Financial Performance - Total revenue for the nine months ended September 30, 2022, was $95.9 million, an increase of 39% compared to $69.0 million in the same period of 2021[2] - Gross profit for the same period was $9.1 million, up from $4.8 million, reflecting a significant improvement in profitability[2] - The company reported a net loss after tax of $0.6 million, a reduction of 83% from a net loss of $3.6 million in the previous year[2] - Operating cash flow for the nine months was $3.5 million, compared to a cash outflow of $4.1 million in the same period last year, indicating a positive shift in cash generation[22] - The company reported a significant increase in other income to $0.8 million from $0.2 million, indicating improved operational efficiency[5] Balance Sheet - Total assets as of September 30, 2022, amounted to $110.8 million, an increase from $105.9 million at the end of 2021[18] - Current liabilities increased to $67.7 million from $60.4 million, primarily due to higher trade and other payables[18] - The company’s cash and cash equivalents at the end of the period were $13.4 million, up from $10.0 million at the beginning of the period[22] - The company’s equity attributable to shareholders decreased to $49.9 million from $52.6 million, reflecting the impact of the net loss[20] Strategic Focus - The company plans to focus on expanding its market presence and enhancing product offerings in the upcoming quarters[2]

Sales Performance - The group's total sales volume in Vietnam for the six months ended June 30, 2022, was approximately 18.6 thousand units, a decrease of 6% compared to the same period last year[8]. - Revenue for the six months ended June 30, 2022, was $62.2 million, an increase of 3.7% from $60.0 million for the same period in 2021[9]. - The group exported approximately 31.3 thousand units of scooters and national motorcycles to ASEAN countries, an increase of 5% compared to the same period last year[8]. - Revenue from motorcycle sales was $55,732,411, while spare parts and engine sales generated $6,459,240, and mold and maintenance services contributed $13,136[65]. - The revenue distribution by region showed that Thailand contributed $24,226,319, an increase from $22,591,753 in 2021, reflecting a growth of about 7.2%[64]. Profitability - The group recorded a net profit of $0.3 million for the six months ended June 30, 2022, improving from a net loss of $1.2 million in the same period last year[9]. - The gross profit for the six months ended June 30, 2022, was approximately $5.7 million, with a gross margin of 9.1%, compared to $5.4 million and 9.0% for the same period in 2021[13]. - Net profit for the six months ended June 30, 2022, was $0.3 million, an improvement of $1.5 million compared to a net loss of $1.2 million for the six months ended June 30, 2021, resulting in a net profit margin of 0.6%[19]. - The company reported a pre-tax profit of $350,198 for the six months ended June 30, 2022, compared to a pre-tax loss of $1,204,651 in the same period of 2021[66]. - The company reported a total comprehensive income of $(469,355) for the six months ended June 30, 2022, compared to a loss of $(5,568,543) in the previous year, indicating a recovery trend[57]. Expenses and Costs - Sales cost increased by 3.7% to $56.5 million for the six months ended June 30, 2022, compared to $54.5 million for the same period in 2021[12]. - Distribution expenses decreased by 9.1% from $3.3 million for the six months ended June 30, 2021, to $3.0 million for the six months ended June 30, 2022[14]. - Administrative and other operating expenses decreased by 8.6% from $3.5 million for the six months ended June 30, 2021, to $3.2 million for the six months ended June 30, 2022, accounting for 5.2% of total revenue[15]. - Employee costs decreased to $5,236,086 in 2022 from $5,893,498 in 2021, indicating a reduction of approximately 11.1%[67]. - Research and development expenses were $630,994 for the six months ended June 30, 2022, down from $813,607 in 2021, a decrease of about 22.4%[68]. Financial Position - As of June 30, 2022, the company's current assets were $114.4 million, with current liabilities of $69.0 million, resulting in a net current asset value of $45.4 million[20]. - The debt ratio increased to 79.1% as of June 30, 2022, compared to 68.6% as of December 31, 2021[20]. - Total assets as of June 30, 2022, amounted to $114,368,892, up from $105,887,447 as of December 31, 2021, reflecting an increase of approximately 8.3%[51]. - The company’s total liabilities decreased from $47,168,309 as of December 31, 2021, to $42,004,308 as of June 30, 2022, indicating a reduction of approximately 10.5%[58]. - The company’s accumulated losses were reported at $(27,849,395) as of June 30, 2022, a decrease from $(28,195,626) as of December 31, 2021, reflecting a reduction in losses[57]. Strategic Initiatives - The group aims to stabilize production and operations while actively seeking sustainable development opportunities amid rising inflation and supply chain challenges[7]. - The company plans to focus on the Vietnamese student market and enhance product design and core technology development in the second half of 2022[27]. - The company aims to expand sales and maintenance service points to improve customer service for its products[27]. - The company will actively participate in market promotion and strengthen overseas after-sales service support in ASEAN countries[27]. - The company continues to focus on expanding its motorcycle-related business and services, with ongoing investments in product development and market expansion strategies[59]. Cash Flow and Financing - The net cash flow from operating activities for the six months ended June 30, 2022, was $1,466,624, a significant improvement compared to a net cash outflow of $(7,977,919) for the same period in 2021[58]. - Cash and cash equivalents increased by $4,286,723 during the six months ended June 30, 2022, compared to a decrease of $(9,898,265) in the same period of 2021[58]. - The company’s financing activities generated a net cash inflow of $4,808,730 for the six months ended June 30, 2022, compared to $7,248,960 in the same period of 2021[58]. - The net proceeds from the IPO amount to approximately $76.7 million, with $58.0 million already utilized and $18.7 million remaining[30]. - The company has allocated $11.7 million for the establishment of a research and development center in Vietnam[30]. Compliance and Governance - The company has complied with the corporate governance code, with the establishment of a nomination committee on January 19, 2022[38]. - All directors have confirmed compliance with the standard code of conduct for securities trading as of June 30, 2022[39]. - The company maintained sufficient public float as per listing rules, ensuring compliance with regulatory requirements[40]. Related Party Transactions - Sales of finished products and spare parts to the ultimate holding company amounted to $56,689 for the six months ended June 30, 2022, down from $67,598 in the previous year[81]. - Purchases of raw materials and finished products from the ultimate holding company totaled $2,388,945, a decrease from $3,304,727 in the prior year[81]. - The total amount of receivables from related parties as of June 30, 2022, was $37,646, a significant decrease from $583,189 as of December 31, 2021[82]. - Trade payables to the ultimate holding company increased to $1,329,111 as of June 30, 2022, compared to $669,936 at the end of the previous year[82]. - Total trade payables to related parties reached $12,752,506 as of June 30, 2022, up from $11,961,731 as of December 31, 2021[82].

Revenue and Profit - Total revenue for the three months ended March 31, 2022, was $28.13 million, a decrease of 4.48% from $29.45 million in the same period of 2021[2] - Gross profit for the same period was $2.45 million, slightly up from $2.44 million year-on-year, indicating a marginal increase of 0.41%[2] - The net profit after tax for the three months ended March 31, 2022, was $0.53 million, a significant improvement from a loss of $0.82 million in the previous year, representing a turnaround of $1.35 million[2] - The company reported a comprehensive income of $0.69 million for the three months ended March 31, 2022, compared to a loss of $(0.42) million in the same period of 2021[12] Cash Flow and Assets - Operating cash flow for the three months was negative at $(1.11) million, an improvement compared to $(5.25) million in the same period last year[24] - Total assets as of March 31, 2022, amounted to $107.59 million, an increase from $105.89 million as of December 31, 2021[20] - Current liabilities were $61.50 million, slightly up from $60.42 million at the end of the previous year[20] - Cash and cash equivalents at the end of the period were $9.57 million, down from $10.27 million at the end of the previous year[24] Equity and Financing - The company’s equity attributable to owners was $53.28 million as of March 31, 2022, compared to $52.59 million at the end of the previous year[22] - The company’s financing income increased to $1.24 million from $0.75 million year-on-year, reflecting a growth of 66.67%[5]

Financial Performance - In 2021, the company reported revenue of $93.0 million, an increase of 10.5% compared to $84.1 million in 2020[8] - The gross profit for 2021 was $5.9 million, down from $8.1 million in 2020, indicating a decline of 27.2%[8] - The company experienced an operating loss of $6.6 million in 2021, compared to an operating loss of $4.9 million in 2020[8] - The net loss for the year ended December 31, 2021, was $5.6 million, an improvement from a net loss of $7.3 million the previous year[24] - The net loss decreased by 23.3% from $7.3 million for the year ended December 31, 2020, to a net loss of $5.6 million for the year ended December 31, 2021, with a net loss ratio reduction from 8.7% to 6.0%[40] - The group’s operating loss increased by 34.7% from $4.9 million for the year ended December 31, 2020, to a loss of $6.6 million for the year ended December 31, 2021[35] Assets and Liabilities - Total assets increased to $113.7 million in 2021 from $107.2 million in 2020, reflecting a growth of 4.7%[8] - Total liabilities rose to $61.1 million in 2021, up from $49.7 million in 2020, marking an increase of 23.0%[8] - The net asset value decreased to $52.6 million in 2021 from $57.5 million in 2020, a decline of 8.5%[8] - As of December 31, 2021, the group's current assets amounted to $105.9 million, up from $99.3 million as of December 31, 2020, while current liabilities increased to $60.4 million from $49.0 million[41] Sales and Market Performance - The company faced a 8.1% decline in motorcycle sales in Vietnam, with total sales of 2,492,372 units in 2021[17] - The total sales volume in Vietnam for the year ended December 31, 2021, was approximately 28.1 thousand units, a decrease of 38.9% compared to the previous year[19] - Domestic sales in Vietnam contributed approximately 27.4% of total revenue, down from 44.9% the previous year, with domestic sales decreasing by 32.4% to $25.5 million[26] - Export sales increased by 45.5% to $67.5 million for the year ended December 31, 2021, compared to $46.4 million the previous year[26] Cost and Expenses - Selling costs increased by 14.7% to $87.2 million, resulting in a selling cost ratio of 93.7%, up from 90.4% the previous year[27] - Distribution expenses rose by 10.6% to $5.2 million, primarily due to increased international shipping and packaging costs[32] - Administrative and other operating expenses decreased by 11.4% to $7.0 million, representing 7.6% of total revenue[34] Corporate Governance - The company has established a nomination committee as of January 19, 2022, to comply with corporate governance codes[67] - The company has a balanced composition of executive and non-executive directors, ensuring effective oversight of business operations[69] - The company’s Chairman and CEO roles are held by different individuals, promoting a balance of power within the board[80] - The company confirmed the independence of all current independent non-executive directors as per the listing rules[82] - The company has established three board committees: Audit Committee, Remuneration Committee, and Nomination Committee, with defined responsibilities[83] Risk Management - The company confirmed that its risk management and internal control systems were effective and sufficient as of December 31, 2021[104] - The board is responsible for evaluating the nature and extent of risks the company is willing to accept to achieve its strategic business objectives[104] - The company management is tasked with establishing, executing, reviewing, and assessing a robust internal control system as part of its risk management framework[105] Future Plans and Investments - The group plans to launch several new or revamped motorcycle models in the Vietnamese and ASEAN markets in 2022, including scooters, national vehicles, and electric vehicles[53] - The group aims to enhance product diversification and profitability by increasing the proportion of high-margin products and reducing low-margin items[54] - The company is investing in new technology development, allocating approximately $2 million for R&D initiatives[130] - The company is considering strategic acquisitions to enhance its market position, with a budget of $5 million earmarked for potential deals[130] Shareholder Relations - The board emphasizes the importance of clear and timely communication with shareholders and investors to build confidence and attract new investments[118] - The company maintains high transparency to ensure accurate and timely information is available to investors through various reports and announcements[118] - Shareholders holding at least 10% of the paid-up capital can request a special general meeting within two months of submission[120] Compliance and Legal Matters - The company has no significant legal or regulatory violations affecting its business as of December 31, 2021[156] - The company has complied with the disclosure requirements of the Listing Rules regarding continuing connected transactions[179] Charitable Contributions - The group made charitable contributions totaling approximately $69,400 during the year ended December 31, 2021[155]

| --- | --- | --- | |-------|-------|-------| | | | | | | | | 中期報告2021 | --- | --- | --- | --- | |------------------------------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 目 錄 | | | | | 公司資料 2 | | | | | 管理層討論及分析 3 | | | | | 其他事項 11 | | | | | 獨立核數師審閱報告 16 | | | | | 綜合損益及其他全面收益表 17 | | | | | 綜合財務狀況表 19 | | | | | 綜合權益變動表 21 | | | | | 簡明綜合現金流量表 22 | | | | | | | | | 未經審核中期財務報告附註 23 二零二一年中期報告 02 | --- | --- | |-------------------------------------------------- ...

VMEPH Annual Report 2020 年報 Vietnam Manufacturing and Export Processing (Holdings) Limited Vietnam Manufacturing and Export Processing (Holdings) Limited 越南製 造加工出口(控股)有限公司 (Stock Code: 422) (Incorporated in the Cayman Islands with limited liability) 越南製造加工出口(控股)有限公司 REPORT2020 ANNUAL Vietnam Vietnam Manufacturing and Export Processing (Holdings) Limited 越南製 造加工出口(控股)有限公司 （股份代號:422） （於開曼群島註冊成立之有限公司） 年報 2020 1 目錄 公司資料 2 財務概要 3 管理層討論及分析 4 企業管治報告 10 董事及高級管理人員簡介 16 董事會報告 18 環境、社會及管治報告 25 獨立核數師報告 36 綜合損益及其他全面收益表 ...

VMEPH Vietnam Manufacturing and Export Processing (Holdings) Limited 越南製 造加工出口(控股)有限公司 (Stock Code: 422) (Incorporated in the Cayman Islands with limited liability) 2020 越南製 （於開曼群島註冊成立之有限公司） （股份代號:422） Vietnam Manufacturing and Export Processing (Holdings) Limited 造加工出口(控股)有限公司 中期報告 INTERIM REPORT 2020 綜合財務狀況表 18 綜合權益變動表 20 目 錄 公司資料 2 管理層討論及分析 3 其他事項 11 獨立核數師審閱報告 15 綜合損益及其他全面收益表 16 簡明綜合現金流量表 21 未經審核中期財務報告附註 22 二零二零年中期報告 02 | --- | --- | |-------------------------------------|-------------------------------- ...

[Company Information](index=2&type=section&id=Company%20Information) This report details the company's core information, including board members, committee structures, legal advisors, registered office, principal place of business, and share registrar - This report comprehensively lists the company's core information, including its board members, committee compositions, legal advisors, registered office, principal place of business, and share registrar[4](index=4&type=chunk) [Financial Summary](index=3&type=section&id=Financial%20Summary) In 2019, the company's revenue rebounded to **$99.5 million**, gross profit turned positive at **$5.4 million**, and losses significantly narrowed, though total assets and net assets continued to decline, with the equity-to-debt ratio rising to **43%** - In 2019, the company's revenue recovered to **$99.5 million**, and gross profit turned positive to **$5.4 million** from a negative figure, with operating and pre-tax losses significantly narrowing compared to 2018[6](index=6&type=chunk) - However, the company's total assets and net assets continued to decline, and the equity-to-debt ratio significantly increased to **43%**[6](index=6&type=chunk) Past Five Years Consolidated Results and Balance Sheet Summary (Million USD) | Indicator | 2019 | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Performance** | | | | | | | Revenue | 99.5 | 91.5 | 93.7 | 133.2 | 125.7 | | Gross Profit / (Loss) | 5.4 | (2.3) | 6.1 | 15.7 | 9.1 | | Loss Before Tax | (17.6) | (40.5) | (9.8) | (0.8) | (7.8) | | Loss Attributable to Equity Holders | (17.6) | (41.8) | (9.3) | (0.7) | (8.0) | | Loss Per Share (USD) | (0.020) | (0.050) | (0.010) | (0.001) | (0.009) | | **Assets and Liabilities** | | | | | | | Total Assets | 109.2 | 115.2 | 161.7 | 178.0 | 177.3 | | Total Liabilities | 44.7 | 33.1 | 35.9 | 43.4 | 41.0 | | Net Assets | 64.6 | 82.1 | 125.8 | 134.6 | 136.3 | | Current Ratio (times) | 2.3 | 3.3 | 3.9 | 3.5 | 3.7 | | Equity-to-Debt Ratio (%) | 43 | 23 | 19 | 19 | 18 | [Management Discussion and Analysis](index=4&type=section&id=Management%20Discussion%20and%20Analysis) [Business Overview and Operating Environment](index=4&type=section&id=Business%20Overview%20and%20Operating%20Environment) The Group is a leading scooter and moped manufacturer in Vietnam, operating under the SYM brand with an annual production capacity of **200,000** units, facing a saturated market, declining sales for major foreign players, and challenges from environmental policies and automotive substitution, holding a **1.87%** market share as the third-largest player - The Group is one of Vietnam's leading motorcycle manufacturers, operating under the SYM brand with an annual production capacity of **200,000** units[11](index=11&type=chunk) - The Vietnamese motorcycle market has gradually entered a saturation phase, with total sales for the top five foreign direct investment manufacturers decreasing by **3.87%** in 2019[12](index=12&type=chunk) - The Group ranks third in the Vietnamese market, behind Honda and Yamaha, with a market share of **1.87%** in 2019[13](index=13&type=chunk) [Business Review](index=4&type=section&id=Business%20Review) In 2019, the Group faced challenges including slower sales growth, production inefficiencies, and increased relocation costs, with Vietnam sales growing **3.6%** to **63,400** units while ASEAN exports declined **18.3%** to **54,000** units due to competition, leading the Group to prioritize profitability, launch new models, and engage in OEM cooperation - The Group's production facilities in Bien Hoa City, Dong Nai Province, were relocated to Nhon Trach II Industrial Park as per government regulations and commenced operations in December 2019, incurring efficiency losses and additional costs during the process[14](index=14&type=chunk) 2019 Sales Volume Performance | Market | Sales Volume (Thousand Units) | Year-on-Year Change | Primary Reason | | :--- | :--- | :--- | :--- | | Vietnam | 63.4 | +3.6% | Benefited from government policies and marketing targeting the student market, leading to increased sales of entry-level mopeds | | ASEAN Exports | 54.0 | -18.3% | Major export markets Malaysia and the Philippines faced impact from low-priced Chinese models | - The Group launched several new models, including the New Attila 125 scooter for urban women and a 50cc moped series for young students, while also engaging in OEM cooperation with the Lambretta brand through a strategic alliance[17](index=17&type=chunk) [Financial Review](index=5&type=section&id=Financial%20Review) For FY2019, the Group's net loss significantly narrowed by **58%** to **$17.6 million**, with total revenue increasing **8.7%** to **$99.5 million**, gross profit turning positive at **$5.4 million** (a **5.4%** margin), and operating expenses decreasing, despite an **$8.3 million** impairment loss on property, plant, and equipment, while net current assets declined and the debt-to-equity ratio rose from **23%** to **43%** FY2019 Key Financial Indicators (Million USD) | Indicator | 2019 | 2018 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 99.5 | 91.5 | +8.7% | | Gross Profit / (Loss) | 5.4 | (2.3) | Turned profitable | | Gross Profit Margin | 5.4% | (2.5%) | +7.9 ppt | | Loss from Operating Activities | (11.0) | (23.3) | -53% | | Net Loss | (17.6) | (41.8) | -58% | | Net Loss Margin | 18% | 46% | -28 ppt | 2019 Revenue by Region (Million USD) | Region | 2019 Revenue | 2018 Revenue | Year-on-Year Change | Proportion of Total Revenue (2019) | | :--- | :--- | :--- | :--- | :--- | | Vietnam Domestic Sales | 50.8 | 50.2 | +1.2% | 51% | | Export Sales | 48.7 | 41.3 | +18% | 49% | - Due to unsatisfactory performance, the Group conducted impairment tests on related property, plant, and equipment, recognizing an impairment loss of approximately **$8.3 million**[28](index=28&type=chunk) - As of the end of 2019, the Group's net current assets were **$57.5 million** (2018: **$77.7 million**), and the debt-to-equity ratio (bank loans/shareholders' equity) increased from **23%** to **43%**[31](index=31&type=chunk) [Outlook](index=7&type=section&id=Outlook) For 2020, the Group anticipates stable Vietnamese economic growth but remains cautious of risks from uncertain Chinese parts supply, intense market competition, and global macroeconomic factors, planning to focus on product innovation with new models, introduce a new corporate identity, improve dealer systems, and explore land development opportunities to diversify revenue streams - Vietnam's economy is expected to grow steadily in 2020, but risks include uncertainty in Chinese parts supply, intense price competition in the motorcycle industry, and global trade frictions[39](index=39&type=chunk) - Product Strategy: The Group plans to launch several new or revamped scooter, moped, and electric vehicle models to increase the proportion of high-value-added products[40](index=40&type=chunk) - Market Strategy: The Group will introduce a new corporate identity system, change the SYM brand logo, improve the dealer agency system, and expand sales and maintenance service points[40](index=40&type=chunk) - Asset Revitalization: The Group will review the land development potential of its old factory in Bien Hoa City, Dong Nai Province, and continue to advance the joint venture land development project in Ha Dong District, Hanoi City, to expand revenue sources[40](index=40&type=chunk) [Other Disclosures](index=8&type=section&id=Other%20Disclosures) As of the end of 2019, **$22.8 million** of the **$76.7 million** net proceeds from the 2007 IPO remained unutilized, primarily allocated for production site development and land development, with the company also acquiring a property in Hanoi for **VND 70 billion** (approximately **$3 million**) during the year, and the Board not recommending a final dividend Use of IPO Proceeds (As of December 31, 2019, Million USD) | Use | Planned Net Amount | Amount Utilized | Unutilized Balance | | :--- | :--- | :--- | :--- | | R&D Center and Distribution Channels | 30.7 | 30.7 | – | | M&A and Working Capital | 11.7 | 11.7 | – | | Production Site Development and Relocation | 15.0 | 7.3 | 7.7 | | Land Development | 19.3 | 4.2 | 15.1 | | **Total** | **76.7** | **53.9** | **22.8** | - During the year, the company acquired a property in Tay Ho District, Hanoi City, Vietnam, through a nominee for a total consideration of **VND 70 billion** (approximately **$3 million**)[46](index=46&type=chunk) - The Board does not recommend the payment of a final dividend for the year ended December 31, 2019[50](index=50&type=chunk) [Corporate Governance Report](index=10&type=section&id=Corporate%20Governance%20Report) [Corporate Governance Practices and the Board](index=10&type=section&id=Corporate%20Governance%20Practices%20and%20the%20Board) The company complied with the HKEX Listing Rules' Corporate Governance Code in 2019, with the only deviation being the absence of a Nomination Committee, whose responsibilities were assumed by the Board, which comprises **4** executive, **2** non-executive, and **3** independent non-executive directors, ensuring a balanced structure with separate roles for Chairman and CEO - The company complied with the Corporate Governance Code, with the only deviation being the absence of a Nomination Committee, whose functions were performed by the Board[53](index=53&type=chunk) - The Board consists of **9** members, including **4** executive directors, **2** non-executive directors, and **3** independent non-executive directors[57](index=57&type=chunk) - The responsibilities of the Chairman (Mr. Liu Wu-Hsiung) and the Chief Executive Officer (Mr. Lin Chih-Ming) are clearly separated and not held by the same individual[61](index=61&type=chunk) [Board Committees](index=11&type=section&id=Board%20Committees) The company has established a Remuneration Committee, comprising two independent non-executive directors and one executive director, responsible for executive compensation, and an Audit Committee, composed of three independent non-executive directors, overseeing financial reporting, risk management, and internal controls, with both committees holding multiple meetings during the year with full attendance - The Remuneration Committee comprises Ms. Lin Ching-Ching (Chairperson), Ms. Wu Kuei-Mei, and Mr. Liu Wu-Hsiung, and held **three** meetings during the year[66](index=66&type=chunk)[67](index=67&type=chunk) - The Audit Committee comprises three independent non-executive directors: Ms. Lin Ching-Ching (Chairperson), Mr. Shen Hua-Jung, and Ms. Wu Kuei-Mei, and held **four** meetings during the year[68](index=68&type=chunk)[69](index=69&type=chunk) [Risk Management and Internal Control](index=13&type=section&id=Risk%20Management%20and%20Internal%20Control) The Board is responsible for assessing the Group's risk appetite and ensuring effective risk management and internal control systems, with an internal audit department reviewing financial, operational, and compliance controls at least annually, and management confirming the effectiveness and adequacy of these systems for 2019, alongside established procedures for handling and disseminating inside information - The Board is responsible for ensuring the Group establishes and maintains appropriate and effective risk management and internal control systems, and reviews their effectiveness at least once a year[77](index=77&type=chunk) - Management has confirmed to the Board that, as of the end of 2019, the company's risk management and internal control systems were effective and adequate[77](index=77&type=chunk) - The Group has established procedures for handling and disseminating inside information to ensure timely public disclosure of inside information whenever reasonably practicable[81](index=81&type=chunk) [Shareholder Relations and Rights](index=15&type=section&id=Shareholder%20Relations%20and%20Rights) The Group maintains transparent communication with shareholders and investors through annual reports, announcements, and its website, clearly outlining shareholder rights, including the procedure for calling an extraordinary general meeting by shareholders holding at least **10%** of the paid-up capital and the process for nominating director candidates - The Group is committed to maintaining high transparency, ensuring investors and shareholders receive timely company information[88](index=88&type=chunk) - Shareholders holding not less than **10%** of the company's paid-up capital may request the Board in writing to convene an extraordinary general meeting[90](index=90&type=chunk) [Biographies of Directors and Senior Management](index=16&type=section&id=Biographies%20of%20Directors%20and%20Senior%20Management) This section provides detailed biographies of the company's executive, non-executive, and independent non-executive directors, as well as senior management, including their age, position, professional experience, educational background, and tenure within the Group and affiliated companies like Sanyang Industry, with most core management possessing over **20** years of experience in the motorcycle industry - This chapter details the personal resumes of the company's executive directors, non-executive directors, independent non-executive directors, and senior management, including their age, position, professional experience, educational background, and tenure within the Group and affiliated companies (such as Sanyang Industry)[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk) - Most core management personnel possess over **20** years of senior experience in the motorcycle industry[100](index=100&type=chunk) [Directors' Report](index=18&type=section&id=Directors%27%20Report) [Principal Activities and Performance](index=18&type=section&id=Principal%20Activities%20and%20Performance) The company's principal activity is investment holding, with its subsidiaries primarily engaged in manufacturing and selling motorcycles, parts, engines, and providing maintenance services, and while the Group's 2019 performance is detailed in the financial statements, the Board does not recommend a final dividend for the year, having adopted a dividend policy to share profits while retaining sufficient reserves for future growth - The Group's principal activities are the manufacturing and sale of motorcycles, parts, and engines, as well as providing motorcycle maintenance services[104](index=104&type=chunk) - The Board does not recommend the payment of a final dividend for the year ended December 31, 2019[105](index=105&type=chunk) [Major Customers and Suppliers](index=19&type=section&id=Major%20Customers%20and%20Suppliers) In FY2019, the Group exhibited high customer concentration, with the largest customer accounting for **24.4%** of total revenue and the top five customers collectively representing **49.5%**, while its supplier base was more diversified, with the top five suppliers accounting for less than **30%** of total purchases FY2019 Customer Concentration | Customer Category | Percentage of Total Revenue | | :--- | :--- | | Largest Customer | 24.4% | | Top Five Customers | 49.5% | - As of the end of 2019, the total purchases from the Group's top five suppliers accounted for less than **30%** of total purchases[113](index=113&type=chunk) [Directors' and Major Shareholders' Interests](index=21&type=section&id=Directors%27%20and%20Major%20Shareholders%27%20Interests) This report discloses the share interests of directors and chief executives in an associated corporation, Sanyang Industry Co., Ltd., and identifies Sanyang Industry Co., Ltd., through its wholly-owned subsidiary SY International Ltd., as the company's major controlling shareholder, holding **608,818,000** ordinary shares, representing **67.07%** of the total share capital - Several directors hold shares in the ultimate holding company, Sanyang Industry Co., Ltd., with non-executive director Ms. Wu Kuei-Mei holding the highest proportion at approximately **1.997%**[129](index=129&type=chunk) Major Shareholder Holdings (As of December 31, 2019) | Major Shareholder Name | Capacity | Number of Shares Held | Approximate Percentage of Total Share Capital | | :--- | :--- | :--- | :--- | | Sanyang Industry Co., Ltd. | Interest in controlled corporation | 608,818,000 | 67.07% | | SY International Ltd. | Beneficial owner | 608,818,000 | 67.07% | [Connected Transactions](index=22&type=section&id=Connected%20Transactions) The Group engages in multiple continuing connected transactions with its indirect major shareholder, Sanyang Group, primarily involving the purchase and sale of motorcycle parts, distribution agency, technical licensing, and R&D services, with all transactions in 2019 remaining within their approved annual caps and confirmed as fair and reasonable by independent non-executive directors and auditors 2019 Major Continuing Connected Transactions (USD) | Transaction Agreement | Nature of Transaction | 2019 Actual Amount | 2019 Annual Cap | | :--- | :--- | :--- | :--- | | Master Purchase Agreement | Purchase of parts from Sanyang Group | 10,826,883 | 11,100,000 | | Distribution Agreement | Acting as distributor for Sanyang Group | 2,304,048 | 3,301,000 | | Technical License Agreement | Use of Sanyang technology | 1,276,535 | 2,580,000 | | Parts Sales Agreement | Sale of parts to Sanyang Group | 1,188,103 | 1,550,000 | - Both the independent non-executive directors and the company's auditors have reviewed the continuing connected transactions during the year and confirmed that the transaction terms are fair and reasonable, in the overall interest of the company and its shareholders, and did not exceed the annual caps[144](index=144&type=chunk) [Environmental, Social and Governance Report](index=25&type=section&id=Environmental%20Social%20and%20Governance%20Report) [Environment and Safety](index=26&type=section&id=Environment%20and%20Safety) The Group adheres to ISO 14001 environmental management and 5S safety systems, with primary environmental risks from VOC emissions during painting, which decreased by **0.76%** in 2019, though total waste significantly increased to **682,246 kg** due to factory relocation, while maintaining robust wastewater treatment and energy/water conservation efforts, with no major environmental violations reported - The Group adheres to the ISO 14001 environmental management system and the 5S safety management system, with a Safety and Health Committee led by the General Manager[159](index=159&type=chunk)[160](index=160&type=chunk) 2019 Emissions Data | Emission | Emission Volume | | :--- | :--- | | Carbon Dioxide | 9,490,534 tonnes | | Volatile Organic Compounds (VOC) | 29,099 tonnes | | Hazardous Waste | 448,552 kg | | Non-Hazardous Waste | 233,724 kg | - The Group provides annual physical examinations and environmental safety and health training for employees, with special positions undergoing occupational disease examinations, and no occupational diseases were found among employees in 2019[178](index=178&type=chunk) [Product Responsibility](index=30&type=section&id=Product%20Responsibility) Guided by 'Focus on Core Business, Quality First, Customer Satisfaction,' the Group implements ISO 9001 quality management, conducts regular quality, technical, and environmental audits of suppliers, prioritizing local procurement in Vietnam, and engages with dealers and consumers through satisfaction surveys and communication, reporting no major quality violations or product recalls in 2019 - The Group establishes quality control procedures in accordance with ISO 9001 quality management system requirements and has a "Product Quality Defect Recall and Correction Measures" in place, with no major quality violations or product recalls during the year[180](index=180&type=chunk)[181](index=181&type=chunk) - Supplier management adopts a global procurement principle while prioritizing local procurement in Vietnam whenever possible, and the Group conducts regular on-site audits of suppliers[181](index=181&type=chunk) - The Group conducts annual customer satisfaction surveys and comprehensive product surveys for the Vietnamese market to understand end-consumer needs[184](index=184&type=chunk)[185](index=185&type=chunk) [Employee Care](index=32&type=section&id=Employee%20Care) The Group upholds diversity and non-discrimination, offering salaries approximately **17%** above the legal minimum wage, along with year-end bonuses and other incentives, with a welfare committee providing subsidies, group insurance, health checks, and recreational activities, strictly prohibiting child and forced labor, establishing a labor union, and offering comprehensive training programs, including opportunities for Vietnamese executives at Sanyang Taiwan - The Group's standard employee salaries are approximately **17%** higher than the government's statutory minimum wage, and it provides year-end bonuses and holiday bonuses[188](index=188&type=chunk) - The Group has legally established a labor union, which holds regular quarterly meetings, and an annual "Labor Conference" to ensure smooth labor-management communication[191](index=191&type=chunk) - A comprehensive employee training system and training center are in place, offering diverse courses, and providing opportunities for Vietnamese executives to intern at the Taiwan headquarters[191](index=191&type=chunk)[192](index=192&type=chunk) [Anti-Corruption and Community Engagement](index=34&type=section&id=Anti-Corruption%20and%20Community%20Engagement) The Group strictly prohibits corruption, adhering to a 'Code of Professional Ethics' and maintaining a robust internal audit system to prevent fraud, with no significant non-compliance or corruption issues identified in 2019, and annually invests approximately **VND 1 billion** (around **$42,500**) in environmental, social, and educational community initiatives, such as supporting underprivileged students and improving living conditions - The Group has a strict "Code of Professional Ethics" prohibiting corruption, bribery, and other misconduct, and has established an internal audit unit, reporting directly to the Board, for supervision[194](index=194&type=chunk)[195](index=195&type=chunk) - The Group annually invests approximately **VND 1 billion** (around **$42,500**) in community welfare activities, covering three major areas: environmental protection, social participation, and education and culture[199](index=199&type=chunk) [Independent Auditor's Report](index=36&type=section&id=Independent%20Auditor's%20Report) [Audit Opinion](index=36&type=section&id=Audit%20Opinion) KPMG, the auditor, issued an unmodified opinion, stating that the consolidated financial statements fairly present the Group's financial position as of December 31, 2019, and its financial performance and cash flows for the year then ended, in accordance with International Financial Reporting Standards and the disclosure requirements of the Hong Kong Companies Ordinance - KPMG, the auditor, issued an unmodified audit opinion on the company's consolidated financial statements for the year 2019[202](index=202&type=chunk) [Key Audit Matters](index=36&type=section&id=Key%20Audit%20Matters) A key audit matter was the impairment assessment of property, plant, and equipment, right-of-use assets, and prepayments for these assets, given the Group's sustained losses, which involved significant management judgment; the auditors evaluated management's assessment process, challenged key assumptions in cash flow forecasts, performed sensitivity analyses, and utilized internal valuation experts to assess reasonableness - A key audit matter was the impairment assessment of non-current assets related to the motorcycle business, as its determination involves significant management judgment and inherent uncertainty[206](index=206&type=chunk)[207](index=207&type=chunk) - The auditor's procedures included evaluating management's assessment process, challenging key assumptions in cash flow forecasts, performing sensitivity analyses, and assessing the independence and methodology of external valuation experts[207](index=207&type=chunk) [Consolidated Financial Statements and Notes](index=40&type=section&id=Consolidated%20Financial%20Statements%20and%20Notes) [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=40&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For FY2019, the Group's revenue increased **8.7%** to **$99.5 million**, gross profit turned positive to **$5.37 million** from a prior-year loss, operating loss narrowed to **$10.99 million**, and after an **$8.29 million** impairment loss and **$1.65 million** net finance income, the pre-tax loss was **$17.57 million**, resulting in a significantly reduced loss attributable to equity holders of **$17.59 million** (from **$41.84 million**), with basic loss per share at **$0.02** Consolidated Income Statement Summary (USD) | Item | 2019 | 2018 | | :--- | :--- | :--- | | Revenue | 99,499,318 | 91,546,757 | | Gross Profit / (Loss) | 5,371,492 | (2,330,403) | | Result from Operating Activities | (10,989,394) | (23,315,513) | | Loss Before Tax | (17,570,369) | (40,508,754) | | Loss for the Year After Tax | (17,594,249) | (41,842,673) | | Loss Attributable to Equity Holders of the Company | (17,594,257) | (41,842,673) | | Loss Per Share (Basic and Diluted) | (0.02) | (0.05) | [Consolidated Statement of Financial Position](index=42&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of December 31, 2019, the Group's total assets decreased to **$109.2 million** from **$115.2 million**, while total liabilities increased to **$44.73 million** due to higher bank loans, leading to a reduction in net assets (total equity) from **$82.12 million** to **$64.57 million**, with net current assets at **$57.5 million** and the current ratio declining from **3.3** to **2.3** Consolidated Statement of Financial Position Summary (USD) | Item | December 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Non-Current Assets | 7,988,584 | 4,435,924 | | Current Assets | 101,232,034 | 110,775,290 | | **Total Assets** | **109,220,618** | **115,211,214** | | **Liabilities and Equity** | | | | Current Liabilities | 43,729,879 | 33,078,444 | | Non-Current Liabilities | 925,636 | 13,037 | | **Total Liabilities** | **44,655,515** | **33,091,481** | | **Total Equity** | **64,565,103** | **82,119,733** | [Consolidated Statement of Cash Flows](index=44&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) In 2019, net cash used in operating activities improved to **$12.42 million** from **$26.78 million**, net cash outflow from investing activities was **$5.10 million** primarily for property, plant, and equipment, and net cash inflow from financing activities was **$7.95 million** mainly from new bank loans, resulting in a net decrease of **$9.56 million** in cash and cash equivalents, with an ending balance of **$19.02 million** Consolidated Statement of Cash Flows Summary (USD) | Item | 2019 | 2018 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (12,417,076) | (26,777,591) | | Net Cash (Used in) / Generated from Investing Activities | (5,101,491) | 46,810,150 | | Net Cash Generated from / (Used in) Financing Activities | 7,953,813 | (4,623,650) | | **Net (Decrease) / Increase in Cash and Cash Equivalents** | **(9,564,754)** | **15,408,909** | | Cash and Cash Equivalents at January 1 | 28,578,446 | 13,356,314 | | **Cash and Cash Equivalents at December 31** | **19,016,628** | **28,578,446** | [Notes to the Consolidated Financial Statements](index=45&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes detail the company's significant accounting policies, estimates, and judgments, providing comprehensive classifications and explanations for financial statement items, including the impact of IFRS 16 adoption, segment information by business and geography, specifics of asset impairment losses, related party transactions, and financial risk management policies - The company adopted IFRS 16 "Leases" from January 1, 2019, choosing the modified retrospective approach, with adjustments made to the opening balances and comparative information not restated[251](index=251&type=chunk) - Note 4 provides detailed disclosure of revenue and segment results by business (manufacturing and sales of motorcycles, parts and engines, molds, and maintenance services) and by region (Vietnam, Malaysia, Philippines, etc)[336](index=336&type=chunk)[339](index=339&type=chunk)[345](index=345&type=chunk) - Note 11(c) details the **$8.29 million** asset impairment loss recognized during the year, attributed to intense competition in the motorcycle industry and increased manufacturing costs leading to sustained operating losses[373](index=373&type=chunk)[374](index=374&type=chunk) - Note 26 provides specific amounts for continuing connected transactions with the ultimate holding company, Sanyang, and its subsidiaries, including sales, purchases, and technology transfers[462](index=462&type=chunk)

Vietnam Manufacturing and Export Processing (Holdings) Limited 越南製 造加工出口(控股)有限公司 (Stock Code: 422) (Incorporated in the Cayman Islands with limited liability) Vietnam Manufacturing and Export Processing (Holdings) Limited 越南製 造加工出口(控股)有限公司 （股份代號:422） （於開曼群島註冊成立之有限公司） 中期報告2019 INTERIM REPORT2019 目 錄 公司資料 2 管理層討論及分析 3 其他事項 10 獨立核數師審閱報告 15 綜合損益及其他全面收益表 16 綜合財務狀況表 18 綜合權益變動表 20 簡明綜合現金流量表 21 未經審核中期財務報告附註 22 二零一九年中期報告 02 畢馬威會計師事務所 | --- | --- | |------------------------|------------------------------------------- ...

[Company Overview](index=2&type=section&id=Company%20Overview) This section outlines the company's fundamental information, including its leadership, auditors, and operational locations - Chairman is Mr. Liu Wu-Hsiung, and CEO is Mr. Lin Chih-Ming (appointed on August 13, 2018)[17](index=17&type=chunk) - The company's auditor is KPMG[17](index=17&type=chunk) - The company's stock code is 422, incorporated in the Cayman Islands, with main production facilities in Dong Nai Province and Hanoi City, Vietnam[18](index=18&type=chunk)[24](index=24&type=chunk) [Financial Summary](index=3&type=section&id=Financial%20Summary) The Group faced significant challenges in FY2018, with revenue decline, a shift from profit to gross loss, and a substantial increase in net loss, leading to a sharp decrease in total assets and net equity [Five-Year Financial Data Summary](index=3&type=section&id=Five-Year%20Financial%20Data%20Summary) The Group faced significant challenges in FY2018, with revenue decline, a shift from profit to gross loss, and a substantial increase in net loss, leading to a sharp decrease in total assets and net equity. Return on equity deteriorated to -50.9%, but the current ratio remained stable at 3.3 times Past Five Years Consolidated Results and Balance Sheet Summary (Million USD) | Indicator | 2018 | 2017 | 2016 | 2015 | 2014 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Results** | | | | | | | Revenue | 91.5 | 133.2 | 125.7 | 177.5 | - | | Gross (Loss) / Profit | (2.3) | 15.7 | 9.1 | 11.9 | - | | Loss Before Income Tax | (40.5) | (13.2) | (11.0) | (15.5) | - | | Loss Attributable to Equity Holders | (41.8) | (9.8) | (7.8) | (10.2) | - | | Loss Per Share (USD) | (0.050) | (0.010) | (0.009) | (0.011) | - | | **Assets and Liabilities** | | | | | | | Total Assets | 115.2 | 178.0 | 177.3 | 212.1 | - | | Total Liabilities | 33.1 | 43.4 | 41.0 | 62.7 | - | | Net Assets | 82.1 | 134.6 | 136.3 | 149.4 | - | | **Ratios** | | | | | | | Return on Equity (%) | (50.9) | (7.4) | (5.9) | (7.0) | - | | Current Ratio (Times) | 3.3 | 3.5 | 3.7 | 2.9 | - | | Debt to Equity Ratio (%) | 23 | 19 | 18 | 25 | - | [Management Discussion and Analysis](index=4&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an in-depth review of the Group's operating environment, financial performance, liquidity, human resources, and future strategies [Operating Environment and Business Review](index=5&type=section&id=Operating%20Environment%20and%20Business%20Review) Despite strong Vietnamese economic growth in 2018, the motorcycle industry faced intense competition and rising costs, with the Group maintaining its third-place market position and expanding product offerings - Vietnam's GDP growth reached **7.08%** in 2018, a ten-year high, but the motorcycle industry faced intense competition and challenges from environmental and infrastructure limitations[25](index=25&type=chunk) - The Group ranked third in the Vietnamese market, behind Honda and Yamaha, selling approximately **57.3 thousand units** in 2018, with a market share of **1.7%**[26](index=26&type=chunk) - To address market changes, the Group launched several new models in 2018, including the Abela 110 scooter, 50cc commuter series (Elegant 50, Angela 50, Galaxy 50), and the high-performance Star SR 170[28](index=28&type=chunk) - As of the end of 2018, the Group had **213 SYM authorized distribution points** across all provinces in Vietnam[28](index=28&type=chunk) [Financial Review](index=5&type=section&id=Financial%20Review) In FY2018, the Group's net loss significantly widened to $41.8 million due to a slight revenue decrease, increased cost of sales, and a substantial impairment loss on property, plant, and equipment FY2018 Key Financial Indicators Change (Million USD) | Indicator (Million USD) | 2018 | 2017 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 91.5 | 93.7 | -2.3% | | Cost of Sales | 93.9 | 87.7 | +7.1% | | Gross (Loss) / Profit | (2.3) | 6.1 | Shift from profit to loss | | Loss from Operations | (43.5) | (13.2) | +230% | | Net Loss | (41.8) | (9.3) | +349% | | Net Loss Margin | 46% | 10% | +36pp | - Due to poor performance, the Group conducted impairment tests on property, plant and equipment and prepaid lease payments, recognizing an impairment loss of approximately **$20.2 million**[37](index=37&type=chunk) - Administrative and other expenses increased by **47%** year-on-year to **$13.7 million**, primarily due to increased research and development expenses[36](index=36&type=chunk) [Liquidity and Financial Resources](index=7&type=section&id=Liquidity%20and%20Financial%20Resources) As of year-end 2018, the Group's net current assets and cash decreased, while interest-bearing borrowings were short-term, with the board affirming a stable financial position Liquidity and Financial Position (As of Year-End) (Million USD) | Indicator (Million USD) | December 31, 2018 | December 31, 2017 | | :--- | :--- | :--- | | Net Current Assets | 77.7 | 105.1 | | Cash and Bank Balances | 63.7 | 102.2 | | Interest-Bearing Borrowings Due Within One Year | 18.9 | 23.3 | | Gearing Ratio | 23.0% | 18.6% | [Human Resources](index=7&type=section&id=Human%20Resources) The Group maintained a stable workforce of 1,575 employees in 2018, with total annual compensation and related costs increasing by approximately 5.8% - As of December 31, 2018, the Group's total number of employees was **1,575** (2017: 1,578)[47](index=47&type=chunk) - Total annual salaries and related costs for 2018 were approximately **$12.8 million**, an increase from **$12.1 million** in 2017[47](index=47&type=chunk) [Outlook and Strategies](index=8&type=section&id=Outlook%20and%20Strategies) For 2019, the Group anticipates continued challenges in the motorcycle industry and plans to focus on product innovation, brand enhancement, channel optimization, and ASEAN market expansion - The operating environment for the Vietnamese motorcycle industry is expected to remain challenging in 2019, with continued price volatility and competition[49](index=49&type=chunk) - Key strategies for 2019 include: - **Product Innovation**: Plans to launch several new or revamped scooter, commuter, and electric vehicle models - **Brand Enhancement**: Introduction of a new corporate identity system, including a change to the SYM brand logo - **Channel Optimization**: Improvement of the dealer agency system and expansion of sales and service points - **Market Expansion**: Active participation in ASEAN market promotion and introduction of diversified OEM products[50](index=50&type=chunk) [Use of Proceeds from Initial Public Offering](index=8&type=section&id=Use%20of%20Proceeds%20from%20Initial%20Public%20Offering) Of the $76.7 million net IPO proceeds from 2007, $41.4 million has been utilized for distribution channel expansion and R&D center construction, with $35.3 million remaining unused IPO Proceeds Utilization (Million USD) | Use | Allocation in Prospectus | Amount Used | Balance as of End of 2018 | | :--- | :--- | :--- | :--- | | Construction and Establishment of R&D Center in Vietnam | 15.0 | 11.7 | 3.3 | | Expansion of Distribution Channels in Vietnam | 4.0 | 4.0 | – | | - Enhancement of Existing Dealers | 46.0 | 14.0 | 32.0 | | - Construction of New Dedicated Stores | 9.0 | 9.0 | – | | Acquisition of Assets or Businesses | 2.7 | 2.7 | – | | General Working Capital | 76.7 | 41.4 | 35.3 | [Corporate Governance Report](index=9&type=section&id=Corporate%20Governance%20Report) This report details the company's adherence to corporate governance principles, board structure, committee functions, risk management, and shareholder rights [Corporate Governance Practices and the Board](index=10&type=section&id=Corporate%20Governance%20Practices%20and%20the%20Board) The company complied with HKEX Listing Rules on corporate governance in 2018, with the Board assuming nomination committee duties and clear separation of Chairman and CEO roles - The company complied with the Corporate Governance Code, with the only deviation being the absence of a Nomination Committee, whose functions were performed by the Board as a whole[56](index=56&type=chunk) - The responsibilities of the Chairman (Mr. Liu Wu-Hsiung) and CEO (Mr. Lin Chih-Ming) are clearly segregated, in compliance with the Code[63](index=63&type=chunk) 2018 Board and General Meeting Attendance Record | Director Name | Board Meetings Attended | General Meetings Attended | | :--- | :--- | :--- | | Mr. Liu Wu-Hsiung | 8/8 | 2/2 | | Mr. Lin Chih-Ming | 2/2 | 0/0 | | Mr. Lin Chun-Yu | 8/8 | 2/2 | | Mr. Chiang Chin-Yung | 2/2 | 0/0 | | Ms. Wu Li-Chu | 6/8 | 2/2 | | Mr. Chiu Ying-Feng | 8/8 | 0/2 | | Ms. Lin Ching-Ching | 8/8 | 2/2 | | Mr. Shen Hua-Jung | 8/8 | 2/2 | | Ms. Wu Kuei-Mei | 8/8 | 2/2 | | Mr. Lu Tien-Fu (Resigned) | 5/5 | 0/0 | [Board Committees](index=11&type=section&id=Board%20Committees) The company established Audit and Remuneration Committees, both comprising independent non-executive directors, to oversee financial reporting, risk management, and executive compensation policies - **Audit Committee**: Composed of three independent non-executive directors, chaired by Ms. Lin Ching-Ching. Held **4 meetings** during the year, with all members in full attendance, responsible for reviewing financial reports, risk management, and internal control systems[69](index=69&type=chunk)[70](index=70&type=chunk) - **Remuneration Committee**: Composed of two independent non-executive directors and one executive director, chaired by Ms. Lin Ching-Ching. Held **3 meetings** during the year, with all members in full attendance, responsible for recommending remuneration policies and structures to the Board[67](index=67&type=chunk)[68](index=68&type=chunk) [Risk Management and Internal Control](index=13&type=section&id=Risk%20Management%20and%20Internal%20Control) The Board is responsible for assessing and managing the Group's risks, ensuring effective internal control systems are in place and reviewed annually, with management confirming their adequacy - The Board is responsible for overseeing risk management and internal control systems, reviewing their effectiveness at least annually[78](index=78&type=chunk) - Management confirmed to the Board that the company's risk management and internal control systems were effective and adequate for the year ended December 31, 2018[78](index=78&type=chunk) [Shareholder Rights](index=15&type=section&id=Shareholder%20Rights) The report outlines procedures for shareholders to submit proposals, requisition extraordinary general meetings, and nominate directors, ensuring transparency and engagement - Shareholders holding not less than **10%** of the company's paid-up capital have the right to request the Board to convene an extraordinary general meeting in writing[92](index=92&type=chunk) - Shareholders may nominate candidates for directorship at general meetings by providing written notice to the company in advance as required[93](index=93&type=chunk) [Directors' Report](index=17&type=section&id=Directors%27%20Report) This report provides an overview of the company's business, financial performance, key relationships, director and shareholder interests, and significant transactions [Business Review and Results](index=18&type=section&id=Business%20Review%20and%20Results) The company, primarily an investment holding entity with core motorcycle manufacturing operations, reported no significant business changes in 2018 and proposed no final dividend, adhering to its dividend policy - The Board does not recommend the payment of a final dividend for the year ended December 31, 2018[108](index=108&type=chunk) - The company has adopted a dividend policy, but dividend payment considers financial performance, reserves, operational needs, and future development, among other factors[109](index=109&type=chunk) [Key Customers, Suppliers, and Employee Relations](index=19&type=section&id=Key%20Customers%2C%20Suppliers%2C%20and%20Employee%20Relations) The Group maintained diversified customer and supplier bases in 2018, with no single entity exceeding 50% of revenue or procurement, while valuing employees through competitive compensation and development - As of the end of 2018, none of the five largest customers or suppliers accounted for more than **50%** of the Group's total operating revenue or procurement[113](index=113&type=chunk) - The Group considers employees valuable assets, providing competitive compensation, training, and development opportunities to motivate them[115](index=115&type=chunk) [Directors' and Shareholders' Interests](index=20&type=section&id=Directors%27%20and%20Shareholders%27%20Interests) The report details shareholdings of directors and major shareholders, including Sym Yang Industrial Co Ltd as the controlling shareholder, noting the expiration of the 2007 share option scheme - The share option scheme adopted on November 24, 2007, expired on November 23, 2017, with no remaining share options as of the end of 2018[133](index=133&type=chunk) Major Shareholders' Interests in the Company's Shares (December 31, 2018) | Major Shareholder Name | Capacity | Number of Shares Held (Shares) | Approximate Percentage of Total Share Capital (%) | | :--- | :--- | :--- | :--- | | Sanyang Industry Co Ltd | Interest in controlled corporation | 608,818,000 (L) | 67.07% | | SY International Ltd | Beneficial owner | 608,818,000 (L) | 67.07% | [Connected Transactions](index=24&type=section&id=Connected%20Transactions) The Group engaged in ongoing connected transactions with its ultimate holding company, including procurement and technical services, all conducted within annual limits and deemed fair by independent directors 2018 Major Continuing Connected Transaction Amounts (USD) | Transaction Type | 2018 Transaction Amount | 2018 Annual Cap | | :--- | :--- | :--- | | General Purchase Agreement (Purchase of parts from Sanyang Group) | 13,284,154 | 42,430,000 | | Distribution Agreement (Agency for Sanyang Group products) | 2,637,616 | 10,000,000 | | Technical License Agreement | 1,513,924 | 5,680,000 | | Research and Development Service Agreement | 2,576,694 | 4,910,000 | - Independent non-executive directors and the company's auditor reviewed these continuing connected transactions, confirming their compliance with relevant Listing Rules[155](index=155&type=chunk) [Major Acquisition](index=26&type=section&id=Major%20Acquisition) In 2018, the company acquired Sym Yang Motors Vietnam Co Ltd for $4.7 million to consolidate and relocate its existing manufacturing facilities, completing the transaction in December - In 2018, the Group completed the acquisition of Sym Yang Motors Vietnam Co Ltd for a total consideration of **$4.7 million**, aiming to integrate production facilities[159](index=159&type=chunk) [Environmental, Social and Governance Report](index=26&type=section&id=Environmental%2C%20Social%20and%20Governance%20Report) This report details the Group's commitment to environmental protection, social responsibility, and robust governance practices [Environmental Protection and Safety](index=27&type=section&id=Environmental%20Protection%20and%20Safety) The Group adheres to ISO14001 and 5S management for environmental and occupational safety, implementing measures for air, waste, and wastewater control, alongside energy and water conservation efforts - The Group has obtained **ISO14001** environmental management system certification and established a Safety and Health Committee to review and promote environmental and labor safety policies[167](index=167&type=chunk)[169](index=169&type=chunk) 2018 Emissions and Resource Consumption Data | Category | Item | Total Amount | | :--- | :--- | :--- | | **Air Pollutants** | Volatile Organic Compounds (VOC) | 29,321 Metric Tons | | **Waste** | Hazardous Waste | 289,056 Kilograms | | | Non-Hazardous Waste | 64,270 Kilograms | | **Energy Consumption** | Electricity | 11,622,659 Kilowatts | | **Water Consumption** | Tap Water | 124,669 Cubic Meters | | | Groundwater | 12,448 Cubic Meters | - To ensure employee occupational health, the Group provides annual workplace environment monitoring, employee health examinations, and safety and health education training[186](index=186&type=chunk) [Product Responsibility](index=31&type=section&id=Product%20Responsibility) The Group upholds quality and customer satisfaction through ISO9001, rigorous supplier audits, and active engagement with distributors and consumers, while developing eco-friendly electric vehicles - The Group adheres to the **ISO9001** quality management system, controlling product quality from raw material intake to shipment[188](index=188&type=chunk) - In supplier management, the Group implements global procurement and conducts regular on-site audits of suppliers for quality, labor safety, and environmental compliance[190](index=190&type=chunk) - To address environmental trends, the Group is committed to developing various electric vehicle models in addition to gasoline motorcycles[193](index=193&type=chunk) [Employee Care](index=33&type=section&id=Employee%20Care) The Group provides competitive compensation, comprehensive benefits, and training programs, fostering a respectful and non-discriminatory environment with established labor union communication channels - The Group's standard employee salaries are approximately **16% higher** than the government's statutory minimum wage to ensure labor stability[197](index=197&type=chunk) - The company has legally established a labor union, holding regular quarterly meetings and an annual "Laborers' Meeting" to facilitate labor-management communication[200](index=200&type=chunk) - To cultivate talent, the Group offers Vietnamese executives opportunities for training and internships at Sanyang, the ultimate holding company in Taiwan[202](index=202&type=chunk) [Anti-Corruption and Community Engagement](index=35&type=section&id=Anti-Corruption%20and%20Community%20Engagement) The Group enforces strict anti-corruption policies with internal audit oversight and actively contributes to community welfare through its 'Caring Society' initiative, focusing on environmental, social, and educational programs - The Group has an internal audit unit, reporting to the Board, which conducts routine audits across procurement, production, sales, and finance, with no significant non-compliance or corruption issues found in 2018[205](index=205&type=chunk) - The Group annually invests approximately **1 billion VND (approximately $43.1 thousand USD)** in community welfare activities, covering environmental protection, social participation, and education and culture[210](index=210&type=chunk) [Independent Auditor's Report](index=37&type=section&id=Independent%20Auditor%27s%20Report) This section presents the auditor's opinion on the consolidated financial statements, including key audit matters and their implications [Independent Auditor's Report](index=37&type=section&id=Independent%20Auditor%27s%20Report) KPMG issued an unmodified opinion on the 2018 consolidated financial statements, highlighting the valuation of non-current assets as a key audit matter due to significant impairment losses from operating losses - Auditor KPMG issued an **unmodified opinion** on the 2018 consolidated financial statements[214](index=214&type=chunk) - **Key Audit Matter**: Valuation of non-current assets (including property, plant and equipment, intangible assets, and prepaid lease payments). Due to significant operating losses during the year, management performed impairment assessments on these assets, recognizing an impairment loss of **$20.2 million**, a process involving significant judgment and uncertainty[218](index=218&type=chunk)[219](index=219&type=chunk) [Consolidated Financial Statements](index=41&type=section&id=Consolidated%20Financial%20Statements) This section presents the Group's comprehensive financial performance, position, equity changes, and cash flows for the reporting period [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=41&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) In FY2018, the Group's revenue slightly decreased, resulting in a gross loss and a significant expansion of operating and net losses due to increased costs and substantial asset impairment charges Consolidated Statement of Profit or Loss Summary (USD) | Item | 2018 | 2017 | | :--- | :--- | :--- | | Revenue | 91,546,757 | 93,746,331 | | Gross (Loss) / Profit | (2,330,403) | 6,065,677 | | Impairment Loss on Property, Plant and Equipment | (11,144,183) | (2,232,753) | | Impairment Loss on Prepaid Lease Payments | (9,089,794) | – | | Results from Operating Activities | (43,549,490) | (13,207,786) | | Loss Before Income Tax | (40,508,754) | (9,776,837) | | Loss for the Year After Tax | (41,842,673) | (9,332,218) | | Loss Per Share (USD) | (0.05) | (0.01) | [Consolidated Statement of Financial Position](index=42&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of year-end 2018, total assets significantly decreased to $115 million, primarily due to non-current asset impairment, while total liabilities also declined, leading to a 34.7% reduction in net equity Consolidated Statement of Financial Position Summary (USD) | Item | December 31, 2018 | December 31, 2017 | | :--- | :--- | :--- | | **Assets** | | | | Non-Current Assets | 4,435,924 | 20,704,479 | | Current Assets | 110,775,290 | 140,974,665 | | **Total Assets** | **115,211,214** | **161,679,144** | | **Liabilities and Equity** | | | | Current Liabilities | 33,078,444 | 35,884,646 | | Non-Current Liabilities | 13,037 | – | | **Total Liabilities** | **33,091,481** | **35,884,646** | | **Net Assets** | **82,119,733** | **125,794,498** | [Consolidated Statement of Changes in Equity](index=43&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) Total shareholders' equity decreased from $126 million to $82.12 million by year-end, primarily driven by the $41.84 million net loss and $1.83 million in foreign exchange differences - Shareholders' equity decreased from **$125,794,498** at the beginning of the year to **$82,119,733** at year-end[240](index=240&type=chunk) - The primary drivers for the decrease in equity were the **$41,842,673** loss for the year and **$1,832,092** in other comprehensive income loss (primarily exchange differences)[240](index=240&type=chunk) [Consolidated Statement of Cash Flows](index=44&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) In 2018, the Group experienced a significant increase in net cash outflow from operating activities, offset by net cash inflow from investing activities, resulting in an overall increase in cash and cash equivalents Consolidated Statement of Cash Flows Summary (USD) | Item | 2018 | 2017 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (26,777,591) | (861,561) | | Net Cash From Investing Activities | 46,810,150 | 6,433,447 | | Net Cash Used in Financing Activities | (4,623,650) | (3,339,850) | | Net Increase in Cash and Cash Equivalents | 15,408,909 | 2,232,036 | | Cash and Cash Equivalents at Year-End | 28,578,446 | 13,356,314 | [Notes to the Consolidated Financial Statements](index=45&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section provides detailed explanations and breakdowns of the figures presented in the consolidated financial statements [Note 4: Revenue and Segment Information](index=60&type=section&id=Note%204%3A%20Revenue%20and%20Segment%20Information) The Group's revenue primarily derived from motorcycle sales, which incurred an operating loss, while parts and engine sales were profitable, with Vietnam contributing 55% of total revenue 2018 Segment Results (USD) | Segment | Revenue from External Customers | Adjusted Profit/Loss Before Interest and Tax | | :--- | :--- | :--- | | Manufacturing and Sales of Motorcycles | 78,046,137 | (22,195,534) | | Manufacturing and Sales of Spare Parts and Engines | 13,414,316 | 587,463 | | Molds and Maintenance Services | 86,304 | 153,899 | 2018 Revenue from External Customers by Geographical Location (USD) | Region | Revenue | Percentage | | :--- | :--- | :--- | | Vietnam | 50,200,637 | 54.8% | | Malaysia | 27,925,538 | 30.5% | | Philippines | 11,657,120 | 12.7% | | Other Regions | 1,763,462 | 1.9% | [Note 11: Property, Plant and Equipment](index=69&type=section&id=Note%2011%3A%20Property%2C%20Plant%20and%20Equipment) Due to poor performance, the Group recognized $11.14 million in impairment loss on property, plant, and equipment and $9.09 million on prepaid lease payments, significantly reducing their carrying values - Due to operating losses, the Group performed an impairment assessment on non-current assets, recognizing an impairment loss of **$11,144,183** on property, plant and equipment[391](index=391&type=chunk) - The impairment test was based on value-in-use calculations, applying an **11%** pre-tax discount rate to future cash flow forecasts for the next five years[391](index=391&type=chunk) [Note 25: Financial Risk Management](index=82&type=section&id=Note%2025%3A%20Financial%20Risk%20Management) The Group manages credit, interest rate, foreign exchange, and liquidity risks, noting low credit concentration but a concentration risk in raw material procurement from related parties - **Credit Risk**: The largest debtor accounted for **65%** of total trade receivables, but the Group assesses customer credit, deeming the risk minimal[451](index=451&type=chunk)[452](index=452&type=chunk) - **Foreign Exchange Risk**: Primary risk currencies are USD and New Taiwan Dollar. A sensitivity analysis showed a **5%** change in USD exchange rates would impact post-tax loss by approximately **$0.21 million**[463](index=463&type=chunk)[480](index=480&type=chunk) - **Business Risk**: There is a concentration risk in raw material procurement from related parties (ultimate holding company Sanyang Group), with related purchases accounting for **18%** of total purchases in 2018[486](index=486&type=chunk) [Note 27: Related Party Transactions](index=88&type=section&id=Note%2027%3A%20Related%20Party%20Transactions) This note details recurring transactions with the ultimate holding company, including significant purchases of raw materials and payments for technical services, all compliant with listing rules 2018 Major Related Party Transaction Amounts (USD) | Transaction Type | Transacting Party | 2018 Amount | | :--- | :--- | :--- | | Sales of Finished Goods and Spare Parts | Sanyang Group | 657,454 | | Purchases of Raw Materials and Finished Goods | Sanyang Group and Associates | 15,921,770 | | Purchases of Property, Plant and Equipment | Sanyang Group and Associates | 579,098 | | Technical License Fees | Sanyang Industry Co Ltd | 1,513,924 | | Technical Consulting Fees | Sanyang Industry Co Ltd | 2,576,694 |