 0.41 0.41 0 0 0 0 0 0 0 0 0.41 0.41 No

19

CHIH-HSIN

Independ

ent

Director

CHEN,

SHIH-HSIU

NG

240 240 0 0 583 583 90 90 0.41 0.41 0 0 0 0 0 0 0 0 0.41 0.41 No

Independ

ent

Director

HSU,

FENG-YUA

N

240 240 0 0 583 583 90 90 0.41 0.41 0 0 0 0 0 0 0 0 0.41 0.41 No

Please describe the policy, system, criteria and structure for the remuneration of independent directors, and the relevance to the amount of remuneration based on the

responsibilities, risks and time commitment: please refer to pages 10~16 of this annual report.

2. In addition to the above table, the remuneration received by the directors of the Company for services rendered to all companies in the financial statements (such as serving as consultants to non-employees) in the most recent year: 0

Note: This is the amount provided for retirement pension expense.

20

(2) Remuneration of Supervisors Unit: NT$ thousands

Title Name

Remuneration of Supervisor Ratio of Total Remuneration (A+B+C) to Net Income (%)

Compensation Paid to Directors from an

Invested Company Other than the

Company's Subsidiary

Salary (A) Bonus (B) Income from Professional

Practice (C)

The company All companies in the

consolidated financial statements

The company All companies in the consolidated






Supervisor LI,

WEN-YAO 240 240 583 583 70 70 0.41 0.41 No

Supervisor LIN,

KUO-HUA 240 240 583 583 70 70 0.41 0.41 No

Supervisor LIANG,

HSIN-YUNG 240 240 583 583 70 70 0.41 0.41 No

(3) Remuneration of the President and Vice President Unit: NT$ thousands

Title Name

Salary (A) Severance Pay (B) Bonuses and

Allowances (C) Employee Bonus (D)

Ratio of Total Compensation

(A+B+C+D) To Net Income (%)

Compensation Paid to

Directors from an Invested

Company Other than the

Company's Subsidiary

The company

All companies

in the consolidated


The company

All companies

in the consolidated


The company

All companies

in the consolidated


The company All companies in the

consolidated financial statements

The company

All companies

in the consolidated


Cash Stock Cash Stock

President CHEN,

WEI-CHIH 1,909 2,644 108 108 1,511 1,572 385 0 385 0 1.78 2.14 No

Vice President

YEN, WEN-HUNG

1,650 1,650 108 108 535 535 274 0 274 0 1.17 1.17 No

COO KU,

FENG-KUEI 1,590 1,590 95 95 582 582 285 0 285 0 1.16 1.16 No

CFO CHEN,

YU-CHUAN 1,398 1,398 97 97 505 505 281 0 281 0 1.04 1.04 No

21

Note: This is the amount provided for retirement pension expense.

22

(4) Name of the Managers Who Distribute the Employee Bonus and the Situation

of Distribution

Unit: NT$ thousands; March 9, 2021

Title Name In Stock In Cash Total

Ratio of Total

Amount to Net

Income (%)

Man

ager

President CHEN,

WEI-CHIH

0 1,225 1,225 0.56

Vice

President

YEN,

WEN-HUNG

COO KU,

FENG-KUEI

CFO CHEN,

YU-CHUAN

Note: The scope of application of the Manager, as stipulated by the Securities

and Futures Commission, Ministry of Finance, Taiwan, March 27, 2003,

letter order No. 0920001301, is as follows.

(1) General Manager and equivalent

(2) Vice President and equivalent

(3) Associate and equivalent

(4) Head of Finance Department

(5) Accounting department head

(6) Other persons who have the right to manage and sign for the company

(5) This is the analysis of the ratio of total remuneration paid by the Company and

by all companies included in the consolidated financial statements for the

two most recent fiscal years to directors, supervisors, president and vice

presidents of the Company The relationship among of the policy, The

relationship among of the policy, standard and combination for remuneration

payment, remuneration determining process, operating performance and

future risk is The relationship among of the policy, standard and combination

for remuneration payment, remuneration determining process, operating

performance and future risk is explained.

1. The ratio of total remuneration for the two most recent fiscal years to

directors, supervisors, president and vice presidents of the Company to the

net income after tax on the parent company only or individual financial

statements

Fiscal year

2019 2020 The ratio of total

remuneration paid by

The ratio of total


The ratio of total


The ratio of total


23

Title

the Company to the

net income after tax

on the parent

company only or

individual financial

statements (%)

all companies

included in the

consolidated financial

statements to the net

income after The

ratio of total

remuneration by all

companies included

in the consolidated


to the net income

after tax on the

parent company only

or individual


(%)

the Company to the

net income after tax

on the parent

company only or

individual financial

statements (%)

all companies

included in the

consolidated financial

statements to the net

income after The

ratio of total

remuneration by all

companies included

in the consolidated


to the net income

after tax on the

parent company only

or individual


(%) Director 4.51 4.89 4.13 4.43

Supervisor 1.32 1.32 1.22 1.22 President and Vice President

4.62 5.09 5.14 5.50

24

2. The policies, standards, and portfolios for the payment of remuneration

(1) Directors' and supervisors' remuneration

The Company may pay remuneration to the directors and

supervisors for the performance of their duties, regardless of operating

profit or loss, in accordance with the Company's Articles of

Incorporation, which authorize the Board of Directors to determine the

value of their participation in and contribution to the Company's

operations, taking into account the market rate in the industry. In

addition, if the Company has a pre-tax profit for the year, the

remuneration shall be distributed in accordance with the Company's

Articles of Incorporation. The remuneration package for directors and

supervisors consists of salary, remuneration to directors and supervisors

and attendance fees.

(2) Remuneration for General Manager and Deputy General Manager

The President and Vice President shall be appointed and

compensated in accordance with the Company's Articles of

Incorporation and the Board of Directors' resolution. The compensation

standards for managers are based on their individual performance,

contribution to work, annual operating results, hard work, and

compliance with company policies, as well as on market standards in

the industry. The manager's compensation package consists of salary,

bonus and employee compensation.

3. Procedures for fixing remuneration

The remuneration policies and systems of the Company's directors and

supervisors are evaluated by the Company's Nomination Committee and

Remuneration Committee in accordance with the Company's "Performance

Evaluation Method", and recommendations are made to the Board of

Directors for approval by the Board of Directors. The Company's

Nomination Committee and Compensation Committee also regularly review

the performance and compensation of directors and supervisors.

4. Correlation with operating performance and future risks

The remuneration of the Company's directors, supervisors and

managers shall be determined with reference to market standards in the

industry, taking into account individual performance, contribution to work

and the Company's operating results, and therefore the Company's

operating results and changes in market conditions are related to

remuneration. The content and amount of compensation for directors,

supervisors and managers will not deviate from financial performance and

will not induce directors and managers to engage in behavior that exceeds

the Company's risk appetite in pursuit of compensation.

25

The correlation between performance evaluation results and

compensation for directors, supervisors and managers is as follows.

26

(1) Performance Evaluation Method

Target Criteria Description

Directors and

Supervisors

1. The Company has established the "Board of

Directors' Performance Evaluation Method", and

individual directors and supervisors will complete

self-assessment questionnaires for internal

evaluation after the end of the year

The self-assessment self-evaluation questionnaire covers the

following six major aspects, with a total of 23 indicators.

A. Mastery of the company's objectives and tasks

B. Awareness of Directors' Duties

C. Degree of participation in the company's operations

D. Internal Relationship Management and Communication

E. Professional and Continuing Education of Directors

F. Internal control

2. The Company has established a Nominating

Committee, which shall be evaluated in

accordance with the "Nominating Committee

Organizational Procedures".

After the year-end, the Nomination Committee will evaluate the

performance of each director and supervisor and report to the

Board of Directors in accordance with the "Nomination Committee

Organizational Procedures".

Managers 1. Annual operating results of the Company The year-end bonus is determined by the president with reference

to the annual operating results of the company.

2. Personal annual performance The manager's performance will be evaluated by the manager's

supervisor in accordance with the annual work performance, and

the evaluation items are as follows.

A. Mastery of the company's objectives and tasks

B. Leadership

C. Judgment

D. Manager's professional and continuing education

27

(2) Performance Evaluation Results

A. Directors and Supervisors (Level 1 to 5, 5 being the best)

Title Name

A. Mastery of

the company's

objectives and

tasks

B. Awareness

of Directors'

Duties

C. Degree of

participation in

the company's

operations

D. Internal

Relationship

Management

and

Communication

E. Professional

and

Continuing

Education of

Directors

F. Internal

control

Chairperson HSIAO,

CHUN-HSIANG

5 5 5 5 5 5

Director CHANG,

YUNG-NAN

5 4 5 5 5 5

Director TSAI,

MING-HSI

5 5 5 4 5 5

Director YU, CHIH-HSIN 5 5 4 5 5 5

Independent

Director

CHEN,

SHIH-HSIUNG

5 5 5 4 5 5

Independent

Director

HSU,

FENG-YUAN

5 5 5 5 5 4

Supervisor LI, WEN-YAO 5 4 5 5 5 5

28

Supervisor LIN, KUO-HUA 5 5 5 4 5 5

Supervisor LIANG,

HSIN-YUNG

5 4 5 5 5 5

B. Manager (Level 1 to 5, 5 being the best)

Title Name

A. Mastery of the

company's objectives and

tasks

B. Leadership C. Judgment D. Manager's professional

and continuing education

President CHEN,

WEI-CHIH

5 5 5 5

Vice

President

YEN,

WEN-HUNG

5 5 4 4

COO KU,

FENG-KUEI

5 5 4 5

CFO CHEN,

YU-CHUAN

5 5 4 5

29

(3) Relevance and reasonableness of performance evaluation results and

salary and compensation

A. Directors and Supervisors

a. Compensation: The compensation is based on the degree of

participation and value of contribution to the Company's operations

and the market rate in the industry. Based on the results of the

performance evaluation, the directors and supervisors of the

Company have performed their relevant functions and their

compensation is reasonable.

b. Compensation: In accordance with the Company's Articles of

Incorporation, if the Company has a pre-tax net profit for the year,

no more than 2% shall be set aside as remuneration to directors and

supervisors. 2 percent of the remuneration to directors and

supervisors for 2020 is NT$5,833,000, and the remuneration to

individual directors and supervisors shall be allocated in proportion

to their individual income bases, with one base for each of

outstanding performance and special contribution to the Company's

business. Except for the Chairman of the Board of Directors who

makes special contributions to the Company's business due to his

management position, who is allocated two bases, the other directors

and supervisors are allocated one base each.

The average attendance rate of the Board of Directors (excluding

supervisors) for 2020 was 97.62%, and the average attendance rate of

supervisors on the Board of Directors for 2020 was 100%.

B. Manager

a. Salary: The salary is determined based on the length of service,

contribution and hard work, and with reference to the market

standard in the industry. All of our managers have management,

business, and financial experience, and have a certain level of

performance in each of the performance indicators, so their salaries

are reasonable.

b. Bonuses: mainly year-end bonuses and operating bonuses. The

President is entitled to an operating bonus based on 0.5% of the

annual consolidated net income before tax; managers other than the

President are entitled to a year-end bonus based on monthly salary,

payment base and performance evaluation base. The operating

performance of the Company and the performance of individuals

are related to the bonus for managers.

(c) Employee compensation: According to the Company's Articles of

30

Incorporation, 2% to 5% of the Company's annual net income before

tax should be set aside as employee compensation, and the amount

of individual manager's compensation will be granted according to

the annual performance. 3% of employee compensation amounting

to NT$8,749 thousand was set aside in 2020. The remuneration to

managers was 0.56% and 0.59% of net income after tax for 2020 and

2019, respectively, which is still within a reasonable range.

31

4. Implementation of Corporate Governance

(1) Board of Directors

A total of 7 (A) meetings of the Board of Directors were held in FY2020.

The attendance of directors and supervisors was as follows:

Title Name Attendance

in Person (B) By Proxy

Attendance

Rate (%) [B/A] Remarks

Chairperson

HSIAO,

CHUN-HSI

ANG

7 0 100 No

Director

CHANG,

YUNG-NA

N

6 0 85.71

No

Director TSAI,

MING-HSI 7 0 100

No

Director YU,

CHIH-HSIN 7 0 100

No

Independent

Director

CHEN,

SHIH-HSIU

NG

7 0 100

No

Independent

Director

HSU,

FENG-YUA

N

7 0 100

No

Supervisor LI,

WEN-YAO 7 0 100

No

Supervisor LIN,

KUO-HUA 7 0 100

No

Supervisor

LIANG,

HSIN-YUN

G

7 0 100

No

Other mentionable items:

1. If there are circumstances referred to in Article 14-3 of the Securities and Exchange Act and

resolutions of the directors ' meetings objected to by independent directors or subject to

qualified opinion and recorded or declared in writing, If there are circumstances referred to in Article 14-3 of the Securities and Exchange Act and resolutions of the directors '

meetings objected to by independent directors or subject to qualified opinion and recorded

or declared in writing, the dates of the meetings, sessions, contents of motion, all

independent directors' opinions and the company 's response should be specified.

Board of

Directors Motions and follow-ups

Item listed in

Article 14-3

of Securities Exchange

Act

Objections

or qualified

opinions of independent

directors

The 1. Revision of the provisions of the “Articles V

32

thirteenth

meeting of

the 14th

Board of Directors on

2020.02.27

of Association”.

2. Revision of the provisions of the " Shareholders' Meetings Regulations".

V

3. Revision of the provisions of “Ethical

Operating Procedures and Conduct Guideline”.

V

4. 2019 Remuneration distribution for the

employees, the directors, and the

supervisors.

V

5. 2019 Business report and financial report V

6. 2019 Surplus distribution V

7. Formulation of “Internal Control System

Announcement”. V

8. Assessment of the independence and

competence of the public certified accountants.

V

9. Review of the directors and supervisors’

2019 continuing education status and 2020 continuing education plans.

V

10. Convention of 2020 shareholders’

general meeting. V

Opinions of independent directors: None

The Company’s response towards the opinions of the independent directors: None

Resolution: As consulted by the Chairman, all proposals were approved by

the directors present without objection.

The

fourteenth meeting of

the 14th


2020.03.27

1. Revision of the provisions of the “Articles of Association”.

V

2. Formulation of implementation of the

first repurchase of the Company’s shares. V

3. Convention of 2020 shareholders’ general meeting.

V

4. Kaohsiung business location housing

lease. V


The Company’s response towards the opinions of the independent

directors: None



The

fifteenth meeting of

the 14th


2020.05.06

1.Revision of the provisions of “Measures

for the Transfer of the First-time

Repurchase of the Shares to Employees”.

V

2.Revision of the provisions of the “Guideline of Corporate Governance

Practices”.

V

3.Revision of the provisions of “Regulations of Corporate Social Responsibility

Practices”.

V

4.Liability Insurance for the Directors,

Supervisors, and Key Employees. V

33

5.Financial institutions’ credit limit. V

6.Endorsement guarantee for Vietnam Caesar Sanitary Wares Joint Stock

Company (subsidiary).

V

7.Revision of the Company’s internal control system and internal audit practice

rules.

V





The

sixteenth

meeting of

the 14th

Board of

Directors on 2020.06.09

1. Establishment of the cash dividend distribution base date and cash dividend

payment date for the year 2020.

V

2. Revision of the 2019 remuneration payment of the directors and supervisors.

V

3. Revision of the 2019 remuneration

payment for the employees. V

4. Revision of the 2019 operating bonus payment.

V

5. Revision of CFO’s salary adjustment. V



directors: None

Resolution:

Motion 2 & 4: Except for the directors and supervisors whose personal

interests are involved in the motion who withdrew during the discussion

and resolution, the other directors present at the meeting approved the

proposals without objection after being consulted by the Chairman.

The rest of the proposals, after being consulted by the Chairman, were

approved by all directors present.

The seventeenth

meeting of

the 14th Board of

Directors on

2020.08.05

1.Revision of the provisions of “Board

Meeting Regulations”. V

2.Revision of the provisions of “Ethical

Conducts and Behaviors Guideline for the

Directors, Supervisors, and Managers”.

V

Revision of the provisions of “Measures for the Transfer of the First-time Repurchase

of the Shares to Employees”.

V

4.Endorsement guarantee for Vietnam Caesar Sanitary Wares Joint Stock

Company (subsidiary).

V

5.Kaohsiung exhibition center construction and decoration.

V

6.Recruitment of a manager for Product

R&D Center. V


34



directors: None



The

eighteenth

meeting of

the 14th


2020.11.04

1.Revision of the provisions of the " Shareholders' Meetings Regulations".

V

2.Revision of the provisions of “Director

and Supervisor Election Guideline”. V

3.Revision of the provisions of “Regulations for the Scope of Duties of Independent

Directors”.

V

4.Establishment of “Risk Management

Policy and Procedures”. V

Investment in a newly established

subsidiary in Taoyuan. V

6. Organizational structure adjustment. V



directors: None

Resolution: As consulted by the Chairman, all proposals were approved by the directors present without objection.

The

nineteenth

meeting of

the 14th Board of

Directors on

2020.12.24

1.Revision of the provisions of the “Articles

of Association”. V

2. Revision of the provisions of “Procedures for Asset Acquisition and Processing”.

V

3.Revision of the provisions of “Procedures

for Loaning Funds to Third Party”. V

4. Revision of the provisions of “Operating Procedures for Endorsement Guarantee”.

V

Revision of the provisions of “Board

Performance Assessment Rules”. V

Revision of the provisions of “Manager’s

Remuneration Rules”. V

Land and real-estate asset sales in Toufen

City, Miaoli County. V

Removal of the non-competition clause for managers.

V

Cash increase for Kaisheng Sanitary Ware

Co., Ltd. (subsidiary). V

Change of internal audit supervisor. V

11.Review of the Company’s directors’ and supervisors’ performance in 2020 and their

performance goals and remuneration in

2021.

V

12. 審 Review of the Company’s managers’ performance in 2020 and their performance

goals and remuneration in 2021.

V

13. Review of the 2020 year-end bonus distribution.

V

35


15. Formulation of the Company’s 2021 annual operation plan and budgeting.

V

16.Formulation of the Company’s 2021

audit plans. V

17.Special bonus distribution. V



Resolution

Motion 11: Except for the directors and supervisors whose personal

interests are involved in the motion who withdrew during the discussion

and resolution, the other directors present at the meeting approved the

proposals without objection after being consulted by the Chairman.

The rest of the proposals, after being consulted by the Chairman, were

approved by all directors present.

2. If there are directors' avoidance of motions in conflict of interest, the directors' names,

contents of motion, causes for avoidance and voting should be specified. If there are

directors' avoidance of motions in conflict of interest, the directors' names, contents of

motion, causes for avoidance and voting should be specified.

Name of Director Contents of Motion

Causes for

Avoidance of

Conflict of Interest

Situation of Voting

HSIAO,

CHUN-HSIANG

, CHANG,

YUNG-NAN,

TSAI,

MING-HSI, YU,

CHIH-HSIN,

CHEN,

SHIH-HSIUNG,

HSU,

FENG-YUAN

Review of the

remuneration plan for

directors and

supervisors in 2019

The content of the

motion concerns the

individual directors

listed on the left

The directors listed

on the left are

individually recused

from the discussion

and resolution, and

the remaining

directors present

will vote on the

resolution.

HSIAO,

CHUN-HSIANG

Review of the

Management Bonus

Plan for 2019

The content of the

motion concerns the


listed on the left


on the left are


from the discussion

and resolution, and

the remaining

directors present

will vote on the

resolution.

36

HSIAO,

CHUN-HSIANG

, CHANG,

YUNG-NAN,

TSAI,

MING-HSI, YU,

CHIH-HSIN,

CHEN,

SHIH-HSIUNG,

HSU,

FENG-YUAN

Reviewed the

performance of

directors and

supervisors in 2009

and the performance

targets and

remuneration for 2020

The content of the

motion concerns the


listed on the left


on the left are


from the discussion

and resolution, and

the remaining

directors present

will vote on the

resolution.

3. Disclosure of information on the period and duration of the Board of Directors'

self-evaluation, the scope, manner and content of the evaluation, and the implementation

of the Board of Directors' evaluation

Assessm

ent cycle

Assessment

period

Assessment

scope

Assessment

method Assessment content

Once

every

year

From

2020.01.01 to

2020.12.31

1.Assessment

of Board

performance.

2.Director

individual

performance

assessment.

3.Functional

committee

(Salary and

Remuneratio

n Committee

and

Nomination

Committee)

performance

assessment.

1.Board

internal

self-assessme

nt.

2.Director’s

self-assessme

nt.

1. Board performance

assessment”

（1） The degree of

participation in the

Company’s operations.

（2） The quality of the Board’s

decision making.

（3） The composition and

structure of the Board.

（4） The election and

continuing education of

the directors.

（5） Internal control.

2.Director’s performance

assessment:

（1） Mastering of the

Company’s goals and

missions.

（2） Acknowledgement of the

director’s duties.




（4） Operation and

communication in internal

relationships.

（5） Director’s professionalism

and continuing education.

（6） Internal control

37

1. Functional committees

(Remuneration and Salary

Committee and Nomination

Committee)’ performance

assessment:




（2） Acknowledgement of the

duties of the functional

committees.

（3） The quality of

decision-making of the

functional committees.

（4） The constitution of the

functional committees

and the election of the

members.

（5） Internal control.

4. Targets of enhanced functions of board of directors of the year and in the most recent year

(e.g. establishing an audit committee, enhancing information transparency, etc.) and

evaluation of implementation

Targets of enhanced functions of board of directors of the year and in the

most recent year (e.g. establishing an audit committee, The Board of

Directors has been working on the establishment of an audi t committee,

enhancing information transparency, etc.) and progress assessment:

(1) The Company's board of directors' meeting regulations are established in accordance

with the "Rules Governing the Meetings of the Board of Directors of Public

Companies", approved by the board of directors and presented to the shareholders'

meeting. The board of directors operates in accordance with the "Rules Governing the

Meetings of the Board of Directors" to implement corporate governance, improve

supervisory functions and strengthen management functions.

(2) All important resolutions of the Board of Directors are announced and reported on the

Market Observation Post System in accordance with the law, and are simultaneously

disclosed on the Investor Zone of the Company's website to provide investors with

relevant information through the Internet in order to protect shareholders' rights and

interests. The disclosure of financial and corporate governance information is an

important responsibility of the Company, and the Company faithfully fulfills its

obligations in accordance with the regulations of the stock exchange and relevant laws

and regulations.

(3) The Company regularly arranges continuing education programs for its directors and

supervisors each year in order to continuously enrich their knowledge and maintain

their core values and professional strengths and capabilities.

(4) The Company's Board of Directors approved the "Standard Operating Procedures for

Handling Directors' Requests" on March 21, 2019 to help directors make informed

decisions and perform their duties as directors and to enhance the effectiveness of the

Board of Directors.

38

(5) The Company's Board of Directors approved the purchase of liability insurance for the

Company's directors, supervisors and key employees on May 6, 2020, to reduce and

diversify the risk of material damage to the Company and its shareholders that may

result from errors or negligent acts, and the insurance coverage was completed on

June 1, 2020, in accordance with the law.

(6) On November 8, 2019, the Board of Directors approved the "Board of Directors'

Performance Evaluation Plan" to implement corporate governance and enhance the

functions of the Board of Directors and functional committees (Salary and

Compensation Committee and Nominating Committee) to establish performance

targets to enhance the efficiency of the Board of Directors' operations. The report of

the Board of Directors was submitted on March 9, 2021 and was disclosed in the

Investor Zone of the Company's website.

(7) The Board of Directors approved the establishment of the Nomination Committee on

November 8, 108, to improve the functions of the Board of Directors, functional

committees (Salary and Compensation Committee and Nomination Committee) and

strengthen the management mechanism of the Company.

(8) On November 8, 2019, the Board of Directors approved the designation of CHEN,

YU-CHUAN as the Senior Corporate Governance Officer, who has more than three

years of experience in financial, accounting and stock management of public

companies, to protect shareholders' rights and interests and strengthen the functions

of the Board of Directors.

(9) The Company has established and implemented a spokesperson system, with a

spokesperson and a proxy spokesperson to speak to the public, and has established a

standardized speaking procedure, and requires the Company's internal employees to

keep financial and business secrets and not to disseminate information to the public at

will. In the event of any change in the spokesperson or proxy spokesperson, the

information will be disclosed immediately.

39

(2) The Operation of the Audit Committee or the Participation of Supervisors in

the Board

1. The Company has not yet established an Audit Committee.

2. A total of 7 (A) meetings of the Board of Directors were held in FY2020.

The attendance of supervisors was as follows:

Title Name Attendance in

Person (B)

Attendance Rate (%)

(B/A) Remarks

Supervisor LI,

WEN-YAO 7 100

No

Supervisor LIN,

KUO-HUA 7 100

No

Supervisor LIANG,

HSIN-YUNG 7 100

No

Other mentionable items: 1. Composition and responsibilities of supervisors:

(1) Communications between supervisors and the Company's employees and

shareholders (e.g. communication channels and methods, etc.):

The Supervisor may contact the Company's employees and shareholders by

telephone or e-mail at any time if necessary. The Company invites the Supervisor

to attend the Board of Directors' meetings and shareholders' meetings, and the

Supervisor may request the Company's officers or employees to explain the

business they are managing, if necessary.

(2) Communications between supervisors and the Company's chief internal auditor and

CPA (e.g., items, methods and results of the audits of corporate finance or

operations, etc.):

The Company's supervisors regularly review the audit reports and may ask

the Company's Chief internal auditor and discuss them at any time. During the

annual report audit, the Company's supervisors communicate with the

accountant regarding the key audit matters (KAM).

2. If a supervisor expresses an opinion during a meeting of the Board of Directors, the

dates of the meetings, sessions, contents of motion, resolutions of the directors'

meetings and the company's response to the supervisor If a supervisor expresses

an opinion during a meeting of the Board of Directors, the dates of the meetings,

sessions, contents of motion, resolutions of the directors' meetings and the

company's response to the supervisor The Board of Directors shall be responsible

for the preparation of the Board's report and the Board's report:

None.

40

(3) Corporate Governance Implementation Status and Deviations from the Corporate Governance Best-Practice Principles for

TWSE/TPEx Listed Companies

Evaluation Item

Implementation Status Deviations from the

Corporate

Governance

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons

Yes No Abstract Illustration

1. Does the company establish

and disclose the Corporate

Governance Best-Practice

Principles based on "Corporate

Does the company establish

and disclose the Corporate

Governance Best-Practice

Principles based on the

"Corporate Governance

Best-Practice Principles for

TWSE/TPEx Listed

Companies"?

In order to establish a good corporate governance system, the Company

has established a "Code of Corporate Governance Practices" in accordance

with the "Code of Corporate Governance Practices for Listed Companies",

which is disclosed on the Market Observation Post System and the

Company's website.

No material

difference was

found.

2. Shareholding structure &

shareholders' rights

(1) Does the company establish

(1) As regulated by the “Guideline of Corporate Governance Practices”,

there is an “Investor Section” that provides the information of which

No material

difference was

41

Evaluation Item


Corporate

Governance

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


an internal operating

procedure to deal with

shareholders' suggestions,

doubts, disputes (1) Does

the company establish an

internal operating procedure

to deal with shareholders'

suggestions, doubts,

disputes and litigations, and

implement based on the

procedure?

(2) Does the company possess

the list of its major

shareholders as well as the

ultimate owners of those

the shareholders are concerned and the contact channels with the

Company in the Company’s official website. A spokesperson and an

acting spokesperson are established to deal with shareholders’

suggestions and doubts. Lawyers shall be appointed to deal with

matters that involve legal issues or other disputes.

(2) The Company has gotten hold of the list of major shareholders who

has the actual control over the company and their ultimate

controllers, and regularly discloses the relevant pledges and

changes in equity changes of directors and shareholders holding

more than 10% of the shares in accordance with the laws and

regulations.

(3) The Company has established the “Subsidiary Supervision

Operating Measures” and “Group Enterprise, Specific Company

and Interest Party Transaction Operating Measures” in the

internal control system. The financial, operational, and

accounting of the affiliated enterprises are all working

independently with a dedicated staff, and are all under the

found.

No material

difference was

found.

No material

difference was

found.

No material

difference was

42

Evaluation Item


Corporate

Governance

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


shares?


and execute the risk

management and firewall

system within its

conglomerate structure?


internal rules against insiders

trading with undisclosed

information?

control and audit of the parent company.

(4) The Company has established and implemented the“Operating

Procedures for the Prevention of Insider Trading” in the internal

control system.

found.

3. Composition and

Responsibilities of the Board

of Directors

(1) Does the Board develop and

implement a diversified

policy for the composition of

its members?

（1） The Company has established a “Nomination Committee” and adopted

the “Candidate Proposal System”. The director candidates shall be

nominated and evaluated by the “Nomination Committee”, then

approved by the Board of Directors, and submitted to the Shareholders’

Meeting for election. According to Article 20 of the “Guideline of

Corporate Governance Practices”, the Board members shall be

No material

difference was

found.

43

Evaluation Item


Corporate

Governance

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


(2) Does the company

voluntarily establish other

functional committees in

addition to the Remuneration

Committee and the Audit

Committee? Committee?

(3) Does the company establish a

standard to measure the

performance of the Board,

and implement it annually?

(3) Does the company

establish a standard to

measure the performance of

the Board, and implement it

annually?

(4) Does the company regularly

evaluate the independence of

equipped with the necessary knowledge, skills, and competencies to

perform their duties. To achieve this ideal goal of corporate

governance, the Board shall possess the following abilities:

1. Operation judgment ability

2. Accounting and financial analysis ability

3. Operation management ability

4. Crisis management ability

5. Industrial knowledge

6. Internaional market perspective

7. Leadership ability

8. Decision-making ability

To strengthen the corporate governance and promote the

integrated development of the Board’s constitution and structure,

it is indicated in Article 20 of the “Guideline of Corporate

Governance Practices”: The constitution of the Board of Directors

shall be diversified; however, directors who are also managers of

the company shall not exceed one three of the total seats of

44

Evaluation Item


Corporate

Governance

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


CPAs?

directors. Diversified planning shall be formulated regarding the

operations, business models, and development needs. It shall

include but not be limited to the following standards in terms of

two main aspects:

1. Basic conditions and values: gender, age, nationality, culture,

etc.

2. Professional knowledge and skills: Professional background

(such as law, accounting, industry, finance, marketing, or

technology), professional skills, industrial background, and

others.

The current Board of Directors is composed of six directors,

including four non-executive directors and two independent

directors. All members have abundant experiences and

professionalism in finance, law, industrial knowledge, and

management. The Company pays attention to gender equality in

the constitution of the Board, so the goal for the female director

No material

difference was

found.

No material

difference was

found.

45

Evaluation Item


Corporate

Governance

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


seat ratio is 12.5%. It is estimated to add a female director seat in

the next election of directors in order to achieve the goal. To

enhance the directors’ professionalism and independence, the

ratio for independent directors is aimed to be 50%. It is estimated

to increase the seats of independent directors in the next election

of directors in order to achieve this goal. Currently, none of the

directors works as the manager of the Company.Please refer to

Note 1 of this table for further information on the achievement of

Board member diversification (Pag. 36).

（2） In addition to the Salary and Remuneration Committee as set in

accordance with the laws and regulations, a Nomination

Committee has been set voluntarily. The “Nomination Committee

Organization Rules” was approved in the Board’s meeting on

Nov 8th, 2019. The Company is planning to establish an Audit

Committee in 2021. The Company has already established the

“Board Performance Assessment Rules” and shall execute the

assessment at the end of every accounting year, which shall then

46

Evaluation Item


Corporate

Governance

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


be submitted to the Board. Reviewed in the form of a survey, the

operation performance of the Directors in the Board of Directors,

the directors’ self-assessment, and the operational assessment of

the functional committees to themselves (the Salary and

Remuneration Committee and the Nomination Committee) shall

be conducted. The assessment results of the Board’s performance

assessment shall be used as a reference for the individual

director’s performance, salary, and remuneration, as well as

nomination and re-election. Regarding the item(s) with the lowest

scores, it shall be submitted to the Nomination Committee and

the Board for a briefing as they shall be taken as items for

improvement.

The assessment items of the Board performance assessment

include the following five main aspects:

1. The degree of participation in the Company’s operations.

2. The quality of the Board’s decision making.

3. The composition and structure of the Board.

No material

difference was

found.

47

Evaluation Item


Corporate

Governance

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


4. The election and continuing education of the directors.

5. Internal control.

The assessment items of the directors’ self-assessment of

performance shall include the following six main aspects:

1. Mastering of the Company’s goals and missions.

2. Acknowledgement of the director’s duties.


4. Operation and communication in internal relationships.

5. Director’s professionalism and continuing education.

6. Internal control

The assessment items of the functional committee’ assessment of

performance shall include the following five main aspects:


2. Acknowledgement of the duties of the functional committees.

3. The quality of decision-making of the functional committees.

48

Evaluation Item


Corporate

Governance

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


4. The constitution of the functional committees and the election

of the members.

5. Internal control.

The results of the Board’s and the Remuneration and Salary

Committee’s performance assessment in 2020 were good, and the

results were reported to the Board on March 9th, 2021. The

Investor Section on the company’s official website was also

disclosed at the same time.

（3） According to Article 29 of the “Corporate Governance Best Practice

Principles for TWSE/TPEx Listed Companies”, a regular (at least

once a year) assessment on the independence and competence of

the employed public certified accountant shall be conducted, and

the declaration of independence issued by certified public

accountants shall be obtained and submitted to the Board for the

approval of the appointment.

In 2020, after evaluating the independence of accountants by the

Company, the accountant Su Yu-xiu and Weng Bo-ren of Deloitte

49

Evaluation Item


Corporate

Governance

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


Taiwan have their independence and competence in compliance

with the Company's independence assessment standards (Note 2

of this table, Pag. 34), and the declaration of independence was

issued by the accountants and given to the Company. The results

of the assessment were submitted to the Board on March 9th, 2021,

and were approved.

4. Do Exchange-listed and

OTC-listed companies appoint

an adequate number of

corporate governance personnel

with appropriate Do

Exchange-listed and OTC-listed

companies appoint an adequate

number of corporate

governance personnel with

appropriate qualifications and

appoint a chief corporate

(1) According to Article 3-1 of the “Corporate Governance Best Practice

Principles for TWSE/TPEx Listed Companies”, the Finance

Department shall be in charge of the Company’s corporate

governance unit, responsible for all matters related to corporate

governance. The duties include the following:

1. To handle all matters related to the Board’s and the

Shareholders’ meetings in accordance with the laws and

regulations.

2. To prepare the Board’s and the Shareholders’ meeting minutes.

3. To assist the directors and supervisors to take office and pursue

continuing education.

No material

difference was

found.

50

Evaluation Item


Corporate

Governance

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


governance officer in charge of

corporate governance affairs

(including but not limited to

Do Exchange-listed and

OTC-listed companies appoint

an adequate number of

corporate governance personnel

with appropriate qualifications

and appoint a chief corporate

governance officer in charge of

corporate governance affairs


providing information

necessary for directors and

supervisors to carry out their

business, assisting directors and

supervisors in complying with

4. To provide the necessary information for the directors and

supervisors to execute their duties.

5. To assist the directors and supervisors to comply with the laws

and regulations.

6. Other matters established of the Articles of Association or

Deeds.

(2) As approved by the Board’s meeting on Nov 8th, 2019, the CFO

Chen Yu-chuan will take the office of corporate governance

supervisor as she has been working in the financial, accounting,

and share-matters in public listed companies, with management

experience for more than three years. She has worked to

guarantee the shareholders’ rights and benefits and fortify the

Board.

(3) 2020 business operations:

1. To assist directors and supervisors to perform their duties,

provide the necessary information, and arrange further

studies:

51

Evaluation Item


Corporate

Governance

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


the law, conducting board

meetings and shareholders'

meetings in accordance with the

law, taking minutes of board

meetings and shareholders'

meetings, etc.)?

(1) To provide the board members with the latest information

of the statutory amendments related to corporate

governance, as well as their updates from time to time.

(2) To review the degree of confidentiality of the relevant

information and provide the board members with the

necessary information to keep the communication

between the directors/supervisors and the supervisors of

all departments smooth.

(3) To make meeting arrangements for the independent

directors based on the Guideline of Corporate Governance

Practices and to understand and discuss company relevant

businesses with the internal audit supervisors and public

certified accountants.

(4) To assist the Board members to arrange a continuing

education plan of at least six credits according to the

Company's industrial characteristics, and the directors'

and supervisors' academic background.

52

Evaluation Item


Corporate

Governance

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


2. To assist the Board meeting and Shareholders’ meeting

procedures and resolutions to be in compliance with the laws

and regulations:

(1) To report the Company’s corporate governance status to

the Board, independent directors, and supervisors,

making sure that the relevant legality of the convention of

the Board and Shareholders’ meetings and corporate

governance rules and regulations.

(2) To assist and remind the Board members to comply with

the laws and regulations when making an official

resolution in the Board meeting.

(3) To announce important information in the Chinese and

English version at the Public Information Post System as a

reference for the investors after making important

resolutions in the Board meetings.

3. To maintain the relationships with the investors, convene at

least two legal person briefings every year, and make

53

Evaluation Item


Corporate

Governance

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


arrangements for the directors to have exchanges and

communication with the main shareholders, institutional

investors, or general shareholders so that the investors can

obtain sufficient information to assess and determine the

reasonable capital market value and to have shareholders’

rights well protected.

4. To formulate Board meeting agenda and notify the Board

members seven days prior to the meeting, offering them the

relevant information for the motions. If avoidance is needed

due to interest conflicts, they shall be reminded beforehand.

Board meeting minutes shall be completed twenty days after

the Board Meeting.

5. To handle the pre-registration of the date of the shareholders

meeting in accordance with the laws and regulations, prepare

meeting notices, meeting manuals, annual reports, and

meeting records within the statutory time limit, and make

announcements on the Public Information Post System; to

54

Evaluation Item


Corporate

Governance

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


handle the relevant change registration after any amendment

of the Articles of Association or re-election of the Board.

6. To assess and insure suitable liability insurance for the

directors and supervisors, and remind them of the latest

Board report after the completion of the issuance.

(4) Please refer to Pag. 54 of the Annual Report for further information

of the management’s corporate governance continuing education

in 2020.

5. Does the company establish a

communication channel and

build a designated section on

its website for stakeholders


shareholders, employees,

customers and suppliers), as

well as handle all the issues

they care for in terms of does

(1) An Interest Party Section is established in the Company’s official

website, which includes Shareholders Section, Customer Section,

Supplier Section, and Staff Section. The complaint channels and

contact information are all disclosed in the various sections. The

information of interest parties can be found in the Interest Party

Section on the Company’s website.

(2) A Shareholder Section is established on the Company’s website

together with the spokesperson and the acting spokesperson who

are responsible for the communication channels. An Investor

No material

difference was

found.

55

Evaluation Item


Corporate

Governance

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


the company establish a

communication channel and

build a designated section on

its website for stakeholders


shareholders, employees,

customers and suppliers), as

well as handle all the issues

they care for in terms of

corporate social

responsibilities?

Section is also established on the Company’s official website,

where the financial and share related information is disclosed.

(3) A Customer Section is established on the Company’s website which

provides customer service e-mail and customer service hotline,

serving as the channels of communication for the consumers.

(4) A Staff Section is established on the Company’s website which

provides a staff hotline, e-mail, and staff e-mail, facilitating the

communication between the staff.

(5) The Company’s official website also provides a Supplier Platform

for the suppliers to submit their quotations and the Company to

manage the suppliers’ quality. It is served as a communication

channel with the suppliers.

The above-mentioned sections will respond promptly and appropriately

to important corporate social responsibility issues which are

concerned by the interest parties.

6. Does the company appoint a

professional shareholder

The Company has entrusted a professional stock affairs agency, the

“Stock Affairs Agency Department of Grand Fortune Securities” to

No material

difference was

56

Evaluation Item


Corporate

Governance

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


service agency to deal with

shareholder affairs?

handle various stock affairs on behalf of the Company. found.

7. Information Disclosure

(1) Does the company have a

corporate website to disclose both

financial standings and the status

of corporate governance?

(2) Does the company have other

information disclosure channels

(e.g. building an English website,

appointing designated people to

(2) Does the company have other

information disclosure channels

(e.g. building an English website,

appointing designated people to

handle information collection and

disclosure, creating a spokesman

(1) The Company has established an exclusive website:

http://www.caesar.com.tw, where the financial affairs and

corporate governance information are revealed in the Investor

Section, serving as a reference for the shareholders and interested

party. Information will be updated on a regular basis, facilitating

the investors to take it as reference.

(2) The company has appointed a dedicated staff to take charge of the

collection and disclosure of the Company’s information and has

established a spokesperson and an acting spokesperson to speak

on behalf of the Company. The management and employees are

requested to keep the financial business confidential, not to

disseminate information arbitrarily in order to fully implement

the spokesperson system. The process of the Company’s legal

person briefings has been uploaded to the Company’s official

No material

difference was

found.

No material

difference was

found.

No material

http://www.caesar.com.tw/

57

Evaluation Item


Corporate

Governance

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


system, webcasting investor

conferences)?

3) Does the Company publicly

announce and file its annual

financial reports within two

months after the end of the

fiscal year, and announce

and file its first, second and

third quarter financial reports

as well as its operations for

each month well in advance of

the prescribed deadline?

Does the Company publicly

announce and file its annual

financial reports within two

months after the end of the

fiscal year, and announce and

website, making sure that all information that may affect the

shareholders and the interested parties’ decision-making can be

disclosed in a timely and fair manner.

(3) The annual financial report must be announced and declared by the

Company within two months after the end of the accounting

year. The 2020 individual financial report and consolidated

financial report were submitted to the Board for approval on

March 9, 2021 and were then announced on the Public

Information Post System. The financial report of Q1 – Q3 of 2020

and the monthly operating conditions of 2020 have been

announced on the Public Information Post System before the

prescribed deadline.

difference was

found.

58

Evaluation Item


Corporate

Governance

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


file its first, second and third

quarter financial reports as

well as its operations for each

month well in advance of the

prescribed deadline?

8. Is there any other important

information to facilitate a

better understanding of the

company's corporate

governance (e.g., including but

not limited to employee rights,

employee wellness, investor

relations, supplier relations,

rights of stakeholders,

directors' and supervisors'

training records, the

implementation of risk

(1) Employee’s rights and benefits and care of the employees

Please refer to Pag. 82 – 3 “Employee-management relationship”

of the annual report.

(2) Relationship with the investors

The Company has implemented the spokesperson and acting

spokesperson system, which is served as a communication

channel between the Company and the shareholders, investors,

and interested parties. The Company shall provide the various

information that may affect the investors’ decision-making in

accordance with the competent authority’s regulations related to

the information announcement and declaration.

(3) Relationship with the suppliers

No material

difference was

found.

59

Evaluation Item


Corporate

Governance

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


management (e.g., including

but not limited to employee

rights, employee wellness,

investor relations, supplier

relations, rights of

stakeholders, directors' and

supervisors' training records,

the implementation of risk

management and risk

evaluation measures, the

implementation of customer

relations policies, and

purchasing insurance for

directors and supervisors)?

The Company has established “Supplier Management Measures”,

ensuring the delivery, quality, and pricing of the suppliers to be

in compliance with the Company’s needs and to establish good

communication and coordination.

(4) Interested parties’ rights

Please refer to the Interested Parties Section under the Investor

Section on the Company's official website

(http://www.caesar.com.tw) and to the "Communication with

Interested Parties" on Pag. 48 of this annual report.

(5) Directors and supervisors’ continuing education

Please refer to the “2020 Directors and Supervisors' Continuing

Education on Corporate Governance" on Pag. 53 of this annual

report.

(6) Implementation of risk management policy and risk measurement

standards

Please refer to the risk management policies and procedures

under the Corporate Governance Section of the Investor Section

60

Evaluation Item


Corporate

Governance

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


of the Company's official website and refer to Pag. 37 - 39 of this

annual report.

(7) Implementation of customer policy

The Company has established a Sales Department and a

Customer Service Department that offer channels of product

consultation and after-sales services and maintenance, keeping a

smooth contact channel with the customers.

(8) Liability insurance purchased by the Company for the Directors

and Supervisors

The purchase of liability insurance for the directors, supervisors,

and important employees was approved by the Board on May 6th,

2020 in order to reduce and disperse the risk of major damages to

the Company and shareholders that may be caused by mistakes

or negligence. The insurance was issued on June 1st, 2020 in

accordance with the laws and regulations.

61

Evaluation Item


Corporate

Governance

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


9. please provide information on the improvements made based on the results of the latest annual corporate governance assessment

Please provide information on the improvements made based on the results of the latest annual corporate governance assessment

published by the Taiwan Stock Exchange Corporate Governance Center and suggest priorities and measures for improvement where

(a company which was not a target of assessment has no need to fill in this column.)

1. Improved situation

(1) The Company has convened a regular meeting of shareholders by the end of May.

(2) The Company has disclosed the specific management objectives and implementation of the Board of Directors' diversity

policy on the Company's website and annual report.

(3) The Company has established risk management policies and procedures approved by the Board of Directors to disclose

the scope of risk management, organizational structure and its operations.

(4) The Company has established an information security risk management framework, formulated information security

policies and specific management plans, and disclosed them on the Company's website or in the annual report.

(5) The Company has formulated an intellectual property management plan that is linked to its operational objectives, and

discloses the implementation status on the Company's website or in its annual report, and reports to the Board of Directors at least once

a year.

(6) The Company has synchronized the release of material information in English.

62

Evaluation Item


Corporate

Governance

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


(7) The Company has been approved by the Board of Directors or submitted to the Board of Directors 7 days prior to the

announcement deadline, and the financial report will be published within 1 day after the approval date or submission date.

(8) The Company has disclosed a specific dividend policy in its annual report.

(9) The Company has been invited to hold at least two (2) corporate meetings in 2020, and the first two corporate meetings of

the year under review are held at least three months apart.

2. Prioritization and Enhancement Measures

(1) The Company plans to upload the annual financial report in English, the English annual report, the English handbook

and the supplementary information of the meeting at 2021 Annual General Meeting of Shareholders.

(2) The Company plans to include at least one female director in the 2021 general election of directors.

(3) The Company plans to voluntarily establish more independent directorships than those required by the Act in 2021 year

of the general election of directors.

(4) The Company will revise the "Code of Corporate Governance Practices" in 2021 to provide for the appointment,

evaluation and remuneration of internal auditors to be reported to the Board of Directors or approved by the Chairman of the

Board of Directors through the Chief internal auditor's signature, and to be disclosed on the Company's website.

63

Note 1: Diversified Core Competency of the members of the Board

Core

Competency

1. Basic

Composition 2. Background 3. Industrial Experience 4. Expertise

Nationali

ty Sex

La

w

Accounti

ng

Indust

ry

Finan

ce

Marketin

g or

Technolo

gy

Lawy

er

Account

ant

Ban

k

Business

Administrat

ion

Manufactur

ing and

Sale

Business

Judgem

ent

Skills

Accounti

ng,

Financial

Analytica

l skills

Managem

ent Skills

Crisis

Managem

ent Skills

Industry

Knowle

dge

Internatio

nal

Market

Perspecti

ve

Leaders

hip

Decision-ma

king Skills

Name

HSIAO,

CHUN-HSIA

NG

ROC Male V V V V V V V V V V V V

CHANG,

YUNG-NAN ROC Male V V V V V V V

TSAI,

MING-HSI ROC Male V V V V V V

YU,

CHIH-HSIN ROC Male V V V V V V V V

CHEN,

SHIH-HSIU

NG

ROC Male V V V V V V V

HSU,

FENG-YUA

N

ROC Male V V V V V V

The average age of the members of the Board was 56.7 years.

64

Note 2: Accountant independence evaluation criteria

Item Item Company

Self-Assessment

Accountants'

Statement

1

The certifying accountant, his or her spouse, and dependent relatives have not

(1) The Company has a direct or indirect material financial interest in the Company.

(2) The Company has a business relationship with the Company or its directors, supervisors or

managers that affects independence.

Yes Yes

2

During the audit period, the certified public accountants, their spouses and dependents did

not hold any positions as directors, supervisors, managers, or positions that directly and

materially affected the audit of the Company.

Yes Yes

3

The certifying accountant does not currently hold any position as a director, supervisor, or

manager of the Company or any position that has significant influence on the Company within

the last two years, and has not undertaken to hold any such position.

Yes Yes

4 The certifying accountant is not related to the directors, supervisors or officers of the Company

by consanguinity, consanguinity, affinity or consanguinity within two degrees. Yes Yes

5

The certifying accountant has not received any gift or present of significant value from the

Company or from any of the Company's directors, supervisors, managers or major

shareholders (the value of which does not exceed the normal standards of social etiquette)

Yes Yes

65

(4) If a company has established a remunearation committee, then it shall disclose the composition, responsibilities and operation of

the If a company has established a remuneration committee, then it shall disclose the composition, responsibilities and

operation of the committee:

1. Information of the Remuneration Committee Members:

Title

Criteria

Name

Meets One of the Following Professional Qualification

Requirements, Together with at Least Five Years' Work Experience Independence Criteria (Note 1)

Number of

Other Public

Companies in

Which the

Individual is

Concurrently

Serving as a

Remuneration

Committee

Member

Remarks

An Instructor or Higher

Position in a

Department of

Commerce, Law,

Finance, Accounting, or

Other Academic

Department Related to

the Business Needs of

the Company in a Public

or Private Junior

College, College or

University

A Judge, Public

Prosecutor, Attorney,

Certified Public

Accountant, or Other

Professional or

Technical Specialist

Who has passed a

National Examination

and been Awarded a

Certificate in a

Profession Necessary for

the Business of the

Company

Have Work Experience

in the Areas of

Commerce, Law,

Finance, or Accounting,

or Otherwise Necessary

for the Business of the

Company 1 2 3 4 5 6 7 8 9 10

Independ

ent

Director

CHEN,

SHIH-HS

IUNG

0 No

Independ

ent

Director

HSU,

FENG-Y

UAN

0 No

Other

HO,

CHENG-

WEI

0 No

Note 1: Please tick the corresponding boxes that apply to a member during the two years prior to being elected or during the term(s) of office. Please

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

66

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

(2) Not a director or supervisor of the Company or any of its affiliates (not applicable in cases where the person is an independent director of the

Company, its parent company, or any subsidiary in which an independent director can also be the (2) Not a director or supervisor of the Company

or any of its affiliates (not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary in

which an independent director can also be the (not applicable in cases where the person is an independent director of the Company, its parent

company, or any subsidiary in which an independent director can also be the independent director these companies mentioned above in accordance

with the Act or local laws and regulations).

(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 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in

holdings.

(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons (4) Not a spouse,

relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three

subparagraphs.

(5) Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of outstanding shares of the

Company, or who holds shares ranking in the top five holdings , or who appoints a representative to be outstanding shares of the Company, or

who holds shares ranking in the top five holdings , or who appoints a representative to be the director or supervior of the Company in accordance

with Paragraph 1 or 2, Article 27 of the Company Act (not applicable in cases where the person is an independent director) cases where the person

is an independent director of the Company, its parent company, or any subsidiary in which an independent director can also be the independent

director these (not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which

an independent director can also be the independent director these companies mentioned above in accordance with the Act or local laws and

regulations). regulations).

(6) A majority of the Company's director seats or voting shares are not controlled by the same person: a director, supervisor, or employee of any other

company (not applicable in cases where the person is an independent director of the Company, its parent employee of any other company (not

applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which an independent

director can also be the independent director these companies mentioned) (not applicable in cases where the person is an independent director of

the Company, its parent company, or any subsidiary in which an independent director can also be the independent director these companies

67

mentioned above) in accordance with the Act or local laws and regulations).

(7) The chairperson, president, or person holding an equivalent position of the Company are not the same person or spouses: a director (or governor),

supervisor, or employee of any other company or institution (not applicable in cases where the person is an independent director of the Company,

its parent company, or any subsidiary in which an independent director can also be an independent director of the Company, its parent company,

or any subsidiary in which an independent director can also be the (not applicable in cases where the person is an independent director of the

Company, its parent company, or any subsidiary in which an independent director can also be the independent director these companies mentioned

above in accordance with the Act or local laws and regulations).

(8) Not a director, supervisor, managerial officer, or shareholder holding 5% or more of the shares, of a specified company or institution that has a

financial or business relationship with the Company (this limit does not apply to where a specified company has a financial or business relationship

with the Company) institution that has a financial or business relationship with the Company (this limit does not apply to where a specified

company or institution holds 20% or more but not more than 50% of the total number of issued shares of the Company) or institution holds 20% or

more but not more than 50% of the total number of issued shares of the Company nor apply to independent directors appointed in accordance with

the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a

subsidiary of the same parent.)

68

(9) Not a professional individual who, or an owner, partner, director, supervisor, or managerial officer of a sole proprietorship, partnership, company, or

institution that, provides auditing services to the Company or any affiliate of the Company, or that provides commercial, legal, financial,

accounting or related services to the Company or any affiliate of the Company for which the provider in the past 2 years has received provider in the

past 2 years has received cumulative compensation not more than NT$500,000, or a spouse thereof; provided, this restriction does not apply to a

member restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for

merger/consolidation and acquisition for merger/consolidation and acquisition, who exercises powers pursuant to the Securities and Exchange

Act or to the Business Mergers and Acquisitions Act or related laws or regulations.

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

2. Operation of the Remuneration Committee

(1) There are totally 3 members in the Remuneration Committee of the Company. (2) The term of the current committee members is from June 13, 2018 to June 12, 2021. A total of 2 (A) Remuneration

Committee meetings were held in FY2020; the qualification and the attendance record of the Remuneration Committee members were as follows A total of 2 (A) Remuneration Committee meetings were held in FY2020; The qualification and the attendance record of the Remuneration Committee members were as follows:

Title Name Attendance in

Person (B) By Proxy

Attendance Rate (%) (B/A)

Remarks

Convener CHEN,

SHIH-HSIUNG 2 0 100 No

Committee

Member HSU, FENG-YUAN 2 0 100 No

Committee

Member HO, CHENG-WEI 2 0 100 No

69

Other mentionable items:

1. If the board of directors declines to adopt or modifies a recommendation of the remuneration committee, it should specify the date of the meeting, session, content of the motion, resolution by the board of directors, and the Company's response to the recommendation. If the board of directors declines to adopt or modifies a recommendation of the remuneration committee, it should specify the date of the meeting, session, content of the motion, resolution by the board of directors, and the Company's response to the remuneration committee's opinion (e.g. the remuneration passed by the Board of Directors exceeds the (eg., the remuneration passed by the Board of Directors exceeds the recommendation of the remuneration committee, the circumstances and cause for the difference shall be specified):

None. 2. Resolutions of the remuneration committee objected to by members or subject to a qualified opinion and recorded or

declared in writing, the date of the meeting, session, content of the motion, all members' opinions and the response to members writing, the date of the meeting, session, content of the motion, all members' opinions and the response to members ' opinion should be specified:

Salary and Remuneration

Committee

Motions and follow-ups

Resolution Result

The company's handling of the salary

and compensation committee's opinion

The Fourth Fifth

2020.06.09

1. Revision of the 2019 remuneration payment of the directors and supervisors.

2. Revision of the 2019 remuneration payment for the employees.


4. Revision of CFO’s salary adjustment.

Motion 1: Except for the

directors and supervisors whose

personal interests are involved

in the motion who withdrew

during the discussion and

resolution, the other directors

present at the meeting approved

the proposals without objection

after being consulted by the

Chairman.

The rest of the proposals, after being consulted by the Chairman, were approved by all

As consulted by the Chairman in the Board Meeting, all proposals were approved by the directors present without objection.

70

directors present.

The Fourth Sixth

2020.12.24

1. Revision of the provisions of “Board Performance Assessment Rules”.

2. Revision of the provisions of “Manager’s Remuneration Rules”.

3. Review of the Company’s directors’ and supervisors’ performance in 2020 and their performance goals and remuneration in 2021.

4. Review of the Company’s managers’ performance in 2020 and their performance goals and remuneration in 2021.

5. Review of the distribution of compensations for the directors and supervisors, as well as the employees, in 2020.

6. Review of the 2020 operating bonus distribution.

7. Review of the 2020 year-end bonus distribution.

8. Discussion of the Company’s Salary and Remuneration Committe’s 2021 work plan.

Except for the committee

members whose personal

interests are involved in the

motion who withdrew during

the discussion and resolution,

the other committee members

present at the meeting approved

the proposals without objection


Chairman. Motion 3:

Except for the directors and

supervisors whose personal




the other directors present at the

meeting approved the proposals

without objection after being

consulted by the Chairman.

The rest of the proposals, after being consulted by the Chairman, were approved by all directors present.

As consulted by the Chairman in the Board Meeting, all proposals were approved by the directors present without objection.

71

(5) Implementation of Corporate Social Responsibility and the Deviations from the Corporate Social Responsibility Best-Practice

Principles for TWSE/TPEx Listed Companies and Reasons

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


1. Does the company conduct

risk assessment on

environmental, social and

corporate governance issues

related to its operations in

accordance with the

principle of materiality, and

formulate relevant risk

management policies or

strategies? Does the

company conduct risk

assessment on

environmental, social and

corporate governance issues

related to its operations in

accordance with the

(1) The Company has established the “Regulations of Corporate

Social Responsibility Practices” which stipulates the

performance of relevant risk assessments on key issues based

on the principle of the importance of corporate social

responsibility and set the relevant risk management policies

or strategies after conducting the relevant assessments. The

“Risk Management Policy and Procedures” was approved by

the Board on Nov 4th, 2020, which will be served as the

highest instruction principle for risk management. The

Company will conduct a regular annual risk assessment and

formulate risk management policies targeting various risks. It

will cover the management goals, management scope and

basis, organizational structure and duties, risk measurement

mechanism, and risk management implementation, in order

to identify, measure, and control the various risks in an

effective manner. All risks arising from the business activities

No material

difference was

found.

72

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


principle of materiality, and

formulate relevant risk

management policies or

strategies?

shall be controlled within an acceptable scope.

(2) The Company’s risk management scope is as the following:

Risk

management

scope

Risk management description

(1) Market 1. Politics and economy: Risk factors related to

domestic and foreign politics and economies

that may influence the Company’s finance

and/or business.

2. Industry: Risk factors consist of the domestic

and foreign industries that have direct and/or

indirect relationships with the Company’s

industry, impacting our finance and/or

business.

(2) Operation

s

1. Operations: Risks arising from the change of

business and operation models, organizational

73

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


structure adjustment, product elimination,

product and service design, quality

management, and business contracts related to

major risk management.

2. Finance: Risks arising from asset evaluation,

credit and solvency, liquidity risks, and

accounting policies, that may affect the

Company.

3. Supply chain: Risks arising from supplier

quality, pricing, and delivery, corporate social

responsibility related issues, that may affect the

Company.

4. Information security: Risks arising from digital

information security, general information

protection regulations, etc. that may affect the

Company.

5. Public relations: Risks arising from issues

74

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


related to public relations, such as brand

management, shaping, and maintenance of the

business image, etc. that may affect the

Company.

6. Intellectual property rights: Such as patent

application and maintenance, intellectual

property right protection, etc.

(3) Investmen

t

For example, risks due to the intensive concentration

of reinvestment subjects, high-risk and

high-leverage operations, trading of derivative

financial products, financial management, and other

short-term investment market price fluctuations, or

risks arising from the operation scope management

from long-term invested companies caused to the

Company.

(4) Statutory

regulation

Legal risks arising from the various possible

infringement of the Company’s rights and benefits

75

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


arising from the incompliance of the relevant laws

and regulations, including but not limited to laws

and regulations related to labor, company, securities

exchange, import and export, industrial conduct

standard, requests of the competent authorities, etc.

(5) Environm

ent

1. Risks arising from greenhouse gases

management, carbon right management,

energy management, and other relevant issues

in response to climate change and natural

disasters.

2. Risks arising from the compliance with

international and local environmental laws and

regulations, such as air pollution, water/toxic

water discharge, noise management,

environmental assessment requests, etc.

3. Risks arising from the safety of the employees’

and suppliers’ working environment, and

76

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


occupational sanitation and health, chemical

management, safety protection, and

contingency responses.

(6) Human

resources

1. Human resources: Risks arising from human

rights issues of employees or suppliers,

including but not limited to the

employee-management relationship, child

labor, forced labor, etc.

2. Risks arising from talent development

management, such as the recruitment and

retention of talents, talent development

mechanism, etc.

2. Does the company establish

exclusively (or concurrently)

dedicated first-line

managers authorized by the

3. The Company has set a “corporate social responsibility team”

that is in charge of the promotion of corporate governance, the

development of a sustainable environment, maintenance of

social charity works, and other corporate social responsibilities.

No material

difference was

found.

77

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


board to be in charge of

proposing the corporate

social responsibility policies

and reporting to the board?


exclusively (or concurrently

dedicated first-line

managers authorized by the

board to be in charge of

proposing the corporate

social responsibility policies

and reporting to the board?

The Chair of the Board shall be the Chairman and the convener,

leading all senior management of all the department. A monthly

meeting shall be conducted with the convention for major issue

discussion on an irregular basis every year. In 2020, the corporate

social responsibility team convened 4 meetings for the

preparation and regular revision of goals, performance, and

progress in terms of the corporate social responsibilities, the

directions for corporate governance, and sustainable

development. All executed plans and results of the 2020

corporate social responsibilities were submitted to the Board on

Dec 24th, 2020.

3. Environmental Issues


proper environmental

management systems based

on the characteristics of their

(1) The Company shall establish a suitable environmental

management system based on the features of the industry,

including the following:

1. Access security: Day and night access management, and

No material

difference was

found.

78

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


industries?

(2) Does the company endeavor

to utilize all resources more

efficiently and use renewable

materials which have low

impact on the environment?

(3) Does the company assess the

potential risks and

opportunities of climate

change for the business now

and in the future, and (3)

Does the company assess the

potential risks and

opportunities of climate

change for the business now

and in the future, and has it

taken measures to address

office and factory safety maintenance contract with

Taiwan Secom.

2. Labor safety promotion and disability injury: There

were no work-related deaths in the Company from 2019

to 2020. During the daily morning meetings in the

factory, promotions of safety concepts are conducted to

strengthen the staff’s ability to identify hazards so that

everyone can work safely in a safe workplace. The

implementations are registered every day in the

notebook.

3. Maintenance and inspection of the equipment:

A. Forklifts: Dedicated custodians shall check daily the

inspection items when they go to work and fill the

results in the daily checklist table.

B. Generator: It is turned on every Friday to ensure

that it is usable when an emergency occurs.

C. Hydraulic trucks: Each hydraulic truck has a

79

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


climate related issues?

(4) Has the Company compiled

statistics on greenhouse gas

emissions, water

consumption and total

weight of waste for the past

two years, and developed

policies to save energy and

reduce carbon emissions,

greenhouse gas emissions,

water consumption or

manage (4) Has the

Company compiled statistics

on greenhouse gas

emissions, water

consumption and total

weight of waste for the past

dedicated custodian who shall conduct regular

inspections every two months. The results shall be

filled in the equipment maintenance and inspection

form.

D. Water dispenser: Regular water quality inspection

shall be conducted and the filter shall be replaced at

the beginning of every month in order to ensure the

safety of the drinking water.

E. Freight elevator: The freight elevator maintenance

contractor shall conduct freight elevator

maintenance and inspection at the end of every

month.

F. Computers: Each computer has a dedicated

custodian who shall conduct a regular inspection

every two months. The results shall be filled in the

equipment maintenance and inspection form.

4. Safety protection measures for the office in Taipei: a fire

No material

difference was

found.

80

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


two years, and developed

policies to save energy and

reduce carbon emissions,

greenhouse gas emissions,

water consumption or

manage waste?

drill and an audit inspection shall be conducted every

half a year in the office in Taipei. Fire alarms shall be

installed at all sections of the office.

(2) The company is committed to the improvement of the utilization

efficiency of the different resources and to the usage of recycled

materials with lower impacts on the environment. The practices

are as the following:

1. To save the raw materials and energy consumed during

the production process and to reduce unnecessary

external packaging and internal cushioning materials in

order to improve the re-utilization efficiency of the

resources.

2. To launch water-free toilets and a series of water kinetic

energy products that have energy-saving,

anti-pollution, and water-saving features, which can

reduce the impact on the environment.

3. To reduce the use of photocopy papers by electronizing

No material

difference was

found.

No material

difference was

found.

81

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


parts of the documents of the Company and the official

documents. Photocopy papers are recycled for

repetitive usage. The internal documents can be

transmitted with recycled envelopes.

4. To implement trash categorization and set up a

recycling station to regularly recycle waste toner

cartridges, waste paper, and old computers so that they

can be recycled and reprocessed.

5. Waste treatment fees and other fees for the recycled

items (e.g. alkaline batteries) or containers are paid to

the Environmental Protection Bureau every two

months.

6. A professional cleaning and processing institution is

entrusted to conduct quarterly waste removal

operations, such as scrap porcelains.

7. A solar power generation system is installed in Zaoqiao

Logistics Center to increase the use of renewable

82

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


energy.

(3) The Company has set up a Corporate Social Responsibility Team

that will conduct assessments and inspections regarding the

potential risks and opportunities of the different departments’

businesses and climate change issues in the meetings, promote

various environmental protection measures, such as

water-saving, energy-saving, carbon reduction, etc., and

proactively develop eco-friendly products that are in

compliance with the national standards.

(4) The Company pays attention to the greenhouse gas emissions,

water consumption, and total waste weight in the past two

years and formulates policies for energy saving and carbon

reduction, greenhouse gas reduction, water reduction, or other

waste management. The practices are as the following:

1. All illumination fixtures of the offices are replaced with

LED lighting fixtures, which could reduce about 430

kWh per month.

83

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


2. Since September 2019, in accordance with the e-invoice

policy of the Ministry of Finance, papers used to print

invoices with the electronic computers were reduced.

About 90,000 pieces of electronic computer invoice paper

can be saved every year.

3. The ACs of the Company are set at a fixed temperature and

are used together with circulation ventilators, which can

reduce the power consumption. Circulation ventilators

were installed in the second half of 2020, reducing an

accumulated 257 kWh.

4. The Management Department conducts irregular

promotions and implementations of the turning-off of

the ACs, lighting, and electronic appliances when not

using them.

5. The Vietnam Caesar Sanitary Wares Joint Stock Company

continues promoting the rectification of hydropower and

oil gas, and the gas equipment has been replaced with a

84

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


natural gas system to reduce the burden on the

environment.

6. Climbing the stairs is encouraged to replace the elevators,

which can reduce power consumption.

7. The Company’s energy saving and carbon reduction

management plan aims to reduce 5% of paper usage, 2%

of carbon emission, and 2% of power consumption

within five years.

8. Based on the Company’s statistics, the greenhouse gas

emission in the past two years was 228,678.81 kg in 2019

and 195,048.98 kg in 2020; the water consumption in the

past two years was 282,000 liters in 2019 and 378,000

liters in 2020; the total weight of waste ceramics in the

past two years was 62,950 kg in 2019 and 79,384 kg in

2020.

4. Social Issues

(1) Does the company formulate

(1) The Company’s "Human Rights Protection Policy" complies with

No material

85

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


appropriate management

policies and procedures

according to relevant

regulations and the

International Bill of Human

Rights?

(2) Has the company established

and implemented reasonable

employee benefits (including

pay, leave and other benefits,

etc.) and (2) Has the

company established and

implemented reasonable

employee benefits (including

pay, leave and other benefits,

etc.) and appropriately

reflected operational

the internationally recognized human rights standards, such as

The United Nations Global Compact, the United Nations’

Universal Declaration of Human Rights, and the International

Labor Organization’s Declaration of Fundamental Principles

and Rights at Work. Based on them, the Company formulates

and implements various policies to protect and guarantee

human rights. Relevant management policies and procedures,

such as work rules, management methods for attendance and

absences, sexual harassment, and preventive methods have

been formulated. The legal rights and benefits of the employees

are guaranteed, whereas the basic labor human rights principles

are respected, with the absence of any endangerment of

laborers’ basic rights.

(2) The Company has established and implemented appropriate

employee welfare measures (including salary, leaves, and

others), which are stated in the following:

difference was

found.

No material

difference was

found.

86

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


performance or results in

employee compensation?

(3) Does the company provide a

healthy and safe working

environment and organize

training on health and safety

for its employees (3) Does

the company provide a

healthy and safe working

environment and organize

training on health and safety

for its employees on a

regular basis?

(4) Does the company provide its

employees with career

development and training

1. The Company has established employee attendance and

leave management based on the Labor Standard Act

which explicitly stipulates the working hour standards

and the salary payment rules of the different types of

leaves. Off-days, holidays, national holidays, and special

holidays regulated by the Labor Standards Act are all

included within the salary payment scope.

2. The assistance and welfares offered to the employees based

on the Labor Standard Act and Act of Gender Equality in

Employment are stated in the following:

（1）Maternity leave, pre-maternity leaves, and family care

leaves are provided.

（2）Approval for the leaves without pay for childcare.

（3）Discount contract signed with childcare institutions

offered for the staff.

（4）The Employee Welfare Committee of our Company

offers holiday allowances, birthday bonuses, marriage

87

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


sessions?

(5) Does the company comply

with relevant legislation and

international standards on

customer health and safety,

customer privacy, (5) Does

the company comply with

relevant legislation and

international standards on

customer health and safety,

customer privacy, marketing

and labeling of its products

and services, and has it

developed relevant

consumer protection policies

and complaint procedures?


allowances, maternity allowances, first home purchase

allowances, funeral allowances, injury and sickness

allowances, child education grants, annual employee

trips, and monthly birthdays parties.

The Company makes appropriate reflections of the operating

performance or results on the employees’ payment with the

following practices:

1. The establishment of a Salary and Remuneration

Committee that sets and reviews regularly the

performance assessment of the directors and

supervisors and review periodically the policies,

systems, standards, and structures of the salaries and

remuneration.

2. The establishment of “Salary Management Measure”

and “Regulations of the Rewards and Punishments for

the Employes”, policies related to the employees’

No material

difference was

found.

88

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


supplier management policy that

requires suppliers to comply

with relevant regulations on

issues such as environmental

protection, occupational safety

and health or labor human rights,

and how is this implemented?


supplier management policy that

requires suppliers to comply

with relevant regulations on

issues such as environmental

protection, occupational safety

and health or labor human rights,

and how is this implemented?

performance evaluation, and clear and explicit reward

and punishment system.

3. To attract and retain the outstanding talents and to

share the operating results of the Company with the

employees, the Company has a comprehensive salary

structure that includes the monthly base salary,

monthly performance bonus, and year-end bonus.

Every year, a budget is allocated to make annual

promotions and adjust the salaries based on the

employees’ performance. Based on the percentage of the

operating performance, a performance goal bonus is

given every month. Based on the Company’s business

performance and the employee’s performance, the

year-end bonus is given, with a minimum of one

month. According to Article 20 of the Company’s

“Articles of Association”, 2% to 5% of the Company’s

annual net profit before tax before deducting employee

No material

difference was

found.

89

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


remuneration, and no more than 2% for the directors

and supervisors. However, when the Company still has

accumulated losses (including adjustments to the

amount of undistributed surplus), the budget shall be

reserved as compensation in advance.

4. To periodically promote continuing training and other

advocacies, which shall be integrated with the

employee performance evaluation system, in order to

facilitate the implementation of a clear and effective

reward and punishment system.

(3) The Company is already offering the employees healthy and

safe workplaces with regular safety and health education for

the employees. The operations are the following:

1. Disinfection of the various workplaces.

2. Regular inspection of the firefighting equipment and

sanitation equipment.

No material

difference was

found.

90

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


3. A centralized AC system is installed in the office with

sufficient lighting and regular elevator maintenance.

4. Security guards are hired to control the access of personnel.

5. The employees are insured with the Labor Insurance and

National Health Insurance as in accordance with the

laws. Additional employer’s accident liability insurance,

employer’s compensation liability insurance, and group

insurance are also provided.

6. Being equal before the laws, the Company has formulated

measures to prevent sexual harassment and disciplinary

measures. Explicit regulations are set for the

investigation and trials for the accused or the suspects,

providing the opportunity of defense of the parties. The

investigation shall be conducted in a fair manner, and

appropriate disciplinary actions shall be given based on

the evidence and “Regulations of the Rewards and

Punishments for the Employes”.

91

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


7. Personal data protection policy and management measures

are established. Unless it is for a specific purpose, the

Company shall not collect, process, and use the personal

data.

(4) To establish an effective career development and training plan,

the Company uses the following methods:

1. To create a good environment for the career development

of the employees, the Company has set a “Personnel

Management Regulations and Measures” that evaluates

the performance and promotion based on the work

performance and development potentials, regardless the

race, class, language, mind, religion, political party,

nationality origin, place of birth, gender, sexual

orientation, age, marriage, appearance, and physical and

mental disabilities.

2. In compliance with the Employment Service Act, the

“Personnel Management Regulations and Measures” is

No material

difference was

found.

92

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


established to implement employee recruitment criteria

based on their professionalism, talents, ethics, and work

experiences, offering everyone fair competition for

employment.

3. Plans are made based on long-term talent cultivation and

on the needs of the departments and of the personnel.

Employees’ competitiveness, professional skills,

knowledge, and attitude are enhanced via internal and

external educational training. Subsidies for educational

training can be applied so that the employees can grow

together with the Company’s performance.

4. Good promotional channels are given. The Company

conducts annual evaluations and performance

assessments on a regular basis, promoting outstanding

talents to become junior to senior management of the

Company.

5. Succession plans are established for the Board members

93

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


and important management and shall be disclosed in the

Investor Section of the Company's official website.

(5) The company complies with relevant laws and regulations and

international standards on customer health and safety,

customer privacy, marketing and labeling of products and

services, which are as listed in the following:

1. CNS mark.

2. Water-saving mark.

3. Golden mark for water-saving.

4. Anti-fouling mark.

5. Load stamp.

6. Nano-label.

7. Eco-friendly mark.

8. SGS certification.

9. Japan’s SIAA antibacterial certification.

10. Lead-free faucet.

The Company has formulated policies and complaints

94

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


procedures related to the protection of consumers’ rights and

benefits. They are stated as in the following:

1. All product information is completely disclosed on the

Company’s official website so that the customers can

read it at any time.

2. “Customer Complaint Measures” is established, providing

a comprehensive sales service, review, and enhancement

procedures in order to avoid any repetition of the

complaint.

3. A Customer Service Department is established for the

customers to make service consultation or to propose any

need or inquiry.

4. A free 0800 hotline is set for the consumers, and dedicated

staff is assigned to handle all related matters.

5. All products are insured with product liability insurance.

(6) The Company has established “Supplier Management

Measures”, which is the basis for the regular and/or irregular

95

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


review of the suppliers. The items of the assessment standard

shall include the corporate social responsibility policies. If the

supplier is involved with the violation of its corporate social

responsibility policies, causing significant impact to the

environment and/or society, the Company may terminate the

contract(s) at any time. Before having any trading with the

suppliers, the Company shall make an appropriate evaluation

of the suppliers. The items of the assessment standard include:

1. Any records of environmental impact.

2. Ethical suppliers are prioritized.

3. The “Supplier Management Measures” is established,

which is the basis for the regular and/or irregular review

of the suppliers.

5. Does the company make

reference to international

standards or guidelines for

the preparation of reports,

The Company has not prepared a corporate social responsibility

report.

It is not mandatory

for the Company to

prepare a Corporate

Social Responsibility

96

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


such as corporate Does

the company make




such as corporate social

responsibility reports,

which disclose

non-financial information

about the company? Does

the company make




such as corporate social

responsibility reports,

which disclose

Report.

97

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


non-financial information

about the company?

If the Company has established the corporate social responsibility principles based on "the Corporate Social Responsibility Best-Practice

Principles for TWSE/TPEx Listed Companies," please describe any discrepancy between the corporate social responsibility principles and

the corporate social responsibility principles. If the Company has established the corporate social responsibility principles based on "the

Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies", please describe any discrepancy between the

Principles and the implementation:

The Company has a "Code of Practice on Corporate Social Responsibility" and has implemented it accordingly.

7. Other important information to facilitate better understanding of the company's corporate social responsibility Other important information to facilitate better understanding of the company's corporate social responsibility practices:

(i) Social welfare. The Company participated in charitable donations and philanthropic activities, and the related donations in 2020 amounted to

approximately NT$296,000, as listed below. The Interior Design Association of the Republic of China, the Love Sharing Charity Association, Tunghai University, the Friends of

the Taoyuan City Police Association, and the Taoyuan Renyou Love Home. (2) Industry-academic cooperation. Each year, we provide summer internship opportunities for university students to accumulate work experience in the society,

practice interpersonal interaction, and learn practical knowledge and work skills. 2020 internships were arranged for one student from the Department of International Business and Trade of Tunghai University to study in the Research and Development Division of the head office. The intern will be placed in the Research and Development Division of the Head Office.

(3) Stakeholder communication channels and response methods.

98

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


The Company has established communication channels with stakeholders and set up a stakeholder area on the Company's website to publicize various stakeholder contact information and e-mails, and to respond appropriately to important CSR issues of concern to stakeholders.

Stakeholder communication reports are disclosed as follows. Interested parties Prioritized issues Communication channels, responses, and communication frequency

Shareholders and investors

1.Corporate governance 2.Sustainable

development strategies

3. Risk management 4.Participation of shareholders 5.Operation performance

1.Suitable contact window(s) for the investors and relevant interested parties, and exclusive e-mail of the spokesperson, acting spokesperson, and investors.

2.Disclosure of the financial information on the Public Information Post System and the Company’s official website on time in accordance with the competent authority’s laws and regulations.

3.At least two legal person briefings per year with an interval of more than three months in between, offering sufficient financial information for the investors.

4.Contact window: Spokesperson (e-mail:[email protected])

Employees

1.Employee welfare 2.Employee

evaluation mechanism

3.Operation performance 4.Employee-mana

1.Announcement via the internal website or internal e-mail: Announcement of the various employee welfare (health check-us, group insurance, etc.), welfare committee information, important operation information, educational training information, annual performance management operations, etc. on an irregular basis.

2.The Company’s employees can contact the supervisors or General Manager directly via e-mail, phone call, or in person. An employee complaint email is provided.

3.A labor-management meeting is convened every three months in order to promote and coordinate labor-management relationship, achieve labor-management cooperation, and

mailto:[email protected]

99

Evaluation Item


Corporate Social

Responsibility

Best-Practice

Principles for

TWSE/TPEx Listed

Companies and

Reasons


gement relationship

prevent various labor problems. 4.Contact window: Ms. Yang, Management Deparmtent (e-mail:[email protected])

Customers 1.Product quality 2.After-sales services

1. A dealer meeting is held every half a year to establish a good interactive relationship with the dealers. Product and consumers’ feedbacks are collected in the dealer meeting.

2.The Sales Department establishes a timely feedback mechanism of the customers and collects all feedbacks.

3.Diversified communication channels and customer satisfaction survey on the website are provided. 4.“Sanitar Helper” service for repair is provided to the consumers 360 days, from 9 AM to 9PM. As long as the defect is not caused by human factors, Sanitar Helper will provide on-site service during the warranty term of the product.

5. Contact window: Ms. Yang, Sales Department (e-mail: [email protected])、 Mr. Tu, Customer Service Department (e-mail:[email protected]) Customer service hotline 0800-001-885 & 0800-655-088

Suppliers 1.Supplier management 2.Stable supply

1.A supplier meeting is held every half a year. The “Supplier Management Measure” is set for a bidirectional dialogue with the suppliers. 2.Contact window: Ms. Huang, Material Department (e-mail:[email protected])


mailto:[email protected])、

100

(6) Implementation of Ethical Corporate Management and Deviations from the Ethical Corporate Management Best-Practice

Principles for TWSE/TPEx Listed Companies and Reasons

Evaluation Item


Ethical Corporate

Management

Best-Practice Principles

for TWSE/TPEx Listed

Companies and

Reasons


1. Establishment of ethical

corporate management

policies and programs

(1) Does the company establish the

ethical corporate

management policies

approved by the Board and

declare the policies and

procedures in its guidelines

and external documents, as

well as the commitment

from its board to implement

the policies? (1) Does the

company establish the

ethical corporate

management policies

(1) The Company has established the “Ethical Operating

Procedures and Conduct Guideline” which was approved by

the Board. It is explicitly stated in this operating procedures and

conduct guideline that the Board and the management shall

proactively implement the ethics policies and shall execute them

in internal management and external business activities. The

ethical operation policies shall be explicitly disclosed in the

Company’s official website and the annual report, allowing the

suppliers, customers, and other business-related institutions

and/or personnel can clearly understand the Company’s ethical

operation ideals. It has specific regulations for the Company’s

employees when executing their operations. When signing

contracts, whether by the Company or its subsidiaries, it shall be

based on the principles of ethics and mutual benefits. The

contract shall be fulfilled proactively.

No material difference

was found.


was found.

101

Evaluation Item


Ethical Corporate

Management



Companies and

Reasons


approved by the Board and

declare the policies and

procedures in its guidelines

and external documents, as

well as the commitment

from its board to implement

the policies?


assessment mechanism for

the risk of unethical

conducts, regularly analyze

and assess the operating

activities with higher risk of

unethical conducts in its

business scope, and

establish appropriate

precautions against

high-risk (2) Does the

(2) The Company has assigned the Finance Department to be

the unit in charge (hereinafter referred to as the “Unit”)

under the Board of Directors. Sufficient resources and

suitable staff shall be allocated to conduct the revision,

execution, explanation, and consultation of the “Ethical

Operating Procedures and Conduct Guideline”, as well as

the archiving of the reports and other supervisions.

Preventive measures for the following behaviors and

conducts shall be covered:

1.Bribery and bribery acceptance.

2. Illegal political contributions.

3. Unappropriate charity donation or sponsor.

4.Provision or acceptance of inappropriate gifts, treatment,

or other inappropriate benefits.

5. Infringement of trade secrets, trademark rights, patent

rights, copyrights, and other intellectual property

rights.

6. Engagement in acts of unfair competition.


was found.

102

Evaluation Item


Ethical Corporate

Management



Companies and

Reasons


company establish

assessment mechanism for

the risk of unethical

conducts, regularly analyze

and assess the operating

activities with higher risk of

unethical conducts in its

business scope, and

establish appropriate

precautions against high-

potential unethical conducts

or listed activities stated in

Article 2, Paragraph 7 of the

Ethical Corporate

Management Best potential

unethical conducts or listed

activities stated in Article 2,

Paragraph 7 of the Ethical

7.Direct or indirect damages of the products and services

caused to the rights, health and safety of consumers or

other interested parties in the stage of R&D,

procurement, manufacturing, supply, or sales.

(3) In addition to the establishment of the “Ethical Operating

Procedures and Conduct Guideline”, an audit mechanism is set

by the internal audit unit to establish an effective internal

control system. The Company’s dedicated unit shall prepare a

report of ethical operations every year and submit it to the

Board for review and modification in order to prevent business

activities with risks of unethical behavior.

103

Evaluation Item


Ethical Corporate

Management



Companies and

Reasons


Corporate Management

Best-Practice Principles for

TWSE/TPEx Practice

Principles for TWSE/TPEx

Listed Companies?


policies to prevent unethical

conduct with clear

statements regarding

relevant procedures, (3)


policies to prevent unethical

conduct with clear

statements regarding

relevant procedures,

guidelines of conduct,

punishment for violation,

rules of appeal, and the

104

Evaluation Item


Ethical Corporate

Management



Companies and

Reasons


commitment to implement

the policies?

2. Fulfill operations integrity

policy

(1) Does the company evaluate

business partners' ethical

records and include

ethics-related clauses in

business contracts?

contracts?


dedicated unit under the

Board of Directors to

promote ethical business

practices and report

regularly (at least once a

year) to the Board of

(1) Before any business activities with important customers or

suppliers, an assessment is needed on the first hand. The

engagement of any business activities shall be conducted

in a fair and transparent manner, and contracts shall be

complied with. The rights and obligations of both parties

shall be stated in the contract in order to prevent any

unethical behaviors or conducts.

(2) The responsible unit for the promotion of ethical operations

is the Finance Department. It is in charge of the

formulation and revision of the ethical operation guideline

and the supervision of the implementation of ethical

operation policies. It shall report the execution status to the

Board on a regular basis every year. The execution status of


was found.


was found.


was found.

105

Evaluation Item


Ethical Corporate

Management



Companies and

Reasons


Directors on its ethical

business policies and

programs to prevent

unethical practices and (at

least once a year) to the

Board of Directors on its

ethical business policies and

programs to prevent

unethical practices and

Supervisor their

implementation?


policies to prevent conflicts

of interest and provide

appropriate communication

channels, and implement

it?

(4) Has the company put in place

2020 was reported to the Board on Dec 24th, 2020.

(3) It is explicitly indicated in the “Ethical Operating Procedures

and Conduct Guideline”, the “Board Meeting Rules”, and the

“Ethical Conducts and Behaviors Guideline for the Directors,

Supervisors, and Managers” the rules of avoidance and

description when there is a conflict of interest of the directors,

supervisors, managers, and other interested parties.

(4) The Company shall establish an effective accounting system

and internal control system based on the regulations

stipulated by the competent authority and shall make

appropriate reviews and revisions on a regular basis

depending on the necessities in order to ensure the

effectiveness of the system design and continuous

operations. The audit unit shall formulate audit plans

based on the self-assessment of the internal audits and

internal controls and shall check the compliance with the

plan to prevent unethical behaviors. An audit report shall


was found.


was found.

106

Evaluation Item


Ethical Corporate

Management



Companies and

Reasons


an effective accounting

system and internal control

system for the

implementation of ethnical

(4) Has the company put in

place an effective accounting

system and internal control

system for the

implementation of ethnical

management, and has the

internal audit unit prepared

an audit plan based on the

assessment results of the risk

of unethical (4) Has the

company put in place an

effective accounting system

and internal control system

for the implementation of

be prepared and submitted to the Board with an internal

control system statement.

(5) Regarding the 2020 internal educational training of ethical

operations, the Chairman of the Board conducted advocacy

training to all primary supervisors of every department,

with a total of 30 attendees. Regarding the external

training, it was entrusted to Futures and Securities

Exchange in which a lecture was conducted to the Board

members and the managers, with a total of 36 attendees.

107

Evaluation Item


Ethical Corporate

Management



Companies and

Reasons


ethnical management, and

has the internal audit unit

prepared an audit plan based

on the assessment results of

the risk of unethical conduct,

and checked compliance

with the unethical conduct

prevention program

accordingly, or appointed a

CPA to carry out the audit?

(5) Does the company regularly

hold internal and external

educational trainings on

operational integrity?

3. Operation of Company's

Integrity Channel


both a reward/punishment

(1) To implement ethical operation policies and to prevent any

unethical behaviors, the Company has established a

“whistle-blower system” that encourages internal and


was found.

108

Evaluation Item


Ethical Corporate

Management



Companies and

Reasons


system and an integrity

hotline? Can the accused be

reached by an appropriate

person for follow-up? Can

the accused be reached by

an appropriate person for

follow-up?


standard operating

procedures for confidential

reporting on investigating

accusation cases?

(3) Does the company provide

proper whistleblower

protection?

external personnel to report unethical or inappropriate

behaviors. The reporting and reward system is explicitly

stated in the “Ethical Operating Procedures and Conduct

Guideline”. Exclusive personnel will be assigned to the

reported subject.

Reports made in the following ways:

TEL for Reporting: 02-8512-3712

Reporting e-mail: [email protected]

Mail address: 7th Floor, No. 111-8, Xingde Road, Sanchong

District, New Taipei City, ReportingMailbox,

Finance Department of Sanitar Co., Ltd.

The Company has also established an Interested Party

Section in the Company’s official website where complaint

and response channels for different interested parties can

be found.

(2) In the “Ethical Operating Procedures and Conduct Guideline”,

the Company has established the standard operating

procedures of the investigation when receiving a report,


was found.


109

Evaluation Item


Ethical Corporate

Management



Companies and

Reasons


the subsequent measure after the investigation is

completed, and the relevant confidentiality mechanism. An

appropriate report channel is provided, and the reporter’s

identity and the content shall be kept confidential.

(3) The Company shall keep the reporter’s identity and the

subject being reported confidential, as well as the content

of the reporting, during the investigation period. It shall

guarantee and protect the reporter not to be mistreated due

to the action.


was found.

4. strengthening information

disclosure

Does the company

disclose its ethical corporate

management policies and the

results of its implementation

on the company's website and

MOPS? Does the company

disclose its ethical corporate

An “Investor Section” is established on the Company’s official

website. The content of the ethical operations and other relevant

information are disclosed. Corporate governance information

can also be found in the Public Information Post System.


was found.

110

Evaluation Item


Ethical Corporate

Management



Companies and

Reasons


management policies and the

results of its implementation

on the company's website and

MOPS?

If the company has its own code of ethics in accordance with the "Code of Conduct for Listed Companies", please describe the differences

between its operation and the code.

The Company has established and implemented the "Procedures and Conduct Guidelines for Integrity Management" and the

operation is no different from the established guidelines.

Other important information to help understand the company's integrity operation: (e.g., the company reviews and amends its code of

conduct for integrity management, etc.)

1. The Company strictly follows the Company Act, the Securities and Exchange Act, the regulations related to listing on the stock exchange, or

other laws and regulations related to business practices as the basis for honest management.

The "Rules of Procedures of the Board of Directors" of the Company provides for a system of recusal of directors' interests. Any person who has

an interest in a proposal listed by the Board of Directors or the legal entity he/she represents, which may be harmful to the Company's

interests, may present his/her opinion and answer questions, but may not join the discussion or vote.

3. The Company has a "Code of Ethical Conduct for Directors, Supervisors and Managers" to guide the ethical conduct of the Company's

directors, supervisors and managers and to enhance the understanding of the Company's ethical standards among the Company's

stakeholders.

The Company's "Regulations for the Prevention of Insider Trading" stipulate that directors, supervisors, managers and employees shall not

disclose material internal information known to them to others, nor shall they ask for or collect material internal information not related to their

111

Evaluation Item


Ethical Corporate

Management



Companies and

Reasons


duties from those who know material internal information of the Company, nor shall they disclose to others material internal information of

the Company not known to them for the purpose of conducting business.

112

(7) If a company has a code of corporate governance and related regulations, it should

disclose how to inquire about them

The Company has established a code of corporate governance and related

regulations, which are disclosed in the "Corporate Governance" and Public

Information Observation Post System in the "Investor Zone" of the Company's

website.

(8) Other important information that may be disclosed to enhance understanding of

corporate governance operations

1. 2020 Directors and Supervisors for Corporate Governance Related Education

Job title Name Date Organizer Course Hours

Chairman of

Board

Shaw

Jin-Siang

2020.03.16

Taiwan

Listed

Company

Association

Environmental Protection in Taiwan 2.0

2020.06.09

Securities

and

Futures

Institute

The Latest Practical Development of Insider

Trading in our Country and Countermeasures for

Corporate Prevention and Control

3.0

2020.06.16 Taiwan

Listed

Company

Association

Taiwan’s Corporate Governance in the

Post-pandemic Period 2.0

2020.07.15

The Legal Environment Faced by Taiwanese

Enterprises’ Business Operations in the American

Market

2.0

2020.08.05

Securities

and

Futures

Institute

How to Strengthen Corporate Governance and

Create Value-addition for the Enterprises through

Corporate Governance Assessment

3.0

Director Chang

Yon-Nang

2020.06.09 Securities

and

Futures

Institute




3.0

2020.09.04

An Exploration of the Remuneration of Employees

and Directors – from the Revised Article 14 of

Securities and Exchange Act

3.0

Director Tsai Min-Shi


and

Futures

Institute




3.0

2020.08.05




3.0

Director Yu Orry


and

Futures

Institute




3.0

2020.08.05




3.0

Independent

Director

Chen

Shih-Xiong 2020.03.16

Republic of

China

3/16 (Taipei) Declaration tips for Income Tax

for Profitable Businesses and FAQ 7.0

113

Certified

Public

Account

Association

Independent

Director Hsu Fayu


and

Futures

Institute




3.0

2020.08.05




3.0

Supervisor Lee Wen-yao


and

Futures

Institute

The latest practical development of China's insider

trading and the way to prevent and respond to

enterprises

3.0

2020.08.05




3.0

Supervisor Lin Guo-Hua

2020.06.09

Securities

and

Futures

Institute




3.0

2020.08.05




3.0

Supervisor Liang

Hsin-yong


and

Futures

Institute




3.0

2020.08.05




3.0

2. 2020 Senior Corporate Governance Officer's Corporate Governance Related

Education

Jon title Name Date Organizer Course Hours

Corporate

Governance

Supervisor

Chen

Yu-chuan

From

2020.03.24

to

2020.03.25

Securities and Futures

Institute

Corporate Governance

Executive Practice

Seminar for Directors,

Supervisors (Including

Independent Directors) -

Taipei Class

12.0

2020.06.09

The Latest Practical

Development of Insider

Trading in our Country

and Countermeasures

for Corporate Prevention

and Control

3.0

114

2020.08.05

How to Strengthen


and Create

Value-addition for the

Enterprises through


Assessment

3.0

3. 2020 Manager's further education on corporate governance

Jon title Name Date Organizer Course Hours

General

Manager

Chen

Wei-chi 2020.06.09


Institute




and Countermeasures


and Control

3.0

Deputy

General

Manager

Yan

Wen-hong 2020.06.09


Institute




and Countermeasures


and Control

3.0

CEO Gu

Fon-guei 2020.06.09


Institute




and Countermeasures


and Control

3.0

CFO Chen

Yu-chuan

From

2020.08.13

to

2020.08.14

Accounting Research

and Development

Foundation

Continuing Education

Course for Accounting

Supervisors of the

Issuer's Securities Firms

and Stock Exchanges

12.0

115

(9) Internal control system implementation status

1. Statement of Internal Control

Sanitar Co., Ltd. Statement of Internal Control System

Date: March 9, 2021

Based on the results of our self-assessment, we declare that our internal control system

for the year ended December 31, 2020 is as follows.

1. The Company recognizes that it is the responsibility of the Board of Directors

and the Manager to establish, implement and maintain an internal control

system, and that the Company has established such a system. The purpose of

the system is to provide reasonable assurance of the effectiveness and

efficiency of operations (including profitability, performance and safety of

assets), reliability of reporting, timeliness, transparency and compliance

with relevant regulations and relevant laws and regulations.

2. No matter how well designed, an effective internal control system can only

provide reasonable assurance that the above three objectives will be

achieved; moreover, due to changes in circumstances and conditions, the

effectiveness of the internal control system may change accordingly.

However, the Company's internal control system has a self-Supervisoring

mechanism and once deficiencies are identified, the Company will take

corrective action.

3. The Company determines the effectiveness of the design and implementation

of the internal control system in accordance with the judgment items of the

effectiveness of the internal control system stipulated in the "Guidelines

Governing the Establishment of Internal Control Systems by Public

Companies" (hereinafter referred to as the "Guidelines"). The judgment

items of the internal control system adopted in the "Guidelines" are divided

into five components based on the management control process: 1. control

environment, 2. risk assessment, 3. control operations, 4. information and

communication, and 5. Supervisoring operations. Each component includes

a number of items. Please refer to the "Guidelines for Handling" for the

aforementioned items.

4. The Company has adopted the above internal control system judgment items

to evaluate the effectiveness of the design and implementation of the

internal control system.

5. Based on the results of the preceding evaluation, the Company believes that

the design and implementation of the Company's internal control system

(including supervision and management of subsidiaries) as of December 31,

2020, including the understanding of the extent to which operational

Annex

II

116

effectiveness and efficiency objectives are achieved, and the reporting of

such internal control system is reliable, timely, transparent and in

compliance with relevant regulations and relevant laws and regulations, is

effective, and that it can reasonably ensure The Company's internal control

system is designed and implemented in a manner that reasonably ensures

the achievement of the above objectives.

6. This statement will become the main content of the Company's annual report

and public statement, and will be made public. If any of the

above-mentioned contents are disclosed in a false or concealed manner, the

Company will be subject to legal liability under Article 20, Article 32, Ar ticle

171 and Article 174 of the Securities and Exchange Act.

7. This statement was approved by the Board of Directors' Meeting held on

March 09, 2021. Of the 6 directors present, 0 held opposing views and the

rest agreed to the contents of this statement.

Sanitar Co., Ltd.

Chairperson: HSIAO, CHUN-HSIANG

Signature

Signed CHEN, WEI-CHIH General

Manager

117

2. If an accountant is engaged to review the internal control system, the

accountant's review report shall be disclosed.

Not applicable.

(10) In the most recent year and as of the date of the annual report, the company

and its internal personnel have been punished by law, or the company has

punished its internal personnel for violating the provisions of the internal

control system, and the result of the punishment may have a significant impact

on the shareholders' equity or securities price, the content of the punishment,

the main deficiencies and improvements should be listed.

No such case.

(11) Significant resolutions of the shareholders' meeting and the board of directors

for the latest year and up to the date of printing of the annual report

1. Significant Resolutions of Shareholders' Meeting and Implementation

Meeting

Date Cause

Important

Resolutions Execution

2020.05.28 Acknowledgment:

1. 2019 Business report and

financial report

2. 2019 Surplus distribution

Motions of discussion:

1. Revision of the

provisions of the

“Articles of Association”.

2. Revision of the

provisions of the "

Shareholders' Meetings

Regulations".

All proposals were

approved by the

shareholders

present.

All proposals were

approved by the

shareholders

present.

1. All relevant forms and

tables were submitted to

the competent authority in

accordance with the

Company Act and other

relevant laws for revision

and announcement

declaration.

2. July 7th, 2020 is set as the

dividend base date and July

31st, 2020 as the dividend

payment date. As the

Company has repurchased

the treasury shares, it has

affected the number of

outstanding shares. The

surplus was adjusted,

resulting in a distribution of

cash dividend of NT

1.71235917 per share.

1.Registration approved by the

MOEA on July 3rd, 2020,

and disclosed on the

Company’s official website.

118

2.Announced on the Public

Information Post System

and the Company’s official

website on May 28th, 2020,

and executed by following

the revised provisions.

2. Important Resolutions of the Board of Directors

Meeting

date Motion Important resolutions

2020.02.27 1.Revision of the provisions of the “Articles of

Association”.

2. Revision of the provisions of the " Shareholders'

Meetings Regulations".


Operating Procedures and Conduct

Guideline”.

4. 2019 Remuneration distribution for the

employees, the directors, and the supervisors.

5. 2019 Business report and financial report



Announcement”.


competence of the public certified

accountants.

9. Review of the directors and supervisors’ 2019

continuing education status and 2020

continuing education plans.

10. Convention of 2020 shareholders’ general

meeting.

As consulted by the Chairman,

all proposals were approved

by the directors present

without objection.

2020.03.27 1. Revision of the provisions of the “Articles of

Association”.

2. Formulation of implementation of the first

repurchase of the Company’s shares.


meeting.

4. Kaohsiung business location housing lease.




without objection.

2020.05.06 1. Revision of the provisions of “Measures for the

Transfer of the First-time Repurchase of the



119

Meeting


Shares to Employees”.

2. Revision of the provisions of the “Guideline of

Corporate Governance Practices”.

3. Revision of the provisions of “Regulations of

Corporate Social Responsibility Practices”.

4. Liability Insurance for the Directors,

Supervisors, and Key Employees.

5. Financial institutions’ credit limit.

6. Endorsement guarantee for Vietnam Caesar

Sanitary Wares Joint Stock Company

(subsidiary).

7. Revision of the Company’s internal control

system and internal audit practice rules.


without objection.

2020.06.09 1. Establishment of the cash dividend

distribution base date and cash dividend

payment date for the year 2020.

2. Revision of the 2019 remuneration payment of

the directors and supervisors.

3. Revision of the 2019 remuneration payment for

the employees.


5. Revision of CFO’s salary adjustment.






the other directors present at

the meeting approved the

proposals without objection


Chairman.

The rest of the proposals, after

being consulted by the

Chairman, were approved by

all directors present.

2020.08.05 1. Revision of the provisions of “Board Meeting

Regulations”.


Conducts and Behaviors Guideline for the

Directors, Supervisors, and Managers”.

3. Revision of the provisions of “Measures for the

Transfer of the First-time Repurchase of the

Shares to Employees”.

4. Endorsement guarantees for Vietnam Caesar

Sanitary Wares Joint Stock Company

(subsidiary).

5. Kaohsiung exhibition center construction and




without objection.

120

Meeting


decoration.

6. Recruitment of a manager for Product R&D

Center.


2020.11.04 1. Revision of the provisions of the "

Shareholders' Meetings Regulations".

2. Revision of the provisions of “Director and

Supervisor Election Guideline”.

3. Revision of the provisions of “Regulations for

the Scope of Duties of Independent Directors”.

4. Establishment of “Risk Management Policy

and Procedures”.

5. Investment in a newly established subsidiary

in Taoyuan.

6. Organizational structure adjustment.




without objection.

2020.12.24 1. Revision of the provisions of the “Articles of

Association”.

2. Revision of the provisions of “Procedures for

Loaning Funds to Third Party”.

3. Revision of the provisions of “Procedures for

Loaning Funds to Third Party”.

4. Revision of the provisions of “Operating

Procedures for Endorsement Guarantee”.

5. Revision of the provisions of “Board

Performance Assessment Rules”.

6. Revision of the provisions of “Manager’s

Remuneration Rules”.

7. Land and real-estate asset sales in Toufen City,

Miaoli County.

8. Removal of the non-competition clause for

managers.

9. Cash increase for Kaisheng Sanitary Ware Co., Ltd.

(subsidiary).

10. Change of internal audit supervisor.

11. Review of the Company’s directors’ and

supervisors’ performance in 2020 and their

performance goals and remuneration in 2021.

12. Review of the Company’s managers’

Motion 11:










Chairman.

The rest of the proposals, after

being consulted by the

Chairman, were approved by

all directors present.

121

Meeting


performance in 2020 and their performance

goals and remuneration in 2021.

13. Review of the 2020 year-end bonus

distribution.


15. Formulation of the Company’s 2021 annual

operation plan and budgeting.

16. Formulation of the Company’s 2021 audit

plans.

17. Special bonus distribution.

2021.03.09 1. 2020 Remuneration distribution for the

employees, the directors, and the supervisors.

2. 2019 Business report and financial report


4. Formulation of the “Regulations on the Audit

Committee Organization”.

5. Revision of the provisions of “Regulations on

the Salary and Remuneration Committee

Organization”.

6. Revision of the provisions of the “Nomination

Committee Organization Rules”


Announcement”.

8. Re-election of directors.

9. Establishment of the nomination period,

number of nominations, and responsible unit

to handle the matters related to the candidates

of directors (including independent directors).

10. Nomination of candidates for director

(including independent director)

11. Removal of the non-competition clause for

new managers.


meeting.


competence of the public certified accountants.

14. Revision of the 2020 remuneration payment

of the directors and supervisors.

Motion 8/14/16:










Chairman.




without objection.

122

Meeting


15. Revision of the 2020 remuneration payment for

the employees.


17. Review of the directors and supervisors’ 2020

continuing education status and 2021

continuing education plans.


(12) For the most recent year and up to the printing date of the annual report, if the

directors or supervisors have dissenting opinions on important resolutions

passed by the board of directors and there are records or written statements,

the main contents of which are:

No such case.

(13) Summary of the resignations and dismissals of the Company's Chairperson,

General Manager, Accounting Officer, Treasurer, Chief internal auditor,

Senior Corporate Governance Officer, and Head of Research and

Development for the most recent year and up to the date of printing of the

annual report

March 31, 2021

Job Title Name Date of arrival Termination

Date

Reasons for

resignation or

dismissal

Internal Chief

internal auditor

Mr. Jiang

Zhengchang

2021.03.15 2020.12.18 Career Planning

Resignation

5. Information Regarding the Company’s Audit Fee and Independence

Unit: NT$ thousands

Name of

Accountin

g Firm

Accou

ntant's

Last

Name

Audit

Public

expens

e

Non-audit fee During the

accounting

audit

Remark System

Design

Business

Registrati

on

Human

Resource

s Other

Subtot

al

Deloitte

Taiwan

Connie

So 2,400 0 0 0 200 200

2020.01.0

1

The non-audit

public

123

Weng

Bo Ren

Until

2020.12.3

1

expense

represents the

establishment

transfer

pricing report

public

expense.

(1) If the amount of non-audit fees paid to the certified public accountant, the

certified public accountant's firm and its affiliates is more than one-fourth of

the audit fees, the amount of audit and non-audit fees and the content of

non-audit services shall be disclosed.

No such case.

(2) If you change your accounting firm and the audit fee paid in the year of change

is less than the audit fee paid in the year before the change, you should disclose

the amount of the audit fee before and after the change and the reasons for the

change.

No such case.

(3) If the audit fee is reduced by 10% or more from the previous year, the amount,

percentage and reasons for the reduction shall be disclosed.

No such case.

6. Replacement of CPA

No such case.

7. Where the company's chairperson, president, or any managerial officer in charge of

finance or accounting matters has in the most recent year held a position at the

accounting firm of its CPAs or at an affiliated enterprise of such accounting firm

No such case.

124

8. Any transfer of equity interests and/or pledge of or change in equity interests (during

the most recent fiscal year or during the current fiscal year up to the date of

publication of the annual report) by a director, supervisor, managerial officer, or

shareholder with a stake of more than 10 percent during the most recent fiscal year

or during the current fiscal year up to the date of publication of the annual report

(1) Changes in shareholdings of directors, supervisors, managers and substantial

shareholders

Job Title Name

2020 For the year ended March 29,

2021 N u m b e r o f s h a r e s h e l d I n c r e a s e ( d e c r e a s e )

N u m b e r o f pledged shares I n c r e a s e ( d e c r e a s e )

N u m b e r o f s h a r e s h e l d I n c r e a s e ( d e c r e a s e )

N u m b e r o f pledged shares I n c r e a s e ( d e c r e a s e )

Chairperson HSIAO,

CHUN-HSIANG 0 0 0 0

Directors CHANG,

YUNG-NAN 0 0 0 0

Directors TSAI,

MING-HSI 2,000 0 0 0

Directors YU, CHIH-HSIN 0 0 0 0

Independent Directors

CHEN, SHIH-HSIUNG

0 0 0 0

Independent Directors

HSU, FENG-YUAN

0 0 0 0

Supervisor LI, WEN-YAO 0 0 0 0

Supervisor LIN, KUO-HUA 0 0 0 0

Supervisor LIANG,

HSIN-YUNG 0 0 0 0

General Manager

CHEN, WEI-CHIH

1,000,000 (1,134,000)

0 0 0

Deputy General Manager

YEN, WEN-HUNG

3,238 0 0 0

Chief Operating

Officer KU, FENG-KUEI 0 0 0 0

Treasurer CHEN,

YU-CHUAN 0 0 0 0

(2) The person to whom the equity is transferred is a related party.

First Name

Reasons for Transfer of

Equity Interests

Transaction Date

Trading Relatives

Relationship between the counterparty and the company, directors,

supervisors, managers and shareholders holding more

than 10 percent of the shares

Number of shares

Trading Price

CHEN, WEI-CHIH

Gift 2020.12.11 Mei-Lin Yip Couples 68,000 31.80

CHEN, WEI-CHIH

Gift 2020.12.11 Yu-Yuan

Chen Father and Son 66,000 31.80

125

(3) If the pledgor is a related party

No such case.

126

9. Relationship information, if among the 10 largest shareholders any one is a related

party, or is the spouse or a relative within the second degree of kinship of another

Name

I

SHAREHOLDI

NG

SHARES HELD

BY SPOUSE,

MINOR

CHILDREN

TOTAL

SHAREHOLDI

NG IN THE

NAME OF

OTHERS

THE NAMES AND

RELATIONSHIPS

OF THE TOP TEN

SHAREHOLDERS

WHO ARE

RELATED TO

EACH OTHER OR

WHO ARE

RELATED TO

EACH OTHER AS

SPOUSES OR

SECOND DEGREE

RELATIVES.

REM

ARK

Num

ber

of

share

s

Shareho

lding

Ratio

Num

ber

of

share

s

Shareho

lding

Ratio

Nu

mbe

r of

shar

es

Shareho

lding

Ratio

Name

(or name)

Relation

ships

HSIAO,

CHUN-H

SIANG

5,013

,581 6.91

1,010

,069 1.39 0 0

Tsai

Tzu-chun

husban

d and

wife

None Cai Jieling

wife

and

sister

TSAI,

MING-HS

I

wife's

younge

r

brother

Tsai

Tzu-chun

3,600

,247 4.96

1,001

,140

(Not

e 1)

1.38 0 0

HSIAO,

CHUN-H

SIANG

husban

d and

wife

None

Cai Jieling

Father

and

Daught

er

None

TSAI,

MING-HS

I

Father

and Son None

CHANG,

YUNG-N

AN

2,881

,975 3.97

174,4

91 0.24 0 0

Zhang

Yixin

Father

and Son None

LIN,

KUO-HU

A

2,572

,574 3.54

685,4

09 0.94 0 0 None None None

127

Name

I

SHAREHOLDI

NG

SHARES HELD

BY SPOUSE,

MINOR

CHILDREN

TOTAL

SHAREHOLDI

NG IN THE

NAME OF

OTHERS

THE NAMES AND

RELATIONSHIPS

OF THE TOP TEN

SHAREHOLDERS

WHO ARE

RELATED TO

EACH OTHER OR

WHO ARE

RELATED TO

EACH OTHER AS

SPOUSES OR

SECOND DEGREE

RELATIVES.

REM

ARK

Num

ber

of

share

s

Shareho

lding

Ratio

Num

ber

of

share

s

Shareho

lding

Ratio

Nu

mbe

r of

shar

es

Shareho

lding

Ratio

Name

(or name)

Relation

ships

Lee Kwok

On

2,250

,000 3.10 Data not available None None None

Huang

Yuezhao

2,243

,538 3.09 0 0 0 0 None None None

Shinzon

Lim

1,997

,875 2.75 0 0 0 0 None None None

Cai Jieling 1,707

,597 2.35 0 0 0 0

HSIAO,

CHUN-H

SIANG

elder

sister's

husban

d

None

Tsai

Tzu-chun

Father

and

Daught

er

None

TSAI,

MING-HS

I

Siblings None

TSAI,

MING-HS

I

1,573

,195 2.17

495,0

67 0.68 0 0

HSIAO,

CHUN-H

SIANG

elder

sister's

husban

d

None

Tsai

Tzu-chun

Father

and Son None

Cai Jieling Siblings None

Xinli

Developm

ent Co.

1,566

,000 2.16 0 0 0 0 None None None

128

Name

I

SHAREHOLDI

NG

SHARES HELD

BY SPOUSE,

MINOR

CHILDREN

TOTAL

SHAREHOLDI

NG IN THE

NAME OF

OTHERS

THE NAMES AND

RELATIONSHIPS

OF THE TOP TEN

SHAREHOLDERS

WHO ARE

RELATED TO

EACH OTHER OR

WHO ARE

RELATED TO

EACH OTHER AS

SPOUSES OR

SECOND DEGREE

RELATIVES.

REM

ARK

Num

ber

of

share

s

Shareho

lding

Ratio

Num

ber

of

share

s

Shareho

lding

Ratio

Nu

mbe

r of

shar

es

Shareho

lding

Ratio

Name

(or name)

Relation

ships

Xinli

Developm

ent Co.,

Ltd.

represent

ative:

Yixin

Zhang

1,300

,000 1.79 0 0 0 0

CHANG,

YUNG-N

AN

Father

and Son None

Note 1: 950,000 shares of the delivery trust with reserved exercise rights.

10. The total number of shares and total equity stake held in any single enterprise by the

company, its directors and supervisors, managerial officers, and any companies

controlled either directly or indirectly by the company

Units: Shares; %; December 31, 2020

Investment Business (Note)

The Company invests

Directors, Supervisors, Managers and Investments in Direct or Indirectly Controlled Businesses

Integrated Investment

Number of shares

Shareholding

ratio

Number of shares

Shareholding

ratio

Number of shares

Shareholding

ratio Vietnam Caesar Sanitary Wares Joint Stock Co.

41,877,700 99.99 200 0 41,877,900 99.99

Kaisheng Sanitary Co., Ltd.

1,326,000 51.00 0 0 1,326,000 51.00

Note: Long-term investments accounted for by the equity method.

129

IV. Capital Overview

1. Capital and shares

(1) Source of Equity

Unit: NT$ thousands; thousands of shares

Year

Month

Issue

Price

Authorized share

capital Paid-in capital Remark

Number

of shares Amount

Numb

er of

shares

Amount Share Capital

Source

The use of

property other

than cash to

offset the

payment of

shares

Others

Dec. 88 10 16,000 160,000 16,000 160,000 Cash capital increase

of $105,000 thousand None Note 1

Oct 96 10 50,000 500,000 20,000 200,000

Surplus capital

increase $40,000

thousand

None Note 2

Dec. 98 10 50,000 500,000 50,000 500,000 Cash capital increase

of $300,000 thousand None Note 3

Aug. '99 10 100,000 1,000,000 56,500 565,000

Cash capital increase

$15,000 thousand

Surplus capital

increase $50,000

thousand

None Note 4

Dec 99 25 100,000 1,000,000 64,500 645,000 Cash capital increase

$80,000 thousand None Note 5

Oct. 102 27 100,000 1,000,000 72,600 726,000 Cash capital increase

$81,000 thousand None Note 6

Note 1: Approval number: Ministry of Economic Affairs, January 04, 2000 (089) Business 148081

Note 2: Approval No.: Ministry of Economic Affairs, October 25, 2007, Economic and Social Affairs No.

09632946040

Note 3: Approval No.: Ministry of Economic Affairs, January 18, 2010, Economic and Commercial Affairs

No. 09901011600

Note 4: Approval No.: Ministry of Economic Affairs, September 06, 2010, Economic and Commercial

Affairs No. 09901201140

Note 5: Approval No.: Ministry of Economic Affairs, January 28, 2011, Economic and Commercial Affairs

No. 10001021530

Note 6：Approval No.: FSC, September 11, 2013, FSC Certificate No. 1020037401, Ministry of Economic

Affairs, November 06, 2013, 10201226950

130

Unit: Unit

Shares

Species

Authorized Share Capital R e m a r k

Outstanding shares Unissued shares Total

Ordinary

shares 72,600,000 27,400,000 100,000,000 Listing

Information about the Omnibus Reporting System: Not applicable.

(2) Shareholder Structure

March 29, 2021

Shareholder

Structure

Quantity

Government Agencies Financial Institutions Other Legal Entities Individuals

F o r e i g n

Institutions

and outsiders

Total

Number of

people 0 3 26 4,236 27 4,292

Number of

shares held 0 1,314,000 5,150,000 65,123,000 1,013,000 72,600,000

Shareholding

Ratio 0.00 1.81 7.09 89.70 1.40 100.00

131

(3) Diversification of shareholding

1. Ordinary shares

March 29, 2021

Shareholding Classification Number of

Shareholders

Number of

shares held

Shareholding

ratio

1 to 999 333 40,021 0.06

1,000 to 5,000 3,092 6,177,193 8.51

5,001 to 10,000 436 3,517,176 4.85

10,001 to 15,000 103 1,355,000 1.87

15,001 to 20,000 70 1,298,542 1.79

20,001 to 30,000 68 1,762,046 2.43

30,001 to 50,000 65 2,540,275 3.50

50,001 to 100,000 30 2,038,877 2.81

100,001 to 200,000 38 5,197,101 7.15

200,001 to 400,000 30 8,078,084 11.12

400,001 to 600,000 4 1,933,950 2.66

600,001 to 800,000 2 1,344,409 1.85

800,001 to 1,000,000 4 3,630,107 5.00

1,000,001 or more 17 33,687,219 46.4

Total 4,292 72,600,000 100.00

2. Special Unit

The Company has not issued any preferred shares.

(4) List of major shareholders

Name, amount and percentage of shareholding of the top ten shareholders

with a shareholding ratio of 5% or more.

Shares

Name of Major Shareholders Number of shares held Shareholding Ratio

HSIAO, CHUN-HSIANG 5,013,581 6.91

Tsai Tzu-chun 3,600,247 4.96

CHANG, YUNG-NAN 2,881,975 3.97

LIN, KUO-HUA 2,572,574 3.54

Lee Kwok On 2,250,000 3.10

Huang Yuezhao 2,243,538 3.09

Shinzon Lim 1,997,875 2.75

Cai Jieling 1,707,597 2.35

TSAI, MING-HSI 1,573,195 2.17

Xinli Development Co. 1,566,000 2.16

132

(5) Stock price, net worth, earnings, dividends and related information per share

for the last two years

Annual

Project 108 years 2020s

Current year ending

March 31, 110

per

shar

e

Mar

ket

Price

Highest 40.45 35.70 35.70

Min. 33.90 23.60 31.80

Average 36.92 31.21 34.18

per

shar

e

Net

valu

e

Before distribution 23.32 23.56

Not applicable

(Note 2)

After distribution 21.62 (Note 1)

per

shar

e

Surp

lus

Weighted average

number of shares (in

thousands)

72,600 72,290

Earnings per share 2.48 3.04

per

shar

e

Divi

dend

s

Cash dividends 1.7 2.0(Note 1)

Grati

s

Issue

Surplus

allotment of

shares

0 0

Capital

Provident

Fund Share

Allotment

0 0

Accumulated unpaid

dividends 0 0

Inve

stme

nt

Com

pens

ation

Anal

ysis

Principal to Benefit

Ratio (Note 3) 14.89 10.27

Principal-to-profit

ratio (Note 4) 21.72 15.61

Cash Dividend Yield

(Note 5) 4.60% 6.41%

133

Note 1: The proposed distribution of earnings for 2020 has not yet been

resolved by the shareholders' meeting.

Note 2: The financial information as of March 31, 2021 has not been reviewed

by the accountants.

Note 3: Capital gain ratio = average closing price per share for the year /

earnings per share.

Note 4: Principal-to-profit ratio = Average closing price per share for the year /

Cash dividends per share.

Note 5: Cash dividend yield rate = Cash dividend per share / Average closing

price per share for the year.

(6) Dividend Policy and Implementation Status

1. Company Dividend Policy

In addition to the Company Law and the Company's Articles of

Incorporation, the Company shall distribute dividends to shareholders at a

rate of not less than 50% of the current and future development plans, taking

into account the investment environment, capital requirements and domestic

and international competition, and taking into account the interests of

shareholders; provided, however, that if the current after-tax profit is less

than the current after-tax profit, the Company shall distribute dividends to

shareholders at a rate of not less than 50% of the current after-tax profit. In

addition, the Company shall distribute dividends to shareholders at a rate of

not less than 50% of its net income for the current year, unless the

distributable earnings for the current period is less than the net income for

the current period. Dividends may be distributed in cash or in stock, with

cash dividends not less than 10% of the total stock dividends, except when

the stock dividends are less than $1 per share.

2. Circumstances of the proposed dividend distribution at the shareholders'

meeting

The appropriation of the Company's 2020 earnings has been resolved by

the Board of Directors on March 9, 2021, and it is proposed to distribute cash

dividends to shareholders in the amount of NT$144,152,000, or NT$2.0 per

share, and the Board of Directors will be authorized to set the basis date for

dividend distribution after the shareholders' meeting.

3. If there is a significant change in the dividend policy, it should be stated

No such case.

(7) Effect of the proposed gratis allotment of shares at the shareholders' meeting

on the Company's operating results and earnings per share

134

There is no plan to allocate shares without compensation during the year.

(8) Remuneration for employees, directors and supervisors

1. The percentage or range of remuneration for employees, directors and

supervisors as set out in the Articles of Association

The Company should appropriate 2% to 5% of its annual net income

before employees' compensation and directors' and supervisors'

compensation to employees' compensation and not more than 2% to

directors' and supervisors' compensation. However, if the Company still has

accumulated losses (including the amount of adjustment to undistributed

earnings), the amount of compensation should be reserved in advance.

2. The basis for estimating the amount of compensation for employees,

directors and supervisors, the basis for calculating the number of shares for

employee compensation distributed by stock, and the accounting treatment

if the actual amount of distribution differs from the estimated amount.

The amount of compensation to employees, directors and supervisors is

estimated in accordance with the Company's Articles of Incorporation and

the "Regulations Governing the Remuneration of Directors and Supervisors"

and is calculated based on past experience and the amount that may be paid

in the future. Any difference between the actual distribution amount and the

estimated amount is accounted for as a change in accounting estimate and

recorded as profit or loss in the following year.

3. The Board of Directors approved the distribution of remuneration

(1) The amount of employees' compensation and directors' and supervisors'

compensation distributed in cash or stock. If the amount differs from the

estimated amount of recognized expenses, the amount of the difference,

the reason for the difference and the treatment of the difference should

be disclosed.

Unit: NT$; shares

Date

approve

d by the

Board

Employee Compensation

Director

s' and

Supervis

ors'

Remune

ration

Whether there is a

difference between the

amount estimated in

the year of expense

recognition

Cash Amount Stock Amount Number of Stocks Total Cash Amount Differe

nce

Reaso

n

Handling situations

110.03.09 8,749,416 0 0 8,749,416 5,832,943 No difference Not applicable Not applicable

(2) The amount of employee compensation distributed in stock and its

proportion to the aggregate of net income after tax and total employee

135

compensation in the individual or individual financial statements for

the period

Not applicable.

4. The actual distribution of compensation to employees, directors and

supervisors in the previous year (including the number of shares distributed,

the amount and the price of the shares), the difference between the

distribution and the recognition of compensation to employees, directors

and supervisors, and the amount of the difference, the reasons for the

difference and the handling of the situation

Unit: NT$; shares

Employee Compensation

Directors'

and

Supervis

ors'

Remuner

ation

Whether there is a difference

in the recognition of

remuneration

Cash Amount Stock Amount Number of Stocks Total Cash

Amount

Differenc

e Reason

Handling situations

7,303,408 0 0 7,303,408 4,868,939 No difference Not applicable Not applicable

136

(9) Buyback of the Company's shares

March 31, 2021

Buyback period First time

Purpose of buying back Transfer of shares to employees

Buy Back Period April 21, 2020 to May 26, 2020

Buyback interval price NTD 19.00 to NTD 46.05

Type and number of shares bought

back Ordinary shares 524,000 shares

Amount of shares bought back NT$15,674,348

Number of repurchases made as a

percentage of the number of

scheduled repurchases (%)

52.4%

Number of shares cancelled and

transferred -

Cumulative number of shares held

by the Company Ordinary shares 524,000 shares

The cumulative number of shares

held by the Company represents

Total ratio of issued shares (%)

0.72%

2. Corporate Bonds

None.

3. Preferred Shares

None.

4. Global Depository Receipts

None.

5. Employee Stock Options

None.

6. Status of New Shares Issuance in Connection with Mergers and Acquisitions

None.

7. Financing Plans and Implementation

As of the quarter ended the publication date of the annual report, the

137

Company had not issued or private placement of marketable securities to obtain

funds and had no plans to use such funds.

138

V. Operational Highlights

1. Business Activities

(1) Business Scope

1. The main contents of the company's business

(1) Ceramics and ceramic products manufacturing industry

(2) Ceramic glassware wholesale industry

(3) Kitchen, bathroom equipment installation engineering industry

(4) Waterware material wholesale industry

(5) Wholesale of furniture, bedding, kitchen appliances, and furnishings

(6) Retailing of furniture, bedding, kitchenware and furnishings

(7) Building Materials Retail

(8) Copper rolling, wire drawing and extrusion industry

(9) Building materials wholesale industry

2. Operating weight

Unit: NT$ thousands

Annual

Product Items

2019 2020

Amount Proportion

(%) Amount

Proportion

(%)

Porcelain 1,142,763 48.94 1,124,375 48.76

Discharge Type 494,716 21.19 463,194 20.08

Electronic

Automation 210,305 9.01

245,240 10.63

Bathroom Type 84,606 3.62 62,383 2.70

Other

categories 402,536 17.24

411,329 17.83

Total 2,334,926 100.00 2,306,521 100.00

3. Current products (services) of the company

The company's main products are basins, toilets, water supply

appliances, bathtubs, bath cabinets, and all kinds of bathroom peripherals

and accessories, as well as providing bathroom equipment repair services.

4. New products (services) planned to be developed

The Company is a professional manufacturer of porcelain, faucets and

bathtubs, with a diversified and complete product line, and expects to

develop new products in the future as follows.

(1) Short-term plans

In response to the increasing shortage of water resources and the

requirements of water conservation regulations, the Company has

139

focused on the redesign and development of the toilet water circuit and

continuously revised its online products so that they can meet the

regulations of the Gold Level Water Conservation Label. In order to

enhance product differentiation, we have (1) introduced ozone

technology into our products to create an antibacterial and deodorizing

bathroom environment by making use of the characteristics of ozone; (2)

developed micro bubble function products to clean the skin deeply

through micro bubbles smaller than capillary pores in the water,

bringing users a different added value and experience; (3) introduced

smart ion sensor technology, which is different from the general

infrared (4) computer toilet seat series products and in the bathroom

space, the use of plastic parts and accessories (hand-held shower,

handrails ... etc.), gradually to the antibacterial certification application

planning; product differentiation strategy, the introduction of more

technology to enhance the added value of the product, through simple

installation and use, fashionable and simple design, combined with the

green and green technology. Through simpler installation and use,

fashionable and simple design, combining the market trend of green

energy, environmental protection and silver hair, and catering to the use

habits of the consumer public, the product features are more layered

and humane temperature. The projects currently under development

cover the following

Water-saving toilets with no water ring encapsulated monobloc and

split type

Toilet items that meet the needs of the construction site market

Urinal development of the characteristic shape

A variety of different characteristics of the faucet series

Public Health Products Combining Ozone Function

Bathroom products that meet the needs of silver-haired people

Lead-free frontier product development

Overall bathroom space storage, product design and planning

Bathroom & Cabinet Products

Long-lasting germicidal bath products

(2) Medium and long term plans

Using our existing process technology and experience, we will

develop other bathroom-related products for other applications, and the

products we plan to develop include

Green energy products for energy saving and environmental

protection

Strengthen the silver hair family and electronic bathing equipment,

140

and develop intelligent health care related products

Deepening Caesar Technology's bath and health management

aspirations related products

High-end products for the middle and high-end market

(2) Industry Overview

1. Industry Status and Development

Although vaccine research and development is accelerated in various

countries and vaccination is expected to commence in the second half of 2020,

the initial number of vaccines is limited, virus mutations are frequent, and it

will still take some time to achieve compliance with herd immunity. In the

construction industry, there is an influx of rush jobs, and the completion rate of

major public construction projects has exceeded a new high in more than a

decade. In New Taipei City, Taoyuan City, Taichung City, Tainan City, and

Kaohsiung City, there was a wave of home deliveries one after another,

making the housing market transactions appear hot at the end of 2020. The

sanitary porcelain manufacturing process has more than 30 stages, all of which

have their own difficulties, any errors in any of the stages will produce

defective products, yield control is extremely difficult, so the sanitary porcelain

industry barriers to entry remain. At present, in addition to China, few new

brands of sanitary equipment have been born in the past two decades, and

almost no new equipment has been put into the domestic sanitary industry,

which shows that the threshold for entry into the industry is still high.

The following is a description of the domestic and international industry

environment:

(1) Business Environment Situation

Countries responded to the epidemic with unprecedented fiscal,

monetary and regulatory measures to maintain household disposable

income, protect corporate cash flow and support credit availability. The

negative growth of advanced economies in Q2 was not as severe as expected,

while the economic recovery in mainland China was stronger than expected.

2020 The global economic recession in the second half of the year is expected

to moderate compared to the first half. Taiwan businesses are returning to

Taiwan, and international companies such as Google and Microsoft are

setting up R&D or innovation centers in Taiwan, which is expected to boost

the domestic smart manufacturing and innovation energy and enhance the

added value of the industry. The newly amended regulations on production

and innovation, the corporate law and the action plan to optimize the

investment environment for new and innovative businesses, and the three

major programs to accelerate investment in Taiwan are all helpful to

stimulate investment and adjust the industrial structure of Taiwan.

141

According to the preliminary statistics from the Office of the

Comptroller of the Executive Yuan, the GDP growth rate for 2020 was 3.11%,

with an average GDP of US$28,383 per person, and the forecast for 2021 is

4.64%, with a GDP of US$30,981 per person.

Unit: NT$ million.

GDP and Economic Growth Rate

Year(Quarter)

Real GDP

(Using 105 years as the

reference year of the chain

value)

Economic growth rate (%)

Not seasonally adjusted Year-over-year(yoy)

2019 19,194,635 2.96

2020 (p) 19,791,301 3.11

2021 (f) 20,709,885 4.64

Explanation: 1. (p) shows the preliminary statistics, (f) shows the predicted

statistics, and (r) shows the corrected statistics.

Source: Office of the Comptroller, Executive Yuan

(2) Domestic Market Changes

According to the votes of the Taiwan Housing Group Trend Center, the

representative word for the housing market in Taiwan in 2020 is

"prosperous", and the reason for this is that "owner-occupants are in charge

and the housing market is in demand. From "hope" in 2017 to "turn" in 2018,

"back" in 2019 to "prosperous" in 2020, the housing market has left the

shadow of tax reform and entered an era of "more hot money, lower interest

rates, and thinner bills", leading to a "prosperous" buying trend in 2020.

According to the Ministry of the Interior, 474,579 buildings were registered

for transfer in 2020, of which 326,589 buildings were transferred,

representing an annual increase of 8.76%, and the threshold of 300,000

buildings was maintained for the second consecutive year, representing a

steady growth in the momentum of Taiwan's repair market.

Year

Transfer Registration

Total Buy and

Sell Auction Inheritance Gift Other

Number of buildings

2018 418,546 277,967 5,234 56,315 43,025 36,005

2019 456,234 300,275 5,117 57,677 43,956 49,209

142

2020 474,579 326,589 5,269 59,109 43,759 39,853

Source: Ministry of the Interior Monthly Statistical Report

According to the statistics of building construction licenses, the total

floor area of building construction licenses reached 41,521 thousand square

meters in 2020, an increase of 12.4% compared to 2019. The total floor area of

building construction licenses reached 28,247 thousand square meters, an

increase of 6.6% from 2019, and the total floor area of construction licenses

reached 32,403 thousand square meters, an increase of 16.4% from 2019. This

shows that the demand for new construction in Taiwan will grow steadily.

Year

Construction License, User License and Start-up Profile

License to build license License to use Start-up license

Number

of pieces

Main floor

Surface area

Number

of pieces

Main floor

Surface area

Number

of

pieces

Main floor

Surface

area

2018 27,344 33,984 22,860 28,366 18,469 26,262

2019 27,143 36,927 22,026 26,489 17,792 27,843

2020 25,980 41,521 22,370 28,247 18,523 32,403

Source: Department of Construction

(3) Factory Operation Overview

With the increasing liberalization of free trade, international bathroom

brands and suppliers are entering the market one after another to compete,

especially in China, where the competition is shifting from low-price to

quality products, making the overall industry more competitive in the future.

Therefore, the company is promoting a brand enhancement and

reengineering program to strengthen the communication channels and

methods with consumers, so that the company's philosophy can penetrate

the market and gain recognition. In response to competition, Caesar will

continue to adopt the concept of "fashionable simplicity" in product design,

reduce product categories, increase purchasing advantages and reduce

management costs, and adjust products to meet different market needs.

Caesar's long-established brand promotion, comprehensive sales channels,

diversified product lines, and flexible operation model, coupled with the

"Bath Housekeeping" approach to strengthen sales and service, have been

widely recognized by consumers and have been one of the top three brands

preferred by domestic consumers for years.

143

2. Upstream, midstream and downstream industry linkages

The Company is a manufacturer and seller of sanitary equipment such

as basins, toilets, water supply devices, bathtubs and other peripheral

products. The relationship between the industry, from the supply of raw

materials, production and assembly to the sale of finished products,

midstream and downstream, is described as follows.

(1) Upstream: Suppliers of raw materials such as copper, porcelain clay,

glaze, gas, etc., faucets and plastic products for finished sanitary

equipment, as well as manufacturers who forge, glaze and shape

the above raw materials. (i.e. the business of Vietnam Caesar Bath

Co.

(2) Midstream: Sales of bathroom equipment and its peripheral products

under its own brand name marketers, distributors and dealers.

(i.e., the Company's business)

(3) Downstream: the construction industry, hardware and sanitary building

materials companies and the end-consumer public that actually

use sanitary equipment and its peripheral products.

The following is a summary of the above-, mid- and downstream

linkages of the bathroom equipment industry to which the Company

belongs.

on

Tour

Medium

Tour

Down

Tour

Bathroom

equipment

manufacturing

industry

Glaze

Pharmacy

Gas

Property

Water

faucet

industry

Plastics Brasswar

e

Industry

Bathroom

Equipment

Distributor

Bathroom

Equipment

Distributor

Bathroom

Equipment Brand

Marketer

Bathroom

equipment

building

materials line

Hardware

equipment and

building

materials line

Construction

Industry

Hardware,

bathroom and

plumbing

company

Porcelain

clay

industry

144

3. Various trends of product development

The development trend of the bathroom industry has gradually

expanded from a simple toilet area to a home living space, and how to plan

a comfortable and pleasant sanitary environment from an aesthetic base is

the goal of research and development that major bathroom brands are

competing for. The creation of thoughtful products to strengthen the

connection and dependence of their customers will further enhance the

brand.

Today's bathroom products are mostly integrated with electronic

technology, the overall industry development has gradually transformed

from the traditional industry to the technology industry, and towards the

following trends.

(1) Bathroom space furnishing

Traditional designers focus on living areas such as living rooms

and bedrooms, but Caesar gradually promotes the planning and

design of the whole bathroom. The value of furnishing the bathroom

space is to combine aesthetics and functionality under the limited

space planning. Through the clever combination of mirror cabinet,

main cabinet and tall cabinet, the fashionable design and simple style

meet the flexible needs of each home space and create more storage

possibilities.

(2) Silver hair family bathroom products

In response to the aging population, how to design and plan the

bathroom space in order to provide silver-haired people and

caregivers with more labor-saving, comfortable and safe bathroom

space, and through the perspective of universal design, to design

products for all ages to meet the needs of every user in the home.

Caesar has noticed this trend of population development and has

designed and planned the silver-haired toilet products, including the

raised digital toilet and the raised general toilet, so that silver-haired

people can easily get up after using the toilet; and has also integrated

the planning of the silver-haired toilet series products to take care of

the needs of silver-haired people in using the toilet.

(3) Seeking strategic cooperation to develop intelligent bathing products

Through strategic cooperation, bathroom products can break out

of the traditional mold. Combining the advantages of Taiwan's

high-tech industry to create a safe and comfortable bathroom space, in

the fall detection, to do a warning and early warning, the traditional

bathroom manufacturers, technology has its limitations. In addition to

the continuous improvement in water conservation and

145

environmental protection, appearance and function, the use of big

data and information technology is a step forward in intelligent

products, through data to know the daily life information, such as use

habits, and even integration of health management-related elements

into product development, through the Internet of Things

management and connection, so that the product is closer to human

nature, and closer to the consumer connection.

(4) Systematic management of production lines

The barcode system is integrated into the production of product

histories, linking the first line of sales with the back office of the

factory, and integrating anti-counterfeiting, identification and

after-sales service. Combined with the electronic system, we can

improve the efficiency and quality of service and provide an extended

warranty mechanism. We also provide barcodes on the product and

on the outer box to gradually improve its electronic system.

4. Competition situation

Almost all of the products sold by Taiwanese sanitary ware brands rely

on imports. In Taiwan, due to high land costs, labor shortage, and high labor

and material costs, almost no new production capacity has been invested in

factory construction. 2020 total imports of sanitary ware grew 9.5% from

2019 (Source: Ministry of Finance). Among them, mainland China accounted

for 42.3% of the total imports, is the main source of Taiwan's sanitary ware

imports, the proportion of the first than still maintained, followed by

Vietnam imports accounted for 31.3% of the total, the third is Japan,

accounting for 13.2% of the total imports. The three regions together

accounted for 86.8% of the total, mainly due to the high manufacturing

difficulty of sanitary ware, manufacturing yield control is not easy, the

technical threshold is very high, coupled with the huge capital required to

build factories, not many companies have the ability to invest in the sanitary

ware industry in Taiwan. 2020 of total imports of water faucets increased by

18.7% over 2019, of which, China accounted for 55.8% of the total imports,

followed by Germany imports accounted for The total imports from China

accounted for 55.8% of the total imports, followed by Germany at 12.6%, and

Vietnam at 5.3%, representing a 21.7% increase from 2019. (Source: Ministry

of Finance). Caesar's own factory in Vietnam covers an area of nearly 15

hectares, including porcelain factory, faucet factory, bathtub factory and

bath cabinet factory, and invests hundreds of millions of dollars in

equipment and technology every year. We will be more competitive in the

market.

146

(3) Technology and R&D Overview

For the most recent year and up to the printing date of the annual report,

research and development expenses and technologies or products successfully

developed.

Unit: NT$ thousands

Annual

Project 2020

For the year ended March

31, 2021

Research and

development expenses 17,706 4,481

Development of

successful technologies

or products

Ozone sterilization

deodorization sensor faucet

Smart Ion Sensor Water

Flush

Micro Bubble micro bubble

shower

New monoblock toilet

Ozone sterilization

deodorization sensor

faucet

Medium and low level

faucet series

Baked faucet series

(4) Long- and short-term business development plans

1. Short-term business development plan

In 2020, the Group's operations focused on new markets, functional

products, network marketing and ERP system integration.

(1) Newly built markets and strengthening existing markets: We are

actively working to develop new markets and make our name known in

the public works market. In recent years, our company has been actively

developing the new construction and public works markets. At the same

time, we continue to deepen our efforts in the existing repair market and

strengthen the professional skills of our sales staff. In terms of service

quality, the Bath Housekeeping service team has been recognized by

consumers to achieve the benefits of word-of-mouth marketing and B2C

customer satisfaction.

(2) Functional products: The launch of the germ elimination faucet series

and the new generation of Aquajet instant flush toilets have greatly

improved our competitiveness. At the same time, the bath and mirror

cabinets are modularized with various sizes and combinations to meet

different needs. CAESAR SPACE", which allows the bathroom to be

used as you wish, increases the ping effect and maximizes the use of the

bathroom. We hope to win more consumers' recognition and adoption,

and increase our competitiveness in the market.

(3) Internet marketing: Since 2020, we have gradually increased the

proportion of budget for internet marketing, developed a precise

147

advertising strategy, and developed a new type of brand

communication field in response to the new digital dividend brought

about by the epidemic, and developed a new type of purchasing process

to master the last mile of channel retailing.

(4) ERP system: Since 2020, we have started planning to update our ERP

system. We expect to integrate Taiwan and Vietnam production into the

same system starting from FY110, and we plan to establish a systematic

management idea based on information technology through the

integration of Taiwan-Vietnam system to provide a faster and more

accurate management platform for decision making and operation for

corporate decision makers and employees.

2. Long-term Business Development Plan

Caesar will continue to focus on the development of the Asian market

and aim to become one of the top three international brands in Asia. We will

continue to invest in key technologies and develop functional products,

complemented by simple and fashionable design concepts and affordable

prices, in order to compete with international brands through product

differentiation strategies.

(1) Expanding into the ASEAN market: We will continue to strengthen our

development efforts in Vietnam to increase our market share. In line

with the ASEAN Zero Tariff Agreement, we have established sales

agents in Malaysia, the Philippines and Cambodia, and will continue to

strengthen our distribution channels and further establish sales agents

in Indonesia.

(2) Layout of China market: Strategic alliance with Taiwan-invested

enterprises in mainland China to open up the China market steadily, so

that the brand awareness of Caesar Bath began to ferment in all parts of

China.

(3) Development of OEM/ODM market: With new product lines, we are

expected to steadily increase our sales by securing orders from

well-known US distributors.

(4) Establishment of simple and fashionable brand image: Caesar Sanitary

Ware will continuously inject new vitality into the brand, renovate the

CIS corporate identity system, and establish a new brand image among

the consumer public with simple and fashionable as the main brand

concept.

(5) Vietnam cabinet market: The newly established cabinet factory in

Vietnam designs and produces cabinets that meet the needs of Vietnam.

It actively expands and creates business opportunities through

148

exhibition stores and distribution mode, and has systematic

development to serve the construction projects and home decoration

upgrades, which will become an important development project for the

company in the future.

149

2. Market and Sales Overview

(1) Market Analysis

1. Sales (provision) of major goods (services) by region

Unit: NT$ thousands

Annual

Sales Area

2019 2020

Amount Proportion

(%) Amount

Proportion

(%)

Taiwan 1,284,658 55.02 1,456,489 63.15

Vietnam 1,029,155 44.08 840,325 36.43

Others 21,113 0.90 9,707 0.42

Total 2,334,926 100.00 2,306,521 100.00

2. Market share

Our company is marketing under the brand name of CAESAR, which

focuses on porcelain toilets, basins, faucets, shower cabinets and bathtubs,

and is not yet available in the market as there are no reliable commercial or

academic institutions or government agencies that can provide reliable

market size statistics to show the market share of our company in the

bathroom equipment market. The Company is the third largest bathroom

equipment manufacturer and seller in Taiwan, with a market share of about

20% in Taiwan, and the third largest brand in Vietnam, with an estimated

market share of 20%.

3. Future market supply and demand and growth

In recent years, the family and demographic structure of Taiwan has

gradually changed from large families to small families, reaching 8.73

million households in 2018, 8.83 million in 108, and 8.93 million in 2019. The

population will drop to 14.49~17.16 million in 2070, which is about 6~70% of

the population in 2020. Therefore, with the change of population age

structure, the demand for barrier-free and universally designed bathrooms

from the middle and upper age groups is expected to increase gradually,

and Caesar will make the necessary product combinations in advance

according to the characteristics of the industry. In addition to Taiwan,

Caesar also focuses its development on Asia, which accounts for over 60% of

the world's population and is also the region with the fastest economic

growth. Although the epidemic was well controlled, the tourism and

physical service industries were still greatly affected. It is expected that after

the gradual liberalization of international tourism, the Vietnamese market

will continue to grow due to the population dividend. Vietnam's economy

grew at a rate of 2.91% in 2020, slowing down to the slowest pace in 30 years.

Foreign investors were unable to enter Vietnam, resulting in a slight

rebound in real estate prices. Since Caesar's production base is in Vietnam

150

and it is one of the top three brands in Vietnam in terms of sales volume, the

growth of Vietnam market in the post-epidemic era will be an important

driving force for Caesar's sustainable growth.

4. Competitive Niche

(1) Competitive product cost: Bathroom equipment is a labor-intensive

industry, and our production base is located in Vietnam, enjoying

relatively low production cost, with automatic production line

equipment to improve the yield rate, supplemented by the ASEAN

tariff-free base, making the product cost relatively competitive.

(2) Copper and Bath Cabinet Plant Capacity: With the expansion of copper

gravity casting production, we can meet the demand of new

construction and public works: With the bath cabinet plant, Caesar

becomes one of the few integrated sanitary ware companies in Taiwan

with a complete production base.

(3) High self-production rate and stable quality: We have self-production

lines for major products such as sanitary ware, faucets, bathtubs, and

bath cabinets, which allow us to bring out the combined effect of

matching product design and strict quality control.

(4) Continued investment in core technology: Caesar FFC porcelain

production technology is the best in Asia, and we continue to maintain

our competitive edge with innovative technology.

(5) Focused online marketing: We flexibly adjust our effective online

marketing strategy to match online advertising and brand positioning.

(6) Perfect pre-sales and after-sales service system: the first to provide

pre-sales service with full product configuration, delivery to the house

and porcelain 10-year warranty, and year-round after-sales service by

bathroom butlers.

(7) Taiwan's 15,000-square-meter distribution center speeds up logistics

operations while reducing the chance of out-of-stocks and providing

effective distribution services throughout the province.

(8) Robust financial structure: The company has good profitability, low

debt ratio, stable cash flow and is able to cope with various crises.

5. Favorable and unfavorable factors of development prospect and

countermeasures

(1) Favorable factors

A.Vietnam production base, Taiwan and Vietnam complement each

other, with competitive advantage

With a total population of 98 million, the average age of Vietnam

is only about 32 years old. Vietnam has a demographic dividend and

the labor force accounts for about 70% of the total population, labor

151

costs are relatively low compared to Taiwan and labor costs are

two-thirds of those in China, the "world factory".

B.ASEAN Tariff Advantage

In 1985, our company chose Vietnam as our production base with

an eye on the ASEAN market. Since 104, the whole region has been

exempted from tariffs, which is favorable to the development of the

market of ASEAN countries, and at the same time, there are still tariff

barriers in some of the bathroom items exported from China to

Vietnam, which is favorable to us and has a relative competitive

advantage over competitors from other countries.

C.Four major business plants to facilitate the expansion of OEM

business

Since the completion of the Vietnam plant expansion, the

Company has four major manufacturing businesses: porcelain, faucets,

cabinets and bathtubs. In addition to supplying Caesar's brand

development in Asia, the Company has the opportunity to expand its

international OEM business and provide one-stop services. The

porcelain business has been receiving orders from a well-known

distributor in the U.S. since 2009 and has the opportunity to further

expand into other projects in the future to diversify its business risks.

D.Proactive management team

Compared with our competitors, our management team is

relatively young, excellent, active and energetic, and has a precise

grasp of the trending products, which enables us to close the gap with

our strong competitors year by year. In Vietnam and Taiwan markets,

we have made significant achievements.

E.Technical Advantages

The Company continues to invest in core technologies, in

addition to the European porcelain Fine Fireclay technology and

green energy hydropower technology, and will further invest in

anti-bacterial technology for application in the kitchen and bathroom

space, which is expected to enhance the overall brand

competitiveness.

F.Private Label Advantage

After 35 years of development, CAESAR is now the second most

popular brand in Taiwan and one of the top three ideal brands for

designers and the top three brands in Vietnam, competing with

international manufacturers. Although there is still a gap between the

company's scale of operation and that of the major international

manufacturers, the company's strong local operation ability and

152

flexible strategy have brought the market share of sanitary equipment

in Taiwan and Vietnam closer.

(2) Adverse factors and countermeasures

A.Professionals are not easy to find, and the training time is long

Countermeasures.

a. We provide summer internship opportunities for interested

university students to work in our head office or factories to

nurture industrial talents.

b. We offer better salaries and benefits than our competitors, a

friendly working environment and a comprehensive welfare system

to attract professional talents.

c. We have planned a comprehensive professional skills training and

internal and external education training for our employees to

enhance their professionalism and ensure the accumulation of

professional skills and experience.

B.The quality of labor is slightly poor, we must eliminate the weak and

keep the strong

Countermeasures.

a. We continue to introduce new automated equipment to reduce the

number of workers in the factory to stabilize production yields.

b. Continuously promote six standard deviations to improve

management efficiency and effectiveness.

c. Increase employee salaries, benefits and performance bonuses, and

enhance on-the-job training to improve staff quality and

productivity.

C.The quality of local raw materials supply in Vietnam is unstable, so

we have to rely on imports.

Countermeasures.

a. Some of the raw materials are in the nature of temporary goods,

and prices and exchange rates fluctuate greatly. Therefore, the

parent company is centrally responsible for the procurement of key

raw materials to control the price and exchange rate risks.

b. Develop local mineral sources in Vietnam to assist manufacturers to

improve washing technology and reduce the risk of imported raw

material supply chain.

(2) Important applications and production process of major products

1. Important applications of the main products

Main Products Important Uses

Porcelain It is a necessity for daily use, such as toilets, water tanks,

153

basins, porcelain feet, squatting toilets, buckets and

ceramic accessories.

Water

It is used in general bathroom water supply apparatus,

including basin faucets, showerheads, shower heads and

hardware fittings, etc.

Bathtub

As a necessity for daily bathing, we develop bathtubs of

different materials, functions and designs according to

market demand, including acrylic bathtubs, massage

bathtubs, classical freestanding bathtubs and shower

columns, etc.

Other (Electronic

Automation)

It is the spare parts for daily bathroom equipment, such as

automatic toilet flush, automatic toilet flush, automatic

water supply faucet, automatic soap dispenser, automatic

hand dryer, computerized toilet cover, etc.

2. Production process of major products

The Company mainly purchases various sanitary products from

Vietnam Caesar Sanitary Ware Co.

(1) Porcelain

154

(2) Water

Casting Process

Processes

Polishing process

Electroplating Process

Assembly and quality inspection process

(3) Bathtub

155

(3) Supply of major raw materials

The Company mainly purchases various finished sanitary products from Vietnam Caesar Sanitary Ware Company Limited, and the current supply of major raw materials for each of its finished sanitary products is as follows.

Raw materials Supply Sources Supply Status

Washed clay China Manufacturers Stable supply

Clay Vietnam and Thailand

Manufacturers Stable supply

Raw mineral clay Vietnam Manufacturers Stable supply

Washed kaolin Vietnam Manufacturers Stable supply

Nagashi Indian and Vietnamese

manufacturers Stable supply

Roasted Powder German and Italian


Copper Bar Taiwan and Korean


65 copper scrap Vietnam Manufacturers Stable supply

Acrylic sheet China Manufacturers Stable supply

(4) The names of customers who have accounted for more than 10% of the total

purchase (sales) in any of the last two years and the amount and proportion of

their purchase (sales), together with the reasons for the increase or decrease

1. Information of major suppliers in the last two years

The Company has no supplier that accounts for more than 10% of the

total purchase price in the last two years, therefore, Not applicable.

2. Major customers in the last two years

Unit: NT$ thousands

2019 2020

Projec

t Name Amount

As a

percentag

e of net

sales for

the year

[%].

Relationshi

p with the

Issuer

Name Amount

As a

percentag

e of net

sales for

the year

[%].

Relationshi

p with the

Issuer

1

Kai

Zhuan

g

403,343 17.27 None

Kai

Zhuan

g

422,146 18.30 None

Other 1,931,58

3 82.73 Other

1,884,37

5 81.70

156

Net

sales

2,334,92

6 100.00

Net

sales

2,306,52

1 100.00

Note: The financial information as of March 31, 2020 has not been reviewed by

the accountants.

The reason for the change: The Company mainly sells through distributors,

and Kai Zhuang is the distributor of the Company in the Greater Taipei area,

and its sales area is the main residential area of the population in Taiwan, so

the sales amount is relatively high.

157

(5) Production volume for the last two years

Unit: NT$ thousands;

Year

Production

Measurements

Main

Commodities

2019 2020

Productivity Production Product

Value Productivity Production

Product

Value

P o r c e l a i n 1,980 952 768,526 1,980 900 507,413

W a t e r 500 456 360,316 500 562 283,547

B a t h t u b 12 7 67,389 12 6 27,959

Total 2,492 1,415 1,196,231 2,492 1,468 818,919

(6) Sales volume for the last two years

Unit: NT$ thousands;

Year

Sales

Measurements

Main

Products

2019 2020

Inside Sales External Sales Inside Sales External Sales

Quantity V a l u e Quantity V a l u e Quantity V a l u e Quantity V a l u e

P o r c e l a i n 958 1,128,134 13 14,629 902 1,100,917 14 23,458

W a t e r 636 492,137 3 2,579 559 462,244 1 950

Electronic Automation

67 209,930 0 375 72 244,760 0 480

B a t h t u b 13 83,626 0 980 10 61,860 0 523

O t h e r (Note) 399,986 (Note) 2,550 (Note) 409,498 (Note) 1,831

Total (Note) 2,313,813 (Note) 21,113 (Note) 2,279,279 (Note) 27,242

Note: Other items are not counted because there are many items with different unit

prices.

158

3. The Number, Average Years of Service, Average Age and Educational Attainment of

the Employees of the Company in the Last Two Years and by the Print Date of the

Annual Report

March 31, 2021

Year 2019 2020 Current year ending

March 31, 2021

Staff

Work

People

Number

Sales 173 256 250

Management 261 272 274

Research and

Development 12 9 10

Production Line 984 976 877

Total 1,430 1,513 1,411

Average annual age 36.4 37.3 36.7

Average

Length of Service 6.4 5.7 6.3

Learning

History

Score

Cloth

than

Rate

Dr. 0 0 0

Master 0.49 0.36 0.39

Large

Commissioner 13.27 14.24 15.90

High Medium 14.56 11.64 11.35

Below High

School 71.68 73.75 72.36

4. Environmental Protection Expenditure

For the most recent year and up to the date of publication of the annual report,

the losses suffered as a result of pollution of the environment (including

compensation and environmental protection audit results for violations of

environmental protection laws and regulations, the date of sanction, the sanction

number, the provisions of the violation, the content of the violation, and the content

of the sanction should be listed), and the estimated amount of current and potential

future losses and measures to deal with them should be disclosed, and if the

amount cannot be reasonably estimated, the facts that cannot be reasonably

estimated should be stated.

No such case.

159

5. Labor Relations

(1) Employee welfare measures, further education, training and retirement

systems and their implementation, as well as agreements between employers

and employees and measures to protect the rights and interests of employees

1. Employee Benefit Measures

In order to enhance the welfare of employees, the Company has

established an employee welfare committee in accordance with the law to

make regular contributions to the welfare fund, and the main points of the

Company's welfare measures are as follows.

(1) Statutory welfare measures: universal health insurance, labor insurance,

and contribution to labor pensions.

(2) The company specially provides: employee bonus, performance bonus,

employee education and training program, and group accident

insurance.

(3) The Employee Welfare Committee provides: three festivals gift,

birthday gift, marriage allowance, maternity allowance, first home

purchase allowance, funeral allowance, injury and illness compensation,

children's education scholarship, annual staff trip, and monthly

birthday celebration party.

Caesar Vietnam (a subsidiary) has established a labor union

organization in accordance with the law and has paid the union dues on a

regular basis, and has implemented the following welfare measures.

(1) Statutory benefit measures: medical insurance, social insurance,

unemployment insurance

(2) The company provides: performance bonuses, employee education and

training programs, and group accident insurance.

(3) The labor union provides: three festivals gift, wedding and funeral

subsidy, injury and sickness compensation, maternity allowance, and

various other convenient and preferential activities, etc.

2. Further training and training situation

The Company holds internal training courses from time to time to

cultivate employees' professional knowledge and skills in accordance with

the needs of each department and their individual functions.

When new employees report to work, the management department

selects the appropriate time and considers giving centralized or individual

lectures according to the actual number of employees. The total number of

employees participating in the training in 2020 was 10, and the total number

of training hours was 60.

3. Retirement System

160

In accordance with the Labor Pension Act, the Company contributes 6%

of monthly wages to a personal pension account established by the Bureau

of Labor Insurance.

The Company's retirement system is governed by the Labor Standards

and Labor Pension Act, and the relevant regulations are as follows.

(1) Employees who meet one of the following conditions may apply for

retirement.

A. Those who have served for more than 15 years and are at least 55

years old.

B. Those who have completed 25 years of service or more.

C. Those who have served for more than 10 years and have reached the

age of 60.

(2) Employees shall not be compulsorily retired unless one of the following

circumstances applies.

A. Aged 65 or older.

B. Mentally or physically incapacitated for work.

4. Agreements between labor and management and various measures to

protect employees' rights and interests

Our company holds regular labor-management meetings to provide a

channel of communication between employees and employers. Since its

establishment, all regulations and measures regarding labor relations have

been handled in accordance with relevant laws and regulations, and based

on the management philosophy of coexistence and mutual prosperity and

clear management policies, we attach great importance to employees'

opinions and provide various channels for responding to opinions to

maintain a good and harmonious labor relations.

(2) For the most recent year and up to the printing date of the annual report, the

losses suffered as a result of labor disputes (including labor inspection results

in violation of the Labor Standards Law, the date of the sanction, the sanction

number, the provisions of the law violated, the content of the law violated, and

the content of the sanction), and the estimated amount of current and potential

future losses and measures to address them, and if the amount cannot be

reasonably estimated, the fact that it cannot be reasonably estimated

No such case.

161

6. Important Contracts

Nature of

Contracts Person(s) involved

Deed of

Commencement

Date

Main Content Restricted

Terms

Credit

Facility

Shanghai Commercial

Savings Bank 2020.05.07~2021.05.07

Short-term

Loans None

Credit

Facility

Citi (Taiwan)

Commercial Bank 2020.05.15~2021.05.15

Short-term

Loans None

Credit

Facility

South China

Commercial Bank 2020.06.25~2021.06.25

Short-term

Loans

Short Term

Guaranteed

Loans

None

Credit

Facility Taipei Fubon Bank 2020.08.15~2021.08.15

Short-term

Loans None

Credit

Facility

Chinatrust Commercial

Bank 2020.08.31~2021.08.31

Short-term

guaranteed

loans

Material

Purchase Loan

None

Credit

Facility First Commercial Bank 2020.07.24~2021.07.24

Short-term

Loans None

Credit

Facility Bank of Taiwan

2020.12.18~2021.12.17 Short-term

Loans None

2020.12.18~2025.12.17

Medium-term

guaranteed

borrowings

Collateral: 80% guaranteed by the ECF

Credit

Facility

Mega International

Commercial Bank 2020.01.30~2021.01.30

Short-term

Loans

Short-term

Purchase Loan

Maintain 10% of

live

performance at

average

utilization

balance

Credit

Facility

Chang Hwa

Commercial Bank 2021.02.28~2022.02.28

Short-term

Loans None

162

VI. Financial Information

1. Condensed Balance Sheet and Statement of Comprehensive Income of the Last Five

Years

(1) Condensed Balance Sheet and Consolidated Income Statement Information -

Consolidated Financial Statements

1. Condensed Balance Sheet - Consolidated Financial Statements

Unit: NT$ thousands

Year

Item

Last five years' financial information (Note 1)

2016 2017 2018 2019 2020

C u r r e n t a s s e t s 1,167,111 1,228,552 1,107,492 1,075,425 1,173,183

P r o p e r t y , p l a n t a n d

e q u i p m e n t 702,730 700,255 1,032,041 1,189,276 1,096,721

I n t a n g i b l e a s s e t s 2,340 4,299 3,021 6,634 5,474

O t h e r A s s e t s 133,771 170,010 149,349 256,670 273,635

T o t a l A s s e t s 2,005,952 2,103,116 2,291,903 2,528,005 2,549,013

Current

liabilities

Pre-assignment 337,342 384,353 429,693 594,590 600,040

After

distribution 497,062 551,333 596,673 718,010 (Note 2)

Non-current liabilities 86,380 110,275 162,470 240,158 233,446

Total

liabilities

Pre-assignment 423,722 494,628 592,163 834,748 833,486

After


Equity attributable to

owners of the parent

c o m p a n y

1,582,222 1,608,479 1,699,730 1,693,246 1,702,815

S h a r e C a p i t a l 726,000 726,000 726,000 726,000 726,000

C a p i t a l F u n d 277,452 277,452 277,452 277,452 277,452

Reserved

Surplus

Pre-assignment 656,009 755,922 842,953 855,824 952,496

After


O t h e r i n t e r e s t s (77,239) (150,895) (146,675) (166,030) (237,459)

T r e a s u r y S t o c k s 0 0 0 0 15,674

Non-controlling interests 8 9 10 11 12,712

R i g h t s

a n d

Benefits

T o t a l

Pre-assignment 1,582,230 1,608,488 1,699,740 1,693,257 1,715,527

After distribution

1,422,510 1,441,508 1,532,760 1,569,837 (Note 2)

Note 1: Audited and certified by the accountant.

163

Note 2: The proposed distribution of earnings for 2020 has not yet been resolved by the

shareholders' meeting.

164

2. Condensed Consolidated Statements of Income - Consolidated Financial

Statements

Unit: NT$ thousands, but earnings per share was NT$

Year

Item

Last five years' financial information (Note)

2016 2017 2018 2019 2020

Operating income 2,222,489 2,269,977 2,293,113 2,334,926 2,306,521

G r o s s P r o f i t 707,655 756,392 751,639 701,683 734,168

Operating profit

o r l o s s 330,609 330,995 348,253 246,713 289,046

Non -ope rat ing

i n c o m e a n d

e x p e n s e s

8,283 10,937 9,015 (1,170) 529

N e t i n c o m e

b e f o r e t a x 338,892 341,932 357,268 245,543 289,575

C o n t i n u i n g

B u s i n e s s U n i t

Net profit for the

p e r i o d

247,111 259,634 254,012 179,852 220,056

Loss of closed

u n i t s 0 0 0 0 0

Net income (loss)

f o r th e p e r i o d 247,111 259,634 254,012 179,852 220,056

O t h e r

c o mp r ehen s iv e

income or loss for

t h e p e r i o d

(Net after tax)

(13,412) (73,656) 4,220 (19,355) (71,431)

T o t a l

c o n s o l i d a t e d

profit or loss for

t h e p e r i o d

233,699 185,978 258,232 160,497 148,625

Net profit vested

i n

Parent Company

O w n e r

247,110 259,633 254,011 179,851 220,092

165

N e t i n c o m e

a t t r ib ut ab l e t o

n o n c on t r o l l in g

i n t e r e s t s

1 1 1 1 (36)

T o t a l


p r o f i t o r l o s s


o w n e r s o f t h e

parent company

233,698 185,977 258,231 160,496 148,663

T o t a l


p r o f i t o r l o s s


n o n c on t r o l l in g

i n t e r e s t s

1 1 1 1 (38)

E a r n i n g s p e r

s h a r e 3.40 3.58 3.50 2.48 3.04

Note: Audited and certified by the accountant.

166

(2) Condensed Balance Sheet and Consolidated Income Statement Information -

Individual Financial Reports

1. Condensed Balance Sheet - Individual Financial Reports

Unit: NT$ thousands

Year

Item

Last five years' financial information (Note 1)

2016 2017 2018 2019 2020

C u r r e n t a s s e t s 420,180 412,277 342,259 417,800 451,053

P r o p e r t y , p l a n t a n d

e q u i p m e n t

309,192 338,872 473,814 503,335 500,848

I n t a n g i b l e a s s e t s 1,733 940 66 261 1,009

O t h e r A s s e t s 1,109,579 1,176,482 1,339,107 1,424,834 1,341,991

T o t a l A s s e t s 1,840,684 1,928,571 2,155,246 2,346,230 2,294,901

Current

liabilities

Pre-assignment 172,425 210,116 293,349 449,677 395,520

After


Non-current liabilities 86,037 109,976 162,167 203,307 196,566

Total

liabilities

Pre-assignment 258,462 320,092 455,516 652,984 592,086

After


Equity attributable to

owners of the parent

c o m p a n y

1,582,222 1,608,479 1,699,730 1,693,246 1,702,815

S h a r e C a p i t a l 726,000 726,000 726,000 726,000 726,000

C a p i t a l F u n d 277,452 277,452 277,452 277,452 277,452

Reserved

Surplus

Pre-assignment 656,009 755,922 842,953 855,824 952,496

After


O t h e r i n t e r e s t s (77,239) (150,895) (146,675) (166,030) (237,459)

T r e a s u r y S t o c k s 0 0 0 0 (15,674)

Non-controlling interests 0 0 0 0 0

Rights and

B e n e f i t s

T o t a l

Pre-assignment 1,582,222 1,608,479 1,699,730 1,693,246 1,702,815

After

distribution 1,422,502 1,441,499 1,532,750 1,569,826 (Note 2)

Note 1: Audited and certified by the accountant.

Note 2: The proposed distribution of earnings for 2020 has not yet been resolved by the

shareholders' meeting.

167

2. Condensed Consolidated Income Statement - Individual Financial Reports

Unit: NT$ thousands, but earnings per share was NT$

Year

Item

Last five years' financial information (Note)

2016 2017 2018 2019 2020

Operating income 1,268,229 1,283,895 1,319,087 1,300,183 1,471,396

Gross Profit 330,205 362,116 362,825 343,548 445,898

Operating profit

or loss 168,249 178,832 189,075 159,522 222,516

Non-operating

income and

expenses

138,394 141,822 156,286 71,753 54,549

Net income

before tax 306,643 320,654 345,361 231,275 277,065

Continuing

Business Unit

Net profit for the

period

247,110 259,633 254,011 179,851 220,092

Loss of closed

units 0 0 0 0 0

Net income (loss)

for the period 247,110 259,633 254,011 179,851 220,092

Other

comprehensive

income or loss for

the period

(Net after tax)

(13,412) (73,656) 4,220 (19,355) (71,429)

Total

consolidated

profit or loss for

the period

233,698 185,977 258,231 160,496 148,663

Net profit vested

in

Parent Company

Owner

247,110 259,633 254,011 179,851 220,092

Net income

attributable to

noncontrolling

interests

0 0 0 0 0

168

Total

consolidated

profit or loss

attributable to

owners of the

parent company

233,698 185,977 258,231 160,496 148,663

Total

consolidated

profit or loss

attributable to

noncontrolling

interests

0 0 0 0 0

Earnings per

share 3.40 3.58 3.50 2.48 3.04

Note: Audited and certified by the accountant.

(3) Name of the accountant and his checking opinion for the last five years

Year Accounting Firm Accountant's Name Verification

Comments

2016 Deloitte Taiwan Yusuhuan

Ming-Chung Hsieh No reservations

2017 Deloitte Taiwan Yusuhuan

Weng Bo Ren No reservations

2018 Deloitte Taiwan Weng Bo Ren

Connie So No reservations

2019 Deloitte Taiwan Connie So


2020 Deloitte Taiwan Connie So


169

2. Five-Year Financial Analysis

(1) Financial Analysis - Consolidated Financial Statements

Year

Analysis Items (Note)

Financial analysis for the last five years

2016 2017 2018 2019 2020

Financial

Structure (%)

Debt to assets ratio 21.12 23.51 25.83 33.02 32.69

Long-term capital to property,

plant and equipment ratio 237.44 245.44 180.43 162.57 177.70

Solvency %

Mobility Ratio 345.97 319.64 257.74 180.86 195.51

Quick Ratio 203.16 161.97 115.29 92.09 80.12

Interest cover multiplier 233.43 226.25 128.09 31.43 36.64

Operating

Capabilities

Receivables turnover rate

(times) 9.78 9.26 9.32 9.65 9.29

Average number of days of

receipt 37.32 39.41 39.16 37.82 39.28

Inventory turnover rate

(times) 3.22 2.69 2.44 2.76 2.54

Turnover rate of accounts

payable (times) 13.51 11.34 12.96 16.22 19.44

Average number of sales days 113.35 135.68 149.59 132.24 143.70

Property, plant and equipment

turnover rate (times) 3.07 3.23 2.64 2.10 2.01

Total Asset Turnover (Times) 1.15 1.10 1.04 0.96 0.90

Profitability

Return on Assets (%) 12.90 12.69 11.66 7.73 8.92

Return on Equity (%) 16.06 16.27 15.35 10.60 12.91

Net income before income tax

as a percentage of paid-in

capital (%)

46.67 47.09 49.21 33.82 39.88

Net Profit Rate (%) 11.11 11.43 11.07 7.70 9.54

Earnings per share (NT$) 3.40 3.58 3.50 2.48 3.04

Cash Flow

Cash flow ratio (%) 76.41 47.31 84.87 58.43 28.43

Cash Flow Fair Ratio (%) 98.74 77.30 67.14 74.97 69.79

Cash reinvestment ratio (%) 6.02 1.15 9.34 8.42 2.14

Leverage Operating leverage 1.88 2.02 1.94 2.55 2.30

Financial leverage 1.00 1.00 1.00 1.03 1.02

Change of 20% or more in each financial ratio for the last two years.

1. The changes in return on equity, net income ratio and earnings per share were mainly due

to the growth in profitability.

170

2. The changes in cash flow ratio and cash reinvestment ratio were mainly due to the

decrease in operating income due to the epidemic in Vietnam.

171

Note: The financial analysis is calculated as follows.

1. Financial Structure

(1) Debt to asset ratio = Total liabilities / Total assets.

(2) Long-term capital to property, plant and equipment = (total equity +

non-current liabilities) / net property, plant and equipment.

2. Solvency

(1) Current ratio = Current assets / Current liabilities.

(2) Quick ratio = (current assets - inventories - prepaid expenses) / current

liabilities.

(3) Interest coverage = Net income before income tax and interest expense /

Interest expense for the period.

3. Management capability

(1) Turnover rate of accounts receivable (including accounts receivable and notes

receivable arising from operations) = Net sales / Average balance of accounts

receivable (including accounts receivable and notes receivable arising from

operations) for each period.

(2) Average collection days = 365/receivable turnover rate.

(3) Inventory turnover rate = Cost of goods sold / average inventory amount.

(4) Turnover rate of accounts payable (including accounts payable and notes

payable arising from operations) = Cost of goods sold / Average balance of

accounts payable (including accounts payable and notes payable arising from

operations) for each period.

(5) Average sales days = 365 / Inventory turnover rate.

(6) Turnover rate of property, plant and equipment = net sales / average net

property, plant and equipment.

(7) Total Asset Turnover = Net Sales / Average Total Assets.

4. Profitability

(1) Return on assets = [Profit and loss after tax + interest expense × (1 - tax rate)] /

Average total assets.

(2) Return on equity = Profit or loss after tax / average total equity.

(3) Net profit margin = profit or loss after tax / net sales.

(4) Earnings per share = (Profit or loss attributable to owners of the parent

company - preferred stock dividends) / weighted-average number of shares

outstanding.

5. Cash flow

(1) Cash flow ratio = Net cash flow from operating activities / Current liabilities.

(2) Net cash flow fair ratio = Net cash flow from operating activities for the last

five years / (capital expenditures + increase in inventories + cash dividends) for

the last five years.

(3) Cash reinvestment ratio = (net cash flow from operating activities - cash

172

dividends) / (gross property, plant and equipment + long-term investments +

other noncurrent assets + working capital).

6. Leverage.

(1) Operating leverage = (net operating revenues - variable operating costs and

expenses) / operating income.

(2) Financial leverage = Operating income / (Operating income - interest

expense).

173

(2) Financial Analysis - Individual Financial Reports

Year

Analysis Items (Note)

Financial analysis for the last five years

2016 2017 2018 2019 2020

Financial

Structure (%)

Debt to assets ratio 14.04 16.59 21.13 27.83 25.80

Long-term capital to property,

plant and equipment ratio 539.55 507.11 392.95 376.79 379.23

Solvency %

Mobility Ratio 243.68 196.21 116.67 92.91 2025.04

Quick Ratio 184.85 146.27 69.48 60.33 68.84

Interest cover multiplier 1,704.57 784.99 340.92 80.80 69.52

Operating

Capabilities

Receivables turnover rate

(times) 8.07 7.57 7.94 8.12 8.35

Average number of days of

receipt 45.22 48.21 45.96 44.95 43.71

Inventory turnover rate

(times) 8.66 8.03 7.16 6.26 6.08

Turnover rate of accounts

payable (times) 14.63 11.41 12.36 16.57 27.91

Average number of sales days 42.14 45.45 50.97 58.30 60.03


turnover rate (times) 4.09 3.96 3.24 2.66 2.93

Total Asset Turnover (Times) 0.71 0.68 0.64 0.57 0.63

Profitability

Return on Assets (%) 14.01 13.79 12.47 8.09 9.62

Return on Equity (%) 16.06 16.27 15.35 10.60 12.96

Net income before income tax

to paid-in capital (%) 42.23 44.16 47.57 31.85 38.16

Net Profit Rate (%) 19.48 20.22 19.25 13.83 14.95

Earnings per share (NT$) 3.40 3.58 3.50 2.48 3.04

Cash Flow

Cash flow ratio (%) 93.31 58.39 53.40 13.39 40.98

Cash Flow Fair Ratio (%) 99.72 81.00 70.09 54.61 60.64

Cash reinvestment ratio (%) 0.93 -2.15 -0.55 -5.71 2.06

Leverage Operating leverage 1.88 1.95 1.85 2.08 1.95

Financial leverage 1.00 1.00 1.00 1.01 1.01

Change of 20% or more in each financial ratio for the last two years.

1. The change in current ratio was mainly due to the decrease in short-term borrowings.

2. The change in the turnover rate of accounts payable was mainly due to the increase in

cost of goods sold as a result of the growth in operating revenue, while the average

balance of accounts payable for each period remained at the same level as the same

174

period last year.

3. The changes in return on equity and earnings per share were mainly due to the growth in

profitability.

4. The changes in cash flow ratio and cash reinvestment ratio were mainly due to the

increase in net cash inflow from operating activities as a result of the growth in operating

revenues.

175

Note: The financial analysis is calculated as follows. 1. Financial Structure

(1) Debt to asset ratio = Total liabilities / Total assets. (2) Long-term capital to property, plant and equipment = (total equity + non-current liabilities) / net property, plant and equipment.

2. Solvency (1) Current ratio = Current assets / Current liabilities. (2) Quick ratio = (current assets - inventories - prepaid expenses) / current liabilities. (3) Interest coverage = Net income before income tax and interest expense / Interest expense for the period.

3. Management capability (1) Turnover rate of accounts receivable (including accounts receivable and notes

receivable arising from operations) = Net sales / Average balance of accounts receivable (including accounts receivable and notes receivable arising from operations) for each period.

(2) Average collection days = 365/receivable turnover rate. (3) Inventory turnover rate = Cost of goods sold / average inventory amount. (4) Turnover rate of accounts payable (including accounts payable and notes

payable arising from operations) = Cost of goods sold / Average balance of accounts payable (including accounts payable and notes payable arising from operations) for each period.

(5) Average sales days = 365 / Inventory turnover rate. (6) Turnover rate of property, plant and equipment = net sales / average net

property, plant and equipment. (7) Total Asset Turnover = Net Sales / Average Total Assets.

4. Profitability (1) Return on assets = [Profit and loss after tax + interest expense × (1 - tax rate)] / Average total assets. (2) Return on equity = Profit or loss after tax / average total equity. (3) Net profit margin = profit or loss after tax / net sales. (4) Earnings per share = (Profit or loss attributable to owners of the parent company - preferred stock dividends) / weighted-average number of shares outstanding.

5. Cash flow (1) Cash flow ratio = Net cash flow from operating activities / Current liabilities. (2) Net cash flow fair ratio = Net cash flow from operating activities for the last

five years / (capital expenditures + increase in inventories + cash dividends) for the last five years.

(3) Cash reinvestment ratio = (net cash flow from operating activities - cash

176

dividends) / (gross property, plant and equipment + long-term investments + other noncurrent assets + working capital).

6. Leverage. (1) Operating leverage = (net operating revenues - variable operating costs and expenses) / operating income. (2) Financial leverage = Operating income / (Operating income - interest expense).

177

3. Audit Committee’s Report for the Most Recent Year

Supervisory Review Report

The Board of Directors has audited the individual financial statements and the

consolidated financial statements of the Company for the year ended December 31, 2020, together with the report on operations and the statement of appropriation of earnings, which have been audited and certified by Connie Su and Bo-Jen Weng, Certified Public Accountants, and have been examined by our supervisors and found to be in order.

Yours sincerely

The Company's 2021 Annual General Meeting of Shareholders

Supervisors: LI, WEN-YAO

Supervisors: LIN, KUO-HUA Supervisors: LIANG, HSIN-YUNG

March 9, 2021

178

4. Financial statements for the most recent year

Sanitar Co., Ltd.

Parent Company Only Financial Statements and

Independent Auditors’ Report For the Years Ended December 31, 2020 and 2019

Address: 7F., No. 111-8, Xingde Rd., Sanchong Dist., New Taipei City

Tel: (02)85123712

Stock Code: 1817

179

Accountant's Audit Report

To Sanitar Co., Ltd.:

Audit opinion

I have audited the financial statements of Sanitar Co., Ltd., which comprise

the Parent Company Only Statements of Financial Position as as of Dec. 31, 2020

and Dec. 31, 2019, the Parent Company Only Statements of Comprehensive

Income from Jan. 1 to Dec. 31, 2020 and from J an. 1 to Dec. 31, 2019, Parent

Company Only Statement of Change in Equity, Parent Company Only Statement

of Cash Flows, and Parent Company Only Financial Statement Notes (including a

summary of significant accounting policies).

In my opinion, the accompanying Parent Company Only Financial

Statements are properly drawn up in accordance with the Regulations Governing

the Preparation of Financial Reports by Securities Issuers so as to give a true and

fair view of the Parent Company Only Financial Position of the Sanitar Co., Ltd.

as of December 2020 and 2019 and of the Parent Company Only Financial

Performance and Cash Flows of Sanitar Co., Ltd. from January 1 to December 31,

2020 and 2019.

Basis for audit opinion

I conducted my audit in accordance with Regulations Governing Auditing

and Attestation of Financial Statements by Certified Public Accountants and

Generally Accepted Auditing Standards. My responsibil ities under those

standards are further described in the 'Accountant 's responsibilities for the aud it

of the Parent Company Only Financial Statements ' section of my report. I am

independent of Sanitar Co., Ltd. in accordance with the Accounting and

Corporate Regulatory Authority Code of Professional Conduct and Ethics for

Public Accountants and Accounting Entities, and I have fulfilled my other ethical

180

responsibilities in accordance with these requirements. I believe that the audit

evidence I have obtained is sufficient and appropriate to provide a basis for my

opinion.

Key Audit Matter

The key auditing matter is which that, in my professional judgment, is most

significant to my review of the Parent Company Only Financial Statements of

Sanitar Co., Ltd. for 2020. Such matter has been considered in the process of

examining the Parent Company Only Financial Statements taken as a whole and

forming an opinion thereon, and I do not express an opinion on the matter

individually.

The following is the description of the key audit matter in the Parent

Company Only Financial Statements of Sanitar Co., Ltd. for 2020:

Key Audit Matter: Authenticity in Sales to Specific Customers

Due to the significant audit risk associated with the revenue recognition

under auditing standards, Sanitar Co., Ltd. are mainly dealing with distributors

and have added significant sales from specific non-distributor customers,

therefore, based on the consideration of the materiality of the financial

statements, the authenticity in sales revenue from specific customers with high

order amounts and significant new sales in th e current year is considered as a key

audit matter. Please refer to Notes 4(11) and 19 to the Parent Company Only

Financial Statements.

In connection with the above key matter, I conducted the following principal

audit procedures:

1. To understand, evaluate and test the effectiveness of the design and

implementation of the internal control system related to revenue

recognition.

2. To obtain a detailed sales breakdown from specific customers in fiscal 2020,

verify the original orders, delivery notes, invoi ces and other related

documents of the relevant transactions, and verify with the recorded

amounts to confirm the authenticity of the revenues.

3. To obtain a breakdown of subsequent sales returns from specific customers,

verify the related documents and examine the reasonableness of the returns.

Responsibilities of management and directors for the Parent Company Only

Financial Statements

181

Management is responsible for the preparation of Parent Company Only

Financial Statements that give a true and fair vi ew in accordance with the

Regulations Governing the Preparation of Financial Reports by Securities Issuers,

and for devising and maintaining a system of internal accounting controls

sufficient to provide a reasonable assurance that assets are safeguarded a gainst

loss from unauthorized use or disposition.

In preparing the Parent Company Only Financial Statements, management is

responsible for assessing the ability of Sanitar Co., Ltd. to continue as going

concern, disclosing, as applicable, matters related to going concern and using the

going concern basis of accounting unless management either intends to liquidate

Sanitar Co., Ltd. or to cease operations, or has no realistic alternative, but to do

so.

The responsibil ities of the governing body (including supervisors) include

overseeing the financial reporting process of Sanitar Co., Ltd.

Auditors’ responsibilities for the audit of the Parent Company Only

Financial Statements

My objectives are to obtain reasonable assurance about whether the Parent

Company Only Financial Statements as a whole are free from material

misstatement, whether due to fraud or error, and to issue an auditors’ report that

includes my opinion. Reasonable assurance is a high level of assurance but is not

a guarantee that an audit conducted in accordance with GAAS will always detect

a material misstatement when it exists. Misstatements can arise from fraud or

error and are considered material if, individually or in the aggregate, they could

reasonably be expected to influence the econ omic decisions of users taken in the

basis of these Parent Company Only Financial Statements.

As part of an audit in accordance with GAAS, I exercise professional

judgment and maintain professional skepticism throughout the audit. I also:

1. Identify and assess the risks of material misstatement of the Parent

Company Only Financial Statements, whether due to fraud or error, design

and perform audit procedures responsive to those risks, and obtain audit

evidence that is sufficient and appropriate to pro vide a basis for audit

opinions. Because fraud may be related to conspiracy, forgery, deliberate

omission, false statement or breach of internal control, the risk of a material

182

misstatement caused by fraud which is not identified is higher than the risk

of a material misstatement caused by any error.

2. Obtain an understanding of internal controls relevant to the audit in order to

design audit procedures that are appropriate in the circumstances, but not

for the purpose of expressing an opinion on the inte rnal control

effectiveness of Sanitar Co., Ltd.

3. Assess the appropriateness of management’s use of accounting policies and

the reasonability of the accounting estimate and relevant disclosure.

4. Conclude on the appropriateness of management’s use of t he going concern

basis of accounting and, based on the audit evidence obtained, whether a

material uncertainty exists related to events or conditions that may cast

significant doubt on the ability of Sanitar Co., Ltd. to continue as a going

concern. If we conclude that a material uncertainty exists, we are required to

draw attention in our auditor’s report to the related disclosures in the Parent

Company Only Financial Statements or, if such disclosures are inadequate,

to modify our opinion. Our conclusions are based on the audit evidence

obtained up to the date of our auditors’ report. However, future events or

conditions may cause Sanitar Co., Ltd. to cease to continue as a going

concern.

5. Evaluate the overall presentation, structure and content of the Parent

Company Only Financial Statements (including the relevant notes), and

whether the Parent Company Only Financial Statements represent the

underlying transactions and events in a manner that achieves fair

presentation.

6. I have obtained sufficient and appropriate evidence to audit the Parent

Company Only Financial Information of Sanitar Co., Ltd. to express an

opinion on the Parent Company Only Financial Statements. I am responsible

for the guidance, supervision and execution of the audit and for for ming an

audit opinion on Sanitar Co., Ltd.

I communicate with the governing body regarding, among other matters, the

planned scope and timing of the audit and significant audit findings (including

any significant deficiencies in internal controls that we identify during our

audit).

183

I have also provided the governing body with a statement that the

independence-regulated personnel of the firm to which I am affiliated have

complied with the Code of Ethics for Professional Accountants with respect to

independence, and communicate with the governing body about all relationships

and other matters (including related protective measures) that may be considered

to affect the accountant 's independence.

I have determined the key audit matter for the audit of the Parent Company

Only Financial Statements of Sanitar Co., Ltd. for the year ended December 31,

2020 from the communications I have had with the governing body. I identified

such matter in my auditor 's report, except for those matters that are not permitted

by law to be disclosed publicly or, in the rarest of circumstances, I decided not to

communicate those matters in my auditor 's report because I reasonably could

expect the negative effect of such communication to outweigh the public interest.

Deloitte & Touche

Accountant SU, YU-XIU

Accountant WENG, BO-REN

FSC Approval Number:

Jin-Guan-Zheng-Shen-Zi

No.1040024195


Jin-Guan-Zheng-Shen-Zi No.

1010028123

March 9, 2021

184

Sanitar Co. , Ltd.

Parent Company Only Statement of Financial Position

As of Dec. 31, 2020 and Dec. 31, 2019

Unit : NT$ thousands

Dec. 31, 2020 Dec. 31, 2019

C o d e Assets Amount ％ Amount ％

Current assets

1100 Cash and cash equivalents (Note IV, VI and XXIV) $ 53,805 2 $ 82,077 4

1150 Notes receivable, net (Note IV, VIII and XXIV) 13,804 1 14,519 1

1170 Net value of accounts receivable (Note IV, VIII, XIX and XXIV) 163,618 7 142,382 6

1180 Accounts receivable－Related parties, net (Note IV, VIII, XIX, XXIV

and XXV)

8,373 1 3,419 -

1200 Other receivables (Note IV and XXIV) 304 - 305 -

1210 Other receivables－related parties (Note IV, XXIV and XXV) 30,251 1 28,037 1

130X Inventory (Note IV and IX) 164,705 7 142,131 6

1419 Other prepaid expenses 2,185 - 2,130 -

1421 Prepayments 11,848 1 2,237 -

1479 Other current assets－Other (Note XIV) 2,160 - 563 -

11XX Total current assets 451,053 20 417,800 18

Non-current assets

1517 Financial assets measured at fair value through other comprehensive

income - non-current (Note VII and XXIV)

262 - - -

1550 Investment accounted for using the equity method (Note IV and X) 1,238,720 54 1,340,484 57

1600 Property, plant and equipment (Note IV, XI and XXVI) 500,848 22 503,335 21

1755 Right-of-use assets (Note IV and XII) 35,636 1 35,007 2

1780 Intangible assets (Note IV and XIII) 1,009 - 261 -

1840 Deferred income tax assets (Note IV and XXI) 62,653 3 44,555 2

1915 Prepayments for business facilities (Note XXVII) - - 458 -

1920 Refundable deposits 4,720 - 4,330 -

1990 Other non-current assets－other (Note VIII and XIV) - - - -

15XX Total non-current assets 1,843,848 80 1,928,430 82

1XXX Total assets $ 2,294,901 100 $ 2,346,230 100

Code Liabilities and Equity

Current liabilities

2100 Short-term loans (Note XV and XXIV) $ 233,000 10 $ 325,000 14

2130 Contract liabilities - current (Note IV and XIX) 2,492 - 826 -

2170 Accounts payable (Note XVI and XXIV) 33,542 2 39,931 2

2180 Accounts payable－related parties (Note XVI, XXIV and XXV) - - 1 -

2200 Other payables (Note XVII and XXIV) 61,886 3 55,953 2

2230 Current income tax liabilities (Note IV, XXI and XXIV) 46,972 2 16,409 1

2280 Lease liabilities - current (Note IV, XII and XXIV) 10,095 - 8,282 -

2399 Other current liabilities－other (Note XXIV) 7,533 - 3,275 -

21XX Total current liabilities 395,520 17 449,677 19

Non-current liabilities

2570 Deferred income tax liabilities (Note IV and XXI) 170,766 8 176,544 8

2580 Lease liabilities - non-current (Note IV, XII and XXIV) 25,800 1 26,763 1

25XX Non-Total current liabilities 196,566 9 203,307 9

2XXX Total liabilities 592,086 26 652,984 28

Equity (Note IV, XVIII and XXI)

Share capital

3110 Common shares 726,000 32 726,000 31

3200 Additional paid-in capital 277,452 12 277,452 12

Retained earnings

3310 Legal reserve 220,568 9 202,583 9

3320 Special reserve 166,030 7 146,675 6

3350 Unappropriated retained earnings 565,898 25 506,566 21

3300 Total retained earnings 952,496 41 855,824 36

3400 Other equity ( 237,459 ) ( 10 ) ( 166,030 ) ( 7 )

3500 Treasury shares ( 15,674 ) ( 1 ) - -

3XXX Total liabilities 1,702,815 74 1,693,246 72

Total liabilities and equity $ 2,294,901 100 $ 2,346,230 100

The notes to the parent company only f inancial s ta tements are part of the parent company only f inancial sta tements and should be read

together .

Chairp er son: XIAO, JUN -XIANG Manager : CHEN, WEI -ZHI Account ing Sup ervi sor : CHEN, YU -JUAN

185

Sanitar Co., Ltd.

Parent Company Only Statements of Comprehensive Income

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

Unit: NT$ thousands,

Except the earnings per share are in NT$

2020 2019

C o d e A m o u n t ％ A m o u n t ％

Operating revenue (Note IV,

XIX and XXV)

4110 Sales revenue $ 1,466,621 100 $ 1,303,656 100

4170 Sales return ( 7,017 ) ( 1 ) ( 24,112 ) ( 2 )

4190 Sales allowances ( 17,284 ) ( 1 ) ( 6,976 ) -

4800 Other operating revenue 29,076 2 27,615 2

4000 Total operating

revenue

1,471,396 100 1,300,183 100

Operating costs (Note VIII, XX

and XXV)

5110 Cost of sales ( 979,919 ) ( 67 ) ( 914,074 ) ( 71 )

5800 Other operating costs ( 45,579 ) ( 3 ) ( 42,561 ) ( 3 )

5000 Total operating costs ( 1,025,498 ) ( 70 ) ( 956,635 ) ( 74 )

5900 Gross operating profit 445,898 30 343,548 26

Operating expenses (Note XX)

6100 Marketing expenses ( 125,529 ) ( 8 ) ( 97,883 ) ( 7 )

6200 Management expenses ( 86,758 ) ( 6 ) ( 77,265 ) ( 6 )

6300 R&D expenses ( 8,003 ) ( 1 ) ( 7,083 ) ( 1 )

6450 Expected credit losses ( 2,270 ) - ( 1,794 ) -


expenses

( 222,560 ) ( 15 ) ( 184,025 ) ( 14 )

6500 Other income and expenses, net

(Note XX)

( 822 ) - ( 1 ) -

6900 Net operating profit 222,516 15 159,522 12

Non-operating income and

expenses (Note IV)

7070 Share of the profit or loss

of subsidiaries and

associates accounted for

using the equity method

58,949 4 71,890 6

7100 Interest income 40 - 73 -

7110 Rental income 530 - 2,286 -

7190 Other income 5 - 1 -

(Continued on the next page)

186

(Continued from the previous page)

2020 2019

C o d e A m o u n t ％ A m o u n t ％

7510 Interest expense ( $ 4,043 ) - ( $ 2,898 ) -

7230 Foreign exchange gain - - 401 -

7630 Foreign exchange loss 932 - - -

7000 Non-operating Total

income and

expenses

54,549 4 71,753 6

7900 Net profit before tax 277,065 19 231,275 18

7950 Income tax expense (Note IV

and XXI)

( 56,973 ) ( 4 ) ( 51,424 ) ( 4 )

8200 Net income in the fiscal year 220,092 15 179,851 14

Other comprehensive income

(Note IV, XVIII and XXI)

8310 Items that will not be

reclassified to profit or

loss:

8316 Investment in equity

instruments

measured at

Unrealized gains

or losses measured

at FVTOCI

( 2,738 ) - - -

8360 Amount of items that may

be reclassified

subsequently to profit or

loss：

8380 Share of the other

comprehensive

income of

subsidiaries,

associates and joint

ventures accounted

for using the equity

method

( 85,864 ) ( 6 ) ( 24,194 ) ( 2 )

8399 income tax related to

the items that may

be reclassified

17,173 1 4,839 -

( 68,691 ) ( 5 ) ( 19,355 ) ( 2 )

8300 Other comprehensive

income in the

fiscal year (net

value after tax)

( 71,429 ) ( 5 ) ( 19,355 ) ( 2 )

8500 Total comprehensive income in

the fiscal year

$ 148,663 10 $ 160,496 12

187

Earnings per share (Note XX)

9750 Basic $ 3.04 $ 2.48

9850 Diluted $ 3.03 $ 2.47

The notes to the parent company only financial statements are part of the parent

company only financial statements and should be read together.

Chairperson: XIAO, JUN-XIANG Manager: CHEN, WEI-ZHI

Accounting Supervisor: CHEN, YU -JUAN

188

Sanitar Co., Ltd.

Parent Company Only Statement of Changes in Equity


Unit: NT$ thousands

O t h e r e q u i t y

S h a r e c a p i t a l R e t a i n e d e a r n i n g s

Code

N u m b e r o f

shares (1,000

s h a r e s )

Share capital A d d i t i o n a l

paid-in capital

Legal reserve Special reserve Unappropriate

d retained

earnings

Exchange

difference arising

from translation

of foreign

operation

financial

statements

Unrealized gains or

losses on financial

assets at fair value

through other

comprehensive

income

T r e a s u r y

s h a r e s

Total equi ty

A1 Balance as of Jan. 1, 2019 72,600 $ 726,000 $ 277,452 $ 177,182 $ 150,895 $ 514,876 ( $ 146,675 ) $ - $ - $ 1,699,730

Appropriation and distribution of

earnings in 2018

B1 Legal reserve - - - 25,401 - ( 25,401 ) - - - -

B3 Special reserve - - - - ( 4,220 ) 4,220 - - - -

B5 Cash dividends - - - - - ( 166,980 ) - - - ( 166,980 )

D1 Net income for 2019 - - - - - 179,851 - - - 179,851

D3 Other comprehensive income after

tax, 2019

- - - - - - ( 19,355 ) - - ( 19,355 )

D5 2019The total comprehensive

income

- - - - - 179,851 ( 19,355 ) - - 160,496

Z1 Balance as of Dec. 31, 2019 72,600 726,000 277,452 202,583 146,675 506,566 ( 166,030 ) - - 1,693,246


earnings in 2019

B1 Legal reserve - - - 17,985 - ( 17,985 ) - - - -

B3 Special reserve - - - - 19,355 ( 19,355 ) - - - -

B5 Cash dividends - - - - - ( 123,420 ) - - - ( 123,420 )

D1 Net income for 2020 - - - - - 220,092 - - - 220,092


tax, 2020

- - - - - - ( 68,691 ) ( 2,738 ) - ( 71,429 )

D5 The total comprehensive income in

2020

- - - - - 220,092 ( 68,691 ) ( 2,738 ) - 148,663

L1 Purchase of treasury shares - - - - - - - - ( 15,674 ) ( 15,674 )

189

Z1 Balance as of Dec. 31, 2020 72,600 $ 726,000 $ 277,452 $ 220,568 $ 166,030 $ 565,898 ( $ 234,721 ) ( $ 2,738 ) ( $ 15,674 ) $ 1,702,815

The notes to the parent company only financial statements are part of the parent company only financial statements and should be read together.

Chairperson: XIAO, JUN-XIANG Manager: CHEN, WEI-ZHI Accounting Supervisor: CHEN, YU-JUAN

190

Sanitar Co., Ltd.

Parent Company Only Statements of Cash Flows


Unit: NT$ thousands

C o d e 2020 2019

Cash flow from operating activities

A10000 Net profit before tax in the current

period

$ 277,065 $ 231,275

A20010 Income charges (credits)

A20100 Depreciation expense 32,805 22,479

A20200 Amortization expense 282 879

A20300 Expected credit losses 2,270 1,794

A20900 Financial costs 4,043 2,898

A21200 Interest income ( 40 ) ( 73 )

A22400 Share of the profit or losses of

the subsidiaries, associates and

joint ventures accounted for

using the equity method

( 58,949 ) ( 71,890 )

A22500 Gain on the disposal of property,

plant and equipment

( 41 ) ( 146 )

A23800 Loss from market price decline

and obsolete and slow-moving

inventory (gain from price

recovery)

2,786 ( 2,500 )

A29900 Profit from lease modification ( 103 ) -

A30000 Net changes in operating assets and

liabilities

A31130 Notes receivable 715 13,886

A31150 Accounts receivable ( 23,506 ) ( 17,212 )

A31160 Accounts receivable － Related

parties

( 4,954 ) ( 1,063 )

A31180 Other receivables ( 1 ) ( 226 )

A31190 Other receivables － Related

parties

( 2,214 ) ( 13,198 )

A31200 Inventory ( 25,360 ) ( 6,620 )

A31220 Other prepaid expenses ( 55 ) 468

A31230 Prepayments ( 9,611 ) 570

A31240 Other current assets ( 1,597 ) 163

A32125 Contract liabilities - current 1,666 826

A32150 Accounts payable ( 6,389 ) ( 32,736 )

A32160 Accounts payable － Related

parties

( 1 ) ( 2,837 )

A32180 Other payables 6,190 ( 21,845 )

A32230 Other current liabilities 4,258 495

A33000 Cash from operating activities 199,259 105,387

A33100 Interests received 42 73

191

A33300 Interests paid ( 4,100 ) ( 2,519 )

A33500 Income tax paid ( 33,113 ) ( 42,688 )

AAAA Net cash inflow from operating

activities

162,088 60,253


192


C o d e 2020 2019

Cash flow from investing activities

B00010 Acquisition of financial assets

measured at fair value through

other comprehensive income

( $ 3,000 ) $ -

B01800 Acquisition of long-term equity

investment accounted for using the

equity method

( 13,260 ) -

B02700 Purchase of property, plant and

equipment

( 19,931 ) ( 39,675 )

B02800 Price for the disposal of property,

plant and equipment

270 216

B03700 Increase in refundable deposits ( 630 ) ( 1,952 )

B03800 Decrease in refundable deposits 240 -

B04500 Acquisition of intangible assets ( 1,030 ) ( 359 )

B07100 Decrease (increase) in prepayments

for business facilities

458 ( 3,248 )

B07600 Dividends from subsidiaries 88,109 -

BBBB Net cash flow from investing

activities (outflow)

51,226 ( 45,018 )

Cash flow from financing activities

C00100 Increase in short-term loans 433,000 210,000

C00200 Decrease in short-term loans ( 525,000 ) -

C04020 Repayment of lease principal ( 10,492 ) ( 6,652 )

C04500 Issuance of cash dividends ( 123,420 ) ( 166,980 )

C04900 Redemption cost for treasury shares ( 15,674 ) -

CCCC Cash inflow (outflow) from

financing activities

( 241,586 ) 36,368

EEEE Increase (decrease) in cash and cash

equivalents

( 28,272 ) 51,603

E00100 Beginning balance of cash and cash

equivalents

82,077 30,474

E00200 Ending balance of cash and cash

equivalents

$ 53,805 $ 82,077

The notes to the parent company only financial statements are part of the parent

company only financial statements and should be read together.

193


Accounting Supervisor: CHEN, YU-JUAN

194

Sanitar Co., Ltd.

Parent Company Only Financial Statement Notes


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

I. Company history

Sanitar Co., Ltd. was established in 1985as a sanitary ware

manufacturer and seller, and was reorganized and established on January

26, 1988 s San Yu Xing Ye Co, Ltd. And was renamed as Sanitar Co., Ltd.

in 2003. The company is mainly engaged in the sales of bathtubs, toilets

and other sanitary equipment, and water supply brassware.

In August 2011, the Company was approved by TPEX for trading on

the stock exchange and was listed and traded on the Taiwan Stock

Exchange on October 24, 2013.

The parent company only financial reports were expressed with the

functional currency, New Taiwan Dollar, adopted by the Company.

II. The date when the financial reports were authorized for issuance and the

process involved

The parent company only financial reports were approved by Board

of Directors on March 9, 2021.

III. Applicabil ity of new issuing & revised standards and interpretation

(I) First-time application of IFRSs recognized and announced

effectiveness by FSC.

Except for the following statements, the application of IFRSs that

are recognized and announced as effective by FSC won’t cause any

major changes to the accounting policies of the Merged company:

Amendments to IAS 1 and IAS 8 “Definit ion of Materiality”

The amendment applied to the Company from January 1, 2020,

switching to ' ' i t could reasonably be expected to influence users ' ' as the

materiali ty threshold and adjusting the disclosure in the Parent

Company Only Financial Statements to remove immaterial information

that could obscure material information.

195

(II) IFRSs recognized by the FSC applicable in 2021

New/amended/revised standards and interpretations

Effective date published by

I A S B

Amendments to IFRS 4 “Extension of Temporary

Exemption from Applying IFRS 9

Effective from the date of

publication

Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and

IFRS 16 “Interest Rate Benchmark Reform -

Phase II”

Effective for annual

reporting periods

beginning on or after

January 1, 2021

Amendments to IFRS 16 “Covid-19 Related Rent

Concessions”


reporting periods


June 1, 2020

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

The amendment to IFRS 16, "Lease reductions related to

novel coronavirus," provides that if the Company enters into a lease

negotiation with a lessor directly related to coronavirus , the Company

may, at its option and when certain conditions are met, recognize a

reduction in lease payments in profit or loss upon the occurrence of the

reduction event or condition and reduce Lease l iabilities accordingly.

Lease liabilities are reduced accordingly.

The Company has not yet negotiated rent in connection with the

foregoing in 2020, but will elect to apply the foregoing if such

negotiation occurs in 2021.

(III) IFRSs announced by IASB but have not been appro ved as effective by

the FSC



I A S B ( N o t e 1 )

“Annual Improvements for 2018-2020” Jan. 1, 2022 (Note 2)

Amendments to IFRS 3 “Updating a Reference to the

Conceptual Framework” Jan. 1, 2022 (Note 3)

Amendments to IFRS 10/IAS 28 “Sales or

Contributions of Assets Between an Investor and

Its Associate/Joint Venture

TBD

IFRS 17 “Insurance Contracts” Jan. 1, 2023

Amendments to IFRS 17 Jan. 1, 2023

Amendments to IAS 1 “Classification of Liabilities

as Current or Non-current”

Jan. 1, 2023

Amendments to IAS 1 “Disclosure of Accounting

Policies”

Jan. 1, 2023 (Note 6)

Amendments to IAS 8 “Definition of Accounting

Estimates”

Jan. 1, 2023 (Note 7)

196

Amendments to IAS 16 “Property, Plant and

Equipment: Proceeds before Intended Use”

Jan. 1, 2022 (Note 4)

Amendments to IAS 37 “Onerous Contracts—Cost

of Fulfilling a Contract”

Jan. 1, 2022 (Note 5)

Note 1: Other than being special specified, the above new issued/

amended/ revised standards or interpretation will be effective

from the fiscal year after the dates for above.

Note 2: The amendments to IFRS 9 apply to swaps or changes in the

terms of financial l iabil ities occurring in annual reporting

periods beginning after Jan. 1, 2022; the amendments to IAS

41 “Agriculture” apply to fair value measurements in annual

reporting period

Note 3: The amendments apply to business combinations for which the

acquisition date begins on or after Jan. 1, 2022 in the annual

reporting period.

Note 4: The amendments apply to the plant, property and equipment

that will be in the location and condition necessary to achieve

management’s intended mode of operation beginning on or

after Jan. 1, 2021.

Note 5: The amendments apply to contracts with all obligations

outstanding as at Jan. 1, 2022.

Note 6: The amendments apply prospectively to annual reporting

periods beginning on or after Jan. 1, 2023.

Note 7: The amendments apply to changes in accounting estimates and

changes in accounting policies that occur in annual reporting


1. Amendments to IFRS 10 and IAS 28 "Sale or contribution of

assets between an investor and its associates or joint ventures

The amendment provides that if the Company sells or i nvests

an asset to an associate (or joint venture), or if the Company loses

control of a subsidiary but retains significant influence (or joint

control) over the subsidiary, the Company recognizes all of the

gains or losses resulting from such transactions if the

197

aforementioned asset or former subsidiary meets the definition of

"business combination" for "business" under IFRS 3.

In addition, if the Company sells or invests in an asset to an

Associate (or joint venture), or if the Company loses control of a

subsidiary in a transaction with an Associate (or joint venture) but

retains significant influence (or joint control) over the subsidiary,

the Company recognizes the gain or loss result ing from the

transaction only to the extent that it is not related to the investor 's

interest in the asset or former subsidiary within the meaning of

IFRS 3, "Business". If the aforementioned asset or former

subsidiary does not meet the definition of a "business" under IFRS

3, the Company recognizes the gain or loss from th e transaction

only to the extent of the investor 's interest not related to the

Associates (or joint venture), i .e. , the Company's share of the gain

or loss is eliminated.

2. Amendments to IAS 1 “Classification of Liabilities as Current or

Non-current”

The amendments clarify that in determining whether a

liability is classified as non -current, an assessment should be

made as to whether the Company has the right to defer settlement

at the end of the reporting period until at least 12 months after the

reporting period. If the Company has such a right at the end of the

reporting period, the liability is classified as non -current,

regardless of whether the Company expects to exercise the right.

The amendments also clarify that if required to comply with

certain conditions in order to have the right to defer settlement of

its liabili ties, the Company must have followed the specified

conditions as at the end of the reporting period, even if the lender

tests whether the Company has adhered to those conditions at a

later date.

The amendments provide that for the purpose of liabil ity

classification, the aforementioned settlement means the

extinguishment of a liability resulting from the transfer of cash,

other economic resources or equity instruments of the Company to

198

the counterparty. However, if the terms of a liability may, at the

option of the counterparty, result in the settlement of an equity

instrument of the Company, and if the option is separately

recognized in equity in accordance with IAS 32 "Financial

Instruments: Presentation," the foregoing terms do not affect the

classification of the liability.

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

The amendments specify that the Company shall determine

the material accounting policy informatio n to be disclosed based

on the definition of material. Accounting policy information is

material if it could reasonably be expected to influence the

decisions that the primary users of general -purpose financial

statements make on the basis of those financi al statements. The

amendments also clarify that:

(1) accounting policy information relating to immaterial

transactions, other events or conditions is immaterial and that

the Company is not required to disclose such information.

(2) the Company may judge relevant accounting policy

information to be material because of the nature of the

transactions, other events or conditions, even if the sums are

not material .

(3) not all accounting policy information relating to significant

transactions, other events or conditions is material.

In addit ion, the amendments cite examples of accounting

policy information that may be material if it relates to significant

transactions, other events or conditions and if:

(1) the Company changes its accounting policy during t he

reporting period and the change results in a material change

in financial statement information;

(2) the Company selects its applicable accounting policy from

the options permitted by the standard;

(3) the Company, due to the absence of a specific standard,

establishes an accounting policy pursuant to IAS 8

199

"Accounting Policies, Changes in Accounting Estimates and

Errors";

(4) the Company discloses a relevant accounting policy that

requires the application of significant judgement or

assumptions; or

(5) involve complex accounting requirements and users of the

financial statements rely on such information to understand

those significant transactions, other events or conditions.

200

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

The amendments expressly state that the accounting estimates

represent the monetary amounts in the financial statements that

are subject to measurement uncertainty. In applying accounting

policies, the Company may need to measure items in the financial

statements using monetary amounts that are not directly

observable but must be estimated, and therefore measurement

techniques and inputs are used to create accounting estimates for

this purpose. The effect of changes in measurement techniques or

inputs on accounting estimates that are not corrections of prior

period errors are accounted for as changes in accounting

estimates.

In addition to the impact described above, the Company is

continuing to evaluate the impact of amendments to other standards and

interpretations on its financial position and financial performance as of

the date of adoption and publication of these parent company only

financial reports, which will be disclosed when the evaluation is

completed.

IV. Summary and explanation of material accounting policies

(I) Compliance statement

The Parent Company Only Financial Statements have been

prepared in accordance with the Regulations Governing the Preparation

of Financial Reports by Securities Issuers.

(II) Basis of preparation

The Parent Company Only Financial Statements have been

prepared on the historical cost basis, except for financial instruments

measured at fair value.

Fair value measurement can be classified as level 1 to level 3

according to the observable degrees and importance of t he relevant

input values:

1. Level 1 input value: It refers to the quoted price at the active

market on the same asset or liability available on the measurement

day (unadjusted).

201

2. Level 2 input value: It refers to the direct (that is the price) or

indirect (inferred from the price) observable input values on asset

or l iability other than the level 1 quoted price.

3. Level 3 input value: Unobservable input value of asset or l iabil ity.

In preparing the Parent Company Only Financial Statements, the

Company uses the equity method of accounting for i ts investee

subsidiaries. In order to make the profit or loss for the year, other

comprehensive income or loss and equity in the Parent Company Only

Financial Statements the same as the profit or loss for t he year, other

comprehensive income or loss and equity attributed to the owners of

the Company in the Parent Company Only Financial Statements, certain

accounting differences between the parent company only basis and the

consolidated basis are adjusted for "investments accounted for using

the equity method", "share of the profit or loss of subsidiaries and

associates accounted for using the equity method" and "share of other

comprehensive income or loss of subsidiaries, affiliates and joint

ventures accounted for under the equity method" and related equity

items.

(III) Standard in determining whether the asset or liability are current or

non-current

Current assets include:

1. assets held mainly for transaction purposes;

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

and

3. cash and cash equivalents (but not including cash used to

exchange or clear liabili ty within 12 months of the asset balance

sheet).

Current liabilities include:

1. liabilities held mainly for transaction purp oses;

2. liabilities due for payment within 12 months after the balance

sheet date (a liability with long-term refinancing done or payment

agreement rearranged also belongs to the current liabilities); and

3. the business entity does not have an uncondit ional right to defer

settlement of the liability for at least 12 months after the balance

202

sheet date. However, where the terms of the liabilities may, at the

option of the counterparty, lead to the settlement by issuing an

instrument of equity, the classif ication will not be affected.

Assets or liabil ities not classified within the above definitions

will be classified as non-current assets and liabilit ies.

(IV) Foreign Currency

The Company prepares financial statements in currencies other

than the Company's functional currency (foreign currencies) and

translates them into the functional currency at the exchange rate on the

transaction date.

Monetary items denominated in foreign currencies are translated

at the closing rate at each balance sheet date. Exchange differences

arising from the settlement of monetary items or the translation of

monetary items are recognized in profit or loss in the period in which

they occur.

Non-monetary i tems measured at fair value in foreign currencies

are translated at the exchange rates prevailing on the date the fair value

was determined, and the resulting exchange differences are recognized

in profit or loss for the current period, except for changes in fair value

recognized in other comprehensive income, in which cas e the resulting

exchange differences are recorded in other comprehensive income. The

exchange differences arising from changes in fair value recognized in

other comprehensive income are recorded as other comprehensive

income.

Non-monetary i tems denominated in foreign currencies that are

measured at historical cost are translated at the exchange rates

prevailing on the dates of transactions and are not retranslated.

203

(V) Inventory

Inventories refer to commodity inventories. Inventories are

measured at the lower of cost or net realizable value. Comparisons

between cost and net realizable value are made on an item -by-item

basis, except for similar inventories. Net realizable value is the

estimated selling price under normal circumstances less the estimated

cost to complete the sale. The weighted -average method is used to

calculate the cost of inventories.

(VI) Investment accounted for using the equity method

The Company accounts the equity method for the investment of the

subsidiaries.

A subsidiary is an individual unit under the control of the

Company.

The original investment under the equity method is recognized by

cost . The carrying amount obtained shall increase or decrease based on

the distribution of the income of the subsidiary, and the shares and

profits of other comprehensive income. The change of equity of the

subsidiary is recognized based on the shareholding ratio.

When the change in the Company's ownership interest in a

subsidiary does not result in a loss of control , it is treated as an equity

transaction. The difference between the carrying amount of the

investment and the fair value of the consideration paid or received is

recognized directly in equity.

When the Company's share of losses in a subsidiary equals or

exceeds its interest in the subsidiary (including the Carrying amount of

the subsidiary under the equity method and other long -term interests

that are substantially a component of the Company's net investment in

the subsidiary), the loss continues to be recognized in proporti on to the

Company's equity in the subsidiary.

If the acquisit ion cost exceeds the identifiable asset and the fair

value of net indebtedness of the subsidiary on the acquisition date, it

shall be counted as the goodwill. The goodwill is included in the

carrying amount of the investment and shall not be amortized. If the

identifiable asset and the fair value of net indebtedness of the

204

subsidiary exceeds the acquisition cost on the acquisition date, it shall

be listed as the current yield.

The overall assessment on the impairment of assets is based on the

cash generating unit of the financial statement, and to compare the

recoverable amount with the carrying amount. If the recoverable

amount increases afterwards, the impairment loss shall be reversed as

profit , only the carrying amount of the assets after reversal of

impairment loss shall not be more than the carrying amount after

subtracting the amortization when the impairment loss has not yet been

recognized. The impairment loss attributing to the goodwil l shall not

be reversed subsequently.

When control over a subsidiary is lost, the Company measures its

remaining investment in the former subsidiary at the Fair value at the

date of loss of control. The difference between the Fair value of the

remaining investment and any disposal price and the Carrying amount

of the investment at the date of loss of control is recognized in profit or

loss for the period. In addition, all Amounts recognized in Other

comprehensive income related to the subsidiary are accou nted for on

the same basis as the Company's direct disposal of the related assets or

liabilities.

The downstream transaction between the Company and the

subsidiary shall be eliminated on the financial statement of the Parent

Company when the income is no t realized. The income of the upstream

and side stream transactions between the Company and the subsidiary

shall be recognized in the financial statement of the Parent Company

within the realm that is unrelated to the subsidiary’s interests from the

Company.

(VII) Property, plant and equipment

Property, plant, and equipment are recognized by cost, and then

measured by cost less accumulated depreciation and accumulated

impairment loss.

Property, plant and equipment under construction are recognized

at cost less accumulated impairment losses. Cost includes fees for

professional services and borrowing costs eligible for capitalization.

205

These assets are classified into the appropriate categories of property,

plant and equipment and depreciation commences wh en they are

completed and in their intended state of use.

The property, plant, and equipment are depreciated separately for

each major part by the straight -line basis method over the life of

service. The Company reviews the estimated useful lives, residu al

values and depreciation methods at least at each year -end and defers

the effect of changes in applicable accounting estimates.

The difference between the net disposal proceeds and the carrying

amount of the asset is recognized in profit or loss when p roperty, plant,

and equipment are derecognized.

(VIII) Intangible assets

1. Individual acquisit ion

Intangible assets with limited duration acquired separately

were initially measured at cost and subsequently at cost less

accumulated amortization and accumulated impairment losses.

Intangible assets are amortized over their useful lives on a

straight-l ine basis and the estimated useful lives, residual values

and amortization method are reviewed at least at each year -end

and the effect of changes in applicable accounting estimates is

deferred. Intangible assets with indefinite useful lives are stated

at cost less accumulated impairment losses.

2. Derecognition

The difference between the net disposal proceeds and the

carrying amount of the asset is recogn ized in profit or loss of the

year when intangible assets are derecognized.

206

(IX) Impairment of property, plant and equipment, right -of-use assets and

intangible assets

The Company assesses at each balance sheet date whether there is

any indication that property, plant and equipment, right -of-use assets

and intangible assets may have been impaired. If any sign of

impairment exists, the recoverable amount of the asset is estimated. If

it is impossible to estimate the recoverable amount of an individual

asset, the Company estimates the recoverable amount of the asset at the

cash generating unit.

Intangible assets with indefinite useful lives and not yet available

for use are tested for impairment at least annually and whenever there

is an indication of impairment.

The recoverable amount is the higher fair value less sell ing cost

and use value. If the recoverable amount of an individual asset or cash

generating unit is less than its carrying amount, the carrying amount of

the asset or cash generating unit shall be reduced to its recoverable

amount, with the impairment loss recognized in profit or loss.

When the following recoverable amount increases, the carrying

amount of the asset or cash generating unit increases to the amount that

can be recovered af ter the revision. However, the increased carrying

amount shall not exceed that (minus amortization or depreciation)

determined by the asset or cash generating unit where the impairment

loss was not recognized in the previous year. The reversal of

impairment loss is recognized in profit or loss.

(X) Financial instruments

Financial assets and financial l iabilities are recognized in the

Parent Company Only Statement of Financial Position when the

Company becomes a party to the contractual provisions of the

instrument.

On initial recognition, financial assets and financial l iabil ities

that are not measured at fair value through profit or loss are measured

at fair value plus transaction costs that are directly attributable to the

acquisition or issuance of the financial assets or financial liabilities.

Transaction costs directly attributable to the acquisition or issue of

207

financial assets or financial liabilities measured at fair value thr ough

profit or loss are recognized immediately in profit or loss.

1. Financial assets

The transaction practice of the financial assets adopts

accounting recognition and de-recognition on the transaction day.

(1) Measurement types

The types of financial assets held by the Company are

investment in equity instruments measured at FVTOCI and

financial assets measured at amortized cost.

A. Financial assets measured at amortized cost

The Company's investments in financial assets are

classified as financia l assets measured at amortized cost if

both of the following conditions are met:

a. they are held within an operating model whose objective

is to hold the financial assets to collect the contractual

cash flows; and

b. the contractual terms give rise to cash flows at a specific

date, which are solely payments of principal and interest

on the principal amount outstanding.

Financial assets measured at amortized cost

(including cash and cash equivalents, notes receivable,

accounts receivable and other rece ivables measured at

amortized cost) are measured at amortized cost using the

effective interest method to determine the total carrying

amount less any impairment loss after initial recognition,

with any foreign currency exchange gain or loss

recognized in profit or loss.

Interest income is calculated by multiplying the

effective interest rate by the total carrying amount of the

financial assets, except in the following two cases:

a. Interest income on credit -impaired financial assets

acquired or created is calculated by multiplying the

credit-adjusted effective interest rate by the amortized

cost of the financial assets.

208

b. Interest income is calculated by multiplying the

effective interest rate by the amortized cost of the

financial asset for financial assets that are not acquired

or originated as credit -impaired but subsequently

become credit -impaired.

Credit-impaired financial assets means that the issuer

or the debtor has experienced significant financial

difficulties, defaulted, there is a high prob ability that the

debtor will file for bankruptcy or other financial

reorganization or that an active market for financial assets

will disappear due to financial difficulties.

Cash equivalents include time deposits that are highly

liquid, readily convertible into known amounts of cash and

subject to a low risk of changes in value within 3 months

from the date of acquisition and are used to meet

short-term cash commitments.

B. Investment in equity instruments measured at FVTOCI

At initial recognition, the Company has an irrevocable

option to designate investments in equity instruments that

are not held for trading and for which there is contingent

consideration recognized by the acquirer of the business

combination to be measured at fair value through oth er

comprehensive income.

Investments in equity instruments measured at fair

value through other comprehensive income are measured at

fair value, with subsequent changes in fair value reported

in other comprehensive income and accumulated in other

equity. On disposal of investments, the cumulative gain or

loss is transferred directly to retained earnings and is not

reclassified to profit or loss.

Dividends on investments in equity instruments

measured at fair value through other comprehensive

income are recognized in profit or loss when the right to

receive payments from the Company is established, unless

209

it is clear that the dividend represents a partial recovery of

the cost of the investment.

(2) The impairment of financial assets

The Company assesses the impairment losses of

financial assets (including notes receivable, accounts

receivable and other receivables) measured at amortized cost

at each balance sheet date based on expected credit losses.

Accounts receivable are recognized as an allowance for

loss based on expected credit losses during the period of

duration. Other financial assets are first evaluated to

determine whether there is a significant increase in credit

risk since initial recognition. If not, they are recognized as an

allowance for loss based on expected credit losses over 12

months, and if so, based on expected credit losses over the

duration period.

Expected credit losses are the average credit losses

weighted by the risk of default. The 12 -month expected credit

loss represents the expected credit loss arising from default

events on a financial instrument that are possible within the

12 months after the reporting date, while the expected credit

loss over the life of the instrument represents the expected

credit loss resulting from all default events on a financial

instrument that are possible over the expected life.

For internal credit risk management purposes, the

Company determines, without regard to its collateral

holdings, that a default on financial assets has occurred in the

following circumstances.

A. There is internal or external information indicating that

the debtor is unlikely to be able to pay its debts.

B. If the date is more than a certain number of days past due,

unless there is reasonable and supportable information

indicating that a delayed default basis is more appropriate.

210

The impairment loss on all financial assets is reduced by

the Carrying amount of the allowance account and does not

reduce the Carrying amount of the financial assets.

211

(3) Derecognition of financial assets

The Company derecognizes financial assets only when

the contractual rights to the cash flows from the financial

assets have lapsed or when the financial assets have been

transferred and substantially all the risks and rewards o f

ownership of the assets have been transferred to other

enterprises.

When financial assets are derecognized in their entirety

at amortized cost , the difference between the carrying amount

and the consideration received is recognized in profit or loss.

When investments in equity instruments measured at fair

value through other comprehensive income are derecognized

as a whole, the cumulative gain or loss is transferred directly

to retained earnings and is not reclassified to profit or loss.

2. Financial liability

(1) Subsequent measurement

All of the financial liability should be measured at the

amortized costs through effective interest rate.

(2) Derecognition of financial liability

When derecognizing the financial liability, the

difference between its book value amount and the

consideration (including any non -cash asset transferred or the

liability borne) paid will be recognized as income.

(XI) Income recognition

The Company allocates the transaction price to each performance

obligation after the performance obligation is identified in the

customer contract and recognizes revenue when each performance

obligation is satisfied.

If the interval between the transfer of merchandises or services

and the receipt of consideration is less than one yea r, no adjustment is

made to the transaction price for the significant financing component

of the contract.

Sales revenue

212

Sales revenue is derived from the sale of porcelain toilets, faucets,

and other sanitary equipment products. The Company recognizes

revenue and accounts receivable at the point of shipment because the

customer has the right to set the price and use the products and has the

primary responsibility for re -selling the products and bears the risk of

obsolescence of the products.

(XII) Lease

The Company assesses whether a contract is (or contains) a lease

at the contract inception date.

213

1. The Company as lessor

If the lease clauses transfer nearly all risks and

Compensation associated with the assets to the lessee, the lease

shall be classified as finance lease. All other leases shall be

classified as business lease.

Under operating leases, lease payments, net of lease

incentives, are recognized as income on a straight -line basis over

the term of the relevant lease. The original direct costs incurred in

acquiring an operating lease are added to the carrying amount of

the subject asset and recognized as an expense on a straight -l ine

basis over the lease term.

2. The Company as lessee

Right-of-use assets and lease liabilit ies are recogn ized at the

inception date of the lease, except for leases of low -value subject

assets to which a recognition exemption applies and short -term

leases where lease payments are recognized as an expense on a

straight-l ine basis over the lease term.

Right-of-use assets are measured init ially at cost (comprising

the original measurement of the lease liability, lease payments

made prior to the commencement date of the lease less lease

incentives received, original direct cost and estimated cost to

reinstate the subject asset) and subsequently at cost less

accumulated depreciation and accumulated impairment losses,

with adjustments for remeasurement of the lease liabil ity.

Right-of-use assets are presented separately on Parent Company

Only Statement of Financial Position.

Right-of-use assets are depreciated on a straight -line basis

from the commencement date of the lease to the earlier of the end

of the useful life or the end of the lease term.

Lease obligations are measured init ially at the present value

of the lease payments (comprising fixed payments, effective fixed

payments, variable lease payments dependent on indices or rates).

If the implied interest rate of the lease is readily determinable, the

lease payments are discounted using that rate. If the rat e is not

214

readily determinable, the lessee's incremental borrowing rate is

used.

Subsequently, lease liabilities are measured on an amortized

cost basis using the effective interest method and interest expense

is amortized over the lease term. If there is a change in future

lease payments as a result of a change in the lease term, or in the

index or rate used to determine the lease payments, the Company

remeasures the lease liability and adjusts the right -of-use asset

accordingly, except that if the carryi ng amount of the right -of-use

asset is reduced to zero, the remaining remeasurement amount is

recognized in profit or loss. Lease l iabili ties are presented

separately on the Parent Company Only Statement of Financial

Position.

Lease agreements that do not depend on changes in indices or

rates are recognized as expenses in the period in which they are

incurred.

(XIII) Income tax

Income tax expense is the sum of current income taxes and

deferred income taxes.

1. Current income tax

The additional income tax on the undistributed surplus

calculated in accordance with the Income Tax Act shall be

included in the income tax expense for the year of resolution of

the shareholders’ meeting.

The adjustment of income tax payable in the previous year

shall be included in the current income tax.

2. Deferred income tax

Deferred income tax is calculated based on the temporary

differences between the carrying amount of assets and liabili ties

on the books and the basis for the calculation of taxable income.

Deferred tax l iabil ities are generally recognized for all

temporary differences in taxable income, while deferred tax assets

are recognized when there is a high likelihood that the taxable

215

income will be used as a tax deduction for deductible temporary

differences.

Deferred tax liabilities are recognized for taxable temporary

differences associated with investee subsidiaries, except where

the Company is able to control the timing of the reversal of the

temporary difference and it is probable that the temp orary

difference will not reverse in the foreseeable future. Deferred tax

assets are recognized for deductible temporary differences

associated with such investments only to the extent that i t is

probable that sufficient taxable income will be available to allow

the temporary differences to be realized and to the extent that

reversal is expected in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at

each balance sheet date and reduced for those where it is no longer

probable that there will be sufficient taxable income to allow all

or part of the assets to be recovered. Deferred tax assets not

previously recognized as such are also reviewed at each balance

sheet date and the carrying amount is increased for those where it

is probable that taxable income will be available to recover all or

part of the assets.

Deferred tax assets and liabilities are measured by the tax

rate of the expected liabilities settlement or assets realization in

the current period, according to the tax rate and the tax law which

have been legalized or substantively legalized on the balance

sheet date. The measurement of deferred tax liabil ities and assets

reflects the tax consequences of the way in which the Company is

expected to recover or pay off the carrying amount of its assets

and liabili ties on the balance sheet date.

3. Current and deferred tax

The current and deferred tax are recognized in profit or loss,

provided that the current and deferred tax in relation to the items

recognized in other comprehensive income or directly included in

equity are recognized in other comprehensive income or directly

included in equity, respectively.

216

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

and assumptions

When the Company adopts an accounting policy, management must

make relevant judgments, estimates, and assumptions of relevant

information that is difficult to obtain from other sources based on

historical experience and other relevant factors.

The Company has included the economic impact of the COVID-19

outbreak in the consideration of significant accounting estimates and the

management will review the estimates and underlying assumptions on an

ongoing basis. If an amendment to an estimate affects only the current

period, the amendment is recognized in the period in which it is made. If

an amendment to an accounting estimate affects both the current and

future periods, the amendment is recognized in both the current and future

periods.

VI. Cash and cash equivalents

Dec. 31, 2020 Dec. 31, 2019

Cash on hand and working capital $ 242 $ 175

Checks and demand deposits 53,563 81,902

$ 53,805 $ 82,077

VII. Financial assets measured at fair value through other comprehensive

income - non-current

Dec. 31, 2020 Dec. 31, 2019

Investment in equity instruments

measured at FVTOCI

Stock of unlisted companies

Amsalp Biomedical

Corporation

$ 262 $ -

The Company invests in the above -mentioned items for medium- to

long-term strategic purposes and expects to make profits from these

investments over the long term. The Company's management believes that

it is inconsistent with the aforementioned long -term investment plan to

include short -term fluctuations in fair value of these investments in profit

or loss, and therefore has chosen to designate these investments as fair

value through Other comprehensive income.

217

The Investment in equity instruments measured at FVTOCI were not

being pledged。

VIII. Notes receivable and accounts receivable

Dec. 31, 2020 Dec. 31, 2019

Notes receivable

Generated from operating

activities

Non-related parties $ 13,804 $ 14,519

Accounts receivable


Minus: Allowance for bad debts ( 4,185 ) ( 1,793 )

$ 163,618

$ 142,382

Related parties $ 8,373

$ 3,419

The average credit period for merchandise sales ranges is from 30 to

90 days, and no interest is charged on Accounts receivable. To mitigate

credit risk, the management of the Company assigns a dedicated team to

ensure that appropriate actions are taken to collect overdue receivables.

In addition, the Company reviews the recoverable amounts of receivables

on a case-by-case basis at the balance sheet d ate to ensure that

appropriate impairment losses are recorded for uncollectible receivables.

Accordingly, the Company's management believes that the Company's

credit risk has been significantly reduced.

The lifetime expected credit losses are calculated using an provision

matrix, which takes into account the customer's past default history and

current financial position, the economic situation of the industry, as well

as the GDP forecast and industry outlook, and classifies customers into

different risk groups and recognizes an allowance for losses based on the

expected loss rate of each group.

If there is evidence that the counter -party is in serious financial

difficulty and the Company cannot reasonably expect to recover the

amount, such as when the counter-party is in liquidation, the Company

will directly write off the related accounts receivable, but will continue to

conduct recourse actions and recognize the amount recovered in profit or

loss as a result of the recourse.

218

The Company's allowance for losses on accounts receivable and

overdue receivables based on the provision matrix is summarized as

follows:

Dec. 31, 2020

Within a

normal credit

period

Overdue

1-180 days

Overdue

Over 180 days Total

Total carrying

amount $ 172,891 $ 1,877 $ 1,408 $ 176,176

Allowance for loss

(Expected credit

loss in the

duration) ( 1,852 ) ( 1,111 ) ( 1,222 ) ( 4,185 )

Amortized cost $ 171,039 $ 766 $ 186 $ 171,991

219

Dec. 31, 2019

Within a

normal credit

period

Overdue

1-180 days

Overdue

Over 180 days Total

Total carrying

amount $ 146,677 $ 587 $ 330 $ 147,594

Allowance for loss

(Expected credit

loss in the

duration) ( 1,231 ) ( 297 ) ( 265 ) ( 1,793 )

Amortized cost $ 145,446 $ 290 $ 65 $ 145,801

Information on the changes in allowance for losses on notes

receivable, accounts receivable and overdue receivables is as follows:

2020

Notes receivable

Accounts

receivable

Overdue

receivables

Beginning balance $ - $ 1,793 $ 1,101

Plus: listed impairment losses

in the period

- 2,392 -

Minus: Reversal of

impairment losses in the

current period

- - ( 122 )

Ending balance $ - $ 4,185 $ 979

2019

Notes receivable

Accounts

receivable

Overdue

receivables

Beginning balance $ - $ 303 $ 797


in the period

- 1,490 304

Ending balance $ - $ 1,793 $ 1,101

The Company's notes receivable, accounts receivable and overdue

receivables are not pledged.

IX. Inventory

Dec. 31, 2020 Dec. 31, 2019

Merchandise inventory $ 164,705 $ 142,131

The allowance for loss for market price decline and obsolete

inventories was $16,604 thousands and $13,818 thousands as of December

31, 2020 and 2019, respectively.

Cost of sales related to inventories for fiscal 2020 and 2019 are as

follows:

220

2020 2019

Loss from market price decline

and obsolete and slow-moving

inventory (gain from price

recovery) $ 2,786 ( $ 2,500 )

Inventory short (over) 106 ( 38 )

Loss on inventory obsolescence 421 7,910

Income from the sale of leftover

materials

( 11 ) ( 115 )

$ 3,302 $ 5,257

The increase in the net realizable value of the Company's inventories

in 2019 was due to an increase in the sell ing price of inventories.

X. Investment accounted for using the equity method

Dec. 31, 2020 Dec. 31, 2019

Investee subsidiaries

Vietnam Caesar Sanitary

Wares Joint Stock

Company (VIETNAM

CAESAR SANITARY

WARES JOINT STOCK

COMPANY)

$ 1,225,499 $ 1,340,484

Kai-Sheng Sanitary Wares

Co., Ltd.

13,221 -

$ 1,238,720 $ 1,340,484

Percentage of owner’s equity and voting

r i g h t s

N a m e o f S u b s i d i a r y Dec. 31, 2020 Dec. 31, 2019

Vietnam Caesar Sanitary Wares

Joint Stock Company

(VIETNAM CAESAR

SANITARY WARES JOINT

STOCK COMPANY) 99.9993% 99.9993%

Kai-Sheng Sanitary Wares Co.,

Ltd. 51% -

On November 4, 2020, the Board of Directors resolved to establish

Kai-Sheng Sanitary Wares Co., Ltd. as a distribution point in Taoyuan

with a total capital of NT$50,000 thousands, divided into 5,000,000

shares at NT$10 per share. The remaining 49% of the shares are held by

non-Related parties. After considering the voti ng rights held by other

shareholders, the Company has the right to dominate Kai -Sheng Sanitary

Wares. After considering the voting rights held by the other shareholders,

221

the Company determined that it has the ability to direct the relevant

activities of Kai-Sheng Sanitary Wares Co. Since Kai -Sheng Sanitary

Wares Co., Ltd. was established in December 2020 and does not have

significant operating activities, the financial statements prepared by

Kai-Sheng Sanitary Wares Co., Ltd. were used to recognize the shar e of

profit or loss of the subsidiary under the equity method and the share of

other comprehensive income. The financial statements of Kai -Sheng

Sanitary Wares Co.

Proportion in 2020 and 2019 were recognized as the share of profit

or loss of subsidiaries using the equity method and the share of other

comprehensive income based on the audited financial statements of

Vietnam Caesar Sanitary Wares Joint Stock Company for the same period.

222

XI. Property, plant and equipment

Self-owned

land Buildings

Transportation

equipment

Other

equipment

Leasehold

improvement

Construction

in progress Total

Cost Balance as of Jan. 1,

2020 $ 243,280 $ 253,536 $ 28,497 $ 9,058 $ 15,303 10,572 $ 560,246

Addition - 801 6,744 - 5,750 6,636 19,931 Disposal - - ( 235 ) ( 137 ) ( 380 ) - ( 752 )

Reclassification - ( 200 ) - - 10,572 ( 10,572 ) ( 200 )

Balance as of Dec. 31, 2020

$ 243,280 $ 254,137 $ 35,006 $ 8,921 $ 31,245 $ 6,636 $ 579,225

accumulated

depreciation

Balance as of Jan. 1, 2020

$ - $ 30,472 $ 18,860 $ 3,626 $ 3,953 $ - $ 56,911

Depreciation expense - 9,120 4,040 2,159 6,670 - 21,989

Disposal - - ( 6 ) ( 137 ) ( 380 ) - ( 523 ) Balance as of Dec. 31,

2020

$ - $ 39,592 $ 22,894 $ 5,648 $ 10,243 $ - $ 78,377

Net worth as of Dec.

31, 2020

$ 243,280 $ 214,545 $ 12,112 $ 3,273 $ 21,002 $ 6,636 $ 500,848

Cost

Balance as of Jan. 1,

2019 $ 243,280 $ 231,694 $ 22,396 $ 3,557 $ 14,003 $ - $ 514,930 Addition - 9,017 2,506 4,376 1,300 22,476 39,675

Disposal - - ( 443 ) - - - ( 443 )

Reclassification - 12,825 4,038 1,125 - ( 11,904 ) 6,084 Balance as of Dec. 31,

2019 $ 243,280 $ 253,536 $ 28,497 $ 9,058 $ 15,303 $ 10,572 $ 560,246

accumulated

depreciation

Balance as of Jan. 1, 2019

$ - $ 23,091 $ 15,330 $ 1,711 $ 984 $ - $ 41,116

Depreciation expense - 7,381 3,903 1,915 2,969 - 16,168

Disposal - - ( 373 ) - - - ( 373 ) Balance as of Dec. 31,

2019

$ - $ 30,472 $ 18,860 $ 3,626 $ 3,953 $ - $ 56,911

Net worth as of Dec.

31, 2019

$ 243,280 $ 223,064 $ 9,637 $ 5,432 $ 11,350 $ 10,572 $ 503,335

There is no indication of impairment of property, plant and

equipment listed above in fiscal 2020 and 2019 as assessed by

management.

Depreciation expense is calculated through straight -line basis

according to the following years:

Buildings

Main building of the

office

55 years

Other 3 to 50 years

Transportation equipment 3 to 5 years

Office equipment 3 to 5 years

Leasehold improvement 5 years

Please refer to Note 26 for the amount of property, plant and

equipment pledged as collaterals for loans.

223

The Company leases the roof of its factory in Zaoqiao Township for

the installation and operation of a solar photovoltaic system to generate

electricity for sale to Taiwan Power Company. The lessee does not have a

preferential right to purchase the asset at the end of the lease period. The

lease period is from the commercial operation date of the solar power

system on March 14, 2019 to the end of 20 years. At the end of the lease

term, the lessee does not have a preferential right to acquire the asset .

224

The total future lease payments to be received under operating leases

are as follows:

2020 2019

The 1st year $ 530 $ 530

The 2nd year 530 530

The 3rd year 530 530

The 4th year 530 530


Over 5 years 6,890 7,420

$ 9,540 $ 10,070

XII. Lease agreement

(1) Right-of-use assets—Buildings

2020 2019

Cost

Beginning balance $ 41,243 $ -

Effect of the first-time

application of IFRS16

-

41,318

Addition 18,700 -

Disposal ( 9,842 ) ( 75 )

Ending balance $ 50,101 $ 41,243

accumulated depreciation

Beginning balance $ 6,236 $ -

Depreciation expense 10,816 6,311

Disposal ( 2,587 ) ( 75 )

Ending balance $ 14,465 $ 6,236

Net worth at the end of the

current period

$ 35,636

$ 35,007

(2) Lease liabilities

Dec. 31, 2020 Dec. 31, 2019

Carrying amount of lease

liabilities

Current $ 10,095 $ 8,282

Non-current $ 25,800 $ 26,763

The discount rate range for Lease l iabilities is as follows:

2020 2019

Buildings 1.66%~1.89% 1.79%~1.89%

225

(III) Other leasing information

2020 2019

Lease expenses of low-value

assets

$ 337 $ 754

Changed lease payment

expenses not considered in

the measurement of lease

liabilities

$ - $ 3

Total cash outflow from lease ($ 10,829) ($ 7,409)

The Company has elected to apply the exemption from recognition

to leases of Office equipment that qualify as short -term leases and

leases of Office equipment that qualify as low -value asset leases and

not to recognize the related right -of-use assets and lease liabilities for

these leases.

XIII. Intangible assets

Trademark

rights

Cost of

computer

software Total

Cost

Balance as of Jan. 1, 2020 $ 8,572 $ 2,596 $ 11,168

Individual acquisition - 1,030 1,030

Disposal ( 8,572 ) ( 2,200 ) ( 10,772 )

Balance as of Dec. 31, 2020 $ - $ 1,426 $ 1,426

Accumulated amortization

Balance as of Jan. 1, 2020 $ 8,572 $ 2,335 $ 10,907

Amortization expense - 282 282

Disposal ( 8,572 ) ( 2,200 ) ( 10,772 )

Balance as of Dec. 31, 2020 $ - $ 417 $ 417

Net worth as of Dec. 31, 2020 $ - $ 1,009 $ 1,009

Cost

Balance as of Jan. 1, 2019 $ 8,572 $ 2,332 $ 10,904

Individual acquisition - 1,074 1,074

Disposal - ( 810 ) ( 810 )

Balance as of Dec. 31, 2019 $ 8,572 $ 2,596 $ 11,168


Balance as of Jan. 1, 2019 $ 8,572 $ 2,266 $ 10,838

Amortization expense - 879 879

Disposal - ( 810 ) ( 810 )

Balance as of Dec. 31, 2019 $ 8,572 $ 2,335 $ 10,907

Net worth as of Dec. 31, 2019 $ - $ 261 $ 261

227

Amortization expense is accrued on a straight -line basis over the

following number of durable years.

Trademark rights 20 years

Computer software 1-3 years

XIV. Other assets

Dec. 31, 2020 Dec. 31, 2019

Current

Input tax $ 1,966 $ 505

Other 194 58

$ 2,160 $ 563

Non-current

Overdue receivables $ 979 $ 1,101

Minus: allowance for loss ( 979 ) ( 1,101 )

$ - $ -

XV. Short-term loans

Dec. 31, 2020 Dec. 31, 2019

Secured loan (Note XXVI)

Bank borrowings $ 233,000 $ 325,000

The interest rates on revolving bank loans ranged from 0.95% to

1.10% and 1.07% to 1.20% in 2020 and Dec. 31, 2019, respectively.

XVI. Accounts payable

Dec. 31, 2020 Dec. 31, 2019


Related parties $ - $ 1

XVII. Other payables

Dec. 31, 2020 Dec. 31, 2019

Salaries and bonuses payable $ 27,339 $ 21,636

Compensation of employees

payable

8,749 7,303

Compensation of directors and

supervisors payable

5,833 4,869

Freight charges payable 2,364 2,003

Advertising expenses payable 3,092 3,528

Other 14,509 16,614

$ 61,886 $ 55,953

228

XVIII. Equity

(I) Share capital for common stock

Dec. 31, 2020 Dec. 31, 2019

Authorized shares (1,000

shares) 100,000 100,000

Authorized share capital $ 1,000,000 $ 1,000,000

Number of outstanding shares

that had been paid (1,000

shares) 72,600 72,600

Share capital of issued shares $ 726,000 $ 726,000

The issued common stock has a par value of $10 per share and

each share is entitled to one vote and the right to receive dividends.

(II) Additional paid-in capital

Dec. 31, 2020 Dec. 31, 2019

Can be used to make up losses,

to issue cash dividends or to

add into share capital (Note)

Share premium $ 254,700 $ 254,700

Premium on capital stock due

to merger

9,481 9,481

Cannot be used for any purpose

Cost of employee stock options 13,271 13,271

$ 277,452 $ 277,452

Note: Such additional paid -in capital may be used to cover losses or,

when the company has no losses, to distribute cash or to capitalize

share capital, provided that the capitalization of share capital is

limited to a certain percentage of paid -in share capital each year.

(III) Retained earnings and dividend policy

In accordance with the Company's policy on the distribution of

earnings, the Company shall first make up for any after-tax net income

in its annual budget (including adjustment of the Unappropriated

retained earningsAmount) and set aside 10% of the total legal reserve

in accordance with the law; however, except when the legal reserve has

reached the Company's total paid-in capital. The Company shall not set

aside 10% of the accumulated losses (including adjustment of the

Unappropriated retained earningsAmount) as legal reserve, except

when the legal reserve has reached the Company's paid -in capital . The

Board of Directors shall prepare a proposal for the distribution of the

229

remaining earnings, together with the Unappropriated retained earnings

(including adjustments to the Unappropriated retained earningsAmount)

at the beginning of the period. The Board of Direc tors shall prepare a

proposal for the distribution of earnings and submit it to the

shareholders ' meeting for resolution on the distribution of dividends to

shareholders.

The Company's dividend policy is in line with its current and

future development plans, taking into account the investment

environment, capital requirements, domestic and international

competition, and the interests of shareholders. Dividends may be

distributed to shareholders in cash or in stock, with cash dividends not

less than 10% of total stock dividends, except when stock dividends are

less than $1 per share.

The legal reserve shall be set aside until the balance reaches the

total paid-up capital of the Company. The statutory reserve may be

applied to make up losses. If the Company is not in deficit, the excess

of the legal reserve over 25% of the total paid -in capital may be

distributed in cash in addition to capitalization.

The Company has appropriated and reversed the special reserve in

accordance with J in-Guan-Zheng-Fa-Zi Letter No. 1010012865,

Jin-Guan-Zheng-Fa-Zi Letter No. 1010047490, Jin -Guan-Zheng-Fa-Zi

Letter No. 1030006415 and the “Questions and Answers for Special

Reserves Appropriated Following Adoption of IFRSs.”

The Company held its regular shareholders ' mee tings on May 28,

2020 and June 20, 2019, and resolved to approve the earnings

distribution for fiscal 2019 and 2018, respectively, as follows:

2019 2018

Legal reserve $ 17,985 $ 25,401

Special reserve $ 19,355 ( $ 4,220 )

Cash dividends $ 123,420 $ 166,980

Cash dividends per share

(NT$)

$ 1.71 $ 2.30

The Company proposed the following distribution of earnings for

fiscal 2020 at the Board of Directors ' meeting on March 9, 2021:

2020

230

Legal reserve $ 22,009

Special reserve $ 71,429

Cash dividends $ 144,152


(NT$)

$ 2.00

The distribution of earnings for fiscal 2020 is subject to the

resolution of the shareholders ' meeting scheduled to be held on May 27,

2021.

(IV) Special reserve

2020 2019

Beginning balance $ 146,675 $ 150,895

Reversal of special reserve - ( 4,220 )

Provision of special reserve

Allowances for deductions

in other equity interest

items 19,355 -

Ending balance $ 166,030 $ 146,675

231

(V) Other equity interest items

1. Exchange differences on translation of foreign financial

statements

2020 2019

Beginning balance ( $ 166,030 ) ( $ 146,675 )

Share of the translation

differences of the

subsidiaries, associates and

joint ventures accounted for

using equity method ( 85,864 ) ( 24,194 )

Relevant income tax 17,173 4,839

Ending balance ( $ 234,721 ) ( $ 166,030 )

2. Unrealized gains or losses on financial assets measured at fair

value through other comprehensive income

2020 2019

Beginning balance $ - $ -

Generated in the current period

Unrealized gains or losses

Equity instrument ( 2,738 ) -

Ending balance ( $ 2,738 ) $ -

(VI) Treasury shares

Reasons for the retirement of

shares

Transfer of shares

to employees

(1,000 shares)

Number of shares as of Jan. 1,

2020

-

Increase in the current period 524

Number of shares as of Dec.

31, 2020

524

Treasury shares held by the Company are not pledged under the

Securities and Exchange Act and are not entitled to dividend

distribution or voting rights.

XIX. Income

2020 2019

Income from customer contracts

Porcelain $ 709,649 $ 643,288

Water use equipment 232,305 196,326

Automated equipment 204,018 162,885

Bathtubs 27,849 33,912

Other 297,575 263,772

$ 1,471,396 $ 1,300,183

233

Contract balance

Dec. 31, 2020 Dec. 31, 2019

Accounts receivable $ 171,991 $ 145,801

Contract liabilities

Payment for goods collected

in advance $ 2,492

$ 826

Re-recognized income from Contract from customer contracts in

2020 and 2019 are$ 0 thousands.

IIX. Net income from continuing operations

Net income from continuing operations includes the following items:

(I) Other income and expenses, net

2020 2019

Compensation for losses ( $ 966 ) ( $ 147 )

Net income from the disposal

and obsolescence of

property, plant and

equipment 41 146

Profit from lease modification 103 -

( $ 822 ) ( $ 1 )

(II) Depreciation, amortization and employee benefit expenses

2020 2019

Belonging to operating

costs


expenses Total


costs


expenses Total

Employee benefit expenses

Salary expenses $ 34,037 $ 87,606 $ 121,643 $ 31,698 $ 67,549 $ 99,247 Premium for the

insurance of employees

3,001 7,321 10,322 2,786 6,199 8,985

Benefits after retirement Defined contribution

plan

1,590 3,732 5,322 1,509 2,989 4,498 Compensation of directors - 9,094 9,094 - 8,104 8,104

Other employee benefit

expenses

987 3,543 4,530 977 2,891 3,868 Total of employee benefit

expenses

$ 39,615 $ 111,296 $ 150,911 $ 36,970 $ 87,732 $ 124,702

Depreciation expense Property, plant and

equipment

$ - $ 21,989 $ 21,989 $ - $ 16,168 $ 16,168

Right-of-use assets - 10,816 10,816 - 6,311 6,311 $ - $ 32,805 $ 32,805 $ - $ 22,479 $ 22,479

Amortization expense $ - $ 282 $ 282 $ - $ 879 $ 879

The respective numbers of employees of the Company calculated

until December 31 of 2020 and 2019 are 146 and 131, while the number

of directors who do not serve as employees is 6. The average fees of

employee benefit of this year and last year respectively are $1,013

thousands and $933 thousands. The average compensations

234

respectively are $869 thousands and $794 thousands, and the average

adjustment of compensation is 9%. The supervisors ' remuneration for

the current year and the previous year were $2,679,882 and $2,380,682,

respectively.

Compensation Policy

1. Directors ' and supervisors ' remuneration

The Company may pay remuneration to the directors and

supervisors for their duties, regardless of operating profit or loss,

in accordance with the Company's Articles of Incorporation,

which authorize the Board of Directors to determine the value of

their participation in and contribution to the Company's operations,

taking into account the market rate in the industry. In addition, if

the Company has Net profit before tax, the remuneration shall be

distributed in accordance with the Company's Articles of

Incorporation.

2. Managers

The managers are appointed and compensated in acc ordance

with the Company's Articles of Incorporation and are subject to

the Board of Directors ' approval. The standards of compensation

for managers are based on their personal performance,

contribution to work, annual operating results, hard work, and

cooperation with company policies, as well as on market standards

in the industry.

3. Employees

Employees are paid monthly in the spirit of equal pay for

equal work according to their academic experience and job level,

and performance bonuses are paid acco rding to the company's

monthly operating performance. If the company has Net profit

before tax, the compensation will be distributed according to the

company's articles of incorporation.

(III) Compensation to employees and compensation to directors and

supervisors

In compliance with the Articles of Incorporation, the Company

contributes 2% to 5% of the pre -tax benefit before compensation to

235

employees and directors and supervisors as compensation to employees

and no more than 2% as compensation to directo rs and supervisors for

the year.

The compensation to employees and compensation to directors and

supervisors for the years 2020 and 2019 were resolved by the Board of

Directors on March 9, 2021 and February 27, 2020, respectively, as

follows:

Estimated l isting ratio

2020 2019

Compensation of employees 3% 3%


supervisors

2% 2%

236

2020 2019

Cash Cash

Compensation of employees $ 8,749 $ 7,303


supervisors

5,833 4,869

If there is any change in the annual Parent Company Only

Financial Statements after the date of adoption, the change in

accounting estimate will be treated as an adjustment in the following

year.

There was no difference between the actual amount of

compensation to employees and compensation to directors and

supervisors for fiscal 2019and 2018 and the amount recognized in the

2019 and 2018 Parent Company Only Financial Statements.

For information on the compensation to employees and

compensation to directors and supervisors resolved by the Board of

Directors of the Company, please visit the Market Observation Post

System (MOPS) of the Taiwan Stock Exchange.

III. Income tax of continuing operations

(I) Income tax recognized in profit or losses

Main components of income tax expenses recognized in profit or

losses:

2020 2019

Current income tax

Generated in the fiscal

year

$ 62,180 $ 31,975

Surtax on unappropriated

retained earnings

954 3,292

Adjustments for the prior

year

( 950 ) 11

62,184 35,278

Deferred income tax

Generated in the fiscal

year

( 6,703 ) 14,593

The tax paid in foreign

countries cannot be

deducted

1,492 1,553

Income tax expense recognized

in profit or losses

$ 56,973 $ 51,424

237

The reconciliations of accounting income and income tax expenses

are as follows:

2020 2019

Net income before tax $ 277,065 $ 231,275

Income tax expense of the net

income before tax calculated

with statutory tax rate $ 55,413 $ 46,255

Non-deductible expenses in the

tax 64 313


retained earnings 954 3,292


countries cannot be deducted 1,492 1,553

Adjustments to the income tax

expenses in the past years in

the current period ( 950 ) 11


in profit or losses $ 56,973 $ 51,424

(II) Income tax recognized in other comprehensive income

2020 2019

Deferred income tax

Generated in the current period

－Share of the other

comprehensive income

of subsidiaries

accounted for using

equity method $ 17,173 $ 4,839

(III) Current income tax liabil ities

Dec. 31, 2020 Dec. 31, 2019

Current income tax liabilities $ 46,972 $ 16,409

(IV) Deferred income tax assets and liabilities

Changes in deferred income tax assets and liabilities are as

follows:

2020

Beginning

balance

Recognized

in profit or

losses

Recognized

in other

comprehensi

ve income

Ending

balance

Deferred income tax assets

Temporary differences

Unrealized loss from

market price decline

and obsolete and $ 2,764 $ 557 $ - $ 3,321

238

slow-moving

inventory

Allowance for bad debts 253 398 - 651

Exchange difference on

translation of the

financial statements of

foreign operations 41,508 - 17,173 58,681

Unrealized foreign

exchange losses 30 ( 30 ) - -

$ 44,555 $ 925 $ 17,173 $ 62,653

Deferred income tax liabilities


Investment income

recognized using

equity method $ 176,544 ( $ 5,825 ) $ - $ 170,719

Unrealized foreign

exchange gains - 47 - 47

$ 176,544 ( $ 5,778 ) $ - $ 170,766

2019

Beginning

balance

Recognized

in profit or

losses

Recognized

in other

comprehensi

ve income

Ending

balance

Deferred income tax assets


Unrealized loss from

market price decline

and obsolete and

slow-moving

inventory

$ 3,263 ( $ 499 ) $ - $ 2,764

Allowance for bad debts - 253 - 253


translation of the


foreign operations

36,669 - 4,839 41,508

Unrealized foreign

exchange losses

- 30 - 30

$ 39,932 ( $ 216 ) $ 4,839 $ 44,555


239


B e g i n n i n g

b a l a n c e

Recognized

in profit or

l o s s e s

Recognized

i n o t h e r

comprehensi

ve i n c o me

E n d i n g

b a l a n c e

Deferred income tax liabilities


Investment income

recognized using

equity method

$ 162,166 $ 14,378 $ - $ 176,544

Unrealized foreign

exchange gains

1 ( 1 ) - -

$ 162,167 $ 14,377 $ - $ 176,544

(V) Deductible temporary differences of deferred income tax assets which

were not recognized in the statement of financial position

Dec. 31, 2020 Dec. 31, 2019

Deductible temporary

differences

$ 729 $ 729

(VI) Income tax assessment

The income tax returns of the Company have been assessed and

approved by the tax authorities through fiscal 2018.

IIII. Earnings per share

(I) Basic earnings per share

The earnings and weighted -average number of common stocks

used to calculate basic earnings per share were as follows:

2020 2019

Net income in the fiscal year $ 220,092 $ 179,851

Weighted average number of

common shares used in the

calculation of basic earnings

per share (1,000 shares)

72,290 72,600

Basic earnings per share (NT$) $ 3.04 $ 2.48

(II) Diluted earnings per share


used to calculate diluted earnings per share were as follows:

2020 2019

Net income in the fiscal year $ 220,092 $ 179,851



calculation of basic earnings 72,290 72,600

240


Influence of dilutive potential

common shares

Compensation of

employees (1,000

shares) 376 352



calculation of diluted earnings

per share (1,000 shares) 72,666 72,952

Diluted earnings per share

(NT$) $ 3.03 $ 2.47

If the Company has the option of paying employees in stock or

cash, it is assumed that employee compensation will be paid in stock

and is included in the weighted -average number of shares outstanding

for the purpose of calculating diluted earnings per share when the

potential ordinary share has a dilutive effect. The dilutive effect of

these potential ordinary shares shall also continue to be considered in

the calculation of diluted earnings per share before the following year 's

resolution by shareholders’ meetin g on the number of employee

compensation shares to be distributed.

IIIII. Capital risk management

The Company is currently in a stable operating phase and the

objective of capital risk management is to ensure that i t can maximize

shareholder returns by optimizing debt and equity balances while

continuing to operate and grow.

The Company adopts a prudent risk management strategy and

conducts regular reviews to determine the most appropriate capital

structure for itself based on its business development strategy and overall

planning of operational needs.

IIIV. Financial instruments

(I) Fair value information

1. Financial instruments not at Fair value

The Company considered that Carrying amount of Financial

assets and Financial liability not at Fair value is close to Fair

value.

2. Financial instruments at Fair value

241

(1) Fair value hierarchy

Dec. 31, 2020

Level 1 Level 2 Level 3 Total

Non-current financial

assets – measured

at the fair value of

other

comprehensive

income

Investments in equity

instruments

－Stocks of

domestic

companies

which are not

listed or traded

over the

counter $ - $ - $ 262 $ 262

There were no transfers between Level 1 and Level 2 fair

value measurements in fiscal 2020 and 2019.

(2) Valuation techniques and inputs for level 3 fair value

measurements

Category of financial

instruments Valuation technique and input value

Investment in the stocks of

domestic companies

which are not listed or

traded over the counter

Net book value per share: Based on the

Company's financial information, the

net book value per share is calculated

as the present value of the expected

gain or loss from holding the

investment.

(II) Types of financial instruments

Dec. 31, 2020 Dec. 31, 2019

Financial assets

Financial assets measured at

amortized cost

Cash and cash equivalents $ 53,805 $ 82,077

Notes receivable, net 13,804 14,519

Net value of accounts

receivable 163,618 142,382

Net accounts receivable－related parties 8,373 3,419

Other receivables 304 305

Other receivables－related

parties 30,251 28,037

Financial assets measured at fair

value through other


242


instruments -

non-current 262 -

Financial liability

Financial liabilities measured at

amortized cost

Short-term loans 233,000 325,000

Accounts payable 33,542 39,931

Accounts payable－related

parties - 1

Other payables 61,886 55,953

(III) Financial risk management objectives and policies

The Company is committed to ensuring that it has sufficient and

cost-effective working capital to meet its operating requirements. The

Company carefully manages market risk (including foreign currency

exchange rate risk, interest rate risk and other price risks), credit risk

and liquidity risk associated with i ts operations to reduce the potential

adverse effects of market uncertainties on the Company's financial

condition.

1. Market risk management

(1) Exchange Rate Risk

The Company is mainly engaged in the domestic market,

and all foreign sales and purchases are quoted in foreign

currencies. The Company adopts a natural hedge of foreign

currency offsetting, and the net foreign currency position is

relatively small. Fluctuations in foreign exchange rates do

not have a significant impact on the Company's financial

operations, and the Company has been paying attention to

exchange rate fluctuations for a long time to minimiz e the

impact on the Company due to exchange rate fluctuations.

The Company's foreign-currency-denominated monetary

assets and monetary liabilities as of the balance sheet date

Carrying amount can be found in Note XXVIII.

The sensitivity analysis of foreign currency exchange

rate risk was calculated for foreign currency monetary items

as of the end of the financial reporting period. If the New

243

Taiwan dollar depreciates/strengthens by 5% against the U.S.

dollar, the Company's net income before tax would

decrease/increase by $1,664 thousands and $1,346 thousands

for the years ended December 31, 2020 and 2019,

respectively.

(2) Interest rate risk

The Company continues to reduce its borrowing with

financial institutions and the Company's management

believes that fluctuations in borrowing rates will have lit tle

impact on the Company.

(3) Other price risk

The equity risk arises mainly from Financial assets

measured at fair value through other comprehensive income

(Investment in the stocks of domestic companies which are

not listed or traded over the counter) .

Sensitivity analysis

The following sensitivity analysis is based on the equity

price risk as of the balance sheet date.

If the equity price increases/decreases by 0.5%, other

comprehensive income will increase/decrease by $1 thousand

from Jan. 1, 2020 to Dec. 31, 2020 due to the change in Fair

value of financial assets measured at Fair value through other

gains or losses.

2. Credit risk

Credit risk refers to the risk of financial loss resulting from

the default of contractual obligations by the counter -parties. As of

the balance sheet date, the Company's maximum exposure to credit

risk due to non-performance by counter-parties is the carrying

value of financial assets recognized in the Parent Com pany Only

Statement of Financial Position. As of the balance sheet date, the

Company's maximum exposure to credit risk arising from

counter-parties ' failure to meet their obligations is the carrying

value of financial assets recognized in the Parent Compan y Only

Statement of Financial Position.

244

In order to mitigate credit risk and maintain the quality of

Accounts receivable, the Company has established procedures to

manage credit risk associated with i ts operations, and the

Company also uses certain credi t enhancement tools, such as

payment for goods collected in advance and margin acquisition, at

appropriate times to reduce customers ' credit risk. The Company

also uses certain credit enhancement tools, such as payment for

goods collected in advance and margin, to reduce customers '

credit risk. In addit ion, the Company reviews the recoverable

amounts of receivables on a case -by-case basis at the balance

sheet date to ensure that appropriate impairment losses have been

recorded for uncollectible receivables.

In 2020 and 2019, except for Company A, the Company's

concentration of credit risk to other customers does not exceed

10% of the total Accounts receivable, and these companies have a

long history and good repayment status, so the Company's related

credit risk is not significant.

The credit risk is limited because the counter -parties of

liquidity are financial institutions with good credit ratings, and

therefore no significant credit risk is expected.

3. Liquidity risk

The Company copes with the operation and reduces the

influence of cash flow fluctuations through the management and

maintenance of sufficient amount of cash and cash equivalents.

The Company's management monitors the use of banking facili ties

and ensures compliance with the terms of bor rowing contracts.

The Company meets its contractual obligations by maintaining

appropriate capital and banking facil ities. The Company's working

capital is sufficient to meet its obligations and there is no

liquidity risk that the Company will not be able to raise funds to

meet its contractual obligations.

The unused funds of the credit agreements from the bank

until December 31s t

, 2020 and 2019 respectively are $573,130

thousands and $354,940 thousands.

245

The following table is based on the earliest possible period

for which the Company may be required to make repayments and

is based on the undiscounted cash flows from financial liabili t ies,

which include cash flows from interest and principal. The

Company's working capital is sufficient to meet the d emand.

Dec. 31, 2020

Less than 1

year 1-2 years 2-3 years

More than 3

years Total

Non-derivative

financial liabilities

Short-term loans $ 233,000 $ - $ - $ - $ 233,000

Accounts payable 33,542 - - - 33,542

Other payables 61,886 - - - 61,886

Current income tax

liabilities 46,972 - - - 46,972

Lease liabilities -

current 10,095 - - - 10,095

Other current

liabilities－other 7,533 - - - 7,533

Lease liabilities -

non-current - 11,111 8,828 6,450 26,389

Dec. 31, 2019

Less than 1


More than 3

years Total

Non-derivative

financial liabilities

Short-term loans $ 325,000 $ - $ - $ - $ 325,000


Accounts payable－

related parties 1 - - - 1

Other payables 55,953 - - - 55,953

Current income tax

liabilities 16,409 - - - 16,409

Lease liabilities -

current 8,282 - - - 8,282

Other current

liabilities－other 3,275 - - - 3,275

Lease liabilities -

non-current - 10,277 10,277 14,482 35,036

246

IIV. Transaction with related parties

The transactions between the Company and related parties (aside

from those revealed in notes) are listed below:

(I) Names of related parties and their relationships with the Company

N a m e o f r e l a t e d p a r t y R e l a t i o n s h i p w i t h t h e C o m p a n y


Joint Stock Company

Subsidiaries

Chia-Ta-Hang Co., Ltd. Substantive related party－the chairperson

of that company was the spouse of a

relative within second degree of kinship

of the chairperson of the Company

(II) Operating revenue

Accounting item Type of related party 2020 2019

Sales revenue Substantive related party

Chia-Ta-Hang Co.,

Ltd.

$ 43,655 $ 36,330

Other operating

revenue

Subsidiary

Vietnam Caesar

Sanitary Wares

Joint Stock

Company

$ 14,907 $ 15,525

There are no significant exceptions to the Terms of Transaction

between the Company and other Non-related parties.

In 2018 and 2017, the Company entered into an agreement with

Vietnam Caesar Sanitary Wares Joint Stock Company to amend the

technical contract for the production of ceramics and entered into a

management services contract with the Company to license and assist

Vietnam Caesar Sanitary Wares Joint Stock Company in the marketing

of the "Caesar Sanitary Wares" brand, market development and

technical support services in Vietnam. Vietnam Caesar Sanitary Wares

Joint Stock Company shall pay the Company's management service fee,

which shall be calculated in accordance with the terms of the Vietnam

Caesar Sanitary Wares Joint Stock Company Agreement. Caesar

Sanitary Wares Joint Stock Company shall pay the Company a

management service fee of 2.5% of Vietnam Sanitary Wares Joint Stock

Company's annual sales amount (net of the amount sold to the Company)

247

on a quarterly basis, subject to a maximum annual amount of

US$500,000; the Company shall receive payment within two months

after the end of each quarter, subject to adjustment of capital

requirements. The effective period of the aforementioned rate is one

year, which is reviewed and revised by the parties upon annual renewal.

2020 and 2019 are recognized under Other operating revenue.

(III) Purchase

Type of related party/Name 2020 2019

Subsidiary


Wares Joint Stock

Company

$ 402,339 $ 408,381

The Company's purchase from Vietnam Caesar Sanitary Wares

Joint Stock Company is a purchase of sanitary equipment products, and

the purchase price is Discussed by both parties in the transaction with

reference to the market price and gross profit of products. The purchase

price is discussed by both parties in the transaction with reference to

the market price and gross profit of products, and the payment terms

are within 30 days after the shipment from Vietnam Caesar Sanitary

Wares Joint Stock Company, subject to adjustment of capital

requirements. The payment terms are within 30 days of shipment by

Vietnam Caesar Sanitary Wares Joint Stock Company, subject to

adjustment of capital requirements. The unrealized gross profit on sales

of $16,479 thousands and $12,216 thousand were recorded in 2020 and

2019, respectively, for the subsidiaries, associates and joint ventures

recognized under the equity method.

(IV) Related party receivables (not including loans for related parties)

Accounting item Type of related party Dec. 31, 2020 Dec. 31, 2019

Accounts

receivable－Related parties

Subsidiary

Vietnam Caesar

Sanitary Wares

Joint Stock

Company

$ 4,172 $ -

Substantive related party

Chia-Ta-Hang Co.,

Ltd.

$ 4,201 $ 3,419

248

(V) Other receivables


Other accounts

receivable


－Related parties Chia-Ta-Hang Co.,

Ltd.

$ 5 $ 5

(VI) Related party payables (not including loans for related parties)


Accounts payable

－related parties

Subsidiary

Vietnam Caesar

Sanitary Wares

Joint Stock

Company

$ - $ 1

(VII) Endorsement

T y p e o f r e l a t e d p a r t y Dec. 31, 2020 Dec. 31, 2019

Subsidiary


Wares Joint Stock

Company

$ 142,400

(USD5,000仟元)

$ 194,870

(USD6,500仟元)

249

(VIII) Others

The Company and Vietnam Caesar Sanitary Wares Joint Stock

Company mutually agreed that the Company purchases raw materials

on behalf of Vietnam Caesar Sanitary Wares Joint Stock Company, and

the amount of raw materials purchased on behalf of Vietnam Caesar

Sanitary Wares Joint Stock Company was $61,990 thousands and

$67,738 thousands for 2020 and 2019, respectively, and the balances of

Other receivables were $30,246 thousands and $28,032 t housands,

respectively.

(IX) Key management compensation

2020 2019

Short-term employee benefits $ 22,678 $ 20,391

Benefits after retirement 408 399

$ 23,086 $ 20,790

The remuneration of directors and other key management

personnel is determined by the Compensation Committee based on

individual performance and industry average.

IIVI. Pledged assets

The following assets have been provided as collateral to secure loans

or l ines of credit with banks

Dec. 31, 2020 Dec. 31, 2019

Property, plant and equipment－land $ 61,652 $ 61,652

Property, plant and equipment－buildings 35,728 36,622

$ 97,380 $ 98,274

IIVII. Significant contingent liabilities and unrecognized contractual

commitments

In addition to those described in other notes, the Company had the

following material commitments and contingencies as of the balance sheet

date:

(I) As of Dec. 31, 2020, the Company has entered into construction

contracts with various vendors for a total pr ice of NT$9,481 thousands

and has paid NT$6,636 thousands, recognized as Construction in

progress.

250

(II) As of Dec. 31, 2020 and 2019, the Company has issued unused letters

of credit amounting to US$0 thousand and US$414 thousands,

respectively.

(III) As of Dec. 31, 2020 and 2019, the Company has guaranteed the

financing loans of Vietnam Caesar Sanitary Wares Joint Stock

Company in the amount of NT$142,400 thousands (US$5,000

thousands) and NT$194,870 thousands (US$6,500 thousands),

respectively.

251

IIVIII. Exchange rate information of foreign currency financial assets and

liabilities

Information on the Company's financial assets and liabili ties in

foreign currencies of significant influence is as follows.

Dec. 31, 2020 Dec. 31, 2019

Foreign

currency

Exchange

rate NT$

Foreign

currency

Exchange

rate NT$

Financial assets

Monetary items

USD $ 1,169 28.48 $ 33,279 $ 1,997 29.980 $ 59,857

RMB 10 4.37 44 - - -

Financial liabilities

Monetary items

USD - - - 1,098 29.980 32,931

IIIX. Other matters

The Company was affected by the global pandemic, but the impact

was relatively insignificant due to the well -controlled outbreak in Taiwan,

and the cumulative Operating revenue increased by approximately 13% as

of Dec. 31, 2020 compared to the same period last year, indicating that

the outbreak did not have a serious impact on the Company's operations.

Although the recent epidemic in Europe and the United States is on the

rise, the Company's operating revenue is concentrated in Taiwan and is

not expected to be significantly affected.

The Company's working capital , salaries, interest , rent and other

expenses have remained normal, and there are no applications for relief

from the government.

IIIX. Disclosures

(I) Information on significant t ransactions and (II) information on investees:

1. Lending to others: None.

2. Endorsement and guarantee for others: (Schedule 1).

3. Marketable securities held at the end of the period (excluding

investments in subsidiaries, associates and joint venture s):

(Schedule 2).

4. The cumulative amount of securities purchased or sold reaches

NT$300 million or 20% of the paid -in capital: None.

252

5. Acquisition of real estate amounting to at least NT$300 million or

20% of the paid-in capital: None.

6. Disposal of real estate amounting to at least NT$300 million or


7. The amount of purchase or sale of goods with related parties

reaches NT$100 mill ion or 20% of the paid -in capital: (Schedule

3).

8. Related party receivables amount ing to at least NT$100 million or


9. Engage in derivative transactions: None.

10. Information of investee companies: (Schedule 4).

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

(IV) Information of Major Shareholders: The name of shareholders who hold

5% of the Company’s shares and the number and ratio of the shares

held by them (Schedule 5).

253

Sanitar Co., Ltd.

Endorsement and Guarantee for Others

From Jan. 1 to Dec. 31, 2020

Schedule 1 Unit: NT$ thousands (unless otherwise specified)

No. Name of the

endorser/guarantor

Guaranteed party Limits on

endorsement/guar

antee amount

provided to each

guaranteed party

Maximum

balance for the

period Ending balance

Amount actually

drawn

Amount of

endorsement/guar

antee

collateralized by

properties

Ratio of

accumulated

endorsement/gu

arantee to net

equity per latest

financial

statements (%)

Maximum

endorsement/guar

antee amount

allowable

Guarantee

provided

by parent

company

Guarantee

provided

by a

subsidiary

Guarantee

provided

to entities

in

Mainland

China

Note Company name Relationships

1 Sanitar Co., Ltd. Vietnam Caesar Sanitary

Wares Joint Stock

Company

Investment

accounted

for using the

equity

method

$ 340,563 $ 196,625 $ 142,400 $ 59,680 $ - 8.36 $ 681,126 Y N N (Note)

Note: The endorsement/guarantee l imit is based on the endorsement/guarantee procedures approved by the shareholders ' meeting and s t ipulated by the Bureau of Securit ies and Futures of the Financial

Supervisory Commission, Executive Yuan on December 18, 2002 , by Order no.(91) -Tai-tsai -zhen-(6)-0910161919. The total amount of the Company's endorsement and guarantee shall not exceed

40% of the Company's net worth and the amount of endorsement and guarantee for subsidiaries directly holding more than 50% of the common stock shall not exceed 20% of the Company's net

worth for the period.

254

Sanitar Co., Ltd.

Marketable Securities Held at the End of the Period

Dec. 31, 2020


Holding Company Type and Name of Marketable Securities

Relationship with the

issuer of the marketable

securities

Financial statement account

End of the period

Note Number of shares Carrying amount

Shareholding

percentage Fair value

Sanitar Co., Ltd. Stock

Amsalp Biomedical Corporation - Non-current financial assets

measured at the fair value

through other comprehensive

income

154,700 $ 262 18.20% $ 262 －

255

Sanitar Co., Ltd.

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



Company name Transaction

counterparty Relationships

Transaction Situation and reason of why trading

conditions are different from general trading Notes/ accounts receivable or

payable

Note Purchases

(Sales) Amount

Ratio to total

purchases/sales

amount (％) Loan period Unit price Loan period Balance

Ratio to total

amount of

notes/accounts

receivable or

payable (%)

Sanitar Co., Ltd. Vietnam Caesar

Sanitary Wares

Joint Stock

Company

Investment

accounted for

using the equity

method

Purchase $ 402,339 39% Vietnam Caesar

Sanitary Wares

Joint Stock

Company should

pay within 30

days after the

delivery, but this

can be adjusted

regarding the

demand for

funds.

Discussed by

both parties in

the transaction

with reference

to the market

price and gross

profit of

products

Vietnam Caesar

Sanitary Wares

Joint Stock

Company should

pay within 30

days after the

delivery, but this

can be adjusted

regarding the

demand for

funds.

Accounts

payable

$ -

-

Note

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

256

Sanitar Co., Ltd.

Name, Location, and Other Related Information of Investees



Name of the Investment

Company

Name of the Investee

Company Location Main businesses

Original investment amount Shares held as of the end of the period

Net income (loss)

of the investee

Gain (loss) on

investment

recognized in

the period

Note End of the

period

End of last

period

Number of

shares (1,000

shares)

Ratio (％)

(Note 3) Carrying amount

Sanitar Co., Ltd. Vietnam Caesar Sanitary

Wares Joint Stock

Company

Vietnam Manufacturing and

sale of sanitary

equipment and

water supply

equipment

$ 665,303 $ 665,303 41,878 100 $ 1,225,499 $ 63,253 $ 58,988 Note 1, 2,

3

Sanitar Co., Ltd. Kai-Sheng Sanitary

Wares Co., Ltd.

Taiwan Manufacturing and

sale of sanitary

equipment and

water supply

equipment

13,260 - 1,326 51 13,221 ( 76 ) ( 39 ) Note 2

Note 1: The difference between the comprehensive income of Vietnam Caesar Sanitary Wares Joint Stock Company and the gain on investment recognized by Sanitar Co., Ltd. was the

net change of the unrealized gains or losses from upstream sale, which was NT$4,264,000.

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

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

257

Sanitar Co., Ltd.

Information of Major Shareholders

Dec. 31, 2020

Schedule 5

Name of Major Shareholder

Shares

Number of shares

held by the person

Shareholding

percentage

HSIAO, CHUN-HSIANG 5,013,581 6.90%

Note 1: Information of Major Shareholders is calculated based on the last

business day of the quarter in which the shareholders held 5% or more of

the Company's common and preferred shares (including Treasury shares).

The number of shares in the consolidated financial statements may differ

from the actual number of shares delivered due to different bases of

computation.

Note 2: The above information is revealed by the trustee's opening of a trust

account with individual subaccounts of the principal if the shareholder

has delivered the shares to the tr ust . As for the shareholder 's shareholding

of more than 10% of insider shares reported under the Securities and

Exchange Act, the shareholding includes the shareholding of the

shareholder himself/herself plus the shareholding of the shareholder

delivered to the trust and has the right to decide the use of the trust

property, etc. Please refer to the Market Observation Post System for the

information on insider shareholding reporting.

258

§DETAIL TABLES OF MAJOR ACCOUNTING ITEMS§

ITEM NO.

Detail Tables of Assets, Liabilities and Equity Detail Table of Cash and Cash Equivalents Detail Table 1 Detail Table of Notes Receivable Detail Table 2 Detail Table of Accounts Receivable Detail Table 3 Detail Table of Inventory Detail Table 4 Detail Table of Prepayments Detail Table 5 Detail Table of the Changes in Non-current

Financial Assets Measured at Fair Value

through Other Comprehensive Income

Detail Table 6

Detail Table of the Changes in Investment

Accounted for Using Equity Method

Detail Table 7

Detail Table of the Changes in Property, Plant

and Equipment

Note XI

Detail Table of the Changes in the

Accumulated Depreciation of Property,

Plant and Equipment

Note XI

Detail Table of the Changes in Right-of-use

Assets

Note XII

Detail Table of the Changes in the

Accumulated Depreciation of Right -of-use

Assets

Note XII

Detail Table of the Changes in Intangible

Assets

Note XIII

Detail Table of Refundable Deposits Detail Table 8 Detail Table of Other Non-current Assets Note XIII Detail Table of Accounts Payable Detail Table 9 Detail Table of Other Payables Note XVI

Detail Table of Other Current Liabilities－Other

Detail Table 10

Detail Table of Lease Liabilities Detail Table 11

Detail Tables of Profit and Loss Items Detail Table of Operating Revenue Detail Table 12 Detail Table of the Cost of Sales Detail Table 13 Detail Table of Other Operating Costs Detail Table 14 Detail Table of Operating Expenses Detail Table 15 Chart of Accounts for the Employee Benefits,

Depreciation, Depletion and Amortization

Expenses in the Period

Note XX

259

Sanitar Co., Ltd.

Detail Table of Cash and Cash Equivalents

Dec. 31, 2020

Detail Table 1 Unit: NT$ thousands unless otherwise

specified

Item Summary Amount

Cash on hand and working

capital

$ 242

Bank deposits

Checking deposit 53,171

Demand deposit 392

$ 53,805

260

Sanitar Co., Ltd.

Detail Table of Notes Receivable

Dec. 31, 2020

Detail Table 2 Unit: NT$ thousands

Name of Customer Summary Amount

Non-related parties

Pu Ｏ Sanitary Ware and

Building Materials Co., Ltd.

Payment for goods $ 3,940

Han Ｏ Construction Co., Ltd. 〃 2,285

Feng Ｏ Enterprise Co., Ltd. 〃 1,661

Yong Ｏ Energy Co., Ltd. 〃 701

Other (Note) 〃 5,217

$ 13,804

Note: The balance of each account did not exceed 5% of the balance of the

subject.

261

Sanitar Co., Ltd.

Detail Table of Accounts Receivable

Dec. 31, 2020


Name of Customer Summary Amount

Related parties

Chia-Ta-Hang Co., Ltd. Payment for goods $ 4,201

Vietnam Caesar Sanitary Wares Joint

Stock Company

〃 4,172

$ 8,373

Non-related parties

A Company Payment for goods $ 46,323

B Company 〃 14,867

C Company 〃 10,737


167,803

Minus: Allowance for bad debts ( 4,185 )

$ 163,618

Note: The balance of each account did not exceed 5% of the balance of the

subject.

262

Sanitar Co., Ltd.

Detail Table of Inventory

Dec. 31, 2020


Lower of Cost or Market

Item Cost Price drop Premium

Merchandise inventory $ 165,403 ( $ 698 ) $ 88,139

Minus: Loss on the provision

for obsolete stocks

( 698 ) - -

164,705 ( 698 ) 88,139

Dead Stock

Merchandise inventory 15,906 ( 15,906 ) -

Minus: Loss on the

provision for dead

stock

( 15,906 ) - -

- ( 15,906 ) -

$ 164,705 ( $ 16,604 ) $ 88,139

Note: The market price of inventory was based on net realizable value.

263

Sanitar Co., Ltd.

Detail Table of Prepayments

Dec. 31, 2020


Item Summary Amount

Other prepaid expenses Prepayment of insurance

premium, etc.

$ 1,204

Inventory of supply 981

$ 2,185

Prepayment for goods K Company $ 8,688

Z Company 1,665

Other 1,495

$ 11,848

264

Sanitar Co., Ltd.

Detail Table of Non-current Financial Assets Measured at Fair Value through Other Comprehensive Income

Dec. 31, 2020s

Detail Table 6 Unit: NT$ thousands (unless otherwise specified)

Fair value

Name of Security

Number of shares

／unit

Carrying amount

(NT$) Unit price (NT$) Total

Provided as collateral or

pledge

Stock of domestic unlisted companies

Amsalp Biomedical Corporation 154,700 10 1.69 $ 262 No

265

Sani ta r Co . , Ltd .

Detai l Table o f th e Ch anges in Inves tment Accounted for Us ing Equi ty Method

Fro m Jan . 1 to Dec. 31 , 20 20

Detai l Table 7 Uni t : NT$ thousand s (un less o th erwise sp ec i fi ed)

Beginning balance Increase in the fiscal year Decrease in the fiscal year Ending balance Net value of equity (Note 1)

Name of the Investee Company

Number of

shares Amount

Number of

shares Amount

Number of

shares Amount Decrease

- Note

Share of the

profit or loss of

subsidiaries,

associates and

joint ventures

accounted for

using equity

method

Number of

shares

Shareholding

percentage Amount

Unit price

(NT$) Total

Provided as

collateral or

pledge

Foreign unlisted company


Joint Stock Company

41,877 $ 1,340,484 - $ - - ( $ 173,973 )

(Note

2) $ 58,988 41,877 100

(Note

3) $ 1,225,499 - $ 1,241,978 No

Kai-Sheng Sanitary Wares Co.,

Ltd.

- - 1,326 13,260 - - ( 39 ) 1,326 51 13,221 - 13,221 No

$ 1,340,484 $ 13,260 ( $ 173,973 ) $ 58,949 $ 1,238,720 $ 1,255,199

Note 1 : Calcu lat ed wi th th e net valu e o f the equi ty o n the f in ancial s ta temen ts o f th e in vest ee co mp anies audi ted b y CP As, an d th e sharehold ing percen tage o f t he Co mpan y.

Note 2 : Thi s was co mposed o f th e exch ange d i f fe rences on t r ansl a t ion o f fo reign fin anc ial s t a t ement s o f NT$85,864 , 000 and the d i s t r ibu t ion o f earn in gs b y Vietn am Caesar Sani tary Wares Jo in t S tock Co mpan y , which was

NT$88,109 ,000 .

Note 3 : Th e sharehold ing percen tage was 99 .993%.

Note 4 : Th e d i f fe ren ce b etween the n et value and the ca rryin g amount came f ro m the unreal i zed gain on the upst r eam sa le a t th e end of year , which was NT$ 16,479 ,000 .

266

Sanitar Co., Ltd.

Detail Table of Refundable Deposits

Dec. 31, 2020


Item Summary Amount

Refundable deposits Security deposits for warehouses,

offices, etc.

$ 1,099

Notes of refundable deposits 3,253

Other 368

$ 4,720

267

Sanitar Co., Ltd.

Detail Table of Accounts Payable

Dec. 31, 2020


Name Summary Amount

Non-related parties

A Company Payment for goods $ 4,946

B Company 〃 4,496

C Company 〃 3,783

D Company 〃 2,030

E Company 〃 1,770


$ 33,542

Note: The amount of each account did not exceed 5% of the balance of the

subject.

268

Sanitar Co., Ltd.

Detail Table of Other Current Liabilities－Other

Dec. 31, 2020


Item Summary Amount

Tax payable Sales tax $ 7,077

Advance received 79

Collections Deduction of premium for the

insurance of employees, etc.

377

$ 7,533

269

Sanitar Co., Ltd.

Detail Table of Lease Liabilities

Dec. 31, 2020


Item Summary Lease period Discount rate Ending balance Remarks

Buildings Exhibition center 107/4/4~114/6/30 1.66%~1.89% $ 35,895

270

Sanitar Co., Ltd.

Detail Table of Operating Revenue

2020


Name Summary Quantity Amount

Porcelain Toilet bowls, water tanks,

basin stands and urinal

bowls, etc.

532,000 pcs $ 709,649

Water use

equipment

Taps, shower heads, shower

pillars, etc.

151,000 pcs 232,305

Automated

equipment

Computer toilet seat covers,

etc.

54,000 pcs 204,018

Bathtubs 6,000 pcs 27,849

Other Mirrors and accessories, etc. 268,499

1,442,320

Other operating

revenue

Income from management

services

14,907

Income from maintenance 14,169

29,076

$ 1,471,396

271

Sanitar Co., Ltd.

Detail Table of the Cost of Sales

2020


Item Amount

Merchandise inventory at the beginning of the

period

$ 155,949

Plus: net value of purchase in the period 1,006,521

Minus: Inventory short ( 106 )

Minus: Inventory obsolescence ( 421 )

Minus: Transferred into other operating costs

－maintenance material fees

( 3,999 )

Minus: Transferred into sales expenses－advertising fee

( 18 )

Minus: Inventory at the end of the period ( 181,309 )

Income from the sale of leftover materials ( 11 )

Loss on inventory obsolescence 421

Inventory short 106

Loss from market price decline and obsolete

and slow-moving inventory

2,786

Cost of sales $ 979,919

272

Sanitar Co., Ltd.

Detail Table of Other Operating Costs

2020


Item Amount

Salary expenses $ 34,307

Insurance premium 3,080

Maintenance fees 3,999

Other (Note) 4,193

$ 45,579


subject.

273

Sanitar Co., Ltd.

Detail Table of Operating Expenses

2020


Item

Marketing

expenses

Management

expenses

R&D

expenses Total

Salary expenses $ 43,832 $ 53,994 $ 5,286 $ 103,112

Transportation fee 11,913 22 70 12,005

Insurance premium 4,336 4,360 403 9,099

Advertising fee 26,699 30 - 26,729

Depreciation expense 22,850 9,895 60 32,805

Other (Note) 15,899 18,457 2,184 36,540

$ 125,529 $ 86,758 $ 8,003 220,290

Expected credit losses 2,270

$ 222,560


subject.

- 274 -

- 275 -

Sanitar Co., Ltd. and Its Subsidiaries

Consolidated Financial Statements and Accountant’s Audit

Report 2020 & 2019

Address: 7F., No. 111-8, Xingde Rd., Sanchong Dist ., New Taipei City

Tel: (02)85123712

Stock Code: 1817

- 276 -

Accountant's Audit Report

To Sanitar Co., Ltd.:

Audit opinion

I have audited the financial statements of Sanitar Co., Ltd. and Its

Subsidiaries, which comprise the Consolidated Statements of Financial Posit ion

as as of Dec. 31, 2020 and Dec. 31, 2019, the Consolidated Statements of

Comprehensive Income from Jan. 1 to Dec. 31, 2020 and from Jan. 1 to Dec. 31,

2019, Consolidated Statement of Change i n Equity, Consolidated Statement of

Cash Flows, and Consolidated Financial Statement Notes (including a summary

of significant accounting policies).

In my opinion, the accompanying consolidated financial statements are

properly drawn up in accordance wi th the Regulations Governing the Preparation

of Financial Reports by Securities Issuers and International Financial Reporting

Standards (IFRS), International Accounting Standards (IAS), International

Financial Reporting Interpretations Committee (IFRIC), a nd Standing

Interpretations Committee (SIC) (hereinafter referred to as IFRSs) recognized

and announced effectiveness by Financial Supervisory Commission (hereinafter

referred to as FSC) so as to give a true and fair view of the consolidated financial

position of the Sanitar Co., Ltd. and Its Subsidiaries as of December 2020 and

2019 and of the financial performance, changes in equity and cash flows of

Sanitar Co., Ltd. and Its Subsidiaries from January 1 to December 31, 2020 and

2019.

Basis for audit opinion

I conducted my audit in accordance with Regulations Governing Auditing

and Attestation of Financial Statements by Certified Public Accountants and

- 277 -

Generally Accepted Auditing Standards. My responsibil ities under those

standards are further described i n the 'Accountant 's responsibilities for the audit

of the financial statements ' section of our report. I am independent of Sanitar Co.,

Ltd. and Its Subsidiaries in accordance with the Accounting and Corporate

Regulatory Authority Code of Professional Cond uct and Ethics for Public

Accountants and Accounting Entities, and I have fulfilled my other ethical

responsibilities in accordance with these requirements. I believe that the audit

evidence I have obtained is sufficient and appropriate to provide a basis for my

opinion.

Key Audit Matter

The key auditing matter is which that, in my professional judgment, is most

significant to my review of the Consolidated Financial Statements of Sanitar Co.,

Ltd. and Its Subsidiaries for 2020. Such matter has been considered in the

process of examining the consolidated financial statements taken as a whole and

forming an opinion thereon, and I do not express an opinion on the matter

individually.

The following is the description of the key audit matter in the Consolidat ed

Financial Statements of Sanitar Co., Ltd. and Its Subsidiaries for 2020:

Key Audit Matter: Authenticity in Sales to Specific Customers

Due to the significant audit risk associated with the revenue recognition

under auditing standards, Sanitar Co., Lt d. and Its Subsidiaries are mainly

dealing with distributors and have added significant sales from specific

non-distributor customers, therefore, based on the consideration of the

materiali ty of the financial statements, the authenticity in sales revenue f rom

specific customers with high order amounts and significant new sales in the

current year is considered as a key audit matter. Please refer to Notes 4(11) and

20 to the Parent Company Only Financial Statements.

In connection with the above key matter, I conducted the following principal

audit procedures:

1. To understand, evaluate and test the effectiveness of the design and

implementation of the internal control system related to revenue

recognition.

2. To obtain a detailed sales breakdown from spec ific customers in fiscal 2020,

verify the original orders, delivery notes, invoices and other related

- 278 -

documents of the relevant transactions, and verify with the recorded

amounts to confirm the authenticity of the revenues.

3. To obtain a breakdown of subsequent sales returns from specific customers,

verify the related documents and examine the reasonableness of the returns.

Other Matters

Sanitar Co., Ltd. has prepared its Parent Company Only Financial

Statements for the years ended December 31, 2020 and 2019, and I have provided

my unqualified opinion on those statements for reference.

Responsibilities of management and directors for the consolidated financial

statements

Management is responsible for the preparation of financial statements that

give a true and fair view in accordance with the Regulations Governing the

Preparation of Financial Reports by Securities Issuers and IFRSs recognized and

announced effectiveness by FSC, and for devising and maintaining a system of

internal accounting controls su fficient to provide a reasonable assurance that

assets are safeguarded against loss from unauthorized use or disposit ion.

In preparing the financial statements, management is responsible for

assessing the ability of Sanitar Co., Ltd. and Its Subsidiaries to continue as going

concern, disclosing, as applicable, matters related to going concern and using the

going concern basis of accounting unless management either intends to liquidate

Sanitar Co., Ltd. and Its Subsidiaries or to cease operations, or has no realistic

alternative, but to do so.

The responsibil ities of the governing body (including supervisors) include

overseeing the financial reporting process of Sanitar Co., Ltd. and Its

Subsidiaries

- 279 -

Auditors’ responsibilities for the audit of the consol idated financial

statements

My objectives are to obtain reasonable assurance about whether the

consolidated financial statements as a whole are free from material misstatement,

whether due to fraud or error, and to issue an auditors’ report that includes my

opinion. Reasonable assurance is a high level of assurance but is not a guarantee

that an audit conducted in accordance with GAAS will always detect a material

misstatement when i t exists. Misstatements can arise from fraud or error and are

considered material if, individually or in the aggregate, they could reasonably be

expected to influence the economic decisions of users taken in the basis of these

consolidated financial statements.

As part of an audit in accordance with GAAS, I exercise professio nal

judgment and maintain professional skepticism throughout the audit. I also:

1. Identify and assess the risks of material misstatement of the consolidated

financial statements, whether due to fraud or error, design and perform audit

procedures responsive to those risks, and obtain audit evidence that is

sufficient and appropriate to provide a basis for audit opinions. Because

fraud may be related to conspiracy, forgery, deliberate omission, false

statement or breach of internal control, the risk of a material misstatement

caused by fraud which is not identified is higher than the risk of a material

misstatement caused by any error.

2. Obtain an understanding of internal controls relevant to the audit in order to

design audit procedures that are appropriate in the circumstances, but not

for the purpose of expressing an opinion on the internal control

effectiveness of Sanitar Co., Ltd. and Its Subsidiaries .

3. Assess the appropriateness of management’s use of accounting policies and

the reasonabil ity of the accounting estimate and relevant disclosure.

4. Conclude on the appropriateness of management’s use of the going concern

basis of accounting and, based on the audit evidence obtained, whether a

material uncertainty exists related to events or c onditions that may cast

significant doubt on the ability of Sanitar Co., Ltd. and Its Subsidiaries to

continue as a going concern. If we conclude that a material uncertainty

exists, we are required to draw attention in our auditor’s report to the

related disclosures in the consolidated financial statements or, if such

- 280 -

disclosures are inadequate, to mod ify our opinion. Our conclusions are

based on the audit evidence obtained up to the date of our auditors’ report.

However, future events or conditions may cause Sanitar Co., Ltd. and Its

Subsidiaries to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the consolidated

financial statements (including the relevant notes), and whether the

consolidated financial statements represent the underlying transactions and

events in a manner that achieves fair present ation.

6. I have obtained sufficient and appropriate evidence to audit the consolidated

financial information of Sanitar Co., Ltd. and Its Subsidiaries to express an

opinion on the Consolidated Financial Statements. I am responsible for the

guidance, supervision and execution of the audit and for forming an audit

opinion on Sanitar Co., Ltd. and Its Subsidiaries.

I communicate with the governing body regarding, among other matters, the

planned scope and timing of the audit and significant audit findings (including

any significant deficiencies in internal controls that we identify during our

audit).

I have also provided the governing body with a statement that the

independence-regulated personnel of the firm to which I am affiliated have

complied with the Code of Ethics for Professional Accountants with respect to

independence, and communicate with the governing body about all relationships

and other matters (including related protective measures) that may be considered

to affect the accountant 's independ ence.

I have determined the key audit matter for the audit of the Consolidated

Financial Statements of Sanitar Co., Ltd. and Its Subsidiaries for the year ended

December 31, 2020 from the communications I have had with the governing body.

I identified such matter in my auditor 's report, except for those matters that are

not permitted by law to be disclosed publicly or, in the rarest of circumstances, I

decided not to communicate those matters in my auditor 's report because I

reasonably could expect the negative effect of such communication to outweigh

the public interest.

- 281 -

Deloitte & Touche

Accountant SU, YU-XIU

Accountant WENG, BO-REN



No.1040024195



No. 1010028123

March 9, 2021

- 282 -

Sanitar Co . , Ltd. and I t s Subsid iar ies

Consol idated Sta tement of Financial Posit ion

Dec. 31, 2020 & 2019

Uni t : NT$ thousands

Dec. 31, 2020 Dec. 31, 2019

Code Assets Amount % Amount %

Current assets

1100 Cash and cash equivalents (Note IV, VI and XXV) $ 164,816 6 $ 238,566 10

1136 Financial assets measured at amortized cost – current (Note IV, VIII and

XXV)

56,199 2 46,888 2

1150 Notes receivable, net (Note IV, IX and XXV) 13,804 1 14,519 1

1170 Net value of accounts receivable (Note IV, IX, XX and XXV) 226,984 9 226,806 9

1180 Accounts receivable－Related parties, net (Note IV, IX, XX, XXV and

XXVI)

4,201 - 3,419 -

1200 Other accounts receivable (Note IV and XXV) 2,257 - 2,836 -

1210 Other accounts receivable－Related parties (Note XXV and XXVI) 5 - 5 -

1220 Income tax assets in the current period (Note XXII) - - 7,486 -

130X Inventory (Note IV, X and XXVII) 652,151 26 512,549 20

1419 Other prepaid expenses 9,505 - 7,824 1

1421 Prepayments for goods 30,751 1 7,484 -

1479 Other current assets－other (Note XV) 12,510 1 7,043 -

11XX Total of current assets 1,173,183 46 1,075,425 43

Non-current assets

1517 Financial assets measured at fair value through other comprehensive

income - non-current (Note IV, VII and XXV)

262 - - -

1600 Property, plant and equipment (Note IV, XII, XXVII and XXVIII) 1,096,721 43 1,189,276 47

1755 Right-of-use assets (Note IV and XIII) 136,307 5 146,625 6

1780 Intangible assets (Note IV and XIV) 5,474 - 6,634 -

1840 Deferred income tax assets (Note IV and XXII) 63,646 3 46,335 2

1915 Prepayments for business facilities (Note XXVIII) 45,474 2 41,565 2

1920 Refundable deposits 7,754 - 7,119 -

1990 Other non-current assets－other (Note XV) 20,192 1 15,026 -

15XX Total of non-current assets 1,375,830 54 1,452,580 57

1XXX Total assets $ 2,549,013 100 $ 2,528,005 100

Code Liabilities and Equity

Current liabilities

2100 Short-term loans (Note XVI and XXV) $ 344,442 14 $ 346,140 14

2130 Contract liabilities - current (Note IV and XX) 5,412 - 8,714 -

2170 Accounts payable (Note XVII and XXV) 70,200 3 91,510 4

2200 Other payables (Note XVIII and XXV) 107,290 4 113,451 4

2230 Current income tax liabilities (Note IV, XX and XXV) 51,373 2 16,409 1

2280 Lease liabilities - current (Note IV and XIII) 12,919 1 14,915 1

2399 Other current liabilities－other (Note XXV) 8,404 - 3,451 -

21XX Total of current liability 600,040 24 594,590 24

Non-current liabilities

2570 Deferred income tax liabilities (Note IV and XXII) 170,786 7 176,566 7

2580 Lease liabilities - non-current (Note IV and XIII) 62,402 2 63,316 2

2645 Deposits received 258 - 276 -

25XX Total of non-current liability 233,446 9 240,158 9

2XXX Total liability 833,486 33 834,748 33

Equity attributable to the owners of the Company (Note IV, XIX and XXII)

Share capital

3110 Common shares 726,000 29 726,000 29

3200 Additional paid-in capital 277,452 11 277,452 11

Retained earnings

3310 Legal reserve 220,568 9 202,583 8

3320 Special reserve 166,030 6 146,675 6

3350 Unappropriated retained earnings 565,898 22 506,566 20

3300 Total retained earnings 952,496 37 855,824 34

3400 Other equity ( 237,459 ) ( 9 ) ( 166,030 ) ( 7 )

3500 Treasury shares ( 15,674 ) ( 1 ) - -

31XX Total liabilities of the owners of the Company 1,702,815 67 1,693,246 67

36XX Non-controlling interests 12,712 - 11 -

3XXX Total liabilities 1,715,527 67 1,693,257 67

Total of liability and equity $ 2,549,013 100 $ 2,528,005 100

The notes at tached are par t o f the conso lidated f inancial repor t .

Chairperson: XIAO, JUN -XIANG Manager: CHEN, WEI -ZHI Accounting Supervisor : CHEN, YU -JUAN

- 283 -


Consolidated Statement of Comprehensive Income


Unit: NT$ thousands

Except the earnings per share are in NT$

2020 2019

Code Amount % Amount %

Operating revenue (Note IV, XX

and XXVI)

4110 Sales revenue $ 2,347,987 102 $ 2,389,950 102

4170 Sales return ( 9,273 ) ( 1 ) ( 28,829 ) ( 1 )

4190 Sales allowances ( 46,362 ) ( 2 ) ( 38,285 ) ( 2 )

4800 Other operating revenue 14,169 1 12,090 1


revenue

2,306,521 100 2,334,926 100

Operating costs (Note X and

XXI)

5110 Cost of sales ( 1,522,765 ) ( 66 ) ( 1,588,252 ) ( 68 )

5800 Other operating costs ( 49,588 ) ( 2 ) ( 44,991 ) ( 2 )

5000 Total operating costs ( 1,572,353 ) ( 68 ) ( 1,633,243 ) ( 70 )

5900 Gross operating profit 734,168 32 701,683 30

Operating expenses (Note XXI)

6100 Marketing expenses ( 255,241 ) ( 11 ) ( 270,248 ) ( 11 )

6200 Management expenses ( 169,215 ) ( 8 ) ( 165,849 ) ( 7 )

6300 R&D expenses ( 17,706 ) ( 1 ) ( 17,223 ) ( 1 )

6450 Expected credit losses ( 2,329 ) - ( 1,860 ) -


expenses

( 444,491 ) ( 20 ) ( 455,180 ) ( 19 )

6500 Other income and expenses, net

(Note XXI)

( 631 ) - 210 -

6900 Net operating profit 289,046 12 246,713 11

Non-operating income and

expenses (Note IV)

7100 Interest income 4,779 - 4,654 -

7110 Rental income 530 - 2,286 -

7190 Other income 1,733 - 1,261 -

7230 Foreign exchange gain 1,740 - 2,035 -

7510 Interest expense ( 8,125 ) - ( 8,067 ) -

7590 Miscellaneous expenses ( 128 ) - ( 3,339 ) -

7000 Non-operating Total

income and

expenses

529 - ( 1,170 ) -


- 284 -


2020 2019

C o d e A m o u n t % A m o u n t %

7900 Net income before tax $ 289,575 12 $ 245,543 11

7950 Income tax expense (Note IV

and XXII)

( 69,519 ) ( 3 ) ( 65,691 ) ( 3 )

8000 Net income in the term 220,056 9 179,852 8

Other comprehensive income

(Note IV, XIX and XXII)

Items that will not be

reclassified to profit or

loss:

8316 Investment in equity

instruments

measured at

Unrealized gains or

losses measured at

FVTOCI

( 2,738 ) - - -

8360 Items that may be

reclassified subsequently

to profit or loss:

8361 Exchange differences

on translation of

foreign financial

statements

( 85,866 ) ( 4 ) ( 24,194 ) ( 1 )

8399 income tax related to

the items that may

be reclassified

17,173 1 4,839 -

8300 Other comprehensive

income in the term

(net value after tax)

( 71,431 ) ( 3 ) ( 19,355 ) ( 1 )

8500 Total comprehensive income in

the term

$ 148,625 6 $ 160,497 7

Net income attributable to:

8610 The owners of the Company $ 220,092 10 $ 179,851 8

8620 Non-controlling interests ( 36 ) - 1 -

8600 $ 220,056 10 $ 179,852 8

The total comprehensive income

attributed to:

8710 The owners of the Company $ 148,663 6 $ 160,496 7

8720 Non-controlling interests ( 38 ) - 1 -

8700 $ 148,625 6 $ 160,497 7

Earnings per share (Note XXIII)

9750 Basic $ 3.04 $ 2.48

9850 Diluted $ 3.03 $ 2.47

- 285 -

The notes attached are part of the consolidated financial report .


Accounting Supervisor : CHEN, YU -JUAN

- 286 -

Sani ta r Co. , Ltd . and I ts Subsid ia ries

Consol idated S tatemen t o f Change in Equi t y

From Jan. 1 to Dec. 31 , 2020 and f rom Jan . 1 to Dec. 31 , 2019

Unit : NT$ thousands

E q u i t y a t t r i b u t a b l e t o t h e o w n e r s o f t h e C o m p a n y

O t h e r e q u i t y

S h a r e c a p i t a l R e t a i n e d e a r n i n g s

C o d e

N u m b e r o f

shares (1,000

s h a r e s ) A m o u n t

A d d i t i o n a l

paid-in capital Legal reserve Special reserve

Unappropriated

retained

earnings

Exchange

difference arising

from translation of

foreign operation


Unrealized gains

or losses on

financial assets

at fair value

through other

comprehensive

income Treasury shares Total

Non-controlling

interests Total equity

A1 Balance as of Jan. 1, 2019 72,600 $ 726,000 $ 277,452 $ 177,182 $ 150,895 $ 514,876 ( $ 146,675 ) $ - $ - $ 1,699,730 $ 10 $ 1,699,740


earnings in 2018

B1 Legal reserve - - - 25,401 - ( 25,401 ) - - - - - -

B3 Special reserve - - - - ( 4,220 ) 4,220 - - - - - -

B5 Cash dividends for the

shareholders of the

Company

- - - - - ( 166,980 ) - - - ( 166,980 ) - ( 166,980 )

D1 Net income for 2019 - - - - - 179,851 - - - 179,851 1 179,852


tax, 2019

- - - - - - ( 19,355 ) - - ( 19,355 ) - ( 19,355 )


2019

- - - - - 179,851 ( 19,355 ) - - 160,496 1 160,497

Z1 Balance as of Dec. 31, 2019 72,600 726,000 277,452 202,583 146,675 506,566 ( 166,030 ) - - 1,693,246 11 1,693,257


earnings in 2019

B1 Legal reserve - - - 17,985 - ( 17,985 ) - - - - - -

B3 Special reserve - - - - 19,355 ( 19,355 ) - - - - - -

B5 Cash dividends for the

shareholders of the

Company

- - - - - ( 123,420 ) - - - ( 123,420 ) - ( 123,420 )

O1 Cash dividends for shareholders - - - - - - - - - - ( 1 ) ( 1 )

D1 Net income for 2020 - - - - - 220,092 - - - 220,092 ( 36 ) 220,056


tax, 2020

- - - - - - ( 68,691 ) ( 2,738 ) - ( 71,429 ) ( 2 ) ( 71,431 )


2020

- - - - - 220,092 ( 68,691 ) ( 2,738 ) - 148,663 ( 38 ) 148,625

E1 Cash capital increase - - - - - - - - - - 12,740 12,740

L1 Purchase of treasury shares - - - - - - - - ( 15,674 ) ( 15,674 ) - ( 15,674 )

Z1 Balance as of Dec. 31, 2020 72,600 $ 726,000 $ 277,452 $ 220,568 $ 166,030 $ 565,898 ( $ 234,721 ) ( $ 2,738 ) ( $ 15,674 ) $ 1,702,815 $ 12,712 $ 1,715,527

- 287 -

The notes at t ached a re part of the consol ida ted f inancial report .

Chai rperson: XIAO, JUN -XIANG Manager: CHEN, WEI-ZHI Accoun t ing Supervi sor : CHEN, YU -JUAN

- 288 -


Consolidated Statement of Cash Flows


Unit: NT$ thousands

Code 2020 2019

Cash flow from operating activities

A10000 Net income before tax in the term $ 289,575 $ 245,543

A20010 Income charges (credits)

A20100 Depreciation expense 107,789 86,579

A20200 Amortization expense 2,004 1,681

A20300 Expected credit losses 2,329 1,860

A20900 Interest expense 8,125 8,067

A21200 Interest income ( 4,779 ) ( 4,654 )

A22500 Net income from the disposal

and obsolescence of property,

plant and equipment

( 91 ) ( 357 )

A23700 Loss for market price decline and

obsolete and slow-moving

inventory

2,427 -

A23800 Gains on inventory value

recoveries

- ( 1,085 )

A29900 Profit from lease modification ( 244 ) -

A30000 Net changes in operating assets and

liabilities

A31130 Notes receivable 715 13,886

A31150 Accounts receivable ( 2,512 ) ( 22,837 )

A31160 Accounts receivable － Related

parties

( 782 ) ( 1,063 )

A31180 Other receivables 580 ( 1,208 )

A31190 Other receivables － related

parties

- ( 5 )

A31200 Inventory ( 142,029 ) 83,050

A31220 Other prepaid expenses ( 1,681 ) 1,897

A31230 Prepayments ( 23,267 ) ( 1,180 )

A31240 Other current assets ( 5,467 ) 10,895

A32125 Contract liabilities - current ( 3,302 ) 6,209

A32150 Accounts payable ( 21,310 ) ( 18,355 )

A32180 Other payables ( 5,904 ) ( 9,708 )

A32230 Other current liabilities 4,953 619

A33000 Cash from operating activities 207,129 399,834

A33100 Interests received 4,778 4,654

A33300 Interests paid ( 8,182 ) ( 4,083 )

A33500 Income tax paid ( 33,113 ) ( 52,965 )

AAAA Net cash inflow from operating

activities

170,612 347,440

- 289 -


- 290 -


Code 2020 2019

Cash flow from investing activities

B00010 Acquisition of financial assets



( $ 3,000 ) $ -

B00040 Increase in financial assets measured

at amortized cost

( 9,311 ) ( 31,148 )

B02700 Purchase of property, plant and

equipment

( 38,484 ) ( 164,355 )

B02800 Price for the disposal of property,

plant and equipment

348 492

B03700 Increase in refundable deposits ( 875 ) ( 1,924 )

B03800 Decrease in refundable deposits 240 -

B04500 Acquisition of intangible assets ( 1,197 ) ( 5,431 )

B06700 Increase in other non-current assets ( 5,166 ) ( 5,795 )

B07100 Increase in prepayments for business

facilities

( 4,676 ) ( 95,979 )

BBBB Net cash outflow from investing

activities

( 62,121 ) ( 304,140 )

Cash flow from financing activities

C00100 Increase in short-term loans 523,302 177,074

C00200 Decrease in short-term loans ( 525,000 ) -

C03100 Return of deposits received - ( 5 )

C04020 Repayment of lease principal ( 15,747 ) ( 16,277 )

C04500 Payment of dividends for the owners

of the Company

( 123,420 ) ( 166,980 )

C04900 Redemption cost for treasury shares ( 15,674 ) -

C05800 Payment of cash dividends for

non-controlling interests

( 1 ) -

C09900 Increase in non-controlling interests 12,740 -

CCCC Net cash outflow from financing

activities

( 143,800 ) ( 6,188 )

DDDD Effect of the changes in exchange rate on

cash and cash equivalents

( 38,441 ) ( 10,488 )

EEEE Increase (decrease) in cash and cash

equivalents

( 73,750 ) 26,624

E00100 Beginning balance of cash and cash

equivalents

238,566 211,942

E00200 Ending balance of cash and cash

equivalents

$ 164,816 $ 238,566

- 291 -

The notes attached are part of the consolidated financial report.


Accounting Supervisor: CHEN, YU-JUAN

- 292 -


Consolidated Financial Statement Notes

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

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

I. Company history

Sanitar Co., Ltd. (hereinafter referred to as "the Company") was

established in 1985 as Lian Tuo Co., Ltd. as a porcelain sanitary ware

manufacturer and distributor, and was reorganized as San Yu Co., Ltd. on

January 26, 1988. The Company was renamed Sanitar Co., Ltd. in 2003

and is mainly engaged in the sales of bathing equipment such as bathtubs,

toilets, and copper water supply fit tings.

In August 2011, the Company was approved by the Taipei Exchange

(TPEx) to trade on the emerging stock market, and has been listed and

traded on the Taiwan Stock Exchange (TWSE) since October 24, 2013.

The consolidated financial reports were expressed with the

functional currency, New Taiwan Dollar, adopted by the Company.

II. The date when the financial reports were authorized for issue and the

process involved

The consolidated financial reports were approved by Board of

Directors on March 9, 2021.

III. Applicabil ity of new issuing & revised standards and interpretation

(1) First-time application of IFRSs recognized and announced

effectiveness by FSC.

Except for the following statements, the application of IFRSs that

are recognized and announced as effective by Financial Supervisory

won’t cause any major changes to the accounting policies of the

Consolidated Company:

Amendments to IAS 1 and IAS 8—Definit ion of Material

The amendment applied to the Consolidated Company from

January 1, 2020, switching to ' ' i t could reasonably be expected to

influence users ' ' as the materiality threshold and adjusting the

disclosure in the consolidated financial statements to remove

immaterial information that could obscure material information.

- 293 -

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

applicable in 2021



IASB

Amendments to IFRS 4 "Extension of Temporary

Exemption from Applying IFRS 9

Effective from the date of

publication

Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and

IFRS 16 "Interest Rate Benchmark Reform - Phase

II”


reporting periods


January 1, 2021

Amendments to IFRS 16 “Covid-19 Related Rent

Concessions”


reporting periods

beginning on or after June

1, 2020

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

The amendment to IFRS 16, "Covid -19 Related Rent

Concessions," provides that if the Consolidated Company enters into a

rental agreement with a lessor directly related to Covid -19, when

certain conditions are met, the Consolidated Company may elect the

practical expedient of recognizing a reduction in lease payments in

profit or loss upon the occurrence of the concession an d reducing the

lease liabil ity accordingly.

The Consolidated Company has not yet entered into any rental

agreements in connection with the foregoing in 2020, but will elect to

apply the foregoing if such agreements occur in 2021.

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

the FSC



IASB (Note 1)

“Annual Improvements for 2018-2020” Jan. 1, 2022 (Note 2)

Amendments to IFRS 3 “Updating a Reference to the

Conceptual Framework” Jan. 1, 2022 (Note 3)

Amendments to IFRS 10/IAS 28 “Sales or

Contributions of Assets Between an Investor and Its

Associate/Joint Venture

TBD

IFRS 17 “Insurance Contracts” Jan. 1, 2023

Amendments to IFRS 17 Jan. 1, 2023

Amendments to IAS 1 “Classification of Liabilities

as Current or Non-current”

Jan. 1, 2023

Amendments to IAS 1 “Disclosure of Accounting

Policies”

Jan. 1, 2023 (Note 6)

- 294 -

Amendments to IAS 8 “Definition of Accounting

Estimates”

Jan. 1, 2023 (Note 7)

Amendments to IAS 16 “Property, Plant and

Equipment: Proceeds before Intended Use”

Jan. 1, 2022 (Note 4)

Amendments to IAS 37 “Onerous Contracts—Cost

of Fulfilling a Contract”

Jan. 1, 2022 (Note 5)

Note 1: Other than being special specified, the above new issued/

amended/ revised standards or interpretation will be effective

from the fiscal year after the dates for above.

Note 2: The amendments to IFRS 9 apply to swaps or changes in the

terms of financial liabilities occurring in annual reporting

periods beginning after Jan. 1, 2022; the amendments to IAS 41

“Agriculture” apply to fair value measurements in annual

reporting periods beginning after Jan. 1, 2022; and the

amendments to IFRS 1 “First -time Adoption of IFRSs” apply

retrospectively to annual reporting periods beginning after 1

January 2022. The amendment to IFRS 1 "First -time Adoption

of IFRSs" apply retrospectively to annual reporting periods

beginning on or after Jan. 1, 2022.

Note 3: The amendments apply to business combinations for whi ch the

acquisition date begins on or after Jan. 1, 2022 in the annual

reporting period.

Note 4: The amendments apply to the plant, property and equipment that

will be in the location and condition necessary to achieve

management 's intended mode of operation beginning on or after

Jan. 1, 2021.

Note 5: The amendments apply to contracts with all obligations

outstanding as at Jan. 1, 2022.

Note 6: The amendments apply prospectively to annual reporting


Note 7: The amendments apply to changes in accounting estimates and

changes in accounting policies that occur in annual reporting


1. Amendments to IFRS 10/IAS 28 “Sales or Contributions of Assets

Between an Investor and Its Associate/Joint Venture

- 295 -

The amendments provide that if the Consolidated Company

sells or contributes assets to an associate/joint venture, or if the

Consolidated Company loses control of a subsidiary but retains

significant influence (or joint control) over the subsidiary, the

Consolidated Company recognizes the full amount of the gain or

loss arising from those transactions if the aforementioned assets

or subsidiary meet the definition of ' 'business ' ' under IFRS 3

' 'Business Combinations.”

Moreover, where the Consolidated Company sells or

contributes assets to an associate/joint venture, or the

Consolidated Company loses control of a subsidiary in a

transaction with the associate/joint venture, but retains significant

influence (or joint control) over the subsidiary, if the foregoing

assets or subsidiary do not fall within the definition of "business"

in IFRS 3, the Consolidated Company recognizes gains or losses

arising from the transaction only to the extent that they are not

related to the investor 's interest in the associate/joint venture, i .e.,

the Consolidated Company's share of such gains or losses should

be eliminated.

2. Amendments to IAS 1 “Classification of Liabilities as Current or

Non-current”

The amendments clarify that in determining wh ether a

liability is classified as non -current, an assessment should be

made as to whether the Consolidated Company has the right to

defer settlement at the end of the reporting period until at least 12

months after the reporting period. If the Consolidate d Company

has such a right at the end of the reporting period, the liabili ty is

classified as non-current, regardless of whether the Consolidated

Company expects to exercise the right. The amendments also

clarify that if required to comply with certain con ditions in order

to have the right to defer settlement of its liabil ities, the

Consolidated Company must have followed the specified

conditions as at the end of the reporting period, even if the lender

- 296 -

tests whether the Consolidated Company has adhered to those

conditions at a later date.

The amendments provide that for the purpose of liabil ity

classification, the aforementioned settlement means the

extinguishment of a liability resulting from the transfer of cash,

other economic resources or equity instruments of the

Consolidated Company to the counterparty. However, if the terms

of a liability may, at the option of the counterparty, result in the

settlement of an equity instrument of the Consolidated Company,

and if the option is separately recognized in equity in accordance

with IAS 32 "Financial Instruments: Presentation," the foregoing

terms do not affect the classification of the liability.

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

The amendments specify that the Consolidated Compa ny

shall determine the material accounting policy information to be

disclosed based on the definition of material . Accounting policy

information is material if i t could reasonably be expected to

influence the decisions that the primary users of general -purpose

financial statements make on the basis of those financial

statements. The amendments also clarify that:

(1) accounting policy information relating to immaterial

transactions, other events or conditions is immaterial and that

the Consolidated Company i s not required to disclose such

information.

(2) the Consolidated Company may judge relevant accounting

policy information to be material because of the nature of the

transactions, other events or conditions, even if the sums are

not material .

(3) not all accounting policy information relating to significant

transactions, other events or conditions is material.

In addit ion, the amendments cite examples of accounting

policy information that may be material if it relates to significant

transactions, other events or conditions and if:

- 297 -

(1) the Consolidated Company changes its accounting policy

during the reporting period and the change results in a

material change in financial statement information;

(2) the Consolidated Company selects its applicable account ing

policy from the options permitted by the standard;

(3) the Consolidated Company, due to the absence of a specific

standard, establishes an accounting policy pursuant to IAS 8

"Accounting Policies, Changes in Accounting Estimates and

Errors";

(4) the Consolidated Company discloses a relevant accounting

policy that requires the application of significant judgement

or assumptions; or

(5) involve complex accounting requirements and users of the

financial statements rely on such information to understand those

significant transactions, other events or conditions.

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

The amendments expressly state that the accounting estimates

represent the monetary amounts in the financial statements that

are subject to measurement uncertainty. In applying accounting

policies, the Consolidated Company may need to measure i tems in

the financial statements using monetary amounts that are not

directly observable but must be estimated, and therefore

measurement techniques and inputs are used to create accounting

estimates for this purpose. The effect of changes in measurement

techniques or inputs on accounting estimates that are not

corrections of prior period errors are accounted for as changes in

accounting estimates .

In addition to the impact described above, the Consolidated

Company is continuing to evaluate the impact of amendments to other

standards and interpretations on its financial position and financial

performance as of the date of adoption and publication of these

consolidated financial statements, which will be disclosed when the

evaluation is completed.

IV. Summary and explanation of important accounting policies

- 298 -

(1) Compliance statement

This consolidated financial report is prepared in accordance wi th

the Regulations Governing the Preparation of Financial Reports by

Securities Issuers and the IFRS approved by the FSC.

(2) Basis of preparation

Except for the financial instruments evaluated at the fair price, the

consolidated financial reports were prepared according to the historical

costs.

Fair value measurement can be classified as level 1 to level 3

according to the observable degrees and importance of the relevant

input values:

1. Level 1 input value: It refers to the quoted price at the acti ve

market on the same asset or liability available on the measurement

day (unadjusted).

2. Level 2 input value: It refers to the direct (that is the price) or

indirect (inferred from the price) observable input values on asset

or l iability other than the level 1 quoted price.

3. Level 3 input value: Unobservable input value of asset or l iabil ity.

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

non-current

Current assets include:

1. Assets held mainly for transaction purposes;

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

and

3. Cash and cash equivalents (but not including cash used to

exchange or clear liabili ty within 12 months of the asset balance

sheet).

Current liabilities include:

1. Liabilities held mainly for transaction purposes;

2. Liabilities due for payment within 12 months after the balance

sheet date (a liability with long-term refinancing done or payment

agreement rearranged also belongs to the current liabilities); and

3. The business entity does not have an unconditional right to defer

settlement of the liability for at least 12 months after the balance

- 299 -

sheet date. However, where the terms of the liabilities may, at the

option of the counterparty, lead to the settlement by issuing a n

instrument of equity, the classification will not be affected.

Assets or liabilities not classified within the above definit ions

will be classified as non-current assets and liabilit ies.

(4) Consolidation basis

The consolidated financial reports inclu de the financial reports of

the Company’s and the individual entity (subsidiary company) that is

controlled by the Company. The subsidiary company’s financial reports

have been adjusted to be consistent with its accounting policies and the

accounting policies for the Consolidated Company. When preparing the

consolidated financial reports, the transaction, account balance,

income and expense among each individual have been eliminated. The

total comprehensive income of the subsidiary company is attributing to

the owners of the company and non -controlling interests even though

the non-controlling interests become balance account of loss. The total

comprehensive income of the subsidiary company belongs to the owner

of the Company and non-controll ing equity, even though it may cause

the non-controlling equity to become the balance of total loss.

For details, shareholding ratio, and business i tems of the

subsidiary, please refer to Note 11 and Schedule 4.

(5) Foreign currency

When financial reports are prepared by each company, currency

(foreign currency) other than individual functional currencies used for

transactions is translated into a functional currency record at the

exchange rate on the trading day.

Foreign currency monetary i tems are translated at th e closing rate

on each balance sheet date. The exchange difference arising from the

delivery of monetary items or the conversion of monetary items should

be recognized in profit or loss in the current year.

The foreign currency non-monetary items measured at fair value

are translated at the exchange rate of the day on which the fair value is

determined. The resulting exchange differences are recognized in profit

or loss of the year. However, when the change in fair value is

- 300 -

recognized in other comprehensive income, the exchange differences

arising therefrom should be recognized in other comprehensive income.

Foreign currency non-monetary items as measured at historical

cost are translated at the exchange rate of the trading day and are not

retranslated.

In preparing the consolidated financial statements, the assets and

liabilities of foreign operators (including subsidiaries that operate in

countries or currencies different from those of the Company) are

translated into New Taiwan dollars at the exchange rate at each balance

sheet date. Income and expense items are translated at average

exchange rates for the period, with the resulting exchange differences

included in other comprehensive income and attributed to the

Company's owners and non-controll ing interests, respectively.

(6) Inventory

Inventory includes raw materials, supplies, work in process,

finished goods and merchandise inventory and is to be assessed by the

cost and market value, except for inventory of same kind, the separate

items shall be listed individually. The calculation of market value is

the sales price minus the cost and the cost of inventory is calculated by

weighted average method.

(7) Property, plant and equipment

Property, plant, and equipment are recognized by cost, and then

measured by cost less accumulated depreciation and accumulated

impairment loss.

Property, plant and equipment under construction are recognized

at cost less accumulated impairment losses. Cost includes fees for

professional services and borrowing costs e ligible for capitalization.

These assets are classified into the appropriate categories of property,

plant and equipment and depreciation commences when they are

completed and in their intended state of use.

The property, plant, and equipment are depreci ated separately for

each major part by the straight -line basis method over the life of

service. The Consolidated Company reviews the estimated useful lives,

- 301 -

residual values and depreciation methods at least at each year -end and

defers the effect of changes in applicable accounting estimates.

The difference between the net disposal proceeds and the carrying

amount of the asset is recognized in profit or loss when property, plant,

and equipment are derecognized.

(8) Intangible assets

1. Acquired separately

Intangible assets with limited duration acquired separately

were initially measured at cost and subsequently at cost less

accumulated amortization and accumulated impairment losses.

Intangible assets are amortized over their useful lives on a

straight-l ine basis and the estimated useful lives, residual values

and amortization method are reviewed at least at each year -end

and the effect of changes in applicable accounting estimates is

deferred. Intangible assets with indefinite useful lives are stated

at cost less accumulated impairment losses.

2. Derecognition

The difference between the net disposal proceeds and the

carrying amount of the asset is recognized in profit or loss of the

year when intangible assets are derecognized.

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

intangible assets

The Consolidated Company assesses at each balance sheet date

whether there is any indication that property, plant and equipment,

right-of-use assets and intangible assets may have been impaired. If

any sign of impairment exists, the recoverable amount of the asset is

estimated. If it is impossible to estimate the recoverable amount of an

individual asset, the Consolidated Company estimates the recoverable

amount of the asset at the cash generating unit. Corporate assets are

allocated to the smallest groups of cash -generating unit on a reasonable

and consistent basis.

Intangible assets with indefinite useful lives and not yet available

for use are tested for impairment at least annually and whenever there

is an indication of impairment.

- 302 -

The recoverable amount is the higher fair value less sell ing cost

and use value. If the recoverable amount of an individual asset or cash

generating unit is less than its carrying amount, the carrying am ount of

the asset or cash generating unit shall be reduced to its recoverable

amount, with the impairment loss recognized in profit or loss.

When the following recoverable amount increases, the carrying

amount of the asset or cash generating unit increases to the amount that

can be recovered after the revision. However, the increased carrying

amount shall not exceed that (minus amortization or depreciation)

determined by the asset or cash generating unit where the impairment

loss was not recognized in the previous year. The reversal of

impairment loss is recognized in profit or loss.

(10) Financial instruments

Financial assets and financial l iabilities are recognized in the

Consolidated Statement of Financial Position when the Consolidated

Company becomes a party to the contractual provisions of the

instrument.

On initial recognition, financial assets and financial l iabil ities

that are not measured at fair value through profit or loss are measured

at fair value plus transaction costs that are di rectly attributable to the

acquisition or issuance of the financial assets or financial liabilities.

Transaction costs directly attributable to the acquisition or issue of

financial assets or financial liabilities measured at fair value through

profit or loss are recognized immediately in profit or loss.

1. Financial assets

The transaction practice of the financial assets adopts

accounting recognition and de-recognition on the transaction day.

(1) Measurement types

The types of financial assets held b y the Consolidated

Company are equity instruments measured at fair value

through other comprehensive income and financial assets

measured at amortized cost.

A. Financial assets measured at amortized cost

- 303 -

The Consolidated Company's investments in financial

assets are classified as financial assets carried at amortized

cost if both of the following conditions are met:

a. they are held within an operating model whose objective

is to hold the financial assets to collect the contractual

cash flows; and

b. the contractual terms give rise to cash flows at a specific

date, which are solely payments of principal and interest

on the principal amount outstanding.

Financial assets measured at amortized cost

(including cash and cash equivalents, notes receiva ble,

accounts receivable and other receivables measured at

amortized cost) are measured at amortized cost using the

effective interest method to determine the total carrying

amount less any impairment loss after initial recognition,

with any foreign currency exchange gain or loss

recognized in profit or loss.

Interest income is calculated by multiplying the

effective interest rate by the total carrying amount of the

financial assets, except in the following two cases:

a. Interest income on credit -impaired financial assets

acquired or created is calculated by multiplying the

credit-adjusted effective interest rate by the amortized

cost of the financial assets.

b. Interest income is calculated by multiplying the

effective interest rate by the amortized cost of the

financial asset for financial assets that are not acquired

or originated as credit -impaired but subsequently

become credit -impaired.

Credit-impaired financial assets are those for which

the issuer or the debtor has experienced significant

financial difficulty, default, a probability that the debtor

may declare bankruptcy or other financial reorganization,

- 304 -

or the disappearance of an active market for the financial

asset as a result of financial difficulty.

- 305 -

Cash equivalents include time deposits t hat are highly

liquid, readily convertible into known amounts of cash and

subject to a low risk of changes in value within 3 months

from the date of acquisition, and are used to meet

short-term cash commitments.

B. Investments in equity instruments measure d at fair value

through other comprehensive income

At initial recognition, the Consolidated Company has

an irrevocable option to designate investments in equity

instruments that are not held for trading and for which

there is contingent consideration rec ognized by the

acquirer of the business combination to be measured at fair

value through other comprehensive income.

Investments in equity instruments measured at fair

value through other comprehensive income are measured at

fair value, with subsequent changes in fair value reported

in other comprehensive income and accumulated in other

equity. On disposal of investments, the cumulative gain or

loss is transferred directly to retained earnings and is not

reclassified to profit or loss.

Dividends on investments in equity instruments

measured at fair value through other comprehensive

income are recognized in profit or loss when the right to

receive payments from the Consolidated Company is

established, unless it is clear that the dividend represents a

partial recovery of the cost of the investment.

(2) The impairment of financial assets

The Consolidated Company assesses financial assets

(including notes receivable, accounts receivable and other

receivables) measured at amortized cost at each balance shee t

date based on expected credit losses.

Accounts receivable are recognized as an allowance for

loss based on expected credit losses during the period of

duration. Other financial assets are first evaluated to

- 306 -

determine whether there is a significant incr ease in credit

risk since initial recognition. If not, they are recognized as an

allowance for loss based on expected credit losses over 12

months, and if so, based on expected credit losses over the

duration period.

Expected credit losses are the average credit losses

weighted by the risk of default. The 12 -month expected credit

loss represents the expected credit loss arising from default

events on a financial instrument that are possible within the

12 months after the reporting date, while the ex pected credit

loss over the life of the instrument represents the expected

credit loss resulting from all default events on a financial

instrument that are possible over the expected life.

- 307 -

For internal credit risk management purposes, the Company

determines, without regard to the collateral held, that a

default on a financial asset has occurred if:

A. there is internal or external information indicating that the

debtor is unlikely to meet its obligations.

B. it is more than a certain number of days past due, unless

there is reasonable and supportable information indicating

that a deferred default basis is more appropriate.

All impairment losses on financial assets are reversed

through an allowance account and do not reduce the carrying

amount of the financial assets.

(3) Derecognition of financial assets

The Company derecognizes financial assets only when

the contractual rights to the cash flows from the financial

assets have lapsed or when the financial assets have been

transferred and substantially all the risks and rewards of

ownership of the assets have been transferred to other

enterprises.

When financial assets are derecognized in their entirety

at amortized cost , the difference between the carrying amount

and the consideration received is reco gnized in profit or loss.

When investments in equity instruments measured at fair

value through other comprehensive income are derecognized

as a whole, the cumulative gain or loss is transferred directly

to retained earnings and is not reclassified to pr ofit or loss.

2. Financial liabilities

(1) Subsequent measurement

All of the financial liabil ities should be measured at the

amortized costs through effective interest rate.

(2) Derecognition of financial liabilities

When derecognizing the financial liabilities, the

difference between its book value amount and the

consideration (including any non -cash asset transferred or the

liability borne) paid will be recognized as income.

- 308 -

(11) Income recognition

The Consolidated Company allocates the transaction price to each

performance obligation after the performance obligation is identified in

the customer contract and recognizes revenue when each performance

obligation is satisfied.

If the interval between the transfer of merchandises or service s

and the receipt of consideration is less than one year, no adjustment is

made to the transaction price for the significant financing component

of the contract.

- 309 -

Merchandise sales revenue

Merchandise sales revenue is derived from the sale of sanitary

ware products such as porcelain toilets and water faucets. The

Consolidated Company recognizes revenue and accounts receivable at

the shipping point because the customer has the right to set the price

and use the products and has the primary responsibility for re-selling

the products and bears the risk of obsolescence of the products from

that point onwards.

(12) Lease

The Consolidated Company assesses whether a contract is (or

contains) a lease at the contract inception date.

1. Consolidated Company as lessor

If the lease clauses transfer nearly all risks and

Compensation associated with the assets to the lessee, the lease

shall be classified as finance lease. All other leases shall be

classified as business lease.

Under operating leases, lease payments, net of lease

incentives, are recognized as income on a straight -line basis over

the term of the relevant lease. The original direct costs incurred in

acquiring an operating lease are added to the carrying amount of

the subject asset and recognized as an expense on a straight -l ine

basis over the lease term.

2. Consolidated Company as lessee

Right-of-use assets and lease liabilit ies are recognized at the

inception date of the lease, except for leases of low -value subject

assets to which a recognition exemption applies and short -term

leases where lease payments are recognized as an expense on a

straight-l ine basis over the lease term.

Right-of-use assets are measured init ially at cost (comprising

the original measurement of the lease liability, lease payments

made prior to the commencement date of the lease less lease

incentives received, original direct cost and estimated cost to

reinstate the subject asset) and subsequently at cost less

accumulated depreciation and accumulated impairment losses,

- 310 -

with adjustments for remeasurement of the lease liabil ity.

Right-of-use assets are presented separately on individual balance

sheets.

Right-of-use assets are depreciated on a straight -line basis

from the commencement date of the lease to the earlier of the e nd

of the useful life or the end of the lease term.

Lease obligations are measured init ially at the present value

of the lease payments (comprising fixed payments, effective fixed

payments, variable lease payments dependent on indices or rates,

amounts expected to be paid by the lessee under residual

guarantees, exercise prices of purchase options where there is

reasonable assurance that they will be exercised, and lease

termination penalties reflected in the term of the lease, less lease

incentives received). If the implied interest rate of the lease is

readily determinable, the lease payments are discounted using that

rate. If the rate is not readily determinable, the lessee's

incremental borrowing rate is used.

Subsequently, lease liabilities are measured on an amortized

cost basis using the effective interest method and interest expense

is amortized over the lease term. If there is a change in the lease

term, future lease payments as a result of variations in the

expected payments under the residual guarantee, the evaluation of

the purchase option on the subject asset, or changes in the index or

rate used to determine lease payments, the Consolidated Company

remeasures the lease liability and adjusts the right -of-use asset

accordingly, except that if the carrying amount of the right -of-use

asset is reduced to zero, the remaining remeasurement amount is

recognized in profit or loss. Lease l iabili ties are presented

separately on the Consolidated Statement of Financial Position.

Rentals under leases that do not depend on changes in indices

or rates are recognized as an expense in the period in which they

are incurred.

(13) Income tax

- 311 -

Income tax expense is the sum of current income taxes and

deferred income taxes.

1. Current income tax

The additional income tax on the undistributed surplus

calculated in accordance with the Income Tax Act shall be

included in the income tax expense for the year of resolution of

the shareholders ' meeting.

The adjustment of income tax payable in the previous year

shall be included in the current income tax.

2. Deferred income tax

Deferred income tax is calculated based on the temporary

differences between the carrying amount of assets and liabili ties

on the books and the basis for the calculation of taxable income.

Deferred tax l iabil ities are generally recognized for all

temporary differences in taxable income, while deferred income

tax assets are recognized when there is a high likelihood that the

taxable income will be used as a tax deduction for deductible

temporary differences.

Deferred tax liabilities are recognized for taxable temporary

differences associated with investments in subsidiaries, except

where the Consolidated Company is able to control the timing of

the reversal of the temporary difference and it is probable that the

temporary difference will not reverse in the foreseeable future.

Deferred income tax assets are recognized for deductible

temporary differences associated with such investments only to

the extent that it is probable that sufficient ta xable income will be

available to allow the temporary differences to be realized and to

the extent that reversal is expected in the foreseeable future.

The carrying amount of deferred income tax assets is

reviewed at each balance sheet date and reduced f or those where it

is no longer probable that there will be sufficient taxable income

to allow all or part of the assets to be recovered. Deferred income

tax assets not previously recognized as such are also reviewed at

each balance sheet date and the carrying amount is increased for

- 312 -

those where it is probable that taxable income will be available to

recover all or part of the assets.

Deferred income tax assets and l iabilities are measured by the

tax rate of the expected l iabilities settlement or assets re alization

in the current period, according to the tax rate and the tax law

which have been legalized or substantively legalized on the

balance sheet date. The measurement of deferred tax liabili ties

and assets reflects the tax consequences of the way in wh ich the

Consolidated Company is expected to recover or pay off the

carrying amount of i ts assets and liabilit ies on the balance sheet

date.

3. Current and deferred tax

The current and deferred tax are recognized in profit or loss,

provided that the current and deferred tax in relation to the items

recognized in other comprehensive income or directly included in

equity are recognized in other comprehensive income or directly

included in equity, respectively.

V. Primary sources of uncertainty in major acc ounting judgments, estimates,

and assumptions

When the Consolidated Company adopts an accounting policy,

management must make relevant judgments, estimates, and assumptions

of relevant information that is difficult to obtain from other sources based

on historical experience and other relevant factors.

The Consolidated Company has included the economic impact of the

COVID-19 outbreak in the consideration of significant accounting

estimates and management will review the estimates and underlying

assumptions on an ongoing basis. If an amendment to an estimate affects

only the current period, the amendment is recognized in the period in

which it is made. If an amendment to an accounting estimate affects both

the current and future periods, the amendment is recognized in both the

current and future periods.

VI. Cash and cash equivalents

Dec. 31, 2020 Dec. 31, 2019

Cash on hand and revolving funds $ 1,823 $ 1,875

- 313 -

Checks and fixed deposit 145,480 188,512

Cash equivalents

Time deposits with original

maturity within three

months

17,513 48,179

$ 164,816 $ 238,566

- 314 -

VII. Financial assets measured at fair value through other comprehensive

income - non-current

Dec. 31, 2020 Dec. 31, 2019

Investments in equity instruments



Stock of unlisted companies

Amsalp Biomedical Corporation $ 262 $ -

The Consolidated Company invests in the above -mentioned subjects

for medium- and long-term strategic purposes and expects to make profits

from the long-term investments. The management of the Consolidated

Company considers that it would be inconsistent with the aforementioned

long-term investment plan to include short -term fair value fluctuations of

these investments in profit or loss, and therefore chooses to designate

these investments as measured at fair value through other comprehensive

income.

The Consolidated Company's investments in equity instruments

measured at fair value through other comprehensive income are not

pledged.

VIII. Financial assets measured at amortized cost

Dec. 31, 2020 Dec. 31, 2019

Current

Time deposits with original

maturity over three months

$ 56,199 $ 46,888

IX. Notes and accounts receivable

Dec. 31, 2020 Dec. 31, 2019

Notes receivable


activities

$ 13,804 $ 14,519

Accounts receivable


Minus: allowance for loss ( 4,431 ) ( 2,028 )

$ 226,984 $ 226,806

Related parties $ 4,201 $ 3,419

The average credit period for the Consolidated Company's

merchandise sales ranges from 30 to 90 days, and no interest is charged

- 315 -

on accounts receivable. To mitigate credit risk, the management of the

Consolidated Company assigns a dedicated team to ensure that

appropriate actions are taken to collect overdue receivables. In addition,

the Consolidated Company reviews the recoverable amounts of

receivables on a case-by-case basis at the balance sheet date to ensure

that appropriate impairment losses are recorded for uncollectible

receivables. Accordingly, the Consolidated Company's management

believes that the Consolidated Company's credit risk has been

significantly reduced.

The Consolidated Company uses the simplified approach of IFRS 9

to recognize an allowance for losses on accounts receivable based on

lifetime expected credit losses. The lifetime expected credit losses are

calculated using an provision matrix, which takes into account the

customer's past default history and current financial position, the

economic situation of the industry, as well as the GDP forecast and

industry outlook, and classifies customers into different risk groups and

recognizes an allowance for losses based on the expected loss rate of each

group.

If there is evidence that the counter -party is in serious financial

difficulty and the Consolidated Company cannot reasonably expect to

recover the amount, such as when the counter -party is in liquidation, the

Consolidated Company will directly write off the related accounts

receivable, but will continue to conduct recourse actions and recognize

the amount recovered in profit or loss as a result of the recourse.

The Consolidated Company's allowance for losses on account s

receivable based on the provision matrix is summarized as follows:

Dec. 31, 2020

Within normal

credit period

Overdue

1-180 days

Overdue

Over 180 days Total

Total carrying

amount $ 228,043 $ 6,101 $ 1,472 $ 235,616

Allowance for loss

(Expected credit

loss in the

duration) ( 1,986 ) ( 1,159 ) ( 1,286 ) ( 4,431 )

Amortized cost $ 226,057 $ 4,942 $ 186 $ 231,185

- 316 -

Dec. 31, 2019

Within normal

credit period

O v e r d u e

1 - 1 8 0 d a y s

O v e r d u e

Over 180 days Total

Total carrying

amount $ 227,608 $ 4,239 $ 406 $ 232,253

Allowance for loss

(Expected credit

loss in the

duration) ( 1,308 ) ( 394 ) ( 326 ) ( 2,028 )

Amortized cost $ 226,300 $ 3,845 $ 80 $ 230,225

Information on the changes in allowance for losses on notes

receivable, accounts receivable and overdue receivables is as follows:

2020

notes receivable

accounts

receivable

overdue

receivables

Beginning balance $ - $ 2,028 $ 1,445

Plus: Impairment losses

recognized in the period

- 2,429 -

Minus: Reversal of

impairment losses in the

current period

- - ( 100 )

Differences from translation

of foreign currencies

- ( 26 ) ( 21 )

Ending balance $ - $ 4,431 $ 1,324

- 317 -

2019

notes receivable

accounts

receivable

overdue

receivables

Beginning balance $ - $ 516 $ 1,112


in the period

- 1,521 339

Differences from translation

of foreign currencies

- ( 9 ) ( 6 )

Ending balance $ - $ 2,028 $ 1,445

The Consolidated Company's notes receivable, accounts receivable

and overdue receivables are not pledged.

X. Inventory

Dec. 31, 2020 Dec. 31, 2019

Raw materials $ 146,386 $ 118,754

Work in progress 52,044 28,558

Finished goods 256,052 188,714

Merchandise inventory 197,669 176,523

$ 652,151 $ 512,549

The allowance for loss for market price decline and obsolete

inventory was $36,660 thousand and $35,658 thousand as of December 31,

2020 and 2019, respectively.

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

follows:

2020 2019

Loss for market price decline and

obsolete and slow-moving inventory

(gain from price recovery) $ 2,427 ( $ 1,085 )

Inventory short (over) ( 873 ) 3,489

Loss on inventory obsolescence 470 8,352

Income from the sale of leftover

materials ( 11 ) ( 115 )

$ 2,013 $ 10,641

Please refer to Note 27 for the amount of inventory set by the

Consolidated Company as collateral for the loan facility.

The increase in the net realizable value of the Consolidated

Company's inventory in fiscal 2019 was due to the increase in the selling

price of inventory.

- 318 -

XI. Subsidiaries

(1) Subsidiaries included in the consolidated financial statements

The principal structure of the preparation of the Consolidated

Financial Statements is as follows:

Shareholding

percentage


Company Name of Subsidiary

Nature of

Business

2020

Dec. 31

2019

Dec. 31


Wares Joint Stock

Company

Manufacturing

and sale

99.9993% 99.9993%

Sanitar Co., Ltd. Kai Sheng Sanitary Ware Co.,

Ltd.

Manufacturing

and sale

51% -

On November 4, 2020, the Board of Directors resolved to establish

Kai Sheng Sanitary Ware Co., Ltd. as a distribution base in Taoyuan

through investment by the Sanitar Co., Ltd. of the Consolidated

Company. The total capital is $50,000 thousand, divided into 5,000,000

shares at NT$10 per share, and authorized to be issued by the Board of

Directors in several installments. Sanitar Co., Ltd. inve sted $13,260

thousand and holds 51% of the shares, while the remaining 49% of the

shares are held by non-affi liated parties. After considering the voting

rights held by other shareholders, the Consolidated Company was

considered to have the actual ability to direct the relevant activities of

Kai Sheng Sanitary Ware Co., Ltd. Since Kai Sheng Sanitary Ware Co.,

Ltd. was established in December 2020 and has no significant operating

activities, Kai Sheng Sanitary Ware Co., Ltd. 's own financial

statements were adopted for the preparation of the Consolidated

Financial Statements.

(2) Subsidiaries not included in the consolidated financial statements:

None.

XII. Property, plant and equipment

Self-owned land Buildings

Machinery

equipment

Transportation

equipment

Other

equipment

Leasehold

improvements

Construction-in-

progress Total

Cost

Balance on Jan. 1,

2020 $ 243,280 $ 797,729 $ 491,947 $ 59,416 $ 23,573 $ 15,303 $ 13,780 $ 1,645,028

Increment - 6,063 8,594 9,679 52 7,046 7,050 38,484

Disposal - - - ( 1,073 ) ( 266 ) ( 380 ) - ( 1,719 )

Recategorized - 2,344 767 - - 10,572 ( 13,116 ) 567

Net exchange

differences - ( 35,920 ) ( 32,567 ) ( 2,108 ) ( 947 ) ( 53 ) ( 124 ) ( 71,719 )

Balance on Dec. 31,

2020 $ 243,280 $ 770,216 $ 468,741 $ 65,914 $ 22,412 $ 32,488 $ 7,590 $ 1,610,641

Accumulated

depreciation

Balance on Jan. 1,

2020 $ - $ 147,188 $ 261,715 $ 32,052 $ 10,844 $ 3,953 $ - $ 455,752

- 319 -

Depreciation expense - 31,731 39,563 7,222 3,072 6,798 - 88,386

Disposal - - - ( 844 ) ( 238 ) ( 380 ) - ( 1,462 )

Net exchange

differences - ( 8,556 ) ( 18,731 ) ( 958 ) ( 506 ) ( 5 ) - ( 28,756 )

Balance on Dec. 31,

2020 $ - $ 170,363 $ 282,547 $ 37,472 $ 13,172 $ 10,366 $ - $ 513,920

Net on Dec. 31, 2020 $ 243,280 $ 599,853 $ 186,194 $ 28,442 $ 9,240 $ 22,122 $ 7,590 $ 1,096,721

Cost

Balance on Jan. 1,

2019 $ 243,280 $ 515,618 $ 432,975 $ 49,217 $ 12,519 $ 14,003 $ 161,424 $ 1,429,036

Increment - 9,555 8,149 7,091 5,487 1,300 132,773 164,355

Disposal - ( 163 ) ( 1,069 ) ( 3,228 ) ( 327 ) - - ( 4,787 )

Recategorized - 284,076 61,012 6,911 6,188 - ( 281,389 ) 76,798

Net exchange

differences - ( 11,357 ) ( 9,120 ) ( 575 ) ( 294 ) - 972 ( 20,374 )

Balance on Dec. 31,

2019 $ 243,280 $ 797,729 $ 491,947 $ 59,416 $ 23,573 $ 15,303 $ 13,780 $ 1,645,028


- 320 -


Self-owned land Buildings

Machinery

equipment

Transportation

equipment

Other

equipment

Leasehold

improvements

Construction-in-

progress Total

Accumulated

depreciation

Balance on Jan. 1,

2019 $ - $ 128,090 $ 230,676 $ 28,930 $ 8,315 $ 984 $ - $ 396,995

Depreciation expense - 21,410 36,957 6,447 2,987 2,969 - 70,770

Disposal - ( 163 ) ( 1,069 ) ( 3,093 ) ( 327 ) - - ( 4,652 )

Net exchange

differences - ( 2,149 ) ( 4,849 ) ( 232 ) ( 131 ) - - ( 7,361 )

Balance on Dec. 31,

2019 $ - $ 147,188 $ 261,715 $ 32,052 $ 10,844 $ 3,953 $ - $ 455,752

Net on Dec. 31, 2019 $ 243,280 $ 650,541 $ 230,232 $ 27,364 $ 12,729 $ 11,350 $ 13,780 $ 1,189,276

There is no indication of impairment of property, plant and

equipment listed above in fiscal 2020 and 2019 as assessed by

management.

Depreciation expense is calculated through straight -line basis

according to the following years:

Buildings

Main office building 50-55 years

Factory building 50 years

Distribution center 35 years

Others 2-50 years

Machinery equipment 1-25 years

Transportation equipment 4-25 years

Other equipment 1-10 years

Leasehold improvements 5 years

Please refer to Note 27 for the amount of property, plant and

equipment pledged as collateral for the loan amount.

The Company leases the roof of its factory in Zaoqiao Township for

the installation and operation of a solar photovoltaic system to generate

electricity for sale to Taiwan Power Company. The lessee does not have a

preferential right to purchase the asset at the end of the lease period. The

lease period is from the commercial operation date of the solar power

system on March 14, 2019 to the end of 20 years. At the end of the lease

term, the lessee does not have a preferential right to acquire the asset .

The total future lease payments to be received under operating leases

are as follows

2020 2019

The 1st year $ 530 $ 530

The 2nd year 530 530

The 3rd year 530 530

- 321 -



Over 5 years 6,890 7,420

$ 9,540 $ 10,070

XIII. Lease agreement

(1)

Lands Buildings Total

Cost

Balance on Jan. 1, 2020 $ 119,583 $ 55,391 $ 174,974

Increment - 25,746 25,746

Disposal - ( 16,612 ) ( 16,612 )

Net exchange differences ( 7,825 ) ( 938 ) ( 8,763 )

Balance on Dec. 31, 2020 $ 111,758 $ 63,587 $ 175,345

Accumulated depreciation

Balance on Jan. 1, 2020 $ 16,046 $ 12,303 $ 28,349

Depreciation expense 3,124 16,279 19,403

Disposal - ( 7,101 ) ( 7,101 )


Balance on Dec. 31, 2020 $ 17,992 $ 21,046 $ 39,038

Net on Dec. 31, 2020 $ 93,766 $ 42,541 $ 136,307

Cost

Balance on Jan. 1, 2019 $ - $ - $ -


application of IFRS 16 121,693 32,494 154,187

Increment - 23,222 23,222

Disposal - ( 75 ) ( 75 )


Balance on Dec. 31, 2019 $ 119,583 $ 55,391 $ 174,974

Accumulated depreciation

Balance on Jan. 1, 2019 $ - $ - $ -


application of IFRS 16 13,066 - 13,066

Depreciation expense 3,284 12,525 15,809

Disposal - ( 75 ) ( 75 )

Net exchange differences ( 304 ) ( 147 ) ( 451 )

Balance on Dec. 31, 2019 $ 16,046 $ 12,303 $ 28,349

Net on Dec. 31, 2019 $ 103,537 $ 43,088 $ 146,625

- 322 -

(2) Lease liabilities

Dec. 31, 2020 Dec. 31, 2019

Carrying amount of lease

liabilities

Current $ 12,919 $ 14,915

Non-current $ 62,402 $ 63,316

Discount rate ranges of lease liabilities are as follows:

2020 2019

Lands 8.37% 8.37%

Buildings 1.66%~8.37% 1.79%~8.37%

(3) Other leasing information

2020 2019

Lease expenses of low-value

assets

$ 706 $ 1,804

Changed lease payment

expenses not considered in

the measurement of lease

liabilities

$ 508 $ 164

Total cash outflow from lease ( $ 17,339 ) ( $ 18,486 )

The Consolidated Company has elected to apply the exemption

from recognition to leases of Office equipment that qualify as

short-term leases and leases of Office equipment that qualify as

low-value asset leases and not to recognize the related right -of-use

assets and lease l iabilities for these leases.

XIV. Intangible assets

T r a d e m a r k

r i g h t s

C o s t o f

c o m p u t e r

s o f t w a r e T o t a l

Cost

Balance on Jan. 1, 2020 $ 8,572 $ 14,239 $ 22,811

Acquired separately - 1,197 1,197

Disposal ( 8,572 ) ( 2,200 ) ( 10,772 )

Net exchange differences - ( 769 ) ( 769 )

Balance on Dec. 31, 2020 $ - $ 12,467 $ 12,467


Balance on Jan. 1, 2020 $ 8,572 $ 7,605 $ 16,177

Amortization expense - 2,004 2,004

Disposal ( 8,572 ) ( 2,200 ) ( 10,772 )


Balance on Dec. 31, 2020 $ - $ 6,993 $ 6,993

- 323 -

Net on Dec. 31, 2020 $ - $ 5,474 $ 5,474


- 324 -


T r a d e m a r k

r i g h t s

C o s t o f

c o m p u t e r

s o f t w a r e T o t a l

Cost

Balance on Jan. 1, 2019 $ 8,572 $ 9,852 $ 18,424

Acquired separately - 5,431 5,431

Disposal - ( 810 ) ( 810 )


Balance on Dec. 31, 2019 $ 8,572 $ 14,239 $ 22,811


Balance on Jan. 1, 2019 $ 8,572 $ 6,831 $ 15,403

Amortization expense - 1,681 1,681

Disposal - ( 810 ) ( 810 )


Balance on Dec. 31, 2019 $ 8,572 $ 7,605 $ 16,177

Net on Dec. 31, 2019 $ - $ 6,634 $ 6,634

Amortization expenses were calculated and recognized using straight

line basis with the following service lives :

Trademark rights 20 years

Computer software 1-8 years

XV. Other assets

Dec. 31, 2020 Dec. 31, 2019

Current

Input tax $ 11,922 $ 6,641

Others 588 402

$ 12,510 $ 7,043

Non-current

Long-term prepaid expenses $ 20,192 $ 15,026

Overdue receivables 1,324 1,445

Minus: Allowance for bad debts ( 1,324 ) ( 1,445 )

$ 20,192 $ 15,026

- 325 -

XVI. Short-term loans

Dec. 31, 2020 Dec. 31, 2019

Secured loan (Note XXVII)

Bank borrowings $ 344,442 $ 346,140

The interest rates on revolving bank loans ranged from 0.85% to

1.25% and 1.07% to 3.10% in 2020 and Dec. 31, 2019, respectively.

XVII. Accounts payable

Dec. 31, 2020 Dec. 31, 2019

Accounts payable


activities

$ 70,200 $ 91,510

XVIII. Other payables

Dec. 31, 2020 Dec. 31, 2019

Salaries and bonuses payable $ 54,587 $ 52,337

Employee bonuses payable 8,749 7,303


supervisors payable

5,833 4,869

Gas bills payable 5,388 7,775

Freight charges payable 3,565 4,277

Advertising expenses payable 3,092 3,528

Other 26,076 33,362

$ 107,290 $ 113,451

XIX. Equity

(1) Share capital

Dec. 31, 2020 Dec. 31, 2019

Rated number of shares (1,000

shares)

100,000 100,000

Rated share capital $ 1,000,000 $ 1,000,000

Paid-in shares (1,000 shares) 72,600 72,600

Issued shares $ 726,000 $ 726,000

The issued common stock has a par value of $10 per share and

each share is entitled to one vote and the right to receive dividends.

- 326 -

(2) Additional paid-in capital

Dec. 31, 2020 Dec. 31, 2019

Can be used to make up losses,

to issue cash dividends or to

add into share capital (Note)

Share premium $ 254,700 $ 254,700

Premium on capital stock due

to merger

9,481 9,481

Cannot be used for any purpose

Cost of employee stock options 13,271 13,271

$ 277,452 $ 277,452

Note: Such additional paid-in capital may be used to cover losses

or, when the company is not losing money, to make cash payments

or to capitalize share capital, provided that the capitalization is

limited to a certain percentage of paid -in share capital each year.

(3) Retained earnings and dividend policies

In accordance with the distribution policy of the Consolidated

Company's Articles of Incorporation, if there is any after-tax net

income in the annual consolidated financial statements, the

accumulated deficit (including the adjustment of the Unappropriated

retained earnings Amount) shall first be offset and 10% shall be set

aside as legal reserve in accordance with the law. However, the legal

reserve shall not be used when the accumulated legal reserve has

reached the total paid-in capital of the Consolidated Company. The

Board of Directors shall prepare a resolution for the distribution of the

remaining earnings, together with the Unappropriated retained earnings

(including the adjustment of the Unappropriated retained earnings

Amount) at the beginning of the period. The Board of Directors shall

prepare a resolution on the appropriation of earnings a nd submit it to

the shareholders for resolution on the distribution of dividends to

shareholders.

The dividend policy of the Consolidated Company is based on

current and future development plans, consideration of the investment

environment, capital requi rements and domestic and international

competition, as well as the interests of shareholders. Dividends may be

distributed to shareholders in cash or in stock, with cash dividends not

- 327 -

less than 10% of the total stock dividends, except when the stock

dividends are less than one dollar per share.

The legal reserve shall be set aside until the balance reaches the

total paid-up capital of the Company. The statutory reserve may be

applied to make up losses. If the Company is not in deficit, the excess

of the legal reserve over 25% of the total paid -in capital may be

distributed in cash in addition to capitalization.

The Company has appropriated and reversed the special reserve in

accordance with J in-Guan-Zheng-Fa-Zi Letter No. 1010012865,

Jin-Guan-Zheng-Fa-Zi Letter No. 1010047490, Jin -Guan-Zheng-Fa-Zi

Letter No. 1030006415 and the “Questions and Answers for Special

Reserves Appropriated Following Adoption of IFRSs.”

The Company of Consolidated Company held its regular

shareholders ' meetings on May 28, 2020 and June 20, 2019, and

resolved to approve the earnings distribution for fiscal 2019 and 2018,

respectively, as follows:

2019 2018

Legal reserve $ 17,985 $ 25,401

Special reserve $ 19,355 ( $ 4,220 )

Cash dividends $ 123,420 $ 166,980


(NT$)

$ 1.71 $ 2.30

The Company proposed the following distribution of earnings for

fiscal 2020 at the Board of Directors ' meeting on March 9, 2021:

2020

Legal reserve $ 22,009

Special reserve $ 71,429

Cash dividends $ 144,152


(NT$)

$ 2.00

The distribution of earnings for fiscal 2020 is subject to the

resolution of the shareholders ' meeting scheduled to be held on May 27,

2021.

(4) Special reserve

2020 2019

Beginning balance $ 146,675 $ 150,895

- 328 -

Reversal of special reserve - ( 4,220 )

Provision of special reserve

Allowances for deductions

in other equity interest

items

19,355 -

Ending balance $ 166,030 $ 146,675

(5) Other equity interest items

1. Exchange differences on translation of foreign financial

statements

2020 2019

Beginning balance ( $ 166,030 ) ( $ 146,675 )


translation of the


foreign operations ( 85,864 ) ( 24,194 )

Relevant income tax of

the loss on translation

of the financial

statements of foreign

operations 17,173 4,839

Ending balance ( $ 234,721 ) ( $ 166,030 )

- 329 -

2. Unrealized gains or losses on financial assets measured at fair

value through other comprehensive income

2020 2019

Beginning balance $ - $ -

Generated in the period

Unrealized gains or

losses

Equity

instrument

( 2,738 ) -

Ending balance ( $ 2,738 ) $ -

(6) Treasury shares

Reasons for the retirement of

shares

Transfer of shares

to employees

(1,000 shares)

Number of shares as of Jan. 1,

2020

-

Increase in the current period 524

Number of shares as of Dec.

31, 2020

524

Treasury shares held by the Company are not pledged under the

Securities and Exchange Act and are not entitled to dividend

distribution or voting rights.

(7) Non-controlling interests

2020 2019

Beginning balance $ 11 $ 10

Share belonging to

non-controlling interests

Increase in

non-controlling

interests because of the

establishment of

Kai-Sheng (Note XI)

12,740 -

Net income (loss) in the

period

( 36 ) 1

Exchange differences on

translation of foreign


( 2 ) -

Cash dividends of

subsidiaries

( 1 ) -

Ending balance $ 12,712 $ 11

XX. Income

2020 2019

- 330 -

Income from customer contracts

Porcelain $ 1,124,375 $ 1,142,763

Water use equipment 463,194 494,716

Automated equipment 245,240 210,305

Bathtubs 62,383 84,606

Others 411,329 402,536

$ 2,306,521 $ 2,334,926

Contract balance

Dec. 31, 2020 Dec. 31, 2019

Accounts receivable $ 231,185 $ 230,225

Contract liabilities

Payment for goods collected

in advance $ 5,412

$ 8,714

2020 and 2019 Income from customer contracts, of which $373,583

thousands and $447,502 thousands were reclassified from contract

liabilities, respectively.

XXI. Net income from continuing operations

Net income from continuing operations includes the following items:

(1) Other income and expenses, net

2020 2019

Compensation for losses ( $ 966 ) ( $ 147 )

Net income from the disposal

and obsolescence of

property, plant and

equipment 91 357

Other 244 -

( $ 631 ) $ 210

(2) Depreciation and amortization, employee benefit expenses

2020 2019

Belonging

to operating

costs

Belonging

to operating

expenses Total

Belonging

to operating

costs

Belonging

to operating

expenses Total

Employee benefit

expenses

Salary expenses $ 191,317 $175,305 $ 366,622 $ 165,934 $ 152,820 $ 318,754

Premium for the

insurance of employees

18,968 15,963 34,931 19,334 14,839 34,173

Benefits after retirement

Defined contribution

plan

1,590 3,732 5,322 1,509 2,989 4,498

Other employee benefit

expenses

9,178 7,563 16,741 7,841 8,531 16,372

Total of employee benefit

expenses

$ 221,053 $ 202,563 $ 423,616 $ 194,618 $ 179,179 $ 373,797

Depreciation expense

- 331 -

Property, plant and

equipment

$ 56,767 $ 31,619 $ 88,386 $ 44,790 $ 25,980 $ 70,770 Right-of-use assets 949 18,454 19,403 1,050 14,759 15,809

$ 57,716 $ 50,073 $ 107,789 $ 45,840 $ 40,739 $ 86,579

Amortization expense $ 743 $ 1,261 $ 2,004 $ 69 $ 1,612 $ 1,681

(3) Compensation to employees and compensation to directors and

supervisors

The Consolidated Company contributes 2% to 5% of the pre -tax

benefit before compensation to employees and directors and

supervisors as compensation to employees and no more than 2% as

compensation to directors and supervisors for the year.

- 332 -

The compensation to employees and compensation to directors and

supervisors for the years 2020 and 2019 were resolved by the Board of

Directors on March 9, 2021 and February 27, 2020, respectively, as

follows:

Estimated l isting ratio

2020 2019

Compensation of employees 3% 3%


supervisors

2% 2%

Amount

2020 2019

C a s h C a s h

Compensation of employees $ 8,749 $ 7,303


supervisors

5,833 4,869

If there is any change in the annual Consolidated Financial

Statements after the date of adoption, the change in accounting

estimate will be treated as an adjustment in the following year.

There was no difference between the actual amount of

compensation to employees and compensation to directors and

supervisors for fiscal 2019and 2018 and the amount recognized in the

2019 and 2018 Consolidated Financial Statements.

For information on the compensation to employees and

compensation to directors and supervisors resolved by the Board of

Directors of the Company, please visit the Market Observation Post

System (MOPS) of the Taiwan Stock Exchange.

XXII. Income tax of continuing operations

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

Main components of income tax expenses recognized in profit or

losses:

2020 2019

Current income tax

Generated in the period $ 74,029 $ 46,378



Adjustments for the prior

year ( 950 ) 11

- 333 -

74,033 49,681

Deferred income tax

Generated in the period ( 6,006 ) 14,457


countries cannot be

deducted 1,492 1,553



- 334 -

The reconciliations of accounting income and income tax expenses

are as follows:

2020 2019

Net income before tax $ 289,575 $ 245,543

Income tax expense of the net

income before tax calculated

with statutory tax rate $ 58,004 $ 49,109

Non-deductible expenses in the

tax ( 2,654 ) ( 2,169 )



Temporary differences which

were not recognized 12,673 13,895


countries cannot be deducted 1,492 1,553 Adjustments to the income tax

expenses in the past years in

the current period ( 950 ) 11



According to the document 512/CT-TTHT of the Dong Nai

Provincial Tax Office of the General Administration of Taxation of the

Socialist Republic of Vietnam, the Vietnam Caesar Sanitary Wares

Joint Stock Company is subject to a preferential corporate income tax

rate of 15% for the initial investment projects with more than 50% of

exported products. The tax rate is 15% for the initial investment and

20% for the expanded investors who are not in the area of tax

incentives.

(2) Income tax recognized in other comprehensive income

2020 2019

Deferred income tax

Generated in the period

－Translation of the financial

statements of foreign

operations $ 17,173 $ 4,839

(3) Income tax assets and liabilit ies in the current period

Dec. 31, 2020 Dec. 31, 2019

Income tax assets in the current

period $ - $ 7,486

Current income tax liabilities $ 51,373 $ 16,409

- 335 -

- 336 -

(4) Deferred income tax assets and liabilities

Changes in deferred income tax assets and liabilities are as

follows:

2020

Beginning

balance

Recognized

in profit or

losses

Recognized in other

comprehensive

income

Exchange

difference

Ending

balance

Deferred income tax

assets


Allowance for bad

debts

$ 679 $ 380 $ - ( $ 28 ) $ 1,031

Unrealized loss for

market price

decline and

obsolete and

slow-moving

inventory

3,494 485 - ( 45 ) 3,934

Exchange

difference on

translation of

the financial

statements of

foreign

operations

41,508 - 17,173 - 58,681

Amortization of

prepaid rent

282 ( 275 ) - ( 7 ) -

Unrealized foreign

exchange losses

30 ( 30 ) - - -

Others 342 ( 333 ) - ( 9 ) -

$ 46,335 $ 227 $ 17,173 ( $ 89 ) $ 63,646

Deferred income tax

liabilities


Investment income

recognized

using equity

method (foreign

investment)

$176,544 ( $ 5,825 ) $ - $ - $170,719

Unrealized foreign

exchange gains

22 46 - ( 1 ) 67

$176,566 ( $ 5,779 ) $ - ( $ 1 ) $170,786

2019

Beginning

balance

Recognized

in profit or

losses

Recognized in other

comprehensive

income

Exchange

difference

Ending

balance

Deferred income tax

assets


Allowance for bad

debts

$ 749 ( $ 64 ) $ - ( $ 6 ) $ 679

Unrealized loss for

market price

3,721 ( 213 ) - ( 14 ) 3,494

- 337 -

decline and

obsolete and

slow-moving

inventory

Exchange

difference on

translation of

the financial

statements of

foreign

operations

36,669 - 4,839 - 41,508

Amortization of

prepaid rent

470 ( 183 ) - ( 5 ) 282

Unrealized foreign

exchange losses

- 30 - - 30

Others - 350 - ( 8 ) 342

$ 41,609 ( $ 80 ) $ 4,839 ( $ 33 ) $ 46,335

Deferred income tax

liabilities


Investment income

recognized

using equity

method (foreign

investment)

$162,166 $ 14,378 $ - $ - $176,544

Unrealized foreign

exchange gains

23 ( 1 ) - - 22

$162,189 $ 14,377 $ - $ - $176,566

- 338 -

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

were not recognized in the statement of financial position

Dec. 31, 2020 Dec. 31, 2019

Deductible temporary

differences

$ 4,299 $ 4,762

(6) Income tax assessment

The income tax returns of the Company have been assessed and

approved by the tax authorities through fiscal 2018.

XXIII. Earnings per share

(1) Basic earnings per share


used to calculate basic earnings per share were as follows:

2020 2019

Net income attributable to the

owners of the company

$ 220,092 $ 179,851





72,290 72,600

Basic earnings per share (NT$) $ 3.04 $ 2.48

(2) Diluted earnings per share


used to calculate diluted earnings per share were as follows:

2020 2019

Net income attributable to the

owners of the company $220,092 $ 179,851




per share (1,000 shares) 72,290 72,600

Influence of dilutive potential

common shares on employee

bonuses or Compensation of

employees (1,000 shares)

376 352



calculation of diluted earnings

per share (1,000 shares) 72,666 72,952

Diluted earnings per share (NT$) $ 3.03 $ 2.47

- 339 -

If the Consolidated Company has the option of paying employees

in stock or cash, it is assumed that employee compensation will be paid

in stock and is included in the weighted -average number of shares

outstanding for the purpose of calculating diluted earnings per share

when the potential ordinary share has a dilutive effect. The dilutive

effect of these potential ordinary shares shall also continue to be

considered in the calculation of diluted earnings per share before the

following year 's resolution on the number of employee compensation

shares to be distr ibuted.

- 340 -

IIIV. Capital risk management

The Consolidated Company is currently in a stable operating phase

and the objective of capital risk management is to ensure that i t is able to

maximize shareholder returns by optimizing debt and equity balances

while continuing to operate and grow.

The Consolidated Company adopts a prudent risk management

strategy and conducts regular reviews to determine the most appropriate

capital structure for itself based on its business development strategy and

overall planning of operational needs.

XXV. Financial instrument

(1) Fair value information

1. Financial instruments not measured at fair value

The Consolidated Company considered that the carrying

amounts of financial assets and liabilities which were not

measured at fair value were close to their fair values.

2. Financial instruments measured at fair value

(1) Fair value levels

December 31, 2020

Level 1 Level 2 Level 3 Total

Non-current financial

assets measured at

fair value through

other

comprehensive

income


instruments

－Stocks of

domestic

companies

which are not

listed or traded

over the

counter $ - $ - $ 262 $ 262

There were no transfers between Level 1 and Level 2 fair

value measurements in fiscal 2020 and 2019.

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

measurements

Category of financial

instruments Valuation technique and input value

- 341 -

Investment in the stocks of

domestic companies

which are not listed or

traded over the counter

Price-to-book ratio method: The net book

value per share can be calculated

based on the financial information of

the Company, and the current value of

gain or loss from holding an item of

investment can thus be calculated.

- 342 -

(2) Types of financial instruments

Dec. 31, 2020 Dec. 31, 2019

Financial assets

Financial assets measured at

amortized cost

Cash and cash equivalents $ 164,816 $ 238,566

Financial assets measured

at amortized cost -

current 56,199 46,888

Notes receivable, net 13,804 14,519

Net value of accounts

receivable 226,984 226,806

Accounts receivable－Related parties, net 4,201 3,419

Other receivables 2,257 2,836

Other receivables－related

parties 5 5

Financial assets measured at fair

value through other



instruments 262 -

Financial liabilities

Measured at amortized cost

Short-term loans 344,442 346,140

Accounts payable 70,200 91,510

Other payables 107,290 113,451

(3) Purpose and policy of financial risk management

The Consolidated Company is committed to ensuring that the

Company has adequate and cost effective working capital for its

operations. The Consolidated Company carefully manages market risk

(including foreign currency exchange rate risk, interest rate risk and

other price risk), credit risk and l iquidity risk associated with its

operating activities to reduce the potentia l adverse effects of market

uncertainties on the Company's finances.

1. Market risk management

(1) Exchange rate risk

The Consolidated Company mainly focuses on the

domestic market, and all foreign sales and purchase

transactions are quoted in foreign currencies. The

Consolidated Company adopts the natural hedging method of

- 343 -

offsetting foreign currency receipts and expenditures, and the

net foreign currency portion is relatively small .

Please refer to Note XXIX for the Carrying amount of

foreign-currency-denominated monetary assets and monetary

liabilities of the Consolidated Company as of the balance

sheet date.

The sensit ivity analysis of the foreign currency

exchange rate risk is based on foreign currency monetary

items as of the end of the financi al reporting period. If the

New Taiwan dollar depreciates/strengthens by 5% against the

U.S. dollar, the Consolidated Company's net income before

tax would decrease by $4,383 thousands and $3,858

thousands for the years ended December 31, 2020 and 2019,

respectively.

(2) Interest rate risk

The Consolidated Company continues to reduce the level

of borrowings from financial institutions and the

Consolidated Company's management believes that

fluctuations in borrowing rates will have little impact on the

Consolidated Company.

(3) Other price risk

The price risk of the Consolidated Company’s equity

came from the investment of financial assets measured at fair

value through other comprehensive income (mainly invested

in the stocks of domestic companies which are not l isted or

traded over the counter).

Sensitivity Analysis

The following sensitivity analysis is based on the equity

price risk at the balance sheet date.

If the equity price increases/decreases by 0.5%, other

comprehensive income will increase/decrease by $1 thousand

from Jan. 1, 2020 to Dec. 31, 2020 due to the change in fair

value of financial assets measured at fair value through other

gains or losses.

- 344 -

2. Credit risk

Credit risk represents the risk of financial loss to the Group

due to default on contractual obligations by the counter -parties.

As of the balance sheet date, the Consolidated Company's

maximum exposure to credit risk due to non -performance of

counter-parties ' obligations is the carrying value of financial

assets recognized in the Consolidated Statement of Financial

Position. As of the balance sheet date, the Consolidated

Company's maximum exposure to credit risk arising from the

counter-party's failure to meet its obligations is the carrying value

of financial assets recognized in the Consolidated Statement of

Financial Position.

To mitigate credit risk and maintain the quality of Accounts

receivable, the Consolidated Company has established

operating-related credit risk management procedures, and the

Consolidated Company also uses certain credit enhancement tools,

such as payment for goods collected in advance and the

acquisition of security deposits, at appropriate times to reduce

customers ' credit risk. The Consolidated Company also uses

certain credit enhancement tools, such as payment for goods

collected in advance and margin acquisit ion, at appropriate times

to reduce customers ' credit risk. In addition, the Consolidated

Company reviews the recoverable amounts of receivables on a

case-by-case basis at the balance sheet date to ensure that

appropriate impairment losses have been recorded for

uncollectible receivables.

- 345 -

In 2020 and 2019, except for Company A, the Consolidated

Company's concentration of credit risk to other customers does not

exceed 10% of the total Accounts receivable, and these companies

have a long history and good repayment status, so the

Consolidated Company's related credit risk is not significant.

The credit risk is limited because the counter -parties of

liquidity are financial institutions with good credit ratings, and

therefore no significant credit risk is expected.

3. Liquidity risk

The Consolidated Company copes with the operation and

reduces the influence of cash flow fluctuations through the

management and maintenance of sufficient amount of cash and

cash equivalents. The management of the Consolidated Company

monitors the use of banking facilities and ensures compliance with

the terms of borrowing contracts. The Consolidated Company is

able to meet its contractual obligations by mai ntaining appropriate

capital and banking facilities. The Consolidated Company's

working capital is sufficient to meet its obligations, and therefore

there is no liquidity risk that the Consolidated Company will not

be able to raise funds to meet its contra ctual obligations.

The unused funds of the credit agreements from the bank

until December 31, 2020 and 2019 respectively are $725,189

thousands and $758,412 thousands.

The following table is based on the earliest possible period

for which the Consolidated Company may be required to make

repayments and is prepared using undiscounted cash flows of

financial liabilities, which include cash flows of interest and

principal. The Consolidated Company's working capital is

sufficient to meet the demand.

Dec. 31, 2020

Less than 1


More than 3

years Total

Non-derivative

financial

liabilities

Short-term loans $ 344,442 $ - $ - $ - $ 344,442


- 346 -

Other payables 107,290 - - - 107,290

Current income tax

liabilities

51,373 - - - 51,373

Lease liabilities -

current

12,919 - - - 12,919

Other current

liabilities－other

8,404 - - - 8,404

Lease liabilities -

non-current

- 15,641 13,377 72,117 101,135

Dec. 31, 2019

Less than 1


More than 3

years Total

Non-derivative

financial

liabilities

Short-term loans $ 346,140 $ - $ - $ - $ 346,140


Other payables 113,451 - - - 113,451

Current income tax

liabilities

16,409 - - - 16,409

Lease liabilities -

current

14,915 - - - 14,915

Other current

liabilities－other

3,451 - - - 3,451

Lease liabilities -

non-current

- 11,618 14,171 88,595 114,384

XXVI. Related party transaction

The transactions, balances in accounts, income and expenses

between the Company and the subsidiary (a related party of the Company)

were all written off at the time of the merger, so they were not disclosed

in the Notes. The transactions between the Consolidated Company and

related parties (aside from those revealed in notes) are listed below:

(1) Names of related parties and their relationships

Name of related party Relationship with the Company

Chia-Ta-Hang Co., Ltd. Substantive related party－The

chairperson of that company was the

spouse of a relative of the chairperson

of the Company within second degree

of kinship

(2) Operating income

Accounting item Type of related party 2020 2019

Sales revenue Substantive related party

Chia-Ta-Hang Co.,

Ltd.

$ 43,655 $ 36,330

There was no material difference between the terms of transaction

for the purchase and sale transactions between the Consolidated

Company and related parties and those for other non -related parties.

- 347 -

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

parties)

Accounting item

Type of related

party/Name Dec. 31, 2020 Dec. 31, 2019

Accounts

receivable －Related parties


Chia-Ta-Hang Co.,

Ltd.

$ 4,201 $ 3,419

(4) Other accounts receivable from related parties

Accounting item

Type of related

party/Name Dec. 31, 2020 Dec. 31, 2019

Other receivables Substantive related party

Chia-Ta-Hang Co.,

Ltd.

$ 5 $ 5

(5) Compensation of key management personnel

2020 2019

Short-term employee benefits $ 24,138 $ 21,923

Benefits after retirement 408 399

$ 24,546 $ 22,322

The remuneration of directors and other key management

personnel is determined by the Compensation Committee based on

individual performance and market trends.

XXVII. Pledged assets

(1) The following assets have been provided as collateral to secure loans or

lines of credit with banks:

Dec. 31, 2020 Dec. 31, 2019


－land

$ 61,652 $ 61,652


－buildings

35,728 36,622

$ 97,380 $ 98,274

(2) As of Dec. 31, 2020 and 2019, in addition to the collaterals mentioned

above, Vietnam Caesar Sanitary Wares Joint Stock Company provided

to Bank of Vietnam as collaterals with the Bank's borrowings with a

credit guarantee value of US$0 thousand and US$450 thousands,

- 348 -

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

and US$1,050 thousand.

XXVIII. Material contingent liabilities and unrecognized contractual

commitments

In addition to those described in other notes, the Consolidated

Company had the following significant commitments and contingencies as

of the balance sheet date:

(1) As of Dec. 31, 2020, the Consolidated Company's Vietnam Caesar

Sanitary Wares Joint Stock Company had entered into contracts with

various manufacturers for the purchase of machinery and equipment or

construction work and related taxes for a total amount of $39,972,806

thousands, of which $38,674,656 thousands (equivalent to $46,428

thousands) had been paid in VND, which was listed under Prepayments

for business facilities and Construction in progress, depending on their

nature.

(2) As of Dec. 31, 2020, the Consolidated Company had entered into

construction contracts with various manufacturers for a total amount of

NT$9,481 thousands, and the price paid was NT$6,636 thousa nds,

which was recognized under Construction in progress.

(3) As of Dec. 31, 2020 and 2019, the Consolidated Company had unused

letters of credit amounting to US$0 thousand and US$414 thousands,

respectively.

(4) As of Dec. 31, 2020 and 2019, the Consoli dated Company's guarantee

for the financing loans of Vietnam Caesar Sanitary Wares Joint Stock

Company amounted to NT$142,400 thousands (US$5,000 thousands)

and NT$194,870 thousands (US$1,870 thousands), respectively.

(US$6,500,000).

- 349 -

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

significant influence

The following information is presented in the aggregate in foreign

currencies other than the functional currency of each of the consolidated

companies, and the exchange rates disclosed r epresent the rates at which

these foreign currencies were translated into the functional currency.

Assets and liabilities denominated in foreign currencies that have a

significant effect are as follows.

Dec. 31, 2020 Dec. 31, 2019

Foreign

currency

Exchange

rate NT$ Foreign

currency Exchange

rate NT$

Assets in

foreign

currencies

Monetary items

USD $ 1,533 28.48 $ 43,672 $ 1,383 29.980 $ 41,455

RMB 10 4.37 44 - - -

Liabilities in

foreign

currencies

Monetary items

USD 4,611 28.48 131,326 3,956 29.980 118,611

XXX. Others

The Consolidated Company was affected by the global pandemic of

novel coronavirus pneumonia, but the impact was relatively insignificant

because the epidemic was well controlled in Taiwan. As of Dec. 31, 2020,

the cumulative consolidated operating revenue decreased by

approximately 1.2% compared to the same period last year, indicating

that the epidemic did not have a serious impact on the Consolidated

Company's operations. Although the recent epidemic in Europe and the

United States is on the rise, the Consolidated Company's operating

revenue is concentrated in Taiwan and Vietnam, and is not expected to be

significantly affected.

The Consolidated Company has maintained normal working capital ,

salaries, interest, rent and other expenses, and has not applied to the

government for relief.

- 350 -

XXXI. Disclosures

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

1. Lending to others: None.

2. Endorsement for other parties: Schedule 1.

3. Marketable securities held at the end o f the period (excluding

investments in subsidiaries, associates and joint ventures): None.

4. The cumulative amount of securities purchased or sold reaches

NT$300 million or 20% of the paid -in capital: None.

5. Acquisition of real estate amounting to at least NT$300 million or


6. Disposal of real estate amounting to at least NT$300 million or


7. The amount of purchase or sale of goods with related parties

reaches NT$100 mill ion or 20% o f the paid-in capital: (Schedule

2)

8. Related party receivables amounting to at least NT$100 million or


9. Engage in derivative transactions: None.

10. Other: the business relationships among the parent company and

subsidiaries and the significant amounts and conditions of

transaction: (Schedule 3).

11. Information of investee companies: (Schedule 4).

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

(IV) Information of Major Shareholders : The names of shareholders who

held more than 5% of the Company’s shares and the number of shares

held by them and the ratio to all the outstanding shares: ( Schedule 5).

XXXII. Department details

The Consolidated Company is an independent operating segment that

provides information to the decision maker for the purpose of allocating

resources and evaluating segment performance, with emphasis on each

type of product or service delivered or provided. The reportable segments

of the Consolidated Company are as follows.

Financial information by region

- 351 -

The Consolidated Company's business units are divided into two

reportable segments: the Taiwan Sanitary Equipment segment and the

Vietnam Sanitary Equipment segment, which are mainly engaged in the

design, manufacturing and trading of sanitary equipment and copper

water supply products, but the two reportable segments are treated

separately because they have their own independent strategies.

- 352 -

The Consolidated Company does not allocate income tax expense

(benefit) or extraordinary gain or loss to reportable segments. In addition,

not all reportable segments include significant non -cash i tems other than

depreciation and amortization.

The accounting policies of each operating segment are the same as

the summary of significant accoun ting policies described in Note IV. The

Consolidated Company's operating profit and loss in the sector is

measured on a pre-tax basis (excluding extraordinary gain or loss) and is

used as the basis for evaluating performance.

The Consolidated Company considers intersegment sales and

transfers as transactions with third parties, which are measured at the

current market.

Financial information of the Consolidated Company by region is as

follows.

Segment of

Sanitary Wares

in Taiwan

Segment of

Sanitary Wares

in Foreign

Countries

Adjustment

and Write-off Total

2020

Revenue

Revenue from external

customers $ 1,456,489 $ 850,032 $ - $ 2,306,521

Revenue from other

segments 14,907 402,339 ( 417,246 ) -

Total revenue $ 1,471,396 $ 1,252,371 ( $ 417,246 ) $ 2,306,521

Profit and loss in the sector $ 276,989 $ 75,796 ( $ 63,210 ) $ 289,575

Total assets of the segment $ 2,320,902 $ 1,517,729 ( $ 1,289,618 ) $ 2,549,013

Total liabilities of the

segment $ 592,162 $ 275,743 ( $ 34,419 ) $ 833,486

2019

Revenue

Revenue from external

customers $ 1,284,658 $ 1,050,268 $ - $ 2,334,926

Revenue from other

segments 15,525 408,381 ( 423,906 ) -

Total revenue $ 1,300,183 $ 1,458,649 ( $ 423,906 ) $ 2,334,926

Profit and loss in the sector $ 231,275 $ 83,619 ( $ 69,351 ) $ 245,543

Total assets of the segment $ 2,346,230 $ 1,562,509 ( $ 1,380,734 ) $ 2,528,005

Total liabilities of the

segment $ 652,984 $ 209,797 ( $ 28,033 ) $ 834,748

- 353 -


Endorsement for Other Parties



No. Name of the

endorser/guarantor

Guaranteed party Limits on

endorsement/guar

antee amount

provided to each

guaranteed party

Maximum

balance for the

period Ending balance

Amount actually

drawn

Amount of

endorsement/guar

antee

collateralized by

properties

Ratio of

accumulated

endorsement/gu

arantee to net

equity per latest

financial

statements (%)

Maximum

endorsement/guar

antee amount

allowable

Guarantee

provided

by parent

company

Guarantee

provided

by a

subsidiary

Guarantee

provided

to entities

in

Mainland

China

Remark Company Name Relationships

1 Sanitar Co., Ltd. Vietnam Caesar Sanitary

Wares Joint Stock

Company

Investment

accounted for using

the equity method

$ 340,563 $ 196,625 $ 142,400 $ 59,680 $ - 8.36 $ 681,126 Y N N (Note)

Note: The endorsement/guarantee l imit is based on the endorsement/guarantee procedures approved by the shareholders ' meeting and s t ipulated by the Bureau of Securit ies and Futures of the Financial

Supervisory Commission, Executive Yuan on December 18, 2002, by Order no.(91) -Tai-tsai -zhen-(6)-0910161919. The total amount of the Company's endorsement and guarantee shall not exceed 40%

of the Company's net worth and the amount of endorsement and guarantee for subsidiaries direc tly holding more than 50% of the common stock shall not exceed 20% of the Company's net worth for the

period.

- 354 -


Marketable Securities Held at the End of Period

Dec. 31, 2020


Holding Company Type and Name of Marketable

Securities

Relationship with the

issuer of the marketable

securities Financial statement account

End of the period

Remark Number of shares Carrying amount

Shareholding

percentage Fair value

Sanitar Co., Ltd. Stock

Amsalp Biomedical Corporation - Non-current financial assets

measured at the fair value

through other comprehensive

income

154,700 $ 262 18.20% $ 262 －

- 355 -


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



Company name Transaction

counterparty Relationships

Transaction Situation and reason of why trading

conditions are different from general

trading

Notes/ accounts receivable or

payable

Remark Purchases

(Sales) Amount

Ratio to total

purchases/sales

amount (%) Loan period Unit Price Loan period Balance

Ratio to total

amount of

notes/accounts

receivable or

payable (%)

Sanitar Co., Ltd. Vietnam Caesar

Sanitary Wares Joint

Stock Company

Investment

accounted for

using the equity

method

Purchase $ 402,339 39% Vietnam Caesar

Sanitary

Wares Joint

Stock

Company

should pay

within 30 days

after the

delivery, but

this can be

adjusted

regarding the

demand for

funds.

Discussed by

both parties in

the transaction

with reference

to the market

price and

gross profit of

products

Vietnam Caesar

Sanitary

Wares Joint

Stock

Company

should pay

within 30 days

after the

delivery, but

this can be

adjusted

regarding the

demand for

funds.

Accounts

payable

$ -

-

Note

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

- 356 -


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



No.

(Note 1) Name of the Trader

Name of the transaction

counterparty

Relationship with

the Trader

(Note 2)

Conditions of Transactions

Accounting Item Amount Terms of Transaction

Ratio to the total

consolidated

operating revenue

or the total

consolidated assets

(Note 3)

0 Sanitar Co., Ltd. Vietnam Caesar Sanitary Wares

Joint Stock Company

1 Other operating revenue $ 14,907 The payment will be collected within 2

months after the end of each quarter.

However, this can be adjusted according

to the demand for funds.

-

1 Accounts receivable －Related parties

4,172 － -

1 Other receivables－related

parties

30,246 － 1%

1 Purchase 402,339 The prices of goods purchased by Sanitar

Co., Ltd. from Vietnam Caesar Sanitary

Wares Joint Stock Company were

discussed by both parties in the

transaction with reference to the market

price and gross profit of products. The

payment shall be made within 30 days

after the delivery, and this can be

adjusted according to the demand for

funds.

17%

Note 1: Information on business transactions between the parent company and subsidiaries should be indicated in the numbered column respectively, and the number should be filled in as follows. (1) Enter 0 for the parent company. (2) Subsidiaries are numbered in order by company, starting from the Arabic numeral 1. Note 2: Relationship with the Trader has the following three types, just label the type. (1) Parent company to subsidiary company. (2) Subsidiary to parent company. (3) Subsidiary to Subsidiary Note 3: The calculation of the ratio of transaction amount to consolidated total revenue or total assets is calculated as Ending balance to consolidated total assets in the case of assets and liabilities, or as cumulative amount to consolidated total revenue in the case of profit and loss. Note 4: Significant Conditions of Transactions in this table may be presented at the Company's discretion based on the principle of materiality.

- 357 -

Sanitar Co., Ltd.

Name, Location, and Other Related Information of Investees




Company

Name of the Investee

Company Location Main businesses

Original investment amount Shares held as of the end of the period

Net income (loss)

of the investee

Gain (loss) on

investment

recognized in

the period

Remark End of the

period

End of last

period

Number of

shares (1,000

shares)

Ratio (%)

(Note 3) Carrying amount


Wares Joint Stock

Company

Vietnam Manufacturing and

sale of sanitary

equipment and

water supply

equipment

$ 665,303 $ 665,303 41,878 100 $ 1,225,499 $ 63,253 $ 58,988 Note 1, 2

and 3

Sanitar Co., Ltd. Kai Sheng Sanitary Ware

Co., Ltd.

Taiwan Sale of sanitary

equipment and

water supply

equipment

13,260 - 1,326 51 13,221 ( 76 ) ( 39 ) Note 2

Note 1: The difference between the comprehensive income of Vietnam Caesar Sanitary Wares Joint Stock Company and the gain on investment recognized by Sanitar Co., Ltd. was the

net change of the unrealized gains or losses from upstream sale, which was NT$4,264,000.

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

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

- 358 -


Information of Major Shareholders

Dec. 31, 2020

Schedule 6

Name of Major Shareholder

Shares

Number of shares

held by the person

Shareholding

percentage

XIAO, JUN-XIANG 5,013,581 6.90%

Information of Major Shareholders is calculated based on the last business day of

the quarter in which the shareholders hold 5% or more of the Company's

common shares and preferred shares that have been delivered without

physical registration (including Treasury shares). The number of shares in

the consolidated financial statements may differ from the actual number

of shares delivered due to different bases of computation.

The above information is revealed by the trustee's opening of a trust account with

individual subaccounts of the principal if the shareholder has delivered

the shares to the trust. As for the shareholder 's shareholding of more than

10% of insider shares reported under the Securities and Exchange Act, the

shareholding includes the shareholding of the shareholder himself/herself

plus the shareholding of the shareholder delivered to the trust and has the

right to decide the use of the trust property, etc. Plea se refer to the Market

Observation Post System for the information on insider shareholding

reporting.

- 359 -

- 360 -

- 361 -

5. Parent company only financial statements audited by CPAs for the most recent year

Please post the accountant's personal financial report (pages 151 to 220)

Total 70 pages

- 362 -

(6) If the Company and its associates have experienced financial difficulties in the most

recent year and by the print date of the annual report, the impact on the financial

position of the Company shall be specified

The Company and its affiliates have not experienced any financial difficulties

in the most recent year or as of the date of the annual report.

- 363 -

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

1. Financial Conditions

The main reasons for the significant changes in assets, liabilities and equity in

the last two years and their effects.

Unit: NT$ thousands

Annual

Project 2019 2020

Amount of

increase

(decrease)

Change ratio

(%)

Current assets 1,075,425 1,173,183 97,758 9.09

Property, plant and

equipment 1,189,276 1,096,721 -92,555 -7.78

Intangible assets 6,634 5,474 -1,160 -17.49

Other Assets 256,670 273,635 16,965 6.61

Total Assets 2,528,005 2,549,013 21,008 0.83

Current liabilities 594,590 600,040 5,450 0.92

Non-current

liabilities 240,158 233,446 -6,712 -2.79

Total liabilities 834,748 833,486 -1,262 -0.15

Equity attributable

to owners of the

parent company

1,693,246 1,702,815 9,569 0.57

Share Capital 726,000 726,000 0 0

Capital Fund 277,452 277,452 0 0

Retention

Surplus 855,824 952,496 96,672 11.30

Other interests (166,030) (237,459) -71,429 -43.02

Treasury Stocks 0 (15,674) (15,674) 0

Non-controlling

interests 11 12,712 12,701 115,463.64

Total equity 1,693,257 1,715,527 22,270 1.32

Change of 20% or more in the last two years due to

1. Other changes in equity were mainly due to the translation differences arising from

the translation of the financial statements of foreign operating companies.

2. The change in noncontrolling interest was mainly due to the investment in 51% shares

of Kaisheng Bath Co.

- 364 -

2. Financial Performance

(1) Reasons for significant changes in operating income, net operating income and

net income before income tax for the last two years

Unit: NT$ thousands

Annual

Project 2019 2020

Amount of

increase

(decrease)

Change ratio

(%)

Operating income 2,334,926 2,306,521 -28,405 -1.22

Operating Costs 1,633,243 1,572,353 -60,890 -3.73

Gross Profit 701,683 734,168 32,485 4.63

Operating Expenses 455,180 444,491 -10,689 -2.35

Other gains and

losses, net 210 (631) (841) -400.48

Operating profit or

loss 246,713 289,046 42,333 17.16

Non-operating

income and expenses (1,170) 529 1,699 -145.21

Net income before

tax 245,543 289,575 44,032 17.93

Net income (loss) for

the period 179,852 220,056 40,204 22.35

Other

comprehensive

income or loss for the

period

(Net after tax)

(19,355) (71,431) -52,076 269.06

Total consolidated

profit or loss for the

period

160,497 148,625 -11,872 -7.40

Change of 20% or more in the last two years due to

1. The change in other gains and losses, net was mainly due to the increase in

compensation losses.

2. The changes in non-operating income and expenses were mainly due to the back

taxes paid by the Vietnam subsidiary in 2008, but not in 2009.

3. The change in net income for the period was mainly due to the increase in profit.

4. The change in other comprehensive income for the period was mainly due to the

exchange differences arising from the translation of the financial statements of foreign

operating companies.

(2) Expected sales volume and its basis

- 365 -

For the year ended December 31, 2020, the Company did not disclose its

financial forecast to the public.

(3) Possible impact on the Company's future financial operations and plans for

response

Not applicable.

3. Analysis of Cash flow

(1) Analysis of recent annual cash flow changes

Unit: NT$ thousands

(2) Improvement plan for lack of mobility

There is no cash flow shortage.

(3) Cash flow analysis for the coming year

Unit: NT$ thousands

Opening

Cash

Balance

Net cash

flow from

operating

activities for

the year

Net cash

flow from

investing

and

financing

activities for

the year

Effect of

exchange

rate

changes

Excess

(shortfall)

of cash

Remedies for cash

shortage

Investment

Plan

Financial

Plan

238,566 170,612 (205,921) (38,441)

164,816 Not

applicable

Not

applicable

Operating activities: Cash inflows from operating income.

Investing activities: The net cash outflow of $62,121 thousand was mainly due to the

acquisition of property, plant and equipment.

Financing activities: The net cash outflow of $143,800 was mainly due to the payment of

cash dividends and treasury stock buyback costs.

Opening

Cash

Balance

Estimated

full-year net cash

flows from

operating

activities

Expected

full-year net

cash flow

from

investing and

financing

activities

Estimated

remaining

(shortfall)

cash amount

Remedies for cash

shortage

Investment

Plan

Financial

Plan

164,816 179,143 (200,501) 143,458 Not

applicable

Not

applicable

Operating activities: The estimated operating income for 2021 plus depreciation and

amortization expenses.

Investing activities: Mainly capital expenditures for 2021 are estimated.

- 366 -

4. The Impact of Major Capital Expenditures on Financial Operations

(1) Use of significant capital expenditures and sources of funds

Unit: NT$ thousands

Project Funding Sources Amount of expenses

Purchase of property,

plant and equipment

Working Capital 38,484

(2) Expected benefits (such as product quality, pollution prevention, cost

reduction, etc.)

Expanding the manufacturing capacity of Vietnam plant to increase

porcelain and water production revenue and increase the competitiveness of

domestic, Vietnam and Southeast Asia markets.

5. Investment Policy in the Most Recent Year, Main Causes for Profits or Losses,

Improvement Plans and Investment Plans for the Coming Year

(1) Latest Annual Reinvestment Policy

The Company's reinvestment policy is based on factors such as expansion

of operating scale and reduction of production costs, and seeks appropriate

targets for reinvestment. In addition to consolidating the existing core business,

the Company expects to explore business opportunities in peripheral markets

and enhance profitability.

(2) The main reasons for profit or loss from investment in the most recent year,

and improvement plans

Unit: NT$ thousands

Transfer

Investment

Company

End of

period

original

Investment

amount

Held at

the end

of the

period

Carrying

amount

Investment

income

(loss)

recognized

in the

period

Main reasons for

gain or loss

Improvement

Plan

Vietnam

Caesar

Bath

Joint Stock

Company

Limited

665,303 1,225,499 58,988

It is one of the top

three local bathroom

brands in Vietnam.

We have made

profits in the last

three years.

None

Kaisheng

Sanitary 13,260 13,221 (39)

A new subsidiary

was established in None

Financing activities: The estimated cash dividends and repayment of short-term loans.

- 367 -

Co., Ltd. December 109 and

began operations in

January 2021.

(3) Investment plan for the coming year

The Company has no significant investment plans for the coming year.

- 368 -

6. Analysis and Assessment of Risks

(1) Effect of interest rate, exchange rate and inflation on the Company's profit and

loss and future measures

1. Effect on the Company's profit or loss

Unit: NT$ thousands

Annual

Project

2019 2020

Amount

Ratio of net

income before

tax (%)

Amount

Ratio of net

income before

tax (%)

Interest income 4,654 1.90 4,779 1.65%

Interest expense 8,067 3.29 8,125 2.81%

Foreign currency

exchange (gain) or

loss

2,035 0.83 1,740 0.60%

2. Future Measures

(1) Interest Rate Change

The Company's working capital is still sufficient and its

dependence on finance is relatively low, and market interest rates have

been hovering at a low level in recent years. The Company's finance

department will pay close attention to changes in interest rates and

maintain good credit relationships with banks to actively seek the best

interest rates and reduce the impact of interest rate changes on the

Company's profit and loss.

(2) Exchange rate changes

The Company's foreign exchange policy is based on the principle of

conservatism and prudence, and foreign sales and purchases are quoted

in foreign currencies, so that foreign currency revenues and expenses

are offset to produce a natural hedging effect. The Company's finance

department will pay close attention to the changes in foreign exchange

rates and adjust the level of foreign exchange holdings and the timing of

conversion in order to reduce the impact of exchange rate changes on

the Company's profit and loss.

(3) Inflation

In order to reduce this risk, the Company adopts a strategy of

decentralizing its purchases to obtain relatively lower costs, and adjusts

its selling prices in a timely manner to maintain stable profits. In

addition, the Company actively strengthens its corporate management

by improving production efficiency, personnel quality and inventory

management in order to reduce the impact of inflation on its operations.

(2) The policy of engaging in high-risk, highly leveraged investments, lending of

- 369 -

funds to others, endorsement and guarantee, and derivative transactions, the

main reasons for profit or loss, and future measures to address them

1. Engaged in high-risk, high-leverage investments

For the most recent year and as of the date of the annual report, the

Company has not engaged in high-risk, highly leveraged investments.

2. Lending of funds to others

The Company follows the Company's "Procedures for Lending Funds to

Others" and the Board of Directors' approval is required before the

Company can lend funds to others. For the most recent year and as of the

printing date of the annual report, the Company has not loaned any funds to

others.

3. Endorsement Guarantee

The Company follows the "Procedures for Endorsements and

Guarantees" and the Board of Directors' approval before the endorsement

and guarantee are made. For the most recent year and as of the date of the

annual report, the Company's endorsement/guarantee recipients are all

subsidiaries.

4. Derivative Commodity Trading

The Company enters into derivative transactions in accordance with the

Company's "Procedures for Handling Derivative Transactions", and the

authorized amount is approved by the president or the board of directors

before the transaction is made. The Company has not engaged in any

derivative transactions in the latest year and up to the date of the annual

report.

(3) Future research and development plans and estimated investment in research

and development

In response to the environmental protection policy and the use of water

resources, our company focuses on the development and design of the water

circuit, and constantly revises and adjusts our products to meet not only the

general water label, but also the gold level water label. In terms of consumer

health, we have been developing lead-free copper and stainless steel faucets

and shower de-chlorinators, as well as de-chlorinating showerheads to reduce

the health hazards of toxic substances (lead and chlorine) to consumers and to

contribute to the water safety of the nation. In addition, the development of

differentiated technologies is also the focus of our company, such as the

integration and application of ozone technology, the research and development

of micro bubble shower technology, and the development of electric

automation and intelligent technology-related product categories.

On the factory side, we have introduced the automatic production process

- 370 -

and continue to increase the proportion of mechanical mold production to

reduce the labor-intensive reliance on manual molds; and the development of

high pressure grouting molds is gradually entering the harvesting period.

Since March 2017, the Vietnam factory has gradually introduced the

production history, which is under continuous testing and improvement,

linking the front-end production line, quality control, logistics, and even

maintenance and after-sales service information together to provide real-time

management information and strengthen the quality and service management.

As a result of the above, the estimated investment in R&D in 2021 is

approximately NT$13,262,000.

1. In the past, porcelain products had to be prototyped, manually reshaped,

tested for mass production, and then tested in water before they could be

marketed. However, with the introduction of the latest 3D light-curing resin

molding technology, from 3D appearance and correction to printing and

molding, water testing can be conducted directly, significantly reducing the

product development time and shortening the time required for introduction

to market. The time required to bring the product to market is greatly

reduced.

2. With the production of the bath cabinet factory, we have introduced

automatic production lines and advanced panel processing machines to

prepare for the subsequent development of new series and diversified bath

cabinet styles, cabinet system development, and whole house customization,

and we have also developed and introduced the latest pressed pop-up and

cushioned thin drawer hardware to enhance the product power of cabinet

and bath cabinet products.

3. We will continue to refine our porcelain high pressure grouting technology

and strengthen the capability of high pressure grouting technology, which

will not only greatly increase the production speed, but also effectively

improve the production yield and capacity, and will give priority to this

high pressure grouting technology for products with high market demand

and easy to apply porcelain structure.

4. Porcelain injection molding technology and related machine purchase,

continue to refine the mold design and production capacity, reduce the

number of pieces of mold, increase production efficiency and reduce the

labor and error rate of workers, effectively improve product yields, the

current porcelain plant two semi-automatic injection molding machine has

been built, continue to refine and improve the new product mold design, the

number of pieces of mold to reduce the design and production capacity.

5. We continue to introduce robotic glazing arms, introducing the world's

advanced intelligent robotic glazing arms, which can simulate the glazing

- 371 -

master's glazing gestures and speed to achieve the realm of robotic glazing,

significantly improving production speed and quality stability. We continue

to optimize and optimize the path design to reduce production hours and

glaze consumption, increase production capacity and save costs.

6. The barcode management system will be introduced in the porcelain factory

as a priority, so that the detailed information of the entire production process,

from sizing to firing, can be recorded to facilitate product quality control and

statistical yield of each production line, and can be used for big data analysis

in the future. In the future, it can be applied to the analysis of big data to

strengthen the product development energy, and the production history

management was officially launched in 2018 to analyze and continuously

improve the process based on the feedback collected.

(4) The impact of significant domestic and international policy and legal changes

on the Company's financial operations and measures to address them

The Company operates in compliance with the relevant domestic and

foreign laws and regulations, and keeps an eye on important domestic and

foreign policies and legal changes to assess their impact on the Company and

provide management with the necessary information for relevant decisions.

The Vietnamese government increases the basic wage every year, resulting in

an increase in operating costs. The Company continues to carry out

automation and machinery improvements to maintain gross profit and to

negotiate with customers on the pass-through mechanism. There were no

material adverse effects on the Company's financial operations due to

significant domestic and foreign policy and legal changes in the most recent

year and up to the date of printing of the annual report.

(5) Impact of technological changes and industry changes on the Company's

financial operations and measures to address them

The Company has a research and development department, which

specializes in tracking and analyzing industry dynamics, research and

innovation of technology. Therefore, at this stage, the Company's financial

business has not been significantly affected by technological changes and

industry changes. However, the Company has assessed that the bathroom

industry has been moving towards the trend of green energy, technology,

environmental protection and health.

(6) Impact of corporate image change on corporate crisis management and

response measures

Our company is committed to provide excellent products and services,

"good quality but better, fast service but faster" is our constant goal. In recent

years, we have continued to cultivate the Taiwan market with a steady pace,

and we have returned our business results to all shareholders, employees and

- 372 -

the public, fulfilling our corporate social responsibility. In the recent year and

as of the printing date of the annual report, no corporate crisis has occurred

due to the change of corporate image.

(7) Expected benefits, possible risks and responses to the merger and acquisition


Company has no plans for mergers and acquisitions, and will carefully

evaluate the benefits and risks of such plans, if any, in the future.

(8) Expected benefits, possible risks and measures for plant expansion

The Company has no plans to expand its plants in the latest year and as of

the date of the annual report. If there are any such plans in the future, the

benefits and risks will be carefully evaluated.

(9) Risks associated with the concentration of inbound and outbound shipments

and measures to address them

The Company has no suppliers accounting for more than 10% of the total

sales, and each product has more than two sources of purchase, so there is no

risk of concentration of sales. There is no concern of excessive concentration.

We have the trademark right of "Caesar Bath" brand, so we can select the

best customers for purchase or sale at any time to avoid the risk of

concentrated purchase or sale.

(10) The impact, risk and response measures of a substantial shift or change in

shareholding of directors, supervisors or substantial shareholders holding

more than 10% of the shares of the Company

For the most recent year and as of the date of the annual report, there has

been no significant transfer or change of ownership of the Company's directors,

supervisors or substantial shareholders holding more than 10% of the shares.

(11) Impact of the change in management rights on the Company, risks and

measures

For the most recent year and as of the date of the annual report, there

has been no change in the Company's management rights.

(12) For litigation or non-litigation events, the Company and its directors,

supervisors, general manager, persons in charge, substantial shareholders

holding more than 10% of the shares, and affiliated companies should

disclose the material litigation, non-litigation or administrative dispute that

has been determined or is still in progress, and the outcome of which may

have a significant impact on shareholders' equity or securities prices, the

facts of the dispute, the amount of the subject matter, the commencement

date of the litigation, the principal parties involved and the The Company

shall disclose the facts of the dispute, the amount of the subject matter, the

commencement date of the litigation, the principal parties involved and the

- 373 -

status of the litigation as of the date of the annual report.


Company has not been involved in litigation or non-litigation matters.

(13) Other important risks and countermeasures

None.

7. Other Important Matters

None.

- 374 -

VIII. Special Disclosure

1. Information of the Associates

(1) Organizational Chart of Affiliated Companies (December 31, 2020)

Note: The above affiliates do not hold shares of the Company.

(2) Basic information of each affiliated company

Unit: NT$ thousands

Company

Name

Date of

Establishment Address

Paid-in

capital

Main business or

production items

Vietnam

Caesar

Sanitary

Wares Joint

Stock Co.

March 20, 1996

Inchai Industrial

Zone, Inchai

District, Dong

Nai Province,

Vietnam

663,230

Manufacture and

sale of bathroom

equipment and

water supply

brassware

Kaisheng

Sanitary Co.,

Ltd.

December 2,

2020

No. 258, Chung

Hsing 5th Street,

Lu Chu District,

Taoyuan City

26,000

Sales of bathroom

equipment and

copper water supply

(3) Information on the same shareholders who are presumed to be in a controlling

or subordinate relationship

No such case.

(4) The industries covered by the business of the overall affiliated company

The main contents of the company's business.

1. Ceramics and ceramic products manufacturing industry

2. Ceramic glassware wholesale industry

3. Kitchen, bathroom equipment installation engineering industry

4. Waterware material wholesale industry

5. Wholesale of furniture, bedding, kitchen appliances, and furnishings

6. Retailing of furniture, bedding, kitchenware and furnishings

7. Building Materials Retail

8. Copper rolling, wire drawing and extrusion industry

9. Building materials wholesale industry

51.00% 99.99%

Sanitar Co., Ltd.

Vietnam Caesar Sanitary Wares Joint Stock Co. Kaisheng Sanitary Co., Ltd.

- 375 -

(5) The names of the directors, supervisors and general managers of each related

company and their shareholdings or capital contributions to the company

December 31, 2020

Company Name Job Title Name or

representative

Shareholding

Number of shares

Shareholding ratio

Vietnam Caesar Sanitary Wares Joint Stock Co.

Chairperson

Caesar Bath &

Shower (Stock) Co.

Representative:

HSIAO,

CHUN-HSIANG

41,877,700 99.99%

Director and General Manager

Caesar Bath &

Shower (Stock) Co.

Representative:

CHEN, WEI-CHIH

41,877,700 99.99%

Directors

Caesar Bath &

Shower (Stock) Co.

Representative:

Yat-Sen Chang

41,877,700 99.99%

Supervisor

Caesar Bath &

Shower (Stock) Co.

Representative:

Lin Lingzhi

41,877,700 99.99%

Kaisheng Sanitary Co., Ltd.

Chairperson

Caesar Bath &

Shower (Stock) Co.

Representative:

HSIAO,

CHUN-HSIANG

1,326,000 51.00%

Directors

Caesar Bath &

Shower (Stock) Co.

Representative:

CHEN, WEI-CHIH

1,326,000 51.00%

Directors

Henrong

Investment Co.

Representative:

P.Y. Wang

520,000 20.00%

Supervisor Zhang Zhangxi 520,000 20.00%

General Manager

Wen-Hsiung Wu 234,000 9.00%

- 376 -

(6) Business Overview by Associates

Unit: NT$ thousands, but earnings per share was NT$; December 31, 2020

Company

Name

Capitali

zation

Total

Asset

Value

Total

liabilities Net value

Operating

income

Operating

profit or

loss

Profit or

loss for

the period

(after tax)

Earni

ngs

per

share

Vietnam

Caesar

Sanitary

Wares

Joint

Stock Co.

663,230 1,517,728 275,741 1,241,987 1,252,370 70,867 63,252 1.51

Kaisheng

Sanitary

Co., Ltd.

26,000 26,000 76 25,924 0 -76 -76 -0.03

(7) Consolidated Financial Statements of Affiliated Companies

For the year ended December 31, 2020 (January 1, 2020 to December 31,

2020), the companies that should be included in the consolidated financial

statements of affiliated companies in accordance with the "Regulations

Governing the Preparation of Consolidated Financial Statements of Affiliated

Companies and Related Party Reports" are the same as those that should be

included in the consolidated financial statements of parent and subsidiary

companies in accordance with IFRS 10, and the information required to be

disclosed in the consolidated financial statements of affiliated companies has

already been disclosed in the aforementioned consolidated financial statements

of parent and subsidiary companies. The information required to be disclosed

in the consolidated financial statements has been disclosed in the preceding

consolidated financial statements of the parent and subsidiary.

(8) Relationship Report

The Company is not a subordinate company under Article 369-2 is of the

Company Law, therefore, Not applicable.

2. Private Placement Securities in the Most Recent Years

No such case.

3. Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Year

No such case.

4. Other Necessary Items to Be Supplemented

- 377 -

None.

- 378 -

IX. Matters that Have Significant Effect on Shareholders' Equity or the

Price of Securities

For the most recent year and up to the date of publication of the annual report, events

that have a significant impact on shareholders' equity or the price of securities as

defined in Article 36, Paragraph 3, Clause 2 of the Securities and Exchange Act have

occurred:

No such case.

sanitar co., ltd

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