Stock Code: 1259 AN-SHIN FOOD SERVICES CO., LTD. 2019 ANNUAL REPORT This Annual Report may be found at: Market Observation Post System: (MOPS) http://mops.twse.com.tw Website of the Company: http://www.mos.com.tw Printed on April 5, 2020 I. Name, job title, contact telephone, and e-mail address of the spokesman and deputy spokesman of the Company: Spokesperson Deputy Spokesperson Name: Shih, Chi-Yin Name: Ho, Chi-Yin Title: Assistant Vice President Title: Special Assistant of the Chairman Telephone number: (02) 2567-5001 Telephone number: (02) 2567-5001 E-mail address: [email protected] E-mail address: [email protected] II. Address and telephone number of the head office, branch, and factory: Address of the head office: 8F., No.156-1, Songjiang Rd., Zhongshan Dist., Taipei City 104, Taiwan Telephone number: (02) 2567-5001 Address and telephone number of the branch: Kindly refer to A. Principal Business Activities of (1) Scope of Business in Ⅴ. OPERATING HIGHLIGHTS (Page 101). Factory: N/A III. Name, address, website, and telephone number of the stock agency: Name: Registrar Agency Department of Capital Website: https://www.capital.com.tw Securities Corporation Address: B2, No.97, Sec. 2, Dunhua S. Rd., Daan TEL: (02)2702-3999 Dist., Taipei City 10601, Taiwan IV. Name of the certified public accountant (hereinafter referred to as “CPA”) who audited the latest annual financial report and name, address, website, and telephone number of this CPA firm: Name of the CPA: Chih, Ping-Chun and Wu, Yu-Lung Name of the CPA firm: PricewaterhouseCoopers Website: http://www.pwc.tw (PwC) Taiwan Address: 27F, No. 333, Section 1, Keelung Road, TEL: (02) 2729-6666 Taipei City V. Name of the overseas stock exchange where the Company’s overseas securities are listed and the inquiry method for information regarding such overseas securities: N/A VI. Website of the Company: http://www.mos.com.tw Table of Contents Pages One. LETTER TO THE SHAREHOLDERS ................................................................................ 1 Two. COMPANY PROFILE ......................................................................................................... 4 I. Date of Establishment ................................................................................................... 4 II. Company Profile ........................................................................................................... 4 Three. CORPORATE GOVERNANCE REPORT ....................................................................... 11 I. Organization System ..................................................................................................... 11 II. Information about the Directors, Supervisors, President, Vice President, Assistant Vice President, and Head of the Department and Branch ............................................. 14 III. Remuneration paid to directors, supervisors, vice president, and assistant vice presidents for the most recent fiscal year ...................................................................... 25 IV. Implementation of corporate governance ..................................................................... 33 V. Information about the fees for the CPA ........................................................................ 87 VI. Information about the change of the CPA ..................................................................... 87 VII. The Company’s Chairman, President, officer in charge of financial or accounting affairs having served in the firm where the CPA serves or its affiliated enterprise in the prior year ................................................................................................................. 87 VIII. In the recent fiscal year and as of the date of this Annual Report, the transfer or pledge of shares by the directors, supervisors, officers, and shareholders holding more than 10% of the Company’s total issued and outstanding shares ........................ 88 IX. Information of the top ten shareholders, being related parties, spouse, or relatives within the second degree of kinship among themselves ............................................... 90 X. The number of shares of an enterprise held by the Company, the Company’s directors, supervisors, officers, and business investments controlled by the Company directly or indirectly, and the consolidated shareholding percentage ........... 91 Four. STATUS OF FUNDING ...................................................................................................... 92 I. Capital and Shares ......................................................................................................... 92 II. Issuance of corporate bonds .......................................................................................... 100 III. Issuance of Preferred Stock........................................................................................... 100 IV. Issuance of Overseas Depository Receipts ................................................................... 100 V. Issuance of Employee Stock Options............................................................................ 100 VI. Issuance of Employee Restricted Shares ...................................................................... 100 VII. Issuance of New Shares for Mergers and Acquisitions ................................................. 100 VIII. Implementation of the Capital Utilization plan............................................................. 100 Five. OPERATING HIGHLIGHTS .............................................................................................. 101 I. Business Activities ........................................................................................................ 101 II. Market Profile, Production, and Sales .......................................................................... 121 III. Employee Statistics ....................................................................................................... 134 Table of Contents Pages IV. Information on Environmental Protection Expenses .................................................... 135 V. Labor Management Relationship .................................................................................. 137 VI. Material Contracts ......................................................................................................... 144 Six. FINANCIAL HIGHLIGHTS ................................................................................................. 146 I. Condensed Balance Sheet and Statement of (Comprehensive) Income in the Most Recent 5 Years ............................................................................................................... 146 II. Financial Analysis in the Most Recent 5 Years ............................................................. 151 III. Supervisors’ Review Report of the Financial Statements in the Most Recent Year ..... 154 IV. Financial Statements in the Most Recent Year .............................................................. 156 V. Individual Financial Statements of the Company Audited by the CPA ........................ 156 VI. Summary of any Financial Difficulty of the Company or Its Affiliates in the Most Recent Year and the Impact of such Difficulty on the Company .................................. 156 Seven. DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND FINANCIAL PERFORMANCE - RISK FACTORS ............................................................................... 157 I. Financial Conditions ..................................................................................................... 157 II. Financial Performance .................................................................................................. 159 III. Cash flow ...................................................................................................................... 161 IV. Impact of Significant Capital Expenditures in the Most Recent Year on the Financial and Operating Conditions of the Company ................................................... 162 V. Re-investment Policy of the Most Recent Year, Reasons for Profit (Loss), Improvement Plan, and Investment Plan for the Following Year ................................. 162 VI. Analysis and Evaluation of Risk Factors ...................................................................... 163 VII. Other Material matters .................................................................................................. 169 Eight. SPECIAL DISCLOSURES ................................................................................................ 170 I. Affiliated enterprise-related information ...................................................................... 170 II. Any Private Placement of Securities within the Latest Fiscal Year and as of the Date of the Annual Report ............................................................................................ 173 III. Any Share Ownership and Disposal of Shares of the Company by Subsidiaries within the Latest Fiscal Year and as of the Date of the Annual Report ........................ 173 IV. Additional Information Required to be Disclosed ........................................................ 173 Nine. For the most recent year and up to the printing date of the annual report, events having a material impact on shareholders' rights and interests or securities prices according to Subparagraph 2 of Paragraph 3 of Article 36 of the Securities and Exchange Act ............... 173 Annex 1: 2019 Consolidated