CSG — Annual Report 2022

Nov 11, 2022

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Stock Code:1463

CHYANG SHENG DYEING & FINSHING CO., LTD.

PARENT COMPANY ONLY FINANCIAL STATEMENTS

With Independent Auditors’ Report For the Years Ended December 31, 2022 and 2021

Address: No. 126, Dagong Rd., Dayuan Dist, Taoyuan City Telephone: (03)386-7661

The independent auditors’ report and the accompanying parent company only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and parent company only financial statements, the Chinese version shall prevail.

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Table of contents

Contents 1. Cover Page 2. Table of Contents 3. Independent Auditors’ Report 4. Balance Sheets 5. Statements of Comprehensive Income 6. Statements of Changes in Equity 7. Statements of Cash Flows 8. Notes to the Financial Statements (1) Company history (2) Approval date and procedures of the financial statements (3) New standards, amendments and interpretations adopted (4) Summary of significant accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Significant contingent liabilities and unrecognized commitments (10) Losses due to major disasters (11) Subsequent events (12) Other (13) Other disclosures (a) Information on significant transactions (b) Information on investees (c) Information on investment in mainland China (d) Major shareholders (14) Segment information 9. List of major account titles

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KPMG

台北市110615信義路5段7號68樓(台北101大樓) 電 話 Tel + 886 2 8101 6666 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, 傳 真 Fax + 886 2 8101 6667 Xinyi Road, Taipei City 110615, Taiwan (R.O.C.) 網 址 Web kpmg.com/tw

Independent Auditors’ Report

To the Board of Directors of Chyang Sheng Dyeing & Finishing Co., Ltd.:

Opinion

We have audited the financial statements of Chyang Sheng Dyeing & Finishing Co., Ltd. and its subsidiaries (“the Company”), which comprise the balance sheets as of December 31, 2022 and 2021, the statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

1. Dyeing and finishing service revenue

Refer to Note 4(n) "Revenue recognition" to the financial statements.

KPMG, a Taiwan partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

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Description of key audit matter:

The Company engaged in dyeing and finishing processing business, The transaction model of such businesses is that the customers provide the raw fabric, and the Company performs the dyeing and finishing processing of the raw fabric. After analyzing the transaction terms of this business, it is to satisfy the performance obligation and transfer the control of labor to the customer over time. The Company calculates the completion ratio and recognizes the sales revenue based on the progress of the manufacturing work orders. Considering the importance of revenue recognition to the financial statements and the impact of revenue recognition to meet performance obligations over time, therefore, the accountant listed it as the key audit matter.

How the matter was addressed in our audit:

Our principal audit procedures included: understanding of revenue recognition policies adopted by the Company, and comparing them with sales terms to assess the appropriateness of those policies; observing the design of the internal control system of sales revenue on site, and testing the effectiveness of its implementation on a sample basis; sample testing of individual revenue transactions, verification to customer orders, proof of shipment, etc.; selecting samples of sales transactions for the period before and after the end of the year, to review the customer orders, sales terms, inventory completion and shipment records and other related information of these transactions. In addition, the reasonableness of the calculation of the percentage of completion is verified on a sample basis by obtaining the work-in-progress list at the end of the period.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

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Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Standards on Auditing of the Republic of China 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 economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the 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 our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control 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 effectiveness of the Company’s internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

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 conditions that may cast significant doubt on the Company’s ability 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 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 auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient and appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on this financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Cheng-Chien Chen and Sheng-Ho Yu.

KPMG

Taipei, Taiwan (Republic of China) March 23, 2023

Notes to Readers

The accompanying parent company only financial statements are intended only to present the financial position, financial performance and cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such parent company only financial statements are those generally accepted and applied in the Republic of China.

The independent auditors’ report and the accompanying parent company only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and parent company only financial statements, the Chinese version shall prevail.

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(English Translation of Financial Statements Originally Issued in Chinese) CHYANG SHENG DYEING & FINISHING CO., LTD.

Balance Sheets

December 31, 2022 and 2021

(Expressed in thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents (note 6(a)) 1110 Current financial assets at fair value through profit or loss (note 6(b)) 1140 Current contract assets (notes 6(p)) 1170 Notes and accounts receivable, net (notes 6(d) and 7) 130X Inventories (note 6(e)) 1476 Other financial assets (note 7) 1479 Other current assets Non-current assets: 1517 Non-current financial assets at fair value through other comprehensive income (note 6(c)) 1550 Investments accounted for using equity method (note 6(f)) 1600 Property, plant and equipment (notes 6(g) and 8) 1755 Right-of-use assets (note 6(h)) 1760 Investment property (notes 6(i) and 8) 1995 Other non-current assets (notes 6(l), (m) and 8) Total assets	December 31, 2022 Amount % $ 200,744 8 103,301 4 11,271 1 81,195 3 21,338 1 12,424 1 3,560 - 433,833 18 2,316 - 1,367,675 57 460,491 19 171 - 126,076 5 31,845 1 1,988,574 82 $ 2,422,407 100	December 31, 2021 Amount % 181,707 8 126,063 5 14,742 1 84,796 4 31,059 1 8,672 - 14,821 1 461,860 20 2,558 - 1,348,337 56 431,459 18 685 - 124,093 5 19,147 1 1,926,279 80 2,388,139 100 Liabilities and Equity Current liabilities: 2181 Notes and accounts payable 2280 Current lease liabilities (note 6(j)) 2399 Other current liabilities Non-Current liabilities: 2570 Deferred income tax liabilities (note 6(m)) 2580 Non-current lease liabilities (note 6(j)) 2600 Other non-current liabilities Total liabilities Equity (notes 6(n)): 3110 Ordinary shares 3200 Capital surplus Retained earnings: 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity: 3411 Exchange differences on translation of foreign financial statements 3420 Unrealized gains or losses from financial assets at fair value through other comprehensive income 3500 Treasury shares Total equity Total liabilities and equity	December 31, 2022		December 31, 2021 Amount % 45,793 2 518 - 60,694 3 107,005 5 77,030 3 174 - 23,910 1 101,114 4 208,119 9 1,732,684 73 270,375 11 184,567 8 56,835 2 81,169 3 322,571 13 (55,834) (2) 19,015 1 (108,791) (5) (145,610) (6) 2,180,020 91 2,388,139 100
			Amount %
			$ 40,641 2 174 - 59,011 2 99,826 4 77,030 3 - - 24,585 1 101,615 4 201,441 8 1,732,684 72 273,926 11 192,540 8 56,835 2 77,751 3 327,126 13 (22,752) (1) 18,773 1 (108,791) (4) (112,770) (4) 2,220,966 92 $ 2,422,407 100

See accompanying notes to financial statements.

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(English Translation of Financial Statements Originally Issued in Chinese) CHYANG SHENG DYEING & FINISHING CO., LTD.

Statements of Comprehensive Income

For the years ended December 31, 2022 and 2021

(Expressed in thousands of New Taiwan Dollars , except for earnings per share)

Operating revenues (notes 6(p) and 7) 5000 Operating costs (notes 6(e), (g), (l), (q) and 12) Gross profit from operations Operating expenses (notes 6(d), (g), (l), (q) and 12): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Expected credit loss Net operating income Non-operating income and expenses: 7100 Interest income (note 6(r)) 7010 Other income (notes 6(k), (r) and 7) 7020 Other gains and losses (note 6(s)) 7375 Share of profit of associates and joint ventures accounted for using equity method (note 6(f)) 7510 Finance costs (note 6(j)) Profit before income tax 7951 Less: income tax expenses (note 6(m)) Profit 8300 Other comprehensive income: 8310 Items that may not be reclassified subsequently to profit or loss: 8311 Gains (losses) on remeasurements of defined benefit plans (note 6(l)) 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income 8349 Less: income tax related to components of other comprehensive income that will not be reclassified to profit or loss Items that may not be reclassified subsequently to profit or loss 8360 Items that may be reclassified subsequently to profit or loss: 8361 Exchange differences on translation Items that may be reclassified subsequently to profit or loss 8300 Other comprehensive income (after tax) Comprehensive income Basic earnings per share (NT dollars) (note 6(o)) Diluted earnings per share (NT dollars) (note 6(o))	2022 Amount % $ 486,163 100 414,079 85 72,084 15 11,854 2 39,099 8 9,312 2 740 - 61,005 12 11,079 3 1,246 - 42,958 9 (2,979) (1) 26,866 6 (6) - 68,085 14 79,164 17 10,480 2 68,684 15 5,178 1 (242) - - - 4,936 1 33,082 7 33,082 7 38,018 8 $ 106,702 23 $ 0.42 $ 0.42	2021 Amount % 452,039 100 382,184 85 69,855 15 12,815 3 38,403 8 9,856 2 55 - 61,129 13 8,726 2 875 - 39,923 9 1,064 - 36,739 8 (12) - 78,589 17 87,315 19 6,640 1 80,675 18 (944) - (4,678) (1) - - (5,622) (1) 9,488 2 9,488 2 3,866 1 84,541 19 0.49 0.49

See accompanying notes to financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) CHYANG SHENG DYEING & FINISHING CO., LTD.

Statements of Changes in Equity

For the years ended December 31, 2022 and 2021 (Expressed in thousands of New Taiwan Dollars)

Balance on January 1, 2021 Profit for the year ended December 31, 2021 Other comprehensive income for the year ended December 31, 2021 Comprehensive income for the year ended December 31, 2021 Appropriation and distribution of retained earnings: Legal reserve Cash dividends on ordinary shares Non-proportional investment in investee's increase in capital Balance on December 31, 2021 Profit for the year ended December 31, 2022 Other comprehensive income for the year ended December 31, 2022 Comprehensive income for the year ended December 31, 2022 Appropriation and distribution of retained earnings: Legal reserve Cash dividends on ordinary shares Non-proportional investment in investee's increase in capital Balance on December 31, 2022	Ordinary shares $ 1,732,684 - - - - - - 1,732,684 - - - - - - $ 1,732,684	Capital surplus				Retained earnings	Retained earnings		Other	equity Unrealized gain (losses) from financial assets measured at fair value through other comprehensive income	equity Unrealized gain (losses) from financial assets measured at fair value through other comprehensive income	Treasury shares (108,791) - - - - - - (108,791) - - - - - - (108,791)	Total equity 2,144,797
									Exchange differences on translation of foreign financial statements
				Legal reserve		Special reserve 56,835 - - - - - - 56,835 - - - - - - 56,835	Unappropriated retained earnings
		267,713		179,160			58,825		(65,322) - 9,488 9,488 - - - (55,834) - 33,082 33,082 - - - (22,752)		23,693
		- -		- -									80,675 3,866
		-		-									84,541
		- - 2,662		5,407 - -									- (51,980) 2,662
		270,375 - -		184,567 - -									2,180,020 68,684 38,018
		-		-									106,702
		- - 3,551		7,973 - -									- (69,307) 3,551
		273,926		192,540									2,220,966

See accompanying notes to financial statements.

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(English Translation of Financial Statements Originally Issued in Chinese) CHYANG SHENG DYEING & FINISHING CO., LTD.

Statements of Cash Flows

For the years ended December 31, 2022 and 2021

(Expressed in thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Expected credit loss Interest expense Interest income Dividend income Share of profit of associates for using equity method Gain on disposal of property, plan and equipment Net loss (profit) of financial assets at fair value through profit or loss Gain from disposal investments Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Financial assets at fair value through profit or loss Contract assets Notes and accounts receivable Inventories Other financial assets and current assets Notes and accounts payable Other financial liabilities and current liabilities Defined benefit assets Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Dividends received Interest paid Income taxes paid Net cash flows from operating activities Cash flows from (used in) investing activities: Dividends received from investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Refundable deposits and other assets Net cash flows from (used in) investing activities Cash flows from (used in) financing activities: Increase in guarantee deposits received Payment of lease liabilities Cash dividends paid Net cash flows used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2022 $ 79,164 42,299 740 6 (1,246) (1,916) (26,866) (95) 3,979 (904) 15,997 19,687 3,471 2,861 9,721 (7,427) (5,152) 1,431 (1,458) 23,134 39,131 118,295 1,246 1,916 (6) (12,266) 109,185 44,160 (63,369) 95 (1,884) (20,998) 675 (518) (69,307) (69,150) 19,037 181,707 $ 200,744	2021 87,315 37,995 55 12 (875) (15) (36,739) (670) (179) (304) (720) (10,958) (6,099) (20,753) (9,368) (257) 3,363 11,940 (1,462) (33,594) (34,314) 53,001 875 15 (12) (3,426) 50,453 49,527 (48,082) 670 - 2,115 246 (512) (51,980) (52,246) 322 181,385 181,707

See accompanying notes to financial statements.

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(English Translation of Financial Statements Originally Issued in Chinese) CHYANG SHENG DYEING & FINISHING CO., LTD.

Notes to the Financial Statements

For the years ended December 31, 2022 and 2021

(Expressed in thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

Chyang Sheng Dyeing & Finshing Co., Ltd. (“The Company”) was incorporated in the Republic of China on October 19, 1983, registered at No. 126, Dagong Rd., Dayuan Dist, Taoyuan City. The major business activities of the Company are processing, printing, bleaching, dyeing and finishing and trading of various fiber products.

The Company’s common shares were listed on the Taiwan Stock Exchange (TWSE) on December 5, 1996.

(2) Approval date and procedures of the financial statements:

These financial statements were authorized for issue by the Board of Directors on March 23, 2023.

(3) New standards, amendments and interpretations adopted:

• (a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. which have already been adopted.

The Company has initially adopted the following new amendments, which do not have a significant impact on its financial statements, from January 1, 2022:

• －

• ●Amendments to IAS 16 “Property, Plant and Equipment Proceeds before Intended Use”

• －

• ●Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a Contract”

• ●Annual Improvements to IFRS Standards 2018–2020

• ●Amendments to IFRS 3 “Reference to the Conceptual Framework”

• (b) The impact of IFRS issued by the FSC but not yet effective

The Company assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2023, would not have a significant impact on its financial statements:

• ●Amendments to IAS 1 “Disclosure of Accounting Policies”

• ●Amendments to IAS 8 “Definition of Accounting Estimates”

• ●Amendments to IAS 12 “ Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

(Continued)

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CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

• (c) The impact of IFRS issued by IASB but not yet endorsed by the FSC

The following new and amended standards, which may be relevant to the Company, have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

Standards or Interpretations Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” Amendments to IAS 1 “Non- current Liabilities with Covenants”

Content of amendment Effective date per IASB Under existing IAS 1 requirements, companies classify a liability as current when they do not have an unconditional right to defer settlement for at least 12 months after the reporting date. The amendments has removed the requirement for a right to be unconditional and instead now requires that a right to defer settlement must exist at the reporting date and have substance. The amendments clarify how a company classifies a liability that can be settled in its own shares – e.g. convertible debt. January 1, 2024 After reconsidering certain aspects of the 2020 amendments1, new IAS 1 amendments clarify that only covenants with which a company must comply on or before the reporting date affect the classification of a liability as current or non-current. Covenants with which the company must comply after the reporting date (i.e. future covenants) do not affect a liability’ s classification at that date. However, when non-current liabilities are subject to future covenants, companies will now need to disclose information to help users understand the risk that those liabilities could become repayable within 12 months after the reporting date. January 1, 2024

The Company is evaluating the impact of its initial adoption of the abovementioned standards or interpretations on its financial position and financial performance. The results thereof will be disclosed when the Company completes its evaluation.

(Continued)

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CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

The Company does not expect the following other new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its financial statements:

• ●Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”

• ●IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”

• ●IFRS16 “Requirements for Sale and Leaseback Transactions”

(4) Summary of significant accounting policies

The significant accounting policies presented in the financial statements are summarized below. Expect for those specifically indicated, the following accounting policies were applied consistently throughout the periods presented in the financial statements.

• (a) Statement of compliance

These financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

• (b) Basis of preparation

• (i) Basis of measurement

Except for the following significant accounts, the financial statements have been prepared on a historical cost basis:

• 1) Financial instruments at fair value through profit or loss are measured at fair value;

• 2) Financial assets at fair value through other comprehensive income are measured at fair value;

• 3) The defined benefit liabilities (assets) are measured at fair value of the plan assets less the present value of the defined benefit obligation.

• (ii) Functional and presentation currency

The functional currency of Company is determined based on the primary economic environment in which the entity operates. The financial statements are presented in New Taiwan Dollars (NTD), which is the Company’s functional currency. All financial information presented in NTD has been rounded to the nearest thousand.

• (c) Foreign currencies

• (i) Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currencies of Company at the exchange rates at the dates of the transactions. At the end of each subsequent reporting period, monetary items denominated in foreign currencies are translated into the functional currencies using the exchange rate at that date.

(Continued)

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CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

Non-monetary items denominated in foreign currencies that are measured at fair value are translated into the functional currencies using the exchange rate at the date that the fair value was determined. Non-monetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the presentation currency at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the presentation currency at the average exchange rate. Exchange differences are recognized in other comprehensive income.

When a foreign operation is disposed of such that control, significant influence, or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to noncontrolling interests. When disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

(d) Classification of current and non-current assets and liabilities

An asset is classified as current under one of the following criteria, and all other assets are classified as non-current.

• (i) It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle;

• (ii) It is held primarily for the purpose of trading;

• (iii) It is expected to be realized within twelve months after the reporting period; or

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

A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current.

An entity shall classify a liability as current when:

• (i) It is expected to be settled in the normal operating cycle;

• (ii) It is held primarily for the purpose of trading;

• (iii) It is due to be settled within twelve months after the reporting period; or

• (iv) The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.

(Continued)

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CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

(e) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Time deposits which meet the above definition and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes should be recognized as cash equivalents.

(f) Financial instruments

Accounts receivable and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a accounts receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A accounts receivable without a significant financing component is initially measured at the transaction price.

(i) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

On initial recognition, a financial asset is classified as measured at: amortized cost; Fair value through other comprehensive income (FVOCI) – equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

1) Financial assets measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

• ‧ it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

• ‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

These assets are subsequently measured at amortized cost, which is the amount at which the financial asset is measured at initial recognition, plus/minus, the cumulative amortization using the effective interest method, adjusted for any loss allowance. Interest income, foreign exchange gains and losses, as well as impairment, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

(Continued)

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CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

• 2) Fair value through other comprehensive income (FVOCI)

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’ s fair value in other comprehensive income. This election is made on an instrument-by-instrument basis.

Equity investments at FVOCI are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in other comprehensive income and are never reclassified to profit or loss.

Dividend income is recognized in profit or loss on the date on which the Company’s right to receive payment is established.

• 3) Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL, including derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

• 4) Impairment of financial assets

The Company recognizes loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, amortized costs, notes and accouts receivable, other receivables, guarantee deposit paid and other financial assets) and contract assets.

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 month after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

At each reporting date, the Company assesses whether financial assets carried at amortized cost at FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial assets is credit-impaired includes the following observable data：

(Continued)

14

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

• ‧ significant financial difficulty of the borrower or issuer；

• ‧ a breach of contract such as a default or being more than 180 days past due；

• ‧ the lender of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider；

• ‧ it is probable that the borrower will enter bankruptcy or other financial reorganization；or

• ‧ the disappearance of an active market for a security because of financial difficulties.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. The Company individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Company expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

• 5)

• Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Company enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

• (ii) Financial liabilities and equity instruments

• 1) Classification of debt or equity

Debt and equity instruments issued by the Company are classified as financial liabilities or equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

2) Equity instrument

An equity instrument is any contract that evidences residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued are recognized as the amount of consideration received, less the direct cost of issuing.

(Continued)

15

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

3) Treasury shares

When shares recognized as equity are repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is recognized in capital surplus or retained earnings (if the capital suplus is not sufficient to be written down).

4) Financial liabilities

Financial liabilities are classified as measured at FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

• 5) Derecognition of financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged, cancelled, or expired. The Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

• 6) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(g) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is calculated using the weighted average method, and includes expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their present location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(Continued)

16

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

(h) Investment in associates

Associates are those entities in which the Company has significant influence, but not control or joint control, over their financial and operating policies.

Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition less any accumulated impairment losses.

The financial statements include the Company’s share of the profit or loss and other comprehensive income of those associates, after adjustments to align their accounting policies with those of the Company, from the date on which significant influence commences until the date on which significant influence ceases.

Gains and losses resulting from transactions between the Company and an associate are recognized only to the extent of unrelated Company’s interests in the associate.

When the Company’s share of losses of an associate equals or exceeds its interests in an associate, it discontinues recognizing its share of further losses. After the recognized interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate.

When the Company subscribes to additional shares in an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment will differ from the amount of the Company’ s proportionate interest in the net assets of the associate. The Company records such a difference as an adjustment to investments, with the corresponding amount charged or credited to capital surplus. The aforesaid adjustment should first be adjusted under capital surplus. If the capital surplus resulting from changes in ownership interest is not sufficient, the remaining difference is debited to retained earnings. If the Company’s ownership interest is reduced due to the additional subscription to the shares of the associate by other investors, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate will be reclassified to profit or loss on the same basis as would be required if the associate had directly disposed of the related assets or liabilities.

(i) Investment in subsidiaries

When preparing the parent company only financial statements, investment in subsidiaries which are controlled by the Company is accounted for using the equity method. Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Company's share of profit or loss and other comprehensive income of the subsidiary as well as the distribution received. The Company also recognized its share in the changes in the equity of subsidiaries. In subsidiaries which are controlled by the Company is accounted for preparing the consolidated statement by each period.

Changes in the Company's ownership interest in a subsidiary that do not result in a loss fo control of a subsidiary are equity transactions with owners.

(Continued)

17

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

(j) Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services, or for administrative purposes. Investment property is measured at cost on initial recognition, and subsequently at cost, less accumulated depreciation and accumulated impairment losses. Depreciation expense is calculated based on the depreciation method, useful life, and residual value which are the same as those adopted for property, plant and equipment.

Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount) is recognized in profit or loss.

Rental income from investment property is recognized as other revenue on a straight-line basis over the term of the lease. Lease incentives granted are recognized as an integral part of the total rental income, over the term of the lease.

• (k) Property, plant and equipment

• (i) Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

• (iii) Depreciation

Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment.

Land is not depreciated.

The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:

• 1) Buildings and constructions: 2~25 years

• 2) Machinery and equipment: 2~10 years

• 3) Office and other equipment: 2~10 years

(Continued)

18

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

• (iv) Reclassification to investment property

A property is reclassified to investment property at its carrying amount when the use of the property changes from owner-occupied to investment property.

(l) Leases

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

• (i) As a leasee

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

• －

• fixed payments, including in-substance fixed payments;

• － variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

• － amounts expected to be payable under a residual value guarantee; and

• －

• payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

• － there is a change in future lease payments arising from the change in an index or rate; or

• － there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee; or

(Continued)

19

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

• － there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or

• － there is a change of its assessment on whether it will exercise a extension or termination option; or

• －

• there is any lease modification

When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Company accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Company presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

• (ii) As a lessor

When the Company acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Company makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease. If a head lease is a short-term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, the Company applies IFRS15 to allocate the consideration in the contract.

(m) Impairment of non-financial assets

At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories, contract assets and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

(Continued)

20

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units（CGUs）. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

• (n) Revenue from contracts with customers

• (i) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Company’ s main types of revenue are explained below.

1) Service revenue

The Company provides OEM service of fabric dyeing and finishing to services customers, and the related services are gradually transferred to the control of customers in the course of contract performance. Therefore, the Company's service revenue is recognized based on the degree of completion of contract performance obligations on the reporting date. Fixed-price contracts are recognized as revenue based on the proportion of the actual OEM processes provided to all processes as of the reporting date. If circumstances change, the estimates of revenues, costs and degree of completion will be revised, and the resulting increases or decreases will be reflected in profit or loss in the period in which the management is informed of the change in circumstances.

• 2) Financing components

The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.

(Continued)

21

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

(o) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

(ii) Defined benefit plans

The Company’s net obligation in respect of defined benefit plans is calculated separately for each the plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings within equity. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(iii) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(p) Income taxes

Income taxes comprise current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes are recognized in profit or loss.

(Continued)

22

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payables or receivables are the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are recognized except for the following:

• (i) temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;

• (ii) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

• (iii) taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized. Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets and liabilities are offset if the following criteria are met:

• (i) the Company has a legally enforceable right to set off current tax assets against current tax liabilities; and

• (ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:

• 1) the same taxable entity; or

• 2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

(q) Earnings per share

The Company discloses the Company’s basic and diluted earnings per share attributable to ordinary shareholders of the Company. Basic earnings per share are calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted-average number of ordinary shares outstanding. Diluted earnings per share are calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted-average number of ordinary shares outstanding after adjustment for the effects of all potentially dilutive ordinary shares, including employee compensation.

(Continued)

23

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

(r) Operating segments

The Company discloses the operating segment information in the consolidated financial statements. Therefore, the Company does not disclose the operating segment information in the parent company only financial statements.

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty

In preparation of these financial statements, management has made judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

The management continues to monitor the accounting estimates and assumptions. The management recognizes any changes in accounting estimates during the period and the impact of those changes in accounting estimates in the following period.

Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the financial statements is as follows:

• (a) For the judgment regarding control of subsidiaries, please refer to the 2022 consolidated financial statements.

• (b) Judgment of whether the Company has substantive control over its investees

The Company holds 33.61% of the outstanding voting shares of Treasure Star and Chyang Sheng Vietnam. Although the remaining company’ s shares are not concentrated within specific shareholders, the Company still cannot obtain more than half of the total number of company’ s directors, and it also cannot obtain more than half of the voting rights at a shareholders’ meeting. Therefore, it is determined that the Company has significant influence on its investees.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year is as follows.

(a) Revenue recognition

Contract revenue are recognized by reference to the stage of completion of each contract. The stage of completion of a contract is measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs. Estimated total contract costs of contracted items are assessed and determined by the management based on the processes, expected processes date and methods, for each contract. Changes in these estimates might affect the calculation of the percentage of completion and related profits from contracts.

The Company’s accounting policies include measuring financial and non-financial assets and liabilities at fair value through profit or loss. The Company’s finance department personnel responsible for independent fair value validation, by independent sources of information to make the evaluation results close to the market status, confirm the source of independent, reliable, consistent with other resources. It also on behalf of the executable price, regularly update calibration evaluation model, evaluation of the required input value and the fair value of data and any necessary adjustment, ensure that the evaluation results are reasonable.

(Continued)

24

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

Different levels of the fair value hierarchy to be used in determining the fair value of financial instruments are as follows:

• (a) Level 1: quoted prices (unadjusted) in active markets for identifiable assets or liabilities.

• (b) Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived from prices).

• (c) Level 3: inputs for the assets or liability that are not based on observable market data.

For any transfer within the fair value hierarchy, the impact of the transfer is recognized on the reporting date. Please refer to note 6(t) for assumptions used in measuring fair value.

(6) Explanation of significant accounts:

• (a) Cash and cash equivalents

Cash and demand deposits Time deposits Cash and cash equivalents in the statement of cash flows	December 31, 2022 $ 70,844 129,900 $ 200,744	December 31, 2021
		51,807 129,900
		181,707

• (i) Please refer to note 6(t) for the interest rate risk and sensitivity analysis of the financial assets and liabilities of the Company.

• (ii) Time deposits with original maturity within one year are used to meet short-term cash commitments rather than investment or other purposes, and can be converted into fixed cash at any time with little risk of value changes, so presented in cash and cash equivalents.

• (b) Current financial assets at fair value through profit or loss

Current financial assets at fair value through profit or loss
Mandatorily measured at fair value through profit or loss Stocks listed on domestic markets Open-end funds Total	December 31, 2022 $ 5,911 97,390 $ 103,301	December 31, 2021
		8,637 117,426
		126,063

(Continued)

25

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

• (c) Financial assets at fair value through other comprehensive income

Equity investments at fair value through other comprehensive income: Stocks listed on domestic markets Unlisted stocks Total	December 31, 2022 $ 437 1,879 $ 2,316	December 31, 2021
		334 2,224
		2,558

• (i) Equity investments at fair value through other comprehensive income.

The Company designated the investments shown above as equity securities at fair value through other comprehensive income because these equity securities represent those investments that the Company intends to hold for long term strategic purposes.

• (ii) There were no disposals of strategic investments and transfers of any cumulative gain or loss within equity relating to these investments as of December 31, 2022 and 2021.

• (iii) For credit risk and market risk, please refer to note note 6 (t).

• (iv) As of December 31, 2022 and 2021, none of the financial assets mentioned above had been pleged as collateral.

• (d) Notes and accounts receivable

Notes receivable Accounts receivable Less: Loss allowance	December 31, 2022 $ 21,416 60,967 (1,188) $ 81,195	December 31, 2021 36,707 48,537 (448) 84,796

The Company applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, accounts receivables have been grouped based on shared credit risk characteristics and the days past due, as well as incorporated forward looking information, including macroeconomic and relevant industry information. The loss allowance provision were determined as follows:

(Continued)

26

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

Current 0 to 90 days past due 91 to 180 days past due More than 181 days past due Total Current 0 to 90 days past due 91 to 180 days past due More than 181 days past due Total	December 31, 2022	December 31, 2022
	Gross carrying amount Weighted- average loss rate $ 43,610 0% 17,021 0%~5% - 0%~40% 336 100% $ 60,967 December 31, 2021		Loss allowance provision
			- 852 - 336
			1,188
		Weighted- average loss rate 0% 0%~5% 0%~40% 100%	Loss allowance provision
			- 112 - 336
			448

The movement in the allowance for notes and accounts receivable were as follows:

Balance at January 1 Impairment losses recognized Balance at December 31	2022 $ 448 740 $ 1,188	2021
		393 55
		448

The aforementioned notes and accounts receivable of the Company had not been pledged as collateral as of December 31, 2022 and 2021.

(e) Inventories

Raw material Finished goods and commodity Total	December 31, 2022 $ 21,338 - $ 21,338	December 31, 2021
		31,059 -
		31,059

(Continued)

27

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

As of December 31, 2022 and 2021, inventory as cost of sales amounted to $393,631 thousand and $370,824 thousand. The loss (gain) relevant to inventories included in cost of sales were as follows:

2022 Unallocated production overheads 22,875 Revenue from sale of scraps (2,427) $ 20,448	2021 14,795 (3,435)
	11,360

As of December 31, 2022 and 2021, the Company did not provide any inventories as collateral for its loans.

(f) Investments accounted for using equity method

A summary of the Company’s financial information for investments accounted for using the equity method at the reporting date is as follows:

Subsidiaries Associates	December 31, 2022 $ 1,248,509 119,166 $ 1,367,675	December 31, 2021 1,230,327 118,010 1,348,337

• (i) Please refer to 2022 annual consolidated financial statements for other related information of subsidiaries.

• (ii) Associates which are material to the Company consisted of the followings:

Name of associates	Nature of relationship with the Company	Main operating loation/Registered country of the company	Proportion of shareholding and voting rights
			December 31, 2022 December 31, 2021 % 18.69 % 18.69
Chyang Sheng Vietnam	Dyeing and printing business	Vietnam

The Company's financial information on investments in individually insignificant associates accounted for using equity method at the reporting date was as follows. This financial information was included in the parent company only financial statements:

Current assets Non-current assets Current liabilities Non-current liabilities Net assets Net assets attributable to the Company	December 31, 2022 $ 400,419 467,224 (223,233) (75,928) $ 568,482 $ 568,482	December 31, 2021
		366,871 444,383 (151,727 (97,232
		562,295
		562,295

(Continued)

28

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

Operating revenue Net loss Other comprehensive income Total comprehensive income Comprehensive income attributable to the Company Share of net assets of associates as of January 1 Comprehensive income attributable to the Company Share of net assets of associates as of December 31 Add: Net equity difference Balance of equity of associates attributable to the Company as of December 31	2022	2021 502,442 (22,844) 40,899 18,055 18,055 2021 101,721 3,375 105,096 12,914 118,010
	$ 713,083 $ (35,289) 41,476 $ 6,187 $ 6,187 2022
	$ 105,096 1,156 106,252 12,914 $ 119,166

(iii) As of December 31, 2022 and 2021, the Company did not provide any investments accounted for using the equity method as collateral for its loans.

(iv) None of the associates invested by the Company has a public market quotation.

(g) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Company for the years ended December 31, 2022 and 2021 were as follows:

Land Cost: Balance on January 1, 2022 $ 296,505 Additions - Disposal - Reclassify to investment property (1,778) Transfer from (to) - Balance on December 31, 2022 $ 294,727 Balance on January 1, 2021 $ 303,139 Additions - Disposal - Reclassify to investment property (6,634) Transfer from (to) - Balance on December 31, 2021 $ 296,505	Buildings and construction 257,291 7,470 - (20,702) 20,846 264,905 260,827 3,560 - (8,399) 1,303 257,291	Machinery and equipment 585,097 2,550 (60,690) - 24,598 551,555 568,915 2,186 (15,326) - 29,322 585,097	Office and other equipment 435,863 10,057 (35,342) - 14,637 425,215 430,788 6,114 (1,610) - 571 435,863	Construction in progress and testing equipment 12,279 43,292 - - (50,650) 4,921 10,668 29,809 - - (28,198) 12,279	Total 1,587,035 63,369 (96,032) (22,480) 9,431
					1,541,323
					1,574,337 41,669 (16,936) (15,033) 2,998
					1,587,035

(Continued)

29

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

Land Depreciation and impairment loss: Balance on January 1, 2022 $ - Depreciation - Disposal - Reclassify to investment property - Balance on December 31, 2022 $ - Balance on January 1, 2021 $ - Depreciation - Disposal - Reclassify to investment property - Balance on December 31, 2021 $ - Carrying amounts: Balance on December 31, 2022 $ 294,727 Balance on December 31, 2021 $ 296,505 Balance on January 1, 2021 $ 303,139	Buildings and construction 239,752 11,276 - (19,303) 231,725 238,979 9,157 - (8,384) 239,752 33,180 17,539 21,848	Machinery and equipment 509,190 17,707 (60,690) - 466,207 508,448 16,068 (15,326) - 509,190 85,348 75,907 60,467	Office and other equipment 406,634 11,608 (35,342) - 382,900 397,243 11,001 (1,610) - 406,634 42,315 29,229 33,545	Construction in progress and testing equipment - - - - - - - - - - 4,921 12,279 10,668	Total 1,155,576 40,591 (96,032) (19,303)
					1,080,832
					1,144,670 36,226 (16,936) (8,384)
					1,155,576
					460,491
					431,459
					429,667

As of December 31, 2022 and 2021, the property, plant and equipment of the Company had been pledged as collateral; please refer to note 8.

(h) Right-of-use assets

Information about vehicles leases for which the Company is a lessee was presented below:

Cost: Balance at January 1, 2022 (the same as ending balance) Balance at January 1, 2021 (the same as ending balance) Accumulated depreciation and impairment losses: Balance at January 1, 2022 Depreciation for the year Balance at December 31, 2022 Balance at January 1, 2021 Depreciation for the year Balance at December 31, 2021 Carrying amount: Balance at December 31, 2022 Balance at December 31, 2021 Balance at January 1, 2021

Vehicles

$ 1,542 $ 1,542 $ 857 514 $ 1,371 $ 343 514 $ 857 $ 171 $ 685 $ 1,199

(Continued)

30

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

(i) Investment property

Cost: Balance at January 1, 2022 Reclassification Balance at December 31, 2022 Balance at January 1, 2021 Reclassification Balance at December 31, 2021 Accumulated depreciation and impairment losses: Balance at January 1, 2022 Depreciation for the year Reclassification Balance at December 31, 2022 Balance at January 1, 2021 Depreciation for the year Reclassification Balance at December 31, 2021 Carrying amount: Balance at December 31, 2022 Balance at December 31, 2021 Balance at January 1, 2021 Fair value: Balance at December 31, 2022 Balance at December 31, 2021	Owned property Land Buildings Total $ 120,975 166,558 287,533 1,778 20,702 22,480 $ 122,753 187,260 310,013 $ 114,341 158,159 272,500 6,634 8,399 15,033 $ 120,975 166,558 287,533 $ - 163,440 163,440 - 1,194 1,194 - 19,303 19,303 $ - 183,937 183,937 $ - 153,801 153,801 - 1,255 1,255 - 8,384 8,384 $ - 163,440 163,440 $ 122,753 3,323 126,076 $ 120,975 3,118 124,093 $ 114,341 4,358 118,699 $ 1,157,896 $ 1,202,341	Total
	Land $ 120,975 1,778 $ 122,753 $ 114,341 6,634 $ 120,975 $ - - - $ - $ - - - $ - $ 122,753 $ 120,975 $ 114,341
		287,533 22,480
		310,013
		272,500 15,033
		287,533
		163,440 1,194 19,303
		183,937
		153,801 1,255 8,384
		163,440
		126,076
		124,093
		118,699

• (i) Investment property comprises office buildings that are leased to third parties under operating leases. The leases of investment properties contain an initial non-cancellable lease term of 1 to 3 years. The subsequent lease term will be negotiated with the lessee, and no contingent rent will be charged. Please refer to note 6(k).

• (ii) The fair value of investment properties aforementioned was evaluated based on third-party quotation information, classified to Level 3 fair values.

• (iii) As of December 31, 2022 and 2021, the investment property of the Company had been pledged as collateral; please refer to note 8.

(Continued)

31

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

(j) Lease liabilities

The lease liabilities were as follows:

Current Non-current	December 31, 2022 $ 174 $ -	December 31, 2021
		518
		174

For the maturity analysis, please refer to note 6(t) financial instruments.

The amounts recognized in profit or loss was as follows:

Interest on lease liabilities Expenses relating to short-term leases	2022 $ 6 $ 3,197	2021 12 3,162

The amounts recognized in the statement of cash flows by the Company were as follows:

Total cash outflow for leases	2022 $ 3,721	2021
		3,686

(k) Operating lease

The Compay leases out its investment property. The Company has classified these leases as operating leases, because it does not transfer substantially all of the risks and rewards incidental to the ownership of the assets. Please refer to note 6(i) investment property that sets out information about the operating leases of investment property.

A maturity analysis of lease payments, showing the undiscounted lease payments to be received after the reporting date are as follows:

Less than one year One to five years Total undiscounted lease payments	December 31, 2022 $ 22,326 56,481 $ 78,807	December 31, 2021
		25,423 3,208
		28,631

Rental income from investment properties in 2022 and 2021 were $37,651 thousand and $36,119 thousand, respectively.

(Continued)

32

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

(l) Employee benefits

(i) Defined benefit plans

Reconciliation of defined benefit obligation at present value and plan asset at fair value are as follows:

Present value of the defined benefit obligations Fair value of plan assets Net defined benefit assets	December 31, 2022 $ (38,457) 46,001 $ 7,544	December 31, 2021 (48,703) 49,610 907

The Company makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provides pensions for employees upon retirement. Plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average monthly salary for the six months prior to retirement.

1) Composition of plan assets

The Company allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. With regard to the utilization of the funds, minimum earnings shall be no less than the earnings attainable from two-year time deposits with interest rates offered by local banks.

The Company’ s Bank of Taiwan labor pension reserve account balance amounted to $46,001 thousand as of December 31, 2022. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

2) Movements in the present value of the defined benefit obligations

The movement in present value of the defined benefit obligations for the Company were as follows:

Defined benefit obligations on January 1 Benefits paid Current service costs and interest income Remeasurements loss (gain) - Experience loss - Actuarial loss arising from demographic assumptions - Actuarial gain arising from financial assumptions Defined benefit obligations on December 31	2022 $ 48,703 (9,334) 480 79 - (1,471) $ 38,457	2021 48,502 (1,722) 272 976 1,960 (1,285) 48,703

(Continued)

33

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

• 3) Movements of defined benefit plan assets

The movements in the present value of the defined benefit plan assets for the Company were as follows:

Fair value of plan assets on January 1 Contributions paid by the employer Benefits paid Interest income Remeasurements loss - Return on plan asstes excluding interest income Fair value of plan assets on December 31	2022 $ 49,610 1,561 (9,334) 378 3,786 $ 46,001	2021 48,891 1,560 (1,722) 174 707 49,610

• 4) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Company were as follows:

Current service costs Net interest of net liabilities (assets) for defined benefit obligations Operating cost Selling expenses Administrative expenses Research and development expenses	2022 $ 115 (13) $ 102 $ 62 11 19 10 $ 102	2021 102 (4) 98 60 10 19 9 98

• 5) Actuarial assumptions

The principal actuarial assumptions at the reporting date were as follows:

Discount rate Future salary increase rate	2022 2021 % 1.400 % 0.750 % 1.125 % 1.125

Expected long-term return on assets was based on the portfolio as a whole, not the sum of individual asset class returns. This rate of return was purely based on historical rates of return without adjustments.

The expected allocation payment to be made by the Company to the defined benefit plans for the one-year period after the reporting date is $1,560 thousand.

(Continued)

34

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

The weighted-average lifetime of the defined benefits plans is 7 years.

6)

Sensitivity analysis

If the actuarial assumptions had changed, the impact on the present value of the defined benefit obligation shall be as follows:

December 31, 2022 Discount rate Future salary increasing rate December 31, 2021 Discount rate Future salary increasing rate	Impact on defined benefit obligations	Impact on defined benefit obligations
	Increase 0.25% $ (580) $ 581 $ (823) $ 819	Decrease 0.25%
		595
		(569
		846
		(801

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligations by the amounts shown above. The method used in the sensitivity analysis is consistent with the calculation of pension liabilities in the balance sheets.

There is no change in the method and assumptions used in the preparation of the sensitivity analysis for 2022 and 2021.

(ii) Defined contribution plans

The Company allocates 6% of each employee’s monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under these defined contribution plans, the Company allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligations.

The pension costs incurred from the contributions to the Bureau of Labour Insurance amounted to $3,587 thousand and $3,560 thousand for the years ended December 31, 2022 and 2021, respectively.

(m) Income taxes

(i) Income tax expense

The components of income tax in the years 2022 and 2021 were as follows:

Current tax expense Deferred tax expense Income tax expense

(Continued)

35

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

• (ii) The Company has no income tax recognized directly in equity nor other comprehensive income for 2022 and 2021.

(iii) Reconciliation of income tax and profit before tax for 2022 and 2021 is as follows:

Profit excluding income tax Income tax using the Company’s domestic tax rate Change in unrecognized deferred tax assest Tax effect of permanent differences Change in provision in prior periods	2022 $ 79,164 15,833 503 (6,218) 362 $ 10,480	2021
		87,315
		17,463 854 (8,301) (3,376)
		6,640

• (iv) Deferred tax assets and liabilities

• 1) Unrecognized deferred tax assets

Deferred tax assets have not been recognized in respect of the following items:

Tax effect of deductible temporary differences	December 31, 2022 $ 26,103	December 31, 2021
		25,600

• 2) Recognized deferred tax assets

Changes in the amount of deferred tax assets for 2022 and 2021 were as follows:

Balance on January 1, 2022 Recognized in profit or loss Balance on December 31, 2022 Balance on January 1, 2021 Recognized in profit or loss Balance on December 31, 2021	The carryforward of unused tax losses $ - - $ - $ - - $ -	Pension costs 2,819 (1,327) 1,492 2,922 (103) 2,819	Total 2,819 (1,327) 1,492 2,922 (103) 2,819

• 3) Recognized deferred tax liabilities

Changes in the amount of deferred tax liabilities for 2022 and 2021 were as follows:

Balance on January 1, 2022 Recognized in profit or loss Balance on December 31, 2022	Land revaluation appreciation allowance		Others 9,036 - 9,036	Total
	$ 67,994 - $ 67,994			77,030 -
				77,030

(Continued)

36

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

Balance on January 1, 2021 Recognized in profit or loss Balance on December 31, 2021	Land revaluation appreciation allowance		Others 9,036 - 9,036	Total
	$ 67,994 - $ 67,994			77,030 -
				77,030

(v) The Company’s tax returns for the years through 2020 were assessed by the tax authority.

• (n) Capital and other equity

(i) Ordinary shares

As of December 31, 2022 and 2021, the number of authorized ordinary shares were 300,000 shares with par value of $10 per share. The total value of authorized ordinary shares were amounted to $3,000,000 thousand. The total issued shares were 173,268 thousand shares. All issued shares were paid up upon issuance.

(ii) Capital surplus

The balances of capital surplus as of December 31, 2022 and 2021, were as follows:

Share capital Treasury share transactions Difference arising from subsidiary’s share price and its carrying value Changes in proportion of shareholding of associates	December 31, 2022 $ 2,141 211,499 31,124 29,162 $ 273,926	December 31, 2021
		2,141 207,948 31,124 29,162
		270,375

According to the R.O.C. Company Act, capital surplus can only be used to offset a deficit, and only the realized capital surplus can be used to increase the common stock or be distributed as cash dividends. The aforementioned realized capital surplus includes capital surplus resulting from premium on issuance of capital stock and earnings from donated assets received. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, capital increases by transferring capital surplus in excess of par value should not exceed 10% of the total common stock outstanding. Among them, if the capital reserve transferred in from the share capital is used to capitalize, the capital reserve transferred in shall be capitalized in the year following the approval and registration of the capital reserve by the competent authority.

(Continued)

37

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

(iii) Retained earnings

The Company's article of incorporation stipulate that Company's net earnings should first be used to offset the prior years' deficits, if any, before paying any income taxes. Of the remaining balance, 10% is to be appropriated as legal reserve, and then any remaining profit together with any undistributed retained earnings shall be distributed according to the distribution plan proposed by the Board of Directors and submitted to the stockholders’ meeting for approval.

Dividends shall be distributed in accordance with the rates set forth in the Company's Articles of Incorporation, taking into account the changing nature of the business and the future capital requirements of the life cycle of each product or service and the impact of the tax system, and with the goal of maintaining a stable dividend. Dividends shall be paid at a rate of not less than 20% of the net income after deducting the amount of loss recovery, legal reserve and special reserve for the current year, and the cash dividends shall not be less than 10% of the total dividends for the current year, except for the purpose of improving the financial structure and meeting capital requirements for reinvestment, capacity expansion or other major capital.

1) Legal reserve

When a company incurs no loss, it may, pursuant to a resolution by a shareholders’ meeting, distribute its legal reserve by issuing new shares or by distributing cash, and only the portion of legal reserve which exceeds 25% of the capital may be distributed.

2) Special reserve

The Company chose to apply the exemption under IFRS 1 at its initial adoption of IFRSs. Including accumulated translation adjustment incurred reset, adoption of deemed cost waiver and lump-sum recognition of pension actuarial benefits are classified to retained earnings at the amount of $143,305 thousand. The Company shall allocate the same amount in special reserve in accordance with the requirements issued by the Financial Supervisory Commission. However, in the financial statements prepared by the company in accordance with IFRS on January 1, 2012, the retained earnings was $56,835 thousand, so the full amount is listed as special reserve.

In accordance with the requirements issued by the FSC, a portion of earnings shall be allocated as special reserve during earnings distribution. If the Company has already reclassified a portion of earnings to special reserve under the preceding subparagraph, it shall make supplemental allocation of special reserve for any difference between the amount it has already allocated and the amount of the current-period total net reduction of other shareholders’ equity. An equivalent amount of special reserve shall be allocated from the after-tax net profit in the period, plus items other than after-tax net profit in the period, that are included in the undistributed current-period earnings and the undistributed prior-period earnings. A portion of undistributed prior-period earnings shall be reclassified to special earnings reserve (and does not qualify for earnings distribution) to account for cumulative changes to the net reduction of other shareholders’ equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders’ equity shall qualify for additional distributions. The amounts of special reserve as of December 31, 2022 and 2021 both were $56,835 thousand.

(Continued)

38

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

3) Earnings distribution

The amounts of cash dividends on the appropriations of earnings for 2021 and 2020 had been approved during the shareholders’ meeting on June 27, 2022 and August 24, 2021, respectively. The relevant dividend distributions to shareholders were as follows, and the relevant information can be inquired at the Market Observation Post System.

Dividends distributed to ordinary shareholders Cash Dividends	2021 Amount per share Total Amount $ 0.4 69,307	2020 Amount per share Total Amount 0.3 51,980	2020 Amount per share Total Amount 0.3 51,980
	Amount per share $ 0.4		Total Amount
			51,980

(iv) Treasury shares

As of December 31, 2022 and 2021, the total amount of treasury shares both were $108,791 thousand and 8,875 thousand shares, in which acquired by Hong Sheng Investment (subsidiary of the Company) in November, 2011 before the amendment.

In accordance with the requirements of Securities and Exchange Act, treasury shares held by the Company should not be pledged, and do not hold any shareholder rights before their transfer.

(o) Earnings per share

The details on the calculation of basic earnings per share and diluted earnings per share were as follows:

• (i) Basic earnings per share

Profit attributable to ordinary shareholders of the Company Weighted average number of ordinary shares at 31 December (in thousands) Basic earnings per share Weighted average number of ordinary shares (in thousands) Issued ordinary shares at 1 January Effect of treasury shares held Weighted average number of ordinary shares at 31 December	2022 $ 68,684 164,393 $ 0.42 2022 173,268 (8,875) 164,393		2021
			80,675
			164,393
			0.49
			2021 173,268 (8,875) 164,393

(Continued)

39

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

(ii) Diluted earnings per share

2022 Profit attributable to ordinary shareholders of the Company $ 68,684 Weighted average number of ordinary shares at 31 December (diluted/ in thousands) $ 164,466 Diluted earnings per share $ 0.42 Weighted average number of ordinary shares (Diluted)(in thousands) 2022 Weighted average number of ordinary shares (basic) 173,268 Effect of treasury shares held (8,875) Effect of estimated employee share bonus 73 Weighted average number of ordinary shares (diluted) at December 31 164,466

2021 80,675 164,467 0.49 2021 173,268 (8,875) 74 164,467

(p) Revenue from contracts with customers

(i) Disaggregation of revenue

Primary geographical markets Taiwan Major products/services lines Cloth processing Other Total	2022 $ 486,163 $ 485,938 225 $ 486,163	2021
		452,039
		451,799 240
		452,039

(ii) Contract balances

Notes and accounts receivable Less: allowance for impairment Total Contract asset-OEM Less: allowance for impairment Total	December 31, 2022 $ 82,383 (1,188) $ 81,195 $ 11,271 - $ 11,271	December 31, 2021 85,244 (448) 84,796 14,742 - 14,742	January 1, 2021 64,491 (393) 64,098 8,643 - 8,643

For details of notes and accounts receivables and allowance for impairment, please refer to note 6(d).

(Continued)

40

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

(q) Employee compensation and directors' and supervisors' remuneration

In accordance with the Articles of Incorporation the Company should contribute no less than 1% of the profit before income taxe as employee compensation and not exceed 3% as directors' and supervisors' remuneration when there is profit for the year. However, if the Company has accumulated deficits, the profit should be reserved to offset the deficit. The amount of remuneration of each director and supervisor and of compensation for employees entitled to receive the abovementioned employee compensation is approved by the Board of Directors. The recipients of shares and cash may include the employees of the Company's affiliated companies who meet certain conditions.

For the years ended December 31, 2022 and 2021, the Company estimated its employee remuneration amounting to $825 thousand and $910 thousand, and directors' and supervisors' remuneration amounting to $2,474 thousand and $2,729 thousand, respectively. The estimated amounts mentioned above are calculated based on the net profit before tax, excluding the remuneration to employees, directors and supervisors of each period, multiplied by the percentage of remuneration to employees, directors and supervisors as specified in the Company's articles. These remunerations were expensed under operating costs or operating expenses during 2022 and 2021. The amounts, as stated in the financial statements, are identical to those of the actual distributions for 2022 and 2021.

(r) Interest income and other income

The details of interest income and other income for the years ended December 31, 2022 and 2021, were as follows:

Interest income from bank deposits Rental income Dividend income Government subsidy and others	2022 $ 1,246 2022 $ 37,651 1,916 3,391 $ 42,958	2021
		875
		2021
		36,119 15 3,789
		39,923

(s) Other gains and losses

The details of other gains and losses for the years ended December 31, 2022 and 2021, were as follows:

Gains on disposal of property, plant and equipment Gains on disposal of investments Gains (losses) on financial assets at fair value through profit or loss Others	2022 $ 95 904 (3,979) 1 $ (2,979)	2021 670 304 179 (89) 1,064

(Continued)

41

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

(t) Financial instruments

(i) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, which arises from the Company’s accounts receivable and investments.

1) Accounts receivable and other receivables

The Company has adopted a policy that only trading with the parties with good credit standing and the Company shall secure a collateral to lighten the risk of financial loss arising from arrears when it is necessary. The major customers are rated by the Company, using public financial information and their transaction histories. The Company keeps monitoring the credit exposure and the customers’ creditworthiness, and then distributes total transaction amounts into the qualified customers. The credit limit of the customers is reviewed and approved annually to control the credit exposure.

2) Investment

The credit risk exposure of bank deposits, fixed-income investment, and other financial instruments is measured and monitored by the Company’ s finance department. As the Company deals with banks and other external parties with good credit standing and with financial institutions which are graded above investment level, the management believes that the Company does not have any compliance issues, and therefore, there is no significant credit risk.

3) Exposure to credit risk

As of December 31, 2022 and 2021, the carrying amount of financial assets, which represents the maximum exposure to credit risk, amounting to $408,988 thousand and $412,804 thousand, respectively.

• 4) Concentration of credit risk

The Company’ s credit risk is mainly affected by the credit characteristics of each creditor. This is also an impact on credit risk from the business of the customer. As of December 31, 2022 and 2021, 72% and 63%, respectively, of accounts receivable arose from sales to individual customers constituting the top five customers.

(ii) Liquidity risk

Liquidity risk is a risk that the Company is unable to meet the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as much as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

(Continued)

42

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

The following table shows the contractual maturities of financial liabilities, including the impact of estimated interest payments. It is prepared as the undiscounted cash flow of financial liabilities based on the earliest date on which the Company can be required to repay:

Carrying amount December 31, 2022 Notes and accounts payable $ 40,641 Lease liabilities 174 Other financial liabilities 50,598 Guarantee deposits received 9,585 $ 100,998 December 31, 2021 Notes and accounts payable $ 45,793 Lease liabilities 692 Other financial liabilities 50,152 Guarantee deposits received 8,910 $ 105,547	Contractual cash flows 40,641 174 50,598 9,585 100,998 45,793 697 50,152 8,910 105,552	Within 1 year 40,641 174 50,598 - 91,413 45,793 523 50,152 - 96,468	1~2 years - - - - - - 174 - - 174	2~ 5 years
				- - - 9,585
				9,585
				- - - 8,910
				8,910

The Company does not expect the cash flows included in the maturity analysis to occur significantly earlier or at significantly different amounts.

(iii) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices, will affect the Company’ s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

1) Currency risk

The Company’s has no significant exposure to foreign currency risk.

2) Interest rate analysis

The details of financial assets and liabilities exposed to interest rate risk were as follows:

Variable-rate instruments: Financail assets Financial liabilities	Carrying amount	Carrying amount
	December 31, 2022 $ 200,744 - $ 200,744	December 31, 2021
		181,707 -
		181,707

(Continued)

43

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

The following sensitivity analysis is based on the exposure to the interest rate risk of derivative and non derivative financial instruments on the reporting date. If the interest rate had increased / decreased by 1 basis point, the Company’s profit before income taxe would have increased / decreased by $502 thousand and $454 thousand for the year 2022 and 2021, with all other variable factors remaining constant. This is mainly due to the Company’s savings at variable rates.

3) Other market price risk

For the years ended December 31, 2022 and 2021, the sensitivity analysis for the changes in the securities price at the reporting date were performed using the same basis for the profit and loss as illustrated below:

Prices of securities at the reporting date	2022 Other comprehensive income after tax Net income $ 44 10,330 (44) (10,330)	2021 Other comprehensive income after tax Net income 33 12,606 (33) (12,606)
	Other comprehensive income after tax $ 44 (44)
Increasing 10% Decreasing 10%

• (iv) Fair value of financial instruments

• 1) Fair value value hierarchy

The carrying amount and fair value of the Company’ s financial assets and liabilities, including the information on fair value hierarchy were as follows; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and lease liabilities, disclosure of fair value information is not required :

Financial assets at fair value through profit or loss Open-end funds and stocks in listed companies Financial assets at fair value through other comprehensive income Stocks listed on domestic markets Unlisted stocks			December 31, 2022	December 31, 2022	December 31, 2022
	Book value			Fair value
			Level 1 103,301 437 - 437	Level 2 - - - -	Level 3 - - 1,879 1,879	Total 103,301 437 1,879 2,316
	$ 103,301 $ 437 1,879 $ 2,316

(Continued)

44

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

Financial assets measured at amortized cost: Cash and cash equivalents Notes and accounts receivable Other current financial assets Refundable deposits Financial liabilities measured at amortized cost: Notes and accounts payable Lease liabilities Other financial liabilities Gurantee deposits received			December 31, 2022 Fair value	December 31, 2022 Fair value	December 31, 2022 Fair value
	Book value
			Level 1	Level 2	Level 3 Total
	$ 200,744 81,195 12,424 9,008 $ 303,371 $ 40,641 174 50,598 9,585 $ 100,998

Financial assets at fair value through profit or loss Open-end funds and stocks in listed companies Financial assets at fair value through other comprehensive income: Stocks listed on domestic markets Unlisted stocks Financial assets measured at amortized cost: Cash and cash equivalents Notes and accounts receivable Other current financial assets Refundable deposits		December 31, 2021	December 31, 2021	December 31, 2021
	Book value $ 126,063 $ 334 2,224 $ 2,558 $ 181,707 84,796 8,672 9,008 $ 284,183		Fair value
		Level 1 126,063 334 - 334	Level 2 - - - -	Level 3 - - 2,224 2,224	Total
					126,063
					334 2,224
					2,558

(Continued)

45

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

Financial liabilities measured at amortized cost: Notes and accounts payables Lease liabilities Other financial liabilities Gurantee deposits received		December 31, 2021	December 31, 2021	December 31, 2021
	Book value $ 45,793 692 50,152 8,910 $ 105,547		Fair value
		Level 1	Level 2	Level 3 Total

• 2) Valuation techniques for financial instruments measured at fair value

A financial instrument is regarded as being quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’ s-length basis. Whether transactions are taking place ‘regularly’ is a matter of judgment and depends on the facts and circumstances of the market for the instrument.

Quoted market prices may not be indicative of the fair value of an instrument if the activity in the market is infrequent, the market is not well-established, only small volumes are traded, or bid-ask spreads are very wide. Determining whether a market is active involves judgment.

The financial instruments held by the Company were classified as follows:

• ． Financial intruments with active markets: including listed stock. The market price is established as the fair value.

• ．Financial intruments without active markets: Measurements of fair value are based on a valuation technique or quoted price from a competitor. Fair value measured by a valuation technique can be extrapolated from similar financial instruments, the discounted cash flow method, or other valuation technique including a model using observable market data at the reporting date.

• 3) There were no fair value measurement transferred of the fair value hierarchy as of December 31, 2022 and 2021.

(Continued)

46

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

• 4) Reconciliation of Level 3 fair values

Opening balance, January 1, 2022 Recognized in other comprehensive income Ending Balance, December 31, 2022 Opening balance, January 1, 2021 Recognized in other comprehensive income Ending Balance, December 31, 2021	Fair value through other comprehensive income Non quoted equity instrument $ 2,224 (345) $ 1,879 $ 2,592 (368) $ 2,224

For the years ended December 31, 2022 and 2021, total gains and losses that were included in “unrealized gains and losses on financial assets at fair value through other comprehensive income” were as follows:

In other comprehensive income, and presented in “unrealized gains and losses on financial assets at fair value through other comprehensive income”	2022 $ (345)	2021 (368)

• 5) Quantified information on significant unobservable inputs (Level 3) used in fair value measurement

The Company’ s financial instruments that use Level 3 inputs to measure fair value include “fair value through other comprehensive income – equity investments”.

There are multiple significant unobservable inputs for the equity instrument investment of the Company without active market. Significant unobservable inputs for the equity instrument investment without active market are independent of each other, so there is no mutual correlation.

(Continued)

47

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

Quantified information of significant unobservable inputs was as follows:

Item Financial assets at fair value through other comprehensive income	Valuation technique Market approach	Significant unobservable inputs Inter-relationship between significant unobservable inputs and fair value measurement ‧P/B ratio multiplie (3.43 and 3.01 at December 31, 2022 and 2021, respectively) ‧Lack-of-marketability Discount (Both were 20% at December 31, 2022 and 2021) ‧The higher the ratio, the higher the fair value ‧The higher the Lack- of-marketability discount, the lower the fair value

• 6) Fair value measurements in Level 3 – sensitivity analysis of reasonably possible alternative assumptions

The Company's measurement of the fair value of financial instruments is reasonable, but if different evaluation models or evaluation parameters are used, the evaluation results may be different. For fair value measurements in Level 3, changing one or more of the assumptions to reflect reasonably possible alternative assumptions would have the following effects:

December 31, 2022 Financial assets at fair value through other comprehensive income Equity investments without an active market December 31, 2021 Financial assets at fair value through other comprehensive income Equity investments without an active market	Inputs P/B and EV ratio Lack of marketability discount P/B and EV ratio Lack of marketability discount	Variation 5% 5% 5% 5%	Other comprehensive income
			Favour- able Unfavour- able 258 (258) 322 (322) 267 (267) 334 (334)

(Continued)

48

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

(u) Financial risk management

• (i) Overview

The Company have exposures to the following risks from its financial instruments:

• 1) Credit risk

• 2) Liquidity risk

• 3) Market risk

The objectives, policies and processes for measuring, managing the above mentioned risks and more disclosures about the quantitative effects of these risks exposures, please refer to Note 6(t).

(ii) Structure of risk management

The Company’ s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect any changes in market conditions and the Company’ s activities. The Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Board of Directors oversees how management monitors compliance with the Company’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Board of Directors is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Board of Directors.

(v) Capital management

The Company’ s objectives for managing capital to safeguard the necessary financial resources to meet the needs of working capital, capital expenditure and debt repayment in the next twelve months. The management uses the debt ratio to manage capital. As of December 31, 2022 and 2021, the Company’ s debt ratio were 8% and 9% respectively. As of December 31, 2022, the Company’ s capital management strategy is consistent with the prior year.

• (w) Investing and financing activities not affecting current cash flow

The Company’s investing and financing activities which did not affect the current cash flow in the years ended December 31, 2022 and 2021, were as follows:

• (i) For right-of-use assets under leases, please refer to note 6(h).

(Continued)

49

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

• (ii) Reconciliation of liabilities arising from financing activities were as follows:

Lease liabilities Total liabilities from financing activities Lease liabilities Total liabilities from financing activities	January 1, 2022 $ 692 $ 692 January 1, 2021 $ 1,204 $ 1,204	Cash flows (518) (518) Cash flows (512) (512)	Others - - Others - -	December 31, 2022
				174
				174
				December 31, 2021
				692
				692

(7) Related-party transactions:

• (a) Names and relationship with the Company

Name of related party	Relationship with the Company
Worthy Textile Industry Co., Ltd.	Subsidiary
Hong Sheng Investment Co., Ltd.	"
Progiant Construction & Development Corporation	"
Sea Some International Development Co., Ltd.	"
Shinkong Textile Co., Ltd.( Shinkong Textile)	Substantial related person

• (b) Significant transactions with related parties

(i) Sales

The amounts of sales and accounts receivable by the Company to related parties were as follows:

Shinkong Textile	Sales 2022 2021 $ 169,200 100,596	Accounts receivable December 31, 2022 December 31, 2021 38,753 24,621	Accounts receivable December 31, 2022 December 31, 2021 38,753 24,621
	2022 $ 169,200		December 31, 2021
			24,621

The selling price and payment terms for related parties approximated general customers.

(ii) Lease

The Company rented plant to other related parties and recognized the amount of rental revenue were as follows:

Shinkong Textile	Amount 2022 2021 $ 13,438 14,044	Other receivables December 31, 2022 December 31, 2021 9,035 6,700	Other receivables December 31, 2022 December 31, 2021 9,035 6,700
	2022 $ 13,438		December 31, 2021
			6,700

(Continued)

50

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

The other receivables include rent receivables and collections and payments at the end of the period, and the rental income is calculated using the number of pings with reference to market conditions and collected on a monthly basis.

(iii) Service

As of December 31, 2022 and 2021, the Company provided administrative assistant to subsidiaries amounting $1,500 thousand, and as of December 31, 2022, relevant receivables have all been fully collected by the Company.

(iv) Guarantee

As of December 31, 2022 and 2021, the Company has provided a guarantee for loans taken out by subsidiary. The credit limit of the guarantee was both $350,000 thousand, and the actual usage amount was both $0 thousand.

• (c) Key management personnel compensation

Key management personnel compensation comprised:

2022 Short-term employee benefits $ 9,665	2021
	8,544

(8) Pledged assets:

The carrying values of assets pledged as security were as follows:

Pledged assets	Object	December 31, 2022 $ 417,480 36,503 6,248 $ 460,231	December 31, 2021
Land (note) Buildings (note) Refundable deposit	Short-term and long-term borrowings " Lease agreements and purchase agreements		417,480 20,657 6,248
			444,385

(Note) Property, plant and equipment, and investment property are separately accounted for.

(9) Significant contingent liabilities and unrecognized commitments:

• (a) The Company signed a long-term steam supply contract with the supplier. Under the premise of stable and sufficient supply, the Company committed the price agreed in the contract, the agreed period and the minimum usage estimate to the supplier. The minimum payable amount by the Company in the future is as follows:

Contract commitment	December 31, 2022 $ 41,940	December 31, 2021
		52,038

• (b) The Company have provided a guarantee for loans taken out by subsidiary, please refer to note 7(b) for relevant information.

(Continued)

51

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

• (c) As of December 31, 2022, the unrecognized contractual commitment amount of property, plant and equipment acquired by the Company is $1,722 thousand.

• (d) As the waste disposal contractor was not able to perform its duties, the Chiayi Environmental Protection Bureau requested the Company to pay a fee of $869 thousand in accordance with the provisions of the Administrative Execution Act, and the Company appealed the administrative penalty and filed an administrative remedy.

(10) Losses due to major disasters: None

(11) Subsequent events: None

(12) Other:

A summary of employee benefits, depreciation, and amortization, by function, is as follows:

By function By item	2022	2022		2021	2021	2021
	Cost of sales	Operating expenses	Total	Cost of sales	Operating expenses	Total
Employee benefits Salary Labor and health insurance Pension Remuneration of directors Others Depreciation (note) Amortization	82,439 7,511 2,503 - 2,300 40,591 -	26,663 2,648 1,186 4,514 1,506 514 -	109,102 10,159 3,689 4,514 3,806 41,105 -	77,906 7,204 2,474 - 2,328 36,226 -	27,282 2,648 1,184 4,769 1,562 514 -	105,188 9,852 3,658 4,769 3,890 36,740 -

(Note) Excluding the depreciation of investment property in 2022 and 2021, which were $1,194 thousand and $1,255 thousand respectively.

The additional information of headcount and employee benefit are as follows:

Headcount The number of non-employee director Average cost of employee benefits Average cost of salaries Average of salaries expense variation Remuneration of supervisors

(Continued)

52

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

The salary policies of the Company (including directors, supervisors, managers and employees) were as follows:

Directors and supervisors

Directors and supervisors do not receive fixed salaries, but only receive honorarium and board attendance fees, and the honorarium of independent directors may be higher than that of general directors and supervisors. If there is a profit in the annual operation, according to the provisions of the Articles of Incorporation, no more than 3% of the pre-tax net profit shall be provided as remuneration for directors and supervisors.

Managers

The remuneration of managers is based on the salary level of the position in the same industry market, and given a reasonable remuneration by considering the responsibilities and the contribution to the Company's operational goals, and then refers to the overall performance, individual performance achievement rate and contribution to the Company performance.

The aforementioned remuneration and policies of directors, supervisors and managers are discussed by the remuneration committee every year and submitted to the board of directors for approval.

Employees

Employee remuneration is in accordance with the Company's employee salary management regulations. The employee remuneration includes monthly salary, performance bonus issued according to operating performance and employee remuneration issued according to annual operating results. The actual remuneration is determined by the employee's seniority, grade and job performance.

(13) Other disclosures:

• (a) Information on significant transactions:

The following is the information on significant transactions required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Company:

(i) Loans to other parties:

Number	Name of lender	Name of borrower	Account name	Related party	Highest balanceof financing to other parties during the period	Ending balance	Actual usage amount during the period	Range of interest rates during the period	Purposes of fund financing for the borrower	Transaction amount for business between two parties	Reasons for short- term financing	Loss allowance	Collateral	Collateral	Individual funding loan limits	Maximum limit of fund financing
													Item	Value
0 1	The Company Progiant Construction	Progiant Construction Hong Sheng Investment	Other receivables- related parties 〃	Yes Yes	200,000 20,000	200,000 20,000	- 10,000	2% 2%	2 2	- -	Working Capital Working Capital	- -	- -	- -	222,097 61,660	444,193 123,320

Note 1: The financing company's total financing amount should not exceed 20% of its net asset value and the financing for a counterparty should not exceed 10% of its net asset value. However, for a counterparty that directly or indirectly holds more than 50% of the voting rights of the reinvestment and the parent company of the reinvestment company it is still limited to 10% of the net value of the latest financial statement.

Note 2: The nature of financing purposes:

• 1) Represents entities with business transaction with the Company;

• 2) Represents where an inter-company or inter-firm short-term financing facility is necessary.

(Continued)

53

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

(ii) Guarantees and endorsements for other parties:

No.	Name of guaranto r	Counter-party of guarantee and endorsement	Counter-party of guarantee and endorsement	Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsement s during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements / guarantees to third parties on behalf of companies in Mainland China
		Name	Relationsh ip with the Company
0	The Company	Progiant Construction	Note2	1,110,483	350,000	350,000	-	-	% 15.76	1,110,483	Y	N	N

Note 1: The ceiling for the total guaranteed amount was 50% of the Company's net assel value, and the limit on the guaranted amount for a single party was 20% of the Company's net asset value. But for an entity that holds more than 75% shares by the Company, the limit of the guaranteed amount was 50% of the Company's net value of the latest financial statement.

Note 2: Subsidary which owned more than 50 percent by the guarantor.

• (iii) Securities held as of December 31, 2022 (excluding investment in subsidiaries, associates and joint ventures):

Name of holder	Category and name of security	Relationship with company	Account title		Ending balance			Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
The Company ″ ″ ″ ″ ″ ″ Worthy Textile ″ ″ ″ ″ ″ ″ ″ ″	TA-YUAN COGENERATION COMPANY LTD. Yong Cheng Environmental Tech. Co.,Ltd Linden Technologies Inc. Capital Money Market Fund Fund-Yuanta Global 5G & NexGen Telecommunication Components Fund-Cathay MSCI Taiwan ESG Sustainability Stock-Fubon Financial LE YOUNG CONSTRUCTION CO., LTD. HOPE VISION CO., LTD. Fund-Yuanta Taiwan Dividend Plus Fund-Yuanta FTSE4Good TIP Taiwan ESG Fund-Cathay Global Autonomous and Electric Vehicles Fund-Fubon MSCI ACWI IMI Select Future Mobility Fund-ICE FactSet Battery and Energy Storage Technology Stock-Asia Cement Stock-GRAND PACIFIC PETROCHEMICAL	None ″ ″ ″ ″ ″ ″ None ″ ″ ″ ″ ″ ″ ″ ″	Financial assets at fair value through other comprehensive income- non-current ″ Financial assets at fair value through profit or loss- non- current Financial assets at fair value through profit or loss- current ″ ″ ″ Financial assets at fair value through profit or loss- non- current Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through profit or loss- current ″ ″ ″ ″ ″ ″	11 400 40 4,919 30 1,000 105 506 1,000 100 10 410 129 99 35 60	$ 437 1,879 - 80,504 716 16,170 5,911 7,557 10,000 2,540 282 4,403 1,484 1,210 1,435 1,131	0.01 0.35 1.15 - - - - 0.51 1.81 - - - - - - 0.01	437 1,879 - 80,504 716 16,170 5,911 7,557 10,000 2,540 282 4,403 1,484 1,210 1,435 1,131

(Continued)

54

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

Name of holder	Category and name of security	Relationship with company	Account title		Ending balance			Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
Worthy Textile ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″	Stock-Shinkong Synthetic Fibers Stock-SOFTSTAR ENTERTAINMENT Stock-YI JINN Stock-Dyaco Stock-Solar Applied Materials Technology Stock-Yong Feng Yu Stock-China Steel Stock-TA CHEN STAINLESS PIPE Stock-Qisda Corporation Stock-Compal Electronics Stock-Taiwan-Asia Stock-SUNPLUS TECHNOLOGY Stock-AUO Corporation Stock-China Airlines Stock-Fubon Financial Stock-Cathay Financial Stock-Chinatrust Commercial Stock-ASIA OPTICAL Stock-Wt Microelectronics Stock-Unimicron Technology Stock-TXC CORPORATION Stock-Good Way Stock-TAISOL Stock-Innolux Stock-Shih Her Stock-United Renewable Energy Stock-AVer Information Stock-MiTAC Synnex Stock-Center Lab Stock-Calin Technology Stock-Etron Technology Stock-Chipbond Technology Stock-SIGURD MICROELECTRONICS Stock-TSEC	None ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″	Financial assets at fair value through profit or loss- current ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″	260 2,682 170 53 50 20 60 90 40 25 148 170 225 136 21 81 80 60 40 10 90 1,761 129 299 8 60 150 100 57 60 204 75 70 74	4,563 43,717 3,179 2,157 1,602 489 1,788 3,816 1,126 576 4,995 3,808 3,375 2,584 1,182 3,221 1,768 3,630 2,444 1,200 7,443 78,365 4,037 3,305 460 1,239 6,945 2,950 2,682 2,256 8,048 4,305 3,399 2,544	0.02 2.05 0.06 0.04 0.01 - - - - - 0.03 0.03 - - - - - 0.02 - - 0.03 3.22 0.15 - 0.01 - 0.16 0.01 0.01 0.04 0.07 0.01 0.02 0.02	4,563 43,717 3,179 2,157 1,602 489 1,788 3,816 1,126 576 4,995 3,808 3,375 2,584 1,182 3,221 1,768 3,630 2,444 1,200 7,443 78,365 4,037 3,305 460 1,239 6,945 2,950 2,682 2,256 8,048 4,305 3,399 2,544

(Continued)

55

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

Name of holder	Category and name of security	Relationship with company	Account title		Ending balance			Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
Hong Sheng ″ ″ ″ ″ ″ ″ ″ Progiant Constructio n 〃 ″ ″ ″ ″ ″ ″	The Compeny Asia Pacific Federation of Industry and Commerce Stock-DE LICACY Stock-Good Way Stock-EVEREST TEXTILE Stock-Yong Feng Yu Stock-SOFTSTAR ENTERTAINMENT Fund-ICE FactSet Battery and Energy Storage Technology LI JIN ENGINEERING CO., LTD. HONG XIN CONSTRUTION CO., LTD. Capital Money Market Fund Fund-Cathay MSCI Taiwan ESG Sustainability Stock-HSIN KUANG STEEL Stock-Chinatrust Commercial Stock-China Airlines Stock-United Renewable Energy	Parent company None ″ ″ ″ ″ ″ ″ None 〃 ″ ″ ″ ″ ″ ″	Financial assets at fair value through other comprehensive income- non-current Financial assets at fair value through profit or loss- non- current Financial assets at fair value through profit or loss- current ″ ″ 〃 〃 〃 Financial assets at fair value through other comprehensive income- non-current 〃 Financial assets at fair value through profit or loss- current 〃 ″ ″ ″ ″	8,875 22 451 49 2,000 30 472 50 6,150 2,000 7,767 1,000 35 25 20 10	126,910 - 6,337 2,181 14,180 734 7,693 611 105,841 23,520 127,265 16,170 1,501 552 380 207	5.12 0.03 0.12 0.09 0.29 - 0.36 - 5.13 3.33 - - 0.01 - - -	126,910 - 6,337 2,181 14,180 734 7,693 611 105,841 23,520 127,265 16,170 1,501 552 380 207

(iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Category and name of security	Account name	Name of counter- party	Relationship with the company	Beginning Balance	Beginning Balance	Purchases	Purchases	Sales	Sales	Sales	Sales	Ending Balance	Ending Balance
					Shares	Amount	Shares	Amount	Shares	Price	Cost	Gain (loss) on disposal	Shares	Amount
The Company	Capital Money Market Fund	Financial assets at fair value through profit or loss- current	- -		7,209	117,426	30,809	503,000	33,099	540,400	539,922	478	4,919	80,504

• (v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None

• (vi) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None

(Continued)

56

CHYANG SHENG DYEING & FINISHING CO., LTD. Notes to the Financial Statements

(vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

Name of company	Related party	Nature of relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transact differen	ions with terms t from others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
The Company	Shinkong Textile	Substantial related person	(Sale)	(169,200)	% (34)	Credit on 30 days	-		38,753	47%

• (viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock: None

• (ix) Trading in derivative instruments: None

• (b) Information on investees:

The following is the information on investees for the year 2022 (excluding information on investees in Mainland China):

Name of investor	Name of investee	Location	Main businesses and products	Original inves	tment amount	Balance as of Decembe	Balance as of Decembe	r 31, 2022	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2022	December 31, 2021	Shares (thousands	) Percentage of ownership	Carrying value
The Company 〃 〃 〃 Worthy Textile 〃 Hong Sheng investment	Worthy Textile Progiant Construction Chyang Sheng Vietnam Hong Sheng investment Chyang Sheng Vietnam Treasure Star Sea Some International	Taiwan Taiwan Vietnam Taiwan Vietnam Samoa Taiwan	Investment company Entrust construction companies to build national housing, namely commercial buildings, leasing and selling business Printing and Dyeing and Finishing Investment company Printing and Dyeing and Finishing International trading business International trading business	638,461 167,200 223,523 (USD6,931 thousand dollar) 140,000 167,362 (USD5,776 thousand dollar) 29,795 3,000	638,461 167,200 223,523 (USD6,931 thousand dollar) 140,000 167,362 (USD5,776 thousand dollar) 29,795 3,000	63,800 26,235 - 14,000 - - 300	% 100.00 % 83.68 % 18.69 % 100.00 % 14.92 % 33.61 % 100.00	700,872 515,995 119,166 31,642 97,019 225,108 4,380	36,141 1,195 (35,289) (3,679) (35,289) 134,109 1,808	36,141 1,000 (6,596) (3,679) (5,264) 45,075 1,808

• (c) Information on investment in mainland China: None

• (d) Major shareholders:

Shareholding Shareholder’s Name	Shares	Percentage
Shinkong Textile Co., Ltd.	33,628,576	% 19.40
Lin Jun Yao	11,400,000	% 6.57
Hong Sheng investment Co., Ltd.	8,874,795	% 5.12

(14) Segment information:

Please see the Consolidated Financial Statements for the year ended December 31, 2022.

(Continued)

57

CHYANG SHENG DYEING & FINSHING CO., LTD.

Statement of cash and cash equivalents

December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Item	Description		Amount
Cash and demand deposits		$	70,844
Time deposits	short-term; interest rates 0.975% - 1.440%		129,900
Total		$	200,744

Statement of notes and accounts receivable

Customer Name	Description		Amount
Shinkong Textile Co., Ltd.	Operating	$	38,753
Carol Textile Co., Ltd.	〃		15,342
Others (note)	〃		28,288
			82,383
Less: Loss allowance			(1,188)
Total		$	81,195
Note: individual amount does not exceed 5%.

58

CHYANG SHENG DYEING & FINSHING CO., LTD.

Statement of inventories

December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Item Finished goods and commodity Work in process Raw materials Subtotal Less: Allowance for inventory valuation and obsolescence	Amount	Amount
	Cost Net realizable value $ 392 - - - 21,378 21,378 21,770 21,378 (432) $ 21,338
		- - 21,378 21,378

Statement of other current assets

Item	Description		Amount
Advance payment		$	1,307
Prepaid expenses	Mainly prepaid consumables and spare parts, etc.		923
Others			1,330
		$	3,560

59

CHYANG SHENG DYEING & FINSHING CO., LTD.

Statement of changes in investments accounted for using the equity method

For the year ended December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Investee Name Worthy Textile Industry Co., Ltd. Progiant Construction & Development Corporation Chyang Sheng Vietnam Co., Ltd. Hong Sheng Investment Co., Ltd.	Beginning balance Shares Amount 63,800 $ 674,379 26,235 524,177 - 118,010 14,000 31,771 $ 1,348,337	Addition Shares Amount - - - - - - - - -	Decrease	(note 2) Amount (34,978) (9,182) - - (44,160)	Other (note 3) Shares Amount - 61,471 - 1,000 - 1,156 - (129) 63,498	Ending balance Shares % of Ownershi p Amount 63,800 % 100.00 700,872 26,235 % 83.68 515,995 - % 18.69 119,166 14,000 % 100.00 31,642 1,367,675	Ending balance Shares % of Ownershi p Amount 63,800 % 100.00 700,872 26,235 % 83.68 515,995 - % 18.69 119,166 14,000 % 100.00 31,642 1,367,675	Market value or net asset value Guarantee or pledged
	Shares	Shares - - - -	Shares - - - -		Shares - - - -	Shares 63,800 26,235 - 14,000	% of Ownershi p % 100.00 % 83.68 % 18.69 % 100.00
	63,800 26,235 - 14,000							700,852 none 515,995 none 106,252 none 158,551 (note 1) none 1,481,650

Note 1: The difference of Hong Sheng Investment's ending balance and net asset value is because Hong Sheng Investment hold shares of the Company, and the Company processes them as treasury shares. Please refer to note 6(n) of financial statements.

Note 2: The decrease in the current period is due to the cash dividends received (recorded as a decrease in long-term equity investments).

Note 3: Other changes in the current period include the recognition of investment income, cumulative translation adjustment, and capital surplus, etc.

60

CHYANG SHENG DYEING & FINSHING CO., LTD.

Statement of financial assets measured at fair value through profit or loss - current

December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Name of Investee Fund-Yuanta Global 5G & NexGen Telecommunication Components Fund-Cathay MSCI Taiwan ESG Sustainability Stock-Fubon Financial Capital Money Market Fund Linden Technologies Inc. Total	Beginning Balance Number of shares Amount 30 $ 1,008 - - 100 7,629 7,209 117,426 40 - $ 126,063	Addi	tions Amount - 18,139 - 503,000 - 521,139	Disposal	Disposal	Other	(note)	Ending Balan Number of shares % of ownership 30 % - 1,000 % - 105 % - 4,919 % - 40 % 1.15	Ending Balan Number of shares % of ownership 30 % - 1,000 % - 105 % - 4,919 % - 40 % 1.15	ce	Guarantee or pleged Note none none none none none Cumulative impairment $12,316 thousand
		Number of shares - 1,000 5 30,809 -		Number of shares - - - 33,099 -	Amount - - - 539,922 - 539,922	Number of shares - - - - -	Amount (292) (1,969) (1,718) - - (3,979)		% of ownership % - % - % - % - % 1.15	amount 716 16,170 5,911 80,504 - 103,301

Note 1: Other changes in stocks and funds are valuation profit or loss adjusted by customers' market prices at the end of the period.

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CHYANG SHENG DYEING & FINSHING CO., LTD.

Statement of changes in property, plant and equipment For the year ended December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Please refer to note 6(g) for relevant information of property, plant and equipment.

Statement of changes in right-of-use assets

Please refer to note 6(h) for relevant information of right-of-use assets.

Statement of changes in investment property

Please refer to note 6(i) for relevant information of investment property.

62

CHYANG SHENG DYEING & FINSHING CO., LTD.

Statement of other non-current assets

December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Item		Amount
Refundable deposits	$	9,008
Deferred income tax assets		1,492
Non-current defined benefit assets		7,544
Others		13,801
	$	31,845

Statement of notes and accounts payable

Item	Description		Amount
J&J Dyestuff Industry Co., Ltd.	Operating	$	3,146
Big Sunshine Co., Ltd.	〃		2,913
Jintex Corporation Ltd.	〃		2,181
Others (note)	〃		32,401
Total		$	40,641

Note: individual amount does not exceed 5%.

63

CHYANG SHENG DYEING & FINSHING CO., LTD.

Statement of other current liabilities

December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Item		Amount
Natural gas, steam and electricity charges	$	21,705
Salaries and bonus payable		13,474
Income tax payable		4,301
Employee compensation and directors' remuneration payable		3,299
Others (note)		16,232
Total	$	59,011
Note: individual amount does not exceed 5%.

Statement of other non-current liabilities

Item Other payables Guarantee deposits received Total	Amount Note $ 15,000 9,585 $ 24,585

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CHYANG SHENG DYEING & FINSHING CO., LTD.

Statement of operating revenue

For the year ended December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Item Weaving and dyeing and finishing Others Total	PCS Amount 24,006 thousand yards $ 485,938 225 $ 486,163

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CHYANG SHENG DYEING & FINSHING CO., LTD.

Statement of operating costs

For the year ended December 31, 2022

(In thousands of New Taiwan Dollars)

Item Direct material: Raw material and dye: Beginning of year Add: Purchases Other Less: End of year Transfer to manufacturing overhead Transfer to research and development expense Other Raw materials and dye used for the year Gray cloth: Beginning of year Sold Direct Labor Manufacturing overhead Manufacturing cost Finished goods Add: Finished goods, beginning of the year Less: Finished goods, end of the year Cost of goods sold Revenue from sale of scraps Unamortized fixed manufacturing overhead Subtotal Commodity: Commodity, beginning of the year Less: Commodity, end of the year Total	Manufacturing cost $ 31,099 114,984 1,460 21,378 7,681 255 3,776 114,453 - - 44,052 235,126 393,631 393,631 - - 393,631 (2,427) 22,875 414,079 - - $ 414,079		Cost of goods sold Operating cost - 31,099 - 114,984 - 1,460 - 21,378 - 7,681 - 255 - 3,776 - 114,453 4,081 4,081 4,081 4,081 - 44,052 - 235,126 - 393,631 - 393,631 66 66 66 66 - 393,631 - (2,427) - 22,875 - 414,079 326 326 326 326 - 414,079

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CHYANG SHENG DYEING & FINSHING CO., LTD.

Statement of operating expenses

For the year ended December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Item Salaries expense Directors' remuneration Labor insurance Pension Rental expense Miscellaneous Professional service fees Directors' and supervisors' honorarium Freight expense Maintenance expense Impairment loss Others (note) Total	Selling expenses $ 5,125 - 356 223 933 99 - - 3,966 1 - 1,151 $ 11,854	Administrative expenses 15,113 2,474 573 357 1,002 8,143 2,426 2,040 - 673 - 6,298 39,099		Research and development expenses 6,425 - 496 606 - 101 - - - 487 - 1,197 9,312	Impairment loss
					- - - - - - - - - - 740 -
					740

Note: individual amount does not exceed 5%.