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SANITAR Co., Ltd.
Transcript of 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
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
Joint Stock Company.
2004 Establishment of Bronze Plant of Vietnam Caesar Sanitary Wares
Joint Stock Company.
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
increase of about NT 96,721 thousand, amounting paid-in capital to
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
NT 726,000 thousand after the capital increase.
Stock listed approved by Taiwan Stock Exchange Corporation.
2014
2018
2019
Vietnam Caesar Sanitary Wares Joint Stock Company had a capital
increase of about NT 90,090 thousand, amounting paid-in capital to
NT 663,230 thousand after the capital increase.
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
Joint Stock Company.
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
in the consolidated financial statements
The company
All companies
in the consolidated financial statements
The company
All companies
in the consolidated financial statements
The company
All companies
in the consolidated financial statements
The company
All companies
in the consolidated financial statements
The Company
Companies in the consolidated
financial statements
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
financial statements
The company All companies in the consolidated
financial statements
The company All companies in the consolidated
financial statements
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
financial statements
The company
All companies
in the consolidated
financial statements
The company
All companies
in the consolidated
financial statements
The company All companies in the
consolidated financial statements
The company
All companies
in the consolidated
financial statements
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
remuneration paid by
The ratio of total
remuneration paid by
The ratio of total
remuneration paid by
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
financial statements
to the net income
after tax on the
parent company only
or individual
financial statements
(%)
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
financial statements
to the net income
after tax on the
parent company only
or individual
financial statements
(%) 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
Board of Directors on
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
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
fifteenth meeting of
the 14th
Board of Directors on
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
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
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
Opinions of independent directors: None
The Company’s response towards the opinions of the independent
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
7.Financial institutions’ credit limit. V
34
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
eighteenth
meeting of
the 14th
Board of Directors on
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
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
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
14.Financial institutions’ credit limit. V
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
Opinions of independent directors: None
The Company’s response towards the opinions of the independent directors: None
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
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.
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
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.
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.
(3) The degree of
participation in the
Company’s operations.
(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:
(1) The degree of
participation in the
Company’s operations.
(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
Implementation Status Deviations from the
Corporate
Governance
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate
Governance
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
shares?
(3) Does the company establish
and execute the risk
management and firewall
system within its
conglomerate structure?
(4) Does the company establish
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
Implementation Status Deviations from the
Corporate
Governance
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
(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
Implementation Status Deviations from the
Corporate
Governance
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate
Governance
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate
Governance
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate
Governance
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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.
3. The degree of participation in the Company’s operations.
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:
1. The degree of participation in the Company’s operations.
2. Acknowledgement of the duties of the functional committees.
3. The quality of decision-making of the functional committees.
48
Evaluation Item
Implementation Status Deviations from the
Corporate
Governance
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate
Governance
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate
Governance
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
(including but not limited to
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
Implementation Status Deviations from the
Corporate
Governance
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate
Governance
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate
Governance
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate
Governance
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
(including but not limited to
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
Implementation Status Deviations from the
Corporate
Governance
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
the company establish a
communication channel and
build a designated section on
its website for stakeholders
(including but not limited to
shareholders, employees,
customers and suppliers), as
well as handle all the issues
they care for in terms of
corporate social
responsibilities?
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
Implementation Status Deviations from the
Corporate
Governance
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
57
Evaluation Item
Implementation Status Deviations from the
Corporate
Governance
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate
Governance
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate
Governance
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate
Governance
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate
Governance
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate
Governance
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
(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.
3. Revision of the 2019 operating bonus payment.
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
after being consulted by the
Chairman. Motion 3:
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.
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
board to be in charge of
proposing the corporate
social responsibility policies
and reporting to the board?
Does the company establish
exclusively (or concurrently
dedicated first-line
managers authorized by the
board to be in charge of
proposing the corporate
social responsibility policies
and reporting to the board?
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
(1) Does the company establish
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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?
(6) Does the company have a
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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?
(6) Does the company have a
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
such as corporate Does
the company make
reference to international
standards or guidelines for
the preparation of reports,
such as corporate social
responsibility reports,
which disclose
non-financial information
about the company? Does
the company make
reference to international
standards or guidelines for
the preparation of reports,
such as corporate social
responsibility reports,
which disclose
Report.
97
Evaluation Item
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
99
Evaluation Item
Implementation Status Deviations from the
Corporate Social
Responsibility
Best-Practice
Principles for
TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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])
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
Implementation Status Deviations from the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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.
No material difference
was found.
101
Evaluation Item
Implementation Status Deviations from the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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?
(2) Does the 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-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.
No material difference
was found.
102
Evaluation Item
Implementation Status Deviations from the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
Corporate Management
Best-Practice Principles for
TWSE/TPEx Practice
Principles for TWSE/TPEx
Listed Companies?
(3) Does the company establish
policies to prevent unethical
conduct with clear
statements regarding
relevant procedures, (3)
Does the company establish
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
Implementation Status Deviations from the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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?
(2) Does the company have a
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
No material difference
was found.
No material difference
was found.
No material difference
was found.
105
Evaluation Item
Implementation Status Deviations from the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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?
(3) Does the company establish
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
No material difference
was found.
No material difference
was found.
106
Evaluation Item
Implementation Status Deviations from the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
(1) Does the company establish
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
No material difference
was found.
108
Evaluation Item
Implementation Status Deviations from the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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?
(2) Does the company establish
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,
No material difference
was found.
109
Evaluation Item
Implementation Status Deviations from the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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.
No material difference
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.
No material difference
was found.
110
Evaluation Item
Implementation Status Deviations from the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
Implementation Status Deviations from the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies and
Reasons
Yes No Abstract Illustration
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
The Latest Practical Development of Insider
Trading in our Country and Countermeasures for
Corporate Prevention and Control
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
2020.06.09 Securities
and
Futures
Institute
How to Strengthen Corporate Governance and
Create Value-addition for the Enterprises through
Corporate Governance Assessment
3.0
2020.08.05
The Latest Practical Development of Insider
Trading in our Country and Countermeasures for
Corporate Prevention and Control
3.0
Director Yu Orry
2020.06.09 Securities
and
Futures
Institute
How to Strengthen Corporate Governance and
Create Value-addition for the Enterprises through
Corporate Governance Assessment
3.0
2020.08.05
How to Strengthen Corporate Governance and
Create Value-addition for the Enterprises through
Corporate Governance Assessment
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
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
2020.08.05
How to Strengthen Corporate Governance and
Create Value-addition for the Enterprises through
Corporate Governance Assessment
3.0
Supervisor Lee Wen-yao
2020.06.09 Securities
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
How to Strengthen Corporate Governance and
Create Value-addition for the Enterprises through
Corporate Governance Assessment
3.0
Supervisor Lin Guo-Hua
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
2020.08.05
How to Strengthen Corporate Governance and
Create Value-addition for the Enterprises through
Corporate Governance Assessment
3.0
Supervisor Liang
Hsin-yong
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
2020.08.05
How to Strengthen Corporate Governance and
Create Value-addition for the Enterprises through
Corporate Governance Assessment
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
Corporate Governance
and Create
Value-addition for the
Enterprises through
Corporate Governance
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
Securities and Futures
Institute
The Latest Practical
Development of Insider
Trading in our Country
and Countermeasures
for Corporate Prevention
and Control
3.0
Deputy
General
Manager
Yan
Wen-hong 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
CEO Gu
Fon-guei 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
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".
3. Revision of the provisions of “Ethical
Operating Procedures and Conduct
Guideline”.
4. 2019 Remuneration distribution for the
employees, the directors, and the supervisors.
5. 2019 Business report and financial report
6. 2019 Surplus distribution
7. Formulation of “Internal Control System
Announcement”.
8. Assessment of the independence and
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.
3. Convention of 2020 shareholders’ general
meeting.
4. Kaohsiung business location housing lease.
As consulted by the Chairman,
all proposals were approved
by the directors present
without objection.
2020.05.06 1. Revision of the provisions of “Measures for the
Transfer of the First-time Repurchase of the
As consulted by the Chairman,
all proposals were approved
119
Meeting
date Motion Important resolutions
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.
by the directors present
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.
4. Revision of the 2019 operating bonus payment.
5. Revision of CFO’s salary adjustment.
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.
2020.08.05 1. Revision of the provisions of “Board Meeting
Regulations”.
2. Revision of the provisions of “Ethical
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
As consulted by the Chairman,
all proposals were approved
by the directors present
without objection.
120
Meeting
date Motion Important resolutions
decoration.
6. Recruitment of a manager for Product R&D
Center.
7. Financial institutions’ credit limit.
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.
As consulted by the Chairman,
all proposals were approved
by the directors present
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:
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.
121
Meeting
date Motion Important resolutions
performance in 2020 and their performance
goals and remuneration in 2021.
13. Review of the 2020 year-end bonus
distribution.
14. Financial institutions’ credit limit.
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
3. 2020 Surplus distribution
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”
7. Formulation of “Internal Control System
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.
12. Convention of 2020 shareholders’ general
meeting.
13. Assessment of the independence and
competence of the public certified accountants.
14. Revision of the 2020 remuneration payment
of the directors and supervisors.
Motion 8/14/16:
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.
As consulted by the Chairman,
all proposals were approved
by the directors present
without objection.
122
Meeting
date Motion Important resolutions
15. Revision of the 2020 remuneration payment for
the employees.
16. Revision of the 2020 operating bonus payment.
17. Review of the directors and supervisors’ 2020
continuing education status and 2021
continuing education plans.
18. Financial institutions’ credit limit.
(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
manufacturers Stable supply
Copper Bar Taiwan and Korean
manufacturers Stable supply
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
distribution 583,442 661,608 759,143 958,168 (Note 2)
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
distribution 496,289 588,942 675,973 732,404 (Note 2)
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
c o n s o l i d a t e d
p r o f i t o r l o s s
a t t r ib ut ab l e t o
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
c o n s o l i d a t e d
p r o f i t o r l o s s
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 (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
distribution 332,145 377,096 460,329 573,097 (Note 2)
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
distribution 418,182 487,072 622,496 776,404 (Note 2)
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
distribution 496,289 588,942 675,973 732,404 (Note 2)
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.
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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
Weng Bo Ren No reservations
2020 Deloitte Taiwan Connie So
Weng Bo Ren No reservations
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).
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(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
Property, plant and equipment
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
FSC Approval Number:
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 ) -
6000 Total operating
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
From Jan. 1 to Dec. 31, 2020 and from Jan. 1 to Dec. 31, 2019
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
Appropriation and distribution of
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
D3 Other comprehensive income after
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
From Jan. 1 to Dec. 31, 2020 and from Jan. 1 to Dec. 31, 2019
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
(Continued on the next page)
192
(Continued from the previous page)
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
Chairperson: XIAO, JUN-XIANG Manager: CHEN, WEI-ZHI
Accounting Supervisor: CHEN, YU-JUAN
194
Sanitar Co., Ltd.
Parent Company Only 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. 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”
Effective for annual
reporting periods
beginning on or after
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
New/amended/revised standards and interpretations
Effective date published by
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
periods beginning on or after Jan. 1, 2023.
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
Non-related parties $ 167,803 $ 144,175
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
Plus: listed impairment losses
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
The 5th 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
Accumulated amortization
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
226
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
Non-related parties $ 33,542 $ 39,931
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
Cash dividends per share
(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
232
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
Belonging to operating
expenses Total
Belonging to operating
costs
Belonging to operating
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%
Compensation of directors and
supervisors
2% 2%
236
2020 2019
Cash Cash
Compensation of employees $ 8,749 $ 7,303
Compensation of directors and
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
Surtax on unappropriated
retained earnings 954 3,292
The tax paid in foreign
countries cannot be deducted 1,492 1,553
Adjustments to the income tax
expenses in the past years in
the current period ( 950 ) 11
Income tax expense recognized
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
Temporary differences
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
Temporary differences
Unrealized loss from
market price decline
and obsolete and
slow-moving
inventory
$ 3,263 ( $ 499 ) $ - $ 2,764
Allowance for bad debts - 253 - 253
Exchange difference on
translation of the
financial statements of
foreign operations
36,669 - 4,839 41,508
Unrealized foreign
exchange losses
- 30 - 30
$ 39,932 ( $ 216 ) $ 4,839 $ 44,555
(Continued on the next page)
239
(Continued from the previous page)
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
Temporary differences
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
The earnings and weighted -average number of common stocks
used to calculate diluted 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 72,290 72,600
240
per share (1,000 shares)
Influence of dilutive potential
common shares
Compensation of
employees (1,000
shares) 376 352
Weighted average number of
common shares used in the
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
comprehensive income
242
Investments in equity
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
year 1-2 years 2-3 years
More than 3
years Total
Non-derivative
financial liabilities
Short-term loans $ 325,000 $ - $ - $ - $ 325,000
Accounts payable 39,931 - - - 39,931
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
Vietnam Caesar Sanitary Wares
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
Vietnam Caesar Sanitary
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
Accounting item Type of related party Dec. 31, 2020 Dec. 31, 2019
Other accounts
receivable
Substantive related party
-Related parties Chia-Ta-Hang Co.,
Ltd.
$ 5 $ 5
(VI) Related party payables (not including loans for related parties)
Accounting item Type of related party Dec. 31, 2020 Dec. 31, 2019
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
Vietnam Caesar Sanitary
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
20% of the paid-in capital: None.
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$100 million or
20% of the paid-in capital: None.
9. Engage in derivative transactions: None.
10. Information of investee companies: (Schedule 4).
(III) Information of investment from Mainland China: None.
(IV) Information of Major Shareholders: The name of shareholders who hold
5% of the Company’s shares and the number and ratio of the shares
held by them (Schedule 5).
253
Sanitar Co., Ltd.
Endorsement and Guarantee for Others
From Jan. 1 to Dec. 31, 2020
Schedule 1 Unit: NT$ 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
Schedule 2 Unit: NT$ thousands (unless otherwise specified)
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$100 million or 20% of the paid -in capital
From Jan. 1 to Dec. 31, 2020
Schedule 3 Unit: NT$ thousands (unless otherwise specified)
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
From Jan. 1 to Dec. 31, 2020
Schedule 4 Unit: NT$ thousands (unless otherwise specified)
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
Detail Table 3 Unit: NT$ thousands
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
Other (Note) 〃 95,876
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
Detail Table 4 Unit: NT$ thousands
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
Detail Table 5 Unit: NT$ thousands
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
Vietnam Caesar Sanitary Wares
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
Detail Table 8 Unit: NT$ thousands
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
Detail Table 9 Unit: NT$ thousands
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
Other (Note) 〃 16,517
$ 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
Detail Table 10 Unit: NT$ thousands
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
Detail Table 11 Unit: NT$ thousands
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
Detail Table 12 Unit: NT$ thousands
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
Detail Table 13 Unit: NT$ thousands
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
Detail Table 14 Unit: NT$ thousands
Item Amount
Salary expenses $ 34,307
Insurance premium 3,080
Maintenance fees 3,999
Other (Note) 4,193
$ 45,579
Note: The amount of each account did not exceed 5% of the balance of the
subject.
273
Sanitar Co., Ltd.
Detail Table of Operating Expenses
2020
Detail Table 15 Unit: NT$ thousands
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
Note: The amount of each account did not exceed 5% of the balance of the
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
FSC Approval Number:
Jin-Guan-Zheng-Shen-Zi
No.1040024195
FSC Approval Number:
Jin-Guan-Zheng-Shen-Zi
No. 1010028123
March 9, 2021
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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
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Sanitar Co., Ltd. and Its Subsidiaries
Consolidated Statement 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
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
4000 Total operating
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 ) -
6000 Total operating
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 ) -
(Continued on the next page)
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(Continued from the previous page)
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
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The notes attached are part of the consolidated financial report .
Chairperson: XIAO, JUN-XIANG Manager: CHEN, WEI-ZHI
Accounting Supervisor : CHEN, YU -JUAN
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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
financial statements
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
Appropriation and distribution of
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
D3 Other comprehensive income after
tax, 2019
- - - - - - ( 19,355 ) - - ( 19,355 ) - ( 19,355 )
D5 The total comprehensive income in
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
Appropriation and distribution of
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
D3 Other comprehensive income after
tax, 2020
- - - - - - ( 68,691 ) ( 2,738 ) - ( 71,429 ) ( 2 ) ( 71,431 )
D5 The total comprehensive income in
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
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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
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Sanitar Co., Ltd. and Its Subsidiaries
Consolidated Statement of Cash Flows
From Jan. 1 to Dec. 31, 2020 and from Jan. 1 to Dec. 31, 2019
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
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(Continued on the next page)
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(Continued from the previous page)
Code 2020 2019
Cash flow from investing activities
B00010 Acquisition of financial assets
measured at fair value through
other comprehensive income
( $ 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
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The notes attached are part of the consolidated financial report.
Chairperson: XIAO, JUN-XIANG Manager: CHEN, WEI-ZHI
Accounting Supervisor: CHEN, YU-JUAN
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Sanitar Co., Ltd. and Its Subsidiaries
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.
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(2) IFRSs recognized by the Financial Supervisory Commission ("FSC")
applicable in 2021
New/amended/revised standards and interpretations
Effective date published by
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”
Effective for annual
reporting periods
beginning on or after
January 1, 2021
Amendments to IFRS 16 “Covid-19 Related Rent
Concessions”
Effective for annual
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
New/amended/revised standards and interpretations
Effective date published by
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)
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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
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
periods beginning on or after Jan. 1, 2023.
1. Amendments to IFRS 10/IAS 28 “Sales or Contributions of Assets
Between an Investor and Its Associate/Joint Venture
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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
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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:
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(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
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(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
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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
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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,
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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.
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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
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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,
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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
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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.
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(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
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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
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VII. Financial assets measured at fair value through other comprehensive
income - non-current
Dec. 31, 2020 Dec. 31, 2019
Investments in equity instruments
measured at fair value through
other comprehensive income
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
Generated from operating
activities
$ 13,804 $ 14,519
Accounts receivable
Non-related parties $ 231,415 $ 228,834
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
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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
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2019
notes receivable
accounts
receivable
overdue
receivables
Beginning balance $ - $ 516 $ 1,112
Plus: listed impairment losses
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.
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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
Name of the Investment
Company Name of Subsidiary
Nature of
Business
2020
Dec. 31
2019
Dec. 31
Sanitar Co., Ltd. Vietnam Caesar Sanitary
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
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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
(Continued on the next page)
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(Continued from the previous page)
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
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The 4th year 530 530
The 5th year 530 530
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 )
Net exchange differences ( 1,178 ) ( 435 ) ( 1,613 )
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 $ - $ - $ -
Effect of the first-time
application of IFRS 16 121,693 32,494 154,187
Increment - 23,222 23,222
Disposal - ( 75 ) ( 75 )
Net exchange differences ( 2,110 ) ( 250 ) ( 2,360 )
Balance on Dec. 31, 2019 $ 119,583 $ 55,391 $ 174,974
Accumulated depreciation
Balance on Jan. 1, 2019 $ - $ - $ -
Effect of the first-time
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
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(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
Accumulated amortization
Balance on Jan. 1, 2020 $ 8,572 $ 7,605 $ 16,177
Amortization expense - 2,004 2,004
Disposal ( 8,572 ) ( 2,200 ) ( 10,772 )
Net exchange differences - ( 416 ) ( 416 )
Balance on Dec. 31, 2020 $ - $ 6,993 $ 6,993
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Net on Dec. 31, 2020 $ - $ 5,474 $ 5,474
(Continued on the next page)
- 324 -
(Continued from the previous page)
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 )
Net exchange differences - ( 234 ) ( 234 )
Balance on Dec. 31, 2019 $ 8,572 $ 14,239 $ 22,811
Accumulated amortization
Balance on Jan. 1, 2019 $ 8,572 $ 6,831 $ 15,403
Amortization expense - 1,681 1,681
Disposal - ( 810 ) ( 810 )
Net exchange differences - ( 97 ) ( 97 )
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
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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
Generated from operating
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
Compensation of directors and
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.
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(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
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
Legal reserve $ 22,009
Special reserve $ 71,429
Cash dividends $ 144,152
Cash dividends per share
(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
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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 )
Exchange difference on
translation of the
financial statements of
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
financial statements
( 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
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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%
Compensation of directors and
supervisors
2% 2%
Amount
2020 2019
C a s h C a s h
Compensation of employees $ 8,749 $ 7,303
Compensation of directors and
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
Surtax on unappropriated
retained earnings 954 3,292
Adjustments for the prior
year ( 950 ) 11
- 333 -
74,033 49,681
Deferred income tax
Generated in the period ( 6,006 ) 14,457
The tax paid in foreign
countries cannot be
deducted 1,492 1,553
Income tax expense recognized
in profit or losses $ 69,519 $ 65,691
- 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 )
Surtax on unappropriated
retained earnings 954 3,292
Temporary differences which
were not recognized 12,673 13,895
The tax paid in foreign
countries cannot be deducted 1,492 1,553 Adjustments to the income tax
expenses in the past years in
the current period ( 950 ) 11
Income tax expense recognized
in profit or losses $ 69,519 $ 65,691
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
Temporary differences
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
Temporary differences
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
Temporary differences
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
Temporary differences
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
The earnings and weighted -average number of common stocks
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
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
(2) Diluted earnings per share
The earnings and weighted -average number of common stocks
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
Weighted average number of
common shares used in the
calculation of basic earnings
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
Weighted average number of
common shares used in the
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
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
- 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
comprehensive income
Investments in equity
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
year 1-2 years 2-3 years
More than 3
years Total
Non-derivative
financial
liabilities
Short-term loans $ 344,442 $ - $ - $ - $ 344,442
Accounts payable 70,200 - - - 70,200
- 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
year 1-2 years 2-3 years
More than 3
years Total
Non-derivative
financial
liabilities
Short-term loans $ 346,140 $ - $ - $ - $ 346,140
Accounts payable 91,510 - - - 91,510
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
Substantive related party
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
Property, plant and equipment
-land
$ 61,652 $ 61,652
Property, plant and equipment
-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
20% of the paid-in capital: None.
6. Disposal of real estate amounting to at least NT$300 million or
20% of the paid-in capital: None.
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
20% of the paid-in capital: None.
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 -
Sanitar Co., Ltd. and Its Subsidiaries
Endorsement for Other Parties
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
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 -
Sanitar Co., Ltd. and Its Subsidiaries
Marketable Securities Held at the End of Period
Dec. 31, 2020
Schedule 2 Unit: NT$ thousands (unless otherwise specified)
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 -
Sanitar Co., Ltd. and Its Subsidiaries
The amount of purchase or sale of goods with related parties reaches NT$100 million or 20% of the paid -in capital
From Jan. 1 to Dec. 31, 2020
Schedule 3 Unit: NT$ thousands (unless otherwise specified)
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 -
Sanitar Co., Ltd. and Its Subsidiaries
The Business Relationships among the Parent Company and Subsidiaries and the Si gnificant Amounts and Conditions of Transactions
From Jan. 1 to Dec. 31, 2020
Schedule 4 Unit: NT$ thousands (unless otherwise specified)
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
From Jan. 1 to Dec. 31, 2020
Schedule 5 Unit: NT$ thousands (unless otherwise specified)
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
Remark 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
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 -
Sanitar Co., Ltd. and Its Subsidiaries
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
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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
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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
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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
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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
For the most recent year and as of the date of the annual report, the
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
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status of the litigation as of the date of the annual report.
For the most recent year and as of the date of the annual report, the
Company has not been involved in litigation or non-litigation matters.
(13) Other important risks and countermeasures
None.
7. Other Important Matters
None.
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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.
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(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%
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(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
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None.
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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.