CSG — Annual Report 2022

Jul 11, 2023

Stock Symbol: 1463

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Annual Report 2022

The Annual Report is available at: http://newmops.twse.com.tw http://www.csgroup.com.tw

Printed on April 30, 2023

• I. The Company's spokesperson and acting spokesperson:

• (1) Spokesperson: Cheng Yi-Min

  • Title: VP of the Financial Department Tel: (02)2555-6866

  • E-mail: public@csgroup.com.tw

• (2) Acting spokesperson: Mei-Na Lan Title: Assistant Manager of the Finance Department Tel: (02)2555-6866 E-mail: public@csgroup.com.tw

• II. Addresses and telephone numbers of the head office, branch offices, and factories: Address of the head office and factories: No. 126, Dagong Road, Dayuan District, Taoyuan City Tel: (03)386-7661 Address of branch offices: 6F, No. 63, Sec. 1, Dihua St., Taipei City Tel: (02)2555-6866

• III. Stock transfer agency: Name: Stock Affairs Department of Taishin Securities Co., Ltd. Address: B1, No. 96, Sec. 1, Jianguo N. Rd., Taipei City Website: https://www.tssco.com.tw Tel: (02)2504-8125

• IV. Names of the accountants and name, address, website, and telephone number of the accounting firm for financial statements in the most recent year: CPAs: CPA Chen Chen-Chien, CPA Yu Sheng-Ho Accounting firm name: KPMG Address: 68F, No. 7, Sec. 5, Xinyi Rd., Taipei City (Taipei 101) Website: www.kpmg.com.tw Tel: (02)8101-6666

• V. Name of overseas stock exchange and method for accessing information on overseas negotiable securities: None

• VI. Company website: www.csgroup.com.tw

Table of Contents

	Table of Contents	Table of Contents
1.	Letter to Shareholders ······································································ 01
	I.	2022 Business Performance ··························································· 01
	II.	Summary of the 2023 Business Plan ················································· 02
	III.	Future Development Strategy ························································· 06
	IV.	The Impact of the External Competitive Environment, Regulatory Environment,
		and Macroeconomic Conditions ······················································ 07
2.	Company Overview ········································································· 09
	I.	Date of Establishment ·································································· 09
	II.	Company History ······································································· 09
3.	Corporate Governance Report ··························································· 13
	I.	Organization ············································································· 13
	II.	Information on Directors, Supervisors, President, Vice President, Assistant Vice
		President, and Heads of Departments and Branch Offices ······················· 16
	III.	Remunerations to Directors, Supervisors, President, and Vice Presidents in the
		Most Recent Year ······································································· 32
	IV.	Implementation of Corporate Governance ·········································· 42
	V.	Information on Fees to CPA ··························································· 88
	VI.	Information on Change of Accountants ·············································· 88
	VII.	The Chairperson, President, Financial or Accounting Manager of the Company
		Who Had Worked for the Accounting Firm or Its Affiliated Enterprise in the Past
		Year ······················································································· 88
	VIII.	Share Transfer by Directors, Supervisors, Managerial Officers and Shareholders
		Holding More Than 10% Equity and Changes to Share Pledging by Them in the
		Past Year and up to the Date of Report ·············································· 89
	IX.	Information on the Relationship between Any of the Top Ten Shareholders
		(Related Party, Spouse, or Kinship within the Second Degree) ················· 91
	X.	The Number of Shares of the Same Invested Company Held by the Company, the
		Company's Directors, Supervisors, and Managerial Officers, and the Businesses
		Controlled Directly or Indirectly by the Company, and the Consolidated
		Shareholding Ratio ····································································· 92
4.	Capital Overview ············································································ 93
	I.	Capital and Shareholding ······························································ 93
	II.	Issuance of Corporate Bonds ·························································· 98
	III.	Issuance of Preferred Shares ·························································· 98
	IV.	Issuance of Global Depositary Receipts (GDR) ···································· 98
	V.	Issuance of Employee Share Options and Restricted Share Awards ············· 98
	VI.	Mergers, Acquisitions or Issuance of New Shares for Acquisition of Shares of
		Other Companies ······································································· 98
	VII.	Implementation of Capital Allocation Plan ········································· 98
5.	Business Overview ··········································································· 99
	I.	Business Activities ······································································ 99
	II.	Market, Production and Sales Overview ············································ 103
	III.	Information of Employees in Last Two Years and up to the Date of Report
		(Including Number of Employees, Average Number of Years with the Company,

		Average Age, and Education) ························································· 114
	IV.	Information on Environmental Management Measures and Environmental
		Protection Expenses ···································································· 114
	V.	Employee Benefits and Labor Relations ············································ 115
	VI.	Information Security Management ··················································· 122
	VII.	Important Contracts ····································································· 126
6.	Financial Overview ·········································································· 127
	I.	Condensed Statement of Financial Position and Statements of Comprehensive
		Income in the Last Five Years ························································· 127
	II.	Financial Analysis for the Past Five Years ·········································· 132
	III.	Audit Committee' Review Report on Financial Statements for the Most Recent
		Year ···················································································· 136
	IV.	Financial Statements for the Most Recent Year ···································· 136
	V.	Financial Statements of the Company for the Most Recent Year Audited by the
		CPA ···················································································· 136
	VI.	The Impact of Financial Difficulties of the Company and Affiliated Companies, If
		Any, on the Company's Financial Position in the Past Year and up to the Date of
		Report ···················································································· 136
7.	Review and Analysis of Financial Status, Financial Performance, and Risk
Management ·························································································· 139
	I.	Analysis of Financial Position ························································ 139
	II.	Financial Performance Analysis ······················································ 139
	III.	Cash Flow Analysis ····································································· 139
	IV.	Effect of Major Capital Expenditures on Financial Position and Business
		Operations in the Most Recent Year ················································· 140
	V.	Investment Policy in the Past Year, Profit/Loss Analysis, Improvement Plan, and
		Investment Plan for the Coming Year ··············································· 140
	VI.	Risks and Assessment ·································································· 140
	VII.	Other Important Matters ······························································· 143
8.	Special Notes ·················································································· 144
	I.	Profiles of Affiliated Enterprises ····················································· 144
	II.	Private Placement of Securities in the Most Recent Year and up to the Date of
		Report ················································································· 146
	III.	Holding or Disposal of the Company's Shares by Subsidiaries in the Past Year and
		up to the Date of Report ······························································· 147
	IV.	Other Supplemental Information ····················································· 147
	V.	Matters, If Any, that May Affect Shareholders' Equity or Securities Prices as
		Defined in Article 36, Paragraph 3, Subparagraph 2 of the Securities and
		Exchange Act in the Most Recent Year and up to the Date of Report ·········· 147

1. Letter to Shareholders

I. 2022 Business Performance

(I). Business Plan Implementation Results:

The Company's main businesses include textiles dyeing and finishing OEM services and construction. Textiles OEM services include fiber processing, bleaching, dyeing, and finishing OEM services, while the construction business involves the construction and purchase/sale of residential/commercial buildings. The Company's consolidated revenue was NT$495,932 thousand, operating profit was NT$76,553 thousand, net profit of the term was NT$68,879, in which net profit attributable to owners of the parent was NT$68,684 thousand, net profit attributable to non-controlling interests was NT$195 thousand, and EPS was NT$0.42.

(II). Budget Implementation:

In accordance to the Guidelines for Disclosure of Financial Forecasts by Public Companies, the Company is not required to disclose financial forecast information.

(III). Analysis of Financial Gains and Losses and Profitability:

Unit: Expressed in thousands of New Taiwan Dollars

Item	Year	2022	2021	Increase (decrease)
Financial receipts and expendit ures	Operating revenue	495,932	456,564	39,368
	Operating margin	76,553	70,969	5,584
	Interest income	1,858	1,570	288
	Interest expenditure	(3,859)	(2,049)	(1,810)
	Net profit after tax	68,684	80,675	(11,991)
Profitabil ity	Return on assets (%)	2.59	3.13	(0.54)
	Return on equity (%)	2.99	3.64	(0.65)
	Ratio of net profit before tax to paid-in capital(%)	5.02	5.72	(0.70)
	Net profit margin (%)	13.89	18.06	(4.17)
	Earnings per share (NTD)	0.42	0.49	(0.07)

(IV). Research and Development Status:

1. Development of new products for mass production:

2. (1) Fluorine-free water repellent adopted for short fiber to achieve a repellent effect that is uniform, durable after washing, and meets the requirements of environmental protection regulations.

3. (2) Established polyester dyeing formula for light, medium, and primary colors to improve dyeing surfaces and vat differences.

4. (3) Replaced sodium dithionite with reduction RCO to improve the convenience of catalysts and better meet requirements for environmental sustainability.

5. (4) Addition of moisture wicking (fast dry) properties to weft mechanical open fiber yarn.

6. (5) Improvement of dyeing machine efficiency, and addition of 600 kg dyeing machine to not only improve production efficiency and prevent vat difference, but also reduce water and energy consumption, so as to achieve sustainable development and environmental protection.

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1. Plans for development of new products and quality improvements:

2. (1) Trial production of motorcycle jacket anti-fall series that meet the requirements of Bluesign certification.

3. (2) Ceased usage of fluorine-based water repellent and replaced with fluorine-free water repellent for long fibers, thereby decreasing pollution to water resources.

4. (3) Trial production of ocean recycle yarn manufactured with 3M water repellent to achieve quality requirements.

5. (4) Trial of Tsp*T fabric weight reduction to achieve soft, elastic feeling and ensure high tensile strength in finished products.

6. (5) Improved the special fabrics and sensitive color types of long fabrics, solved the abnormal phenomenon of surface resin due to C0 water repellent.

II. Summary of 2023 Business Plan: (I). Operating Policy:

Chyang Sheng Vision: "Modernize C.S. into a first-rate, world class company that allows employees to achieve life-long learning and growth". Uphold the spirit of professionalism through dyeing and finishing services to satisfy customer demands, pursue revenue growth, and sustainable operations.

Our operating code of conduct: "Create new revenue streams, decrease costs, utilize collective power; upgrade, transform, innovate, and surpass". Our hope is that the entire company will adopt these standards and practices to create new opportunities for the Company. We've established specific policies for this purpose:

1. Focus on talent-centric knowledge capital

2. Develop customer relations from the perspective of the service industry

3. Build culture oriented towards customer values and teams that are efficient and capable of executing at the highest level, thereby maintaining customer trust

4. Achieve new streams of revenue, decrease expenditures, manage costs, and prevent any waste

5. Practice 6S Visual Management, improve the quality of employees and work environments

6. Establish a culture of discipline for an exceptional human-centric culture

7. Build a management team capable of executing and performing at the highest level

Additionally, we will continue to develop the Company's core competencies - the ability to practice and execute quality - and hope that these values are understood, implemented, and practiced by all employees. Declaration of our enterprise culture:

1. Create a culture of integrity and accountability.

2. Create a culture that pursues excellence and advancement.

3. Create a culture of sharing knowledge and information between individuals.

Encourage colleagues to reset their thinking, to re-think, re-design, embrace positive attitudes, do the right things, and cultivate the right people; do the right things well and to completion while also finding methods for success instead of reasons for failure; bear hope instead of complaints, interpret things positively, think

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outside the box and do not harbor negative emotions. This will lead to good thinking that will lead the Company to success.

The Company's doctrines of "integrity, team, professionalism, and efficiency" is something we hope all colleagues practice at their jobs daily.

Our pursuit of economic development must be conducted while fulfilling our responsibility for sustainable development. The third reading of the Climate Change Response Act was passed in the Legislative Yuan on January 10, 2023, and was promulgated by the president. The goal of net zero emissions by 2050 was included in the act, increasing the level of climate governance, levying carbon fees for special purposes, adding a special chapter on climate change adaptation, and incorporating management mechanisms such as carbon footprint and product labeling. In response to the Glasgow Climate Pact established at COP 26 in 2021, nations have been urged to enhance their reduction targets; Taiwan has increased its 2030 carbon reduction goal from 20% with the base period of 2005 to 24%±1%. The Company strives to promote an environment sustainability plan including investing into the engineering modification, optimization, and recycling of energy consumption and creating a food chain to establish an operating model based in sustainable development to protect environmental resources and the goal of net zero. While achieving economic development for the enterprise, social aspects and shared stakeholder values must be catered to for the comprehensive protection and sustainability of environments and ecosystems.

(II). Sales forecast:

The Company's 2023 sales forecast is the amount: Dyeing, finishing, and OEM shipments amounting to 26,400,000 yards.

(III). Production and sales strategy:

1. Create customer value

The Company is one of the few professional domestic dyeing and finishing plants with production lines for short fiber continuous dyeing, long fiber dyeing, and long/short fiber interweaving cold dyeing. With quality assurances for professional dyeing from domestic brands and merchants, the Company is oriented to providing services that create customer value.

• (1) Classification of products from each production line that are suitable for processing

Continuous dyeing line: Natural fibers such as cotton and linen, blends such as T/C, T/R

Long fiber dyeing line: Polyester fiber, polyester fiber two-way warp and weft elastic series

Interweaving cold dyeing line: Long/short fiber interweaving, renewable fiber series

• (2) Special feature products include:

• 100% Cotton medical fabric (Shihlin dye) wash-resistant series

• T/C, T/R blend fabric reduction series

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  - Microfiber processing products and high color fastness dyeing series

  - Long slim 20 denier high density ultra water repellent processing

  - T 100%, T-OP "two-way elastic" fabric series

  - Poly HCR high shrinkage elastic polyester fabric series

• (3) Functional processing products include:

  • Moisture wicking, antibacterial moisture wicking processing

  • Development of processing with hybrid functions such as antibacterial, odor resistance, or UV resistance.

  • Microcapsule processing for health benefits such as mosquito repellent, aromas, and moisturizing skin care.

  • Introduction and application of nanoscale processing catalysts.

  • Fluorine free (C0) eco-friendly water repellent processing

  • EN-471 requirement standards for fluorescent orange and fluorescent yellow.

  • Fabrics meet TFT function certification standards for UV resistance, moisture wicking, and fast drying

• Provide professional services through market segmentation

• (1) Short fiber continuous dyeing line:

  • Provide professional dyeing and finishing OEM services for T/C, T/R blended fabrics and utilize the advantage of continuous dyeing. Aside from the core business of domestic and export uniform fabric, the resources of domestic dyeing plants have been consolidated to undertake special work clothes fabric resistant to industrial washing from the U.S. and EU through traders.

• (2) Long fiber dyeing line: Provide brand customers with customization services

The plant's long fiber dyeing line focuses on the advantage of reliable quality for the Poly series, utilizing digital color management and processes such as concentrated quantification of fine denier, high density, and elastic fabrics. Major brand customers are closely maintained to satisfy market demands.

1. Quality first, on-time delivery, rapid service

Both the comprehensive and progressive agreement for trans-pacific partnership (CPTPP) and regional comprehensive economic partnership came into effect in 2018 and 2022, respectively; unfortunately, Taiwan was unable to participate in the major regional trade organizations. Despite disadvantages, Taiwan has had the opportunity of obtaining a portion of orders transferred out of China due to the trade war between the U.S. and China. Ultimately, product quality has become the most critical aspect. This became an opportunity for enterprise transformation and upgrade and striving to achieve quality first, on-time delivery, and rapid service.

1. Digital technology application

Full dedication to plans for further upgrade and transformation to productivity

4.0.

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• (1) Build seamless upstream/downstream transition mechanisms to obtain real-time data to achieve the goal of rapid materials preparation, reduced inventory, and on-time delivery based on the requirements of orders.

• (2) Big data analysis mechanisms such as ERP and MES are linked to the reproducible formulas labs and on-site monitoring technology, allowing for automated formula management and production resumes of products to achieve data transparency and rapid response capabilities for production lines.

• (3) Introduce energy-saving dyeing and setting machines and utilize equipment automation and smart feedback control technology to achieve smart production lines and transition towards a smart factory for professional dyeing and finishing.

• (4) Introduce automated optical inspection (AOI) systems to identify discarded cloth in key segments of production machinery, replacing labor operated inspection systems. Implement AI assisted automatic fabric/report inspection for finished products to solve labor shortages and increase both accuracy and timeliness.

• Talent cultivation

• (1) Cultivate high quality, worldly, energetic, and idealistic mid-level managers through the "Industry-Academia Special Joint Program"

• (2) The rotation of R&D, technical, and on-site personnel shall be conducted in a manner to develop multi-skilled talent by exposing them to both office and factory affairs for talent required to address complex environments and changes in the future.

• (3) Assist employees with career planning and increase opportunities for them to train their core capabilities.

• Function integration in production lines, maintain and update machinery

• (1) Review the latest plans relating to demand of production and sales and combine production lines according to function, allowing for concentrated production of equipment and fully expressing their combined productivity benefits.

• (2) Implement energy and water conservation for machinery and equipment to decrease the ratio of dyeing liquor ratio and consumption of energy and chemical catalysts as we transition towards sustainable environmental protection.

• (3) Eliminate and replace pre-treatment equipment to combine scouring and condensing processes. This eliminates production bottlenecks by shortening processes and improves the smoothness of elastic fabric finishing.

• Selection of raw materials and incoming inspections

• (1) The raw materials qualification program selects suitable raw materials or competing products to improve processing quality and decrease the price fluctuation impact of raw materials.

• (2) By eliminating unsuitable combinations and standardizing formulas, identical formulas can be utilized in concentrated processing to promote

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product consistency and decrease waste due to the changing of specifications.

• (3) Each batch of incoming raw materials are sampled and submitted to the testing lab for rigorous inspections to ensure material stability.

• Comprehensive quality controls

• (1) Each manufacturing processes adheres to the quality policies of "no manufacturing of defective products", "no acceptance of defective products", and "no dissemination of defective products". Quality controls and guarantees are performed to provide customers with satisfactory products and services.

• (2) Implementation of ISO 9001 quality controls ensures consistent quality that satisfy customer requirements.

• (3) A Quality Management Team has been established to plan and perform operations related to quality management and inspection. Systematic quality audits assist production departments with the implementation and performance of comprehensive quality controls.

III. Future Development Strategy:

The Company's primary business operations continue to be in joint exports. Due to changes in global market competition, our primary fabric plants have invested into vertical integration from fabrics to garments and the development of brands and distribution channels to maintain competitive advantage. As such, business in Taiwan's OEM operations have been severely compressed. In response to the intense changes of the competitive environment in the global textile industry, the Company's long and short-term development goals are as follows:

• (I) Continue transitioning towards advancements in high-value, differentiated products Develop various high value-added materials to achieve differentiation, combining them with technology and trends to produce functional fabrics that generate greater business opportunities.

• (II) Obtained GRS certification for the development of eco-friendly textile products Currently, many textile manufacturers in Taiwan have invested in the development of eco-friendly textiles such as recycled nylon, dope dyed fiber, bio-based eco-friendly textiles, and anhydrous dyed textiles; the use of recycled PET bottles in textiles has earned an excellent global reputation. The trend of eco-friendly textiles will inevitably garner more future attention and as such, complying with global trends will facilitate entry into the global production and sales supply chain.

• (III) Develop fashionable and functional textiles

• In recent years, consumer preference has shifted towards a lifestyle that "combines sports, work, and life" which is why the demand for fashionable and functional textile products has increased. Taiwan's textile industry has become a major global base of R&D and production for functional textiles. As more major global brands continue to release functional fashion garments, the Company will actively strive to find a niche to expand the textile market.

The strategy to achieve development goals in the preceding paragraph requires long-term development and planning of digital transformation, smart mechanical

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production, innovative manufacturing processes, and strategic alliances to identify brand requirements and perform vertical integration with garment distribution channels. The combination of the Company's existing dyeing and finishing business with an operation model that encompasses energy supply for dyeing and finishing as well as the professional service park will allow full utilization of the circular economy development model provided by recycling and steam and electricity symbiosis at Dayuan Industrial Park. The short-term business plan will focus more on high fastness quality such as the concentrated quantification and high quality production of higher T100% two-way elastic fabrics, fine and lightweight denier fabrics, and high density fabrics. Working with domestic upstream suppliers of poly eco-friendly raw materials eliminates any worries for domestic mass production while forming strategic partnerships with brand operating customers will sustain the development plan to increase sales volume.

IV. The Impact of the External Competitive Environment, Regulatory Environment, and Macroeconomic Conditions:

• (I) Competition in the global economy is transitioning towards regional integration in the form of global supply chains. Following the UK, Taiwan applied to join CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) in 2021 but has yet to join as further review and negotiations are required. Also, the RCEP (Regional Comprehensive Economic Partnership) formed by ASEAN countries and its 5 FTA partners, including China, became effective in 2022. The partnership's ultimate goal is to eliminate tariffs on more than 90% of products between member countries; due to the continuing U.S.-China trade war, China will undoubtedly utilize this opportunity to increase their trading power to oppose the U.S. and CPTPP. If Taiwan is unable to negotiate and sign individual free trade agreements or gain entry into the trade organizations in these two major regions, exports of Taiwanese textiles will suffer severe crowding out effects.

• (II) The Russia-Ukraine War has persisted for more than a year, resulting in severe impact to the global economy. The surging prices of natural gas, coal, and imported raw materials has caused a global inflation and affected consumer purchase power. Even as COVID-19 restrictions ease in the west, brands are seeing an increase in inventory, orders are stagnating, and there has been a negative short-term impact to global economy growth. Due to many global factors and interference, domestic energy prices will continue to increase and inevitably impact energy costs for the current year. In response, production management must take inventory of energy consumption in each plant and establish KPI goals for improvement, utilize the PDCA management cycle to review energy consumption, and adopt a spirit of constant improvement to suppress the severe impact of surging energy prices.

• (III) The standards of environmental protection laws have comparatively risen and have evolved along with environmental sustainability. Taoyuan City requested dyeing and finishing businesses to implement improvements and alternative plans in compliance with the "Boiler Air Pollution Emission Standards" by June 30, 2022. The Company conducted engineering to improve heating systems used in manufacturing processes and

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has replaced the existing coal heating systems with a new medium pressure steam heating system and gas boiler, both of which meet the operation guidelines of the latest provisions in the "Boiler Air Pollution Emission Standards".

• (IV) In order to implement the eco-friendly guidelines of the Zero Discharge of Chemicals (ZDHC) certification, the Company has obtained Bluesign certification and is fully dedicated to implementing certified replacements for dyes and chemical catalysts. Improvements to raw materials and additives have resulted in effects such as increased costs. Further review of raw material consumption and selection of competing products must be conducted to effectively control and manage variable costs.

Chairman: Chen Jen-Fa Executive: Lu Fang-Fu Head of Accounting: Cheng Yi-Min

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2. Company Overview

• I. Date of Establishment: Established on October 19, 1983.

Addresses and telephone numbers of the head office and factories

Address Tel Head office : No. 126, Dagong Road, Dayuan (03) 386-7661 District, Taoyuan City Factories : No. 126, Dagong Road, Dayuan (03) 386-7661 District, Taoyuan City Taipei Office : 6F, No. 63, Sec. 1, Dihua St., (02)2555-6866 Taipei City

II. Company History:

※1983:

The Company was established in Dayuan Kuoda Industrial Park on October 19, 1983 with a paid-in capital of NT$190,280,000, and began building a short-fiber dyeing and finishing factory, mainly providing customers with processing, dyeing, and finishing services. ※1984:

After the short-fiber dyeing and finishing factory was completed and formally began operating in September 1984, the Company began to provide continuous dyeing and finishing for short-fiber woven fabric, such as cotton, T/C, and T/R. ※1985:

Reviewed and approved by the Bureau of Standards, Metrology and Inspection, Ministry of Economic Affairs as a factory with "Class A Quality Control," and was further recognized for excellent quality control in October. The Company was invited to organize the "Quality Control Observational Tour," which invited domestic companies on the tour.

※1987:

Comprehensively implemented the "MIS computerized production and sales information management system" to improve production efficiency and the quality of marketing services.

※1991:

February: Chairman Chen Tse retired and the executive board elected Mr. Chen Jen-Fa to succeed him as the chairman.

※1992:

August: Passed the evaluation by SGS YARSLEY and obtained the quality assurance certifications ISO-9002, EN 29002, and BS 5750 PART 2, becoming the first textile dyeing and finishing company to obtain this recognition.

August: Premier Hau Pei-Tsun led Minister Kuo Wan-Jung of the Council for Economic Planning and Development, Minister Hsiao Wan-Chang of the Ministry of Economic Affairs, Minister Chao Shou-Po of the Ministry of Labor, Minister Chang Po-Ya of the Department of Health, Minister Chao Shao-Kang of the Environmental Protection Administration, and Director-General Hu Chih-Chiang of the Government Information Office on a visit to the Company's factory. November: Recognized as an "Excellent Taxpayer" by Taiwan Provincial Government Finance Department in 1992.

※1993:

January: Expansion of the long-fiber dyeing and finishing factory was completed and began production; expanding products to the continuous dyeing, exhaust dyeing, and cold dyeing of woven fabric with short-fiber, long-fiber, and both short-fiber and long-fiber.

November: The "CIM Factory Automation Investment Plan was reviewed and approved by the Industrial Development Bureau, becoming the first dyeing and finishing company to obtain this approval.

9

December: Selected by the Energy Technology Service Center under the Ministry of Economic Affairs as a demonstration factory for providing energy conservation guidance to the textiles industry.

• ※1994:

• April: Invited by the Energy Technology Service Center under the Ministry of Economic Affairs to hold a presentation of energy conservation results.

• July: Passed the evaluation by Hong Kong's ITS (Inchcape Testing Services) and obtained the Marks & Spencer Laboratory certificate of compliance.

• November: Invited to the Office of the President and President Lee Teng-Hui personally awarded the excellent supplier award for industrial automation.

※1995:

• December: Passed the quality verification by the UK's COURTAULDS (now LENZING) and obtained a licensing number to use the TENCEL  trademark.

※1996:

January: Organized the "Dyeing and finishing industry pollution prevention observational tour" in coordination with the MOEA Industrial Development Bureau, China Technical Consultants, Inc., and Taiwan Textile Research Institute, and invited dyeing and finishing companies nationwide to observe the environmental protection improvements and industrial waste reduction results of the Company. December: The Company's stock was formally listed on the stock exchange on December 5, 1996 with a paid-in capital of NT$884,756 thousand.

※1997:

March: The Company was invited by the IDB, US Environment Protection Training Association, and Indonesia Resources R&D Center to serve as the factory for the observational tour of the training course "Clean Production by the Dyeing and Finishing Industry in APEC Economies."

• July: Established Progiant Construction & Development Corporation in July 1997 and expanded into the building development business.

※1998:

March: Organized the "APEC Clean Production Observational Tour" in cooperation with the IDB, and invited distinguished guests from Asia Pacific countries to observe results of the Company's efforts in environmental protection and performance in industrial waste reduction.

April: Obtained the ISO-14001 Environmental Management Systems certification after passing SGS evaluation.

September: Obtained over 50% shares of Chyang Sheng Textiles Vietnam Co., Ltd. in September 1998 and renamed it Chyang Sheng Vietnam Co., Ltd. to provide printing services.

※1999:

November: Passed the evaluation by Switzerland's TESTEX and obtained the eco-friendly mark "Oeko-Tex Standard 100."

※2001:

September: Obtained the ISO 9001:2000 Quality Management System certification. October: The Company obtained LYCRA certification.

※2002:

July: The Company obtained NEXT certification.

※2003:

March: The Company obtained PUMA certification.

November: The Company obtained Adidas certification.

※2004:

December: Submitted an application and implemented the MOEA project "Eco-friendly

10

Fiber Lyocell Scouring Bleaching, and Deweighting Combination Engineering Technology Development Project."

December: Obtained "Nylon UV Resistant" and "Nylon Moisture Absorbing and Quick Drying" certifications for functional textiles from the TFT.

※2005:

September: Signed an agreement with Nano-Tex to jointly develop Nano-Pel, Nano-Tex[®] Resists Spills, Nano-Tex[®] Repels & Releases Stains, and Nano-Tex[®] Coolest Comfort.

※2006:

February: Signed a contract with Taiwan Textile Research Institute for "weaving process monitoring technology," and jointly developed the "fabric inspection machine defect collection system."

August: The application for the "Digital Dyeing and Finishing Collaborative Design and Development Project" was approved by the MOEA.

※2008:

September: The "Digital Dyeing and Finishing Collaborative Design and Development Project" was successfully completed.

※2009:

May: Obtained Adidas Level 2+(Plus) laboratory certification.

June: Comprehensively updated the Company's computer system, completed the implementation of the ERP system developed by Taiwan Textile Research Institute, and continued to increase the Company's use of information technology.

August: Obtained the ISO 14064-1 GHG inventory and verification certificate.

※2010:

April: Completed tasks for merging long-fiber and short-fiber factories, concentrating processing of the two production lines to streamline the organization. August: Obtained ISO 9001:2008 and ISO 14001:2004 certifications after completing SGS evaluation.

November: Completed the "Chyang Sheng Dyeing and Finishing System Value Chain Digitalization Project" of the IDB.

※2011:

April: Obtained Adidas Level 3 laboratory certification.

December: Obtained BSI verification certificates for the carbon footprint of the Company's polyester low denier, polyester flexible, and nylon products.

※2012:

July: Chyang Sheng Vietnam Co., Ltd. carried out a cash capital increase in the amount of US$7.25 million, added a knitted fabric factory and dyeing and finishing factory, and expanded production lines.

July: Established Pro-Star International Investment Consulting Ltd. on July 1, 2012 to engage in international trade of textiles.

※2013:

November: Obtained Cradle to Cradle certification for 100% poly and Poly 65%/cotton 35% products.

※2014:

December: The Company released shares of Chyang Sheng Vietnam Co., Ltd. and Pro-Star International Investment Consulting Ltd. via capital increase, in order to bring in strategic partners and establish an integrated factory from weaving, dyeing, to garments, and also strengthen sports brand channels. The Company's shareholding ratio of Chyang Sheng Vietnam Co., Ltd. and Pro-Star International Investment Consulting Ltd. was lowered to under 50%, so the companies were not included in the consolidated financial statements.

December: Merged with the wholly-owned subsidiary Xu Chiang Investment Co., Ltd. to

11

integrate the group's resources and enhance overall competitiveness, and retired the 15,142,388 shares of the Company that it held. The Company's paid-in capital became NT$1,732,683,810 after the shares were retired.

※2017:

March: Added continuous sludge drying equipment with the goal of cutting sludge in half, contributing to the environment by reducing waste.

November: Obtained Switzerland's Bluesign@ technology certification and became a partner of Bluesign@ technology companies, achieving the highest environmental protection, health, and safety requirements for products.

※2018:

June: The application for the MOEA technology development project "Optimization of Long-fiber Woven Fabric Smart Manufacturing" was approved and began implementation.

※2019:

December: Completed the "Optimization of Long-fiber Woven Fabric Smart Manufacturing" and enhanced the Company's smart manufacturing management abilities.

※2020:

August: Replaced the existing coal heating system with a new medium pressure steam heating system and significantly reduced carbon emissions, contributing to the protection of Earth's environment by significantly reducing carbon emissions.

※2021:

August: Obtained the latest version of the ISO9001:2015 Quality Management Systems certification, showing that the quality of the Company's operations meets customer requirements.

August: Obtained the latest version of the ISO14001:2015 Environmental Management Systems certification, showing that the Company has achieved a balance between environment, society, and economy and meets society's expectations on sustainable development, transparency, and responsibility.

October: Obtained BlueSign certificates from Switzerland's Bluesign Technologies AG for cotton, T/C, and T/R, processes and products all comply with Environment, Health, and Safety (EHS), It is the world's latest environmental protection standard to ensure safe use by consumers.

※2022:

April: Led the industry in implementing the "Zero Fee" policy for foreign workers after referencing the International Bill of Human Rights and Responsible Business Alliance Code of Conduct, in order to fulfill the Company's corporate social responsibility and protect the human rights of foreign workers. The Company eliminates the risk of human trafficking and forced labor for foreign workers by revising hiring procedures.

※2023:

February: Obtained the ecological textiles certification OEKO TEX@standard 100, and passed the testing for harmful substances in products, ensuring that products are harmless to human beings and ecology.

12

3. Corporate Governance Report

I. Organization:

• (I) Organizational structure:

==> picture [467 x 297] intentionally omitted <==

----- Start of picture text -----

Shareholders’ meeting
Remuneration Committee
Board of Directors
Audit Committee
Audit Office
Chairperson
Chairman's Office
President
President's Office
Finance Department Management Department Business Department Production Department
----- End of picture text -----

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(II) Business operations of major departments:

Departme nt name	Duties	Duties
Chairman's Office		- Responsible for the Company's mid-term and long-term business development.
President's Office		- Review the planning and implementation of the Company's business policies and strategies each year. - Oversee salaries and performance evaluations of personnel in each department. ‧R&D Section - R&D of new products, competing products, and process improvement. ‧IT Section - Manages, plans, and maintains company-wide computer software and hardware. ‧QA Section - Establishes and revises quality specifications, quality control, quality assurance, and acceptance.
Audit Office		- Assists in the establishment and implementation of the Company's management system, internal control system, internal audit system, and operating procedures. - Verifies the completeness and reliability of systems and operating procedures.
Business Department		- Handles import/export affairs, accepts purchase orders from customers, manages customer accounts, follow up, appraisal, serves as a contact for customer services, develops new customers, collects market data, and plans domestic and overseas exhibitions. - Collects information on the dyeing and finishing business and market.
Management Department		- Manages labor, personnel, and organizational systems, benefits, safety and health, public relations, education and training, and general affairs. ‧General Affairs Section - Manages company-wide general affairs and materials. ‧Human Resources Section - Manages company-wide human resources. ‧Procurement Section - Handles the procurement, price inquiry, and price negotiations for various materials. ‧Environmental Safety Section - Establishes, plans, inspects, repairs, and manages wastewater pre-treatment equipment.

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Finance Department

‧Accounting Section - Summarizes production and sales costs and prepares related statements. Organizes, records, and retains accounts, prepares financial statements, and handles taxes. ‧Finance Section - Handles fund allocation, contract signing, cashier management, and financial operations.

Production Department

‧Factory Affairs Office - Handles production management, management and settings of engineering standard data, matters of the quality assurance system, quality assurance activities, product inspection and packaging management, production plan formulation and management. ‧Technology Research Office - Provides formulas, physical property testing, and quality assurance monitoring for production. ‧Production Section - Manages all matters related to production in the bleaching segment, dyeing segment, and finishing segment. ‧Inspection Section - Manages the quality control of finished products and implementation of quality control education for employees. ‧Engineering Office - Handles factory equipment operations, maintenance of water and electrical equipment, equipment repair, industrial safety, building maintenance,and other related matters.

15

II. Information on Directors, Supervisors, President, Vice President, Assistant Vice President, and Heads of Departments and Branch Offices:

(I) Directors and supervisors:

	Directors and	Directors and	Supervisors(I)	Supervisors(I)	Supervisors(I)												April 30, 2023	April 30, 2023	April 30, 2023	April 30, 2023
Position	Nationality or place of registration	Name	Gender Age	Date of election (appointment)	Term	Date first elected	Shares held when elected		Shares currently held		Shares held by spouse and underage children		Shares nam	held in the e of others	Experience (Education)	Other positions at the Company or elsewhere	Other managerial officer, director or supervisor who is the spouse orarelative withinsecond degree			Note
							Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio			Position	Name	Relationship
Chairperson	ROC	Chen Jen-Fa	Male 71-80 years’ old	2022/06/27	3 years	2001/5/22	6,612,543	3.82%	6,612,543	3.82%	1,445,172	0.83%	-	-	Department of Law, National Chengchi University	Chairman, Progiant Construction & Development Corporation Independent Director, Everest Textile Co., Ltd.	Director	Chen Chia-Ling	Female	None
Director	ROC	Shinkong Asset Management Co., Ltd	-	2022/06/27	3 years	2004/6/18	413,236	0.24%	413,236	0.24%	-	-	-	-	-	-	None	-	-	None
		Representative: Wu Hsin-En	Male 41-50 years’ old				-	-	-	-	-	-	-	-	Master's in Material Science, California State University, Los Angeles	Chairman, Shinkong Textile Co., Ltd. Chairman, Shinkong Asset Management Co., Ltd.	None	-	-	None
	ROC	Shinkong Asset Management Co., Ltd	-	2022/06/27	3 years	2004/6/18	413,236	0.24%	413,236	0.24%	-	-	-	-	-	-	None	-	-	None
		Representative: Chiu Chin-Fa	Male 61-70 years’ old				-	-	-	-	-	-	-	-	Master's in Business Administration , National Taiwan University	Consultant, Shinkong Textile Co., Ltd.	None	-	-	None
	ROC	Lin Ho-Tsung	Male 71-80 years’ old	2022/06/27	3 years	2001/5/22	2,913,990	1.68%	2,913,990	1.68%	874,753	0.50%	-	-	Department of Industrial Management and Enterprise Information, Aletheia University	Chairman, Ever-Bright Technology Co. Ltd. Director, Progiant Construction & Development Corporation	Director	Lin Ho-Hsiung	Younger brother	None
	ROC	HONG SHENG INVESTMENT CO.,LTD	-	2022/06/27	3 years	2013/06/24	8,874,795	5.12%	8,874,79 5	5.12%	-	-	-	-	-	-	None	-	-	None

16

Position	Nationality or place of registration	Name	Gender Age	Date of election (appointment)	Term	Date first elected	Shares held when elected	Shares held when elected	Shares currently held	Shares currently held	Shares held by spouse and underage children	Shares held by spouse and underage children	Shares nam	held in the e of others	Experience (Education)	Other positions at the Company or elsewhere	Other managerial officer, director or supervisor who is the spouse orarelative withinsecond degree	Other managerial officer, director or supervisor who is the spouse orarelative withinsecond degree	Other managerial officer, director or supervisor who is the spouse orarelative withinsecond degree	Note
							Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio			Position	Name	Relationship
		Representative: Lu Fang-Fu	Male 61-70 years’ old				-	-	100,0 00	0.06%	-	-	-	-	Master's in Textiles and Clothing, Fu Jen Catholic University	The Company's president	None	-	-	None
	ROC	Phoebes Inc.	-	2022/06/27	3 years	2019/06/20	420,0000	0.24%	420,0000	0.24%	-	-	-	-	-	-	None	-	-	None
		Representative: Cheng Ming-Yueh	Female 61-70 years’ old				-	-	700,0 00	0.40%	-	-	-	-	Department of Fashion Design, Shih Chien University	Editor-in-chief, Phoebes Inc.	None	-	-	None
	ROC	Chen Chia-Ling	Female 51-60 years’ old	2022/06/27	3 years	2015/03/24	1,251,709	0.72%	1,456,709	0.84%	-	-	-	-	Master's in International Business Management, University of Bristol	Independent Director and Trustee of CSOP ETF	Director	Chen Jen-Fa	Father	None
	ROC	FU JIN INVESTMENT CO.,LTD	-	2022/06/27	3 years	2001/5/22	487,000	0.28%	487,000	0.28%	-	-	-	-	-	-	None	-	-	None
		Representative: Chen Yu-Chin	Male 61-70 years’ old				-	-	2,142,20 4	1.24%	3,598	0.00%	-	-	Department of Business Administration, Aletheia University	Chairman, Fu Jin Investment Co., Ltd. Chairman, Chyang Sheng Vietnam Co., Ltd. Chairman, Fusso Machinery Corporation	None	-	-	None
	ROC	Lin Ho-Hsiung	Male 71-80 years’ old	2022/06/27	3 years	2013/06/24	2,461,023	1.42%	2,461,023	1.42%	893,490	0.52%	-	-	Graduated from commercial vocational senior high school	Director, Progiant Construction & Development Corporation	Director	Lin Ho-Tsung	Brother	None
Independent Director	ROC	Weng Chih-Hsien	Male 51-60 years’ old	2022/06/27	3 years	2016/06/20	-	-	-	-	-	-	-	-	Master's in Accounting, Fu Jen Catholic University Passed the R.O.C. CPA examination	Partner, Lidian Accounting Firm	None	-	-	None

17

Position	Nationality or place of registration	Name	Gender Age	Date of election (appointment)	Term	Date first elected	Shares held when elected	Shares held when elected	Shares currently held	Shares currently held	Shares held by spouse and underage children	Shares held by spouse and underage children	Shares held in the name of others	Shares held in the name of others	Experience (Education)	Other positions at the Company or elsewhere	Other managerial officer, director or supervisor who is the spouse orarelative withinsecond degree	Other managerial officer, director or supervisor who is the spouse orarelative withinsecond degree	Other managerial officer, director or supervisor who is the spouse orarelative withinsecond degree	Note
							Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio			Position	Name	Relationship
	ROC	Wu Chieh-Hsin	Male 41-50 years’ old	2022/06/27	3 years	2019/06/20	-	-	-	-	-	-	-	-	Master's in Business Administration, Metropolitan State University Master, College of Management, National Yang Ming Chiao Tung University	Chairman, Super Dragon Technology Co., Ltd. Chairman, Ron Pwu Applied Materials Technology Co., Ltd.	None	-	-	None
	ROC	Chen Hsien-Chang	Male 61-70 years’ old	2022/06/27	3 years	2022/06/27	-	-	-	-	4,458	0.00%	-	-	MBA, Northeastern University, Louisiana	Chairman, Well Joy Enterprise Co., Ltd.	None	-	-	None

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Major shareholders of institutional shareholders

April 30, 2023

	Major shareholders of institutional shareholders April 30, 2023	Major shareholders of institutional shareholders April 30, 2023
Name of institutional shareholder (Note 1)	Major shareholders of institutional shareholders (Note 2)
	Name	Shareholding ratio
Hong Sheng Investment Co., Ltd.	Chyang Sheng Dyeing & Finishing Co., Ltd	100%
Phoebes Inc.	Chun-Yao Lin	99.80%
Shinkong Asset Management Co., Ltd.	Shinkong Textile Co., Ltd.	100%
Fu Jin Investment Co., Ltd.	1. Chen Shu-Yun 2. Chen Yu-Chin 3. Chen Yu-Kun 4. Chen Lin-Te 5. Chen Tsung-Jen 6. ChenCheng Wei-Hsiang	24.36% 23.00% 20.16% 7.23% 0.46% 0.32%

• Note 1: The names of the institutional shareholders shall be listed for directors and supervisors who are representatives of institutional shareholders.

• Note 2: Fill in the names of the major institutional shareholders (with shareholding percentages ranking in the top ten) and their shareholding percentage. If the major shareholder is a legal person, then fill in Table (2) below.

• Note 3: Where the institutional shareholder is not a company, the name and shareholding ratio of shareholders that must be disclosed above is the name and ratio of contributions or donations from the investor or donor.

19

Main shareholders of institutional shareholders

April 30, 2023

	Main shareholders of institutional shareholders April 30, 2023	Main shareholders of institutional shareholders April 30, 2023
Name of Institution (Note 1)	Major shareholders of institution (Note 2)
	Name	Shareholding ratio
Chyang Sheng Dyeing & Finishing Co., Ltd	1. Shinkong Textile Co., Ltd. 2. Chun-Yao Lin 3. Hong Sheng Investment Co., Ltd. 4. Chen Jen-Fa 5. Cheer Treasure Investment Limited 6. Ching-Yuan Su 7. He-Hung Lin 8. Kao-Huang Lin 9. Lin Ho-Tsung 10. Lin Ho-Hsiung	19.41% 6.58% 5.12% 3.82% 3.17% 2.14% 2.08% 1.73% 1.68% 1.42%
Shinkong Textile Co., Ltd.	1. Shinkong Synthetic Fibers Corporation 2. Shin Kong Wu Ho-Su Memorial Hospital 3. Ji Zhen Co., Ltd. 4. Hongpu Co., Ltd. 5. Lianquan Investment Co., Ltd. 6. Herui Industry Co., Ltd. 7. Qianchengyi Co., Ltd. 8. Chengguang Enterprise Co., Ltd. 9. Huachen Co., Ltd. 10. Mianhao Enterprise Co., Ltd.	9.45% 6.99% 6.54% 4.68% 4.54% 3.99% 3.93% 3.73% 3.56% 2.70%

Note 1: If the major shareholder in the above table is a legal person, fill in the name of the legal person.

• Note 2: Fill in the names of the major institutional shareholders (with shareholding percentages ranking in the top ten) and their shareholding percentage.

Note 3: Where the institutional shareholder is not a company, the name and shareholding ratio of shareholders that must be disclosed above is the name and ratio of contributions or donations from the investor or donor. Add the note "Deceased" if the donor is deceased.

20

Information on Directors and Supervisors (II)

I. Disclosure of Professional Qualifications of Directors and Supervisors and Independence of Independent Directors:

Qualifications Name	Professional qualifications and experience (Note 1)	Independence status (Note 2)	Number of other public companies in which the individual is concurrently serving as an independent director
Chairperson Chen Jen-Fa	1. Education: Department of Law, National Chengchi University 2. Current position: Chairman, Chyang Sheng Dyeing & Finishing Co., Ltd. 3. Experience: Independent Director, Everest Textile Co., Ltd. 4. Expertise: Business administration, strategy management 5. Has at least 5 years of work experience required for company operations 6. Not having any of the situations set forth in Article 30 of the Company Act of the R.O.C.	(1) Not a director, supervisor or employee of another company that is controlled by the same person that holds the majority seats on the board or majority votes of the Company. (2) Not a director, supervisor, manager, or shareholder holding five percent or more of the shares of a specific company or institution that has a financial or business relationship with the Company. (3) Not a professional who provided audit service or received compensation in the last two years for commercial, legal, financial, or accounting services to the Company or its affiliates, nor is an owner, partner, director, supervisor, or manager, or the spouse of any of the above, of a sole proprietorship, partnership, company, or organization that provides such services to the Company or its affiliates. (4) Not a government agency, juristic person, or its representative set forth in Article 27 of the Company Act of the R.O.C.	1
Director Shinkong Asset Management Co., Ltd Representative: Wu Hsin-En	1. Education: Master's in Material Science, California State University, Los Angeles 2. Current position: Chairman, Shinkong Textile Co., Ltd. 3. Experience: Chairman, Shinkong Textile Co., Ltd. and Chairman, Shinkong Asset Management Co., Ltd. 4. Expertise: Business administration, project management 5. Has at least 5 years of work experience required for company operations 6. Not having any of the situations set forth in Article 30 of the Company Act of the R.O.C.	(1) Not an employee of the Company or any of its affiliates (2) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship of a manager in (1) (2) Not a director, supervisor or employee of another company that is controlled by the same person that holds the majority seats on the board or majority votes of the Company. (3) Not a director, supervisor or employee of another company or institution that has the same chairman, president, or the equivalent or a spouse in one of the roles at the Company. (4) Not a professional who provided audit service or received compensation in the last two years for commercial, legal, financial, or accounting services to the Company or its affiliates, nor is an owner, partner, director, supervisor, or manager, or the spouse of any of the above, of a sole proprietorship, partnership,	None

21

Qualifications Name	Professional qualifications and experience (Note 1)	Independence status (Note 2)	Number of other public companies in which the individual is concurrently serving as an independent director
		company, or organization that provides such services to the Company or its affiliates. (5) Not having a marital relationship, or a relative within the second degree of kinship to any other director of the company.
Director Lin Ho-Tsung	1. Education: Department of Industrial Management and Enterprise Information, Aletheia University 2. Current position: Chairman, Ever-Bright Technology Co., Ltd. 3. Experience: Director, Progiant Construction & Development Corporation 4. Expertise: Business administration, project management 5. Has at least 5 years of work experience required for company operations 6. Not having any of the situations set forth in Article 30 of the Company Act of the R.O.C.	(1) Not an employee of the Company or any of its affiliates (2) Not a director, supervisor or employee of an institutional shareholder holding directly 5% or more of the Company's shares, being one of the top five shareholders, or being appointed a director or supervisor of the company pursuant to Article 27, Paragraph 1 or 2 of the Company Act. (2) Not a director, supervisor or employee of another company that is controlled by the same person that holds the majority seats on the board or majority votes of the Company. (3) Not a director, supervisor or employee of another company or institution that has the same chairman, president, or the equivalent or a spouse in one of the roles at the Company. (4) Not a director, supervisor, manager, or shareholder holding five percent or more of the shares of a specific company or institution that has a financial or business relationship with the Company. (5) Not a professional who provided audit service or received compensation in the last two years for commercial, legal, financial, or accounting services to the Company or its affiliates, nor is an owner, partner, director, supervisor, or manager, or the spouse of any of the above, of a sole proprietorship, partnership, company, or organization that provides such services to the Company or its affiliates. (6) Not a government agency, juristic person, or its representative set forth in Article 27 of the Company Act of the R.O.C.	None
Director HONG SHENG INVESTMENT CO., LTD Representative: Lu Fang-Fu	1. Education: Master's in Textiles and Clothing, Fu Jen Catholic University 2. Current position: President, Chyang Sheng Dyeing & Finishing Co., Ltd. 3. Experience: Chief Factory Director and Vice President, Chyang Sheng Dyeing & Finishing Co., Ltd. 4. Expertise: Production management and R&D management 5. Has at least 5 years of work experience required for company operations	(1) Not a director, supervisor or employee of another company that is controlled by the same person that holds the majority seats on the board or majority votes of the Company. (2) Not a director, supervisor, manager, or shareholder holdingfive percent or more of	None
	22

Qualifications Name	Professional qualifications and experience (Note 1)	Independence status (Note 2)	Number of other public companies in which the individual is concurrently serving as an independent director
	6. Not having any of the situations set forth in Article 30 of the Company Act of the R.O.C.	the shares of a specific company or institution that has a financial or business relationship with the Company. (3) Not a professional who provided audit service or received compensation in the last two years for commercial, legal, financial, or accounting services to the Company or its affiliates, nor is an owner, partner, director, supervisor, or manager, or the spouse of any of the above, of a sole proprietorship, partnership, company, or organization that provides such services to the Company or its affiliates. (4) Not having a marital relationship, or a relative within the second degree of kinship to any other director of the company.
Director Phoebes Inc. Representative: Cheng Ming-Yueh	1. Education: Department of Fashion Design, Shih Chien University 2. Current position: Editor-in-chief, Phoebes Inc. Director, Bioteque Corporation 3. Experience: Editor-in-chief, Phoebes Inc. 4. Expertise: Innovation management 5. Has at least 5 years of work experience required for company operations 6. Not having any of the situations set forth in Article 30 of the Company Act of the R.O.C.	(1) Not an employee of the Company or any of its affiliates (2) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship of a manager in (1) (2) Not a director, supervisor or employee of another company that is controlled by the same person that holds the majority seats on the board or majority votes of the Company. (3) Not a director, supervisor or employee of another company or institution that has the same chairman, president, or the equivalent or a spouse in one of the roles at the Company. (4) Not a director, supervisor, manager, or shareholder holding five percent or more of the shares of a specific company or institution that has a financial or business relationship with the Company. (5) Not a professional who provided audit service or received compensation in the last two years for commercial, legal, financial, or accounting services to the Company or its affiliates, nor is an owner, partner, director, supervisor, or manager, or the spouse of any of the above, of a sole proprietorship, partnership, company, or organization that provides such services to the Company or its affiliates. (6) Not having a marital relationship, or a relative within the second degree of kinship to any other director of the company.	None

23

Qualifications Name	Professional qualifications and experience (Note 1)	Independence status (Note 2)	Number of other public companies in which the individual is concurrently serving as an independent director
Director Chen Chia-Ling	1. Education: Master's in International Business Management, University of Bristol 2. Current position: Independent Director and Trustee of CSOP ETF 3. Experience: CEO of China Asset Management (Hong Kong) Limited and Director of DWS Investments Hong Kong Limited 4. Expertise: Financial management 5. Has at least 5 years of work experience required for company operations 6. Not having any of the situations set forth in Article 30 of the Company Act of the R.O.C.	(1) Not an employee of the Company or any of its affiliates (2) Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate amount of one percent or more of the total number of issued shares of the company or ranks as one of its top ten shareholders. (3) Not a director, supervisor or employee of an institutional shareholder holding directly 5% or more of the Company's shares, being one of the top five shareholders, or being appointed a director or supervisor of the company pursuant to Article 27, Paragraph 1 or 2 of the Company Act. (4) Not a director, supervisor or employee of another company that is controlled by the same person that holds the majority seats on the board or majority votes of the Company. (5) Not a director, supervisor or employee of another company or institution that has the same chairman, president, or the equivalent or a spouse in one of the roles at the Company. (6) Not a director, supervisor, manager, or shareholder holding five percent or more of the shares of a specific company or institution that has a financial or business relationship with the Company. (7) Not a professional who provided audit service or received compensation in the last two years for commercial, legal, financial, or accounting services to the Company or its affiliates, nor is an owner, partner, director, supervisor, or manager, or the spouse of any of the above, of a sole proprietorship, partnership, company, or organization that provides such services to the Company or its affiliates. (8) Not a government agency, juristic person, or its representative set forth in Article 27 of the Company Act of the R.O.C.	None
Director Shinkong Asset Management Co., Ltd Representative: Chiu Chin-Fa	1. Education: Master's in Business Administration, National Taiwan University 2. Current position: Consultant, Shinkong Textile Co., Ltd. 3. Experience: President, Shinkong Textile Co., Ltd. Executive Vice President, Ruentex Industries Co., Ltd. 4. Expertise: Business administration, project management	(1) Not an employee of the Company or any of its affiliates (2) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of	None

24

Qualifications Name	Professional qualifications and experience (Note 1)	Independence status (Note 2)	Number of other public companies in which the individual is concurrently serving as an independent director
	5. Has at least 5 years of work experience required for company operations 6. Not having any of the situations set forth in Article 30 of the Company Act of the R.O.C.	kinship of a manager in (1) (2) Not a director, supervisor or employee of another company that is controlled by the same person that holds the majority seats on the board or majority votes of the Company. (3) Not a director, supervisor or employee of another company or institution that has the same chairman, president, or the equivalent or a spouse in one of the roles at the Company. (4) Not a professional who provided audit service or received compensation in the last two years for commercial, legal, financial, or accounting services to the Company or its affiliates, nor is an owner, partner, director, supervisor, or manager, or the spouse of any of the above, of a sole proprietorship, partnership, company, or organization that provides such services to the Company or its affiliates. (5) Not having a marital relationship, or a relative within the second degree of kinship to any other director of the company.
Director FU JIN INVESTMENT CO., LTD Representative: Chen Yu-Chin	1. Education: Department of Business Administration, Aletheia University 2. Current position: Chairman, Chyang Sheng Vietnam Co., Ltd. Chairman, Fusso Machinery Corporation 3. Experience: Vice President, Fusso Machinery Corporation Expertise: Business administration, project management 4. Chairman of Chyang Sheng Vietnam Co., Ltd., Director of Pro-Star International Investment Consulting Ltd., and Chairman of Fu Jin Investment Co., Ltd. 5. Has at least 5 years of work experience required for company operations 6. Not having any of the situations set forth in Article 30 of the Company Act of the R.O.C.	(1) Not an employee of the Company or any of its affiliates (2) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship of a manager in (1) (3) Not a director, supervisor or employee of an institutional shareholder holding directly 5% or more of the Company's shares, being one of the top five shareholders, or being appointed a director or supervisor of the company pursuant to Article 27, Paragraph 1 or 2 of the Company Act. (4) Not a director, supervisor or employee of another company that is controlled by the same person that holds the majority seats on the board or majority votes of the Company. (5) Not a director, supervisor or employee of another company or institution that has the same chairman, president, or the equivalent or a spouse in one of the roles at the Company. (6) Not a director, supervisor, manager, or shareholder holding five percent or more of the shares of a specific company or institution that has	None

25

Qualifications Name	Professional qualifications and experience (Note 1)	Independence status (Note 2)	Number of other public companies in which the individual is concurrently serving as an independent director
		a financial or business relationship with the Company. (7) Not a professional who provided audit service or received compensation in the last two years for commercial, legal, financial, or accounting services to the Company or its affiliates, nor is an owner, partner, director, supervisor, or manager, or the spouse of any of the above, of a sole proprietorship, partnership, company, or organization that provides such services to the Company or its affiliates. (8) Not having a marital relationship, or a relative within the second degree of kinship to any other director of the company.
Director Lin Ho-Hsiung	1. Education: Graduated from commercial vocational senior high school 2. Current position: Director, Progiant Construction & Development Corporation 3. Expertise: Innovation management 4. Has at least 5 years of work experience required for company operations 5. Not having any of the situations set forth in Article 30 of the Company Act of the R.O.C.	(1) Not an employee of the Company or any of its affiliates (2) Not a director, supervisor or employee of an institutional shareholder holding directly 5% or more of the Company's shares, being one of the top five shareholders, or being appointed a director or supervisor of the company pursuant to Article 27, Paragraph 1 or 2 of the Company Act. (3) Not a director, supervisor or employee of another company that is controlled by the same person that holds the majority seats on the board or majority votes of the Company. (4) Not a director, supervisor or employee of another company or institution that has the same chairman, president, or the equivalent or a spouse in one of the roles at the Company. (5) Not a director, supervisor, manager, or shareholder holding five percent or more of the shares of a specific company or institution that has a financial or business relationship with the Company. (6) Not a professional who provided audit service or received compensation in the last two years for commercial, legal, financial, or accounting services to the Company or its affiliates, nor is an owner, partner, director, supervisor, or manager, or the spouse of any of the above, of a sole proprietorship, partnership, company, or organization that provides such services to the Company or its affiliates. (7) Not a government agency,	None

26

Qualifications Name	Professional qualifications and experience (Note 1)	Independence status (Note 2)	Number of other public companies in which the individual is concurrently serving as an independent director
		juristic person, or its representative set forth in Article 27 of the Company Act of the R.O.C.
Independent Director Weng Chih-Hsien	1. Education: Master, Graduate Institute of Accounting, Fu Jen Catholic University 2. Current position: Senior Special Assistant at Shin Zu Shing Co., Ltd. and Partner of Lidian Accounting Firm 3. Experience: Vice President of Finance, Coremax Corporation 4. Convener of the Company's Remuneration Committee and convener of the Audit Committee 5. Expertise: Finance and accounting 6. Has at least 5 years of work experience required for company operations 7. Not having any of the situations set forth in Article 30 of the Company Act of the R.O.C.	(1) Not an employee of the Company or any of its affiliates. (2) Not a director or supervisor of the Company or any of its affiliates. (3) Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate amount of one percent or more of the total number of issued shares of the company or ranks as one of its top ten shareholders. (4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship of a manager in (1) or personnel in (2) and (3). (5) Not a director, supervisor or employee of an institutional shareholder holding directly 5% or more of the Company's shares, being one of the top five shareholders, or being appointed a director or supervisor of the company pursuant to Article 27, Paragraph 1 or 2 of the Company Act. (6) Not a director, supervisor or employee of another company that is controlled by the same person that holds the majority seats on the board or majority votes of the Company. (7) Not a director, supervisor or employee of another company or institution that has the same chairman, president, or the equivalent or a spouse in one of the roles at the Company. (8) Not a director, supervisor, manager, or shareholder holding five percent or more of the shares of a specific company or institution that has a financial or business relationship with the Company. (9) Not a professional who provided audit service or received compensation in the last two years for commercial, legal, financial, or accounting services to the Company or its affiliates, nor is an owner, partner, director, supervisor, or manager, or the spouse of any of the above, of a sole proprietorship, partnership, company, or organization that	None
Independent Director Wu Chieh-Hsin	1. Education: MBA, Metropolitan State University 2. Current position: Chairman, Super Dragon Technology Co., Ltd. 3. Experience: Independent Director, Taisun Enterprise Co., Ltd. 4. Expertise: Business administration 5. Member of the Company's Audit Committee 6. Has at least 5 years of work experience required for company operations 7. Not having any of the situations set forth in Article 30 of the Company Act of the R.O.C.		None
Independent Director Chen Hsien-Chang	1. Education: MBA, Northeastern University, Louisiana 2. Current position: Chairman, Well Joy Enterprise Co., Ltd. 3. Experience: Chairman, Well Joy Enterprise Co., Ltd. 4. Expertise: Business administration 5. Member of the Company's Remuneration Committee and Audit Committee. 6. Has at least 5 years of work experience required for company operations 7. Not having any of the situations set forth in Article 30 of the Company Act of the R.O.C.		None

27

Qualifications Name	Professional qualifications and experience (Note 1)	Independence status (Note 2)	Number of other public companies in which the individual is concurrently serving as an independent director
		provides such services to the Company or its affiliates. (10) Not having a marital relationship, or a relative within the second degree of kinship to any other director of the company. (11) Not a government agency, juristic person, or its representative set forth in Article 27 of the Company Act oftheR.O.C.

II. Board Diversity and Independence:

• (I) Board Diversity:

• Diversity policy:

To strengthen corporate governance and promote the sound development of the composition and structure of the board of directors, the Company's Board of Directors established the "Chyang Sheng Dyeing & Finishing Co., Ltd. Corporate Governance Best Practice Principles," in which Article 20 stipulates: The composition of the board of directors shall be determined by taking diversity into consideration and formulating an appropriate policy on diversity based on the Company's business operations, operating dynamics, and development needs. The policy should include, but is not limited to, general conditions and values (e.g. gender, age, nationality, culture, and ethnic group) as well as professional knowledge and skills (e.g. law, accounting, industry, finance, marketing, and technology).

• Specific management goals:

• The board of directors provides guidance on the Company's strategies, supervises management, is responsible for the Company and its shareholders, and ensures that it exercises its functions according to requirements of applicable laws and regulations and the Articles of Incorporation or decisions made during shareholders' meetings with regard to the respective operations and arrangements of the corporate governance system. The Company's board members all have the necessary knowledge, skills, literacy, and industry decision-making and management abilities to perform duties. The Company continues to arrange a variety of continuing education courses for board members, in order to improve the quality of their decisions, enhance their supervision ability, and further strengthen board competencies.

• The implementation status of the board diversity policy is as follows:

• The Company's Board of Directors currently consists of 12 directors, including 9 non-independent directors (including 2 female directors) and 3 independent directors. All 12 directors are citizens of the R.O.C.

The Board of Directors as a whole already has the ability to make sound business judgments, ability to perform accounting and financial analysis, business administration ability, crisis management ability, knowledge of the industry, an international market perspective, leadership, and decision-making ability. Board members have industry experience and professional competence: The progress is detailed in the table below:

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The implementation status of the board diversity policy is as follows:

Core members for diversity Name of director	Core members for diversity Name of director		Basic composition	Basic composition		Term as independent director			Industry experience	Industry experience	Industry experience			Profe	ssional competence
		Nationality	Gender	Has employee status	Age distribution		Business administration	Corporate governance	Production management	R&D and innovation	Smart production	Investment/Financial management	Brand and marketing	Legal	Accounting/Finance
Director	Chen Jen-Fa	ROC	Male		71-80		V	V	V			V	V	V	V
Director	Shinkong Asset Management Co., Ltd. - Wu Hsin-En		Male		40-50		V			V			V
Director	Lin Ho-Tsung		Male		71-80		V		V
Director	Hong Sheng Investment - Lu Fang-Fu		Male	V	61-70		V	V	V	V	V
Director	Phoebes Inc. - Cheng Ming-Yueh		Female		61-70					V			V
Director	Chen Chia-Ling		Female		50-60			V				V			V
Director	Shinkong Asset Management Co., Ltd. - Chiu Chin-Fa		Male		61-70				V	V			V
Director	Fu Jin Investment - Chen Yu-Chin		Male		61-70		V		V				V
Director	Lin Ho-Hsiung		Male		71-80		V					V
Independent Director	Weng Chih-Hsien		Male		50-60	2		V						V	V
Independent Director	Wu Chieh-Hsin		Male		40-50	1	V	V			V
Independent Director	Chen Hsien-Chang		Male		61-70		V	V					V

Note: Percentage of directors who are concurrently employees of the Company: 1/12(8%); Percentage accounted for by independent directors: 3/12(25%); Percentage accounted for by female directors: 2/12(16%).

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• (II) Board independence:

  • The Company has 12 board members, in which 3 are independent directors, accounting for 25% of all directors. All independent directors maintain independence when performing their duties and do not have a conflict of interest with the Company.

  • The Company's chairman and president positions are held by different individuals, and they are not spouses or relatives. Hence, the Board of Directors is able to fully fulfill its responsibility to supervise management, provide guidance for company strategies, and be held accountable to the Company and shareholders.

  • The Company expressly states in Article 17, Paragraph 1 of the Rules of Procedures for Board of Directors Meetings that directors must explain important contents of interests that they or the institution they represent have in an agenda item during the board meeting, in order to ensure the independence of the Board of Directors. If there is a potential conflict of interest, they may not participate in the discussion or voting, and should also recuse themselves. Nor may they vote on other directors' behalf. All of the Company's directors comply with the provisions above and fully ensure that discussions and voting on agenda items are based on directors' objective and independent judgment.

  • The Company established and implemented the Regulations Governing Board Performance Evaluations to implementing corporate governance and enhance functions of the Board of Directors and functional committees. Performance evaluations of the Board of Directors, functional committees, and individual directors are conducted annually. An external institution is commissioned to conduct a board performance evaluation every three years, results and recommendations are submitted to the Board of Directors, and referenced when selecting or nominating directors in the next election.

• Note 1: Professional qualifications and experience: Describe the professional qualifications and experience of directors and supervisors. If Audit Committee members have an expertise in accounting or finance, describe the accounting or finance background and work experience, and whether there are situations specified in Article 30 of the Company Act.

• Note 2: Independent directors shall describe their compliance with independence, including but not limited to whether the independent director, his/her spouse, and relatives within the second degree of kinship is a director, supervisor, or employee of the Company or its affiliated enterprises. Number of shares and shareholding percentage of the Company held by the individual, his/her spouse, and relative within the second degree of kinship: Is the individual a director, supervisor, or employee of a company that has a certain relationship (refer to Article 3, Paragraph 1, Subparagraphs 5 to 8 of the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies) with the Company? Amount of remuneration received for providing the Company or its affiliated enterprises with commercial, legal, financial, or accounting services in the last two years.

• Note 3: Please refer to the sample template for best practices on the TWSE Corporate Governance Center Website for the disclosure method.

30

(II) President, Vice Presidents, Assistant Vice Presidents, and Managers of Departments and Branches:

															April 30,	2023
Position (Note 1)	Nationality	Name	Gender	Date of election (appointment)	Shareholding		Shares held by spouse and underage children		Shares hel of	d in the name others	Experience (Education) (Note 2)	Concurrently held positions in other companies	Manager who is a relative within se		spouse or a cond degree	Note (Note 3)
					Number ofshares	Shareholding ratio	Number ofshares	Shareholding ratio	Number ofshares	Shareholding ratio			Position	Name	Relationship
President	ROC	Lu Fang-F u	Male	2001/05/22	100,000	0.06%	-	-	-	-	Section Chief at Nan Ya Plastics Corporation, Fu Jen Catholic University Graduate Institute of Textiles and Clothing	Director, Worthy Textile Industry Co., Ltd.	None	None	None	None
Vice President, Corporate Governance Officer	ROC	Cheng Yi-Min	Male	2004/06/29	0	0.00%	-	-	-	-	MBA, Hawaii Pacific University Assistant Manager of Auditing, KPMG	Director, Progiant Construction & Development Corporation	None	None	None	None
Chief auditor	ROC	Hsin-J u Hsieh	Fema le	2012/12/24	0	0.00%	-	-	-	-	Department of Business Administrati on, Lunghwa University of Science and Technology Department of Finance, Chihlee University of Technology	None	None	None	None	None

Note 1: It shall include information on president, vice presidents, assistant vice presidents, and department and branch directors, and if the position is equivalent to the president, vice presidents, and assistant vice presidents, regardless of the title, it shall also be disclosed.

Note 2: If there is experience related to the current position, such as employment at an auditing firm or related company during the aforementioned disclosed period, the title and responsible position shall be stated.

Note 3: Where the chairperson and president or equivalent position (highest level managerial officer) is the same person, the spouse, or a first-degree relative, the reason, reasonableness, necessity, and response measures (such as increasing the number of independent director seats and more than half of all directors not concurrently serving as employees or managerial officers) must be disclosed.

(III) Where the chairperson and president or equivalent position (highest level managerial officer) is the same person, the spouse, or a first-degree relative, the reason, reasonableness, necessity, and response measures must be disclosed: N/A

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III. Remunerations to Directors, Supervisors, President, and Vice Presidents in the Most Recent Year:

(I). Remuneration to directors and independent directors (Disclose the name and remuneration method)

Position	Name			Directo	Directo	r's remunerat	ion			Ratio of total remuneration (A+B+C+D) to net income after tax (%)	Ratio of total remuneration (A+B+C+D) to net income after tax (%)			Pay received as an employee	Pay received as an employee	Pay received as an employee	Pay received as an employee	Pay received as an employee	Pay received as an employee		Ratio of total compensation (A + B+ C+ D+ E+ F+ G) to net profit after tax (%)	Ratio of total compensation (A + B+ C+ D+ E+ F+ G) to net profit after tax (%)	Remuneration received from investee companies other than subsidiaries or the parent company
		Remu	neration (A)	Severance pay and pension (B)		Directors'	remuneration (C)	Busines	s expense (D)			Salary, special	bonus and allowance (E)	Severance p	ay and pensio (F)	n	Employee bonuses			(G)
		The Company	All companies in the consolidated financial statements	The Company	All companies in the consolidated financial statements	The Company	All companies in the consolidated financial statements	The Company	All companies in the consolidated financial statements	The Company	All companies in the consolidated financial statements	The Company	All companies in the consolidated financial statements	The Company	All companies in the consolidated financial statements	The C	ompany	All compan consolidated statements		ies in the financial (Note 7)	The Company	All companies in the consolidated financial statements
																Cash amount	Stock amount	Cash amount		Stock amount
Chairperson	Chen Jen-Fa	2,470 u g	2,550	0	0	2,324	2,333	1,332	1,368	8.91%	9.10%	2,236	2,236	0	0	0	0	0		0	12.17%	12.36%	0
Director	Shinkong Management Ltd Representative: Hsin-En
	Shinkong Management Ltd Representative: Chin-Fa
	Lin Ho-Tsung
	HONG SH INVESTMENT LTD Representative: Fang-Fu
	Phoebes Inc. Representative: ChengMing-Y
	Chen Chia-Lin
	FU INVESTMENT LTD Representative: Chen Yu-Chin
	Lin Ho-Hsiung
Independent Director	Weng Chih-Hsi	0	0	0	0	150	150	1,020	1,020	1.70%	1.70%	0	0	0	0	0	0		0	0	1.70%	1.70%	0
	Wu Chieh-Hsin
	Chen Hsien-Ch

1. Please describe the policy, system, standard, and structure of remuneration to independent directors, and the correlation between duties, risk, and time input with the amount of remuneration: The Company pays fixed compensation and fees for conducting business to independent directors. The Company's independent directors do not receive directors' remuneration.

2. Other than as disclosed in the above table, the remuneration earned by directors for providing services (e.g. providing consulting services as a non-employee of the parent company/all companies in financial statements/investees) in the latest fiscal year: The Company's directors do not receive any compensation, including for consulting services, other than the remuneration disclosed in the table above.

32

Range of remuneration chart

Range of remuneration chart applicable to the Company's directors	Name of director	Name of director	Name of director	Name of director
	Total of (A+B+C+D)		Total of (A+B+C+D+E+F+G)
	The Company (Note 8)	All companies in the consolidated financial statements (Note 9) H	The Company (Note 8)	All companies in the consolidated financial statements (Note 9) I
Less than NT$1,000,000	Lin Ho-Tsung, Chiu Chin-Fa, Wu Hsin-En, Chen Yu-Chin, Lin Ho-Hsiung, Chen Chia-Ling, Cheng Ming-Yueh, Chen Hsien-Chang, Weng Chih-Hsien, Wu Chieh-Hsin, Lu Fang-Fu	Lin Ho-Tsung, Chiu Chin-Fa, Wu Hsin-En, Chen Yu-Chin, Lin Ho-Hsiung, Chen Chia-Ling, Cheng Ming-Yueh, Chen Hsien-Chang, Weng Chih-Hsien, Wu Chieh-Hsin, Lu Fang-Fu	Lin Ho-Tsung, Chiu Chin-Fa, Wu Hsin-En, Chen Yu-Chin, Lin Ho-Hsiung, Chen Chia-Ling, Cheng Ming-Yueh, Chen Hsien-Chang, Weng Chih-Hsien, Wu Chieh-Hsin	Lin Ho-Tsung, Chiu Chin-Fa, Wu Hsin-En, Chen Yu-Chin, Lin Ho-Hsiung, Chen Chia-Ling, Cheng Ming-Yueh, Chen Hsien-Chang, Weng Chih-Hsien, Wu Chieh-Hsin
NT$1,000,000(inclusive)to NT$2,000,000(exclusive)
NT$2,000,000(inclusive)to NT$3,500,000(exclusive)	Chen Jen-Fa	Chen Jen-Fa	Chen Jen-Fa, Lu Fang-Fu	Chen Jen-Fa, Lu Fang-Fu
NT$3,500,000(inclusive)to NT$5,000,000(exclusive)	-	-	-	-
NT$5,000,000 (inclusive) to NT$10,000,000 (exclusive)	-	-	-	-
NT$10,000,000 (inclusive) to NT$15,000,000 (exclusive)	-	-	-	-
NT$15,000,000 (inclusive) to NT$30,000,000 (exclusive)	-	-	-	-
NT$30,000,000 (inclusive) to NT$50,000,000 (exclusive)	-	-	-	-
NT$50,000,000 (inclusive) to NT$100,000,000 (exclusive)
NT$100,000,000 and above	-	-	-	-
Total	12	12	12	12

Note 1: The names of the Directors shall be separately listed (the institutional shareholder shall list the names of the institutional shareholders and the representatives

33

separately), and the amount of each payment shall be disclosed in. Directors who are also concurrently a president or vice president shall be listed in this table and Table (3) below

• Note 2: Remuneration to directors in the most recent year (include director salary, additional duty payments, severance pay, various bonuses, or incentive payments). Note 3: Refers to the amount of remuneration to directors as approved by the Board of Directors for the most recent year.

• Note 4: Refers to the related business expenses of directors in the past year (including transportation allowance, special allowance, stipends, dormitory, and car). Where housing, cars, other means of transportation, or expenditures exclusively for individuals are offered, the nature and costs of the offered assets, the actual rent or fair market rent, fuel expenses, and other benefits shall be disclosed. In addition, where a driver is provided, please provide an explanation in the notes on the compensation paid to the driver by the Company, but not including the remuneration.

• Note 5: All pays to the director who is also an employee of the Company (including the position of president, vice president, other managerial officer and staff), including salary, additional pay, severance pay, bonuses, rewards, transportation allowance, special allowance, stipends, dormitory, and car. Where housing, cars, other means of transportation, or expenditures exclusively for individuals are offered, the nature and costs of the offered assets, the actual rent or fair market rent, fuel expenses, and other benefits shall be disclosed. In addition, where a driver is provided, please provide an explanation in the notes on the compensation paid to the driver by the Company, but not including the remuneration. The salary expenses recognized in accordance with IFRS 2 Share-based payment, including obtaining employee stock options, restricted stock awards, and participating in capital increase by cash by acquiring shares, shall also be included in the remuneration.

• Note 6: Refers to the employee bonus (including stocks and cash) received by directors who are also an employee (including concurrently holding the position of president, vice president, other managerial officer, or employee) for the most recent year. Disclose the amount of employee bonus approved by the Board of Directors in the most recent year. If it cannot be estimated, calculate the value intended to be distributed this year according to the actual value distributed last year, and fill out Table 1-3.

• Note 7: Disclose the total pay to directors from all companies in the consolidated statements (including the Company).

• Note 8: Refers to the total remuneration paid to each director by the Company, and the director's name shall be disclosed in the corresponding remuneration bracket.

• Note 9: Disclose the total remuneration all companies (including the Company) in the consolidated financial statements paid to each director of the Company, and the director's name shall be disclosed in the corresponding remuneration bracket.

• Note 10: Net profit after tax refers to the net profit after tax in the most recent year. For companies that have adopted the International Financial Reporting Standards, net profit after tax refers to the net profit after tax on the standalone financial statements for the most recent year.

• Note 11: a. This field should clearly state the amount of remuneration directors of the Company received from investees other than subsidiaries.

• b. Where the Company's directors received relevant remuneration from investees other than subsidiaries, the remuneration received by the Company's directors from investees other than subsidiaries shall be included in the "I" column of the remuneration bracket table with the column name changed to "all investees."

• c. Remuneration refers to pay, compensation (including compensation of employees, directors and supervisors) and remuneration for conducting business received by a director of the Company serving as a director, supervisor or manager of an investee of the Company other than subsidiaries.

• ※ The remuneration disclosed in this table is different from the income concept of the Income Tax Act. Thus, the purpose of this table is for information disclosure, not for tax purposes.

34

(II). Remuneration to supervisors (Disclose the name and remuneration method)

Position	Name	Remuneration to supervisors	Remuneration to supervisors	Remuneration to supervisors	Remuneration to supervisors	Remuneration to supervisors	Remuneration to supervisors	Ratio of total (A), (B), and (C) to net profit after tax (%)	Ratio of total (A), (B), and (C) to net profit after tax (%)	Remuneration received from investee companies other than subsidiaries or the parent company
		Remuneration(A)		Remuneration(B)		Business expense (C)
		The Company	All companies in the consolidated financial statements	The Company	All companies in the consolidated financial statements	The Company	All companies in the consolidated financial statements	The Company	All companies in the consolidated financial statements
Supervisor	Lin Ho-Hsiung	0	120	0	0	152	82	0.22%	0.40%	0
Supervisor	Su Pai-Huang

The Company established an Audit Committee after the directors election in the 2022 Annual General Meeting. Remuneration to supervisors was collected before the election.

35

Range of remuneration chart

Range of remuneration paid to each supervisor	Names of supervisors	Names of supervisors
	Total of(A + B + C)
	The Company (Note 6)	All companies in the consolidated financial statements (Note 7) D
Less than NT$1,000,000	Lin Ho-Hsiung, Su Pai-Huang	Lin Ho-Hsiung, Su Pai-Huang
NT$1,000,000(inclusive)to NT$2,000,000(exclusive)	-	-
NT$2,000,000(inclusive)to NT$3,500,000(exclusive)	-	-
NT$3,500,000(inclusive)to NT$5,000,000(exclusive)	-	-
NT$5,000,000(inclusive)to NT$10,000,000(exclusive)	-	-
NT$10,000,000(inclusive)to NT$15,000,000(exclusive)	-	-
NT$15,000,000(inclusive)to NT$30,000,000(exclusive)
NT$30,000,000(inclusive)to NT$50,000,000(exclusive)
NT$50,000,000(inclusive)to NT$100,000,000(exclusive)
NT$100,000,000 and above	-	-
Total	2	2

Note 1: The names of the supervisors shall be separately listed (the institutional shareholder shall list the names of the institutional shareholders and the representatives separately), and the amount of each payment shall be disclosed in.

Note 2: Refers to remuneration to supervisors in the most recent year (including supervisor salary, additional duty payments, pensions, various bonuses, or incentive payments).

Note 3: Refers to the amount of remuneration to supervisors as approved by the Board of Directors for the most recent year.

• Note 4: The business expense of supervisors in the most recent year (including transportation allowance, special allowance, stipends, dormitory, and car). Where housing, cars, other means of transportation, or expenditures exclusively for individuals are offered,

• the nature and costs of the offered assets, the actual rent or fair market rent, fuel expenses, and other benefits shall be disclosed. In addition, where a driver is provided, please provide an explanation in the notes on the compensation paid to the driver by the Company, but not including the remuneration.

Note 5: Disclose the total pay to supervisors from all companies in the consolidated financial statements (including the Company).

Note 6: Refers to the total remuneration paid to each supervisor by the Company, and the supervisor's name shall be disclosed in the corresponding remuneration bracket.

Note 7: Disclose the total remuneration all companies (including the Company) in the consolidated financial statements paid to each supervisor of the Company, and the supervisor's name shall be disclosed in the corresponding remuneration bracket.

Note 8: Net profit after tax refers to the net profit after tax in the most recent year. For companies that have adopted the International Financial Reporting Standards, net profit after tax refers to the net profit after tax on the standalone financial statements for the most recent year. Note 9: a. This field should clearly state the amount of remuneration supervisors of the Company received from investees other than subsidiaries.

• b. Where the Company's supervisors received relevant remuneration from investees other than subsidiaries, the remuneration received by the Company's supervisors from investees other than subsidiaries shall be included in the "D" column of the remuneration bracket table with the column name changed to "all investees."

• c. Remuneration refers to pay, compensation (including compensation of employees, directors and supervisors) and remuneration for conducting business received by a supervisor of the Company serving as a director, supervisor or manager of an investee of the Company other than subsidiaries.

• ※ The remuneration disclosed in this table is different from the income concept of the Income Tax Act. Thus, the purpose of this table is for information disclosure, not for tax purposes.

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(III). Remunerations to the president and vice presidents (Disclose the name and remuneration method)

Position	Name	Salary (A)	Salary (A)	Severance pay and pension (B)	Severance pay and pension (B)	Bonuses and allowances, etc. (C)	Bonuses and allowances, etc. (C)	Employee bonuses (D)	Employee bonuses (D)	Employee bonuses (D)	Employee bonuses (D)	Ratio of total remuneration (A+B+C+D) to net income after tax (%)	Ratio of total remuneration (A+B+C+D) to net income after tax (%)	Remuneration received from investee companies other than subsidiaries or the parent company
		The Company	All companies in the consolidated financial statements	The Company	All companies in the consolidated financial statements	The Company	All companies in the consolidated financial statements	The Company		All companies in the consolidated financial statements		The Company	All companies in the consolidated financial statements
								Cash amount	Stock amount	Cash amount	Stock amount
President	Lu Fang-Fu	1,875	1,875	0	0	360	360	0	-	0	-	3.26%	3.26%	0

Note: 1 company car is provided with a total cost of NT$2,695 thousand, and the balance not discounted is NT$0.

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Range of remuneration chart

Range of remuneration paid to presidents and vice presidents	Names of president and vice presidents	Names of president and vice presidents
	The Company (Note 6)	All companies in the consolidated financial statements (Note 7) E
Less than NT$1,000,000	-	-
NT$1,000,000(inclusive)to NT$2,000,000(exclusive)	-	-
NT$2,000,000(inclusive)to NT$3,500,000(exclusive)	Lu Fang-Fu	Lu Fang-Fu
NT$3,500,000(inclusive)to NT$5,000,000(exclusive)	-	-
NT$5,000,000(inclusive)to NT$10,000,000(exclusive)	-	-
NT$10,000,000(inclusive)to NT$15,000,000(exclusive)	-	-
NT$15,000,000(inclusive)to NT$30,000,000(exclusive)
NT$30,000,000(inclusive)to NT$50,000,000(exclusive)
NT$50,000,000(inclusive)to NT$100,000,000(exclusive)	-	-
NT$100,000,000 and above	-	-
Total	1	1

• Note 1: The names of the president and vice president shall be separately listed, and the amount of each payment shall be disclosed on an aggregate basis. Directors who are also concurrently a president or vice president shall be listed in this table and Table (1) above.

• Note 2: Salary, additional pay, and severance pay received by the president or vice president in the most recent year.

• Note 3: Refers to the remuneration paid to the president or vice president, including various bonuses, incentives, travel expenses, special disbursements, allowances, accommodation, company car, other physical items, other compensations, etc., in the most recent year. Where housing, cars, other means of transportation, or expenditures exclusively for individuals are offered, the nature and costs of the offered assets, the actual rent or fair market rent, fuel expenses, and other benefits shall be disclosed. In addition, where a driver is provided, please provide an explanation in the notes on the compensation paid to the driver by the Company, but not including the remuneration. The salary expenses recognized in accordance with IFRS 2 Share-based payment, including obtaining employee stock options, restricted stock awards, and participating in capital increase by cash by acquiring shares, shall also be included in the remuneration.

• Note 4: Provides the employee remunerations approved by the Board of Directors and distributed to the president and vice presidents in the most recent year (including shares and cash); if they cannot be estimated, calculate the value intended to be distributed this year according to the actual value distributed last year, and fill out Table 1-3. Net profit after tax refers to the net profit after tax in the most recent year. For companies that have adopted the International Financial Reporting Standards, net profit after tax refers to the net profit after tax on the standalone financial statements for the most recent year.

• Note 5: Disclose the total pay to the president or vice presidents from all companies in the consolidated statements (including the Company).

• Note 6: Refers to the total remunerations paid to each president and vice president by the Company, and the names of presidents and vice presidents shall be disclosed in the corresponding remuneration bracket.

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• Note 7: Disclose the total remuneration all companies (including the Company) in the consolidated financial statements paid to each president and vice president of the Company, and the names of presidents and vice presidents shall be disclosed in the corresponding remuneration bracket.

• Note 8: Net profit after tax refers to the net profit after tax in the most recent year. For companies that have adopted the International Financial Reporting Standards, net profit after tax refers to the net profit after tax on the standalone financial statements for the most recent year.

• Note 9: a. The amount of remuneration the president or vice presidents of the Company receives from investees other than subsidiaries of the company shall be clearly indicated in this field.

• b. If the president and vice presidents of the company receive the remuneration related investees other than subsidiaries, the remuneration received by the president and vice presidents from the investees other than subsidiaries shall be incorporated into column E in the remuneration range table and the column's name shall be changed to "All investees."

• c. Remuneration refers to pay, compensation (including compensation distributed to employees, directors and supervisors) and remuneration for conducting business received by the Company's president and vice presidents who serve as directors, supervisors or managerial officers at subsidiaries other than investee companies.

• ※ The remuneration disclosed in this table is different from the income concept of the Income Tax Act. Thus, the purpose of this table is for information disclosure, not for tax purposes.

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(IV). Names of managerial officers that received employee bonuses and status of the distribution: None

					April 30, 2023	April 30, 2023
	Position (Note 1)	Name (Note 1)	Stock amount	Cash amount	Total	Ratio of total amount to net profit after tax (%)
Managerial officers	President	Lu Fang-Fu	-	-	-	-
	Head of Accounting and Corporate Governance Officer	Cheng Yi-Min
	Chief auditor	Hsin-Ju Hsieh

• (V) Compare the percentage of after-tax net profit distributed by the Company and all companies on the consolidated financial statements as remuneration to the Company's directors, president, and vice presidents in the most recent two years, and describe the policy, standard, and composition of remuneration, procedures to determining remuneration, and the connection to business performance and future risks.

1. Total remuneration to the Company's directors and president as a percentage of net profit:

The total amount of remuneration to the Company's directors and president from the Company and all companies in the consolidated financial statements as a percentage of net profit after tax is shown in the table below.

Recipient of remuneration	2022	2022	2021	2021
	Remuneration as a percentage of net profit after tax		Remuneration as a percentage of net profit after tax
	The Company	All companies in the consolidated financialstatements	The Company	All companies in the consolidated financialstatements
Director	10.62%	10.08%	10.61%	10.72%
President	3.26%	3.26%	2.69%	2.69%

The Company's chairman (concurrently holds a managerial position), president, and independent directors receive fixed compensation. Remaining directors only receive transportation fees and attendance fees for board meetings, and do not receive other wages. The remuneration received by directors are all discussed by the Remuneration Committee and submitted to the Board of Directors for approval. There is no significant difference between remuneration to the Company's managers and industry standards. Furthermore, remuneration to directors is recognized according to the Articles of Incorporation, and changes between any two periods is mainly due to changes in the Company's profits that year.

2. The policies and standards of paying remunerations, and packages of remuneration:

The Company's remuneration policy takes into consideration the salary standard in the market, duties in the Company, and contribution to the Company's business goals. Procedures for determining remuneration give consideration to the Company's overall performance, achievement of individual performance goals, and contribution to Company performance. The remuneration to directors is approved by the Company's Remuneration Committee and submitted to the Board of Directors for acknowledgment. However, independent directors do not receive directors' remuneration.

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3. Procedure for determining remuneration:

Remuneration to directors and managers is periodically evaluated by the Company's Remuneration Committee each year according to regulations. Revisions are discussed by the Remuneration Committee and submitted to the Board of Directors for approval before being implemented.

4. Related to business performance:

(1) Remuneration to directors fully considers the Company's business goals, financial position, and the directors' responsibilities.

(2) Bonuses and remuneration to managers fully considers their professional competence and the Company's business performance and financial position.

The director and manager performance evaluation and remuneration policy above is reviewed by the Remuneration Committee, and then submitted to the Board of Directors for approval.

5. Correlation with future risks:

Risk factors are all taken into consideration by the Company's management when making important decision. The performance of these important decisions reflects on the Company's profitability, and is further connected to the remuneration to managers.

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IV. Implementation of Corporate Governance:

(I). Operations of the Board of Directors and participation of supervisors in Board operations:

1. A total of 5 Board meetings were held in 2022. The attendance of directors and

supervisors was as follows:

Position	Name	Attendance in person B	Attendance by proxy	Attendance in person (%) 【B/A】	Note
Chairpers on	Chen Jen-Fa	5	0	100	Re-elected 2022/06/27
Director	Shinkong Asset Management Co., Ltd Representative: Wu Hsin-En	2	0	100	Newly appointed 2022/06/27
Director	Lin Ho-Tsung	5	0	100	Re-elected 2022/06/27
Director	Hong Sheng Investment Co., Ltd. Representative: Lu Fang-Fu	5	0	100	Re-elected 2022/06/27
Director	Phoebes Inc. Representative: Cheng Ming-Yueh	1	0	100	Appointed 2022/09/01
	Phoebes Inc. Representative: Chun-Yao Lin	3	0	75	Relieved of the position 2022/09/01
Director	Chen Chia-Ling	5	0	100	Re-elected 2022/06/27
Director	Shinkong Asset Management Co., Ltd Representative: Chiu Chin-Fa	5	0	100	Re-elected 2022/06/27
Director	Fu Jin Investment Co., Ltd. Representative: Chen Yu-Chin	5	0	100	Re-elected 2022/06/27
Director	Lin Ho-Hsiung	3	0	100	Newly appointed 2022/06/27
Independe nt Direct or	Weng Chih-Hsien	5	0	100	Re-elected 2022/06/27
Independe nt Direct or	Wu Chieh-Hsin	5	0	100	Re-elected 2022/06/27
Independe nt Direct or	Chen Hsien-Chang	3	0	100	Newly appointed 2022/06/27
Superviso r	Lin Ho-Hsiung	2	0	100	Relieved of the position 2022/06/27

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Position	Name	Attendance in person B	Attendance by proxy	Attendance in person (%) 【B/A】	Note
Superviso r	Su Pai-Huang	2	0	100	Relieved of the position 2022/06/27
Other disclosures: I. If any of the following circumstances occurs in the operation of the Board of Directors, the date, period, content of the motions, the opinions of all independent directors, and the Company's handling of independent directors' opinions shall be stated: (I). Matters referred to in Article 14-3 of the Securities and Exchange Act: Board of Directors Date Agenda content Independent directors' opinions and the Company's handling of the opinions 12th meeting of the 13th-term 2022/03/23 1. The Company's 2021 board performance evaluation results. 2. Proposed distribution of employee bonuses and directors and supervisors' remuneration in 2021. 3. Approved the ratification of the Company's 2021 Business Report and Financial Statements. 4. The Company's 2021 Dividend Distribution Proposal. 5. Proposal to revise the Company's Articles of Incorporation. 6. Proposed amendment to articles and title of the Company's Regulations on Director and Supervisor Elections. 7. Proposed amendment to articles of the Company's Procedures for Lending Funds to Others. 8. Proposed amendment to articles of the Company's Procedures for Endorsement and Guarantee. 9. Proposed amendment to articles of the Company's Procedures for Acquisition and Disposal of Assets. 10. Proposal to hold a directors election. 11. Proposal to nominate director and independent director candidates. 12. Proposal to lift the non-compete clause for newly appointed directors and their representatives. 13. Routine evaluation of the CPAs' independence. 14. The Company's 2021 Statement on Internal Control. Approved by all independent directors without any other opinions 13th meeting of the 13th-term 2022/05/10 1. The Company's financial statements (includes the 2022 Q1 consolidated financial statements) Approved by all independent directors without any other opinions 2nd meeting of the 14th-term 2022/08/11 1. The Company's financial statements. (includes the 2022 Q2 consolidated financial statements). 2. In coordination with the Company establishing an Audit Committee to replace supervisors, the Company's Rules of Procedure for the Board of Directors' Meetings, Procedures for Handling Material Inside Information, Remuneration Committee Charter, Stock Trading Halt and Resumption Application Procedure, Corporate Governance Best Practice Principles, Code of Ethical Conduct, and Ethical Corporate Management Best Practice Principles were revised. Approved by all independent directors without any other opinions 3rd meeting of the 14th-term 2022/11/11 1. The Company's financial statements. (includes the 2022 Q3 consolidated financial statements) 2. Report on the Company's implementation of ethical corporate management in 2022. 3. Proposed amendment to the Company's "Procedures for Handling Material Inside Information" and "Internal Audit Implementation Rules." 4. Proposed extension of the Company's credit limit. 5. Proposal for the Company to provide endorsement/guarantee to subsidiary Progiant Construction & Development Corporation. 6. Proposal for the Company to provide short-term financing to subsidiary Progiant Construction & Development Corporation. Approved by all independent directors without any other opinions

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Position		Name	Name	Attendance in person B	Attendance in person B	Attendance by proxy	Attendance in person (%) 【B/A】	Attendance in person (%) 【B/A】	Note
7. Discuss the Company's 2023 audit plan. 4th meeting of the 14th-term 2023/03/23 1. The Company's 2022 board performance evaluation results. 2. Proposed distribution of employee bonuses and directors and supervisors' remuneration in 2022. 3. Proposed distribution of employee bonuses and directors and supervisors' remuneration in 2022. 4. The Company's 2022 dividend distribution proposal. 5. Proposed assessment data for the appointment of accountants and pre-approval for non-assurance services in 2023. 6. Passed the Company and subsidiaries' investment limit in securities. 7. The Company's 2022 Statement on Internal Control. Approved by all independent directors without any other opinions (II). In addition to the aforementioned matters, other board meeting resolutions with independent directors' dissenting and unqualified opinions in records or written statements: The Company's independent directors did not express any dissenting or qualified opinions on Board resolutions: None. II. Specify the name of the director, agenda item, reason for recusal, and participation in voting of directors who recused themselves from agenda items they have a conflict of interest: The Company's director Lu Fang-Fu concurrently holds the position of manager at the Company, and thus recused himself during discussions on employee bonuses and did not participate in voting. After thorough discussion by the remaining directors in attendance, the proposal was passed as proposed without any objections. Board of Directors Date Agenda content Directors who recused themselve s Reasons for recusal due to a conflict of interest and participation in voting 12th meeting of the 13th-ter m 2022/03/23 Proposed distribution of employee bonuses and directors and supervisors' remuneration in 2021. President Lu Fang-Fu Lu Fang-Fu concurrently holds the position of director and manager and thus did not participate in discussions and voting. The proposal was approved by the remaining directors in attendance. 4th meeting of the 4th-term 2023/03/23 Proposed distribution of employee bonuses and directors and supervisors' remuneration in 2022. President Lu Fang-Fu Lu Fang-Fu concurrently holds the position of director and manager and thus did not participate in discussions and voting. The proposal was approved by the remaining directors in attendance. III. TWSE/TPEx-listed companies are required to disclose the evaluation cycle and period, scope of evaluation, evaluation method, and evaluation items of the self (or peer) evaluations conducted by the Board of Directors: The Company's Board of Directors approved the Regulations Governing Board Performance Evaluations on November 12, 2019, and completed board performance evaluation for January 1 to December 31, 2022 in 2023 Q1. 1. Implementation of Board evaluations: Evaluation cycle Evaluation period Scope of evaluation Evaluation method Evaluation items Internal evaluations are 2022.01.01 ~2022.12.31 Board of Directors Board of Directors self-evaluati 1. The criteria for Board performance evaluation includes the following five aspects:					7. Discuss the Company's 2023 audit plan.
		4th meeting of the 14th-term	2023/03/23		1. The Company's 2022 board performance evaluation results. 2. Proposed distribution of employee bonuses and directors and supervisors' remuneration in 2022. 3. Proposed distribution of employee bonuses and directors and supervisors' remuneration in 2022. 4. The Company's 2022 dividend distribution proposal. 5. Proposed assessment data for the appointment of accountants and pre-approval for non-assurance services in 2023. 6. Passed the Company and subsidiaries' investment limit in securities. 7. The Company's 2022 Statement on Internal Control.			Approved by all independent directors without any other opinions

44

Position	Position	Position		Name	Name		Attendance in person B	Attendance by proxy	Attendance by proxy		Attendance in person (%) 【B/A】	Note
	conducted annually and external evaluations are conducted once every three years					Individual board members		on / Self-evaluat ion by Board members		(1) Degree of participation in company operations (2) Improving the quality o Board decisions (3) Board composition and structure (4) Election and continuing education of directors (5) Internal control 2. The criteria for Board member performance evaluation include the following six aspects: (1) Understanding of the Company's goals and mission (2) Understanding of directors duties (3) Degree of participation in company operations (4) Maintaining interna relationships and communication (5) The professional and continuing education of directors (6) Internal control 3. The criteria for functional committee performance evaluation include the following five aspects: (1) Degree of participation in company operations (2) Understanding of the role and responsibilities of the functiona committee (3) Improving the quality o committee decisions (4) Functional committee composition and election of members (5) The performance evaluation indicators for the board of directors in internal controls shall be based on the Company's operations, and the Company shall determine the content that accords with and appropriate for the Company's performance evaluation; each committee shall review and make recommendations on a regularbasis.
						Functional committees / Remuneration Committee / Audit Committee
	2. 3.
		Item			Recommendations in the evaluation repor				Measures the Company plans to take
		1			Directors are recommended to continue improving their expertise				The Company irregularly provides courses promoted by the competent

45

Position	Position		Name	Attendance in person B	Attendance by proxy	Attendance by proxy	Attendance in person (%) 【B/A】	Note
through continuing education in accordance with the Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies authority and promotion information to directors for reference. IV. Programs this year and in the most recent year for strengthening the functionality of the Board (for example, setting up an auditing committee, improving transparency, etc.) and assessment of execution: (I). Establishing an Audit Committee and Remuneration Committee: The Company's Annual General Meeting selected independent directors and established an Audit Committee on June 27, 2022 to exercise powers specified in the Securities and Exchange Act, Company Act, and other laws and regulations. The Company already has a Remuneration Committee to evaluate the remuneration policy and system for directors and managers, so that the Board of Directors will better perform its duties. (II). The Company established the Rules of Procedures for Board of Directors Meetings as the basis for Board operations. (III). Strengthening corporate governance: The Company's Board of Directors approved the appointment of a corporate governance officer on August 10, 2020. The corporate governance officer assists the Board of Directors by performing the following tasks: 1. Handle matters related to board meetings and shareholders' meetings in accordance with the law. 2. Prepare board meeting and shareholders' meeting minutes. 3. Assist in the appointment and continuing education of directors and supervisors. 4. Assist in providing directors and supervisors with the data and laws they need to perform their duties. 5. Assist directors and supervisors with compliance. 6. Other matters specified in the Articles of Incorporation or contract. (IV). The Company set performance goals to improve the Board of Directors' efficiency and enhance board functions. The Company's Board of Directors conducts internal performance evaluations once a year and an external evaluation at least once every three years in accordance with the Regulations Governing Board Performance Evaluations. A report is submitted to the Board of Directors before the end of the first quarter in the following year. Performance evaluation results are not only used as the basis for review and improvement, but also referenced when determining remuneration and nomination. The 2022 performance evaluation results were reported to the Board of Directors on March 23, 2023. (V) The Company announces important resolutions of the Board of Directors on the company website, and has purchase liability insurance for directors. (VI) Increasing information transparency: The Company's website has an "Investor Section" that provides contact information of the spokesperson and information on the Company's financial position and business performance for inquiry by shareholders. The Board of Directors also approved "Procedures for Handling Material Inside Information" and "Regulations for the Prevention of Insider Trading." V. Succession plan for Board members and important managers: (I). Election of Board members: The Company began using the candidate nomination system in 2021 and elects directors to three-year terms. Unless otherwise stipulated by the law or Articles of Incorporation, elections of directors shall be conducted in accordance with the Rules Governing the Election of Directors and Supervisors. The overall composition of the board of directors is taken into consideration in the election of the Company's directors. The composition of the board of directors shall take diversity into consideration and formulate an appropriate policy on diversity based on the Company's business operations, operating dynamics, and development needs. The policy includes but is not limited to the following standards: I. Basic qualifications and values: Gender, age, nationality, and culture. II. Professional knowledge and skills: A professional background (e.g., law, accounting, industry, finance, marketing, or technology), professional skills, and industry experience. Each board member shall have the necessary knowledge, skill, and experience to			through continuing education in accordance with the Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies			authority and promotion information to directors for reference.

46

Position	Name	Attendance in person B	Attendance by proxy	Attendance in person (%) 【B/A】	Note
perform duties; the abilities that must be present in the board as a whole are as follows: I. Ability to make sound business judgments. II. Ability to perform accounting and financial analysis. IV. Ability to handle crisis management. V. Knowledge of the industry. VI. An understanding of international markets. VII. Leadership. VIII. Decision-making ability. The Company plans successors for directors through the following methods: I. Current directors recommend suitable candidates. II. Shareholders recommend director candidates. III. Board performance evaluation results are used as the basis for nominating directors. The Company stays up-to-date on changes in the Company's internal and external environment and development needs, and arranges annual continuing education courses to enhance the professional competencies of directors and improve their performance when performing duties. (II). Succession plan for important managers: In response to business management and human resource development needs, when planning successors, besides considering whether the candidates have outstanding professional and management abilities, their values must also match the Company's values, and they must have integrity, be practical, be innovative, and have a corporate spirit. Training for successors of management include internal training of management skills, which is combined with experience from job rotation to hone the decision-making ability required for becoming senior managers. With regard to external training courses, the Company's senior managers actively participate in the courses of professional training units, and on average receive 16 hours of training.

Note 1: If the director or supervisor is a legal person, disclose the name of shareholders and its representative.

Note 2: (1) If a director or supervisor is separated before the end of the year, specify the date of separation in the remarks, and calculate actual attendance rate (%) based on the number of Board meetings convened during the director or supervisor's term and actual attendance.

(2) If directors or supervisors are reelected before the end of the year, list new and old directors and supervisors, and specify if the director or supervisor is old, new, or reelected and the reelection date in the remarks. Actual attendance rate (%) is calculated based on the number of Board meetings convened during the director or supervisor's term and actual attendance.

47

1. Attendance of independent directors at Board meetings: A total of 5 Board meetings were held in 2022. The attendance of independent directors was as follows:

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Attendance of independent directors in Board meetings in 2022 ◎: In person; ☆ :
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(II). Operations of the Audit Committee or participation of supervisors in Board

operations:

1. The Audit Committee met 2 times in 2022. The attendance of independent directors is as follows:

Position	Name	Attendance in person B	Attendance by proxy	Attendance in person (%) 【B/A】	Note
Convener and Independent Director	Weng Chih-Hsien	2	0	100	Re-elected on June 27, 2022
Independent Director	Wu Chieh-Hsin	2	0	100	Re-elected on June 27,2022
Independent Director	Chen Hsien-Chang	2	0	100	Newly appointed on June 27, 2022
Other disclosures: I. The date of the Audit Committee meeting, the term, contents of the proposals, dissenting or qualified opinions given by independent directors or contents of major proposed items, resolutions of the Audit Committee, and the Company's handling of the resolutions of the Audit Committee shall be recorded under the following circumstances in the operations of the Audit Committee meeting. (I). Matters referred to in Article 14-5 of the Securities and Exchange Act: Audit Committee Date Agenda content Opinions or major recommendations from independent directors Resolutions of the Audit Committee 1st meeting of the 1st-term 2022/08/11 1. The Company's financial statements. (includes the 2022 Q2 consolidated financial statements). 2. In coordination with the Company establishing an Audit Committee to replace supervisors, the Company's Rules of Procedure for the Board of Directors' None Passed with the approval of all members in attendance.

48

		Meetings, Procedures for Handling Material Inside Information, Remuneration Committee Charter, Stock Trading Halt and Resumption Application Procedure, Corporate Governance Best Practice Principles, Code of Ethical Conduct, and Ethical Corporate Management Best Practice Principles were revised.
2nd meeting of the 1st-term	2022/11/11	1. The Company's financial statements. (includes the 2022 Q3 consolidated financial statements) 2. Report on the Company's implementation of ethical corporate management in 2022. 3. Proposed amendment to the Company's "Procedures for Handling Material Inside Information" and "Internal Audit Implementation Rules." 4. Proposed extension of the Company's credit limit. 5. Proposal for the Company to provide endorsement/guarantee to subsidiary Progiant Construction & Development Corporation. 6. Proposal for the Company to provide short-term financing to subsidiary Progiant Construction & Development Corporation. 7. Discuss the Company's 2023 audit plan.	None	Passed with the approval of all members in attendance.
3rd meeting of the 1st-term	2023/03/23	1. The Company's 2022 board performance evaluation results. 2. Proposed distribution of employee bonuses and directors and supervisors' remuneration in 2022. 3. Proposed distribution of employee bonuses and directors and supervisors' remuneration in 2022. 4. The Company's 2022 dividend distribution proposal. 5. Proposed assessment data for the appointment of accountants and pre-approval for non-assurance services in 2023. 6. Passed the Company and subsidiaries' investment limit in securities. 7. The Company's 2022 Statement on Internal Control.	None	Passed with the approval of all members in attendance.
The Company's handling of Audit Committee members' opinions: All members of the Audit Committee approved the agenda items above,and matters were handled accordingto recommendations.

(II). In addition to matters above, other resolutions that have not been approved by the Audit Committee but have been passed by a vote of two-thirds or more of the entire Board of Directors: None

II. Regarding the recusal of independent directors due to conflict of interest, the name of the independent directors, agenda item, reasons for recusal, and the participation in voting should be clearly stated: N/A.

III. Communication between independent directors, the chief internal auditor, and the accountants: (I). The Company's chief internal auditor attends board meetings without voting rights, and reports recent implementation of auditing and overall implementation of audit work in the previous year. The chief internal auditor fully communicates with independent directors and supervisors regarding the contents of audits, deficiencies found in the internal control system, and improvement and tracking of abnormalities. The Internal Audit Office provides written audit reports and improvement tracking reports to independent directors and supervisors every month and quarter, and directly communicates with independent directors and supervisors via e-mail, telephone, or face-to-face when necessary. Communication between independent directors and supervisors with the chief internal auditor in 2022 is as follows:

49

(II).	Date	Matters of communication	Communication and implementation results
	2022.03.23	The Company's January-February and 2021 audit report	The Audit Office reports audit results to independent directors and supervisors, and then reports results to the Board of Directors after obtaining approval from independent directors and supervisors.
	2022.05.10	The Company's March-April audit report	The Audit Office reports audit results to independent directors and supervisors, and then reports results to the Board of Directors after obtaining approval from independent directors and supervisors.
	2022.08.11	The Company's May-July audit report	The Audit Office reports audit results to independent directors and supervisors, and then reports results to the Board of Directors after obtaining approval from independent directors and supervisors.
	2022.11.11	1. The Company's August-October audit report 2. Report on the audit plan formulated for 2023. 3. Report on the basis for used by the Board of Directors for declaring the effectiveness of the internal control system.	1. After communication and discussion, independent directors and supervisors did not have any objections regarding audit results, which were submitted to the Board of Directors. 2. The independent directors and supervisors did not have any objections regarding the 2023 audit plan and results were submitted to the Board of Directors. 3. Directors and supervisors approved the issuance of a Statement on Internal Control, which was submitted to and approved by theBoard of Directors.
	Date	Matters of communication	Communication and implementation results
	2022.11.18	1. The Company's compliance with the internal control system in 2022. 2. Additional disclosure of financialstatements	Independent directors' did not express any opinions

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	2022.12.27	Auditing of financial statements and audit planningreport	Independent directors' did not express any opinions

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(III). Corporate governance implementation status and deviations from Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies and reasons:

sted Companies and reasons:
Evaluation item			Operating status	Deviations from Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No	Summary
I. Does the company establish and disclose its corporate governance principles in accordance with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies?	V		The Company established Corporate Governance Best Practice Principles, which is disclosed on the company website for investors to reference.	Complies with the Corporate Governance Best-Practice Principles.
II. Shareholding structure & shareholders' equity (I) Has the company established internal operating procedures for handling shareholder suggestions, questions, complaints or litigation, and handled related matters accordingly? (II) Does the company have a list of major shareholders that have actual control over the Company and a list of ultimate owners of those major shareholders? (III) Has the company established and implemented risk management and firewall systems within its conglomerate structure? (IV) Does the company have internal regulations in place to prevent its internal staff from trading securities based on information yet to be public on the market?	V V V V		(I) The Company has established Procedures for Handling Material Inside Information and appointed a spokesperson and acting spokesperson, who are responsible for speaking to the public and handling shareholders' recommendations or disputes. (II) The Company commissioned a professional stock affairs agency to handle stock affairs, and monitors shareholders' shareholding in coordination with the Ministry of Finance. This allows us to gain access to the list of major shareholders that control the company and changes in their pledged shares or shareholding. (III) The Company and affiliates have clear division of authority and responsibilities with respect to management, and established the "Management Regulations for Related Party Transactions" and "Regulations Governing the Supervision and Management of Subsidiaries." Affiliates have independent finances, business, and accounting, and are controlled and audited by the Company. (IV) The Company established a "Code of Ethical Conduct," "Procedures for Handling Material Inside Information," and "Regulations for the Prevention of Insider Trading" applicable to the Company's directors, supervisors, managers, and employees. Related information is irregularly updated and communicated.	Complies with the Corporate Governance Best-Practice Principles.

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Evaluation item			Operating status	Deviations from Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companiesandreasons
	Yes	No	Summary
III. Composition and duties of the board of directors (I) Does the board of directors develop and implement a diversified policy for the composition of its members? (II) Does the company voluntarily establish other functional committees in addition to the Remuneration Committee and Audit Committee? (III) Does the company establish standards and method for evaluating Board performance, conduct annual performance evaluations, submit performance evaluation results to the Board, and use the results as a basis for determining the remuneration and nomination of individual directors? (IV) Does the company regularly evaluate the independence of CPAs?	V V V	V	(I) Members of the Company's board of directors are selected with an emphasis on diversity of backgrounds, general knowledge, skills, and the competencies required to perform their duties. The Company appoints 12 directors in accordance with the Company Act and Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies, in which 3 are independent directors, 5 are representatives of legal persons, and the directors have the work experience and expertise required for business, legal affairs, finance, and accounting. (see pages 16-19) (II) The Company's established a Remuneration Committee in accordance with the law, and also established an Audit Committee in 2022. Other corporate governance operations are handled by their respective departments. We currently do not have any other functional committees, but will establish them when needed. (III) The Company established the Regulations Governing Board Performance Evaluations and periodically evaluate and review board performance according the regulations. Results are referenced when determining the remuneration of or nominating individual directors, and reported to the Board of Directors. Please see the description in Operations of the Board of Directors for details. (IV) The Company assesses the independence of its accountants every year, and requires the accountants to issue a declaration of independence, which is submitted to the Board of Directors for discussion. (Refer to Note 1)	Complies with the Corporate Governance Best-Practice Principles.

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Evaluation item			Operating status	Deviations from Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companiesandreasons
	Yes	No	Summary
IV. Does the public company have a suitable number of competent corporate governance personnel, and has it appointed a corporate governance supervisor responsible for corporate governance matters (including but not limited to providing information for directors and supervisors to perform their duties, assisting directors and supervisors with regulatory compliance, handling matters related to Board meetings and shareholders' meetings, and preparing proceedings for Board meetings and shareholders' meetings)?	V		The Company's Board of Directors appointed Vice President Cheng Yi-Min as the corporate governance officer on August 10, 2020, and reported the appointment to the competent authority and completed announcement. The corporate governance officer is responsible for corporate governance matters, provides information required by directors and supervisors to perform their duties, handles matters related to Board meetings and shareholders' meetings, handles company registration and change of registration, and prepares proceedings for Board meetings and shareholders' meetings in accordance with the law. When necessary, the corporate governance officer may coordinate with other units or external resources to handle related matters. (Refer to Note 2)	Complies with the Corporate Governance Best-Practice Principles.
V. Does the Company have communication channels with stakeholders (including but not limited to shareholders, employees, customers, and suppliers), a stakeholder section on the Company website, and properly respond to important CSR issues of concern to stakeholders?	V		(I) The Company has a spokesperson and acting spokesperson, and contact information are all announced on the Market Observation Post System (MOPS) in accordance with regulations. The company website has a Stakeholders Section with e-mail and URL to respond to stakeholder issues at any time,, in order to establish good communication channels with stakeholders and investors. (II) The Company website has a "Corporate Governance Section" for investors to inquire and download corporate governance related regulations, important resolutions of the Board of Directors, and material information. (III) The Company established the "Regulations for Financial and Business Transactions between Affiliated Enterprises" in accordance with the Corporate Governance Best Practice Principles to achieve fair and reasonable financial and business transactions with affiliates, and disclosed the regulations onthe company website.	Complies with the Corporate Governance Best-Practice Principles.
VI. Has the company designated a professional shareholder service agency to deal with matters of the shareholders' meeting?	V		The Company appointed a professional stock transfer agency – Taishin International Bank Stock Affairs Department to handle the Company's stockaffairs.	Complies with the Corporate Governance Best-PracticePrinciples.

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Evaluation item			Operating status	Deviations from Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companiesandreasons
	Yes	No	Summary
VII. Information disclosure (I) Has the company established a corporate website to disclose information regarding the company's financial, business and corporate governance status? (II) Has the company established other information disclosure channels (e.g., maintaining an English-language website, appointing responsible people to handle information collection and disclosure, appointing spokespersons, or webcasting investor conferences on the company website)? (III) Does the company announce and report annual financial statements within two months after the end of each fiscal year, and announce and report Q1, Q2, and Q3 financial statements, as well as monthly operation results, before the prescribed time limit?	V V	V	(I) The Company has a website (www.csgroup.com.tw) that introduces the Company's situation and related businesses. Information on financial position, business performance, and corporate governance are announced on the Market Observation Post System according to regulations of the competent authority. (II) The Company has established Chinese and English version websites, and appointed a spokesperson responsible for communicating with the public. The Company has appointed dedicated personnel to collect and disclose its information, which is announced on the company website or Market Observation Post System. Data of investor conferences each year are also placed on the company website for investors to access. (III) The Company has not yet announced and reported the annual financial statements within two months after the end of the fiscal year, but has reported its financial statements and monthly operation results within the time limit specified in the "Matters to be Handled by Issuers of Securities Listed in the TWSE."	Complies with the Corporate Governance Best-Practice Principles.
VIII. Is there any other important information to facilitate a better understanding of the company's corporate governance practices (including but not limited to employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, continuing education of directors and supervisors, the implementation of risk management policies and risk evaluation standards, the implementation of customer relationspolicies,andpurchasinginsurance for	V		(I) Employee rights and employee care: The Company has appointed dedicated units to face different stakeholders, e.g. the Human Resources Department handles employee rights and interests, and the Employee Welfare Committee cares for employee needs. The units are all operating smoothly. (II) Employee care: The Company fully understands that employees are the most important assets to business operations, and that having competent employees with excellent capabilities and performance will drive the Company's stable development andprogress. TheCompany	Complies with the Corporate Governance Best-Practice Principles.

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Evaluation item			Operating status	Deviations from Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companiesandreasons
	Yes	No	Summary
directors and supervisors)?			therefore upholds the corporate social responsibility policy of "humanitarian care," the management concept of being "people-oriented," and the concept of "home" to establish a management system that provides employees with comprehensive care. The Company strictly protects employees' lawful rights and interests according to labor related laws and regulations, and provides employees with a healthy and safe work environment. We have established a variety of open communication channels between labor and management, fair remuneration and promotions, a complete training and development system, complete benefits system, and open and transparent profit sharing system, so that employees will contribute their capabilities and performance without any worries, and jointly growth together with the Company. This creates good labor-management relations and a warm and harmonious atmosphere at work, which lays a solid foundation for the Company's sustainable operation. (III) Investor relations: We established the spokesperson and acting spokesperson system as a communication channel to respond to shareholders' questions. (IV) Supplier relations: The Company has always maintained good relationships with our suppliers. (V) Stakeholders' rights: The Company respects and protects the lawful rights and interests of stakeholders, and maintains good communication with customers, employees, and suppliers through communication channels. We provide information in a timely manner through announcements according to regulations of the competent authority. (VI) Continuing education of directors and supervisors: Every director and supervisor has relevant practical experience and expertise. The Company irregularly notifies directors to take continuing education courses for professional knowledge, and they have received continuing education inaccordance withtheDirectionsforthe

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Evaluation item			Operating status	Deviations from Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companiesandreasons
	Yes	No	Summary
			Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies. (Refer to Note 3) (VII) Implementation of risk management policies and risk measurement standards: The Company's major business policies, investment plans, endorsements and guarantees, lending to others, and bank loans are evaluated and analyzed by the responsible department and decided by the Board of Directors. The Audit Office formulates annual audit plans based on risk assessment results and implements the plans accordingly, in order to implement supervision mechanisms and control risks. (VIII) Customer policy implementation: The Company has a dedicated department that provides customer services and implements the customer policy, which is being smoothly implemented. (IX) Liability insurance purchased by the Company for directors and supervisors and social responsibility: The Company has purchased liability insurance for directors for liabilities within the scope of their duties during their term, in order to mitigate and disperse the risk of any material damages to the Company and its shareholders caused by any erroror negligence ofdirectors.

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Evaluation item	Operating status	Operating status	Operating status	Deviations from Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companiesandreasons
	Yes	No	Summary
IX. Specify the improvement of corporate governance with reference to the corporate governance evaluation by the Corporate Governance Center of Taiwan Stock Exchange Corporation in the most recent year, and the measures prioritized for issues that require improvement: For items that the Company did not earn any points in the evaluation results, improvements that can be immediately made are already being made, including updating information on the company website. We have supplemented information disclosed in the annual report this year, but some items need to be evaluated and submitted to the Board of Directors for approval or to the shareholders' meeting for a resolution, so they cannot be immediately corrected. This portion will be evaluated and carried out by related units. Improvements made by the Company for items that it did not receive points in the 9th Corporate Governance Evaluation (2021) announced in April 2023 are as follows: ◎ Improvements already made: 1. Update information on the company website in a timely manner. 2. Improve disclosures of agenda items in shareholders' meetings, board meetings, and the annual report. 3. The Company's 2022 performance evaluation results are already disclosed on the company website, and were reported to the Board of Directors and announced on March 23, 2023. ◎ Not yet improved but prioritized items and measures: 1. Update the Company's English website. 2. Report the English version of material information. 3. English version financial statements and annual report. 4. Directors are recommended to continue improving their expertise through continuing education in accordance with the Directions for the Implementation of ContinuingEducation for Directors and Supervisors of TWSE Listed andTPEx Listed Companies.

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Note 1: Evaluation of the accountants' independence:

• I. Evaluated by: Board of Directors

• II. Date of evaluation: 2022.03.23

• III. Evaluation of the accounting firm and accountants: KPMG Taiwan/CPA Chen Chen-Chien, CPA Yu Sheng-Ho

• IV. Evaluation items:

Established after referencing Article 47 of the Accounting Act and "Integrity, Objectivity and Independence" in Bulletin No. 10 of the Norm of Professional Ethics for Certified Public Accountant of the Republic of China:

for Certified Public Accountant of the Republic of China:
Description	Evaluation results	Meet the independence criteria
1. The accountants do not have direct or material indirect financial interestsin the Company.	Yes	Yes
2. The accountants do not have a close business relationship with the Company.	Yes	Yes
3. The accountants did not have any potential employment relationship whileauditingthe Company.	Yes	Yes
4. The accountants have not borrowed any money from the Company.	Yes	Yes
5. The accountants have not received any valuable gifts from the Company and the Company's directors, supervisors, and managers (the value exceeds the norm of etiquette).	Yes	Yes
6. The accountants have not provided auditing services to the Companyforsevenconsecutive years.	Yes	Yes
7. The accountants do not hold any shares of the Company.	Yes	Yes
8. The accountant, his/her spouse or dependents, and audit team did not serve as the Company's director, supervisor, manager, or position with significant influence over audits during the audit period or in the past two years, and are certain will not hold the abovementioned positions duringfuture audit periods.	Yes	Yes
9. Do the accountants meet independence requirements specified in Bulletin No. 10 of the Norm of Professional Ethics for Certified Public Accountants, and has the Company obtained a "statement of independence"from the accountants?	Yes	Yes

V. Evaluation results:

After evaluation, there were no concerns about the independence and competence of CPA Chen Chen-Chien and CPA Yu Sheng-Ho of KPMG Taiwan, who were appointed to audit the financial statements this year.

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Note 2: Appointment of the Corporate Governance Officer and Implementation Status

• (I) Appointment of the corporate governance officer and scope of duties The Company's Board of Directors adopted a resolution on August 10, 2020 to appoint Vice President Cheng Yi-Min as the corporate governance officer, in order to implement corporate governance, strengthen board competencies, and protect shareholders' interests. The corporate governance officer is the highest level supervisor of corporate governance related affairs. Vice President Cheng already has at least 3 years of experience in a management position related to legal affairs, finance, or corporate governance in public companies. The corporate governance officer is responsible for supervising and implementing corporate governance operations, including handling matters related to board meetings and shareholders' meetings in accordance with the law, preparing board of directors meeting and the shareholders' meeting minutes, assisting the directors in their appointment and continuing education, providing the directors with the information needed to perform their duties, and assisting the directors with compliance.

• (II) Implementation status of corporate governance operations in 2022 1. Handle matters related to board meetings and shareholders' meetings in accordance with the law.

  • (1) Handle pre-registration of the date of the shareholders' meeting, prepare meeting notices, handbook, annual report, and proceedings, and make announcements within the time limit in accordance with the law.

  • (2) Prepare the agenda for board meetings and notify directors within the time limit prescribed by the law, and provide adequate data for reference when deliberating on agenda items. Directors are reminded in advance if they need to recuse themselves due to a conflict of interest with an agenda item, and board meeting minutes are completed within 20 days after the meeting.

• Assist directors with compliance

  • (1) Remind directors of their rights and obligations.

  • (2) Provide directors with the latest legislation related to business administration.

• Assist directors in performing duties and providing the data they require

  • (1) All directors are able to obtain assistance from the corporate governance officer to ensure that board meetings comply with procedures and all applicable laws and rules; ensures good information exchanges between board members and between directors and management.

  • (2) Provide directors with the data needed to perform their duties, and handle requests from directors as soon as possible within 30 days to effectively help directors perform their duties.

• Assist directors with participating in continuing education courses

(III) Continuing education of the corporate governance officer:

No.	Continuing education institution	Course name	Date of continuing education	Number of hours
1	Taiwan Stock Exchange Corporation	2020 Corporate Governance and Ethical Corporate Management Meeting for Directors and Supervisors	2020.10.23	3
2	Securities & Futures Institute	Case study on breaches of trust by directors and supervisors and practices for determining breach of trust	2020.11.20	3

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No.	Continuing education institution	Course name	Date of continuing education	Number of hours
3	Accounting Research and Development Foundation	Analysis of the latest corporate governance policy and compliance auditing practices of corporate governance personnel	2020.11.25	6
4	Accounting Research and Development Foundation	How internal auditors respond to common deficiencies when preparing financial statements according to IFRS	2020.12.02	6
5	Accounting Research and Development Foundation	2021 Seminar on Prevention of Insider Trading	2021.11.09	3
6	Accounting Research and Development Foundation	Corporate corruption detection and prevention practices: Legal liabilities, forensics, and big data analysis	2021.12.03	6
7	Accounting Research and Development Foundation	New policy for sustainable development, climate governance, and low carbon management	2021.12.21	6
8	Accounting Research and Development Foundation	Continuing education course for accounting officers of issuers, securities firms, and securities exchanges	2022.12.15~2022.12.16	12

Note: Pursuant to the "Taiwan Stock Exchange Corporation Operation Directions for Compliance with the Establishment of Board of Directors by TWSE Listed Companies and the Board's Exercise of Powers," the corporate governance officer shall receive at least 18 hours of continuing education in the first year after being appointed, and at least 12 hours every year thereafter. The corporate governance officer completed 12 hours of continuing education courses in 2022.

Note 3: Continuing education of directors:

Position	Name	Continuing education institution	Course name	Date of continuin g education	Number of hours
Director	Chen Jen-Fa	Taiwan Academy of Banking and Finance	Corporate governance lecture hall - Revelation of the Russo-Ukrainian War to Taiwan	2022/08/17	3
		Taiwan Academy of Banking and Finance	Corporate governance forum - Insights into future talent strategy from the perspective of global trends	2022/12/21	3
Director	LuFang-Fu	Accounting	Internet technology	2022/12/29	6

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Position	Name	Continuing education institution	Course name	Date of continuin g education	Number of hours
		Research and Development Foundation	development trends and new concepts of internal auditors
Director	Wu Hsin-En	Corporate Operating and Sustainable Development Association	Low carbon economy and global trends and business opportunities of low carbon innovation	2022/08/08	3
		Corporate Operating and Sustainable Development Association	Global tax reform and corporate tax governance from the perspective of ESG trends and pandemic environment	2022/11/07	3
Director	Chiu Chin-Fa	Securities & Futures Institute	2022 Seminar on Compliance of Stock Transactions by Internal Personnel	2022/10/26	3
		Accounting Research and Development Foundation	Legal liabilities related to competition for management right	2022/12/09	3
Independent Director	Weng Chih-Hsien	Accounting Research and Development Foundation	Latest developments in policies for "ESG sustainability" and financial statement preparation and internal control management practices	2022/12/29	6
Independent Director	Wu Chieh-Hsin	Taiwan Corporate Governance Association	Key integration issues in the merger and acquisition process	2022/11/18	3
		Taiwan Corporate Governance Association	How to understand financial statements to supervise company operations	2022/12/06	3
Independent Director	Chen Hsien-Chang	Accounting Research and Development Foundation	Common management deficiencies in internal controls and analysis of practicalcases	2022/12/21	6

Continuing education measures:

Continuing education hours required for directors and supervisors of TWSE/TPEx-listed

companies are as follows:

• (I) Newly appointed directors and supervisors should receive at least 12 hours of continuing education in the year they are appointed, and at least 6 hours every year thereafter.

• (II) Directors and supervisors that are re-elected should receive at least 6 hours of continuing education each year during their term.

• (III) Continuing education hours are accumulated, in principle, from January 1 to December 31. If a course spans multiple years due to special circumstances or course design, the reason shall be specified when disclosing the implementation status of continuing education.

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(IV). If the Company established a Remuneration Committee or Nomination Committee, disclose its composition and operations:

1. Information on Remuneration Committee members

Identity (Note 1)	Qualificati ons Name	Professional qualifications and experience (Note 2)	Independence status (Note 3)	Number of other public companies in which the member also serves as a member of their Remuneration Committee
Convener and Independent Director	Weng Chih-Hsien	Please refer to page 16 for relevant information on the Disclosure of Professional Qualifications of Directors and Independence of Independent Directors	(1) Not an employee of the Company or any of its affiliates. (2) Not a director or supervisor of the Company or any of its affiliates (not applicable in cases where the person is an independent director of the Company, its parent company, subsidiary, or the subsidiary of the same parent company in accordance with the Act or with local laws). (3) Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate amount of one percent or more of the total number of issued shares of the company or ranks as one of its top ten shareholders. (4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship of a manager in (1) or personnel in (2) and (3). (5) Not a director, supervisor, or employee of a corporate shareholder that directly holders 5% or more of the Company's outstanding shares, is a top five shareholder, or appointed a representative as the Company's director or supervisor in accordance with Article 27, Paragraph 1 or 2 of the Company Act (not applicable in cases where the person is an independent director of the Company, its parent company, subsidiary, or the subsidiary of the same parent company in accordance with the Act or with local laws). (6) Not a director, supervisor, or employee of other companies controlled by the same person with over half of the Company's director seats or shares with voting rights (not applicable in cases where the person is an independent director of the Company, its parent company, subsidiary, or the subsidiary of the same parent company in accordance with the Act or with local laws). (7) Not a director, supervisor, or employee of another company or institution who is the same person or spouse of the Company's chairperson, president or equivalent position (not applicable in cases where the person is an independent director of the Company, its parent company, subsidiary, or the subsidiary of the same parent company in accordance with the Act or with local laws). (8) Not a director, supervisor, or managerial officer of a specific company or institution with financial or	0
Independent Director	Chen Hsien-Chang			0
Others	Su Pai-Huang	1. Education: Master, Institute of Industrial Engineering, National Taiwan University 2. Experience: President, Zig Sheng Industrial Co., Ltd. The Company's directors and supervisors Representative of institutional supervisor Lily Textile Co., Ltd. Director, Taiwan Synthetic Resins Manufacturers Association Taiwan Man-made Fiber Industries Association Chairperson 3. Appointment : Member Su has worked in the textiles industry for over30 years,		0

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			and previously served as a director of the textiles industry association. He has an abundance of professional experience in the industry's salary structure.	business dealings with the Company, or shareholder with 5% or more shares of the Company (not applicable in cases where the specific company or institution holds 20% or more but less than 50% of the Company's outstanding shares, and is an independent director of the Company, its parent company, subsidiary, or the subsidiary of the same parent company in accordance with the Act or with local laws). (9) Not a professional individual who, or an owner, partner, director, supervisor, or manager of a sole proprietorship, partnership, company, or institution that audited or provided commercial, legal, financial, or accounting services for total compensation not exceeding NT$500,000 in the most recent two years to the company or to any affiliate of the company, or a spouse thereof. This does not apply to members of the Remuneration Committee, Public Tender Offer Review Committee, or Merger and Acquisition Special Committee performing duties in accordance with the Securities and Exchange Act or laws and regulations related to mergers and acquisitions. (10) Not having a marital relationship, or a relative within the second degree of kinship to any other director of the company. (11) Not having any of the situations set forth in Article 30 of the Company Act of the R.O.C. (12) Not a government agency, juristic person, or its representative set forth in Article 27 of the Company Act of the R.O.C.

Note 1: Please describe the work experience, professional qualifications and experience, and independence of Remuneration Committee members in the form. If the member is an independent director, add the note "Please refer to Profile of Directors and Supervisors (I) in Attachment 1 on page 13." Please fill in independent director or other in identity (please specify if the individual is the convener).

• Note 2: Professional qualifications and experience: Describe the professional qualifications and independence of individual Remuneration Committee members.

• Note 3: Meet the independence criteria: Describe the compliance of Remuneration Committee members with independence, including but not limited to whether the member, his/her spouse, and relatives within the second degree of kinship is a director, supervisor, or employee of the Company or its affiliated enterprises. Number of shares and shareholding percentage of the Company held by the individual, his/her spouse, and relative within the second degree of kinship Is the individual a director, supervisor, or employee of a company that has a certain relationship (refer to Article 6, Paragraph 1, Subparagraphs 5 to 8 of the Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Taiwan Stock Exchange or the Taipei Exchange) with the Company? Amount of remuneration received for providing the Company or its affiliated enterprises with commercial, legal, financial, or accounting services in the last two years.

• Note 4: Please refer to the sample template for best practices on the TWSE Corporate Governance Center Website for the disclosure method.

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2. Operations of the Remuneration Committee

• I. There are three members in the Company's Remuneration Committee.

II. Current term of office: From June 27, 2022 for June 26, 2025. The Remuneration Committee convened a total of 3 meetings in 2022, the qualifications and attendance of members was as follows:

Position	Name	Attendance in person (B)	Attendance by proxy	Attendance rate (%) (B/A) (Note)	Note
Convener	Weng Chih-Hsien	3	0	100%	Newly appointed on June 27, 2022 (Independent Director)
Committee member	Chen Hsien-Chang	3	0	100%	Newly appointed on June 27, 2022 (Independent Director)
Committee member	Su Pai-Huang	2	0	100%	Newly appointed on June 27, 2022 (Others)
Committee member	Wu Chieh-Hsin	1	0	100%	Relieved of the position on June 27, 2022 (Independent Director)
Other disclosures: I. If the Board of Directors does not accept or revises the Remuneration Committee's recommendation, specify the date of the Board meeting, session, contents of the agenda item, resolution of the Board of Directors, and the Company's response to the Remuneration Committee's opinions (if the remuneration passed by the Board of Directors is higher than the recommendation of the Remuneration Committee, specify the discrepancy and reason): None II. If with respect to any resolution of the Remuneration Committee, any member has a dissenting or qualified opinion that is on record or stated in a written statement, describe the date of committee meeting, term of the committee, agenda item, opinions of all members, and actions taken by the company in response to the opinion of members: None III. Proposals and resolutions of the Remuneration Committee meetings and the Company's handling of themembers'opinionsinthemostrecent year: Remuneration Committee Agenda items and resolutions 8th meeting of 4th-term March 23, 2022 Agenda item: ◎ Proposal to review the Company's director, supervisor, and manager performance evaluation and remuneration policies, systems, standards, and structures. ◎ Discuss the proposed distribution of employee bonuses and directors and supervisors' remuneration in 2021. Members' opinions: No dissenting or unqualified opinions. Resolution: Passed as proposed after the chairperson consulted all attending members. The Company's handling of the opinions of the Remuneration Committee: Submitted to the Board of Directors and approved by allattending directors.

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	1st meeting of 5th-term July 07, 2022	Agenda item: ◎ Proposal to elect the convener of the Remuneration Committee.
		Members' opinions: No dissenting or unqualified opinions. Resolution: Passed as proposed after the chairperson consulted all attending members. The Company's handling of the opinions of the Remuneration Committee: Submitted to the Board of Directors and approved by allattending directors.
	2nd meeting of 5th-term November 11, 2022	Agenda item: ◎ Proposal to review the Company's director, supervisor, and manager performance evaluation and remuneration policies, systems, standards, and structures. ◎ Discuss the Company's remuneration to directors, supervisors, and managers for the current year. ◎ Discuss the Company's 2022 year-end bonus distribution proposal.
		Members' opinions: No dissenting or unqualified opinions. Resolution: Passed as proposed after the chairperson consulted all attending members. The Company's handling of the opinions of the Remuneration Committee: Submitted to the Board of Directors and approved by all attending directors.

• Note 1: If a Remuneration Committee member is separated before the end of the year, specify the date of separation in

the remarks, and calculate actual attendance rate (%) based on the number of meetings convened during the Remuneration Committee's term and actual attendance.

• Note 2: If the Remuneration Committee is reelected before the end of the year, list new and old Remuneration Committee members, and specify if the member is old, new, or reelected and the reelection date in the remarks. Actual attendance rate (%) is calculated based on the number of Remuneration Committee meetings convened during the member's term and actual attendance.

• Information on members and operations of the Nomination Committee: N/A

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(V) Implementation status of sustainable development and deviations from the Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies and the reason for such deviations:

Implementation items			Operating status (Note 1)	Deviations from Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No	Summary (Note 2)
I. Has the Company established a governance framework to promote sustainable development and a dedicated department (or have another department be responsible for related efforts) for fulfilling sustainable development, with the board of directors authorizing high-level managers to handle such efforts, and having relevant progress be supervised by the board of directors?		v	1. Even though the Company has not established a sustainable development governance framework, the powers planned for implementing corporate social responsibility and sustainable development are as follows: (1) Implementation and improvement of the corporate governance organization and system. (2) Communication and implementation of ethical corporate management related work items. (3) Implement and develop the corporate social responsibility policy and sustainable operations. (4) Implement and assist with the supervision of risk management related matters. (5) Planning and implementation of energy conservation, carbon reduction, and carbon neutrality related matters. (6) Implementation of other matters instructed by the Board of Directors. The President's Office is responsible for implementing the sustainability policy and improving risk management, and collaborates with human resources and production units in jointly implementing matters related to sustainable development, taking action to face climate change while regularly reporting the implementation status and plans for the following year to the Board of Directors. 2. 2022 Results: (1) Continue to take air pollution reduction measures and suspend use of coal-fired boilers. (2) Increase the use of reclaimed water. (3) Continue to replace machinery and equipment with more energy and water efficient models. (4) Continue to organize employee care activities and environmental protection related educationactivities.	The Company will establish a governance framework for sustainable development to comply with the Sustainable Development Best Practice Principles.

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Implementation items			Operating status (Note 1)	Deviations from Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No	Summary (Note 2)
			The results above are disclosed in the CSR Section of the company website. 3. Results are periodically reported to the Board of Directors, reporting goals that were set and communication with stakeholders. The Board of Directors periodically examines the Company's strategies and progress towards achieving goals, and urges the Company to adjust its direction when necessary to meet stakeholders' expectations, in order to become aligned with international standards.
II. Does the company perform assessments of risks in environmental, social, and corporate governance issues relevant to its business activities and devise risk management policies and strategies accordingly? (Note 2)	v		1. Material environmental issues: The Company identified climate change risks and evaluated response measures for climate change. For example, we established risk management procedures for water and electricity consumption in response to the risk of water shortage in the dry season and power rationing during the summer caused by climate change. This includes water rationing and water supply management rules for factories and operating standards on the priority of emergency power supply. As of the end of 2022, the Company has implemented ISO 9001 Quality Management Systems and ISO 14001 Environmental Management Systems. 2. Material social issues: From a social perspective, we list occupational safety and health management as a key item, and obtained ISO 45001 Occupational Safety and Health Management System and CNS 15506 TOSHMS Occupational Safety and Health Management System, related management policies include: Raising employees' awareness, understanding, and capabilities related to safety and health through training and communication; managers at all levels regularly examine the conduct and operating environment of employees and contractors. 3. Material governance issues: To prevent the risk of violating the law due to not immediately updating internal regulations when there are regulatory changes, we planned and established a regulation management system to track changes in domestic regulations, in order to effectivelyimplement, summarize, andrespond toregulatory changes.	No deviation

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Implementation items	Operating status (Note 1)	Operating status (Note 1)	Operating status (Note 1)	Deviations from Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No	Summary (Note 2)
III. Environmental issues (I) Has the company developed an appropriate environmental management system, given its distinctive characteristics?	v		The Company established a Labor Safety and Health Committee and management unit, and also established the Regulations on the Management of Labor Safety and Health Organization. We established an environmental management system based on characteristics of the textiles industry, and obtained ISO14001 Environmental Management System certification, utilizing management measures and strategies to resolve environment related issues in an orderly, targeted, and methodical way. Measures include promoting paperless operations in offices, reducing paper waste, and replacing all lights with energy-saving lights to reduce the impact of the Company's operations on the natural environment. The Company signed an agreement with the Industrial Development Bureau, MOEA for the "Industry Low Carbon Technology Integration and Application Guidance Project," in order to improve the industry's image of being eco-friendly and ensure that the Company's conduct does not cause hazards to the environment. The Company continues to actively participate in meetings for formulating and amending environmental protection regulations, providing opinions for amendments and staying up-to-date on regulatory trends. This allows the Company to formulate response measures in advance and effectively control environmental risks.	No deviation
(II) Is the Company committed to improving the efficiency of various resources and utilizing renewable materials to reduce the environmental impact?	V		The Company and Taiwan Textile Research Institute jointly developed a heat recycling system to lower the burden of operations on the environment. We also recycle and reuse water with the primary goal of achieving zero pollution and emissions. We periodically review water and electricity consumption, replace energy consuming equipment, implement energy conservation and carbon reduction projects in factories, and improve the efficiency of resource and energy use.	No deviation

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Implementation items	Operating status (Note 1)	Operating status (Note 1)	Operating status (Note 1)	Deviations from Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No	Summary (Note 2)
(III) Does the company evaluate potential risks and opportunities brought by climate change, and take response measures to climate-related issues?	V		The Company reviewed climate change related risks and opportunities, including identifying physical risks from water shortage in the dry season and power rationing during the summer caused by extreme weather, transition risks from regulatory changes, and opportunities from water conservation and carbon reduction technologies to provide low carbon products. We formulated response plans based on identification results, and evaluated plans and response measures for current and potential risks and opportunities related to climate issues, including continuing to carry out GHG reduction measures and developing new low carbon, low energy consumption processes. We reduced energy consumption and carbon emissions through improvements to technology and engineering, emissions control, and improved or replaced energy and water saving equipment, so as to meet environmental protection requirements and fulfill our responsibility as a citizen of the Earth.	No deviation
(IV) Does the company compile statistics of greenhouse gas emissions, water use, and total weight of waste in the past two years, and does it establish policies for energy conservation & carbon reduction, greenhouse gas emission reduction, water use reduction, and other waste management?	V		The Company has dedicated years of effort to its energy conservation and carbon reduction policy, and listed the sustainable development of ecological resources as a business policy (see Business Policy on page 2 of the annual report for details). We use the GHG inventory system to monitor our GHG emissions, and continue to compile statistics of water consumption (518,000 kL and 536,000 kL in 2022 and 2021, respectively) and total waste (588 tons and 765 tons in 2022 and 2021, respectively), which are listed in the management report for follow-up. The Company established various emission standards and aims to reduce gas emissions, water consumption and total weight of waste per unit energy consumption by 5% each year, in hopes of becoming a low carbon company for environmental sustainability. To achieve the reduction goals above, we continue to replace production equipment of the water conservation system and improve process R&D, used medium pressure steam to replace coal-fired boilers, and added a new sludge drying system to reduce waste. The abovementioned improvements also lowered GHG emissions. Use the energy consumption per unit production volume in 2021 for calculation, the increase or decrease in GHG emissions, water consumption, and waste was	No deviation

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Implementation items		Operating status (Note 1)	Operating status (Note 1)	Deviations from Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No	Summary (Note 2)
			-2%, -1.3%, and -21.6%, respectively.
IV. Social issues (I) Has the Company formulated management policies and procedures in accordance with relevant laws and regulations as well as the International Bill of Human Rights?	v		The Company recruits employees in an ethical and socially responsible way in accordance with regulations of human rights organizations, such as the United Nations International Labor Organization. We are committed to eliminating all risks of human trafficking and forced labor in our operations and supply chain. We announced and implemented the "migrant worker zero fee" policy, and revised labor recruitment procedures to eliminate all risks of human trafficking and forced labor for migrant workers. We meet the expectations of international human rights organizations regarding migrant workers policy. We do not use child labor based on the humanitarian spirit and to comply with labor regulations, such as the Labor Standards Act, ensuring that underage youth can grow in an environment that is healthy for their body and mind. During recruitment, interviewers communicate the company policy of no child labor with job applicants, and also strictly verify the identity of applicants to eliminate any possibility of hiring child labor who used false ID. (see the description in Employee Benefits and Labor Relations)	No deviation

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Implementation items			Operating status (Note 1)	Deviations from Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No	Summary (Note 2)
(II) Does the company establish and implement reasonable employee benefits (including remuneration, leave, and other benefits), and ensure business performance or results are reflected adequately in employee remuneration?	V		The Company complies with the Labor Standards Act and related laws and regulations when setting salary and benefit measures, and provides benefits that are competitive in the market to encourage employees. Furthermore, periodic evaluations are conducted for issuing performance bonuses from monthly earnings to share profits with employees. In terms of employee benefits, the Company offers a variety of benefits and established complete retirement regulations that comply with the law. The Company established a Supervisory Committees of Labor Retirement Reserve and makes periodic pension contributions to an account at the Bank of Taiwan (originally the Central Trust of China). The committee convenes regular meetings to review pension contributions and utilization, in order to protect employees' rights and interests. Furthermore, for employees who choose to use the new pension system, the Company allocates 6% of their monthly salaries to their individual pension account at the Labor Insurance Bureau in accordance with the law. (see the description in Employee Benefits and Labor Relations)	No deviation
(III) Does the company provide employees with a safe and healthy work environment? Are employees trained regularly on safety and health issues?	V		The Company periodically organizes employees health examinations and strengthens supervision of labor safety and health management by each department. We train the emergency response capabilities and safety concepts of employees through labor safety and health training. The Company hired doctors and nurses stationed at its factory to care for the physical and mental health of employees, and actively follow up on employees' health condition, providing employees with a safe and healthy work environment. No occupational accidents occurred this year. (see the description in Employee Benefits and Labor Relations)	No deviation
(IV) Does the company set up effective career development and training programs for its employees?	V		The Company surveys department and individual needs and career plans, examines the difference in capabilities of employees, and plans and arranges external training for employees, including Taiwan Textile Research Institute, Taiwan Silk & Filament Weaving Industrial Association, and China Productivity Center, providing courses that will benefit employees' career development. This cultivates talent with many competencies. The Company also irregularly hires external lecturers to provide training in specific topics at the Company. (see the description in	No deviation

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Implementation items			Operating status (Note 1)	Deviations from Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No	Summary (Note 2)
			Employee Benefits and Labor Relations)
(V) Do the company's products and services comply with relevant laws and international standards in relation to customer health and safety, customer privacy, and marketing and labeling of products and services, and are relevant consumer protection or customer rights protection and grievance procedure policies implemented?	V		The Company advertises and labels its products and services according to relevant regulations and international standards. The Company established internal control procedures to ensure the reasonableness of procurement and production, and also maintains communication channels with suppliers, maintaining the reasonable rights and interests of both sides based on mutual trust and mutual benefit. The Company is a professional dyeing and finishing OEM service provider, the rights and interests of clients are described in the contract, and customer complaint channels are provided to improve the Company's relationship with customers. The Company cares about the opinions of its customers. Besides individual visits, it also provides a contact person and e-mail addresses for products on its website. We also set up a stakeholder section on the company website to provide a channel for customer questions, complaints, or suggestions, which the Company handles and gives feedback based on the principle of good faith, so as to protect customers' rights and interests.	No deviation
(VI) Does the company have a supplier management policy, require suppliers to comply with regulations on environmental protection, occupational safety and health, and labor rights, and what is its implementation status?	V		The Company established a supplier management policy, which requires product certification documents to be obtained from suppliers before making purchases. Besides evaluating past supply records and reputation, compliance with environmental protection, occupational safety and health, and labor human rights is also an evaluation indicator. When a contract signed with a supplier violates the CSR policy, clauses of the contract may be terminated or canceled. Furthermore, the Company requires suppliers to comply with environmental regulations and issue guarantees. If a supplier isfoundinviolation, the Companymay terminate orcancelthe contract.	No deviation
V. Does the company reference internationally acceptedreporting		v	Even though the Company has not issued a CSR Report, the environmental policy, human rightsregulations, corporate governance,healthand safety, and Code of	The Company hasnotissued a

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Implementation items	Operating status (Note 1)	Operating status (Note 1)	Operating status (Note 1)	Deviations from Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No	Summary (Note 2)
standards or guidelines, and prepare reports that disclose non-financial information of the company, such as corporate social responsibility reports? Do the reports above obtain assurance from a third party verificationunit?			Ethical Conduct are all in compliance with GRI Standards, and we also conduct self-evaluations of the implementation status.	CSR Report, but will include it in future plans based on the situation.
VI. If the Company has established corporate social responsibility principles based on "Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies", please describe any discrepancy between the principles and their implementation: Even though the Company has not established Corporate Social Responsibility Best Practice Principles, we are actively fulfilling our corporate social responsibility in corporate governance, environmental protection, and social welfare, and requirements are specified in human resources, environmental protection, and safety and health standards, which is in compliance with regulatory requirements.

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Implementation items	Operating status (Note 1)	Operating status (Note 1)	Operating status (Note 1)	Deviations from Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No	Summary (Note 2)
VII. Other important information to facilitate a better understanding of the Company's implementation of sustainable development: The Company's plans for sustainable development and implementation results: I. Implementation plans: (I) The Company has joined the United Nations Global Compact and contributed to corporate social responsibility worldwide. We advocate 10 principles for human rights, labor, environment, and anti-corruption to drive the Company's sustainable development. Human rights: 1. Support and respect international human rights within our scope of influence. 2. Ensure that the Company does not violate human rights. Labor: 1. Protect laborers' freedom of association and effectively acknowledge their collective bargaining right. 2. Eliminate all forms of forced labor. 3. Effectively eliminate child labor. 4. Eliminate discrimination in employment and the workplace. Environment: 1. Support preventive measures taken for environmental challenges. 2. Take even more measures to fulfill our corporate social responsibility to the environment. 3. Encourage the R&D and diffusion of environmental protection technology. Anti-corruption: 1. The Company should dedicate its efforts to anti-corruption activities, including extortion and bribery. (II) The Company has always dedicated efforts to fulfilling its corporate social responsibility. In addition to the description above, our efforts also include: 1. Environmental protection The Company is a professional dyeing and finishing OEM service provider. In recent years, we have provided guidance for clean production technologies and process waste reduction and pollution prevention technologies with the support of the MOEA and IDB. We believe that we will be able to eliminate the stereotype of being labor-intensive and gradually transition to becoming technology-intensive. Our R&D and design focuses on automated machinery, safety and environmental protection, and product diversification. Our new production image plan aims to present new textures, comfort, and environmental protection. Furthermore, the Company continues to add and optimize sludge drying equipment with the goal of cutting sludge in half. We completed the MOEA technology development project "Optimization of Long-fiber Woven Fabric Smart Manufacturing," which reduces energy consumption through AI, improves product yield, reduces waste, and shortens the delivery time, contributing to the protection of the natural environment. In terms of international environmental protection certifications, the Company's textile products have obtained Switzerland's Bluesign® certification and OEKO TEX@standard 100 certification. 2. Product accountability As a global citizen, the Company has a profound understanding of the importance of environmental sustainability, and implements an environmental management system (ISO-14001:2015) to minimize the risk of environmental violations. The Company is actively implementing energy conservation & carbon reduction plans, raising the environmental protection awareness of its employees, and improving the efficiency of resource use.

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Implementation items	Operating status (Note 1)	Operating status (Note 1)	Operating status (Note 1)	Deviations from Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No	Summary (Note 2)
3. Labor relations Personnel appointment is based on manpower requirements for the annual plan of each department. The Company finds outstanding talent that match its core values through diverse recruitment channels. The Company works together with campuses in promoting internships and collaborative teaching, as well as practical training, providing students with internship plans to experience the workplace. This assists the professional development of students and strengthens their employability. The Company attaches importance to talent retention and objectively learns about the reason employees resign through interviews, while collecting related information. The information is analyzed for subsequent improvement plans, and provided to department managers for personnel management, work design, and adjusting the criteria of job openings. 4. Anti-corruption The Company established the Ethical Corporate Management Promotion Task Group, which periodically reports the implementation of ethical corporate management in the previous year to the Board of Directors at the beginning of the year, assisting the Board of Directors with inspecting and evaluating if unethical conduct prevention measures are effective. The Ethical Corporate Management Promotion Task Group established the Ethical Corporate Management Best Practice Principles, Code of Ethical Conduct, Procedures for Ethical Management and Guidelines for Conduct, the internal control system, authorization system, and separation of duties. It implements anti-corruption measures in coordination with internal audits, self-evaluations of the internal control system, and channels for reporting unethical conduct. 5. Customer privacy The Company strictly maintains the confidentiality of trade secrets, and does not inquire about or collect information on unrelated intellectual property, such as trade secrets, trademarks, patents, and copyright, of suppliers and customers. The Company shall not disclose the trade secrets to any third party and also signs a non-disclosure agreement (NDA) with customers. Information security risk protection measures have been implemented to protect trade secrets. 6. Socioeconomic Compliance The Company complies with the Fair Trade Act and Regulations Governing Permission of Trade Between Taiwan Area and Mainland Area, and all products comply with international safety standards. This ensures that the business activities are environmentally friendly and complies with ethics. Internal training courses are also organized to promote laws and regulations. II. Implementation Results The Company added sludge drying equipment in 2019 and achieved the goal of cutting sludge in half. The Company signed the United Nations Global Compact in 2020 and contributed to corporate social responsibility worldwide, dedicating efforts to 10 principles for human rights, labor, environment, and anti-corruption, in order to drive the Company's sustainable development. The Company signed an agreement with National Chin-Yi University of Technology to implement an industry-academia collaborationproject in 2022 and 2021,which on averageprovided internships to 12 students in theCompany's factoryeachyear.

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Implementation items	Operating status (Note 1)	Operating status (Note 1)	Operating status (Note 1)	Deviations from Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No	Summary (Note 2)

Note 1: If "Yes" was selected, please describe important policies, strategies, measures, and implementation status; If "No" was selected, please explain the reason for discrepancies and describe future policies, strategies, and measures in "Deviations from Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies and reasons." For implementation items 1 and 2, public companies must describe their sustainable development governance and supervision framework, including but not limited to formulating the management approach, strategies, and goals, as well as review measures. Describe the Company's risk management policy or strategy and evaluation of ESG issues related to its operations.

Note 2: The principle of materiality means that ESG issues have a material effect on the Company's investors and other stakeholders. Note 3: Please refer to the sample template for best practices on the TWSE Corporate Governance Center Website for the disclosure method.

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(VI) Implementation of Ethical Corporate Management and Deviations from the "Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies" and Reasons:

Evaluation item			Operatingstatus(Note 1)	Deviations from the "Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies"andreasons
	Yes	No	Summary
I. Establishment of ethical corporate management policy and plans (I) Has the company established an ethical corporate management policy that was approved by the Board of Directors, and declare its ethical corporate management policy and methods in its regulations and external documents, as well as the commitment of its Board and management to implementing the management policies? (II) Does the company have mechanisms in place to assess the risk of unethical conduct, and perform regular analysis and assessment of business activities with higher risk of unethical conduct within the scope of business? Does the company implement programs to prevent unethical conduct based on the above and ensure the programs cover at least the matters described in Paragraph 2, Article 7 of the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies? (III) Does the company provide clearly the operating procedures, code of conduct, disciplinary actions, and appeal procedures in the programs against unethical conduct? Does the company enforce the programs above effectively and perform regular	V V V		(I) The Company established Ethical Corporate Management Best Practice Principles and specified its ethical corporate management policy and practices in regulations and public documents. The Board of Directors and management actively comply with the ethical corporate management policy and the Ethical Corporate Management Best Practice Principles. (II) The Company specifies plans to prevent unethical conduct in the Ethical Corporate Management Best Practice Principles, and periodically provides training and communicates with employees, so that they will fully understand the Company's determination, policies, prevention plans, and consequences of unethical conduct, so as to achieve ethical corporate management. We regularly audit, analyze, and assess risks through the audit system, and the Management Department establishes prevention measures. Additionally, the Company's Ethical Corporate Management Best Practice Principles already covers conduct specified in Article 7, Paragraph 2 of the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies. (III) The Company specified programs to prevent unethical conduct in the best practice principles, and clearly provides operating procedures, code of conduct, disciplinary actions, and a complaint system, analyzing operating activities with relatively high risk ofunethicalconduct. We strengthenprevention	No deviation. There are no significant differences. There are no significant differences.

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Evaluation item			Operatingstatus(Note 1)	Deviations from the "Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies"andreasons
	Yes	No	Summary
reviews and amendments?			measures through reviews and irregular audits, and periodicallyreview and amend the programs above.
II. Implementation of ethical corporate management (I) Does the Company evaluate the ethical conduct record of counterparts, and does it include an ethical conduct clause in contracts signed with the counterpart?	V		(I) Before starting a business relationship, the Company considers the legality of a distributor, supplier, customer, or other counterparty in a transaction and any record of unethical conduct in the past, in order to avoid engaging with parties with a record of unethical conduct. When entering into contracts, the Company includes compliance with the ethical corporate management policy as a contract term. In the event that the trading counterparties are involved in unethical conduct, the Company may suspend or terminate the contract at any time.	There are no significant differences.
(II) Does the company have a dedicated unit responsible for business integrity under the board of directors which reports the ethical management policy and programs against unethical conduct regularly (at least once a year) to the board of directors while overseeing such operations? (III) Has the company established policies to prevent conflicts of interests, implemented such policies, and provided adequate channels of communications? (IV) Has the company established effective accounting systems and internal control systems to implement ethical corporate	V V V		(II) The Company's Board of Directors appointed the Management Department as the dedicated unit for achieving sound ethical corporate management. The Management Department is responsible for formulating and supervising the implementation of the ethical corporate management policy and prevention plans, and periodically reports to the Board of Directors each year. The implementation status was reported to the Board of Directors in November 2022. (III) The Company's directors, supervisors, managers, employees, and substantial controllers actively report any violations of ethical corporate management regulations to the Board of Directors, managers, chief internal auditor, or other managers. The Company keeps the whistleblower's identity and contents of the report confidential, and actively verifies and handles reports. (IV) The Company has established effective accounting and	There are no significant differences. There are no significant differences. There are no significant differences.

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Evaluation item			Operatingstatus(Note 1)	Deviations from the "Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies"andreasons
	Yes	No	Summary
management and designated its internal audit unit, based on the results of assessment of the risk of involvement in unethical conduct, devise relevant audit plans and audit the compliance with the prevention programs accordingly or commissioned a CPA to conduct the audit? (V) Does the Company provide regular internal and external training on ethical corporate management?	V		internal control systems. Internal auditors and accountants regularly audit the above systems to ensure compliance with programs for preventing unethical conduct. (V) The Company irregularly communicates ethical corporate management during employee training and meetings, and arranges training during annual review meetings.	There are no significant differences.
III. Implementation of the Company's whistleblowing system (I) Does the company provide incentives and means for employees to report malpractices? Does the company assign dedicated personnel to investigate the reported malpractices? (II) Does the Company have standard operating procedures for investigating whistleblowing cases and related confidentiality mechanisms? (III) Does the Company take measures to protect whistleblowers from inappropriate treatment or retaliation?	V V V		(I) The Company set up an employee opinion box, e-mail, and telephone number to encourage employees to express their opinions. Employees can directly report violations to supervisors or the Audit Office, and assign dedicated personnel suitable for the accused. (II) The Company established standard operating procedures for investigating reports, and established the whistleblowing system "Employee opinion box" on the company website and intranet, which receives reports for any illegal or unethical conduct. An independent dedicated unit is responsible for accepting and investigating reports, and ensures the confidentiality of the whistleblower's identity and the contents of the report. (III) The Company maintains the confidentiality of the whistleblower's identity and contents of the report, and prevents whistleblowers from receiving improper treatment due to the report. This is expressly stated in theEthicalCorporateManagementBestPractice	There are no significant differences. There are no significant differences. There are no significant differences.

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Evaluation item	Operatingstatus(Note 1)	Operatingstatus(Note 1)	Operatingstatus(Note 1)	Deviations from the "Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies"andreasons
	Yes	No	Summary
			Principles and Code of Ethical Conduct.
IV. Enhancing information disclosure Does the Company disclose the contents and implementation results of its Ethical Corporate Management Best Practice Principles on its website and MOPS?	V		The Company discloses information on the Ethical Corporate Management Best Practice Principles on the Market Observation Post System and in the Investors Section of the company website, and irregularly discloses implementation results on the website for investors and stakeholders to reference.	There are no significant differences.
V. If the Company established Ethical Corporate Management Best Practice Principles in accordance with the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies, describe its operations and discrepancies: The Company established Ethical Corporate Management Best Practice Principles in accordance with the "Ethical Corporate Management Best Practice Principles for TWSE/TPEX-Listed Companies" of the competent authority, and there is no significant difference between the principles and their implementation.
VI. Other important information to facilitate a better understanding of the company's implementation of ethical corporate management: The Company has upheld the business philosophy and values of "integrity, accountability, involving everyone in operations, pursuing excellence, and the happiest services" since it was established, and has created a corporate culture of integrity and accountability, showing how much the Company values ethical corporate management. For the Company's ethical corporate management philosophy, please refer to the description in Business Policy on page 2 of the annual report.

• V. If the Company established Ethical Corporate Management Best Practice Principles in accordance with the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies, describe its operations and discrepancies:

• The Company established Ethical Corporate Management Best Practice Principles in accordance with the "Ethical Corporate Management Best Practice Principles for TWSE/TPEX-Listed Companies" of the competent authority, and there is no significant difference between the principles and their implementation.

The Company has upheld the business philosophy and values of "integrity, accountability, involving everyone in operations, pursuing excellence, and the happiest services" since it was established, and has created a corporate culture of integrity and accountability, showing how much the Company values ethical corporate management. For the Company's ethical corporate management philosophy, please refer to the description in Business Policy on page 2 of the annual report.

Note: Provide a brief description regardless of whether "Yes" or "No" was selected.

(VII) If the company has established corporate governance principles and related guidelines, disclose the means of accessing this information:

• Please visit the Company's website (www.csgroup.com.tw) for related rules and regulations under Investor Relations\Corporate Governance.

(VIII) Disclose other material information that will benefit understanding of the Company's corporate governance status:

1. Procedures for Handling Material Inside Information

2. The Company established the "Management Guidelines for the Prevention of Insider Trading," which specifies that management items for

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handling material inside information and preventing insider trading shall be in accordance with related laws, orders, regulations of the Taiwan Stock Exchange Corporation or Taipei Exchange, and these Guidelines. This provides the basis for establishing management and control

mechanisms for preventing insider trading, prevents improper disclosure of the Company's information, and ensures the timeliness and correctness of information that is disclosed. Contents of the Guidelines include:

  - (1)  Applicable subjects and scope of material information.

  - (2)  Operating procedures for maintain the confidentiality of material inside information.

  - (3)  Dedicated unit.

  - (4)  Procedures for handling the disclosure of the Company's material information.

1. The Company periodically reports insider trading related regulations and notices during board meetings, annual seminars, and monthly meetings. (1) Directors and managers provide and communicate the latest regulations and notices on insider trading after board meetings, including the reporting obligations of insiders and prohibiting insider trading. E-mails on the prevention of insider trading are sent to insiders every quarter, and continuing education is provided each year to raise directors and managers' awareness of compliance with insider trading regulations.

2. (2) The Company organizes annual review meetings every December, and officer level and above employees participate in the meeting. The meeting this year was held in the conference room of the factory in December 2022, and included 2 hours of special topic reports on regulations and notices related to insider trading, ethical corporate management, and ethical conduct.

3. (3) The Company convenes monthly meetings and irregularly schedules cases of insider trading prevention during the meetings, using the cases to let employees clearly understand the latest laws and regulations, as well as the Company's policy for insider trading.

4. Specific measures and training for ethical corporate management and prevention of unethical conduct:

5. To implement the ethical corporate management policy and prevent unethical conduct, the Company communicates discipline requirements and its excellent corporate culture during orientation, communicating the importance of integrity with employees. The Company irregularly organizes internal training on ethical corporate management, and also organizes annual training events on ethical corporate management related issues. During the annual seminars in 2022 and the second week of December 2021, officer and higher level employees participated and a 120-minute special topic report was given on "Regulations and notices on insider trading, ethical corporate management, and ethical conduct." There were 36 participants in 2022 and 41 participants in 2021. The presentation and video files were provided in the internal employee system after the course ended for access by employees who did not participate in the event that day.

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• (IX) The following items relating to the implementation status of the internal control system shall be disclosed:

• Statement on Internal Control:

Chyang Sheng Dyeing & Finishing Co., Ltd Statement on Internal Control

Date: March 23, 2023

This statement relates to the Internal Control System of the Company and the results of a

self-assessment for the year 2022:

• I. The Company is fully aware that the establishment, implementation and maintenance of its internal control system is the responsibility of the Board of Directors and the management personnel. In this regard the Company has established such a system. The aim of the system is to provide reasonable assurance of the achievement of objectives in the effectiveness and efficiency of operations (including profits, performance, and safeguarding of asset security), reliability, timeliness, and transparency of reporting, and compliance with applicable laws and regulations.

• II. There are inherent limitations to even the most well designed internal control system. As such, an effective internal control system can only reasonably ensure the achievement of the three aforementioned objectives. Moreover, the operating environment and situation may change and impact the effectiveness of the internal control system. However, self-supervision measures were implemented within the Company's internal control system to facilitate immediate rectification once procedural flaws have been identified.

• III. The Company judges the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control Systems by Public Companies (hereinafter referred to as the "Regulations"). The internal control system judgment criteria adopted by the Regulations divides internal control into five elements based on the process of management control: 1. Control environment, 2. Risk assessment, 3. Control operation, 4. Information and communication, and 5. Monitoring. Each element further contains several items. For more information on the aforementioned items, see the Regulations.

• IV. The Company has evaluated the design and operating effectiveness of its internal control system according to the aforesaid criteria.

• V. Based on the findings of the aforementioned examination, the Company believes it can reasonably assure that the design and implementation of its internal control system as of Saturday, December 31, 2022 (including supervision and management of subsidiaries), including the effectiveness and efficiency in operation, reliability in financial reporting and compliance with relevant regulatory requirements, have achieved the aforementioned objectives.

• VI. This Statement will become a major part of the content of the Company's Annual Report and Prospectus, and will be made public. Any falsehood, concealment, or other illegality in the

83

content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Act.

VII. This statement was passed by the Board of Directors on Thursday, March 23, 2023, with none of the 12 attending directors expressing dissenting opinions, and the remainder all affirming the content of this Statement.

Chyang Sheng Dyeing & Finishing Co., Ltd

Chairman: Chen Jen-Fa Signature and Seal:

President: Lu Fang-Fu Signature and Seal:

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1. If the company engages an accountant to examine its internal control system,

disclose the CPA examination report: None

• (X) If any penalties are imposed on the Company and its personnel or punishments are imposed by the Company on personnel in violation of internal control system regulations in the past year and up to the date of report, and the results of the penalty may have a material effect on shareholders equity or stock price, specify the contents of the penalty, major deficiencies and improvement: There were no penalties imposed on the Company's insiders in accordance with the law or for violating the internal control system in 2022.

• (XI) Important resolutions adopted in shareholders' meeting and Board meetings in the past year and up to the date of report:

  1. Important resolutions of the 2022 Annual General Meeting and their implementation:

Date

Important resolutions and implementation status

2022/06/27

1. Approved the acknowledgment of the 2021 business report and financial statements. Implementation status: Approved. 2. Approved the acknowledgment of the 2021 dividend distribution proposal. Implementation status: August 7, 2022 was set as the record date for distribution of cash dividends, and cash dividends (NT$0.4 per share) were distributed according to schedule on August 26, 2022. 3. Proposal to revise the Company's Articles of Incorporation. Implementation status: Approved in the meeting, approved by the Ministry of Economic Affairs for registration on September 6, 2022, and announced on the company website. 4. Proposed amendment to articles and title of the Company's Regulations on Director and Supervisor Elections. Implementation status: Approved and announced on the company website. 5. Proposed amendment to articles of the Company's Procedures for Lending Funds to Others. Implementation status: Approved and announced on the company website. 6. Proposed amendment to articles of the Company's Procedures for Endorsement and Guarantee. Implementation status: Approved and announced on the company website. 7. Proposed amendment to articles of the Company's Procedures for Acquisition and Disposal of Assets. Implementation status: Approved and announced on the company website. 8. Proposal to hold a directors election. Implementation status: Twelve directors (including 3 independent directors) were elected to the Company's 14th-term Board of Directors, the directors were approved by the Ministry of Economic Affairs for registration on September 6,2022,and announced on the

85

			company website. 9. Proposal to lift the non-compete clause for newly appointed directors and their representatives. Implementation status: Approved.	company website. 9. Proposal to lift the non-compete clause for newly appointed directors and their representatives. Implementation status: Approved.
Term/meeting number		Date of meeting		Major resolutions
12th meeting of the 13th-term		2022/03/23		1. The Company's 2021 board performance evaluation results. 2. Please discuss conclusions of the Remuneration Committee meeting. 3. Proposed distribution of employee bonuses and directors and supervisors' remuneration in 2021. 4. Approved the ratification of the Company's 2021 Business Report and Financial Statements. 5. The Company's 2021 Dividend Distribution Proposal. 6. Proposal to amend articles of the Company's Articles of Incorporation. 7. Proposed amendment to articles and title of the Company's Regulations on Director and Supervisor Elections. 8. Proposed amendment to articles of the Company's Procedures for Lending Funds to Others. 9. Proposed amendment to articles of the Company's Procedures for Endorsement and Guarantee. 10. Proposed amendment to articles of the Company's Procedures for Acquisition and Disposal of Assets. 11. Proposal to hold a directors election. 12. Proposal to nominate director and independent director candidates. 13. Proposal to lift the non-compete clause for newly appointed directors and their representatives. 14. Routine evaluation of the CPAs' independence. 15. The Company's 2021 Statement on Internal Control. 16. Proposal for related matters of the Company's 2022 Annual General Meeting.
13th meeting of the 13th-term		2022/05/10		1. The Company's financial statements. (includes the 2022 Q1 consolidated financial statements). 2. Report on the Company's purchase of liability insurance for directors, supervisors, and managers. 3. Proposal to establish the Company's Audit Committee Charter.
1st meeting of the 14th-term		2022/07/07		1. Proposal to elect the chairman. 2. Proposal to appoint managers.
2nd meeting of the 14th-term		2022/08/11		1. The Company's financial statements. (includes the 2022 Q2 consolidated financial statements). 2. Please discuss conclusions of the Remuneration Committee meeting. 3. In coordination with the Company establishing an Audit Committee to replace supervisors, the Company's Rules of Procedure for the Board of Directors' Meetings, Procedures for Handling Material Inside Information, Remuneration Committee Charter, Stock Trading Halt and Resumption Application Procedure, Corporate Governance Best Practice Principles, Code of Ethical Conduct, and Ethical Corporate Management Best Practice Principles were revised.
3rd meeting of the 14th-term		2022/11/11		1. The Company's financial statements. (includes the 2022 Q3 consolidated financial statements) 2. Report on the Company's implementation of ethical corporate management in 2022. 3. Report on GHG inventory and verification schedule. 4. Please discuss conclusions of the Remuneration Committee meeting. 5. Proposed amendment to the Company's "Procedures for Handling Material Inside Information" and "Internal Audit Implementation Rules." 6. Proposed extension of the Company's credit limit.

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		7. Proposal for the Company to provide endorsement/guarantee to subsidiary Progiant Construction & Development Corporation. 8. Proposal for the Company to provide short-term financing to subsidiary Progiant Construction & Development Corporation. 9. Discuss the Company's 2023 audit plan.
4th meeting of the 14th-term	2023/03/23	1. The Company's 2022 board performance evaluation results. 2. Please discuss conclusions of the Remuneration Committee meeting. 3. Proposed distribution of employee bonuses and directors and supervisors' remuneration in 2022. 4. Proposed distribution of employee bonuses and directors and supervisors' remuneration in 2022. 5. The Company's 2022 dividend distribution proposal. 6. Proposed assessment data for the appointment of accountants and pre-approval for non-assurance services in 2023. 7. Passed the Company and subsidiaries' investment limit in securities. 8. The Company's 2022 Statement on Internal Control. 9. Proposal for related matters of the Company's 2023 Annual General Meeting.

(XII) Dissenting or qualified opinion of directors or supervisors against an important resolution passed by the Board of Directors that is on record or stated in a written statement in the past year and up to the date of report:

Agenda items of all board meetings in the most recent year and up to the date of report were approved by all directors and supervisors, and no dissenting opinions were expressed.

• (XIII) Resignation and dismissal of managerial officers related to the financial report (including chairperson, president, chief accounting officer, chief financial officer, chief internal auditor, corporate governance supervisor, and R&D supervisor) in the past year and up to the date of report:

None.

87

V. Information on Fees to CPA:

				Unit: NT$, in thousands	Unit: NT$, in thousands	Unit: NT$, in thousands
Name of the accounting firm	Name of accountants	Audit period	Audit fee	Non-audi t fee	Total	Note
KPMG	Chen Chen-Chien	2022.01.01~2022.12.31	1,810	0	1,810	None
	Yu Sheng-Ho	2022.01.01~2022.12.31

• Note: Audit fees are fees paid by the Company to the accountants for auditing and reviewing financial statements and tax certification fees.

If any one of the following situations apply to the audit fees and non-audit fees paid to the accountants, their accounting firm, and affiliated enterprises and the contents of non-audit services, disclose the following matters:

• (I) If the accounting firm is changed and the audit fees paid in the year of the replacement is less than that of the previous year, the amounts of the audit fees before and after the replacement and the causes shall be disclosed: None.

• (II) If the audit fees decreased more than 10% from that of the prior year, the amount, percentage, and reasons for the decrease in audit fees shall be disclosed: None.

VI. Information on Change of Accountants: None.

VII. The Chairperson, President, Financial or Accounting Manager of the Company Who Had Worked for the Accounting Firm or Its Affiliated Enterprise in the Past Year: None.

88

VIII. Share Transfer by Directors, Supervisors, Managerial Officers and Shareholders Holding More Than 10% Equity and Changes to Share Pledging by Them in the Past Year and up to the Date of Report:

(I) Changes in shareholding of directors, supervisors, managerial officers, and shareholders holding more than 10% equity: None

Unit: Shares

				Unit: Shares	Unit: Shares
Position	Name	2022		The current year up to April 30
		Increase (decrease) in shares held	Increase (decrease) in pledged shares	Increase (decrease) in shares held	Increase (decrease) in pledged shares
Chairperson	Chen Jen-Fa	0	0	0	0
Director	Shinkong Asset Management Co., Ltd Representative: WuHsin-En	0	0	0	0
Director	Lin Ho-Tsung	0	0	0	0
Director	HONG SHENG INVESTMENT CO., LTD Representative:LuFang-Fu	0	0	0	0
Director	Phoebes Inc. Representative: Cheng Ming-Yueh	0	0	0	0
Director	Chen Chia-Ling	223,000	0	25,000	0
Director	Shinkong Asset Management Co., Ltd Representative: Chiu Chin-Fa	0	0	0	0
Director	FU JIN INVESTMENT CO., LTD Representative: Chen Yu-Chin	0	0	0	0
Director	Lin Ho-Hsiung	0	0	0	0
Independent Director	Weng Chih-Hsien	0	0	0	0
Independent Director	Wu Chieh-Hsin	0	0	0	0
Independent Director	Chen Hsien-Chang	0	0	0	0
Representative of institutional director and president	Lu Fang-Fu	0	0	0	0
Head of Accounting and Corporate Governance Officer	Cheng Yi-Min	0	0	0	0

89

Position	Name	2022	2022	The current year up to April 30	The current year up to April 30
		Increase (decrease) in shares held	Increase (decrease) in pledged shares	Increase (decrease) in shares held	Increase (decrease) in pledged shares
Chief auditor	Hsin-Ju Hsieh	0	0	0	0
Major shareholder	Shinkong Textile Co., Ltd.	2,308,000	0	0	0

• (II) Information on share transfer to related parties by directors, supervisors, managerial officers, and shareholders holding more than 10% equity: None

• (III) Share pledging by directors, supervisors, managerial officers, and shareholders holding more than 10% equity: None.

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IX. Information on the Relationship between Any of the Top Ten Shareholders (Related Party, Spouse, or Kinship within the Second Degree):

NAME (NOTE 1)	SHAREHOLDING	SHAREHOLDING	SHARES HELD BY SPOUSE AND UNDERAGE CHILDREN	SHARES HELD BY SPOUSE AND UNDERAGE CHILDREN	TOTAL SHARES HELD IN THE NAME OF OTHERS	TOTAL SHARES HELD IN THE NAME OF OTHERS	TITLES, NAMES AND RELATIONSHIPS BETWEEN TOP 10 SHAREHOLDERS (RELATED PARTY, SPOUSE, OR KINSHIP WITHIN THE SECOND DEGREE). (NOTE 3)	TITLES, NAMES AND RELATIONSHIPS BETWEEN TOP 10 SHAREHOLDERS (RELATED PARTY, SPOUSE, OR KINSHIP WITHIN THE SECOND DEGREE). (NOTE 3)	NOTE
	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Title (or Name)	Relationship
SHINKONG TEXTILE CO., LTD. REPRESENTATIVE: WU HSIN-EN	33,628,576	19.41	0	0.00%	0	0.00%
	-	0.00%	0	0.00%	0	0.00%
CHUN-YAO LIN	11,400,000	6.58%	0	0.00%	0	0.00%
HONG SHENG INVESTMENT CO., LTD REPRESENTATIVE: HSU FANG-JUNG	8,874,795	5.12%	0	0.00%	0	0.00%
	20,560	0.01%	0	0.00%	0	0.00%
CHEN JEN-FA	6,612,543	3.82%	1,445,172	0.83%	0	0.00%	CHEER TREASURE INVESTMENT LIMITED REPRESENTATIVE: LIN YU-FANG	SPOUSE
CHEER TREASURE INVESTMENT LIMITED REPRESENTATIVE: LIN YU-FANG	5,486,467	3.17%	0	0.00%	0	0.00%
	1,445,172	0.83%	6,612,543	3.82%	0	0.00%	CHEN JEN-FA	SPOUSE
CHING-YUAN SU	3,703,288	2.14%	0	0.00%	0	0.00%
HE-HUNG LIN	3,612,251	2.08%	0	0.00%	0	0.00%	LIN HO-TSUNG / LIN HO-HSIUNG	BROTHER
KAO-HUANG LIN	3,000,000	1.73%	0	0%	0	0.00%
LIN HO-TSUNG	2,913,990	1.68%	874,753	0.50%	0	0.00%	LIN HO-HSIUNG / HE-HUNG LIN	BROTHER
LIN HO-HSIUNG	2,461,023	1.42%	893,490	0.52%	0	0.00	LIN HO-TSUNG / HE-HUNG LIN	BROTHER

NOTE 1: THE NAMES OF ALL TOP TEN SHAREHOLDERS SHALL BE LISTED, AND THE NAMES OF INSTITUTIONAL SHAREHOLDER AND REPRESENTATIVE SHALL BE LISTED SEPARATELY.

NOTE 2: SHAREHOLDING PERCENTAGE REFERS TO THE TOTAL PERCENTAGE OF SHARES HELD UNDER OWN NAME OR THE NAME OF SPOUSE, MINOR CHILDREN, OR OTHERS.

NOTE 3: SHAREHOLDERS LISTED ABOVE INCLUDE LEGAL PERSONS AND NATURAL PERSONS, AND THEIR RELATIONSHIPS MUST BE DISCLOSED IN ACCORDANCE WITH THE REGULATIONS GOVERNING THE PREPARATION OF FINANCIAL REPORTS BY SECURITIES ISSUERS.

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X. The Number of Shares of the Same Invested Company Held by the Company, the Company's Directors, Supervisors, and Managerial Officers, and the Businesses Controlled Directly or Indirectly by the Company, and the Consolidated Shareholding Ratio:

Unit: Thousand USD; %

					Unit: Thousand USD;%	Unit: Thousand USD;%
Investee company	Investment by the Company		Investments from directors, supervisors, managerial officers and their directly or indirectlycontrolled enterprises		Combined investment
	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio
Chyang Sheng Vietnam Co., Ltd.	5,659 (Note 1)	18.69%	4,516 (Note 1)	14.92%	10,175 (Note 1)	33.61%

Note 1: The unit is US$1,000.

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4. Capital Overview

I. Capital and Shareholding:

(I) Sources of capital:

1. Capital formulation process

Unit: Shares/NTD

Month/Year	Issue price	Authorized capital	Authorized capital	Paid-in capital	Paid-in capital	Note	Note	Note
		Number of shares	Amount	Number of shares	Amount	Sources of capital	Shares acquired by non-cash assets	Others
1983.10.19	10	19,028,000	190,280,000	19,028,000	190,280,000	Establishment	None	Approved in Letter (1987) Tai-Cai-Zheng(1) No. 00868 dated 1987.9.2
1991.05.17	10	45,000,000	450,000,000	30,444,800	304,448,000	Capitalization of profits in the amount of 114,168,000	None	Approved in Letter (1991) Tai-Cai-Zheng(1) No. 00697 dated 1991.4.12
1992.06.13	10	45,000,000	450,000,000	60,000,000	421,060,000	Capitalization of profits in the amount of 106,556,800 Capitalization of additional paid-in capital in the amount of 10,055,200	None	Approved in Letter (1992) Tai-Cai-Zheng(1) No. 01017 dated 1992.5.18
1992.12.03	10	100,000,000	1,000,000,000	75,000,000	600,000,000	Cash capital increase 178,940,000	None	Approved in Letter (1992) Tai-Cai-Zheng(1) No. 02266 dated 1992.9.1
1993.06.29	10	100,000,000	1,000,000,000	78,750,000	750,000,000	Capitalization of profits in the amount of 79,800,000 Capitalization of additional paid-in capital in the amount of 70,200,000	None	Approved in Letter (1993) Tai-Cai-Zheng(1) No. 00849 dated 1993.4.21
1994.08.10	10	100,000,000	1,000,000,000	82,687,500	787,500,000	Capitalization of profits in the amount of 37,500,000	None	Approved in Letter (1994) Tai-Cai-Zheng(1) No. 28072 dated 1994.6.23
1995.08.23	10	100,000,000	1,000,000,000	88,475,625	826,875,000	Capitalization of profits in the amount of 39,375,000	None	Approved in Letter (1995) Tai-Cai-Zheng(1) No. 38249 dated 1995.6.30
1996.09.16	10	100,000,000	1,000,000,000	101,747,000	884,756,250	Capitalization of profits in the amount of 57,881,250	None	Approved in Letter (1996) Tai-Cai-Zheng(1) No. 41729 dated 1996.7.3
1997.09.24	10	101,747,000	1,017,470,000	152,009,050	1,017,470,000	Capitalization of profits in the amount of 110,594,530 Capitalization of additional paid-in capital in the amount of 22,119,220	None	Approved in Letter (1997) Tai-Cai-Zheng(1) No. 47584 dated 1997.6.13
1998.09.21	10	300,000,000	3,000,000,000	152,009,050	1,520,090,500	Capitalization of profits in the amount of 125,148,810 Capitalization of additional paid-in capital in the amount of 27,471,690 Cash capital increase in the amount of 350,000,000	None	Approved in Letter (1998) Tai-Cai-Zheng(1) No. 52060 dated 1998.6.22
1999.08.23	10	300,000,000	3,000,000,000	174,810,408	1,748,104,080	Capitalization of profits in the amount of 117,512,854 Capitalization of additional paid-in capital in the amount of 110,500,726	None	Approved in Letter (1999) Tai-Cai-Zheng(1) No. 62752 dated 1999.7.12
2000.08.03	10	300,000,000	3,000,000,000	201,031,969	2,010,319,690	Capitalization of profits in the amount of 174,810,408 Capitalization of additional paid-in capital in the amount of 87,405,202	None	Approved in Letter (2000) Tai-Cai-Zheng(1) No. 52743 dated 2000.6.20
2001.08.01	10	300,000,000	3,000,000,000	206,057,769	2,060,577,690	Capitalization of additional paid-in capital in the amount of 50,258,000	None	Approved in Letter (2001) Tai-Cai-Zheng(1) No. 137362 dated 2001.6.12
2001.10.23	10	300,000,000	3,000,000,000	201,316,769	2,013,167,690	Retired treasury shares 47,410,000	None	Approved in Letter (2001) Tai-Cai-Zheng(3) No. 148759 dated 2001.8.09
2003.05.29	10	300,000,000	3,000,000,000	198,320,769	1,983,207,690	Retired treasury shares 29,960,000	None	Approved in Letter (2003) Tai-Cai-Zheng(3) No. 0920104756 dated 2003.2.12
2005.01.13	10	300,000,000	3,000,000,000	193,789,769	1,937,897,690	Retired treasury shares 45,310,000	None	Approved in Letter (2004) Jin-Guan-Zheng(3) No. 0930149464 dated 2004.11.02

93

Month/Year	Issue price	Authorized capital	Authorized capital	Paid-in capital	Paid-in capital	Note	Note	Note
		Number of shares	Amount	Number of shares	Amount	Sources of capital	Shares acquired by non-cash assets	Others
2007.01.29	10	300,000,000	3,000,000,000	188,410,769	1,884,107,690	Retired treasury shares 53,790,000	None	Approved in Letter (2006) Jin-Guan-Zheng(3) No. 0950152106 dated 2006.11.07
2015.2.03	10	300,000,000	3,000,000,000	173,268,381	1,732,683,810	Consolidated and retired shares of the parent company held by subsidiaries 151,423,880	None	Approved in Letter (2015) Tai-Zheng-Shang-Yi-Zi No. 1040001960 dated 2015.1.30

2. Type of Shares

	2. Type of Shares	2. Type of Shares	2. Type of Shares
Type of Shares	Authorized capital			Note
	Outstanding shares (Note)	Unissued shares	Total
Ordinary shares	173,268,381	126,731,619	300,000,000

Note: Listed stock

(II) Shareholder structure: April 30, 2023

Shareholder structure Quantity	Government agencies	Financial institutions	Financial institutions	Other legal persons	Other legal persons	Individuals	Foreign institutions and foreigners	Foreign institutions and foreigners	Total
Number of people	0	4		28		11,280	36		11,348
Number of sharesheld	0	29,116		53,851,737		115,564,268	3,823,260		173,268,381
Shareholding ratio	0.00%	0.02%		31.08%		66.70%	2.20%		100.00%
(III) Dispersion of equity ownership: (par value of NT$10 per share) April 30,2023
Shareholding range			Number of shareholders		Number of shares held			Shareholding ratio
1 to 999			4,629		605,983			0.35%
1,000 to 5,000			4,899		10,904.545			6.29%
5,001 to 10,000			884		7,201,597			4.16%
10,001 to 15,000			214		2,798,322			1.62%
15,001 to 20,000			204		3,792,658			2.19%
20,001 to 30,000			148		3,848,523			2.22%
30,001 to 40,000			76		2,772,853			1.60%
40,001 to 50,000			53		2,517,288			1.45%
50,001 to 100,000			118		8,561,503			4.94%
100,001 to 200,000			46		6,279,261			3.62%
200,001 to 400,000			21		5,778,959			3.34%
400,001 to 600,000			22		10,409,608			6.01%

Shareholder structure Quantity	Government agencies	Financial institutions	Financial institutions	Other legal persons	Other legal persons	Individuals	Foreign institutions and foreigners	Foreign institutions and foreigners	Total
Number of people	0	4		28		11,280	36		11,348
Number of sharesheld	0	29,116		53,851,737		115,564,268	3,823,260		173,268,381
Shareholding ratio	0.00%	0.02%		31.08%		66.70%	2.20%		100.00%
(III) Dispersion of equity ownership: (par value of NT$10 per share) April 30,2023
Shareholding range			Number of shareholders		Number of shares held			Shareholding ratio
1 to 999			4,629		605,983			0.35%
1,000 to 5,000			4,899		10,904.545			6.29%
5,001 to 10,000			884		7,201,597			4.16%
10,001 to 15,000			214		2,798,322			1.62%
15,001 to 20,000			204		3,792,658			2.19%
20,001 to 30,000			148		3,848,523			2.22%
30,001 to 40,000			76		2,772,853			1.60%
40,001 to 50,000			53		2,517,288			1.45%
50,001 to 100,000			118		8,561,503			4.94%
100,001 to 200,000			46		6,279,261			3.62%
200,001 to 400,000			21		5,778,959			3.34%
400,001 to 600,000			22		10,409,608			6.01%

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Shareholding range	Shareholding range	Number of shareholders	Number of shareholders	Number of shares held	Shareholding ratio
600,001 to 800,000		9		6,178,889	3.57%
800,001 to 1,000,000		5		4,603,498	2.66%
1,000,001 or more		20		97,014,894	55.98%
Total		11,348		173,268,381	100.00%
(IV) List of major shareholders: April 30, 2023 Shareholding Name of major shareholder Number of shares held Shareholding ratio Shinkong Textile Co., Ltd. 33,628,576 19.41% Chun-Yao Lin 11,400,000 6.58% HONG SHENG INVESTMENT CO., LTD 8,874,795 5.12% Chen Jen-Fa 6,612,543 3.82% Cheer Treasure Investment Limited 5,486,467 3.17% Ching-Yuan Su 3,703,288 2.14% He-Hung Lin 3,612,251 2.08% Kao-Huang Lin 3,000,000 1.73% Lin Ho-Tsung 2,913,990 1.68% Lin Ho-Hsiung 2,461,023 1.42%
	Shareholding Name of major shareholder		Number of shares held		Shareholding ratio
	Shinkong Textile Co., Ltd.		33,628,576		19.41%
	Chun-Yao Lin		11,400,000		6.58%
	HONG SHENG INVESTMENT CO., LTD		8,874,795		5.12%
	Chen Jen-Fa		6,612,543		3.82%
	Cheer Treasure Investment Limited		5,486,467		3.17%
	Ching-Yuan Su		3,703,288		2.14%
	He-Hung Lin		3,612,251		2.08%
	Kao-Huang Lin		3,000,000		1.73%
	Lin Ho-Tsung		2,913,990		1.68%
	Lin Ho-Hsiung		2,461,023		1.42%

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(V) Stock price, net worth, earnings, dividends and related information for the past two years

Unit: NTD; Shares

Item	Year	Year	2022	2021	The current year up to March 31, 2023 (Note 8)
Stock price (Note 1)	Highest		14.65	19.15	15.8
	Lowest		13.20	12.00	14.1
	Average		13.92	13.93	14.56
Net worth per share (Note2)	Before distribution		13.51	13.26	(Note 10)
	After distribution		(Note 9)	12.86	-
Earnings per share	Weighted average shares		173,268,381	173,268,381	173,268,381
	Earnings per share (Note 3)		0.42	0.49	(Note 10)
Dividend s per share	Cash Dividends		(Note 9)	0.4	-
	Stoc k divid ends	(Note 9)	(Note 9)	-	-
		(Note 9)	(Note 9)	-	-
	Accumulated unpaid dividend(Note 4)		-	-	-
Return on investme nt analysis	Price-earnings ratio (Note 5)		33.14	28.42	-
	Price-dividend ratio (Note 6)		(Note 9)	34.83	-
	Cash dividend yield (Note 7)		(Note 9)	2.87	-

*If there is surplus or capital reserve to increase capital allocation, the market price and cash dividend information retrospectively adjusted based on the number of shares shall be disclosed.

Note 1: The year's high and low market prices of common stock are provided, and the average price for the year is computed based on the year's transaction amount and volume.

Note 2: Please use the number of outstanding shares at the end of the year and distribution decided by the shareholders' meeting in the following year.

• Note 3: If retroactive adjustments must be made due to stock dividends, list the EPS before and after adjustment.

• Note 4: If the conditions of securities issuance stipulate that dividends not distributed in the current year may be distributed when there is a profit, disclose the cumulative amount of dividends not distributed up to the current year.

Note 5: Price-earnings ratio = average per share closing price for the year / earnings per share.

Note 6: Price-dividend ratio = average per share closing price for the year / cash dividend per share.

Note 7: Cash dividend yield = cash dividends per share / average per share closing price for the year. Note 8: Fill in net worth per share and EPS data for the most recent quarter that was already audited by

the accountant. Fill in data for the current year up to the date of report for remaining fields.

Note 9: Distribution not yet adopted in a resolution by the shareholders' meeting.

Note 10: The Q1 financial statements have not been reviewed by the accountants.

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• (VI) Dividend policy and implementation status:

• Dividend policy:

The Company's dividends shall be distributed in accordance with the proportions set forth by the Articles of Incorporation for the goal of maintaining dividend stability by taking into account the characteristics of the business environment, the life cycles of various products or services, and the impacts of future capital requirements as well as taxation.

The distribution of dividends, other than improving financial structure and meeting capital needs such as reinvestment, production capacity expansion, or other major capital expenditures, shall not be less than net profit tax of the current year after deducting an amount to make up for losses, allocate, 20% of the statutory surplus reserve and special surplus reserve, and cash dividends shall not be less than 10% of the total dividends in the current year.

1. Current-year dividend distribution proposal to shareholders' meeting:

   • The Company's 2022 earnings distribution proposal was formulated by the Board of Directors as follows:

   • Dividends to ordinary shares: Cash dividends in the amount of NT$0.4 per share will be distributed. The record date will be set once the proposal is approved by the shareholders' meeting.

2. (VII) Effect of the proposed stock dividends (to be adopted by the shareholders' meeting) on the Company's business performance and earnings per share: N/A.

3. (VIII) Employee bonuses and directors' remuneration:

4. Percentages or ranges of employee bonuses and directors' remuneration under the Articles of Incorporation:

According to the Articles of Incorporation, if the Company is profitable in the current year, no less than 1% of net profits before tax shall be allocated as employee remuneration. The Board of Directors shall determine whether this shall be distributed in shares or cash to employees of the Company who are eligible based on certain conditions. also, no more than 3% of net profits before tax shall be allocated as director remuneration, which shall be distributed in cash.

1. Basis for estimating the amount of employees bonuses and directors' remuneration, basis for calculating the number of shares to be distributed as employee bonuses, and the accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated amount, for the current period:

Basis for estimating employee bonuses and directors' remuneration in the current period is the percentage specified in the Articles of Incorporation, in which employee bonuses is 1% and directors' remuneration is 3%. Any changes to the actual amount distributed is handled as a change in accounting estimates and recognized by making adjustments in the year of the resolution by the shareholders' meeting.

1. Distribution of remuneration passed by the Board of Directors:

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The Board of Directors adopted the resolution to distribute NT$825 thousand in employee bonuses and NT$2,474 in directors' remuneration (both to be distributed in cash) this year (2022). There was no discrepancy with the estimates in the year they were recognized as expenses.

1. Actual distribution of employee bonuses and remuneration of directors and supervisors in the previous year (2021) (including dividend shares, amount and stock price), discrepancies, if any, from the amount of employee bonuses and directors and supervisors' remuneration previously recognized, and the causes and treatments for the discrepancies:

There was no discrepancy in the actual amount of employee bonuses and remuneration to directors and supervisors distributed in 2021 with the estimates.

Item	Actual amount distributed (NTD)	Original amount approved by the shareholders' meeting in 2021 (NTD)	Discrepancy (NTD)
Employee bonuses	910	910	0
Directors and supervisors' remuneration	2,729	2,729	0

• (IX) Status of company share buyback: None

• II. Issuance of Corporate Bonds: None.

• III. Issuance of Preferred Shares: None.

• IV. Issuance of Global Depositary Receipts (GDR): None.

• V. Issuance of Employee Share Options and Restricted Share Awards: None.

• VI. Mergers, Acquisitions or Issuance of New Shares for Acquisition of Shares of Other Companies: None.

• VII. Implementation of Capital Allocation Plan: None.

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5. Business Overview

I. Business Activities:

(I). Business scope:

1. Major business activities and revenue breakdown:

Business department	Business item or product	As a percentage of the Company's consolidated revenue
Textiles business	Bleaching, dyeing, and finishing services for fiber products	99.70%
Construction business	Construction and sales of residential and commercial buildings	0.30%

The Company is mainly in the business of textiles dyeing and finishing. The subsidiary Progiant Construction & Development Corporation is mainly in the business of house construction and sales. New construction projects added in 2022 are not available for sale yet and have not generated income. Hence, the analysis below does not include operations of the construction department.

2. Products and new products under development:

• (1) Products: Processing, bleaching, dyeing, and finishing services for fiber products.

(2) New products under development:

• A. Trial production of motorcycle jacket anti-fall series that meet the requirements of Bluesign certification.

• B. Ceased usage of fluorine-based water repellent and replaced with fluorine-free water repellent for long fibers, thereby decreasing pollution to water resources.

• C. Trial production of ocean recycle yarn manufactured with 3M water repellent to achieve quality requirements.

• D. Trial of Tsp*T fabric weight reduction to achieve soft, elastic feeling and ensure high tensile strength in finished products.

• E. Improved the special fabrics and sensitive color types of long fabrics, solved the abnormal phenomenon of surface resin due to C0 water repellent.

(II). Industry overview:

1. Current industry trends and future outlook

• According to statistical analysis of the Market Development Division, Taiwan Textile Federation, Taiwan's total export value of textiles was US$8.84 billion in 2022, down 2%. Total imports was US$3.945 billion, up 2%. The trade surplus was US$4.895 billion, down US$269 million or 5% compared with the same period in 2021.

(1) Import/Export structure of textiles

• The export value can be broken down as follows: fabrics (72%), followed by yarn (13%), fibers (5%), apparel and clothing (5%), and miscellaneous textiles (5%). Of the five major export items, fabrics grew 2% while remaining products all declined, fibers declined 14%, yarn declined 9%, apparel and clothing declined 9%, and miscellaneous textiles declined 10%.

• The import value can be broken down as follows: apparel and clothing

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(54%) grew 10%, followed by fabric (15%) grew 3%, yarn (12%) declined 19%, miscellaneous textiles (11%) declined 0.4%, and fiber (8%) declined 4%.

• (2) Main import/export markets for textiles

• Analyzing exports by region, the largest export market for Taiwan's textiles is Vietnam, followed by China, America, India, Indonesia, and Cambodia, which account for a total of 61% of exports. In terms of items exported, fabrics were the main items exported to all five regions, in which the export value to Vietnam was the highest and the percentage of exports to Cambodia was the highest.

• Breaking down imports by region, China is the number one source of imports, followed by Vietnam, the EU, USA, and Japan, accounting for 80% of total imports. Apparel and clothing are the main items imported from China, Vietnam, and the EU, while fabrics are the main items imported from the USA and Japan, accounting for 46% and 30% of textiles imported.

• (3) The Company is one of few large-scale professional dyeing and finishing companies in Taiwan, and mainly provides professional dyeing and finishing services for woven fabrics with short-fiber, long-fiber, and both short-fiber and long-fiber. Observing the imports/exports of the domestic textiles industry, professional dyeing and finishing companies must change the traditional thinking of being product manufacturing centers to manufacturing service providers that provide value-added services, in order to effectively differentiate from the market and avoid cut throat competition, as well as respond to the development of regional economic integration between ASEAN countries. The dyeing and finishing industry is not limited to product OEM services, and must be extended to a series of services that meet customer needs and increase customer value. This highlights the differentiation of professional dyeing and finishing factories and creates higher added value. The Company has thus developed a series of services needed by buyers and aim to become the strategic partner of major international brands.

2. Relationships with suppliers in the industry's supply chain

Petrochemical materials are at the upstream of the textiles industry chain. After being made into nylon fiber, polyester fiber, rayon fiber, and carbon fiber, the fibers are spun into yarn, which is woven into fabric, and then goes through bleaching, dyeing, pattern printing, coating, and finishing. The fabric is then cut and sowed into garments or other textile products.

(1) Upstream

Raw materials at the upstream of the textiles industry not only include natural cotton, wool, silk, and linen, but also petrochemical materials, such as EG and

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PTA used to produce polyester products, CPL used to produce nylon products, and AN used to produce acrylic cotton.

(2) Midstream

The mid-stream of the textiles industry has man-made fiber products, natural fiber products, and chemical catalysts, as well as yarn and fabrics made from the materials above.

Natural fibers are divided into plant fibers and animal fibers, in which plant fibers include cotton, linen, jute, and ramie, while animal fibers include wool, rabbit fur, silk, and camel hair. Due to the limited production and unstable sources of natural fibers in Taiwan, artificial methods are used to produce materials similar to natural fibers, but with stable sources and at low cost, such as rayon and acetate fiber.

Taiwan has insufficient natural fibers, so man-made fibers account for 85% of fibers in Taiwan, in which the majority are nylon and polyester products.

(3) Downstream

Dyeing and finishing, apparel, and other home textiles are at the downstream of the textiles industry, in which dyeing and finishing consumes the most energy and water. However, dyeing and finishing also provides differentiation and added value to textile products. In response to international environmental protection requirements, the dyeing and finishing industry has been focusing on upgrading dyeing and finishing technologies, and developing low carbon or eco-friendly green products, in order to achieve energy conservation and carbon reduction and for products to comply with international environmental protection regulations.

The apparel industry is the segment of the textiles industry that adds the most value. However, wages in Taiwan are higher than developing countries in the region, and there is a severe labor shortage. Hence, garment factories have long moved from Taiwan to nearby labor-intensive countries, such as Vietnam, Indonesia, and Cambodia, leaving the dyeing and finishing industry in a difficult situation in Taiwan.

3. Product trends and competition

Following the rise of sports, functional textiles have gained growing importance. Taiwanese companies have already established the value chain of the functional textiles industry and become an important supply chain to well-known clothing brands around the world. Textiles have been developed with a variety of functions, including windproof and breathable, waterproof and breathable, quick drying, anti-pilling, and flexible fit, as well as light weight and insulating. At present, Taiwan supplies nearly 70% of functional fabrics to multinational brands, and all well-known outdoor or sports brands around the world are target customers of Taiwan's textiles industry.

Facing the demand from global markets on new and different products, as

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well as the severe competition from textile products of South Korea, China, India, and Vietnam, Taiwanese companies are developing special customized products with regulating functions through their technological advantage in functional fibers.

Taiwan is currently unable to join regional economic cooperation agreements, and it is the greatest barrier to the internationalization of the textiles industry. Over the past two decades, Taiwanese textile companies faced expansions and low price competition from Chinese companies, but have now developed new products under the blue ocean strategy, and no longer pursue large inventory and high production volume. Instead, Taiwanese textile companies have adopted the competition strategy of differentiation.

(III). Overview of Technology and R&D:

1. R&D expenses:

The Company's R&D expenses was NT$9,314 thousand in 2022 and NT$9,857 thousand in 2021.

2. Successfully developed technologies and new products:

• (1) Trial production and mass production of fabrics that combine polyester with different materials.

• (2) Trial production and mass production of fabrics that combine TOP/polyester+CD flexible materials.

• (3) Trial production and mass production of polyester gauze insulation fabrics.

• (4) Trial production and mass production of mechanical stretch fabric with antibacterial effect.

• (5) Fully upgraded from C6 water repellent to C0 water repellent in 2023.

• (6) Trial production of A/C fire-retardant fabric.

(IV). Long- and short-term business plans:

Due to the impact of high inflation, monetary tightening, and financial market fluctuations, the global economy has weakened and the industry chain continues to digest its inventory. As a result, export sales and production data has shown negative growth, impacting overall demand and sales.

In the textiles industry, brands continue to digest their inventory and are more conservative when placing purchase orders. Compounded with higher oil prices and raw material cost due to the Russo-Ukrainian, as well as continued global inflation, end demand remains weak and consumers have low purchase intention. Hence, exports of the textiles industry declined in 2022. Looking towards this year (2023), the inventory of brands is gradually declining and we are optimistic about overall recovery. We will continue to monitor purchase orders and changes in data.

1. Long-term business plan:

Taipei Innovative Textile Application Show is a core promotion platform for innovative applications of Taiwan's textiles industry, and focuses on four major themes: "functional applications, sustainability and environmental protection,

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smart textiles, and smart manufacturing." The Company is among very few professional dyeing and finishing OEM service providers that remain in Taiwan, and faces a large group of customers, including brands, trading companies, and grey fabric manufacturers. Hence, the Company aims to provide loyal customers with stable product quality delivered on time while meeting customers' value requirements, in order to grow together with customers.

Functional applications ~~ Seizing global business opportunities

Sustainable environment ~~ Realizing the sustainability spirit of cherishing the Earth

Smart textiles ~~ Strengthening the connection with a happy life and convenience

Smart manufacturing ~~ Expand automated processes and comprehensively improve performance through AI

2. Short-term business plan:

• (1) Simplify the growth strategy:

The short-term business plan will focus more on high fastness quality such as the concentrated quantification and high quality production of higher T100% two-way elastic fabrics, fine and lightweight denier fabrics, and high density fabrics. Selection will be based on common processes, machinery and equipment, and prescription conditions, in order to provide greater value to customers through higher grade, higher value, and more refined products. We will continue to implement development plans to increase business volume.

(2) Differentiated product strategies:

• A. In the long-term, the Company will focus on T100% two-way elastic fabrics and lightweight denier fabrics, which are emphasized for the differentiation of Taiwan's functional textile products and have become the mainstream in the market. We will continue to actively implement development plans to increase business volume combined with the supply of high value raw materials, provided that there are no issues with local mass production of upstream raw materials.

• B. POLY+CD multiple materials interweaving into color grid fabric is a product development strategy of existing customers for differentiation in new markets. Besides achieving wider variety in smaller quantities, it also meets market demand on rapid delivery, and is not constrained by the need to first dye the fabric.

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II. Market, Production and Sales Overview:

(I). Market analysis:

1. Sales region of the Company's main products

For the short-fiber line, domestic sales for making uniforms, fashion clothing, and medical fabric account for approximately 60%, while sales through trading companies to North America for making special work clothes and to Central America for making school uniforms account for approximately 40%. Over 90% of the long-fiber line is sold to brands in America, Europe, and Japan. China's domestic market has been growing in recent years. The remaining less than 10% is sold domestically for making uniforms of agencies and organizations that require functional fabrics.

2. Market share and future market supply/demand and growth

• (1) Statistics of Taiwan Textile Federation show that Taiwan's textile exports volume decreased 10.5% and export amount decreased 2.0% in January to December, 2022, in which the export volume of knitted fabric products decreased 8.7% and export amount decreased 1.6%; the export volume of woven fabric products grew 1.5% and export amount grew 8.2% with average unit price increasing by 6.6%. In terms of export volume, polyester long-fiber woven fabrics grew 6.7%, nylon long-fiber woven fabric decreased 1.3%, and cotton woven fabric decreased 11.0%.

• (2) The Company delivered 7,879 thousand yards for short-fiber OEM services in January to December 2022, 2,844 thousand yards (-26.5%) lower compared with the same period last year. Cotton fabric bleaching and dyeing decreased 1,013 thousand yards, cotton PFP decreased 836 thousand yards, T/C fabric decreased 506 thousand yards, T/R fabric decreased 541 thousand yards, and mixed fabric increased 50 thousand years.

• (3) The Company delivered 16,128 thousand yards for long-fiber OEM services in January to December 2022, 2,346 thousand yards (+17.0%) higher compared with the same period last year, in which polyester long-fiber fabric increased 2,739 thousand yards (+21.3%), nylon fabric decreased 318 thousand years (-92.3%), and mixed fabric decreased 74 thousand yards (-12.9%).

• (4) Looking towards 2023, as other countries open up and the epidemic alert level is being lowered in Taiwan, the Company faces pressure from increasing customer inventory and rising energy cost. Relative to the Company's overall demand, we are working to increase purchase orders by 3.2% and above. Internal and external environment related factors that require a response include:

  • A. Visibility of long-fiber export orders in 2023 is not as high compared with the same period last year, so it is necessary to maintain the demand from brands in hopes that things will only get better this year, being cautious but not pessimistic and take things one step at a time.

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Due to the increase in energy consumption by machinery, negative interest rate products are first eliminated from the domestic sales of short-fiber, and we will actively seek orders for T/C and T/R processing.

• B. Raw materials, supplies, and energy procurement cost has increased. Besides appropriately reflecting it on processing fee, the Company will also strengthen management to increase productivity.

• C. It is hard to recruit entry level employees. Besides optimizing wages, we also added automation equipment to reduce dependency on manpower.

3. Competitive niche

Under the ongoing US-China trade war, the Bureau of Foreign Trade and Industrial Development Bureau actively implemented programs to encourage Taiwanese businesses to return and invest in Taiwan, but it is highly difficulty for the textiles industry, especially the dyeing and finishing industry due to its high energy consumption. Instead of hoping that the textiles industry will return to Taiwan, it is more practical to transfer a portion of purchase orders back to Taiwan and utilize the production capacity already in Taiwan. Whether or not this is successful depends on the industry's readiness to take on the purchase orders.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) became effective at the end of 2018. Formerly the TPP, the CPTPP aims to eliminate over 98% of customs duties between member states by opening up their markets, securing and strengthening the position of each member state in industries that they have an advantage in. Following the UK, Taiwan applied in 2021 but has yet to join as further review and negotiations are required. The Regional Comprehensive Economic Partnership (RCEP) formed by member states of ASEAN, which aim to ultimately cancel 90% and above of customs duties between member states, formally took effect in 2022. This put textiles companies that stayed in Taiwan in a critical situation where they must either develop innovative functions and engage in transformation and upgrade, or else they will eventually fail. Textile companies in Taiwan also hope that the government or official organizations will look into feasible plans for joining regional organizations.

The rise of Industry 4.0 has made smart manufacturing the main direction of developments in Taiwan, and Taiwan's AI academies are actively cultivating talent for the AI and IoT industries. Chyang Sheng's Long-Fiber Woven Fabric Smart Manufacturing Project completed through guidance from the industry upgrade and innovation platform at the beginning of 2020 was a part of efforts in transformation and upgrade. Specific measures include the application of information streaming, human-machine collaboration, and bringing in smart production modules of new machinery, in hopes of resolving insufficient color, relying on manual experience, gap in manpower, and paper operations.

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4. Favorable and unfavorable factors for future development and response strategies:

• A. Favorable factors for future development:

• (a) The dyeing and finishing industry is an important indicator of the textiles industry moving abroad, and attracts great attention, which benefits its future development.

  • Leading countries in the textiles industry, such as Japan and Italy, all have a development policy that emphasizes R&D in dyeing and finishing to strengthen mid-stream industries, focuses on the development of the dyeing and finishing industry from a high-tech perspective. The Company cooperates with the government strategy to upgrade the dyeing and finishing industry, and implements the IDB's industry upgrade and innovation platform guidance project "Optimization of Long-fiber Woven Fabric Smart Manufacturing." The project optimizes production conditions and is a favorable factor to future development.

• (b) Dyeing and finishing differentiates textiles and provides added value, making it a key factor for the textiles industry to flourish. The total export amount of Taiwan's woven fabric was US$1,900,003,000 in 2022, in which the export amount of fabrics that completed dyeing and finishing was US$1,800,003,000, accounting for 94.8%; the export amount of grey fabric that did not go through dyeing and finishing was only US$100,000,000, accounting for 5.2%, a record low since the pandemic. This shows that the dyeing and finishing industry increases added value and is a key industry that continues to drive the development of the textiles industry.

• (c) Dyeing and finishing factories are highly automated and have strong market competitiveness.

The Company has a color control system and automated dye and catalyst weighing and adjustment system, making product samples that are highly accurate. The Company installed energy efficient exhaust dyeing machines in the dyeing section with main sensors and central control connection technology. In the subsequent section, resin processing includes automatic weighing, automatic weft adjustment, automated weft density control, and ERP system connection. We installed automated equipment, such as smart dyeing machines and fully automated material flow, under computer integrated automated production and sales management of factories in recent years, as well as the selection of optimal production conditions for smart production. This reduced human error and improved our success rate the first time to 90% and above, allowing us to stably control product quality and improve productivity and lower cost, which enhances the Company's competitiveness.

• B. Unfavorable factors for future development and response strategies:

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• (a) The textiles dyeing and finishing industry is highly dependent on energy, and response measures to the high unit price of energy in Taiwan are as follows:

• (1) With the implementation of one fixed day off and one flexible rest day, we comprehensively reviewed shift schedules during the peak and off seasons, focused on key data of daily production volume for increasing productivity, and continued to implement the "multiple competency segment concentrated production model" to increase the utilization of short-fiber line continuous machinery, and gradually improve the energy consumption per yard processed.

• (2) Evaluate the energy consumption of current machinery, gradually replace old equipment, lower the liquor ratio of machinery to 1:8, and lower the percentage of energy consumption.

• (3) Monitor the development of domestic and overseas competitors, formulate alternative energy plans with high reliability, and lower the unit price of energy.

• (b) Response measures for insufficient Taiwanese shift workers are as follows:

• (1) Adjust the starting salary for domestic workers and prioritize local workers along with individuals introduced by employees to provide guidance, in order to stabilize new employees that join the Company.

• (2) The Company implemented "zero fees" for hiring migrant workers, in order to fulfill its corporate social responsibility and protect the human rights of foreign workers. Even though it significantly increases the cost of hiring migrant workers, the Company still hopes to make an impact in hiring entry level employees.

• (3) The Company works with universities in "industry-academia collaboration projects," and cultivates talent through textiles related departments. In recent years, we have hired management associates from textiles related departments as successors for entry level managers.

• (c) Implemented stricter standards for particulate matter, SOx, and NOx emissions in response to the announcement of the "Boiler Air Pollutant Emissions Standards."

• (1) The Company is located in Dayuan Industrial Park and has not changed its policy to purchase steam from the park's co-generation plant.

• (2) The Company conducted engineering to improve heating systems used in manufacturing processes and has replaced the existing coal heating systems with a new medium pressure steam heating system and gas boiler, both of which meet the operation guidelines of the latest provisions in the "Boiler Air Pollution Emission Standards".

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• (D) In light of the difficulty of obtaining water resources, especially during the dry season from November to April the following year, the MOEA formally announced the "Regulations on the Water Conservation Charge" on January 6, 2023, which is applicable to major water users in the electronics industry, steel industry, textiles industry, and cement industry. The Company's current measures for water conservation charge include condenser and cooling water recycling and reuse. We will also commission an engineering company to evaluate the feasibility of a water recycling system for the dyeing process and also carry out related construction projects.

(II). Key applications and production processes of main products:

1. Applications of main products

The Company's products mainly include fabrics for clothing, fabrics for hats, fabrics for bedding, medical fabrics, and special fabrics. Current customers are mainly major textile companies, trading companies, and wholesalers in Taiwan, apparel factories, buying office, Japanese companies or distributors overseas. The Company not only continuously engages in mass production, but is also able to produce a wide variety of products in small quantities, and is able to meet different levels of consumer needs, which is highly favorable to the Company's future development.

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2. Production process

==> picture [571 x 415] intentionally omitted <==

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（一） 棉、麻、T/C等短纖梭織布加工流程：	(I) Cotton, linen, T/C, and other short-fiber woven fabric processing process:
胚布	Greyfabric
胚布準備	Greyfabricpreparation
胚布檢查	Greyfabric inspection
燒毛	Singeing
退漿 精練 漂白	Desizing Scouring Bleaching
絲光	Mercerizing
定型	Setting
減量	Weight reducing
拉幅烘乾	Tenteringand steaming
壓染	Continuous dyeing
固色	Fixing
蒸染	Steam dyeing
水洗	Washing
磨毛	Brushed
水洗	Washing
浸染	Exhaust dyeing
擴布	Tentering
烘乾	Steaming
中檢	Middle inspection
樹酯整理	Resin finish
壓光	Calendering
防皺	Wrinkle free
成品檢查	Finishedproduct inspection
包裝	Packaging
成品	Finishedproduct
（二） 嫘縈、T/R布及長短纖交織布加工流 程：	(II) Rayon, T/R fabric, and long-fiber and short-fiber mixed fabric processing process:
胚布	Greyfabric
胚布準備	Greyfabricpreparation
胚布檢查	Greyfabric inspection
燒毛 冷捲	Singeing Cold rolling

鹼處理	Alkali treatment
拉幅烘乾	Tenteringand steaming
減量	Weight reducing
拉幅烘乾	Tenteringand steaming
冷染	Cold dyeing
水洗	Washing
磨毛	Brushed
水洗	Washing
浸染	Exhaust dyeing
中檢	Middle inspection
樹酯整理	Resin finish
磨毛	Brushed
防皺	Wrinkle free
成品檢查	Finishedproduct inspection
包裝	Packaging
成品	Finishedproduct
（三） 聚酯、尼能等細丹尼、超細丹尼絲 織布加工流程：	(III) Fine and extra fine denier, such as polyester and nylon, fiber fabric processing process:
胚布	Greyfabric
胚布準備	Greyfabricpreparation
胚布檢查	Greyfabric inspection
退漿 精練	Desizing Scouring
鬆弛	Relaxation
定型	Setting
減量	Weight reducing
拉幅烘乾	Tenteringand steaming
浸染	Exhaust dyeing
磨毛	Brushed
水洗	Washing
中檢	Middle inspection
樹脂整理	Resin finish
成品檢查	Finishedproduct inspection
包裝	Packaging
成品	Finishedproduct

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(III). Supply of main raw materials:

The Company's main raw materials are chemical materials, including dye,

catalysts, and resin. Due to the rapid development of the domestic chemicals industry in recent years, raw materials supply has been stable.

Main raw materials	Market condition	Procurement strategy
Dye	Supply is stable but prices are easily affected by oil price fluctuations. Main suppliers are well-known dye factories in Taiwan and overseas with good quality.	1. Establish the minimum safety stock system to control inventory cost 2. Pay attention to exchange rate fluctuations to reduce exchange risks 3. Select raw materials with reasonable prices and high quality 4. Periodically review suppliers' prices, product quality, and services
Chemicals and catalysts	Chemicals and catalysts are mainly sourced domestically with stable supply and no risk of shortage.
Resin	Supply is stable and prices stable

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(IV). Names of customers who accounted for more than 10% of the sales in the last two years, and sales as a percentage of total sales:

1. Major suppliers that account for 10% and above of purchases

Information on major suppliers in the last two years

Unit: Thousand NTD

	2022	2022	2022	2022	2021	2021	2021	2021	2023 up to March 31	2023 up to March 31	2023 up to March 31
Item	Name	Amount	As a percentage of total purchase (%)	Relationshi p with issuer	Name	Amount	As a percentage of total purchase (%)	Relationshi p with issuer	Name	Amount P	ercentage of net purchase in the current year up to March 31 (%)	Relationshi p with issuer
1	Supplier Z	13,091	9.35	-	Supplier X	13,650	8.62	-	Supplier Y	2,937	11.1	-
2	Others	126,843	90.65	-	Others	144,761	91.38	-	Others	23,535	88.9	-
	Net purchase	139,934	100	-	Net purchas	e 158,411	100	-	Net purchase	26,473	100.00	-

Note 1: List the names and procurement amounts and percentages of suppliers whose procurement accounted for more than 10% of the total procurement in the last two years. However, if the name of the supplier may not be disclosed due to the contractual agreement, or the counterparty of the transaction is an individual and a non-related party, it may be listed by using a code.

• Note 2: If the most recent financial statements of a company whose stock is listed on the stock exchange or traded over the counter was audited or reviewed by an accountant before the date of report, the financial statements shall be disclosed.

2. Major customers that account for 10% and above of sales

Information on major customers in the last two years

Unit: Thousand NTD

									Unit: Thousand NTD	Unit: Thousand NTD	Unit: Thousand NTD	Unit: Thousand NTD
	2022				2021				2023 up to March 31
Item	Name	Amount	As a percentage of net sales (%)	Relationshi p with issuer	Name	Amount	As a percentage of net sales (%)	Relationshi p with issuer	Name	Amount	Percentage of net sales in the current year up to March31(%)	Relationshi p with issuer
1	Customer A	169,200	33.90	-	Customer A	100,596	22.15	-	Customer A	33,360	36.24	-
2	Customer B	109,181	21.88	-	Customer B	85,824	18.89	-	Customer B	13,336	14.49	-
3	Others	220,720	44.22	-	Others	267,857	58.96	-	Others	45355	49.29	-
	Net sales	499,101	100	-	Net sales	454,277	100	-	Net sales	9,2050	100.00	-

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Note 1: List the names and sales amounts and percentages of customers that accounted for more than 10% of the total sales in the last two years. However, if the name of the customer may not be disclosed due to the contractual agreement, or the counterparty of the transaction is an individual and a non-related party, it may be listed by using a code. Note 2: If the most recent financial statements of a company whose stock is listed on the stock exchange or traded over the counter was audited or reviewed by an accountant before the date of report, the financial statements shall be disclosed.

(V) Output volume and value in the last two years: Output value unit: Thousand NTD

	Year Volume and value Mainproducts	2022	2022	2022	2021	2021	2021
		Production capacity	Production volume	Output value	Production capacity	Production volume	Output value
	Dyeing and finishin (1,000yards)	30,000	24,233	421,093	30,000	25,030	379,525

Note 1: Production capacity is the volume that can be produced by current equipment under normal operations after considering necessary suspension and holidays. Note 2: If products are substitutes for each other, their production capacity may be combined with a note provided for explanation.

(VI) Sales volume and value in the past two years:

Unit: Thousand NTD

	Year Sales Volume and value Mainproducts	2022	2022	2022	2022	2021	2021	2021	2021
		Domestic sales		Export sales		Domestic sales		Export sales
		Quantity	Value	Quantity	Value	Quantity	Value	Quantity	Value
	Dyeing and finishing (1,000 yards)	24,007	503,929	-	-	24,504	464,901	-	-
	Construction revenue	-	1,470	-	-	-	-	-	-
	Less: Return and discounts	-	9,467	-	-	-	8,337	-	-
	Total	24,007	495,932	-	-	24,504	456,564	-	-

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III. Information of Employees in Last Two Years and up to the Date of Report (Including Number of Employees, Average Number of Years with the Company, Average Age, and Education):

	April 30,2023	April 30,2023	April 30,2023	April 30,2023
	Year	2022	2021	The current year up to April 30, 2023
Number of employe es	Employees	38	39	40
	Technicians	45	45	45
	Operators	105	109	99
	Total	188	193	184
Average age		44	44	45
Average	years of service	10.0	8.2	9.8
Educatio n backgrou nd %	Ph.D.	0	0	0
	Master's	1.6	2.6	1.6
	Bachelor	32.6	29.5	33.2
	Senior High School	40.1	45.6	40.8
	Below senior high school	25.7	22.3	24.5

IV. Information on Environmental Management Measures and Environmental Protection Expenses:

• (I) Environmental management measures:

The Company obtained ISO14001:2015 Environmental Management Systems certification and approval for registration. Based on the spirit of continuous improvement of ISO14001 Environmental Management Systems, we are gradually improving environmental management performance, and conduct internal and external audits each year to ensure that operations comply with ISO14001. We continue to implement environmental protection measures through the EHS computerized system.

To protect the environment and fulfill our corporate social responsibility, the Company has made a commitment to:

1. reduce waste, conserve energy, and reduce the negative impact on the environment.

2. provide environmental protection information to educate employees, allow all employees to participate in efforts to improve the work environment, and implement pollution prevention.

3. Comply with environmental regulations of the government and ensure environmental quality.

4. Disclose the Company's environmental policy and use the management cycle to

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continuously improve the environment.

Continue to step up factory greening based on the concept of "environment greening." As for environmental impact assessment, handle environmental impact assessment documents, reporting, and commitments according to the Company's needs, in order to monitor changes in the Company's environmental pollution.

Implement air pollution reduction goals according to ISO environmental management systems, adopt the world's most advanced best available control technology, conduct rolling reviews each year, implement reduction projects, and reduce air pollutant emissions with the goals of low pollution, green, and sustainability. The Company's air pollution management policy is as follows: 1. Strengthen management of matters specified in air pollution regulations to meet regulatory requirements and abnormal air pollution events. 2. Plan response measures for poor air quality in the fall and winter and mid-term and long-term air pollution improvement plans in coordination with the government's air quality improvement policy. 3. Replaced the existing coal heating system with a new medium pressure steam heating system and gas boiler.

As for GHG management, continue to manage the GHG reduction quota with the goal of a 5% reduction each year, in order to properly manage and reduce GHG emissions.

• (II) Environmental protection expenditure information:

• Losses incurred as a result of environmental pollution (including compensation and environmental protection audit results that violate environmental laws and regulations; the date of punishment, the number of the punishment, the provisions of the statute violated, the content of the statute violation, and the content of the punishment should be listed) in the most recent year and up to the date this annual report was printed:

Date of disposal	Letter number	Article violated	Content of violation	Penalty
2022.7.29	Tao-Huan-Ji-Zi No. 1110063051	Article 31, Paragraph 1, Subparagraph 2 of the Waste Disposal Act	The sludge volume reported on the industrial waste management system does not match the water pollution source control data management system.	A fine of NT$6,000
2022.8.5	Fu-Huan-Ji-Zi No. 1110205073	Article 18 of the Water Pollution Control Act and Article 4 of its filing regulations	The water consumption reported for 2022.7.1-2021.12.31 exceeds the approved volume.	A fine of NT$21,000

1. Estimated amount for the present and future and response measures: N/A.

V. Employee Benefits and Labor Relations:

• (I). The Company's employee benefit measures, education, training, retirement system and its implementation, as well as labor-management agreements and various employee rights protection measures:

• Employee benefit measures

The Company provides a sound compensation system and insists on providing employees with a wide range of benefits and leisure activities based on the belief of protecting the Company's most important assets. This allows employees to relax their body and mind after work, interact more frequently and build better relationships with their colleagues through a variety of activities, and creates a happy and harmonious workplace.

• Remuneration system

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Employees receive a salary, meal allowance, additional pay, performance bonuses, shift allowance, overtime pay (better than required by the Labor Standards Act), annual salary adjustment, irregular promotions and salary adjustments, profit sharing, and year-end bonus; salary adjustments are made based on market standards and economic trends.

• Benefits and subsidies

All employees enjoy labor insurance, health insurance, marriage subsidies, funeral subsidies, birthday cash gift, holiday cash gifts or other gifts, company trips, and employee health examinations. The Company provides maternity leave, paternity leave, and childcare leave in accordance with the law, and also established regulations for continuing education and training of employees, in order to improve the quality and development advantages of human resources, and thereby maintain the foundation of the Company's sustainable operation and development.

• Benefits facilities

The Company has a lounge, audiovisual room, billiards room, basketball court, employee dormitories, parking lot, and catering. The Company also set up breastfeeding rooms for female employees.

1. Continuing education and training

The Company has a complete training plan for employees to bring out their potential and improve their work performance in a work environment suitable for their talents, achieving a win-win situation for company development and self-growth. The Company also offers a variety of specialized training for employees to develop a complete professional skill set and gain better career development opportunities.

• Learning and development

Plans are formulated based on organizational goals, department development, individual competency growth, the industry environment, and future trends, combining internal and external training resources to plan different training courses that will enhance the overall competitiveness of employees and the Company.

• Education and training

New employee training: Introduces Chyang Sheng's history, organizational structure, benefits system, labor safety and environmental protection awareness, and allows employees to identify with the Company by introducing them to the Company's business philosophy, values, and future prospects.

On-the-job training: Managers let employees quickly become familiar with routine work through work assignments, work instructions, and project implementation based on the nature of their work and their individual abilities. Professional competency training: Training plans formulated according to needs of company policy, position, and employees work development. Includes professional training in manufacturing, quality assurance, environmental engineering, information technology, sales, human resources, R&D, and finance,

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in order to improve individual work performance and enhance team competitiveness.

Level-specific management training:

• (1) Management skills training: Managers play an extremely important role in operations, so training plans are implemented based on the abilities and management and leadership skills required at each level.

• (2) Technician training: Training courses that provide technicians with the knowledge, skills, and attitude needed for their work, so that they can obtain certifications and permits to perform operations.

General knowledge training: Company-wide general education courses are planned to support the Company's overall development vision and goals, training employees to have the same level of awareness and concepts of teamwork to achieve the Company's overall goals.

In addition to professional competencies, we also attach great importance to the individual growth of employees, and hope that employees can all find a balance between their expertise in the workplace and their private life. Self-development training: The Company encourages employees to seize opportunities for external training. Employees are not only able to learn professional skills in their units, but also participate in forums, seminars, language training, and computer skills training opportunities offered by training institutions closely related to their work, which allow them to absorb and reinforce the new knowledge and skills they learn and improve their abilities.

• Industry-academia collaboration program

Cultivate high quality, worldly, energetic, and idealistic mid-level managers through the "Industry-Academia Special Joint Program"

1. Retirement system and implementation status

The Company established Employee Retirement Regulations according to the Labor Standards Act, and makes monthly contributions to the Labor Retirement Reserve employees using the old pension system, which is then deposited into to a dedicated account at the Bank of Taiwan under the name of the committee. The Supervisory Committee of Labor Retirement Reserve is responsible for managing, supervising, and reviewing retirement reserve related matters. The Company contributes 6% of the monthly salary of employees who chose the new pension system and new employees to the labor pension fund in accordance with the Labor Pension Act.

Retirement system implementation: The Company established employee retirement regulations and a Labor Retirement Fund Supervisory Committee in accordance with the law. The committee is responsible for the safekeeping and use of the retirement reserve. Furthermore, the Company allocates 2% of employees monthly salary to a dedicated account at the Bank of Taiwan as the sources of funds for pension payments. The pension payment and calculation method is in accordance with the Labor Standards Act and Labor Pension Act.

For employees who chose the Labor Pension Act on July 1, 2005, their original seniority is retained and pension for the retained seniority is paid

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according to the old pension system when they retire. Employees contribute 6% of their monthly salary to the dedicated account for their pension at the Labor Insurance Bureau.

1. Employee-employer agreements and protection measures for employee rights and interests

2. (1) Measures for protecting employee rights: The Company has exerted every effort in environmental protection, energy conservation, and employee care over the years, and obtained ISO-45001 Occupational Safety and Health Management System, in hopes of fulfilling its corporate social responsibility on the path towards sustainable development.

3. (2) Employee work environment and personal safety: The Company established a dedicated unit responsible for formulating occupational safety and health management plan, and for identifying, evaluating, and controlling hazards in the work environment and operations. The dedicated unit carries out automated inspection of mechanical equipment and operations, monitors the operating environment, continuously improves safety and health facilities, and creates a safe, healthy, comfortable, and friendly work environment. The Company has signed contracts with doctors and nurses to provide health services at factories, plan the implementation of labor health education, provide instructions for health promotion and hygiene, prevent work related injuries and illness, provide health consultation and first aid, emergency response, and strengthen labor healthcare.

4. (3) The Company established the "Workplace Sexual Harassment Prevention, Grievance and Discipline Measures" in accordance with Article 12 of the Act of Gender Equality in Employment and Article 2 of the Sexual Harassment Prevention Act, in order to provide employees with a work and service environment free from sexual harassment, and take appropriate preventive, corrective, disciplinary, and handling measures to protect the interests and privacy of the parties.

5. (4) Human rights policy and management plan

   • A. Human rights policy

     • The Company strictly abides by the International Labor Office Tripartite Declaration of Principles, OECD Guidelines for Multinational Enterprises, and Universal Declaration of Human Rights, and takes action consistent with the Responsible Business Alliance (RBA). The Company has formulated its human rights protection and labor policy on this basis, as described below:

     • (A) Diversity, inclusion, and equal opportunity:

       • 1-1. Employees are not treated differently due to their race, class, language, thoughts, religion, political party, nationality, place of birth, gender, sexual orientation, age, marital status, appearance, facial features, horoscope, blood type, mental or physical disability, or union membership.

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• 1-2. The Company ensures that the employment policy does not involve differential treatment and achieves fair and just employment, salaries and benefits, training, evaluation, and promotion opportunities, avoiding and responding to matters that harm employee rights and interests. We strive to create a work environment with equality in employment and is free from discrimination and harassment.

• 1-3. Periodically track the implementation of diversity, inclusion, and equal opportunity.

• 1-4. The Company does not hire child labor under the age of 16 years old, and any conduct that may result in the employment of child labor is not permitted.

The Company protects the human rights of foreign employees to fulfill its corporate social responsibility, and referenced the

International Bill of Human Rights and Responsible Business Alliance Code of Conduct to ensure that "all laborers do not pay any fees to be employed." The Company thus implemented the "Zero Fee" policy for hiring foreign workers. Based on this policy, the Company bears the agency fee, visa fee, police criminal record certificate, physical examination fee, and plane ticket for newly hired foreign employees, regardless of their nationality, further fulfilling our corporate social responsibility in human rights issues and employee rights and interests.

• (B) Reasonable work hours:

The Company specified work hours and rules for extending work hours to ensure that employees are not at risk of working excessive hours. We set a reminder in the attendance system, periodically examine and manage the attendance of employees, and irregularly communicate with managers and employees.

• (C) No forced labor:

• A written employment contract is signed in accordance with the law when we hire employees. The contract states that the employment relationship is based on an agreement between the parties, and that it does not involve forced labor, human trafficking or slavery.

• (D) Healthy and safe workplace:

• To prevent potential health and safety risks due to work, we periodically examine employees' health and safety risk, and implement improvement plans based on identification results.

• (E) Freedom of association:

• Employees have freedom of association, established a large number of clubs, and are actively encouraged to join the clubs.

• (F) Labor-management negotiations:

The Company established smooth communication channels and

periodically convenes labor/management meetings to ensure the rights

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and interests of both sides.

• (G) Privacy protection:

• To fully protect the privacy of customers and all stakeholders, the Company established complete information security management mechanisms and complies with strict management regulations and protection measures.

• (H) Business ethics:

Ethical corporate management, no improper gains, fair trade, respect intellectual property rights, obligation to maintain the confidentiality of trade secrets/customer data, identity protection, prevention of retaliation, and raise employees' compliance awareness.

• B. Specific management plans

The Company provides related courses during employee training and orientation to ensure that the human rights policy is fully implemented, including:

• (A) Orientation: Contents include no forced labor, no child labor, anti-discrimination, anti-harassment, implement work hour management, ensure humane treatment, and provide a health and safe work environment.

• (B) For the prevention of workplace violence, we communicate with employees and make announcements for employees to understand that they have the responsibility to ensure that unlawful infringement does not occur in the workplace when they are performing their duties. We also announced a grievance hotline to create a friendly work environment.

• (C) Occupational safety training series: Contents include health promotion communication, labor safety and health and fire safety training, as well as first aid training.

The Company provided employees with a total of 86 hours of training for human rights protection in 2022. A total of 43 participants completed the training, accounting for 20% of all employees. In the future, we will continue to follow human rights protection issues, and provide related training to raise awareness of human rights protection and lower the probability of risks occurring.

1. Labor relations and labor union

The Company established a labor union on April 27, 1988 in accordance with the Labor Union Act, and the industrial union holds regular and irregular board meetings. The labor union communicates with the Company in writing or through meetings based on resolutions adopted in board meetings. The Company and labor union have entered into a collective bargaining agreement to protect the rights and interests of both parties, strengthen cooperation, improve the benefits of members, and drive business development. The agreement is announced on the company website, and the Company has maintained harmonious labor-management relations.

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Employee welfare activities and the implementation and supervision of other systems have been quite successful through the coordination and cooperation between labor and management or the labor union and the Company.

The Company's labor union has always upheld reasonableness when seeking to improve the work environment and employee benefits. It also makes sure that employees abide by labor-management agreements, and actively engages in manufacturing activities. The Company understands the effort that employees put in, and provide better salaries compared with competitors, an excellent dormitory environment, and a wide variety of leisure equipment. The Company invests a considerable amount of funds each year to improve employee benefits, so there have not been any labor-management disputes in the past three years. Based on the harmonious relationship between labor and management, the Company has not had any labor management disputes so far, and does not expect any disputes to occur in the future.

1. Employee opinion box:

The Company values employees' opinions and provides a variety of channels to facilitate communication and coordination between labor and management, such as setting up an employee opinion box and online communication platform. These channels allow us to gain an in-depth understanding of employees' opinions and thoughts on management and the benefits system, so that we can continue to maintain good labor-management relations.

The Company provides channels for openly expressing opinions/filing reports, so that all stakeholders can express their opinion on corporate social responsibility or file a complaint. Internal employees can express their opinions or file complaints through the opinion box or other channels announced internally. Opinion box/Whistleblowing mailbox: E-mail: democrat@csgroup.com.tw

1. The Company established the "Chyang Sheng Dyeing & Finishing Co., Ltd. Ethical Corporate Management Best Practice Principles" and "Code of Ethical Conduct and Regulations for the Prevention of Insider Trading," which include regulations on individual responsibilities, group responsibilities, and responsibilities of the Company, public, and other stakeholders. The regulations are applicable to directors, managers, and employees and aim to prevent unethical conduct and encourage their conduct to comply with requirements and standard, including general principles, employees with a conflict of interest, and customer and supplier relations and conflict of interest. Related principles already cover the Company ethical corporate management policy.

The Ethical Corporate Management Best Practice Principles, Code of Ethical Conduct, and Regulations for the Prevention of Insider Trading are not only disclosed on the company website www.csgroup.com.tw, but also regularly and irregularly communicated with employees to strengthen their ethics and values, in hopes that they will jointly comply.

• (II). Losses sustained due to labor disputes in the most recent year and up to the date of report, current and future estimated amount, and response measures: None.

• (III). Disclose the estimated amount for the present and future and response measures: None.

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VI. Information Security Management:

• (I) State the cybersecurity risk management framework, cybersecurity policies, specific management plans, and the resources invested in cybersecurity management:

• I. Information Security Risk Management Policy

  1. Scope:

Ensures the reliability of protection mechanisms for the software systems and hardware equipment, including computer software, hardware, peripherals, and network systems, used by the Company for information processing, and ensures that the resources above are protected from interference, sabotage, or hacking acts or attempts.

1. Purpose:

Ensures the lawful access to the Company's information and that complete information system operations are provided without interruption when attacked. After rapidly taking necessary response measures when an incident occurs, restores normal operation within the shortest time possible to reduce the damages brought the incident.

1. Communication:

We raise the information security awareness of employees through periodic information security training and communication, and thereby raise the Company's information security standards.

1. Execution:

Carried out by all employees according to management measures.

• II. Information Security Risk Management Committee and Duties

• Structure:

The Company established an Information Security Management Committee in 2022 (see the figure below for the structure), in which the head of the IT Section serves as the convener.

==> picture [501 x 162] intentionally omitted <==

----- Start of picture text -----

Chairperson
President Development Section
Professional Section
Information Security Management Committee President's Office
The head of the IT Section serves as the convener QA Section
IT Section
Finance Department Business Department Management Department Production Department
Finance Section Accounting Section Long Fabrics Section Short Fabrics Section Resources SectionHuman General SectionAffairs Procurement Section Environmental Safety Section Bleaching and Finishing Section SectionDyeing Inspection Section Technology Research Office Factory Affairs Office Engineering Office
Matching SectionColor Resin Section Testing Section Management Production Section Transportation Storage and Section Engineering Section Electrical Section Business Section
----- End of picture text -----

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1. Duties:

   • (1) Periodic reporting: The convener reports the Company's overall information security status to the Board of Directors in writing every June.

   • (2) Emergency reporting: In the event of a contingency that is sufficient to impact the Company's operations, it shall be immediately reported to the Board of Directors.

   • (3) Regular reviews: The convener of the Information Security Management Committee reviews the information security policy and measures at least once a year, such as the enactment of new laws by the government, response to new information security hazards, and implementation of new information security technologies.

2. III. Information security management measures

3. Responsible personnel

The convener of the Information Security Management Committee is the main manager of information security, the IT Section is the main management unit, heads of each unit are reporters and secondary managers, and all employees are required to comply.

1. IT room environment management

2. (1) Servers include ERP server, e-mail server, website server, and anti-virus software, which are all located in the IT room managed by the IT Section. The servers are maintained by employees in the IT Section and employees that enter the room need to be registered.

3. (2) The IT room has an independent air conditioning system, the room temperature is controlled under 25°C, in order to avoid system crash due to overheating. The IT room also has fire extinguishers to prevent a fire accident.

4. (3) The IT room has an online UPS with voltage stabilizer, and the batteries will allow servers to operate for at least 30 minutes. The power in the IT room is connected to the Company's generator, so that servers can continue to operate during a power outage.

5. Network security management

6. (1) The Company's connection to the external network is protected by three layers of firewalls, as shown in the structure below: Firewall leased from the ISP (first layer) > Firewall in the IT room (second layer) > Firewall in the computer operating system (third layer)

7. (2) The virus signature is periodically updated for the firewall leased from the ISP (Chunghwa Telecom) and firewall in the IT room, keeping the protection from these two layers up-to-date. These two firewall layers all have a network management policy to block malicious attacks and links, prevent improper use by employees, and prevent bandwidth from being

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occupied. These two firewall layers all automatically generate reports and provide log files for inquiry.

• (3) Computers are only able to connect to the intranet and not Internet, unless authorized personnel submit an application, in order to lower the probability of malicious attacks.

• (4) The Company's Taipei Office connects to data of the Taoyuan Factory via intranet, and is connected via a dedicated line with VPN function provided by the ISP (Taiwan Fixed Network), ensuring the safety of data transferred between the two locations.

• Computer virus protection management

• (1) The firewall in the IT room has anti-virus and anti-hacking functions, and its signatures are automatically updated at least once a day, ensuring that the firewall's protection is up-to-date.

• (2) Anti-virus software is installed in the Company's computers, and there is a server for centralized control of anti-virus software, monitoring the status of anti-virus software on every computer. The anti-virus software on computers automatically updates signatures at least once a day. Anti-virus software must remain enabled, and access rights are managed by employees in the IT Section; employees may not disable anti-virus software without permission.

• (3) The e-mail server has e-mail filter and anti-virus functions to prevent inappropriate e-mail from being sent to computers.

• System data access control

• (1) Employees must first apply for access rights before using information systems. The IT Section may only create an account after obtaining approval from the responsible supervisor.

• (2) Passwords for accounts must be complex, contain English letters, numbers, and special symbols, and must be at least 8 digits in length.

• (3) Information systems all have log file recording functions to record the time of login and functions used by each account for tracking.

• (4) Employees must sign a resignation application form that is countersigned by the IT Section when they resign. The IT Section will cancel the account to ensure that the account of employees who resign are already ineffective or deleted.

• (5) The Company's contractors must sign a non-disclosure agreement to prevent unauthorized disclosure of data.

• Ensure sustainable operation

• (1) In addition to the server that is operating, there is a backup server for various systems. The ERP server has a backup server that can be launched in a short amount of time when the server that is operating malfunctions, so that company operations will not be suspended.

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• (2) Backups of important data is stored at two or more locations, including remote backup, in which the Taipei Office and Taoyuan Factory mutually serve as remote backup. The frequency of backup is once a day, and personnel of the IT Section check if data backup is completed every day.

• (3) Disaster recovery drills are conducted at least once a year. The drills involve launching the backup server and checking if backup data is loaded and the server begins to operate, ensuring the effectiveness of backup mechanisms and backup data, as well as the familiarity of personnel with recovery operations.

• (4) For Internet lines leased from the ISP, at least two lines with different frameworks are leased to prevent services from becoming unusable in the event of a single network failure.

• (5) Aside from equipment of major systems, the IT Section has backups for the software and hardware equipment used by basic-level units, so that units can smoothly carry out routine operations, while shortening the wait time for requisitioning and purchasing equipment.

• Policy communication and review

• (1) The convener of the Information Security Management Committee communicates the importance of information security management and the necessity of data backup during management meetings once a year.

• (2) The convener of the Information Security Management Committee organizes information security training courses once a year to remind employees to carry out information security measures.

• (3) The Company's information security management policy and measures mainly focus on security, but also considers the flexibility of controls. Under the premise of not affecting security, employees can offer their opinions, which will be reviewed to make management mechanisms more reasonable.

• (II) List any losses suffered by the company in the most recent year and as of the date the annual report was printed due to significant cybersecurity incidents, the possible impacts therefrom, and measures being or to be taken. If a reasonable estimate cannot be made, an explanation of the facts of why it cannot be made shall be provided:

Implementation status of the information security policy in 2022:

1. No malicious data tampering

There was no data tampering and equipment malfunction this year (e.g. extortionware).

1. Backup recovery drill

2. The Company's main ERP server has a backup server that automatically restores data every day, and personnel of the IT Section conduct inspections twice a week. Important databases are backed up every hour and inspected every week.

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1. Communication

The Company irregularly communicates the importance of information security management during management meetings, and shares cases of other companies attacked by malware, attaching importance to and jointly preventing information security incidents.

VII. Important Contracts:

Nature of contract	The Parties	Commencement date/expirationdate	Main Content	Restrictive clauses
Steam purchase agreement	Ta-Yuan Cogen Co., Ltd.	2021.01.01~2023.12.31	Steam purchase	Monthly consumption must be higher than 5,000 tons, and any volume under 5,000 tons is calculated as 5,000 tons.
Construction contracts	Fandeng Construction Co.,Ltd.	2020.05.30~2023.04.03	Civil engineering for construction projects	None

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6. Financial Overview

• I. Condensed Statement of Financial Position and Statements of Comprehensive Income in the Last Five Years:

• (I). Condensed balance sheet and statement of comprehensive income

  1. Condensed balance sheet (consolidated)

Unit: Expressed in thousands of New Taiwan Dollars

Year Item	Year Item	Financial statements for the past five years(Note 1)	Financial statements for the past five years(Note 1)	Financial statements for the past five years(Note 1)	Financial statements for the past five years(Note 1)	Financial statements for the past five years(Note 1)	As of March 31, 2023 (Note 3)
		2018	2019	2020	2021	2022
Current assets		1,550,377	1,349,006	1,404,820	1,458,790	1,453,250	-
Property, plant and equipment		424,927	423,721	429,667	431,459	460,491	-
Intangible assets		-	-	-	-	-	-
Other assets		729,497	787,989	799,753	851,434	911,352	-
Total	assets	2,704,801	2,560,716	2,634,240	2,741,683	2,825,093	-
Current liabilities	Before distribution	172,364	134,977	271,662	339,974	-	-
	After distribution	414,940	238,938	323,643	409,281	(Note 2)	-
Non-current liabilities		99,337	115,581	114,741	119,490	127,235	-
Total liabilities	Before distribution	271,701	250,558	386,403	459,464	503,524	-
	After distribution	514,277	354,519	438,384	528,771	(Note 2)	-
Equity attributable to owners ofparent		2,307,677	2,207,977	2,144,797	2,180,020	2,220,966	-
Share capital		1,732,684	1,732,684	1,732,684	1,732,684	1,732,684	-
Capital reserve		249,963	262,388	267,713	270,375	273,926	-
Retained earnings	Before distribution	471,721	344,712	294,820	322,571	327,126	-
	After distribution	229,145	240,751	242,839	253,264	(Note 2)	-
Other interests		(37,900)	(23,016)	(41,629)	(36,819)	(3,979)	-
Treasury shares		(108,791)	(108,791)	(108,791)	(108,791)	(108,791)	-
Non-controlling interests		125,423	102,181	103,040	102,199	100,603	-
Total equity	Before distribution	2,433,100	2,310,158	2,247,837	2,282,219	2,321,569	-
	After distribution	2,190,524	2,206,197	2,195,856	2,212,912	(Note 2)	-

(Note 1): The financial data before the date of report have been audited by the accountants.

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(Note 2): The proposed distribution of 2022 earnings has not yet been approved by the shareholders' meeting. (Note 3): The Q1 financial statements have not been reviewed by the accountants.

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2. Condensed Statement of Comprehensive Income (Consolidated)

Unit: Expressed in thousands of New Taiwan Dollars

Year Item	Financial statements for the past five years (Note 1)	Financial statements for the past five years (Note 1)	Financial statements for the past five years (Note 1)	Financial statements for the past five years (Note 1)	Financial statements for the past five years (Note 1)	As of March 31, 2023 (Note 3)
	2018	2019	2020	2021	2022
Operating revenue	972,877	553,776	441,609	456,564	495,932	-
Gross profit	352,374	118,379	84,751	70,969	76,553	-
Operating income/loss	229,009	13,773	8,363	(1,134)	4,566	-
Non-operating income and expense	99,596	122,093	58,629	100,301	82,338	-
Net income before tax	328,605	135,866	66,992	99,167	86,904	-
Net income from continuing operations	308,044	121,338	61,102	82,450	68,879	-
Profit (Losses) from discontinued operations	0	0	0	0	0	-
Net profit (loss) for the current period	308,044	121,338	61,102	82,450	68,879	-
Other consolidated income of the term (netvalueafter tax)	5,320	20,653	(18,649)	7,899	38,018	-
Total comprehensive income for the period	313,364	141,991	42,453	90,349	106,897	-
Net income attributable to owners of the parent	265,943	114,625	53,906	80,675	68,684	-
Net income attributable to non-controlling interests	42,101	6,713	7,196	1,775	195	-
Total comprehensive income attributable owners of the parent	271,263	130,451	35,456	84,541	106,702	-
Total comprehensive income attributable to non-controlling interests	42,101	11,540	6,997	5,808	195	-
Earnings per share	1.62	0.70	0.33	0.49	0.42	-

(Note 1): The financial data in the past five years have been audited by the accountants.

(Note 2): The proposed distribution of 2022 earnings has not yet been approved by the shareholders' meeting.

(Note 3): The Q1 financial statements have not been reviewed by the accountants.

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3. Condensed Balance Sheet (Standalone)

Unit: Expressed in thousands of New Taiwan Dollars

3. Condensed Balance Sheet	3. Condensed Balance Sheet	(Standalone) Unit: Expressed in thousands of New Taiwan Dollars	(Standalone) Unit: Expressed in thousands of New Taiwan Dollars	(Standalone) Unit: Expressed in thousands of New Taiwan Dollars	(Standalone) Unit: Expressed in thousands of New Taiwan Dollars	(Standalone) Unit: Expressed in thousands of New Taiwan Dollars
Year Item		Financial statements for the past five years
		2018	2019	2020	2021	2022
Current assets		403,924	429,805	416,673	461,860	433,833
Property, plant and equipment		424,927	423,721	429,667	431,459	460,491
Intangible assets		0	0	0	0	0
Other assets		1,682,076	1,554,481	1,488,428	1,494,820	1,528,083
Total assets		2,510,927	2,408,007	2,334,768	2,388,139	2,422,407
Current liabilitie s	Before distribution	110,722	96,770	88,585	107,005	99,826
	After distribution	353,298	200,731	140,566	176,312	(Note 1)
Non-current liabilities		92,528	103,260	101,386	101,114	101,615
Total liabilities	Before distribution	203,250	200,030	189,971	208,119	201,441
	After distribution	445,826	303,991	241,952	277,426	(Note 1)
Equity attributable to owners ofparent		2,307,677	2,207,977	2,144,797	2,180,020	2,220,966
Share capital		1,732,684	1,732,684	1,732,684	1,732,684	1,732,684
Capital reserve		249,963	262,388	267,713	270,375	273,926
Retained earnings	Before distribution	471,721	344,712	294,820	322,571	327,126
	After distribution	229,145	240,751	242,839	253,264	(Note 1)
Other interests		(37,900)	(23,016)	(41,629)	(36,819)	(3,979)
Treasury shares		(108,791)	(108,791)	(108,791)	(108,791)	(108,791)
Non-controlling interests		-	-	-	-	-
Total equity	Before distribution	2,307,677	2,207,977	2,144,797	2,180,020	2,220,966
	After distribution	2,065,101	2,104,016	2,092,816	2,110,713	(Note 1)

(Note 1): The proposed distribution of 2022 earnings has not yet been approved by the shareholders' meeting.

130

4. Condensed Statement of Comprehensive Income (Standalone)

Unit: Expressed in thousands of New Taiwan Dollars

4. Condensed Statement of	Comprehensive Income (Standalone) Unit: Expressed in thousands of New Taiwan Dollars	Comprehensive Income (Standalone) Unit: Expressed in thousands of New Taiwan Dollars	Comprehensive Income (Standalone) Unit: Expressed in thousands of New Taiwan Dollars	Comprehensive Income (Standalone) Unit: Expressed in thousands of New Taiwan Dollars	Comprehensive Income (Standalone) Unit: Expressed in thousands of New Taiwan Dollars
Year Item	Financial statements for the past five years
	2018	2019	2020	2021	2022
Operating revenue	492,478	491,045	357,146	452,039	486,163
Gross profit	74,292	74,969	39,846	69,855	72,084
Operating income/loss	323	(10,190)	(16,104)	8,726	11,079
Non-operating income and expense	268,911	127,408	74,187	78,589	68,085
Net income before tax	269,234	117,218	58,083	87,315	79,164
Net income from continuing operations	265,943	114,625	53,906	80,675	68,684
Losses from discontinued operations	-	-	-	-	-
Net profit (loss) for the current period	265,943	114,625	53,906	80,675	68,684
Other comprehensive income for the period (net income after tax)	5,320	15,826	(18,450)	3,866	38,018
Total comprehensive income for the period	271,263	130,451	35,456	84,541	106,702
Earnings per share	1.62	0.70	0.33	0.49	0.42

(II). Name of CPA and audit opinions in the last five years

Year	Name of accountant:	Audit opinion
2022	Chen Chen-Chien, Yu Sheng-Ho	Unqualified opinion
2021	Chen Chen-Chien, Yu Sheng-Ho	Unqualified opinion
2020	Huang Yong-Hua, Chen Chen-Chien	Unqualified opinion
2019	Huang Yong-Hua, Chen Chen-Chien	Unqualified opinion
2018	Huang Yong-Hua, Chen Chen-Chien	Unqualified opinion

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II. Financial Analysis for the Past Five Years: (I). Financial analysis

1. Consolidated financial analysis

Analysis	Year (Note 1) item (Note 3)		Financial analysis for the past five years	Financial analysis for the past five years	Financial analysis for the past five years		As of March 31, 2023 (Note 1)
		2018	2019	2020	2021	2022
Financial structure (%)	Debt ratio	10.05	9.78	14.67	16.76	17.82	-
	Ratio of long-term fund to property, plant and equipment	591.71	565.66	543.68	550.61	525.73	-
Solvency %	Current ratio	899.48	999.43	517.12	429.09	386.21	-
	Quick ratio	810.81	867.43	442.92	340.37	271.65	-
	Interest protection multiples	0	0	0	0	0	-
Operating ability	Receivables turnover (times)	12.11	6.63	6.08	6.01	5.80	-
	Average collection period	30.14	55.05	60.03	60.73	62.93	-
	Inventory turnover (times)	2.48	2.55	1.83	1.51	1.14	-
	Payables turnover (times)	7.99	7.24	6.05	6.07	6.97	-
	Average inventory turnover days	147.07	143.17	199.05	242.44	320.18	-
	Property, plant and equipment turnove (times)	2.29	1.31	1.03	1.06	1.08	-
	Total assets turnover (times)	0.36	0.22	0.17	0.17	0.18	-
Profitabilit y	Return on assets (%)	10.65	4.61	2.37	3.13	2.59	-
	Return on equity (%)	11.90	5.12	2.68	3.64	2.99	-
	Pre-tax profit to paid-in capital ratio (%) (Note 7)	18.97	7.84	3.87	5.72	5.02	-
	Net profit margin (%)	31.66	21.91	13.84	18.06	13.89	-
	Earnings per share (NTD)	1.62	0.70	0.33	0.49	0.42	-
Cash flows	Cash flow ratio (%)	350.66	200.73	54.14	(17.22)	37.58	-
	Cash flow adequacy ratio (%)	60.03	89.74	115.49	113.78	109.98	-
	Cash reinvestment ratio (%)	10.51	4.95	2.91	(3.86)	2.20	-
Leverage	Operating leverage	1.96	16.05	21.42	(157.70)	40.68	-
	Financial leverage	1.02	1.00	1.08	0.36	6.46.	-

(Note 1): The Q1 financial statements have not been reviewed by the accountants.

Reasons for changes in financial ratios in the most recent two years (changes reaching 20% and above):

1 Construction costs (listed under inventory) and advance receipts for real estate (current liabilities) increased this year due to continued pre-sale and construction of the Construction Department's projects, resulting in a decline in quick ratio and increase in inventory turnover and average inventory turnover days.

2 A portion of investment losses were recognized this year, resulting in non-operating profits decreasing compared with the same period last year, lowering the net profit margin.

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2. Financial Analysis (Standalone)

Year (Note 1) Analysis item (Note 3)	Year (Note 1) Analysis item (Note 3)	Financial analysis for the past five years	Financial analysis for the past five years	Financial analysis for the past five years	Financial analysis for the past five years	Financial analysis for the past five years	The current year up to March 31, 2023
		2018	2019	2020	2021	2022
Financial structure (%)	Debt ratio	8.09	8.31	8.14	8.71	8.32	Not applicab le because there are no standalo ne financia l stateme nts for 2023 Q1
	Ratio of long-term fund to property, plant and equipment	561.20	539.27	517.10	523.12	499.03
Solvency %	Current ratio	364.81	444.15	470.37	431.62	434.59
	Quick ratio	339.43	415.98	444.77	401.74	412.29
	Interest protection multiples	0	0	0	0	0
Operating ability	Receivables turnover (times)	6.51	6.13	5.00	6.07	5.86
	Average collection period	56.06	59.54	73.00	60.13	62.28
	Inventory turnover (times)	11.80	13.06	11.09	12.37	14.44
	Payables turnover (times)	8.04	8.39	7.16	8.66	9.58
	Average inventory turnover days	30.93	27.95	32.92	29.50	25.27
	Property, plant and equipment turnover(times)	1.16	1.16	0.83	1.05	1.06
	Total assets turnover (times)	0.20	0.20	0.15	0.19	0.20
Profitability	Return on assets (%)	10.14	4.66	2.27	3.42	2.86
	Return on equity (%)	11.01	5.08	2.48	3.73	3.12
	Pre-tax profit to paid-in capital ratio (%)	15.35	6.62	3.11	4.66	3.96
	Net profit margin (%)	54.00	23.34	15.09	17.85	14.13
	Earnings per share (NTD)	1.62	0.70	0.33	0.49	0.42
Cash flows	Cash flow ratio (%)	8.43	43.26	66.69	47.15	109.38
	Cash flow adequacy ratio (%)	15.68	18.75	17.09	19.41	52.43
	Cash reinvestment ratio (%)	(6.79)	(1.87)	0.22	(0.57)	1.22
Leverage	Operating leverage	540.41	(17.44)	(8.34)	20.37	16.36
	Financial leverage	1.00	1.00	1.00	1.00	1.00

Please explain reasons for changes in financial ratios in the most recent two years (changes reaching 20% and above):

1 The Company's profits decreased compared with the previous year, so its net profit margin decreased 20.8% compared with the previous year.

2 Cash flow ratio and cash re-investment ratio increased this year due to the increase in cash flows from operating activities.

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Note	1: The financial data in the past year have been audited by the accountants.	1: The financial data in the past year have been audited by the accountants.
Note	2: For companies whose stock is listed on the stock exchange or traded over the counter, financial data on the
	financial statements for the quarter before the date of report must be included in analysis.
Note	3: The following formulas should be included at the end of this table:
	1. Financial structure
	(1)	Debt ratio = total liabilities / total assets.
	(2)	Ratio of long-term capital to property, plant and equipment = (value of equity+ non-current liabilities)
	/ net	amount of property, plant and equipment.
	2. Liquidity
	(1)	Current ratio = current assets / current liabilities.
	(2)	Quick ratio = (current assets - inventory - prepaid expenses) / current liabilities.
	(3)	Interest protection multiples = net income before income tax and interest expense / current interest
	expense.
	3. Operating ability
	(1)	Receivables (including accounts receivable and business-related notes receivable) turnover ratio =
		net sales / average balance of receivables for each period (including accounts receivable and
		business-related notes receivable).
	(2)	Average collection days = 365 / receivables turnover.
	(3)	Inventory turnover = cost of goods sold / average amount of inventory.
	(4)	Payables (including accounts payable and business-related notes payable) turnover = cost of goods
		sold / average balance of payables for each period (including accounts payable and business-related notes
		payable).
	(5)	Average days of sales = 365 / inventory turnover.
	(6)	Property, plant and equipment turnover = net sales / average net amount of property, plant and
	equipment.
	(7)	Total assets turnover = net sales / average total assets
	4. Profitability
	(1)	Return on assets = [profit and loss after tax + interest expenses * (1 - tax rate)] / average total assets.
	(2)	Return on equity = income after tax / net average equity.
	(3)	Net profit margin = profit and loss after tax / net sales.
	(4)	Earnings per share = (Profit and loss attributable to owners of parent - stock dividends of preferred
		stocks) / weighted average number of outstanding shares. (Note 4)
	5. Cash flows
	(1)	Cash flow ratio = net cash flows from operating activities / current liabilities.
	(2)	Net cash flow adequacy ratio = net cash flows from operating activities in the past five years /
		(capital expenditure + increase in inventory + cash dividends) in the past five years.
	(3)	Cash re-investment ratio = (net cash flows from operating activities - cash dividends) / (gross amount
		of property, plant and equipment + long-term investment + other non-current assets + operating capital).
		(Note 5)
	6. Leverage:
	(1)	Operating leverage = (net operating income – variable operating cost and expenses) / operating
		income (Note 6).
	(2)	Financial leverage = operating profit / (operating profit - interest expenses).
Note	4: Pay attention to the following matters when using the formula above for calculating EPS:
	1. Based on the weighted average number of ordinary shares and not the number of outstanding shares at the
	end of the year.

1. The period of shares from cash capital increase or treasury stock must be taken into consideration when calculating the weighted average number of shares.

2. When calculating EPS in previous years or half years after capital increase by earnings or capital surplus, adjustments must be made according to the ratio of capital increase and the duration does not need to be considered.

3. If preferred stock is non-convertible cumulative preferred stock, the dividends (regardless of whether it is distributed) shall be deducted from after-tax net income or added to after-tax net loss. If the preferred stock is non-cumulative and there is after-tax net income, dividends on preferred stock shall be deducted from after-tax net profit. In case of a loss, then no adjustment is necessary.

4. Note 5: Pay attention to the following matters during cash flow analysis:

5. Net cash flows from operating activities refers to the net cash flows from operating activities in the cash flow statement.

6. Capital expenditure refers to the cash outflows from capital investments each year.

7. Inventory increase is only calculated when the amount at the end of the period is greater than the beginning of the period, and is calculated at zero if inventory decreases at the end of the year.

8. Cash dividends include cash dividends on ordinary shares and preferred shares.

9. Gross profit for property, plant, and equipment shall refer to the total amount for property, plant, and equipment before accumulated depreciation is deducted.

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• Note 6: Issuers must divide operating costs and operating expenses into fixed and variable based on their properties. If it involves estimates or subjective judgment, make sure it is reasonable and consistent.

• Note 7: For company shares with no face value or with face value per share not equaling NT$10, the aforementioned calculation for paid-in capital ratio should be changed to calculation for the equity ratio attributable to owners of parent in the balance sheet instead.

135

III. Audit Committee' Review Report on Financial Statements for the Most Recent Year

Chyang Sheng Dyeing & Finishing Co., Ltd Audit Committee's Report

In accordance with the reporting guidelines of Article 14-4 of the Securities Exchange Act and Article 219 of the Company Act, the 2022 financial statements, earnings distribution proposal, and business report prepared by the Company's Board of Directors through KMPG Taiwan have been reviewed by the Audit Committee and found to contain no discrepancies.

Please verify.

To

The Company's 2023 Annual Shareholders' Meeting

Chyang Sheng Dyeing & Finishing Co., Ltd Chairman of the Audit Committee:

March 23, 2023

136

• IV. Financial Statements for the Most Recent Year: Please see pages 109-164 of the Annual Report

• V. Financial Statements of the Company for the Most Recent Year Audited by the CPA: Please see pages 165-212 of the Annual Report

• VI. The Impact of Financial Difficulties of the Company and Affiliated Companies, If Any, on the Company's Financial Position in the Past Year and up to the Date of Report: None

137

7. Review and Analysis of Financial Status, Financial Performance, and Risk Management

I. Analysis of Financial Position: Unit: Expressed in thousands of New Taiwan Dollars

Year Item	2022	2021	Discrepancies	Discrepancies
			Amount	%
Current assets	1,453,250	1,458,790	(5,540)	(0.38)
Property, plant and equipment	460,491	431,459	29,032	6.73
Intangible assets	-	-	-	-
Other non-current assets	911,352	851,434	59,918	7.04
Total assets	2,825,093	2,741,683	83,410	3.04
Current liabilities	376,289	339,974	36,315	10.68
Non-current liabilities	127,235	119,490	7,745	6.48
Total liabilities	503,524	459,464	44,060	9.59
Share capital	1,732,684	1,732,684	-	-
Capital reserve	273,926	270,375	3,551	1.31
Retained earnings	327,126	322,571	4,555	1.41
Other equity	(3,979)	(36,819)	32,840	(89.19)
Total equity	2,321,569	2,282,219	39,350	1.72

Main reason for material changes and their impact:

1. The increase in current liabilities and total liabilities this year was mainly due to the increase in advance payments from the sale of real estate of construction projects implemented by subsidiaries.

2. The change in other equity was mainly due to exchange rate fluctuations and adjustments to the translation of the financial statements of foreign operations.

The changes above do not have a significant impact on the Company's business performance and financial position.

138

II. Financial Performance Analysis:

• (I) Comparative analysis of business performance Unit: Expressed in thousands of New Taiwan Dollars

Taiwan Dollars
Year			Amount of	Difference
	2022	2021
Item			change	(%)
Operating revenue	495,932	456,564	39,368	8.62
Operating cost	419,379	385,595	33,784	8.76
Operating margin	76,553	70,969	5,584	7.87
Operating expenses	71,987	72,103	(116)	(0.16)
Net operating profit	4,566	(1,134)	5,700	(502.65)
Non-operating income and			(17,963)	(17.91)
	82,338	100,301
expense
Net income (loss) before tax	86,904	99,167	(12,263)	(12.37)
Less: Income tax expense	18,025	16,717	1,308	7.82
Profit/Loss from discontinued
	0	0	0	0
operations
Current period net profit	68,879	82,450	(13,571)	(16.46)

1. Analysis and explanation of the increase or decrease in ratio:

2. Our revenue, gross profit, and net operating profit increased as the industry recovered after the pandemic in 2022. However, overall profits decreased compared with the previous year after recognizing losses from short-term investments and deducting income tax.

3. Expected sales volume and its basis: Not applicable because the Company has not made financial forecasts for the year.

4. Potential impact on future financial position and business performance and response plan: The Company's production and sales have gradually recovered along with the global economy. Combined with the ample self-owned funds we have, our future financial position and business performance will not be impacted.

III. Cash Flow Analysis:

• (I). Analysis of changes in cash flow in the most recent year Unit: Expressed in thousands of New Taiwan Dollars

of New Taiwan Dollars
Year	2022	2021	Discrepancies Amount Percentage
				Percentage
Net cash flow from operating activities	141,412	(58,532)	199,944	(341.60%)
Net cash flow from investing activities	(45,186)	(52,113)	6,927	(13.29%)
Net cash flow from financing activities	(65,630)	(58,520)	(7,110),	12.15%

1. Cash inflow from operating activities increased in 2022 due to the Company's disposal of short-term investments.

2. The cash outflow from investing activities was mainly due to the investment in new equipment.

3. The decrease in cash outflow from financing activities was mainly due to the difference in cash dividends distributed.

4. (II). Liquidity analysis for the most recent two years

139

			Percentage of
Year
	2022	2021	increase (decrease)
Item
			(%)
Cash flow ratio (%)	37.58	(17.22)	54.80
Cash flow adequacy ratio (%)	109.98	113.78	(0.03)
Cash reinvestment ratio (%)	2.20	(3.86)	(1.57)

Analysis of changes in percentage:

1. Cash re-investment ratio and cash flow ratio increased this year due to a net cash inflow from operating activities.

2. Cash flow adequacy ratio decreased due to the distribution of higher cash dividends this year

compared with the average of the past five years.

(III). Cash flow analysis for the coming year Unit: Expressed in thousands of New Taiwan Dollars

Cash and cash				Remedial	measures for
	Expected annual net
equivalents at		Expected annual	Expected cash	expected	cash deficit
	cash flow from
beginning of	operating activities	cash outflow	surplus (deficit)	Investment
period		(3)	(1)+(2)-(3)		Financial plan
	(2)			plan
(1)
253,973	116,529	(83,307)	287,195	-	-

1. Liquidity analysis for the coming year:

2. Operating activities: Expected annual net cash inflow from operating activities is NT$116,529 thousand.

3. Expected annual cash outflow: The amount of cash dividends distributed and capital expenditures is estimated at NT$83,307 thousand.

4. Remedial measures for expected cash deficit: There was no cash deficit.

IV. Effect of Major Capital Expenditures on Financial Position and Business Operations in the Most Recent Year:

• (I). Status of major capital expenditures and source of funds: Not applicable because there were no major capital expenditures.

• (II). Expected benefits: N/A.

V. Investment Policy in the Past Year, Profit/Loss Analysis, Improvement Plan, and Investment Plan for the Coming Year:

• The Company's investment policy focuses on businesses that the Company specializes in. From a long-term perspective, investees Chyang Sheng Vietnam Co., Ltd. and Pro-Star International Investment Consulting Ltd. benefit from preferential tariffs agreements between Vietnam and other countries, as well as purchase orders from brands, and profits are expected to remain stable. The Company does not have any major investment plans in the current year and coming year.

VI. Risks and Assessment:

• (I). Impact of interest rate and exchange rate changes and inflation on Company's profit and response measures: The consolidated balance of loans from financial institutions was only NT$2,000 thousand at the end of the year, so changes in interest rates will not impact the Company's overall operations and income.

The consolidated company does not collect or make payments in foreign

140

currencies, and any raw materials that are imported by trading companies are delivered within a short period of time after placing an order. Hence, exchange rate fluctuations do not have a significant impact on the Company.

The consumer price index and wholesale price index both increased in 2022, and fluctuate significantly along with the global economy, oil prices, and international raw material prices. Besides affecting the unit price of energy, the Company plans to optimize energy reuse to lower costs, and may adjust the unit price of processing in response. Furthermore, the impact is limited due to the Company's proper control over raw materials inventory.

• (II). Policies of engaging in high-risk, high-leverage investments, lending to others, providing endorsement and guarantee, and derivatives transactions, profit/loss analysis, and future response measures:

The Company follows the Procedures for Lending Funds to Others, Procedures for Endorsement and Guarantee, and Procedure for the Acquisition and Disposal of Assets when lending funds to others, providing endorsements/guarantees, and trading derivatives. However, the Company currently does not engage in derivatives trading. Lending to others is limited to the parent company and subsidiaries or between subsidiaries. Endorsement and guarantee are only provided to subsidiaries for bank loans.

• (III). Future R&D projects and expected R&D expenses: The Company's R&D plans are carried out according to schedule, and R&D expenses account for approximately 2.5%-3% of revenue. Please see "Research and Development Status" in the Letter to Shareholders for details of future R&D plans.

• (IV). The effect of changes in important domestic and foreign policies and laws on the Company's financial position and business operations, and response measures: No impact.

• (V) The impacts of technology changes (including information security risks) and industry changes on the Company's financial position and business performance, and response measures:

• The Company has a dedicated IT department and document management department to oversee information security management, including firewall settings, periodic information risk drills, confidentiality of customer information and employee information, and remote backup. The Company periodically hires an external information security expert to examine and assess information security risk. The Company's financial position and business performance have not been impacted by any technology changes (including information security risks) and industry changes as of the date of report. Please see Information Security Management on page 89.

• (VI) Impact of corporate image change on risk management and response measures: N/A.

• (VII) Expected benefits and potential risks of merger and acquisition and response measures: N/A.

• (VIII) Expected benefits and potential risks of capacity expansion and response measures: N/A.

• (IX) Risks associated with over-concentration in purchase or sale and response measures:

141

N/A.

• (X) The effects and risks of large-scale share transfers or conversions by directors, supervisors, or major shareholders holding more than 10% of the Company's shares, and response measures: Shinkong Textile Co., Ltd., the parent company of the Company's director Shinkong Asset Management Co., Ltd., purchased the Company's shares in the stock market this year, and consolidated shareholding as of the first quarter was 19.64%. The Company and Shinkong Textile Co., Ltd. are upstream and downstream in the supply chain and have already been working closely together. The company began appointing a representative as the Company's director in 2004. Hence, there is no risk to the Company's business.

• (XI) The effect of changes in management right on the Company, risks, and response measures: N/A.

• (XII) Litigation or non-litigation events: The waste disposal company hired by the consolidated company did not perform its duties, and Chiayi City Environmental Protection Bureau performed the company's duties on its behalf according to the Administrative Execution Act, requiring the consolidated company to pay NT$869 thousand in substitute performance fees. The consolidated company objected to the administrative penalty and filed for administrative remedy. The case currently does not have a significant impact on the Company's operations and financial performance.

(XIII) Other risks and response measures:

Risk category	Risk item	Impact on operations	Mitigation measures
Economic risks	Gap in competitiveness of low carbon products	With countries around the world enacting laws and regulations to achieve net zero emissions, companies are also setting net zero emissions and the use of green electricity as their primary ESG goals. Water, oil, electricity, and gas consumption account for a significant portion of the dyeing and finishing industry's costs, and carbon emissions management has become an important aspect in the dyeing and finishing	To enhance the competitiveness of low carbon products, the Company plans to reduce carbon emissions by the organization and from the raw materials used to make products. We set carbon reduction goals in hopes of reducing the carbon footprint of our products, and prepare for the establishment of green low carbon supply chains. We will also direct our efforts to waste reuse and recycling, and fully

142

industry. If the carbon	utilize		the
emissions of products	co-generation		and
cannot be effectively	circular	economy
lowered, it will create	development		model in
potential risks that may	Dayuan	Industrial
impact operations when	Park.
competing for purchase
orders from customers,
or cause customers to
transfer the increase in
carbon tariffs to
Chyang Sheng.

VII. Other Important Matters: None.

143

8. Special Notes

I. Profiles of Affiliated Enterprises:

(I). Consolidated Affiliate Business Report

1. Organization chart of affiliated enterprises

==> picture [351 x 207] intentionally omitted <==

----- Start of picture text -----

Chyang Sheng Dyeing &
Finishing Co., Ltd
100% 83.68% 100%
Hong Sheng Investment Sea Some International Progiant Construction &
Co., Ltd. Development Co., Ltd. Development Corporation
100%
Worthy Textile Industry
Co., Ltd.
----- End of picture text -----

1. Information on affiliated enterprises

Unit: Thousand NTD

Company name	Date of Establishment	Address	Paid-in capital	Main business and products
HONG SHENG INVESTMENTCO.,LTD	1996.12.09	6F, No. 63, Sec. 1, Dihua St., TaipeiCity	140,000	Investment
Progiant Construction & Development Corporation	1997.07.03	6F, No. 63, Sec. 1, Dihua St., TaipeiCity	313,500	Construction
Sea Some International Development Co.,Ltd.	1997.10.28	6F, No. 63, Sec. 1, Dihua St., TaipeiCity	3,000	International trade
Worthy Textile Industry Co.,Ltd.	1998.09.23	6F, No. 63, Sec. 1, Dihua St., Taipei City	638,000	Textiles industry

1. Businesses included in the affiliated enterprises' overall operations: As shown in the table above, includes investment, construction, trade, and textiles industries.

2. Information on companies presumed to have control and subsidiary relationship: None.

3. Information on directors, supervisors, and presidents of affiliates:

Unit: shares; %

Company name	Position	Name or representative	Shareholding	Shareholding
			Number of shares	Shareholding ratio
HONG SHENG INVESTMENT CO., LTD	Chairperson	Hsu Fang-Jung (Representative of Chyang Sheng Dyeing & Finishing Co.,Ltd.)	14,000,000	100.00
	Supervisor	Mei-Na Lan (Representative of Chyang Sheng Dyeing & Finishing Co.,Ltd.)
Progiant Construction & Development Corporation	Chairperson	Chen Jen-Fa (Representative of Chyang Sheng Dyeing & Finishing Co.,Ltd.)	26,235,000	83.68
	Supervisor	Chen Chia-Yu	0	0.00

144

Company name	Position	Name or representative	Shareholding	Shareholding
			Number of shares	Shareholding ratio
Sea Some International Development Co., Ltd.	Chairperson	Hsu Fang-Jung (Representative of Hong ShengInvestment Co.,Ltd.)	300,000	100.00
	Supervisor	Mei-Na Lan (Representative of Hong ShengInvestment Co.,Ltd.)
Worthy Textile Industry Co., Ltd.	Chairperson	Chen Jen-Fa (Representative of Chyang Sheng Dyeing & Finishing Co.,Ltd.)	63,800,000	100.00
	Supervisor	Chen Yu-Chin (Representative of Chyang Sheng Dyeing & Finishing Co.,Ltd.)
	Supervisor	Lin Ho-Hsiung (Representative of Chyang Sheng Dyeing & FinishingCo.,Ltd.)

1. Business overview of affiliated enterprises: Unit: Expressed in thousands of New Taiwan Dollars

Company name	Capital	Total assets	Total liabilities	Net worth	Operating revenue	Operating profit	Income/loss for the current period (after tax)	Earnings per share (NTD) (After tax)
HONG SHENG INVESTMEN TCO.,LTD	140,000	168,774	10,055	158,719	28,361	(8,992)	(1,723)	(0.12)
Progiant Construction & Development Corporation	313,500	836,282	267,656	568,625	1,470	(7,503)	5,044	0.16
Sea Some International Development Co.,Ltd.	3,000	7,167	2,625	4,542	8,299	1,639	1,976	6.59
Worthy Textile Industry Co., Ltd.	638,000	751,998	26,145	725,853	7,917	5,969	36,141	0.57

• (II). Consolidated financial statements of affiliated enterprises:

Pursuant to Description 4 and Attachment 5 of the Letter (1999) Tai-Cai-Zheng(6) No. 04448, consolidated financial statement of affiliates are not separately prepared and the statement in Attachment 1 of the letter is not issued. Instead, the Company issued the statement in Attachment 5, please refer to page 107 of this manual; for the consolidated financial statements of parent company and subsidiaries, please refer to pages 109-164.

• (III). Affiliation report: None

145

Statement

We hereby declare that companies that are to be included in the consolidated financial statements in accordance with the "Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises" are the same as companies that are to be included in consolidated financial statements of the parent company in accordance with IAS No. 27, which is recognized by the Financial Supervisory Commission, in 2022 (From January 1 to December 31). All information on affiliated enterprises that must be disclosed in the consolidated financial statements was already disclosed in the abovementioned consolidated financial statements. Hence, we did not separately prepare consolidated financial statements of affiliated enterprises.

It is hereby declared

Chyang Sheng Dyeing & Finishing Co., Ltd Responsible person: Chen Jen-Fa

March 23, 2023

146

II. Private Placement of Securities in the Most Recent Year and up to the Date of Report: None.

III. Holding or Disposal of the Company's Shares by Subsidiaries in the Past Year and up to the Date of Report:

				Unit: NT$,in thousands;%	Unit: NT$,in thousands;%	Unit: NT$,in thousands;%	Unit: NT$,in thousands;%	Unit: NT$,in thousands;%	Unit: NT$,in thousands;%	Unit: NT$,in thousands;%	Unit: NT$,in thousands;%
N a m e o f s u b s i d i a r y	P a i d - i n c a p i t a l	Sources of funds	The Company's shareholding ratio	Date of acquisition or disposal	Number of shares acquired and amount	Number of shares disposed of and amount	Gain (loss) on investme nts	Number of shares held and amount as of the date of report (March 31, 2023)	Pledge status	Amount of endorsements/guar antees provided by the Company to subsidiaries	Amount of loans provided by the Company to subsidiaries
HONG SHENG INVESTMENT CO. LTD	140,000	Self-owned	100%	Before January 1, 2003	8,874,795 shares NT$106,128 thousand	-	-	8,874,795 shares NT$122,916 thousand	None	None	None
				The current year up to April 30, 2023				8,874,795 shares NT$122,916 thousand	No impact on the Company's performance and financial position

IV. Other Supplemental Information: None.

• V. Matters, If Any, that May Affect Shareholders' Equity or Securities Prices as Defined in Article 36, Paragraph 3, Subparagraph 2 of the Securities and Exchange Act in the Most Recent Year and up to the Date of Report: None.

147

Chyang Sheng Dyeing & Finishing Co., Ltd Responsible person: Chen Jen-Fa

148

1

Stock Code:1463

CHYANG SHENG DYEING & FINSHING CO., LTD. AND SUBSIDIARIES

CONSOLIDATED 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 consolidated 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 consolidated financial statements, the Chinese version shall prevail.

2

Table of contents

Contents 1. Cover Page 2. Table of Contents 3. Representation Letter 4. Independent Auditors’Report 5. Consolidated Balance Sheets 6. Consolidated Statements of Comprehensive Income 7. Consolidated Statements of Changes in Equity 8. Consolidated Statements of Cash Flows 9. Notes to the Consolidated Financial Statements (1) Company history (2) Approval date and procedures of the consolidated 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

Page

1 2 3 4 5 6 7 8 9 9 9～11 11～26 26～27 28～58 58～59 60 60～61 61 61 61 62～66 67 67 67 67～68

3

Representation Letter

The entities that are required to be included in the combined financial statements of Chyang Sheng Dyeing & Finishing Co., LTD. as of and for the year ended December 31, 2022 under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standards No. 10, "Consolidated Financial Statements." endorsed by the Financial Supervisory Commission of the Republic of China. In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, Chyang Sheng Dyeing & Finishing Co., LTD. and Subsidiaries do not prepare a separate set of combined financial statements.

Company name: Chyang Sheng Dyeing & Finishing Co., LTD. Chairman: REN FA CHEN Date: March 23, 2023

4

Independent Auditors ’ Report

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

Opinion

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

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group of at December 31, 2022 and 2021, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“IFRSs”), International Accounting Standards (“IASs”), Interpretations developed by the International Financial Reporting Interpretations Committee ( “ IFRIC ” ) or the former Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

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 Consolidated Financial Statements section of our report. We are independent of the Group 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 consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated 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" to the consolidated financial statements.

4-1

Description of the key audit matter:

The Group engaged in dyeing and finishing processing business, the transaction model of such businesses is that the customers provide the raw fabric, and the Group 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 Group 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 consolidated financial reporting and the impact of revenue recognition to meet performance obligations over time, therefore, the accountant listed it as the key audit matter.

Our principal audit procedures included: understanding of revenue recognition policies adopted by the Group, 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.

Other Matter

Chyang Sheng Dyeing & Finishing Co., Ltd. has prepared its parent-company-only financial statements as of and for the years ended December 31, 2022 and 2021, on which we have issued an unmodified opinion.

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

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the IFRSs, IASs, IFRC, SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’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 Group or to cease operations, or has no realistic alternative but to do so.

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

4-2

Auditor ’ s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an 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 consolidated 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 consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for 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 Group’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 Group’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 consolidated 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 Group to cease to continue as a going concern.

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

6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

4-3

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 consolidated 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 consolidated financial statements are intended only to present the consolidated 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 consolidated financial statements are those generally accepted and applied in the Republic of China.

The independent auditors’ report and the accompanying consolidated 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 consolidated financial statements, the Chinese version shall prevail.

5

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

Consolidated 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(r)) 1170 Notes and accounts receivable, net (including related parties) (note 6(d), (r) and 7) 130X Inventories (note 6(e)) 1476 Other financial assets (note 7 and 8) 1479 Other current assets Non-current assets: 1510 Non-current financial assets at fair value through profit or loss (note 6(b)) 1517 Non-current financial assets at fair value through other comprehensive income (note 6(c)) 1551 Investments accounted for using equity method (note 6(f)) 1600 Property, plant and equipment (note 6(h) and 8) 1755 Right-of-use assets (notes 6(i)) 1760 Investment property, net (note 6(j) and 8) 1840 Deferred income tax assets (note 6(o)) 1995 Other non-current assets (note 6(n) and 8) Total assets	December 31, 2022 Amount % $ 253,973 9 512,795 19 11,271 - 84,600 3 431,047 15 147,163 5 12,401 -	December 31, 2021 Amount % 223,377 8 659,644 24 14,742 1 86,310 3 301,630 11 153,849 6 19,238 1 1,458,790 54 7,213 - 141,919 5 385,313 14 431,459 16 1,208 - 252,980 9 6,405 - 56,396 2 1,282,893 46 2,741,683 100 December 31, 2022 December 31, 2021 Liabilities and Equity Amount % Amount % Current liabilities: 2130 Current contract liabilities (note 6(e) and (r)) 246,218 9 196,636 7 2171 Notes and accounts payable 56,214 2 64,071 2 2280 Current lease liabilities (note 6(l)) 418 - 759 - 2305 Other financial liabilities 48,922 2 45,954 2 2399 Other current liabilities 24,517 1 32,554 1 376,289 14 339,974 12 Non-Current liabilities: 2540 Total long-term borrowings (note 6(k)) 2,000 - - - 2570 Deferred income tax liabilities (note 6(o)) 99,349 3 93,442 3 2580 Non-current lease liabilities (note 6(l)) 41 - 458 - 2640 Net defined benefit liability (note 6(n)) - - 420 - 2670 Other non-current liabilities 25,845 1 25,170 1 127,235 4 119,490 4 Total liabilities 503,524 18 459,464 16 Equity attributable to owners of parent (notes 6(p)): 3110 Ordinary shares 1,732,684 61 1,732,684 63 3200 Capital surplus 273,926 10 270,375 10 Retained earnings: 3310 Legal reserve 192,540 7 184,567 7 3320 Special reserve 56,835 2 56,835 2 3350 Unappropriated retained earnings 77,751 3 81,169 3 327,126 12 322,571 12 Other equity: 3411 Exchange differences on translation of foreign financial statements (22,752) (1) (55,834) (2) 3420 Unrealized gains or losses from financial assets at fair value through other comprehensive income 18,773 1 19,015 1 (3,979) - (36,819) (1) 3500 Treasury shares (108,791) (4) (108,791) (4) 36XX Non-controlling interests (note 6(g)) 100,603 3 102,199 4 Total equity 2,321,569 82 2,282,219 84 Total liabilities and equity $ 2,825,093 100 2,741,683 100	December 31, 2021 Amount % 223,377 8 659,644 24 14,742 1 86,310 3 301,630 11 153,849 6 19,238 1 1,458,790 54 7,213 - 141,919 5 385,313 14 431,459 16 1,208 - 252,980 9 6,405 - 56,396 2 1,282,893 46 2,741,683 100 December 31, 2022 December 31, 2021 Liabilities and Equity Amount % Amount % Current liabilities: 2130 Current contract liabilities (note 6(e) and (r)) 246,218 9 196,636 7 2171 Notes and accounts payable 56,214 2 64,071 2 2280 Current lease liabilities (note 6(l)) 418 - 759 - 2305 Other financial liabilities 48,922 2 45,954 2 2399 Other current liabilities 24,517 1 32,554 1 376,289 14 339,974 12 Non-Current liabilities: 2540 Total long-term borrowings (note 6(k)) 2,000 - - - 2570 Deferred income tax liabilities (note 6(o)) 99,349 3 93,442 3 2580 Non-current lease liabilities (note 6(l)) 41 - 458 - 2640 Net defined benefit liability (note 6(n)) - - 420 - 2670 Other non-current liabilities 25,845 1 25,170 1 127,235 4 119,490 4 Total liabilities 503,524 18 459,464 16 Equity attributable to owners of parent (notes 6(p)): 3110 Ordinary shares 1,732,684 61 1,732,684 63 3200 Capital surplus 273,926 10 270,375 10 Retained earnings: 3310 Legal reserve 192,540 7 184,567 7 3320 Special reserve 56,835 2 56,835 2 3350 Unappropriated retained earnings 77,751 3 81,169 3 327,126 12 322,571 12 Other equity: 3411 Exchange differences on translation of foreign financial statements (22,752) (1) (55,834) (2) 3420 Unrealized gains or losses from financial assets at fair value through other comprehensive income 18,773 1 19,015 1 (3,979) - (36,819) (1) 3500 Treasury shares (108,791) (4) (108,791) (4) 36XX Non-controlling interests (note 6(g)) 100,603 3 102,199 4 Total equity 2,321,569 82 2,282,219 84 Total liabilities and equity $ 2,825,093 100 2,741,683 100
	1,453,250 51
	7,557 - 141,677 5 441,293 16 460,491 17 453 - 254,963 9 5,063 - 60,346 2
	1,371,843 49
	$ 2,825,093 100
			(3,979) - (36,819) (1)
			(108,791) (4) (108,791) (4)
			100,603 3 102,199 4
			2,321,569 82 2,282,219 84
			$ 2,825,093 100 2,741,683 100

See accompanying notes to financial statements.

6

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

Consolidated 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)

4000 Net operating revenues (notes 6(r) and 7) 5000 Operating costs (notes 6(e), (l), (n), (s) and 12) Gross profit from operations Operating expenses (notes 6(d), (l), (n), (s) and 12): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Expected credit loss Net operating income (loss) Non-operating income and expenses: 7010 Other income (notes 6(m), (t) and 7) 7020 Other gains and losses (note 6(u)) 7060 Share of profit (loss) of associates accounted for using equity method (note 6(f)) 7100 Interest income (note 6(t)) 7510 Interest expense (note 6(l)) 7900 Profit before income tax 7950 Less: income tax expenses (note 6(o)) Profit 8300 Other comprehensive income (loss): 8310 Items that may not be reclassified subsequently to profit or loss: 8311 Gains (losses) on remeasurements of defined benefit plans (note 6(n)) 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income 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 8300 Other comprehensive income (after tax) Comprehensive income Profit attributable to: Owners of parent Non-controlling interests Comprehensive income (loss) attributable to: Owners of parent Non-controlling interests Basic earnings per share (NT dollars) (note 6(q)) Diluted earnings per share (NT dollars) (note 6(q))	2022	% 100 85	2021	% 100 84 16 3 11 2 - 16 - 16 - 6 - - 22 22 4 18 - - - 2 2 20 18 - 18 19 1 20 0.49 0.49
	Amount $ 495,932 419,379		Amount 456,564 385,595
	76,553	15	70,969
	11,908 50,025 9,314 740	2 10 2 -	13,529 48,662 9,857 55
	71,987	14	72,103
	4,566	1	(1,134)
	73,854 (22,730) 33,215 1,858 (3,859)	15 (5) 7 - (1)	73,091 1,029 26,660 1,570 (2,049)
	82,338	16	100,301
	86,904 18,025	17 4	99,167 16,717
	68,879	13	82,450
	5,178 (242)	1 -	(944) (645)
	4,936	1	(1,589)
	33,082	7	9,488
	38,018	8	7,899
	$ 106,897	21	90,349
	$ 68,684 195	13 -	80,675 1,775
	$ 68,879	13	82,450
	$ 106,702 195	21 -	84,541 5,808
	$ 106,897	21	90,349
	$	0.42
	$	0.42

See accompanying notes to financial statements.

7

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

Consolidated Statements of Changes in Equity

For the years ended December 31, 2022 and 2021

(Expressed in thousands of New Taiwan Dollars)

Equity attributable to owners of parent

								Other equity	Other equity
									Unrealized gain
									(losses) from
					Retained earnings				financial assets
							Exchange differences on		measured at fair value
							translation of		through other			Total equity
		Ordinary	Capital			Unappropriated	foreign financial		comprehensive			attributable to	Non-controlling
		shares	surplus	Legal reserve	Special reserve	retained earnings	statements		income		Treasury shares	owners of parent	interests		Total equity
Balance at January 1, 2021	$	1,732,684	267,713	179,160	56,835	58,825	(65,322)			23,693	(108,791)	2,144,797	103,040		2,247,837
Profit for the year ended December 31, 2021		-	-	-	-	80,675	-			-	-	80,675	1,775		82,450
Other comprehensive income for the year ended December 31,
2021		-	-	-	-	(944)		9,488		(4,678)	-	3,866	4,033		7,899
Comprehensive income for the year ended December 31, 2021		-	-	-	-	79,731		9,488		(4,678)	-	84,541	5,808		90,349
Appropriation and distribution of retained earnings:
Legal reserve		-	-	5,407	-	(5,407)	-			-	-	-	-		-
Cash dividends on ordinary shares		-	-	-	-	(51,980)	-			-	-	(51,980)	-		(51,980)
Cash dividends of the Company received by its subsidiaries		-	-	-	-	-	-			-	-	-	(6,649)		(6,649)
Non-proportional investment in investee's increase in capital		-	2,662	-	-	-	-			-	-	2,662	-		2,662
Balance at December 31, 2021		1,732,684	270,375	184,567	56,835	81,169	(55,834)			19,015	(108,791)	2,180,020	102,199		2,282,219
Profit for the year ended December 31, 2022		-	-	-	-	68,684	-			-	-	68,684		195	68,879
Other comprehensive income for the year ended December 31,
2022		-	-	-	-	5,178		33,082		(242)	-	38,018	-		38,018
Comprehensive income for the year ended December 31, 2022		-	-	-	-	73,862		33,082		(242)	-	106,702		195	106,897
Appropriation and distribution of retained earnings:
Legal reserve		-	-	7,973	-	(7,973)	-			-	-	-	-		-
Cash dividends on ordinary shares		-	-	-	-	(69,307)	-			-	-	(69,307)	-		(69,307)
Cash dividends of the Company received by its subsidiaries		-	-	-	-	-	-			-	-	-	(1,791)		(1,791)
Non-proportional investment in investee's increase in capital		-	3,551	-	-	-	-			-	-	3,551	-		3,551
Balance at December 31, 2022	$	1,732,684	273,926	192,540	56,835	77,751	(22,752)			18,773	(108,791)	2,220,966	100,603		2,321,569

See accompanying notes to financial statements.

8

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

Consolidated Statements of Cash Flows

For the years ended December 31, 2022 and 2021

(Expressed in thousands of New Taiwan Dollars)

Cash flows from operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Expected credit loss Interest expense Interest revenue Dividend income Share of loss (profit) of investments accounted for using equity method Gain from disposal of property, plant and equipment Impairment loss on financial assets Loss on disposal of investment properties Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Financial assets at fair value through profit or loss, mandatorily measured at fair value Contract assets Notes and accounts receivable (including related parties) Inventories Other financial assets and current assets Non-current assets Total changes in operating assets Contract liabilities Notes and accounts payable Other financial liabilities and current liabilities Defined benefit liability Total changes in operating assets and liabilities Total adjustments Cash inflow (outflow) generated from operations Interest received Dividends received Interest paid Income taxes paid Net cash flows from (used in) operating activities Cash flows from 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 Decrease (increase) in refundable deposits Increase in other non-current assets Net cash flows used in investing activities Cash flows from financing activities: Decrease in short-term loans Proceeds from long-term debt Decrease in guarantee deposits received Dividends paid from subsidiary to non-controlling shares Payment of lease liabilities Cash dividends paid Net cash flows used in financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2022 $ 86,904 42,540 740 3,859 (1,858) (22,803) (33,215) (95) 5,388 17,565	2021 99,167 38,282 55 2,049 (1,570) (24,846) (26,660) (670) 13,829 -
	12,121	469
	123,552 3,471 970 (129,417) (1,473) (6,217)	(92,146) (6,099) (20,699) (100,054) (20,126) -
	(9,114)	(239,124)
	45,733 (7,857) (796) 4,758	53,709 1,094 8,157 (1,462)
	32,724	(177,626)
	44,845	(177,157)
	131,749 1,858 22,803 (10) (14,988)	(77,990) 1,570 24,846 (18) (6,940)
	141,412	(58,532)
	10,317 (63,369) 95 9,655 (1,884)	4,647 (48,082) 670 (9,348) -
	(45,186)	(52,113)
	- 2,000 675 (1,791) (758) (65,756)	(2,000) - 245 (6,649) (798) (49,318)
	(65,630)	(58,520)
	30,596 223,377	(169,165) 392,542
	$ 253,973	223,377

See accompanying notes to financial statements.

9

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

Notes to the Consolidated 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 consolidated financial statements comprise the Company and subsidiaries (together referred to as the “Group”). The major business activities of the Group 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 consolidated financial statements:

These consolidated 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 Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated 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 Group 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 consolidated 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)

10

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated 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 Group, 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 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. 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.	Effective date per IASB
		January 1, 2024 January 1, 2024

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

(Continued)

11

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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

(a) Statement of compliance

These consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter, referred to as “the Regulations”) and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations endorsed and issued into effect by the Financial Supervisory Commission, R.O.C..

• (b) Basis of preparation

• (i) Basis of measurement

Except for the following significant accounts, the consolidated 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 each Group is determined based on the primary economic environment in which the entity operates. The consolidated 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.

(Continued)

12

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

• (c) Basis of consolidation

• (i) Principles of preparation of the consolidated financial statements

The consolidated financial statements comprise the Company and subsidiaries. Subsidiaries are entities controlled by the Group. The Group ‘controls’ an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. Intragroup balances and transactions, and any unrealized income and expenses arising from Intragroup transactions are eliminated in preparing the consolidated financial statements. The Group attributes the profit or loss and each component of other comprehensive income to the owners of the parent and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.

The Group prepares consolidated financial statements using uniform accounting policies for like transactions and other events in similar circumstances.

Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received will be recognized directly in equity, and the Group will attribute it to the owners of the parent.

• (ii) List of subsidiaries in the consolidated financial statements

Name of investor Name of subsidiary Principal activity The Company Hong Sheng Investment Co., Ltd. (Hong Sheng Investment) General investing 〞 Progiant Construction & Development Corporation (Progiant Construction) Entrust construction companies to build the rental and sales business of national residences and commercial buildings 〞 Worthy Textile Industry Co., Ltd. (Worthy Textile) General investing Hong Sheng Investment Sea Some International Development Co., Ltd. (Sea Some International) International trade

Shareholding December 31, 2022 December 31, 2021 100.00% 100.00% 83.68% 83.68% 100.00% 100.00% 100.00% 100.00%

(iii) Subsidiaries excluded from the consolidated financial statements: None.

(Continued)

13

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

(d) Foreign currencies

• (i) Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currencies of Group entities 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. 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 a foreign currency 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 the Group 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 the Group 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.

(e) 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.

(Continued)

14

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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

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 Group 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.

In addition, the business cycle of constructing business, engaged in the Group, is longer than one year. The relevant assets and liabilities of construction business are defined as non-current or non-current based on the business cycle.

• (f) 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.

(g) 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 Group 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) – debt investment; FVOCI – equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Group 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.

(Continued)

15

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

• 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.

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

On initial recognition of an equity investment that is not held for trading, the Group 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 Group’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 Group 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 Group 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.

(Continued)

16

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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 Group 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 Group in accordance with the contract and the cash flows that the Group expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

At each reporting date, the Group assesses whether financial assets carried at amortized cost and debt securities 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：

• ‧ 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 Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. The Group 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 Group 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 Group’s procedures for recovery of amounts due.

• 5) Derecognition of financial assets

The Group 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 Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

(Continued)

17

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

The Group 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 Group 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.

• 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 Group derecognizes a financial liability when its contractual obligations are discharged, cancelled, or expired. The Group 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.

(Continued)

18

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

• 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 Group 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.

(h) Inventories

• (i) Manufacturing

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on 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.

(ii) Construction and development business

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on 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. The measurement of net realizable value is as follows:

• 1) Construction sites: The net realizable value is calculated on the basis of the estimated current market conditions judged by the management.

• 2) Construction-in-progress: The net realizable value is calculated on the basis of the expected selling price (based on the current market conditions) less cost of construction completion and selling costs.

• 3) Buildings and land held for sale: The NRV is the estimated selling price (with reference to the management authority’s estimation based on prevailing market conditions) less estimated costs to be incurred in selling the properties and selling expenses.

(Continued)

19

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

• (i) Investment in associates

• (i) Associates are those entities in which the Group 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 consolidated financial statements include the Group’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 Group, from the date on which significant influence commences until the date on which significant influence ceases.

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

When the Group’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 Group has incurred legal or constructive obligations or made payments on behalf of the associate.

When the Group 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 Group’s proportionate interest in the net assets of the associate. The Group 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 Group’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.

(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.

(Continued)

20

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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 Group.

• (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 construction: 2~25 years

• 2) Machinery and equipment: 2~10 years

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

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 Group 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.

(Continued)

21

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

• (i) As a leasee

The Group 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 Group’s incremental borrowing rate. Generally, the Group 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 Group s estimate of the amount expected to be payable under a residual value guarantee; or

• － 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 modifications

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.

(Continued)

22

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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 Group 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 Group 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 Group has elected not to recognize right-of-use assets and lease liabilities for short-term leases. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(ii) As a leasor

When the Group 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 Group 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 Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Group 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, not with reference to the underlying asset. If a head lease is a short-term lease to which the Group 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 Group applies IFRS15 to allocate the consideration in the contract.

• (m) Impairment – non-derivative financial assets

At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than inventories, 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.

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.

(Continued)

23

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

(n) Revenue recognition

(i) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Group expects to be entitled in exchange for transferring goods or services to a customer. The Group 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 Group’s main types of revenue are explained below.

1) Sale of goods–real estate

The Group develops and sells residential properties, and revenue is recognized when control over the properties has been transferred to the customer. The properties have generally no alternative use for the Group due to contractual restrictions. However, an enforceable right to the amounts performed to date becomes available to the Group, after the legal title to the properties is transferred to the customer. Therefore, revenue is recognized at a point in time when the legal title to the properties is transferred to the customer.

The revenue is measured at the transaction price agreed under the contract. For sales of existing homes, in most cases, in most cases, the consideration is due when legal title to a property has been transferred. While deferred shall not exceed twelve months. The transaction price is therefore not adjusted to reflect the effects of significant financing components. For pre-selling properties, the consideration is usually received in installments during the period from the signing of the contract to the transfer of properties to the customer. If the contract contains a significant financing component, the transaction price will be adjusted for the effects of the time value of money during the period, using the specific borrowing rate of the construction project. Receipt of a prepayment from a customer is recognized as a contract liability. Interest expense and contract liability are recognized when adjusting the effects of the time value of money. Accumulated amount of contract liabilities is recognized as the revenue when control over the property has been transferred to the customer.

2)

Service revenue

The Group 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 Group'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.

(Continued)

24

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

3) Financing components

The Group does not expect to have any contracts when 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 group does not adjust any of the transaction prices for the time value of money.

• 4) Contract costs

The Group entrust advertisers for selling real estate, The Group recognizes as an asset the incremental costs of obtaining a contract with a customer if the Group expects to recover those costs, and amortized on a systematic basis consist with when the control of over the property has been transferred to the customer. The incremental costs of obtaining a contract are those costs that the Group incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained.

Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained shall be recognized as an expense when incurred, unless those costs are explicitly chargeable to the customer regardless of whether the contract is obtained.

(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

’ A benefit plan that is not a defined contribution plan is a defined benefit plan. The Group 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 Group, 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.

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 Group recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

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.

(Continued)

25

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The Group 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.

• (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 Group 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.

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 Group 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 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, and reflect uncertainty related to income taxes, if any.

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

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

(Continued)

26

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

• (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 Group 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.

(r) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group). Operating results of the operating segment are regularly reviewed by the Group’s chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance. Each operating segment consists of standalone financial information.

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

In preparation of these consolidated 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 next period.

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

(Continued)

27

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

• (a)Judgment of whether the Group has substantive control over its investees

The Group 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 Group 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 Group 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.

• (b) 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 Group’s accounting policies include measuring financial and non-financial assets and liabilities at fair value through profit or loss. The Group’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.

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(v) for assumptions used in measuring fair value.

(Continued)

28

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

(6) Explanation of significant accounts:

• (a) Cash and cash equivalents

Cash and demand deposits Time deposits Cash and cash equivalents in consolidated statement of cash flows	December 31, 2022 $ 103,846 150,127	December 31, 2021 93,477 129,900
	$ 253,973	223,377

• (i) Please refer to note 6(v) for the exchange rate risk, and sensitivity analysis of the financial assets and liabilities of the Group.

• (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) Financial assets at fair value through profit or loss

Mandatorily measured at fair value through profit or loss (current and non-current) Stocks listed on domestic markets Emerging stock Open-end Funds Total Current Non-Current	December 31, 2022 $ 261,440 7,557 251,355	December 31, 2021 285,884 7,213 373,760
	$ 520,352	666,857
	December 31, 2022 $ 512,795 7,557	December 31, 2021 659,644 7,213
	$ 520,352	666,857

• (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 $ 437 141,240	December 31, 2021 334 141,585 141,919
	$ 141,677

(Continued)

29

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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

The Group designated the investments shown above as equity securities at fair value through other comprehensive income because these equity securities represent those investments that the Group 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 (v).

• (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 (including related parties)

Notes receivable Accounts receivable (including related parties) Less: Loss allowance	December 31, 2022	December 31, 2021 36,707 50,051 (448) 86,310
	$ 21,416 64,372 (1,188)
	$ 84,600

The Group 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:

Current 0 to 90 days past due 91 to 180 days past due More than 181 days past due Current 0 to 90 days past due 91 to 180 days past due More than 181 days past due	December 31, 2022	December 31, 2022	December 31, 2022	Loss allowance provision - 852 - 336
	Gross carrying amount $ 47,015 17,021 - 336	Weighted-aver age loss rate
	$ 64,372			1,188
				Loss allowance provision - 112 - 336
	Gross carrying amount $ 47,793 1,922 - 336	Weighted-aver age loss rate
		0% 0%~5% 40% 100%
	$ 50,051			448

(Continued)

30

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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	2021 393 55
	$ 1,188	448

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

• (e) Inventories

• (i) Inventory details

Weaving, dyeing and printing business Raw material Construction and development business Land held for construction Construction in progress Subtotal Total	December 31, 2022 $ 21,338	December 31, 2021 31,059 76,033 194,538 270,571 301,630
	$ 21,761 387,948
	409,709
	$ 431,047

The loss (gain) relevant to inventories included in cost of sales were as follows:

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

(ii) Construction and development business

Item Zhongshan urban renewal Case of Glorious Case of Xining N. Rd. Other		December 31, 2022	December 31, 2022
	Land under constr construction) $ - 14,020 3,595 4,146	Construction in progress 345,812 - 9,458 32,678	Buildings and lands held for sale - - - -	Total
	$ 21,761	387,948	-	409,709 246,218

(Continued)

31

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Item Zhongshan urban renewal Case of Glorious Case of Xining N. Rd. Other		December 31, 2021	December 31, 2021
	Land under constr construction) $ 55,173 14,020 3,595 3,245	Construction in progress 185,076 - 6,955 2,507	Buildings and lands held for sale - - - -	Total
	$ 76,033	194,538	-	270,571 196,636

  - 1) The construction inventories listed above are expected to be recovered over a period of more than twelve months.

  - 2) Interest capitalized for construction for 2022 is $12 thousand and rate is 2.35%, and there is no interest capitalized for construction in progress in 2021.

• (iii) As of December 31, 2022 and 2021, the Group did not provide any inventories as collateral for its loans.

• (f) Investments accounted for using equity method

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

Associates	December 31, 2022 $ 441,293	December 31, 2021 385,313

• (i) Associates which are material to the Group consisted of the followings:

Name of associates Nature of relationship with the Group Main operating loation/Registered country of the company	Proportion of shareholding and voting rights
	December 31, 2022 December 31, 2021
Chyang Sheng Vietnam Dyeing and printing business Vietnam Treasure Star International trade Samoa	33.61% 33.61% 33.61% 33.61%

(Continued)

32

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The following consolidated financial information of significant associates has been adjusted according to individually prepared IFRS financial statements of these associates:

• 1) Chyang Sheng Vietnam:

Current assets Non-current assets Current liabilities Non-current liabilities Net assets Net assets attributable to the Group Operating revenue Net loss Other comprehensive income Total comprehensive income Comprehensive income attributable to the Group Share of net assets of associates as of January 1 Comprehensive income attributable to the Group Share of net assets of associates as of December 31 Add: Net equity difference Balance of equity of associates attributable to the Group as of December 31	December 31, 2022 $ 400,419 467,224 (223,233) (75,928)	December 31, 2021 366,871 444,383 (151,727) (97,232)
	$ 568,482	562,295
	$ 568,482	562,295
	2022 $ 713,083	2021 502,442
	$ (35,289) 41,476	(22,844) 40,899
	$ 6,187	18,055
	$ 6,187	18,055
	2022 $ 188,964 2,079	2021 182,896 6,068
	191,043 25,142	188,964 25,142
	$ 216,185	214,106

• 2) Treasure Star:

Current assets Non-current assets Current liabilities Non-current liabilities Net assets Net assets attributable to the Group	December 31, 2022 $ 856,881 49,215 (262,515) -	December 31, 2021 729,319 14,813 (260,920) -
	$ 643,581	483,212
	$ 643,581	483,212

(Continued)

33

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

2022 Operating revenue $ 1,434,100 Net income $ 134,109 Other comprehensive income (loss) 56,954 Total comprehensive income $ 191,063 Comprehensive income attributable to the Group $ 191,063 2022 Share of net assets of associates as of January 1 $ 162,424 Comprehensive income attributable to the Group 64,218 Dividends received from associates (10,317) Share of net assets of associates as of December 31 216,325 Add: Net equity difference 8,783 Balance of equity of associates attributable to the Group as of December 31 $ 225,108	2022 $ 1,434,100	2021 1,045,313
	$ 134,109 56,954	102,151 (12,664)
	$ 191,063	89,487
	$ 191,063	89,487
	2022 $ 162,424 64,218 (10,317)	2021 136,991 30,080 (4,647)
	216,325 8,783	162,424 8,783
		171,207

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

(iii) None of the associates invested by the Group has a public market quotation.

• (g) Material non-controlling interests of subsidiaries

The material non-controlling interests of subsidiaries were as follows:

Subsidiaries	Main operation place	Percentage of non- controlling interests December 31, 2022 December 31, 2021 16.32% 16.32%
		December 31, 2022
Progiant Construction	Taiwan	16.32%

• (i) Progiant Construction collective financial information were as follows. The following information has been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. Intragroup transactions were not eliminated in this information.

Current assets Non-current assets Current liabilities Non-current liabilities Net assets Non-controlling interests	December 31, 2022 $ 726,490 164,534 (271,058) (3,368)	December 31, 2021 681,210 174,446 (227,668) (1,612)
	$ 616,598	626,376
	$ 100,603	102,199

(Continued)

34

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Operating revenue Net income Other comprehensive income Total comprehensive income Profit, attributable to non-controlling interests Comprehensive income, attributable to non-controlling interests Net cash flows from operating activities Net cash flows from investing activities Net cash flows from financing activities Net increase (decrease) in cash and cash equivalents	2022 $ 1,470	2021 -
	$ 1,195 -	10,879 24,717
	$ 1,195	35,596
	$ 195	1,775
	$ 195	5,809
	$ 13,515 9,655 (8,972)	52,408 (9,348) (42,755)
	$ 14,198	305

(h) Property, plant and equipment

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

Cost: Balance on January 1, 2022 Additions Disposal Reclassify to investment property Transfer from (to) Balance on December 31, 2022 Balance on January 1, 2021 Additions Disposal Reclassify to investment property Transfer from (to) Balance on December 31, 2021 Accumulated depreciation: Balance on January 1, 2022 Depreciation Disposal Reclassify to investment property Balance on December 31, 2022	Land $ 296,505 - - (1,778) -	Buildings and construction Machinery and equipment Office and other equipment Construction in progress and testing equipment Total 257,291 585,097 439,875 12,279 1,591,047 7,470 2,550 10,057 43,292 63,369 - (60,690) (35,342) - (96,032) (20,702) - - - (22,480) 20,846 24,598 14,637 (50,650) 9,431
	$ 294,727	264,905 551,555 429,227 4,921 1,545,335
	$ 303,139 - - (6,634) -	260,827 568,915 434,800 10,668 1,578,349 3,560 2,186 6,114 29,809 41,669 - (15,326) (1,610) - (16,936) (8,399) - - - (15,033) 1,303 29,322 571 (28,198) 2,998
	$ 296,505	257,291 585,097 439,875 12,279 1,591,047
	$ - - - -	239,752 509,190 410,646 - 1,159,588 11,276 17,707 11,608 - 40,591 - (60,690) (35,342) - (96,032) (19,303) - - - (19,303)
	$ -	231,725 466,207 386,912 - 1,084,844

(Continued)

35

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Balance on January 1, 2021 Depreciation Disposal Reclassify to investment property Balance on December 31, 2021 Carrying amounts: Balance on December 31, 2022 Balance on December 31, 2021 Balance on January 1, 2021	Land $ - - - -	Buildings and construction Machinery and equipment Office and other equipment Construction in progress and testing equipment Total 238,979 508,448 401,255 - 1,148,682 9,157 16,068 11,001 - 36,226 - (15,326) (1,610) - (16,936) (8,384) - - - (8,384)
	$ -	239,752 509,190 410,646 - 1,159,588
	$ 294,727	33,180 85,348 42,315 4,921 460,491
	$ 296,505	17,539 75,907 29,229 12,279 431,459
	$ 303,139	21,848 60,467 33,545 10,668 429,667

As of December 31, 2022 and 2021, the property, plant and equipment of the Group had been pledged as collateral for long-term borrowings; please refer to note 8.

(i) Right-of-use assets

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

Cost: Balance at January 1, 2022 (the same as ending balance) Balance at January 1, 2021 Additions Write-off Balance on December 31, 2021 Accumulated depreciation: Balance at January 1, 2022 Depreciation for the year Balance at December 31, 2022 Balance at January 1, 2021 Depreciation for the year Write-off Balance at December 31, 2021 Carrying amount: Balance at December 31, 2022 Balance at December 31, 2021 Balance at January 1, 2021

Vehicles $ 2,265 $ 2,666 724 (1,125) $ 2,265 $ 1,057 755 $ 1,812 $ 1,381 801 (1,125) $ 1,057 $ 453 $ 1,208 $ 1,285

(Continued)

36

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(j) Investment property

Cost: Balance at January 1, 2022 Reclassify from property, plant and equipment Balance at December 31, 2022 Balance at January 1, 2021 Reclassify from property, plant and equipment Balance at December 31, 2021 Accumulated depreciation: Balance at January 1, 2022 Depreciation for the year Reclassify from property, plant and equipment Balance at December 31, 2022 Balance at January 1, 2021 Depreciation for the year Reclassify from property, plant and equipment 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 $ 261,352 166,558 1,778 20,702	Owned property Land Buildings $ 261,352 166,558 1,778 20,702	Owned property Land Buildings $ 261,352 166,558 1,778 20,702	Total 427,910 22,480
	Land $ 261,352 1,778
	$ 263,130	187,260		450,390
	$ 254,718 6,634	158,159 8,399		412,877 15,033
	$ 261,352	166,558		427,910
	$ 11,490 - -	163,440 1,194 19,303		174,930 1,194 19,303
	$ 11,490	183,937		195,427
	$ 11,490 - -	153,801 1,255 8,384		165,291 1,255 8,384
	$ 11,490	163,440		174,930
	$ 251,640	3,323		254,963
	$ 249,862	3,118		252,980
	$ 243,228	4,358		247,586
			$ 2,819,472
			$ 1,610,378

(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 5 years. The subsequent lease term will be negotiated with the lessee, and no contingent rent will be charged. Please refer to note 6(m).

(Continued)

37

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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

• (iii) As of December 31, 2022 and 2021, the investment property of the Group had been pledged as collateral for long-term borrowings; please refer to note 8.

• (k) Long-term borrowings

The details were as follows:

Secured bank loans Borrowing rate range at the end of the period	December 31, 2022 $ 2,000	December 31, 2022 $ 2,000	December 31, 2022 $ 2,000	December 31, 2021 -
		2.35%		-

• (i) The pledged assets of the Group as collateral for bank borrowings, please refer to note 8.

• (ii) The long term borrowing listed above will expire on June 30, 2024, and will be repaid in one lump sum.

(l) Lease liabilities

The lease liabilities were as follows:

The lease liabilities were as follows:
Current Non-current	December 31, 2022 $ 418	December 31, 2021 759
	$ 41	458

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

The amounts recognized in profit or loss was as follows:

Interest on lease liabilities Expenses relating to short-term leases	2022 $ 10 $ 4,293	2021 18
		4,247

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

Total cash outflow for leases	2022 $ 5,061	2021 5,063

(Continued)

38

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

(m) Operating lease

The Group leases out its investment property. The Group 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(j) 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 30,360 60,498	December 31, 2021 33,340 15,259
	$ 90,858	48,599

Rental income from investment properties in 2022 and 2021 were $45,568 thousand and $43,919 thousand, respectively.

(n) 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(liabilities)	December 31, 2022 $ (39,784) 46,001	December 31, 2021 (50,030) 49,610
	$ 6,217	(420)

The Group 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 calculated based on years of service and average monthly salary for the six months prior to retirement.

1) Composition of plan assets

The Group 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.

(Continued)

39

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

The Group’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 Group were as follows:

Defined benefit obligation on January 1 Benefit paid Current service costs and interest cost Remeasurements loss (gain) - Experience loss - Actuarial loss arising from demographic assumptions - Actuarial gain arising from financial assumptions Defined benefit obligation on December 31	2022 $ 50,030 (9,334) 480 79 - (1,471)	2021 49,829 (1,722) 272 976 1,960 (1,285)
	$ 39,784	50,030

• 3) Movements of defined benefit plan assets The movements in the present value of the defined benefit plan assets for the Group 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	2021 48,891 1,560 (1,722) 174 707 49,610
	$ 46,001

(Continued)

40

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

• 4) Expenses recognized in profit or loss

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

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

• 5) Actuarial assumptions

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

Discount rate Future salary increase rate	2022	2021 0.750% 1.125%
	1.400% 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 Group to the defined benefit plans for the one-year period after the reporting date is $1,560 thousand.

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

(Continued)

41

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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 Increase 0.25% Decrease 0.25% $ (580) 595	Impact on defined benefit obligations Increase 0.25% Decrease 0.25% $ (580) 595
	Increase 0.25% $ (580)
		595
	$ 581	(569)
	$ (823)	846
	$ 819	(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 Group 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 Group 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 $3,754 thousand and $3,728 thousand for the years ended December 31, 2022 and 2021, respectively.

(o) Income taxes

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

Current tax expense Deferred tax expense Income tax expense	2022 $ 10,776 7,249	2021 12,154 4,563
	$ 18,025	16,717

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

(Continued)

42

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(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 $ 86,904	2021 99,167
	25,562 370 (5,544) (2,363)	28,908 956 (11,668) (1,479)
	$ 18,025	16,717

• (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 The carryforward of unused tax losses	December 31, 2022
	$ 28,520 28,150

The R.O.C. Income Tax Act allows net losses, as assessed by the tax authorities, to offset taxable income over a period of ten years for local tax reporting purposes. Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will be available against which the Group can utilize the benefits therefrom.

As of December 31, 2022, the information of the Group’s unused tax losses for which no deferred tax assets were recognized are as follows:

Year of loss Hong Sheng Investment 2021 (estimate) 2022 (estimate) Total	Unused tax loss $ 123 470 $ 593	Expiry date
		2031 2032

(Continued)

43

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

• 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	Others

As of December 31, 2022, the information of domestic entities' unused tax losses recognized as defferred tax assets for which included in the consolidated financial statements are as follows:

Year of loss Progiant Construction 2012 (approved) 2013 (approved) Total	Unused tax loss $ 3,010 6,071 $ 9,081	Expiry date
		2022 2023

• 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 Balance on January 1, 2021 Recognized in profit or loss Balance on December 31, 2021	Land revaluation appreciation allowance $ 67,994 -	Others 25,448 5,907	Total 93,442 5,907
	$ 67,994	31,355	99,349
	$ 67,994 -	20,192 5,256	88,186 5,256
	$ 67,994	25,448	93,442

(Continued)

44

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

• (v) The Company’s tax return for the years through 2020 was assessed by the tax authority. And, Progiant Construction's, Worthy Textile's, Hong Sheng Investment's, and Sea Some International's tax returns for the year through 2020 were assesed by the tax authority.

(p) 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	December 31, 2021 2,141 207,948 31,124 29,162
	$ 2,141 211,499 31,124 29,162
	$ 273,926	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.

(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.

(Continued)

45

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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 consolidated 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. (When the Company distributes its 2020 earnings in 2021, a portion of its current-period earnings and undistributed prior-period earnings shall be reclassified to special earnings reserve. When the Company distributes its 2021 earnings in 2022, the after-tax net profit in the period, plus items other than the after-tax net profit in the period, that are included in the undistributed current-period earnings and undistributed prior-period earnings, shall be reclassified to special earnings reserve.) 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)

46

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated 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
	Amount per share	Amount per share
	$ 0.4	0.3

• (iv) Treasury shares

As of December 31, 2022 and 2021, the total amount of treasury shares both were $108,791, 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.

• (q) 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 Issued ordinary shares at 1 January Effect of treasury shares held Weighted average number of ordinary shares at 31 December	2022 $ 68,684	2021 80,675 164,393 0.49 2021 173,268 (8,875) 164,393
	164,393
	$ 0.42
	2022 $ 173,268 (8,875)
	$ 164,393

(Continued)

47

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

• (ii) Diluted earnings per share

Profit attributable to ordinary shareholders of the Company Weighted average number of ordinary shares at 31 December (diluted/ in thousands) Diluted earnings per share Weighted average number of ordinary shares (basic) Effect of treasury shares held Effect of estimated employee share bonus Weighted average number of ordinary shares (diluted) at December 31	2022 $ 68,684	2021 80,675 164,467 0.49 2021 173,268 (8,875) 74 164,467
	$ 164,466
	$ 0.42
	2022 $ 173,268 (8,875) 73
	$ 164,466

• (r) Revenue from contracts with customers

• (i) Disaggregation of revenue

Primary geographical markets Taiwan Major products/services lines Cloth processing Sale of real estate Others Primary geographical markets Taiwan Major products/services lines Cloth processing Others Cloth processing		2022	2022	Total 495,932
	Weaving and dyeing and Finishing $ 486,163	Construction 1,470	Other 8,299
	$ 485,938 - 225	- 1,470 -	- - 8,299	485,938 1,470 8,524
	$ 486,163	1,470	8,299	495,932
		2021		Total 456,564
	Weaving and dyeing and Finishing $ 452,039	Construction -	Other 4,525
	$ 451,799 240	- -	- 4,525	451,799 4,765
	$ 452,039	-	4,525	456,564

(Continued)

48

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ii) Contract balances

Notes and accounts receivable Less: allowance for impairment Total Contract asset-OEM Less: allowance for impairment Total Contract liabilities- Sale of real estate	December 31, 2022 December 31, 2021 $ 85,788 86,758 (1,188) (448) $ 84,600 86,310 $ 11,271 14,742 - - $ 11,271 14,742 $ 246,218 196,636

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

• (ii) The amount of revenue recognized for the years ended December 31, 2022 and 2021 that was included in the contract liability balance at the beginning of the period were $0 thousand.

• (s) 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 consolidated financial statements, are identical to those of the actual distributions for 2022 and 2021.

(Continued)

49

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(t) 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:

were as follows:
Interest income from bank deposits Rental income Dividend income Others	2022 $ 1,858	2021 1,570
	2022 $ 45,568 22,803 5,483	2021 43,919 24,846 4,326 73,091
	$ 73,854

(u) Other gains and losses

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

Gains (Losses) on disposals of investments Gains on disposals of property, plant and equipment Losses on financial assets (liabilities) at fair value through profit or loss Foreign exchange gains Others	2022 $ (17,565) 95 (5,388) 333 (205)	2021 14,524 670 (13,829) 8 (344) 1,029
	$ (22,730)

(v) Financial instruments

• (i) Credit risk

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

(Continued)

50

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

• 1) Accounts receivable and other receivables

As the weaving ,dyeing and finishing business, the Group has adopted a policy that only trading with the parties with good credit standing and the Group 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 Group, using public financial information and their transaction histories. The Group 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.

As the real estate development business, most of the land premiums for sales are accounts received in advance, and most of them can be financed by bank housing loans, so there is no significant credit risk in the accounts receivable of the Group.

The Group did not have any collateral or other credit enhancements to avoid credit risk of financial assets.

• 2) Investment

The credit risk exposure of bank deposits, fixed-income investment, and other financial instruments is measured and monitored by the Group’s finance department. As the Group 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 Group 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 $1,188,093 thousand and $1,322,295 thousand, respectively.

• 4) Concentration of credit risk The Group’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, 69% and 62%, respectively, of the ending balance of accounts receivable arose from sales to individual customers constituting the top five customers (excluding real estate development business). The real estate development business has a large customer base and does not significantly trade with a single customer, and the credit risk of accounts receivable is not significantly concentrated.

(Continued)

51

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ii) Liquidity risk

The following table shows the contractual maturities of financial liabilities, including the impact of estimated interest payments.

December 31, 2022 Notes and accounts payable Lease liabilities Other financial liabilities Long-term borrowing Deposit guarantee December 31, 2021 Notes and accounts payable Lease liabilities Other financial liabilities Deposit guarantee	Carrying amount $ 56,214 459 52,642 2,000 10,845	Contractual cash flows	Within 1 year	1~2 years	2~ 5 years
		56,214 461 52,642 2,016 10,845	56,214 420 52,642 - -	- 41 - 2,016 -	- - - - 10,845
	$ 122,160	122,178	109,276	2,057	10,845
	$ 64,071 1,217 51,971 10,170	64,071 1,230 51,971 10,170	64,071 769 51,971 -	- 461 - -	- - - 10,170
	$ 127,429	127,442	116,811	461	10,170

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

(iii) Market risk

1) Currency risk

The Group’s significant exposure to foreign currency risk were as follows:

Financial assets USD	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2021 Foreign currency Exchange rate TWD 114 27.68 3,164	December 31, 2021 Foreign currency Exchange rate TWD 114 27.68 3,164
	Foreign currency $ 120	Exchange rate	TWD	Foreign currency	Exchange rate
		30.71	3,695	114	27.68

The Group’s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts receivable (including relatied parties) and other receivables that are denominated in foreign currency.A strengthening (weakening) of 1% of the NTD against the above mentioned foreign currency would have increased (decreased) the net profit after tax by $37 thousand and $32 thousand, respectively. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the reporting date. The analysis assumes that all other variables remain constant and ignores any impact of forecasted sales and purchases. The analysis is performed on the same basis for 2021 (prior year).

(Continued)

52

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The amount of exchange gains and losses (including realized and unrealized) of the Group’s monetary items converted into the functional currency, and the exchange rate information that has been converted to the functional currency of the parent company, NTD (that is, the currency expressed by the Group) are as follows:

NTD	2022	2022	2021 Foreign exchange gain (loss) Exchange rate 8 1
	Foreign exchange gain (loss)	Exchange rate
	$ 333	1	8

• 2) Interest rate analysis

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

Variable-rate instruments: Financial assets Financial liabilities	Carrying	amount December 31, 2021 368,377 -
	December 31, 2022 $ 388,370 (2,000)
	$ 386,370	368,377

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 points, the Group’s profit before income taxe would have increased / decreased by $966 thousand and $921 thousand for the year 2022 and 2021, with all other variable factors remaining constant. This is mainly due to the Group’s savings at variable rates. In addition, the Group's fixed-rate financial assets are measured at cost after amortization, and changes in market interest rates on the reporting date have no impact on profit or loss, so the sensitivity analysis of changes in fair value is not intended to be disclosed.

• 3) Other market price risk

For the years ended December 31, 2022 and 2021, the sensitivity analyses 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	2022	2021 Other comprehensive income before tax Profit before income tax 33 66,686 (33) (66,686)
	Other comprehensive income before tax	Profit before income tax	Other comprehensive income before tax
Increasing 10% Decreasing 10%	$ 44 (44)	52,035 (52,035)	33 (33)

(Continued)

53

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

• (iv) Fair value of financial instruments

• 1) Fair value value hierarchy

The fair value of financial assets and liabilities at fair value through profit or loss, financial instruments used for hedging, and financial assets at fair value through other comprehensive income is measured on a recurring basis. The carrying amount and fair value of the Group’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 Emerging stock Financial assets at fair value through other comprehensive income Stocks in listed companies Stocks in unlisted companies Financial assets measured at amortized cost: Cash and cash equivalents Notes and accounts receivable, net (including related parties) Other current financial assets Deposit guarantee Financial liabilities measured at amortized cost: Notes and accounts payable Lease liabilities Other financial liabilities Long-term borrowing Deposit guarantee		December 31, 2022	December 31, 2022	December 31, 2022
	Book value		Fair value
		Level 1 512,795 -	Level 2 - 7,557	Level 3 - -	Total 512,795 7,557
	$ 512,795 7,557
	$ 520,352	512,795	7,557	-	520,352
	$ 437 141,240	437 -	- -	- 141,240	437 141,240
	$ 141,677	437	-	141,240	141,677
	$ 253,973 84,600 147,163 40,328
	$ 526,064
	$ 56,214 459 52,642 2,000 10,845
	$ 122,160

(Continued)

54

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Financial assets at fair value through profit or loss Open-end funds and stocks in listed companies Emerging stock Financial assets at fair value through other comprehensive income: Stocks in listed companies Stocks in unlisted companies Financial assets measured at amortized cost: Cash and cash equivalents Notes and accounts receivable, net (including related parties) Other current financial assets Deposit guarantee Financial liabilities measured at amortized cost: Notes and accounts payables Lease liabilities Other financial liabilities Deposit guarantee		December 31, 2021 Fair value Level 1 Level 2 Level 3 Total 659,644 - - 659,644 - 7,213 - 7,213	December 31, 2021 Fair value Level 1 Level 2 Level 3 Total 659,644 - - 659,644 - 7,213 - 7,213	December 31, 2021 Fair value Level 1 Level 2 Level 3 Total 659,644 - - 659,644 - 7,213 - 7,213
	Book value $ 659,644 7,213
		Level 1 659,644 -	Level 2 - 7,213
	$ 666,857	659,644	7,213	- 666,857
	$ 334 141,585	334 -	- -	- 334 141,585 141,585
	$ 141,919	334	-	141,585 141,919
	$ 223,377 86,310 153,849 49,983
	$ 513,519
	$ 64,071 1,217 51,971 10,170
	$ 127,429

• 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.

(Continued)

55

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

The financial instruments held by the Group 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) Transfers between Level 2 and Level 3

The Group helds an investment in equity shares of unlisted company, which is classified as fair value through other comprehensive income, with a book value of $10,000 thousand as of December 31, 2021. Because the shares were not listed on an exchange and there were no recent observable arm’s length transactions in the shares, the fair value measurement was transferred from Level 2 to Level 3 of the fair value hierarchy. There was no transfer in year 2022.

• 4) Reconciliation of Level 3 fair values

Opening balance, January 1, 2022 Total gains and losses recognized in other comprehensive income Ending Balance, December 31, 2022 Opening balance, January 1, 2021 Total gains and losses recognized in other comprehensive income Transfers from Level 2 Ending Balance, December 31, 2021

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 24,349

(Continued)

56

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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

The Group’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 Group 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.

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 ‧Lack-of-marketability Discount (20%~30% and 20%~30% at December 31, 2022 and 2021, respectively) ‧P/B ratio multiplier (1.26~3.43 and 1.20~3.01 at December 31, 2022 and 2021, respectively) ‧C.E.R. ratio multiplier (7.56~21.37 and 8.05~9.78 at December 31, 2022 and 2021, respectively)	Inter-relationship between significant unobservable inputs and fair value measurement
			‧The higher the Lack-of-marketabil ity discount is, the lower the fair value ‧The higher the ratio, the higher the fair value ‧The higher the ratio, the higher the fair value

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

The Group'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:

(Continued)

57

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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	Variation	Other comprehensive income Favour- able Unfavour-a ble 7,286 (7,286) 9,747 (9,747) 7,219 (7,219) 9,648 (9,648)
			Favour- able
	P/B and EV ratio Lack of marketability discount P/B and EV ratio Lack of marketability discount	5% 5% 5% 5%	7,286 9,747 7,219 9,648

• (w) Financial risk management

• (i) Overview

The Group 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(v).

• (ii) Structure of risk management

The Group’s risk management policies are established to identify and analyze the risks faced by the Group, 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 Group ’ s activities. The Group, 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.

(Continued)

58

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

’ The Board of Directors oversees how management monitors compliance with the Group s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. 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.

(x) Capital management

The Group’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. And considering the particularity of the real estate development business which the source of funds for real estate development can be obtained through pre-sale method. The management uses the debt ratio excluding advance payment for real estate to manage capital. As of December 31, 2022 and 2021, the Group’s debt ratio were 18% and 16% respectively. As of December 31, 2022, the Group’s capital management strategy is consistent with the prior year.

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

The Group’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(i).

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

Long-term borrowings Lease liabilities Total liabilities from financing activities Short-term borrowings Lease liabilities Total liabilities from financing activities	January 1, 2022 Cash flows Others December 31, 2022 $ - 2,000 - 2,000 1,217 (758) - 459
	$ 1,217 1,242 - 2,459
	January 1, 2021 Cash flows Others December 31, 2021 $ 2,000 (2,000) - - 1,291 (798) 724 1,217 $ 3,291 (2,798) 724 1,217

(7) Related-party transactions:

• (a) Names and relationship with the Company

Name of related party Relationship with the Group Associate Substantial related person

Chyang Sheng Vietnam Co., Ltd (Chyang Sheng Vietnam) Shinkong Textile Co., Ltd.( Shinkong Textile)

(Continued)

59

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

• (b) Significant transactions with related parties

(i) Sales

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

Associate Shinkong Textile Total	Sales 2022 2021 $ 8,299 4,525 169,200 100,596	Sales 2022 2021 $ 8,299 4,525 169,200 100,596	Accounts December 31, 2022	receivable December 31, 2021 1,514 24,621
	2022 $ 8,299 169,200
			3,405 38,753
	$ 177,499	105,121	42,158	26,135

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

(ii) Lease

The Group 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
	2022 $ 13,438
		9,035

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.

• (c) Key management personnel compensation

Key management personnel compensation comprised:

Short-term employee benefits	2022 $ 11,985	2021 12,770

(Continued)

60

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

(8) Pledged assets:

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

Pledged assets	Object
Land(Notes) Buildings(Notes) Refundable deposit Other financial assets -current

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

(9) Significant contingent liabilities and unrecognized commitments:

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

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

• (b) The details of the joint investment and construction contract signed by the Group are as follows:

Project name	Landlord or Co-Investor Builder	Land number	Joint construction	Completed/Estimated Completion Year 2023
Zhongshan urban renewal project	Taipei City Government	Section 4 of Zhongshan Section, Zhongshan District	urban renewal

The Refundable deposit paid by the Group for the real estate development business are as follows:

Refundable deposit	December 31, 2022 $ 31,030	December 31, 2021 40,975

As of December 31, 2022, the total contract price signed with the contractor is $356,200 thousand, and $217,214 thousand has been paid in accordance with the contract.

(Continued)

61

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

• (c) The price of pre-sale house sales contract signed by the Group and the customerprice of pre-sale contracts between the Group and its customers is as follows:

(c) The price of pre-sale house sales contract signed by th pre-sale contracts between the Group and its customers is	eGroupand the c as follows:	ustomerprice of
The price of the signed sales contract Amount collected as agreed	December 31, 2022 $ 952,730	December 31, 2021
		952,730
	$ 246,540	198,520

• (d) Due to operating and financing needs of the Group, the amount of endorsement guarantee provided by the financial institution at December 31, 2022 and 2021 is $350,000 thousand dollar, and the actual amount of expenditure is $0 thousand dollar.

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

• (f) As the waste disposal contractor was not able to perform its duties, the Chiayi Environmental Protection Bureau requested the Group to pay a fee of $869 thousand in accordance with the provisions of the Administrative Execution Act, and the Group 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	2022	2021	2021	2021
	Cost of sales	Operating expenses	Total	Cost of sales	Operating expenses	Total
Employee benefits Salary Labor and health insurance Pension Others Depreciation (Note) Amortization	82,439 7,511 2,503 2,300 40,591 -	30,259 2,905 1,353 6,373 755 -	112,698 10,416 3,856 8,673 41,346 -	77,906 7,204 2,474 2,328 36,226 -	30,953 2,973 1,352 6,862 801 -	108,859 10,177 3,826 9,190 37,027 -

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

(Continued)

62

CHYANG SHENG DYEING & FINSHING CO., LTD. AND ITS SUBSIDIARIES

Notes to Consolidated Financial Statements

(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 Group:

(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-ter m 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	- -	Worki Capital Worki 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 (that is, the Group), it is still limited to 10% of the net value of the latest financial statement.

• Note 2: The aforementioned inter-company transactions have been eliminated in the consolidated financial statements.

Note 3: The nature of financing purposes:

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

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

• (ii) Guarantees and endorsements for other parties:

No.	Name of guarantor	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 theperiod	Balance of guarantees and endorsements as of reporting date	Actual usage amount during theperiod	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	Relationshi p with the Company
0	The Company	Progiant Constructi on	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.

(Continued)

63

CHYANG SHENG DYEING & FINSHING CO., LTD. AND ITS SUBSIDIARIES

Notes to Consolidated Financial Statements

(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 withcompany	Account title	Ending balance	Ending balance	Ending balance	Ending balance	Highest Percentage of ownership (%)	Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fairvalue
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 Stock-Shinkong Synthetic Fibers Stock-SOFTSTAR ENTERTAINMENT Stock-YI JINN Stock-Dyaco	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 60 260 2,682 170 53	$ 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 4,563 43,717 3,179 2,157	0.01 0.35 1.15 - - - - 0.51 1.81 - - - - - - 0.01 0.02 2.05 0.06 0.04	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 4,563 43,717 3,179 2,157	0.01 0.35 1.15 - - - - 0.51 1.81 - - - - - - 0.01 0.02 2.05 0.06 0.04

(Continued)

64

CHYANG SHENG DYEING & FINSHING CO., LTD. AND ITS SUBSIDIARIES

Notes to Consolidated Financial Statements

**Name of holder **	Category and name of security	Relationship withcompany	Account title		Ending balance			Highest Percentage of ownership (%)	Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fairvalue
Worthy Textile 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃	Stock-Solar Applied Materials Technology Stock-Yong Feng Yu Stock-China Steel Stock-TA CHEN STAINLESS PIPE Stocl-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 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃	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	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	0.01 - - - - - 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	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	0.01 - - - - - 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

(Continued)

65

CHYANG SHENG DYEING & FINSHING CO., LTD. AND ITS SUBSIDIARIES

Notes to Consolidated Financial Statements

==> picture [451 x 393] intentionally omitted <==

----- Start of picture text -----

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

Note: The Company's shares held by subsidiaries are treated as treasury stocks and have been eliminated in the consolidated financial report.

• (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-p arty	Relationship with the company	BeginningBalance	BeginningBalance	Purchases	Purchases	Sales	Sales	Sales	Sales	EndingBalance	EndingBalance
					Shares (thousands)	Amount	Shares (thousands)	Amount	Shares (thousands)	Price	Cost	Gain (loss) ondisposal	Shares (thousands)	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

(Continued)

66

CHYANG SHENG DYEING & FINSHING CO., LTD. AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements

• (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

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

			(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
Name of company	Related party	Nature of relationship	Transaction details				Transactions with terms different from others		Notes/Accounts receivable (payable)		Note
			Purchase/Sale	Amount	Percentage of total purchases/sales	Payment terms	Unitprice	Payment terms	Ending balance	Percentage of total notes/accounts receivable(payable)
Th Company	e Shinkong Textile	Substantial related person	(Sale)	(169,200)	(34)%	After Monthl	-		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

• (x) Business relationships and significant intercompany transactions:

No. **(Note 1) **	Name of company	Name of counter-party	Nature of relationship (Note 2)	Intercompany transactions	Intercompany transactions	Intercompany transactions	Intercompany transactions
				Account name	Amount (Note 3)	Trading terms	Percentage of the consolidated net revenue or total assets
2	Progiant Construction	Hong Sheng Investment	3	Other receivables	10,000	Financing purposes	0.35%

Note 1: fill in of numbers:

1) 0 represents the parent company.

• 2) The subsidiaries start with number 1.

Note 2: Relationship with counterparty are represented below:

• 1) Transactions from parent company to subsidiary.

• 2) Transactions from subsidiary to parent company.

• 3) Transactions between subsidiaries.

Note 3: The aforementioned inter-company transactions have been eliminated in the consolidated financial statements.

(Continued)

67

CHYANG SHENG DYEING & FINSHING CO., LTD. AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements

• (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 investment amount	Original investment amount	Balance as of December 31, 2022	Balance as of December 31, 2022	Balance as of December 31, 2022	Highest Percentage of ownership	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2022	December 31, 2021	Shares (thousands)	Percentage of wnership	Carrying value
The Company 〃 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	(USD6,931 thousand dollar) (USD5,776 thousand dollar)	(USD6,931 thousand dollar) (USD5,776 thousand dollar)	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	100.00% 83.68% 18.69% 100.00% 14.92% 33.61% 100.00%	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	Note 1 〃 Note 1 Note 1

Note 1: The aforementioned inter-company transactions have been eliminated in the consolidated financial statements.

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

• (d) Major shareholders:

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:

• (a) General information

The reportable segments are the Group’s strategic divisions. They offer different products and services, and are managed separately because they require different technology and marketing strategies.

The profit and loss of each operating department of the Group is measured based on gross profit and used as an evaluation of performance: the accounting policies used are the same as the summary of important accounting policies described in Note 4.

(Continued)

68

CHYANG SHENG DYEING & FINISHING CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The 2022 and 2021 operating segment information of the Group are as follows:

Revenue from external customers Intersegment revenue Total Revenue Reportable segment profit or loss Revenue from external customers Intersegment revenue Total Revenue Reportable segment profit or loss		2022	2022	Total 495,932 -
	Weaving and dyeing and finishing business $ 494,462 -	Construction business 1,470 -	Reconciliation and elimination - -
	$ 494,462	1,470	-	495,932
	$ 75,083	1,470	-	76,553
		2021		Total 456,564 -
	Weaving and dyeing and finishing business $ 456,564 -	Construction business - -	Reconciliation and elimination - -
	$ 456,564	-	-	456,564
	$ 70,969	-	-	70,969

• (b) Geographical information

In presenting information on the basis of geography, segment revenue is based on the geographical location of customers, and segment assets are all located in Asia.

Geographic area Asia	2022 $ 495,932	2021
		456,564

• (c) Major customers

The details of the Group’s customers whose individual sales income accounted for more than 10% of the net operating revenues on the consolidated income statement for the years, 2022 and 2021 are as follow:

Customer Number Customer A Customer B	2022	2022	2022
	Amount $ 109,181 169,200	Perecentage
	$ 278,381	56 186,420	41

1

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.

2

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

Page

1 2 3 4 5 6 7 8 8 8～10 10～23 23～24 24～49 49～50 50 50～51 51 51 51～52 52～56 56 56 56 56 57～66

3

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.

3-1

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.

3-2

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.

3-3

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.

4

(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 -	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 2388139 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, 2022	December 31, 2022
			Amount	%	Amount
			99,826 4 107,005 5
			77,030 3 77,030 3 - - 174 - 24,585 1 23,910 1
	433,833 18
	2,316 - 1,367,675 57 460,491 19 171 - 126,076 5 31,845 1		101,615 4 101,114 4
			201,441 8 208,119 9
			1,732,684 72 1,732,684 73
			273,926 11 270,375 11
			192,540 8 184,567 8 56,835 2 56,835 2 77,751 3 81,169 3
	1,988,574 82
			327,126 13 322,571 13
			(22,752) (1) (55,834) (2) 18,773 1 19,015 1 (108,791) (4) (108,791) (5)
			(112,770) (4) (145,610) (6)
			2,220,966 92 2,180,020 91
			$ 2,422,407 100 2,388,139 100
	$ 2422407 100

See accompanying notes to financial statements.

5

(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	% 100 85	2021	% 100 85 15 3 8 2 - 13 2 - 9 - 8 - 17 19 1 18 - (1) - (1) 2 2 1 19 0.49 0.49
	Amount $ 486,163 414,079		Amount 452,039 382,184
	72,084	15	69,855
	11,854 39,099 9,312 740	2 8 2 -	12,815 38,403 9,856 55
	61,005	12	61,129
	11,079	3	8,726
	1,246 42,958 (2,979) 26,866 (6)	- 9 (1) 6 -	875 39,923 1,064 36,739 (12)
	68,085	14	78,589
	79,164 10,480	17 2	87,315 6,640
	68,684	15	80,675
	5,178 (242) -	1 - -	(944) (4,678) -
	4,936	1	(5,622)
	33,082	7	9,488
	33,082	7	9,488
	38,018	8	3,866
	$ 106,702	23	84,541
	$	0.42
	$	0.42

See accompanying notes to financial statements.

6

(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	Other equity Retained earnings Unrealized gain (losses) from financial assets Capital surplus Legal reserve Special reserve Unappropriated retained earnings Exchange differences on translation of foreign financial statements measured at fair value through other comprehensive income Treasury shares 267,713 179,160 56,835 58,825 (65,322) 23,693 (108,791)		Retained earnings	Retained earnings	Other	equity Unrealized gain (losses) from financial assets measured at fair value through other comprehensive income Treasury shares	Total equity 2,144,797
						Exchange differences on translation of foreign financial statements
			Legal reserve	Special reserve
	$ 1,732,684
	- -	- - - - - -			80,675 - - - (944) 9,488 (4,678) -			80,675 3,866
	-	- - -			79,731 9,488 (4,678) -			84,541
	- - -	- 5,407 - - - - 2,662 - -			(5,407) - - - (51,980) - - - - - - -			- (51,980) 2,662
	1,732,684 - -	270,375 184,567 56,835 - - - - - -			81,169 (55,834) 19,015 (108,791) 68,684 - - - 5,178 33,082 (242) -			2,180,020 68,684 38,018
	-	- - -			73,862 33,082 (242) -			106,702
	- - -	- 7,973 - - - - 3,551 - -			(7,973) - - - (69,307) - - - - - - -			- (69,307) 3,551
	$ 1,732,684	273,926 192,540 56,835			77,751 (22,752) 18,773 (108,791)			2,220,966

See accompanying notes to financial statements.

7

(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)	2021 87,315 37,995 55 12 (875) (15) (36,739) (670) (179) (304)
	15,997	(720)
	19,687 3,471 2,861 9,721 (7,427) (5,152) 1,431 (1,458)	(10,958) (6,099) (20,753) (9,368) (257) 3,363 11,940 (1,462)
	23,134	(33,594)
	39,131	(34,314)
	118,295 1,246 1,916 (6) (12,266)	53,001 875 15 (12) (3,426)
	109,185	50,453
	44,160 (63,369) 95 (1,884)	49,527 (48,082) 670 -
	(20,998)	2,115
	675 (518) (69,307)	246 (512) (51,980)
	(69,150)	(52,246)
	19,037 181,707	322 181,385
	$ 200,744	181,707

See accompanying notes to financial statements.

8

(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)

9

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 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. 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.	Effective date per IASB
		January 1, 2024 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)

10

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)

11

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)

12

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)

13

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	December 31, 2021 51,807 129,900 181,707
	$ 200,744

• (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	December 31, 2021 8,637 117,426
	$ 103,301	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	December 31, 2021 334 2,224
	$ 2,316	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	December 31, 2021 36,707 48,537 (448) 84,796
	$ 21,416 60,967 (1,188)
	$ 81,195

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	December 31, 2022	Loss allowance provision - 852 - 336
	Gross carrying amount $ 43,610 17,021 - 336
	$ 60,967			1,188
				Loss allowance provision - 112 - 336
	Gross carrying amount $ 46,279 1,922 - 336	Weighted-aver age loss rate 0% 0%~5% 0%~40% 100%
	$ 48,537			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	2021 393 55
	$ 1,188	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 -	December 31, 2021 31,059 -
	$ 21,338	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:

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

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	December 31, 2021 1,230,327 118,010 1,348,337
	$ 1,367,675

(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:

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
Chyang Sheng Vietnam Dyeing and printing business Vietnam	18.69% 18.69%

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)	December 31, 2021 366,871 444,383 (151,727) (97,232)
	$ 568,482	562,295
	$ 568,482	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 $ 713,083 502,442	2022 2021 $ 713,083 502,442
	$ (35,289) (22,844) 41,476 40,899
	$ 6,187 18,055
	$ 6,187 18,055
	2022 2021 $ 105,096 101,721 1,156 3,375
	106,252 105,096 12,914 12,914
	$ 119,166	118,010

(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:

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

(Continued)

29

CHYANG SHENG DYEING & FINISHING CO., LTD.

Notes to the Financial Statements

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

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	Owned property	Total 287,533 22,480
	Land $ 120,975 1,778	Buildings
		166,558 20,702
	$ 122,753	187,260	310,013
	$ 114,341 6,634	158,159 8,399	272,500 15,033
	$ 120,975	166,558	287,533
	$ - - -	163,440 1,194 19,303	163,440 1,194 19,303
	$ -	183,937	183,937
	$ - - -	153,801 1,255 8,384	153,801 1,255 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

• (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:

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	December 31, 2021 25,423 3,208
	$ 78,807	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:

follows:
Present value of the defined benefit obligations Fair value of plan assets Net defined benefit assets	December 31, 2022 $ (38,457) 46,001	December 31, 2021 (48,703) 49,610
	$ 7,544	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)	2021 48,502 (1,722) 272 976 1,960 (1,285) 48,703
	$ 38,457

(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	2021 48,891 1,560 (1,722) 174 707
	$ 46,001	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)	2021 102 (4)
	$ 102	98
	$ 62 11 19 10	60 10 19 9
	$ 102	98

• 5) Actuarial assumptions

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

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

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 Increase 0.25% Decrease 0.25% $ (580) 595
	Increase 0.25% $ (580)
		595
	$ 581	(569)
	$ (823)	846
	$ 819	(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	2022 9,153 1,327	2021 6,537 103
	$ 10,480	6,640

(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	2021 87,315
	15,833 503 (6,218) 362	17,463 854 (8,301) (3,376)
	$ 10,480	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

• 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	Total 2,819 ) (1,327) 1,492 2,922 ) (103) 2,819
	$ - -	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
	$ 67,994 9,036 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
	$ 67,994 9,036 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	December 31, 2021 2,141 207,948 31,124 29,162 270,375
	$ 2,141 211,499 31,124 29,162
	$ 273,926

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
	Amount per share
	$ 0.4	0.3

• (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	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	2022 $ 68,684	2021 80,675
		164,393		164,393
		$ 0.42		0.49
		2022		2021 173,268 (8,875) 164,393
		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	2022 $ 68,684	2021 80,675
	$ 164,466	164,467
	$ 0.42	0.49
		2021 173,268 (8,875) 74
	164,466	164,467

(p) Revenue from contracts with customers

(i) Disaggregation of revenue

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

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

were as follows:
Interest income from bank deposits Rental income Dividend income Government subsidy and others	2022 $ 1,246	2021 875
	2022 $ 37,651 1,916 3,391	2021 36,119 15 3,789
	$ 42,958	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	2021 670 304 179 (89)
	$ (2,979)	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:

December 31, 2022 Notes and accounts payable Lease liabilities Other financial liabilities Guarantee deposits received December 31, 2021 Notes and accounts payable Lease liabilities Other financial liabilities Guarantee deposits received	Carrying amount $ 40,641 174 50,598 9,585	Contractual cash flows	Within 1 year	1~2 years	2~ 5 years
		40,641 174 50,598 9,585	40,641 174 50,598 -	- - - -	- - - 9,585
	$ 100,998	100,998	91,413	-	9,585
	$ 45,793 692 50,152 8,910	45,793 697 50,152 8,910	45,793 523 50,152 -	- 174 - -	- - - 8,910
	$ 105,547	105,552	96,468	174	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 December 31, 2021 181,707 - 181,707
	December 31, 2022 $ 200,744 -
	$ 200,744

(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)	2022 Other comprehensive income after tax Net income $ 44 10,330 (44) (10,330)	2021 Other comprehensive income after tax Net income	2021 Other comprehensive income after tax Net income
	Other comprehensive income after **tax **			Net income
Increasing 10% Decreasing 10%	$ 44 (44)	10,330 (10,330)	33 (33)	12,606 (12,606)

• (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	Total 103,301 437 1,879 2,316
	Book value		Fair value
		Level 1 103,301	Level 2 -	Level 3 -
	$ 103,301
	$ 437 1,879	437 -	- -	- 1,879
	$ 2,316	437	-	1,879

(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 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, 2022	December 31, 2022	December 31, 2022
	Book value		Fair value
		Level 1 Level 2 Level 3 December 31, 2021			Total Total 126,063
	$ 200,744 81,195 12,424 9,008
	$ 303,371
	$ 40,641 174 50,598 9,585
	$ 100,998
	Book value $ 126,063		Fair value
		Level 1 126,063	Level 2 -	Level 3 -
	$ 334 2,224	334 -	- -	- 2,224	334 2,224
	$ 2,558	334	-	2,224	2,558
	$ 181,707 84,796 8,672 9,008
	$ 284,183

(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		Fair value
		Level 1	Level 2	Level 3 Total
	$ 105,547

• 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 ‧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)	Inter-relationship between significant unobservable inputs and fair value measurement
			‧The higher the ratio, the higher the fair value ‧The higher the Lack-of-marketabil ity 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	Variation	Other comprehensive income Favour- able Unfavour-a ble 258 (258) 322 (322) 267 (267) 334 (334)
			Favour- able
	P/B and EV ratio Lack of marketabilit y discount P/B and EV ratio Lack of marketability discount	5% 5% 5% 5%	258 322 267 334

(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 Cash flows Others December 31, 2022 $ 692 (518) - 174
	$ 692 (518) - 174
	January 1, 2021 Cash flows Others December 31, 2021 $ 1,204 (512) - 692 $ 1,204 (512) - 692

(7) Related-party transactions:

• (a) Names and relationship with the Company

Name of related party

Worthy Textile Industry Co., Ltd.

Hong Sheng Investment Co., Ltd.

Progiant Construction & Development Corporation Sea Some International Development Co., Ltd. Shinkong Textile Co., Ltd.( Shinkong Textile)

Relationship with the Company

Subsidiary " " "

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 December 31, 2022	receivable December 31, 2021 24,621
	2022 $ 169,200
		38,753

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
	2022 $ 13,438
		9,035

(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:

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

(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	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	2022 202	2021 201
	12	8
	$ 667	635
	$ 574	545
	5.32% $ 449	896

(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:

==> picture [471 x 101] intentionally omitted <==

----- Start of picture text -----

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

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 theperiod	Balance of guarantees and endorsements as of reporting date	Actual usage amount during theperiod	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 (%)	Fairvalue
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 (%)	Fairvalue
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 val through profit or loss- current 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃	u 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 (%)	Fairvalue
Hong Sheng 〃 〃 〃 〃 〃 〃 〃 Progiant Construction 〃 〃 〃 〃 〃 〃 〃	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 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) ondisposal	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	Transactions with terms different from others	Transactions with terms different from others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/Sale	Amount	Percentage of total purchases/sales	Payment terms	Unitprice	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 investment amount	Original investment amount	Balance as of December 31, 2022	Balance as of December 31, 2022	Balance as of December 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	(USD6,931 thousand dollar) (USD5,776 thousand dollar)	(USD6,931 thousand dollar) (USD5,776 thousand dollar)	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 Cash and demand deposits Time deposits Total	Description short-term; interest rates 0.975% - 1.440%	Amount $ 70,844 129,900
		$ 200,744

Statement of notes and accounts receivable

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

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 $ 392 - 21,378 21,770 (432) $ 21,338	Net realizable value
		- - 21,378
		21,378

Statement of other current assets

Item Advance payment Prepaid expenses Others	Description Mainly prepaid consumables and spare parts, etc.	Amount $ 1,307 923 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	Beginning balance	Beginning balance	**Addition **	**Addition **	Decrease (note 2)	Decrease (note 2)	**Other **	(note 3)	Ending balance	Ending balance	Ending balance	Market value or net asset value	Guarantee or pledged
	Shares	Amount	Shares	Amount - - - -	Shares	Amount (34,978) (9,182) - -	Shares	Amount 61,471 1,000 1,156 (129)	Shares	% of Ownership	Amount 700,872 515,995 119,166 31,642
Worthy Textile Industry Co., Ltd. Progiant Construction & Development Corporation Chyang Sheng Vietnam Co., Ltd. Hong Sheng Investment Co., Ltd.	63,800 $ 674,379 26,235 524,177 - 118,010 14,000 31,771 $ 1,348,337		- - - -		- - - -		- - - -		63,800 26,235 - 14,000	100.00% 83.68% 18.69% 100.00%		700,852 none 515,995 none 106,252 none 158,551 (note 1) none 1,481,650
		$ 1,348,337		-		(44,160)		63,498			1,367,675

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

61

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

Statement of notes and accounts payable

Item J&J Dyestuff Industry Co., Ltd. Big Sunshine Co., Ltd. Jintex Corporation Ltd. Others (note) Total	Description Operating 〃 〃 〃	Amount $ 3,146 2,913 2,181 32,401 $ 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 Natural gas, steam and electricity charges Salaries and bonus payable Income tax payable Employee compensation and directors' remuneration payable Others (note) Total Note: individual amount does not exceed 5%.	Amount $ 21,705 13,474 4,301 3,299 16,232
	$ 59,011

Statement of other non-current liabilities

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

64

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 24,006 thousand yards	Amount $ 485,938 225 $ 486,163

65

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 - - - - - - - - 4,081 4,081 - - - - 66 66 - - - - 326 326 -	Operating cost 31,099 114,984 1,460 21,378 7,681 255 3,776 114,453 4,081 4,081 44,052 235,126 393,631 393,631 66 66 393,631 (2,427) 22,875 414,079 326 326 414,079

66

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%.