ECLAT — Annual Report 2019

Jun 24, 2020

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ECLAT TEXTILE CO., LTD.

2020 Annual Report

Notice to readers

This English-version annual report is a summary translation of the Chinese version and is not an official document of the shareholders’ meeting. If there is any discrepancy between the English and Chinese versions, the Chinese version shall prevail.

Taiwan Stock Exchange Market Observation Post System: https://mops.twse.com.tw/mops/web/index ECLAT Annual Report is available at: http://www.eclat.com.tw Printed on May 18, 2020

Spokesperson

Name Roger, Jen-Chieh LO Title Vice president Telephone 02-2299-6000 E-mail rogerlo@eclat.com.tw

Deputy Spokesperson

Name Richard, Shu-Wen WANG Title Executive Vice President Telephone 02-2299-6000 E-mail service@eclat.com.tw

Stock Transfer Agent

Name Share Registrar’s Office of Yuanta Securities Co., Ltd. Address B1, No. 210, Sec. 3, Chengde Rd., Datong Dist., Taipei City 10366 Website http://www.yuanta.com.tw Telephone 02-2586-5859

Auditors

Name KPMG Certified Public Accountants CPAs Hui-Chih Kou, Hsin-Yi Kuo Address 68F., No. 7, Sec. 5, Xinyi Rd., Xinyi Dist., Taipei City Website http://www.kpmg.com.tw Telephone 02-8101-6666

Website http://www.eclat.com.tw Overseas Securities Exchange : None.

Headquarters, Branches and Plant

Headquarters

Address No.28, Wuquan Rd., Wugu Dist., New Taipei City 248, Taiwan (R.O.C.) Telephone 02-2299-6000

Correspondence Office

Address 10F.-3, No. 80, Sec. 2, Chang’an E. Rd., Zhongshan Dist., Taipei City 104, Taiwan (R.O.C.)

Wuku Plant

Address No.28, Wuquan Rd., Wugu Dist., New Taipei City 248, Taiwan (R.O.C.) Telephone 02-2299-6000

Da-Shan Plant

Address No.50, Longshan Rd., Houlong Township, Miaoli County 356, Taiwan (R.O.C.) Telephone 037-432-371

Hsi-Chou Plant

Address No.39, Sanhao Rd., Houlong Township, Miaoli County 356, Taiwan (R.O.C.) Telephone 037-731-600

Da-Yuan Plant

Address No.134, Dagong Rd., Dayuan Dist., Taoyuan City 337, Taiwan (R.O.C.) Telephone 03-386-1199

Contents

	Contents
I.	Letter to Shareholders·············································································· 1
**II. **	Company Profile
2.1	Date of Incorporation ·················································································· 3
2.2	Company History ························································································ 3
III.	Corporate Governance Report
3.1	Organization ······························································································· 9
3.2	Directors, Supervisors and Management Team ·········································· 11
3.3	Implementation of Corporate Governance ················································· 23
3.4	Information Regarding the Company’s Audit Fee and Independence ·········· 58
3.5	Information regarding Change of CPA ························································ 58
3.6	The Company’s chairman, president or managers in charge of finance
	and accounting operations, who holds any positions within the CPA firm
	or its affiliates in the most recent year, the name, job title and the
	employment period at the independent audit firm or its affiliates ·············· 58
3.7	Transfer or pledge of stock rights of directors, supervisors, managers,
	shareholder with a stake of more than 10 percent in the most recent
	fiscal year and up till the publication date of this annual report ·················· 58
3.8	Relationship among the Top 10 Shareholders ············································ 61
3.9	Comprehensive Shareholding Percentage ·················································· 62
**IV. **	Capital Overview
4.1	Capital and Shares ···················································································· 63
4.2	Issuance of corporate bonds ······································································ 70
4.3	Issuance of preferred shares ····································································· 70
4.4	Issuance of overseas depository receipts ··················································· 70
4.5	Status of employee stock option plan and status of employee restricted
	stock········································································································· 70
4.6	Issuance of new shares in connection with mergers or acquisitions or
	with acquisitions of shares of other companies ·········································· 70
4.7	Capital plans and execution ········································································ 70
V.	Operational Highlights
5.1	Business Activities ···················································································· 71
5.2	Market and Sales Overview ······································································· 89
5.3	Human Resources ··················································································· 101
5.4	Environmental Protection Expenditure ··················································· 101
5.5	Labor Relations······················································································· 107
5.6	Important Contracts················································································ 109

VI. Financial Overview

6.1 Five-Year Financial Summary ·································································· 110 6.2 Five-Year Financial Analysis ···································································· 115 6.3 Audit Committee’s Review Report in the Most Recent Year ······················ 122 6.4 Consolidated Financial Statements for the Years Ended December 31, 2019 and 2018, and Independent Auditors’ Report ·································· 123 6.5 Financial Statements for the Years Ended December 31, 2019 and 2018, and Independent Auditors’ Report ··························································· 180 6.6 Any financial distress experienced by the Company or its affiliated enterprises and impacts on the Company’s financial position in the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report ······························································· 232 VII. Review of Financial Status, Financial Performance, and Risk Management 7.1 Analysis of Financial Status ····································································· 233 7.2 Analysis of Financial Performance ··························································· 234 7.3 Analysis of Cash Flow ·············································································· 235 7.4 Major Capital Expenditure Items and Source of Capital ···························· 236 7.5 Investment Policy in Last Year, Main Causes for Profits or Losses, Improvement Plans and the Investment Plans for the Coming Year ·········· 237 7.6 Analysis of Risk Management ·································································· 239 7.7 Other important Items ······································································· 248 VIII. Special Disclosure 8.1 Summary of Affiliated Companies ···························································· 249 8.2 Private Placement Securities in the Most Recent Years and as of the Date of this Annual Report ·············································································· 256 8.3 Securities of the Company Held by or Disposed of by Subsidiaries in the Most Recent year and as of the Date of this Annual Report ······················· 256 8.4 Other Necessary Supplement ·································································· 256 8.5 Any Events in the most recent year and as of the Date of this Annual Report that Had Significant Impacts on Shareholders’ Right or Security Prices ····································································································· 256

I. Letter to Shareholders

Dear Shareholders,

Overview

The trade conflict between China and U.S. continues from 2018 to 2019. The essence of trade conflict is, in fact, a competition between the two giant powers in the world for the global leading position. Despite that both countries have reached the first stage agreement at the end of 2019, the conflict between the two powers is expected to continue.

Under such circumstance, the global supply chain is under great migration in large scale, and Vietnam becomes the priority choice for the global manufacturers. In the textile and garment industries, brands and retailers have also adjusted their supply chains. Except for the domestic market in China, the proportion of production in China has been significantly decreased and the orders have been transferred or shifted to Southeast Asia or other new emerging developing countries.

In 2019, the U.S. demonstrated stable economic growth, and the labor market and wage continued to increase. By improving customer experience, direct sales on official website, and optimizing product delivery/return timing, National Brands drove their long-term business growth. In addition to the market in North American, the market in Asia also demonstrated significant growth. Through research and innovation, the Company heads toward the development of high-value added and niche products, and collaborates with branded customers closely such that both operating revenue and operating income indicate continuous growth. Nevertheless, due to the trade war between the U.S. and China, the exchange rate in the financial market fluctuates violently, creating a non-operating unfavorable variable to the business.

Financial Performance

In 2019, the net operating revenue of the Group was NTD 28.125 billion, where the net operating revenue from the Knitting Division was NTD 8.573 billion, accounted for 30.48% of the overall operating revenue of the Group. The operating income from the Garment Division was NTD 19.552 billion, accounted for 69.52% of the overall operating revenue of the Group. The total thereof shows a growth of NTD 546.93 million from 2018 with a growth of 1.98%. Regarding the current operating profit, the operating profit for 2019 was NTD 5.471 billion, a growth of NTD 165.50 million from 2018 with a growth of 3.12%. The net income for 2019 was NTD 4.299 billion, a decline of NTD 80.505 million from 2018 with a decrease of 1.84%. For 2019, the earnings per share (EPS) after tax was NTD 15.67.

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Business Developments

In 2020, in response to the trend of supply chain concentration and diversified manufacturing country of origin, the Company’s Board of Director has decided to establish a vertical integration factory of fabrics and garment in Indonesia. The Company seeks to cooperate with subcontractors in Vietnam and other regions to diversify its capacity. We will adequately raise the revenue share of our tier 1 clients, optimize product mix and reallocate capacity to elevate production efficiency. Along with the expansion of the Company, we will continue to cultivate professional talents, offer competitive benefit package and focus on issues including corporate social responsibilities and environment protection. The new headquarter is now under construction on schedule. We expect to offer our employees a consummate workplace with convenient transportation. As for our production bases, we will keep recruiting workforce via our strategies of salary and welfares. Education and training will be reinforced with examination system to offer bonus. We are aiming at elevating capabilities of our labor force and building up a complete promotion mechanism.

Outlook

In 2020, the COVID-19 pandemic outbreaks as the biggest black swan event, along with panics around the globe. We consider that short-term global economic recession is inevitable; the demand for consumer staples and discretionary industries will set back with no exceptions. As a result, we see strong headwind ahead of our business outlook. Nevertheless, leisure and sportswear are still goods what consumer “must have” and “desire to have” in the long-term perspective. On the trend of supplier consolidation, our customers cooperate more closely with vendors than ever before. Vendor’s scale of capacity, manufacturing site diversity, inventory management, human rights, environmental and corporate social responsibilities will be significantly valued. The Company will constantly invest in research and development, focus on product quality, fortify talents cultivation and management, apply digital technology and utilize environmental materials and process. We will keep creating the maximum value to our clients, employees and shareholders.

We wish all shareholders all the best, good health, and success

Chairman

Cheng-Hai Hung

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II. Company Profile

2.1 Date of Incorporation : November 28, 1977

2.2 Company History

• November 1977: Company established, registered capital of NT$ 500,000, divided into 500 shares at a par value of NT$ 1,000 each. The business address was registered in Xinzhuang City, Taipei County. At the beginning, the main business of the Company included fabrics, garment and textile raw materials, and the first Chairman of the company was Hsien-Chin, Tsai.

• September 1981: Capital increased by cash at an amount of NT$ 500,000, and the total capital was increased to NT$ 1,000,000.

• February 1985: Mr. Cheng-Hai Hung assumed the position of Chairman of the Company.

• November 1987: Capital increased by cash at an amount of NT$ 6,000,000, and the total capital was increased to NT$ 7,000,000.

• August 1988: Performed capital increase by cash at an amount of NT$ 45,000,000, and the total capital was increased to NT$ 52,000,000, and Da-shan Plant was established in Houlong Township, Miaoli County, to perform the manufacturing items of fabric knitting, heat setting, quality inspection as well as packaging etc. In addition, the Company was relocated to Changan East Road, Taipei City.

• March 1991: Performed capital increase by surplus earnings at an amount of NT$ 13,333,000, and the paid-in capital was increased to NT$ 65,333,000. In addition, Wugu Plant was established to increase the knitting production capacity of the Company.

• March 1992: Capital increased by cash at an amount of NT$ 9,000,000, and performed capital increase by surplus earnings at an amount of NT$ 15,000,000, and Creditor's right for payment of shares to offset the debt of NT$ 21,000,000, and the paid-in capital was increased to NT$ 110,333,000.

• December 1992: Performed capital increase by cash at an amount of NT$ 44,667,000 and capital increase by surplus earnings at an amount of NT$ 40,000,000, such that the paid-in capital was increased to NT$ 195,000,000, and the par value of each share was changed from NT$ 1,000 to NT$ 10, such that the number of issued shares reached 19,500,000 shares.

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• January 1993: Established the R&D department under the Planning Department and responsible for collection of market trend information and development of new fabrics. In addition, test center was established for testing various quality standards of fabrics.

• August 1993: Received “Q Mark” qualification certificate from DuPont, and the company was the first enterprise in Asia-Pacific region to received certificate from DuPont, demonstrating DuPont’s recognition in the quality of the elastic fabric produced by the Company.

• November 1995: Newly established Wugu Plant 2 in order to increase the quality inspection and packaging production capacity of the Company.

• September 1996: Established New York, USA and Hong Kong offices, responsible for sales order affairs in these regions.

• January 1997: The Company established the own brand of “Eclon” and received the trademark approval from the Bureau of Standards, Metrology and Inspection, MOEA.

• June 1997: Acquired and merged Lujia Co., Ltd., and the capital increased by the merger at an amount of NT$ 173,308,960, and performed the capital increased by surplus earnings at an amount of NT$ 156,000,000, as well as capital increase by cash for 20,000,000 shares, issued at share premium of NT$ 12.50 per share, and the paid-in capital reached NT$ 724,308,960; in addition, public listing of the Company was completed.

• April 1998: To expand the overseas production site and to reduce production cost, Eclat Cayman Islands Holdings indirectly invested in Unison (Wuxi) Textile Garment Co., Ltd. for 42%.

• September 1998: Performed capital increase by surplus earnings at an amount of NT$ 72,430,900, and the paid-in capital increased to NT$ 796,739,860.

• December 1998: Additionally, established Hsi-chou Plant, Miao-li in order to integrate the works of knitting, heat setting, quality inspection and packaging of Wugu Plant and Da-shan Plant, Miaoli; in addition, further expansion of the production lines were performed in order to increase the own manufacturing ratio and to improve the stability of product quality.

• February 2000: Hsi-chou Plant, Miao-li, qualified the inspection by the SGS international certification institution, and received ISO14001 environmental management certification.

• March 2000: The Company received approval from DuPont, and officially

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established the DuPont Lycra  certified Testing Lab.

• April 2000: In the evaluation by the Labor Committee of Executive Yuan, the Company was nominated for the domestic labor-management relationship outstanding business unit

• September 2000: Performed capital increase by surplus earnings at an amount of NT$ 51,628,700, and the paid-in capital increased to NT$ 912,107,660.

• November 2000: Received the Industrial Sustainable Excellence Award from MOEA.

• December 2000: Approved by the Taiwan Stock Exchange for stock listing.

• April 2001: Officially listed for trading at Taiwan Stock Exchange.

• July 2003: To expand the business in China and to collect market information, Antares (Shanghai) Textile Co., Ltd. was established in Shanghai through the Grand Elite Holdings Inc.

• August 2003: Introduced the Enterprise Resource Planning (ERP) system.

• September 2003: To vertically integrate the production capability and to gain the competitive advantages early, the investment on the Unison (Wuxi) Textile Garment Co., Ltd. and Aegis Inc. was increased the shareholding from 42% to 100%.

• April 2004: To head toward the development of professional garment manufacturer and to increase the garment sales percentage, the Initiate Vertical Sourcing Co. Ltd. was established through the Grand Elite Holdings Inc. in order to perform the trading businesses of garment, clothing and household textiles.

• August 2004: To gain competitive advantages, vertically integrate the production capacity and to handle the market condition as well as to strengthen the operation management, 100% of the shareholding of the E-TOP (Wuxi) Textile Garment Co., Ltd. was obtained through the subsidiary of Eclat Cayman Islands Holdings.

• January 2005: Obtained the total of 1,035,528 shares of the subsidiary of Being Long Co., Ltd.; after the acquisition, the shareholding of the Company on such subsidiary increased from 50.00% to 52.96%.

• June 2005: Sold the Initiate Vertical Sourcing Co. Ltd. and ended the investment thereof.

• August 2005: Obtained shares of the subsidiary of Being Long Co., Ltd., and the shareholding of the Company on such subsidiary increased from 52.96% to 100%.

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• August 2005: Capital increased by surplus earnings at an amount of NT$ 134,079,820, and the paid-in capital after the increase reached NT$ 1,091,792,860.

• December 2005: To expedite the global garment production planning, and with the optimistic outlook on business opportunities for Vietnam’s enrollment in the WTO, the Company reached the resolution to jointly invest with the Tainan Spinning Co., Ltd. to establish the Eclat Textile Co., Ltd. in Vietnam through the Eclat Cayman Islands Holdings. The capital of the Vietnam factory was US$ 7,000,000, and the Company invested an amount of US$ 5,600,000, with the shareholding of 80%. The construction of the factory was completed in June 2006.

• December 2005: To improve the financial structure and to repay the debt to banks, capital increase by cash for 20,000,000 shares was performed, issued at share premium of NT$ 13.50 per share, and the paid-in capital after the increase reached NT$ 1,291,792,860.

• January 2006: To stabilize the garment raw material supply source, the Company invested in the Vietnam Namtex Textile Co., Ltd. through Eclat Cayman Islands Holdings; the investment amount was US$ 2,000,000, and shareholding of 20%.

• June 2006: To actively expand the channel of garment sales, the Company invested in ANKL Co., Ltd. for an amount of NT$ 30,000,000, and shareholding of 25%.

• August 2006: Capital increased by surplus earnings at an amount of NT$ 142,097,210, and the paid-in capital after the increase reached NT$ 1,433,890,070.

• March 2007: For the purpose of lowering cost and increasing competitiveness, the Company has decided to establish a fabric mill with dyeing and knitting function via ECLAT CAYMAN ISLANDS HOLDINGS. The mill will cooperate with existed garment factories in Vietnam to make the Company to be a vertical integration firm, ranging from knitting, dyeing to garment in Vietnam, so as to offer its clients one-stop- shop services with total solutions. The investment amount is USD19 million, which represents 100% of shareholding. The factory construction was completed in February 2009

• June 2007: Capital increased by surplus earnings at an amount of NT$ 157,727,900, and the paid-in capital after the increase reached NT$ 1,591,617,970.

• July 2007: To invest in the Eclat Fabrics (Vietnam) Co., Ltd., capital increase by

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cash for 25,000,000 shares was performed, issued at share premium of NT$ 16 per share, and the paid-in capital after the increase reached NT$ 1,841,617,970.

• June 2008: Capital increased by surplus earnings at an amount of NT$ 55,248,540, and the paid-in capital after the increase reached NT$ 1,896,866,510.

• June 2009: Capital increased by surplus earnings at an amount of NT$ 37,937,330, and the paid-in capital after the increase reached NT$ 1,934,803,840.

• June 2010: Capital increased by surplus earnings at an amount of NT$ 58,044,110, and the paid-in capital after the increase reached NT$ 1,992,847,950.

• June 2011: Capital increased by surplus earnings at an amount of NT$ 119,570,870, and the paid-in capital after the increase reached NT$ 2,112,418,820.

• April 2002: To integrate resources and to strength the operation management, the Company acquired and merged the BeingLong Co., Ltd.

• June 2012: Capital increased by surplus earnings at an amount of NT$ 147,869,310, and the paid-in capital after the increase reached NT$ 2,260,288,130.

• October 2012: To improve the financial structure and to repay the debt to banks, capital increase by cash for 20,000,000 shares was performed, issued at share premium of NT$ 50 per share, and the paid-in capital after the increase reached NT$ 2,460,288,130.

• 2013: Capital increased by surplus earnings at an amount of NT$ 49,205,760, and the paid-in capital after the increase reached NT$ 2,509,493,890. To cope with the increasing order demand, Eclat Textile (Cambodia) Co., Ltd. construction and Eclat Fabrics Co., Ltd (Vietnam) second phase expansion construction were completed; Dayuan Dyeing Plant and the Eclat Textile Co., Ltd. in Vietnam Plant expansion, obtained Vietnam Tai-Yuan Garments Co., Ltd. and Colltex Garment Mfy Co., Ltd.(VN) acquired Heching Plant.

• 2014: Capital increased by surplus earnings at an amount of NT$ 100,379,750, and the paid-in capital after the increase reached NT$ 2,609,873,640. Colltex Garment Mfy Co., Ltd. (VN) expansion construction complete and mass production started. Due to the intense competition in raw materials in China, increase of wages and inflation of prices, the advantage ceased to exist, and the Company

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• ended the operation of the Antares (Shanghai) Textile Co., Ltd.

• 2015: To invest in subsidiary and to improve the operating fund and financial structure, capital increase by cash for 8,000,000 shares was performed, issued at share premium of NT$ 320 per share, and capital increase by cash was completed in March 2016, such that the paid-in capital after the increase reached NT$ 2,689,873,640.

• 2016: To cope with the long-term increasing trend on the demand for printed products, the Company invested through Eclat Cayman Islands Holdings jointly with I.N.T. International Inc. in E&I Printing Co., Ltd. in Dong Nai Province, Vietnam, and the shareholding percentage was 40%.

• 2017: Capital increased by surplus earnings at an amount of NT$ 53,797,470, and the paid-in capital after the increase reached NT$ 2,743,671,110. The Board of Directors of the Company approved the additional establishment of Hsichou Digital Printing Plant.

• 2018: The Board of the Company approved the 3[rd ] facility expansion of Eclat Fabrics (Vietnam) Co., Ltd.

• 2019: The Board of the Company approved the proposal to invest in PT Eclat International Ltd. and to relocate the MIAO-LI plant.

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III. Corporate Governance Report

3.1 Organization

3.1.1 Organization Chart

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Shareholders’
meeting
Audit
Chairman Committee
Office
Board of
Remuneration
Directors
Committee
Internal Audit
Chairman
Office
CSR Executive
Committee
Fabric Garment Financial and Investment Labor Safety
Administration and Health IT Office
Business Unit Business Unit Accounting Business
Department
----- End of picture text -----

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3.1.2 Responsibilities of Functional Committee and Main Departments

Functional Committe/ Main Department	Responsibilities
Audit Committee	Assist the board of directors to effectively execute their rights for supervising the company in compliance with the authorization provided under the Company Act, Securities and Exchange Act and other relevant laws.
Remuneration Committee	Establish and periodically review the performance evaluation of directors and managerial personnel as well as the policy, system, standard and structure for the remuneration. In addition, periodically assess and specify the remunerationofdirectors andmanagerialpersonnel.
CSR Executive Committee	Establish corporate social responsibility annual plan and strategic directions, in order to further arrange and execute various corporate social responsibility projects and activities. Follow up and review corporate social responsibility annual plan, project and activity execution performance.
Internal Audit Office	Planning, establishment, revision and auditing of internal control system. Analysis, evaluation and recommendation of department operation management performance.
IT Office	Planning, establishment, execution and maintenance of computer information system.
Chairman Office/Investment Business / Labor Safety and Health Management Department	Managing the establishment of entire company’s operation strategy, department coordination, customer credit verification and legal affairs handling. Planning and management of invested business. Laborsafety andhealth managementrelated affairs.
Fabric Division	Marketing strategy, planning and execution. Market information collection and analysis. Product sales and market expansion. Planning, execution and control of production capacity. Arrangement and coordination of production plan. Planning, execution and control of production schedule. Planning and control of outsourcing processing. Raw material purchase strategy, planning and execution. Global trend information integration and providing. Development, design and testing of new products. Overseas tradeshow, domestic research project cooperative solution. Company and productimage creationaffairs.
Garment Division	Market sales and expansion. Market information collection and analysis. Development, design and creation of new products. Planning, execution and control of production capacity. Production plan, schedule planning and execution. Planning and control of outsourced processing.
Administration	Human resource management and organization development. Planning, execution and control of general affairs as well as physical security management. Company legal affairs, litigation, commercial contracts, legal compliance.
Financial and Accounting	Company financial, accounting services, tax affairs management, financial planning, investment management and strategy planning.

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3.2 Directors, Supervisors and Management Team

3.2.1 Directors and Supervisors:

3.2.1.1. Director:

April 20, 2020

Title	Nationality	Name	Gender	Date Elected	Term	Date of first Elected	Shareholding when elected	Shareholding when elected	Current Shareholding	Current Shareholding	Spouse and Minor shareholding	Spouse and Minor shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Major Education and Experience	Other position	Who are Spouses or within Two Degrees of Kinship	Who are Spouses or within Two Degrees of Kinship	Who are Spouses or within Two Degrees of Kinship	Remark(s) (Note)
							Shares	%	Shares	%	Shares	%	Shares	%			Title	Name	Relation
Chairman	R.O.C.	Cheng-Hai Hung	Male	June, 14, 2018	3 years	November, 1977~Present day, Director; February, 1985 ~Present day, Chairman	9,035,318	3.29%	9,035,318	3.29%	9,543,332	3.48%	-	-	Bachelor of Chihlee University of Technology Chairman and President, Eclat Textile Co., Ltd.	Note 1	Assistant Vice President, Fabric Division	Jui-Ting Hung	First- degree kinship	None
																	Assistant Vice President, Fabric Division	Shih-Tu Chen	Second- degree kinship	None
Director	R.O.C.	Li-Chen Wang	Male	June, 14, 2018	3 years	November, 1977~Present day, Director	7,932,435	2.89%	7,932,435	2.89%	8,362,129	3.05%	-	-	Zhihui Junior High School Vice President, Eclat Textile Co.,Ltd.	Note 2	None	-	-	None
Director	R.O.C.	Hsien-Chin Tsai	Male	June, 14, 2018	3 years	November, 1977~ February, 1985 Chairman; February, 1985 ~Present day, Director	21,634,993	7.89%	21,634,993	7.89%	-	0.00%	-	-	Nanya Institute of Technology LUBTEK CO.,LTD., Chairman	Note 3	President, Fabric Division	Chun-Chin Tsai	Second- degree kinship	None
Director	R.O.C.	Kun-Tang Chen	Male	June, 14, 2018	3 years	June, 14, 2006	482,864	0.18%	473,864	0.17%	2,549	0.00%	-	-	PhD., Textile Management, University of Leeds, Vice President, Nan Yang Dyeing & Finishing Co., Ltd.	Note 4	None	-	-	None
Director	R.O.C.	Jen-Chieh Lo	Male	June, 14, 2018	3 years	June, 10, 2002	365,724	0.13%	365,724	0.13%	179,274	0.07%	-	-	Master of Department of Accounting, Soochow University Senior Manager, Horizon Securities	Note 5	None			None
Director	R.O.C.	Shu-Wen Wang	Male	June, 14, 2018	3 years	18, June, 2012	28,008	0.01%	28,008	0.01%	-	-	-	-	Master of Accounting and Finance, California State University, Los Angeles Assistant Manager, CTBC Bank	Note 6	None	-	-	None
Director	R.O.C.	Yih-Yuan Investment Corp.		June, 14, 2018	3 years	June, 24,2015	25,790,335	9.40%	25,790,335	9.40%	-	-	-	-	-	-	-	-	-	None
			Male	Representative: Kuo-Sung Hsieh		-	-	-	-	-	-	-	-		DBA, University of South Australia CPA	Note 7	None			None
Director	R.O.C.	Shou-Chun Yeh	Male	June, 14, 2018	3 years	June, 24,2015	517,330	0.19%	517,330	0.19%	-	-	-	-	Bachelor of department of Accounting, National Chengchi University Chairman, Zig Sheng Co., Ltd.	Note 8	None	-	-	None

-11-

Title	Nationality	Name	Gender	Date Elected	Term	Date of first Elected	Shareholding w	hen elected	Current Shareholding	Current Shareholding	Spouse and Minor shareholding	Spouse and Minor shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Major Education and Experience	Other position	Who are Spouses or within Two Degrees of Kinship	Who are Spouses or within Two Degrees of Kinship	Who are Spouses or within Two Degrees of Kinship	Remark(s) (Note)
							Shares	%	Shares	%	Shares	%	Shares	%			Title	Name	Relation
Independent Director	R.O.C.	Ya-Kang Wang	Male	June, 14, 2018	3 years	June, 24,2015	-	-	-	-	-	-	-	-	Master od Institute of Urban Planning, National Chung Hsing University Director General, Industrial Development Bureau, MOEA Director General, Small and Medium Enterprise Administration ,MOEA Secretary General, Chinese National Federation of Industries	Note 9	None	-	-	None
Independent Director	R.O.C.	Cheng-Ping Yu	Male	June, 14, 2018	3 years	June, 24,2015	-	-	-	-	-	-	-	-	PhD of The University of Leeds, Associate Professor, Department of Textiles & Clothing, Fu Jien Catholic University	Note 10	None	-	-	None
Independent Director	R.O.C.	Nai-Ming Liu	Male	June, 14, 2018	3 years	June, 24,2015	-	-	-	-	-	-	-	-	Master of Department of Accounting, National Chengchi University Adjunct Lecturer, Hsing Wu University CPA	Note 11	None	-	-	None

• Note : Where the chairperson of the board of directors and the general manager or person of an equivalent post (the highest level manager) of a company are the same person, spouses, or relatives within the first degree of kinship, an explanation shall be given of the reason for, reasonableness, necessity thereof, and the measures adopted in response thereto.

• Note 1: Mr. Cheng-Hai Hung presently and concurrently acts as the R&D supervisor of the Company, the consultant of Taiwan Textile Federation, the juror of Department of Industrial Technology (DoIT), MOEA，the director of PT Eclat Textile International、the Chairman for Unison (Wuxi) Textile Garment Co., Ltd., Eclat Textile Co., Ltd. (Vietnam) , E-Top (Vietnam) Co., Ltd., Colltex Garment Mfy Co., Ltd.(Vn), Tai-Yuan Garments Co., Ltd., Eclat Fabrics (Vietnam) Co., Ltd., Eclat Enterprise, and Eclat Textile (Cambodia).

• Note 2: Mr. Li-Chen Wang presently and concurrently acts as the Consultant of the Company, the Director for Yih-Yuan Investment Corp., Grand Elite Holdings Inc., Eclat Cayman Island Holdings and Eclat Fabrics (Vietnam) Co., Ltd.

• Note 3: Mr. Hsien-Chin Tsai presently and concurrently acts as the Chairman of Lubtek Co., Ltd., the Director of Yih-Yuan Investment Corp., Grant Elite Holdings Inc., Eclat Cayman Islands Holdings, Unison (Wuxi) Textile Garment Co., Ltd., and Eclat Fabrics (Vietnam) Co., Ltd.

• Note 4: Mr. Kun-Tang Chen presently acts as the President of the Company, the Director as well as President concurrently for Eclat Fabrics (Vietnam) Co., Ltd., E-Top (Vietnam) Co., Ltd, Colltex Garment Mfy Co., Ltd.(Vn), Eclat Enterprise, Eclat Textile (Cambodia) and Eclat Textile Co., Ltd(Vietnam).

• Note 5: Mr. Jen-Chieh Lo presently acts as the Vice President of the Company, concurrently acts as the Director for Eclat Textile Co., Ltd. (Vietnam), E-Top (Vietnam) Co., Ltd., Colltex Garment Mfy Co., Ltd. (Vn), Tai-Yuan Garments Co., Ltd., Eclat Fabrics (Vietnam) Co., Ltd., Grand Elite Holdings Inc., Eclat Enterprise, Eclat Textile (Cambodia), Eclat Cayman Islands Holdings; Chairman of Hui Yuan Investment Corp. and Supervisor of Unison (Wuxi) Textile Garment Co., Ltd.

• Note 6: Mr. Shu-Wen Wang presently acts as the Executive Vice President of the Company, the Director for Eclat Textile Co., Ltd. (Vietnam) and Eclat Fabrics (Vietnam) Co., Ltd. and Supervisor of PT Eclat Textile International.

• Note 7: Mr. Kuo-Sung Hsieh presently and concurrently acts as the CPA at Honesty CPA Firm and Assistant Professor at Shih Chien University. Associate Professor at Soochow University, the consultant of China Credit Information Service Ltd and Professional Actuary Management Consulting Co., Ltd.

• Note 8: Mr. Shou-Chun Yeh presently and concurrently acts as the Chairman of Zig Sheng Industrial Co., Ltd., Director of Everest Textile Co., Ltd. and Supervisor of Evertex Fabrinology Limited.

• Note 9: Mr. Ya-Kang Wang presently and concurrently acts as the Consultant of Taiwan Textile Research Institute, Evaluation Specialist at Public Construction Commission, Executive Yuan, Director of Johnson Health Tech .Co., Ltd. and Singtex Industrial Co., Ltd,; Independent Director of Wah Lee Industrial Corp., Wisher Industrial Co., Ltd. and Feng Hsin Steel Co., Ltd.

• Note 10: Mr. Cheng-Ping Yu presently and concurrently acts as Associate Professor at Department of Textiles & Clothing, Fu Jen Catholic University.

• Note 11: Mr. Nai-Ming Liu presently and concurrently acts as Adjunct Lecturer at Hsing Wu University, CPA at Cheng Yuan CPA Firm, Independent Director of Bioptik Technology Inc., and Apaq Technology Co., Ltd.

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Major Shareholders of Corporate Shareholders April 20, 2020

Name of corporate shareholder	Major Shareholders of Corporate Shareholder
Yih-Yuan Investment Corp.	Cheng-Hai Hung (21.12%) Hsien-Chin Tsai (21.08%) Li-Chen Wang (20.23%) Twinbron Inc.- Fu-Jane Wang (8.65%) Wei Yueh Investment Corp.- Wei-Tsu Chen (6.92%) Shih-Fan Chen (6.92%) Hung-Chun Li (4.31%) Jui-Ting Hung (3.85%) Ping-Yuan Hsu (3.12%) Chih-MingHsu (0.69%)

3.2.1.2 Professional qualifications and independence analysis of directors and supervisors:

Criteria Name		(Note)						Independence	Independence	Criteria	(Note)					Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director
	A	B	C	(1)	(2).	(3)	(4)	（5）	（6）	（7）	（8）	（9）	（10）	（11）	（12）
Chairman Cheng-Hai Hung	-	-	v	-	-	-	-	-	v	v	-	v	v	v	v	None
Director Li-Chen Wang	-	-	v	-	-	-	v	-	v	v	-	v	v	v	v	None
Director Hsien-Chin Tsai	-	-	v	-	-	-	-	-	v	v	-	v	v	v	v	None
Director Kun-TangChen	-	-	v	-	-	v	v	v	v	v	v	v	v	v	v	None
Director Jen-Chieh Lo	v	-	v	-	-	v	v	v	v	v	v	v	v	v	v	None
Director Shu-Wen Wang	-	-	v	-	-	v	v	v	v	v	v	v	v	v	v	None
Director Yih-Yuan Investment Corp. Representative : Kuo-SungHsieh	v	v	v	v	v	v	v	v	v	v	-	v	v	v	-	None
Director Shou-Chun Yeh	-	-	v	v	v	v	v	v	v	v	-	v	v	v	v	None
Independent Director Ya-KangWang	-	v	v	v	v	v	v	v	v	v	v	v	v	v	v	3
Independent Director Cheng-PingYu	v	-	v	v	v	v	v	v	v	v	v	v	v	v	v	None
Independent Director Nai-MingLiu	v	v	v	v	v	v	v	v	v	v	v	v	v	v	v	2

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• ( (Note) Check in each box with “v”, if the member meets one of the following qualification requirements or independence criterias.

• A An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University

• B A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company

• C Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company

• （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 (The same does not apply, however, in cases where the person is an independent director of the company, its parent company, or any subsidiary, as appointed in accordance with the laws of Taiwan government or local government 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 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings。

• （4）Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three subparagraphs.

• （5） Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of outstanding shares of the Company or who holds shares ranking in the top five holdings, or a representative appointed to assume the position of director or supervisor of the Company according to Paragraph 1 or Paragraph 2 of Article 27 of the Company Act (provided that if the position of an independent director is held concurrently for the company and its parent company, a subsidiary or a subsidiary of the same parent company according to this law or laws of the local country, such restriction shall not be applied).

• （6）Not a director, supervisor, or employee of other company if a majority of the Company's director seats or voting shares and those of that other company are controlled by the same person (provided that if the position of an independent director is held concurrently for the company and its parent company, a subsidiary or a subsidiary of the same parent company according to this law or laws of the local country, such restriction shall not be applied).

• （7）Not a director (managing director), supervisor (managing supervisor) or employee of other company or institution being the same person holding the position of Chairman, President or equivalent position in the company or a spouse thereof (provided that if the position of an independent director is held concurrently for the company and its parent company, a subsidiary or a subsidiary of the same parent company according to this law or laws of the local country, such restriction shall not be applied).

• （8）Not a director, supervisor, officer, or shareholder holding 5% or more of the shares, of a specified company or institution which has a financial or business relationship with the Company. (provided that if the specific company or institution holds 20% or more and no more than 50% of the total number of issued shares of the company, and the position of an independent director is held concurrently for the company and its parent company, a subsidiary or a subsidiary of the same parent company according to this law or laws of the local country, such restriction shall not be applied).

• （9）Not a professional individual who is an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that provides commercial, legal, financial, accounting services or consultation to the Company with accumulated service fee over 500 thousdnd in two years or to any affiliate of the Company, or a spouse thereof. These restrictions do not apply to any member of the Remuneration Committee who exercises powers pursuant to Securities and Exchange Act as well as Business Mergers And Acquisitions Act, the review committee who exercises powers pursuant to Public Tender Offers for Securities of Public Companies and a special committee for merger /consolidation and acquisition.

• （10）Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company

• （11）Not been a person of any conditions defined in Article 30 of the Company Law.

• （12）Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law.

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3.2.2 Profiles of Key Managers:

April 20, 2019

Title	Nationality	Name	Gender	Date Effective	Shareholding	Shareholding	Spouse and Minor Shareholding	Spouse and Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Major Education and Experience	Other position	Manager who are Spouses or within Two Degrees of Kinship	Manager who are Spouses or within Two Degrees of Kinship	Manager who are Spouses or within Two Degrees of Kinship	Remark(s) (Note)
					Shares	%	Shares	%	Shares	%			Title	Name	Relation
Chairman and R&D Supervisor	R.O.C.	Cheng-Hai Hung	Male	July, 2015	9,035,318	3.29%	9,543,332	3.48%	-	-	Bachelor of Chihlee University of Technology Chairman and President, Eclat Textile Co., Ltd.	None	Assistant Vice President, Fabric Division	Shih-Tu Chen	Second-degree kinship	None
													Assistant Vice President, Fabric Division	Jui-Ting Hung	First-degree kinship	None
President, Fabric Division	R.O.C.	Chun-Chin Tsai	Male	July, 1985	-	-	-	-	1,687,705	0.62%	Kai Ming Senior Technical and Commercial Vocational School Vice President, Eclat Textile Co., Ltd.	None	None	-	-	None
President, Garment Division	R.O.C.	Kun-Tang Chen	Male	June, 2005	473,864	0.17%	2,549	0.00%	-	-	PhD., Textile Management, University of Leeds, Vice President, Nan Yang Dyeing & FinishingCo.,Ltd.	Note 1	None	-	-	None
Executive Vice President	R.O.C.	Shu-Wen Wang	Male	May, 2013	28,008	0.01%	-	-	-	-	Master of Accountancy, California State University, Los Angeles, U.S.A. Assistant Manager,CTBC Bank	None	None	-	-	None
Vice President, Fabric Division	R.O.C.	Sheng-Tien Lee	Male	April, 2012	331	0.00%	-	-	-	-	National Tung Shih Senior High School Assistant Vice President, Bing LongInc.	None	None			None
Vice President, Financial and Accounting Department	R.O.C.	Jen-Chieh Lo	Male	February, 2002	365,724	0.13%	179,274	0.07%	-	-	Master of Department of Accounting, Soochow University Senior Manager, Horizon Securities	None	None	-	-	None
Vice President, Fabric Division	R.O.C.	Cheng-Chin Tsai	Male	July, 2011	4,569	0.00%	-	-	-	-	Bachelor of Fu Jen Catholic University Assistant Vice President of Sales, Eclat Textile Co.,Ltd.	None	None	-	-	None
Vice President, Garment Division	R.O.C.	Li-Fen Cheng	Female	January, 2012	2,125	0.00%	-	-	-	-		None	None	-	-	None
											Master of University of Leeds
											Assistant Vice President of Sales, Eclat Textile Co., Ltd.
Assistant Vice President, Garment Division	R.O.C.	Jui-Li Fang	Male	August, 2000	0	0.00%	-	-	-	-	Bachelor of Tao Yuan Agricultural & Industrial Vocational School Sales Manager, Eclat Textile Co., Ltd.	None	None	-	-	None
Assistant Vice President, Fabric Division	R.O.C.	Ping-Chi Hsu	Male	July, 2011	23,583	0.01%	-	-	-	-	Master of Fu Jen Catholic University Manager of Fabric Division, Eclat Textile Co.,Ltd.	None	None	-	-	None
Assistant Vice President, Garment Division	R.O.C.	Chia-Chun Chiang	Male	August, 2011	0	0.00%	-	-	-	-	EMBA (discontinued), Fu Jen Catholic University Sales Manager, Eclat Textile Co., Ltd.	None	None	-	-	None

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Title	Nationality	Name	Gender	Date Effective	Shareholding	Shareholding	Spouse and Minor Shareholding	Spouse and Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Major Education and Experience	Other position	Manager who are Spouses or within Two Degrees of Kinship	Manager who are Spouses or within Two Degrees of Kinship	Manager who are Spouses or within Two Degrees of Kinship	Remark(s) (Note)
					Shares	%	Shares	%	Shares	%			Title	Name	Relation
Assistant Vice President, Financial and Accounting Department	R.O.C.	Lai-Kuei Chen	Female	November, 2013	28,989	0.01%	-	-	-	-	Bachelor of Soochow University Manager of Accounting Division, Eclat Textile Co., Ltd.	None	None	-	-	None
Assistant Vice President, Garment Division	R.O.C.	Hao-He Chen	Male	January, 2014	2,595	0.00%	3,040	0.00%	-	-	Bachelor of Department of Political Science, National Taiwan University Sales Manager, Eclat Textile Co., Ltd.	None	None	-	-	None
Assistant Vice President, Fabric Division	R.O.C.	Lien-Tsai Chen	Male	January, 2014	40	0.00%	-	-	-	-	Bachelor of National Taiwan University of Science and Technology Sales Manager, Eclat Textile Co., Ltd.	None	None	-	-	None
Assistant Vice President, Garment Division	R.O.C.	Wei-Yeh Huang	Male	January, 2014	2,060	0.00%	-	-	-	-	Oriental Institute of Technology Sales Manager, Eclat Textile Co., Ltd.	None	None	-	-	None
Assistant Vice President, Fabric Division	R.O.C.	Shih-Tu Chen	Male	May, 2014	2,436	0.00%	-	-	-	-	St. Peter Senior High School Factory Manager, Eclat Textile Co., Ltd.	None	R&D Supervisor	Cheng-Hai Hung	Second-degree kinship	None
Assistant Vice President, Garment Division	R.O.C.	Chu-Chang Ou	Male	May, 2014	1,020	0.00%	-	-	-	-	National Kaohsiung Marine University QA Manager, Avida Department Store, Wanda Industry Corp. Ltd. and Eclat Textile Co.,Ltd.	None	None	-	-	None
Assistant Vice President, Fabric Division	R.O.C.	Jui-Ting Hung	Male	February, 2017	4,218,746	1.54%	44,880	0.02%	-	-	Master of Materials Science and Engineering, National Tsing Hua University and University of Florida Teaching Assistant of Materials Science and Engineering, University of Florida; Sales Manager,Eclat Textile Co.,Ltd.	None	R&D Supervisor	Cheng-Hai Hung	First-degree kinship	None
Assistant Vice President, Garment Division	R.O.C.	Heng-Wei Hsu	Male	February, 2017	2,832	0.00%	1,252	0.00%	-	-	Bachelor of DBA, Fu Jen Catholic University Manager of Manufacturing Division, Lesotho Garment Plant, Eclat Textile Co., Ltd. (Vietnam) Assistant Vice President of Eclat Textile Co.,Ltd.	Note 2	None	-	-	None
Assistant Vice President, Eclat Fabrics (Vietnam) Co., Ltd.	R.O.C.	Chi-Feng Huang	Male	February, 2017	1,800	0.00%	-	-	-	-	Master of Department of Fiber and Composite Materials, Feng Chia University Textile Factory Director and Factory Supervising Manager, Eclat Textile Co.,Ltd	None	None	-	-	None

Note : Where the chairperson of the board of directors and the general manager or person of an equivalent post (the highest level manager) of a company are the same person, spouses, or relatives within the first degree of kinship, an explanation shall be given of the reason for, reasonableness, necessity thereof, and the measures adopted in response thereto. Note 1 : Kun-Tang Chen presently and concurrently acts as the President of Eclat Textile Co., Ltd. (Vietnam).

Note 2: Heng-Wei Hsu presently and concurrently acts as the Director of Eclat Textile Co., Ltd. (Vietnam).

-16-

3.2.3 Remuneration of Directors, Independent Directors, Supervisors, President, and Vice Presidents for the most recent fiscal year:

1. Compensation Paid to Directors and Independent Directors

2019 Unit: NT$1000

Title	Name (Note 1)	Directors’ remuneration	Directors’ remuneration	Directors’ remuneration	Directors’ remuneration	Directors’ remuneration	Directors’ remuneration	Directors’ remuneration	Directors’ remuneration	Ratio of Total Compensation (A+B+C+D) to Net Income (%) (Note 10)	Ratio of Total Compensation (A+B+C+D) to Net Income (%) (Note 10)	Compensation as concurrentlyan employee of the Company	Compensation as concurrentlyan employee of the Company	Compensation as concurrentlyan employee of the Company	Compensation as concurrentlyan employee of the Company	Compensation as concurrentlyan employee of the Company	Compensation as concurrentlyan employee of the Company	Compensation as concurrentlyan employee of the Company	Compensation as concurrentlyan employee of the Company	Ratio of Total Compensation (A+B+C+D+E+F+G) to Net Income (%) (Note 10)	Ratio of Total Compensation (A+B+C+D+E+F+G) to Net Income (%) (Note 10)	Compensation from ventures other than subsidiaries or from the parent company (Note 11)
		Compensation(A) (Note 2)		Pension(B)		Compensation to Directors (Note 3)		Allowances (D) (Note 4)				Salaries, bonuses, special allowances etc. (E) (Note 5)		Pension(F)		Employee remuneration(G) (Note 6)
		The Company	Companies in the consolidated financial statements (Note 7)	The Company	Companies in the consolidated financial statements table (Note 7)	The Company	Companies in the consolidated financial statements (Note 7)	The Company	Companies in the consolidated financial statements (Note 7)	The Company	Companies in the consolidated financial statements (Note 7)	The Company	Companies in the consolidated financial statements (Note 7)	The Company	Companies in the consolidated financial statements (Note 7)	The Company		Companies in the consolidated financial statements (Note 7)		The Company	Companies in the consolidated financial statements (Note 7)
																Amount paid in cash	Amount paid in shares	Amount paid in cash	Amount paid in shares
Director	Cheng-Hai Hung	960	960	-	-	-	-	1,121	1,121	0.05%	0.05%	70,758	71,425	250	250	-	-	-	-	1.70%	1.72%	-
	Li-Chen Wang
	Hsien-Chin Tsai
	Kun-TangChen
	Jen-Chieh Lo
	Shu-Wen Wang
	Representative of Yih-Yuan Investment Corp.-Kuo-Sung Hsieh
	Shou-Chun Yeh
Independent Director	Ya-KangWang	1,526	1,526	-	-	-	-	401	401	0.04%	0.04%	-	-	-	-	-	-	-	-	0.04%	0.04%	-
	Cheng-PingYu
	Nai-MingLiu
1. Please describe the policy, system, standard and structure for the remuneration to independent directors, and the correlation between duties, risk, and time input with the amount of remuneration: The Company has established the “Rules for Performance Evaluation of the Board of Directors and Functional Committees,” which forms the basis for performance evaluation of the independent directors and inside directors. In addition to the consideration of the overall business performance and profitability of the Company, the individual participation, performance achievement rate and contribution to the operational benefits of the Company are evaluated comprehensively in order to provide reasonable remuneration. 2. Other than disclosure in the above table,Directors remunerations earned by providingservices(e.g.providingconsultingservices as a non-employee)of the Companyin the most recent fiscalyear: 120

-17-

Remuneration Range table

Bracket		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)	Companies in the consolidated financial statements (Note 9) H	The Company (Note 8)	Companies in the consolidated financial statements (Note 9) I
Less than NT$1,000,000	Cheng-Hai Hung, Li Chen Wang Hsien-Chin Tsai, Kun-Tang Chen Jen-Chieh Lo, Shu-Wen Wang Shou-Chun Yeh, Ya-Kang Wang Cheng-Ping Yu, Nai-Ming Liu Representative of Yih-Yuan Investment Corp.- Kuo-SungHsieh	Cheng-Hai Hung, Li Chen Wang Hsien-Chin Tsai, Kun-Tang Chen Jen-Chieh Lo, Shu-Wen Wang Shou-Chun Yeh, Ya-Kang Wang Cheng-Ping Yu, Nai-Ming Liu Representative of Yih-Yuan Investment Corp.- Kuo-SungHsieh	Hsien-Chin Tsai, Li-Chen Wang Shou-Chun Yeh, Ya-Kang Wang Cheng-Ping Yu, Nai-Ming Liu Representative of Yih-Yuan Investment Corp.- Kuo-Sung Hsieh	Hsien-Chin Tsai, Li-Chen Wang Shou-Chun Yeh, Ya-Kang Wang Cheng-Ping Yu, Nai-Ming Liu Representative of Yih-Yuan Investment Corp.- Kuo-Sung Hsieh
NT$ 1,000,000(inclusive)~ NTS 2,000,000(exclusive)
NT$ 2,000,000(inclusive)~ NTS 3,500,000(exclusive)
NT$ 3,500,000(inclusive)~ NTS 5,000,000(exclusive)
NT$ 5,000,000(inclusive)~ NTS 10,000,000(exclusive)			Jen-Chieh Lo	Jen-Chieh Lo
NT$ 10,000,000(inclusive)~ NT$ 15,000,000(exclusive)			Shu-Wen Wang	Shu-Wen Wang
NT$ 15,000,000(inclusive)~ NT$ 30,000,000(exclusive)			Cheng-Hai Hung	Cheng-Hai Hung
NT$ 30,000,000(inclusive)~ NT$ 50,000,000(exclusive)			Kun-TangChen	Kun-TangChen
NT$ 50,000,000(inclusive)~ NT$ 100,000,000(exclusive)
NT$ 100,000,000 and above
Total	11	11	11	11

• Note 1: The names of directors shall be listed separately (for corporate shareholders, corporate shareholders’ names and their representatives’ names shall be listed separately), and the regular directors and independent directors are listed separately in order to disclose each payment made in a summary table. For a director concurrently acts as President or Vice President, the name shall be listed on this and the following table.

• Note 2: Refers to the remuneration of directors for the most recent year (including the directors’ salary, allowance, severance pay, various bonuses, rewards etc.).

• Note 3: The amount of directors’ remuneration appropriated in the most recent year and approved by the board of directors.

• Note 4: Refers to the relevant business execution expense of directors in the most recent year (including transportation fee, special allowances, various subsidies, accommodation, company vehicles and other physical offers etc.) When there are expenses for housing, car or other transportation tools or specialized personal expense, the asset nature and cost provided shall be disclosed, and the rent shall be calculated according to the actual or fair market price, gasoline fee and other payments. If drivers are provided, please describe the compensation to relevant drivers paid by the Company, but not counted as the remuneration.

• Note 5: Refers to the expense for the compensation, including salary, allowance, severance pay, various bonuses, rewards, transportation fee, special allowances, various subsidies, accommodation, company car etc. and physical offers etc., collected by directors concurrently acting as employees (including adjunct President, Vice President, other Managers and employees). When there are expenses for housing, car or other transportation tools or specialized personal expense, the asset nature and cost provided shall be disclosed, and the rent shall be calculated according to the actual or fair market price, gasoline fee and other payments. If drivers are provided, please describe the compensation to relevant drivers paid by the Company, but not counted as the remuneration. In addition, for the salary expense recognized according to IFRS 2 “Share-Based Payment”, including the employee stock warrants, new restricted employee shares and participation in subscription of shares for capital increase by cash, it shall also be counted as part of the remuneration.

• Note 6: Refers to where directors concurrently acting as employees (including adjunct President, Vice President, other Managers and employees) obtain employees’ remuneration (including stocks and cash), the employees’ remuneration amount appropriated in the most recent year based on the approval of the board of directors shall be disclosed. If such amount cannot be estimated, then the proposed appropriation amount for present year shall be calculated according to the actual appropriation amount ratio of last year, and Table 1-3 shall be further completed.

• Note 7: The total amount of the various compensations paid by all companies (including the Company) indicated in the consolidated financial statements to the directors of the Company shall be disclosed.

• Note 8: For the total amount of compensations paid to each director by the Company, the name of the directors shall be disclosed in their remuneration brackets.

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• Note 9: For the total amount of the compensations paid by all companies (including the Company) indicated in the consolidated financial statements to the directors of the Company, the name of the directors shall be disclosed in their remuneration brackets.

• Note 10: The net income refers to the net income of the most recent year. Where the IFRS standard is adopted, the net income refers to the net income of an entity or individual financial statements of the most recent year.

• Note 11: a. This field shall clearly indicate the relevant compensation amount received by the directors of the Company from non-consolidated affiliates.

• b. Where directors of the Company receive relevant remuneration from non-consolidated affiliates, then the compensation received by the directors of the Company from investees other than subsidiaries shall be counted into the Field I of the remuneration bracket table, and the name of such field shall be changed “All investees”.

• c. The compensation refers to the remuneration and salary received by directors acting as directors, supervisors or managers of investees other than subsidiaries (including salaries of employees, directors and supervisors) and business execution expenses etc.

• The content of the compensation disclosed in this table is of different meaning from the income described in the Income Tax Act; therefore, the purpose of this table is for the purpose of information disclosure only and is not for the purpose of taxation.

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2. Compensation Paid to President and Vice Presidents

2019 Unit: NT$1000

Title	Name (Note 1)	Salary(A) (Note 2)	Salary(A) (Note 2)	Pension(B)	Pension(B)	Bonuses and Allowances (C) (Note 3)	Bonuses and Allowances (C) (Note 3)	Employee remuneration (D) (Note 4)	Employee remuneration (D) (Note 4)	Employee remuneration (D) (Note 4)	Employee remuneration (D) (Note 4)	Ratio of Total Compensation (A+B+C+D) to Net Income(%) (Note 8)	Ratio of Total Compensation (A+B+C+D) to Net Income(%) (Note 8)	Compensation from ventures other than subsidiaries or from the parent company (Note 9)
		The Company	Companies in the consolidated financial statements (Note 5)	The Company	Companies in the consolidated financial statements (Note 5)	The Company	Companies in the consolidated financial statements (Note 5)	The Company		Companies in the consolidated financial statements (Note 5)		The Company	Companies in the consolidated financial statements All Companies (Note 5)
								Cash Amount	Stock Amount	Cash Amount	Stock Amount
Chairman and R&D Supervisor	Cheng-Hai Hung	18,843	19,510	668	668	86,817	86,817	None	None	None	None	2. 47%	2.49%	None
President	Chun-Chin Tsai
President	Kun-Tang Chen
Vice President	Jen-Chieh Lo
Vice President	Shu-Wen Wang
Vice President	Sheng-Tien Lee
Vice President	Cheng-Chin Tsai
Vice President	Li-Fen Cheng

Remuneration brackets table

Ranges of remuneration paid to the Company’s President and Vice Presidents	Name of President and Vice Presidents	Name of President and Vice Presidents
	The Company (Note 6)	All Consolidated Entities included in the financial statements(Note 7) (E)
Less than NT$1,000,000
NT$ 1,000,000(inclusive)~ NTS 2,000,000(exclusive)
NT$ 2,000,000(inclusive)~ NTS 3,500,000(exclusive)
NT$ 3,500,000(inclusive)~ NTS 5,000,000(exclusive)
NT$ 5,000,000 (inclusive) ~ NTS 10,000,000(exclusive)	Chun-Chin Tsai, Jen-Chieh Lo, Sheng-Tien Lee, Cheng-Chin Tsai	Chun-Chin Tsai, Jen-Chieh Lo, Sheng-Tien Lee, Cheng-Chin Tsai
NT$ 10,000,000(inclusive)~ NT$ 15,000,000(exclusive)	Shu-Wen Wang, Li-Fen Cheng	Shu-Wen Wang, Li-Fen Cheng
NT$ 15,000,000(inclusive)~ NT$ 30,000,000(exclusive)	Cheng-Hai Hung	Cheng-Hai Hung
NT$ 30,000,000(inclusive)~ NT$ 50,000,000(exclusive)	Kun-TangChen	Kun-TangChen
NT$ 50,000,000(inclusive)~ NT$ 100,000,000(exclusive)
NT$ 100,000,000 and above
Total	8	8

Note 1: The names of President and Vice President shall be listed separately, and all amounts paid shall be disclosed in a summary table method. For a director concurrently acts as President or Vice President, this table and the above table shall be completed.

• Note 2: Refers to the salary, allowance, severance pay for the President and Vice Presidents in the most recent year.

Note 3: Refers to various bonuses, rewards, transportation fees, special allowances, various subsidies, accommodation, company car and physical offers etc. as well as other remuneration amounts. When there are expenses for housing, car or other transportation tools or specialized personal expense, the asset nature and cost provided shall be disclosed, and the rent shall be calculated according to the actual or fair market price, gasoline fee and other payments. If drivers are provided, please describe the compensation to relevant drivers paid by the Company, but not counted as the remuneration. In addition, for the salary expense recognized according to IFRS 2 “Share-Based Payment”, including the employee stock warrants, new restricted employee shares and participation in subscription of shares for capital increase by cash, it shall also be counted as part of the remuneration.

• Note 4: The employees’ remuneration (including stocks and cash) appropriation for President and Vice Presidents approved by the board of directors for the most recent year shall be disclosed. If such amount cannot be estimated, then the proposed appropriation amount for the present year shall be calculated according to the actual appropriation amount ratio of last year, and Table 1-3 shall be further completed. The net income refers to the net income of the most recent year. Where the IFRS standard is adopted, the net income refers to the net income of an entity or individual financial statements of the most recent year.

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• Note 5: The total amount of various compensations paid by all companies (including the Company) indicated in the consolidated financial statements to the President and Vice Presidents of the Company shall be disclosed.

• Note 6: For the total amount of compensations paid to each President and Vice Presidents by the Company, the name of the Presidents and Vice Presidents shall be disclosed in their remuneration brackets.

• Note 7: The total amount of compensations paid by all companies (including the Company) to each President and Vice Presidents by the Company shall be disclosed, and the name of the Presidents and Vice Presidents shall be disclosed in their remuneration brackets.

• Note 8: The net income refers to the net income of the most recent year. Where the IFRS standard is adopted, the net income refers to the net income of an entity or individual financial statements of the most recent year.

• Note 9: a. This field shall clearly indicate relevant compensation amount received by the President and Vice Presidents of the Company from non-consolidated affiliates.

  • b. Where President and Vice Presidents of the Company receive relevant remuneration from invested enterprises other than subsidiaries, then the compensation received by the President and Vice Presidents of the Company from investees other than subsidiaries shall be counted into the Field E of the remuneration bracket table, and the name of such field shall be changed “All investees”

  • c. The compensation refers to the remuneration and salary received by the President and Vice President acting as directors, supervisors or managers at investees other than subsidiaries (including salaries of employees, directors and supervisors) and business execution expenses, etc.

• Note 10: Refers to the number of new restricted employee shares obtained by directors concurrently acting as employees (including adjunct President, Vice President, other Managers and employees) up to the annual report printing date; in addition to the completion of this table, Table 15-1 shall be further completed.

  • *The content of the compensation disclosed in this table is of different meaning from the income described in the Income Tax Act; therefore, the purpose of this table is for the purpose of information disclosure only and is not for the purpose of taxation.

• 3.2.4 Name of managers with distribution of employees’ remuneration and distribution status: None.

• 3.2.5 Separately compare and describe total remuneration, as a percentage of net income stated in the Company only financial reports or individual financial reports, as paid by the Company and by each other company included in the consolidated financial statements during the past 2 fiscal years to directors, supervisors, president, and assistant presidents, and analyze and describe remuneration policies, standards, and packages, the procedure for determining remuneration, and its linkage to operating performance:

Title	2019	2019	2018	2018
	The Company	Companies in the consolidated financial statements	The Company	Companies in the consolidated financial statements
Percentage of Compensation Paid to Directors	1.70%	1.72%	1.62%	1.64%
Percentage of Compensation Paid to Independent Directors	0.04%	0.04%	0.04%	0.04%
Percentage of Compensation Paid to President and Vice Presidents	2.47%	2.49%	2.34%	2.36%

According to Article 25 of the Articles of Incorporation of the Company, when directors are performing duties, regardless whether the Company operates at a profit or loss, the Company may pay remuneration to the directors for their performance of job duties, and the board of directors is authorized to determine the remuneration according to the directors’ participation level in the Company’s operation and value of contribution along with the consideration on the general standards adopted in the same industry.

The Company has established the “Rules for Performance Evaluation of the Board of Directors and Functional Committee,” which forms basis for the evaluation of independent directors and inside directors . In addition to the consideration of the overall business performance, future operational risk and industry development trend, the individual

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performance achievement rate and contribution to the Company’s operational benefits etc. are also considered comprehensively, in order to provide reasonable remuneration. Furthermore, the remuneration evaluation system is also timely reviewed according to the actual operation status and relevant laws.

The directors, president and vice presidents of the Company are of the responsibilities for the execution of the Group’s operation and management, and the salary structure refers to the base salary, allowance and company cars. The remuneration is determined according to the overall operational performance along with the consideration of the target achievement rate, profitability, operational benefits and level of contribution of each individual managerial officer along with the consideration of the standard adopted in the same industry, in order to provide reasonable remuneration. Furthermore, the remuneration evaluation system is also timely reviewed according to the actual operation status and relevant laws.

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3.3 Implementation of Corporate Governance

(I) Board of Directors Status:

In the most recent year, there were 6 board of directors meetings convened (A), and the attendance of directors is as follows:

Title	Name (Note 1)	Attendance in Person (B)	By Proxy	Attendance Rate (%)【B/A】(Note 2)	Remark
Chairman	Cheng-Hai Hung	6	0	100%	-
Director	Li-Chen Wang	6	0	100%	-
Director	Hsien-Chin Tsai	6	0	100%	-
Director	Jen-Chieh Lo	6	0	100%	-
Director	Kun-Tang Chen	6	0	100%	-
Director	Shu-Wen Wang	6	0	100%	-
Director	Shou-Chun Yeh	6	0	100%	-
Director	Kuo-Sung Hsieh	6	0	100%	Representative of Corporate Shareholder Yih-Yuan Investment Corp.
Independent Director	Nai-Ming Liu	6	0	100%	-
Independent Director	Ya-Kang Wang	5	1	83%	-
Independent Director	Cheng-Ping Yu	6	0	100%	-
Other mentionable items: I. Where the operation of a board of directors is subject to one of the following, the board of directors date, session, proposal content, opinion of all independent directors and Company’s handling for the opinions of independent directors shall be described: (I) Matters referred to in Article 14-3 of the Securities and Exchange Act: The independent director of the Company has no dissenting opinions or qualified opinions on the resolutions (Note 3). (II) Other matters involving objections or expressed reservations by independent directors that were recorded or stated in writing that require a resolution by the board of directors : There were no resolutions subject or dissenting or qualified options of independent directors of the Company. II. For the execution status of recusal of directors due to conflicts of interest, the name of directors, proposal content, reasons of recusal and participation in voting shall be described: Meeting issues of board of directors in the most recent year involving recusal of directors due to conflict of interest are as follows: Directors Contents Reasons Execution status Cheng-Hai Hung、 Kun-Tang Chen、 Jen-Chieh Lo、 Shu-Wen Wang Ratification of 2018 yearend bonus The motion involves director’s own interests Avoidance of discussion and voting Cheng-Hai Hung、 Kun-Tang Chen、 Jen-Chieh Lo、 Shu-Wen Wang Salary Ratification of all staff and manager The motion involves director’s own interests Avoidance of discussion and voting

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Yih-Yuan Investment Corp. Representative : Kuo-Sung Hsieh	Provide Letter of support to E-Sun bank and Land Bank of Taiwan	The motion involves director’s own interests	Avoidance of discussion and voting
Yih-Yuan Investment Corp. Representative : Kuo-Sung Hsieh	Provide Letter of support to The Shanghai Commercial & Savings Bank and Land Bank of Taiwan	The motion involves director’s own interests	Avoidance of discussion and voting

III. Goals (such as establishment of Audit Committee, improvement of information transparency etc.) such as establishment of an execution status evaluation on the enhancement of functions of board of directors for the current year and the most recent year: The Company continues to execute routine revenue, financial information report and announcement of major resolution of board of directors, improveinformation transparency. To enhance the function of the board of directors, in addition to the establishment of Remuneration Committee, Audit Committee and chief corporate governance officer in order to assist the board of directors to perform supervisory responsibilities. The Company has increased Directors and Officers Liability Insurance Limit coverage and signed a Board of Director’s performance evaluation contract with Ernst & Young Global Limited in 2019. In addition, the Company establishes the “Regulations Governing Board of Directors and Functional Committee Performance Evaluation”, “Ethical Corporate Management Best Practice Principles”, “Corporate Governance Best Practice Principles”, “CSR Promotion Committee” and “Nominated Committee” in order to enhance the corporate ethical management and corporate governance performance.

• Note 1: Where a director or supervisor is a corporate, the name of the corporate shareholder and the name of its representative shall be disclosed.

Note 2:

• (1) Before the end of the fiscal year, if there is any resignation of the director or supervisor, the resignation date shall be indicated in the remarks field. The actual attendance rate (%) is calculated according to the number of board of directors convened and the number of actual attendance during the term of office.

• (2) Before the end of the fiscal year, if there is any re-election of directors or supervisors, the new and old directors and supervisors shall be listed, and the remarks field shall indicate the old, new or consecutive term of office and the re-election date for the directors or supervisors. The actual attendance rate (%) is calculated according to the number of board of directors convened and the number of his/her actual attendance during his/her term of office. The number of meetings and his/her actual number of attendance are used for the calculation.

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Note 3: Resolutions related to Article 14-3 of Securities and Exchange Act:

MeetingDates	Resolution
January 14, 2019 (2019 1st Meeting)	Approved of 2018 yearend bonus of the management. Approved 2019 endorsement and guarantee matters of the Company. Approved the loaning limit of the Company's subsidiary funds to the affiliates. Approved 2019 independent CPA assignment. Approved the machinepurchaseproject of the Hsi-Chou Plant.
March 14, 2019 (2019 2nd Meeting)	Approved the construction budget of HQ and sub-contractor. Approved the amendments to the Company’s ” Articles of Incorporation”. Approved the proposal for the amendments to the Company’s “Regulations Governing the Acquisition and Disposal of Assets”. Approved the annual salaryincreases of the Company.
May 7, 2019 (2019 3rd Meeting)	Approved the proposal for the donation of NT$ 2 million to Eclat Education Foundation. Approvied the proposal for the amendments to the Company and it’s subsidiary’s “Operational Procedures for Loaning Funds to Other”. Approved the amendment to the Company’s “Regulations for Making of Endorsements and Guarantees”. Approved the Company’s ”Standard Operating Procedures for Handling Requests made by Directors”. Approved to provide the Letters of Support to the Shanghai Commercial bank and Land bank of Taiwan.
August 6, 2019 (2019 4th Meeting)	Approved the proposal for the amendments to the Company’s “Regulations Governing the Exercise of Powers by Audit Committees”. Approved the abolishment to the “Operational Procedures for Loaning Funds to Other” of GRAND ELITE HOLDINGS INC.
September 17, 2019 (2019 5th Meeting)	Approved the amendments of the Company’s“Procedures for Election of Directors”. Approved the investment project. Approved to provide the Letters of Support to the Esun bank and Land bank of Taiwan.
November 7, 2019 (2019 6th Meeting)	Approved the proposal for the amendments to the Company’s an internal control system ”Production cycle”. Approved the investment project in Indonesia. Approved the cancellation of the loaning of fund facility of US$42,850 thousand which was approved by the BoD at January 14, 2019. Approved to provide the Letters of Support to the Shanghai Commercial bank and Land bank of Taiwan.

(II) Audit Committee Implementation Status and Supervisor Participating Board of Directors Status:

The Audit Committee of the Company is formed by 3 independent directors. The purpose of the Audit Committee is to assist the board of directors in their supervision on the quality and integrity of matters related to accounting, auditing, financial report process and financial control executed by the Company.

Besides the matters referred to in Article 14-3 of the Securities and Exchange Act, the Audit Committee of the Company also reviews: financial statements audit and accounting policies and procedures, offering or issuing securities, legal compliance and risk management (including material topics of the environmental audit, information security), plan to prevent fraud and fraud investigation report, assessment of CPA’s qualification, independence and performance evaluation etc.

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Audit Committee Implementation Status Information

There were 6 (A) Audit Committee meetings convened in the most recent year, and the attendance status of the independent directors is as follows:

Title	Name	Attendance in Person(B)	By Proxy	Attendance Rate (%) (B/A) (Note 1)	Remark
Independent Director	Nai-Ming Liu	6	0	100%	-
Independent Director	Ya-Kang Wang	5	1	83%	-
Independent Director	Cheng-Ping Yu	6	0	100%	-
Other mentionable items: I. Where the operation of Audit Committee is subject to one of the following, the board of directors date, session, proposal content, resolution result of the Audit Committee meeting and the opinion of the Audit Committee of the Company shall be described. (I) Matters referred to in Article 14-5 of the Securities and Exchange Act: The Audit Committee of the Company have no dissenting opinions or qualified opinions on the resolutions (Note 2). (II) Other matters which were not approved by the Audit Committee but were approved by two-thirds or more of all directors: None. II. For the execution status of recusal of independent directors due to conflicts of interest, the name of independent directors, proposal content, reasons of recusal and participation in voting: There were no meeting issues of Audit Committee meeting in the most recent year involving recusal of independent directors due to conflict of interest. III. The communications between the independent directors, the internal auditors, and the independent auditors are listed in the table below (shall include major events, methods and results etc. communicated in relation to the company's financial and business status). Explanation: (I) The independent directors communicate with the internal audit officer at the Audit Committee meeting convened quarterly. The internal audit officer provides audit reports to the independent directors in the meeting periodically in order to communicate the audit result and the follow-up execution status. 2019 Communication of Independent Directors and Internal Audit Supervisor Excerpt: Note 3. (II) The independent directors communicate with the independent auditor via the board of directors and annual meetings. CPA provides an explanation on the audit of the financial statements and the audit result to the independent directors annually, and communicates issues related to the internal control effectiveness audit result, whether there is any financial report adjustment of entries or whether the amendment of laws affects the account recognition method etc. 2019 Excerpt from the communication between independent directors and CPA: Note 4.

Note 1:

• Before the end of the fiscal year, if there is any resignation of independent director, the resignation date shall be indicated in the remarks field. The actual attendance rate (%) is calculated according to the number of Audit Committee meetings convened and the number of actual attendance during the term of office.

• Before the end of the fiscal year, if there is any re-election of independentdirectors, the new and old independent directors shall be listed, and the remarks field shall indicate the old, new or consecutive term of office and the re-election date for the independent directors. The actual attendance rate (%) is calculated according to the number of Audit Committee meetings convened and the number of his/her actual attendance during his/her term of office.

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Note 2: Resolutions related to Article 14-5 of Securities and Exchange Act:

Meeting Dates	Contents and Resolution	Resolutions related to Article 14-5 of Securities and Exchange Act
January 14, 2019 (2019 1st Meeting)	1. Approved 2019 financingfacilityof the Company.
	2. Approved 2019 endorsement and guarantee matters of the Company.	V
	3. Approved the loaning limit of the Company's subsidiaryfunds to the affiliates.	V
	4. Approved 2019 independent CPA assignment.	V
	5. Approved the machine purchase project of the Hsi-Chou Plant.	V
	Resolution：All proposals were adopted unanimously by the Audit Committee.
	Response to Audit Committee’s opinion: Not Applicable.
March 14, 2019 (2019 2nd Meeting)	1. Discussing 2018 internal control system effectiveness review and issuing “ Management's Reports on Internal Control”.	V
	2. Approved the construction budget of HQ and sub-contractor.	V
	3. Approved the amendments to the Company’s ” Articles of Incorporation”.	V
	4. Approved the proposal for the amendments to the Company’s “Regulations Governing the Acquisition and Disposal of Assets”.	V
	5. Approved FY2018 Business Report and Financial Statements.	V
	6. Approved the Proposal for Distribution of 2018 Profits.
	7. Approved the disposal of the investment of “Best Information Co.,Ltd.”
	Resolution：All proposals were adopted unanimously by the Audit Committee.
	Response to Audit Committee’s opinion: Not Applicable.
May 7, 2019 (2019 3rd Meeting)	1. Reportingthe 1Q2019 Consolidated Financial Report
	2. Approved the proposal for the amendments to the Company and it’s subsidiary’s “Operational Procedures for LoaningFunds to Other”.	V
	3. Approved the amendment to the Company’s “Regulations for Making of Endorsements and Guarantees”.	V
	4. Approved the Company’s ”Standard Operating Procedures for HandlingRequests made byDirectors”.	V
	Resolution：All proposals were adopted unanimously by the Audit Committee.
	Response to Audit Committee’s opinion: Not Applicable.
August 6, 2019 (2019 4th Meeting)	1. Reporting the 2Q 2019 Consolidated Financial Report.
	2. Approved the proposal for the amendments to the Company’s “Regulations Governing the Exercise of Powers byAudit Committees”.	V
	3. Approved the abolishment to the “Operational	V

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Meeting Dates	Contents and Resolution	Resolutions related to Article 14-5 of Securities and Exchange Act
	Procedures for Loaning Funds to Other” of GRAND ELITE HOLDINGS INC.
	Resolution：All proposals were adopted unanimously by the Audit Committee.
	Respond to Audit Committee’s opinion: Not Applicable.
September 17, 2019 (2019 5th Meeting)	1. Approved the amendments of the Company’s “Procedures for Election of Directors”.	V
	2. Approved the investment project.	V
	Resolution：All proposals were adopted unanimously by the Audit Committee.
	Response to Audit Committee’s opinion: Not Applicable.
November 7, 2019 (2019 6th Meeting)	1. Approved the 2020 Internal Auditing plan.
	2. Approved the proposal for the amendments to the Company’s an internal control system ”Production cycle”.	V
	3. Approved the investment project in Indonesia.	V
	4. Using the retained earnings in 2018FY to conducting investmentprojects.
	5. Approved the cancellation of the loaning of fund facility of US$42,850 thousand which was approved by the BoD at January14,2019.	V
	6. Approved to provide the Letters of Support to the Shanghai Commercial bank and Land bank of Taiwan.	V
	7. Approved the re-locate proposal of Miao-Li Plant.	V
	Resolution：All proposals were adopted unanimously by the Audit Committee.
	Response to Audit Committee’s opinion: Not Applicable.

Note 3：2019 Communication of Independent Directors and Internal Audit Supervisor Excerpt as follows:

Meeting Dates	Contents	Independent Directors’ Suggestion and React
March 14, 2019	Reporting the 4Q 2018 environmental protection auditingimplementation.	None
	Reporting the 4Q 2018 internal auditing implementation.
	2018 internal control system effectiveness review.
	2018 “Management's Reports on Internal Control”.
May 7, 2019	Reporting the 1Q 2019 internal audit implementation.	None
August 6, 2019	Reporting the 2Q 2019 environmental protection auditingimplementation.	None
	Reporting the 2Q 2019 internal audit implementation.
November 7, 2019	Reporting the 3Q 2019 environmental protection auditingimplementation.	Independent director proposed: All units are encouraged to describe the recommendations to the operation process in
	Reporting the 3Q 2019 internal auditing implementation.
	2020 annual audit plan.

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Meeting Dates	Contents	Independent Directors’ Suggestion and React
	Amendments to the Company’s an internal control system ”Production cycle”.	the “Internal Control Self-Assessment Questionnaire” in order to provide it to relevant units for reference. Result: Internal audit is to be handled accordingly.
	Implementation and fillout on 2019 Self-Assessment Questionnaire on internal control system.

Note 4: 2019 Communication of Independent Directors and Independent Auditor Excerpt as follows:

Date	Major meeting agendas	Independent Directors’ Suggestion and React
November 7, 2019	 Report for audit result of 3Q 2019 consolidated financial reports 1. Auditor’s responsibility to interim financial report review. 2. Review scope. 3. Findings on interim review.	None.
	 2019FY audit plan 1. Definition of audit scope. 2. Key audit matters.	Unanimously agree to delete the "Inventory" issue from the key audit matter.
	 Important regulations update 1. Article 10-1 of Statute for Industrial Innovation. 2. Article 23-3 of Statute for Industrial Innovation : To use undistributed earnings to reinvestment.	Independent director proposed to clarify the applicable scope of the Statue for Industrial Innovation. The Company has replied the confirmation result to the independent director on November 11,2019.

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(III) Corporate governance Implementation status and deviation from “ the Corporate ” Governance Best-Practice Principles for TWSE/TPEx Listed Companies :

Evaluation Item		Implementation status	Implementation status	deviation from the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”and Reasons
	Yes	No	Abstract Illustration
1. Does the Company follow the “Corporate Governance Best- Practice Principles for TWSE/TPEx Listed Companies” to establish and disclose its corporate governance practices?	V		The Company has established the “Corporate Governance Best -Practice Principles of the Company” according to the “Corporate Governance Best -Practice Principles for TWSE/TPEx Listed Companies” and has published such Principles on the Market Observation Post System (MOPS) and the Company’s website.	None
2. The shareholding structure and shareholders’ equity of the Company (1) Does the Company have the internal procedures regulated to handle shareholders’ proposals, doubts, disputes, and litigation matters; in addition, have the procedures been implemented accordingly?	V		The Company has established the “Internal Material Information Handling Operation Procedures”, and has assigned dedicated personnel to handle and respond to the recommendations and doubts made by shareholders.	None
(2) Is the Company constantly informed of the identities of its major shareholders and the ultimate owners?	V		The Company is constantly informed of the identities of its major shareholders and the ultimate owners according to the shareholders’ roster provided by the shareholders’ service agent. In addition, the Company also discloses the status related to the pledge, increase/decrease change of equity for shareholders with shareholdingexceeding10%.	None
(3) Has the company established and implemented risk management practices and firewalls for companies it is affiliated with?	V		The Company establishes the “Subsidiaries Supervisory and Control Procedures” and implements the execution thereof. The business dealings or transactions among the affiliates are handled according to relevant regulations.	None
(4) Has the company established internal policies that prevent insiders from trading securities against non-public information?	V		The Company has established the “Procedures for Preventing Insider Trading and Handling Material Inside Information” and implements the execution thereof in order to prevent insiders from trading securities against non-public information. The Company also discloses the status related to the pledge, increase/decrease change of equity for the insiders (including directors, managerial officers and shareholders with	None

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Evaluation Item		Implementation status	Implementation status	deviation from the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”and Reasons
	Yes	No	Abstract Illustration
			shareholding exceeding 10%) for reporting on M.O.P.S., and implement internal educational trainings and promotionsperiodically.
3. Composition and duties of the board of directors: (1) Does the Board of Directors have diversity policies regulated and implemented substantively according to the composition of the members?	V		The “Corporate Governance Best Practice Principles” of the Company specifies the requirement for diversity of members of board of directors. In 2018, 11 seats of board of directors were elected, there are 3 independent directors, and the board is formed by directors equipped with professional knowledge, skills and experience in the business, financial and accounting fields necessary for the company management. (Note 1) The ratio of directors equipped with the identity of employees of the Company accounts for 36% of all directors, the ratio of independent directors accounts for 27% of all directors. 2 directors are of the age above 70 years old, 6 directors are of the age between 60~69 years old, and 3 directors are of the age under 60 years old. The board of directors has disclosed the diverse policy for the formation of board members on the Company’s website.	None
(2) Does the company voluntarily establish other functional committees in addition to the Remuneration Committee and the Audit Committee?	V		In addition to the establishment of the Remuneration Committee and Audit Committee according to the laws, the Company also establishes the “CSR Executive Committee”, and the current commissioners consist of 2 independent directors and 1 director, and the committee forms 5 teams in total: 1. Sustainable environment development; 2. Human resource; 3. Corporate governance; 4. Product and service; 5. Social participation. The main operating goal is to implement the concept of corporate social responsibility and sustainable operation. For the relevant outcome, in addition to the preparation of corporate social responsibility report, it also reports the current year execution outcome and the operational plan for the next year to the board of directors.	None

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Evaluation Item		Implementation status	Implementation status	deviation from the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”and Reasons
	Yes	No	Abstract Illustration
(3)Does the Company establish a standard to measure the performance of the Board and implement it annually, and are performance evaluation results submitted to the board of directors and referenced when determining the remuneration of individual directors and nominations for reelection?	V		The Company had established the “Regulations Governing Board of Directors and Functional Committee Performance Evaluation” on November 7, 2017, specifying that the board of directors shall perform at least one performance evaluation of the board of directors and members of the board annually. The measurement items for the performance evaluation of the board of directors (functional committees) of the Company include the following five major aspects: 1. The degree of participation in the company's operations. 2. Improvement in the quality of decision making by the board of directors. 3. The composition and structure of the board of directors. 4. The election of the directors and their continuing professional education. 5. Internal controls. The measurement items for the performance evaluation of the members (self or peer) of the board of directors include the following six major aspects: 1. Their grasp of the company's goals and missions. 2. Their recognition of director's duties. 3. Their degree of participation in the company's operations. 4. Their management of internal relationships and communication. 5. Their professionalism and continuing professional education. 6. Internal controls. The result of the 2019 board of directors’ performance evaluation had been complete at the end of 2019 and had reported to the board of directors and the functional committes on January 14, 2020. The overall evaluation result of the board of directors is 97.92%; the individual comprehensive evaluation result is 96.73%. The individual evaluation results for the Audit Committee, Remuneration Committee and CSR Executive Committee are 100% respectively. Overall board of directors (functional committees included) performance evaluation result indicates effective operation.	None

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Evaluation Item		Implementation status	Implementation status	deviation from the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”and Reasons
	Yes	No	Abstract Illustration
(4) Does the company regularly evaluate the independence of CPAs?	V		The Company has made assessment on the independence of CPA and obtained the independence declaration issued by the independent CPA for submission to the Audit Committee for review, followed by submitting to the board of directors for approval in order to execute the entrustment of independent auditors. According to our assessment,the CPAs of KPMG audit firm are qualified with the Company’s independence requirement (Note2), the latest assessment was completed onJanuary3,2020.	None
4. Has the TWSE/TPEx Listed Companieshad an adequate number of competent corporate governance personnel, andappointed a chief corporate governance officer that as the most senior officer to be in charge of corporate governance affairs (including but not limited to furnish information required for business execution by directors and supervisors,to assist directors and supervisors with legal compliance, to handle matters relating to board meetings and shareholders meetings according to laws, and to produce minutes of board meetings and shareholders meetings)?	V		The Company had established the Secretary Section of the Board, formed by personnel designated by the Chairman’s Office, Financial and Accounting Department, Administration Department and Internal Audit Office concurrently in order to be responsible for the corporate governance related affairs. In addition, the corporate governance supervisor to be responsible for the supervision thereof. Thw main works include providing materials necessary for directors to perform duties, handle meeting related matters for the board of directors meetings, audit committee meetings, renumeration committee meetings, CSR Executive Committee meetings and shareholders meetings according to the laws , handling company alternation registration, preparing relevant meeting minutes of meetings, performing information announcement and reporting, establishment and revision of internal control systems related to regulatory changes. Corporate Governance Officer continuing education status:(Note 3).	None
5. Has the Company set up channels of communication for stakeholders (including but not limited to shareholders, employees, customers and suppliers),dedicated a section on the Company's website for stakeholder affairs and adequately responded to stakeholders' inquiries on	V		The Company had established the stakeholders section on the Company’s website, and the website also publishes the contact information of the spokesperson and all business windows in order to provide communication channels to the stakeholders. The stakeholder section is provided with email box handled by dedicated personnel in order toproperlyrespond to relevant issues,	None

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Evaluation Item		Implementation status	Implementation status	deviation from the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”and Reasons
	Yes	No	Abstract Illustration
significant corporate social responsibility issues?			including corporate social responsibilities concerned by stakeholders.
6. Does the Company engage a share administration agency to handle shareholder meeting affairs?	V		The Company entrusts the Shareholders Service Department of Yuanta Securities Co., Ltd. for handling shareholder meeting affairs.	None
7. Information disclosure (1) Has the Company established a website that discloses financial, business, and corporate governance-related information? (2) Has the Company adopted other means to disclose information (e.g. English website, assignment of specific personnel to collect and disclose corporate information, implementation of a spokesperson system, broadcasting of investor conferences via the company website)?	V		The Company had established Chinese and English websites to periodically disclose financial business information, and designates dedicated personnel to be responsible for the maintenance of the Company’ s website. The Company establishes the spokesperson and deputy spokesperson, and the investor conference and shareholders’ meeting related information are updated timely on the Company’s website.	None
(3) Has the Company made public announce and reported the annual financial statements within two months after the end of each fiscal year, and has the Company also made announcement and provided report of the first, second and third quarter financial statements as well as the monthly business operation status?		V	The Company has made public announce and reported the annual financial statements, quarterly financial statements and the monthly business operation status according to relevant regulations.	The public announcement date for 2019 financial statements is March 5, 2020. The Company will make its best effort to announce the 2020 financial statements within two months after the end of accounting fiscal year~~.~~

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Evaluation Item		Implementation status	Implementation status	deviation from the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”and Reasons
	Yes	No	Abstract Illustration
8. Does the Company have other information that enables a better understanding of the Company’s corporate governance practices (including but not limited to employee rights, employee care, investor relations, supplier relations, stakeholders’ interests, continuing education of directors/supervisors, implementation of risk management policies and risk measurements standards, implementation of customer policies, and insuring against liabilities of company directors and supervisors)?	V		1. Employees’ rights and benefits: The Company treats employees as partners, and protects the rights and benefits of employees according to the Labor Standards’ Act. 2. Employee care: Providing welfare system for improving the employees’ living and proper educational training system, establishing excellent relationship with employees based on mutual trust and dependence. For example, the Company offers medical care subsidy, holiday bonuses, accommodation for employees’ living care and parking space subsidy etc. 3. Investor relationship: The Company establishes the spokesperson system in order to allow dedicated personnel to be responsible for responding to the investor corporate shareholders and handling recommendations of shareholders. 4. Supplier relationship: The company maintains excellent relationship with suppliers in order to ensure the rights and benefits of both parties. 5. Stakeholders: Stakeholders may communicate with and recommend to the Company in order to maintain their legitimate rights and benefits. 6. Continuing education of directors: (Note 4) 7. Execution status of risk management policy and risk measurement standards: The Company establishes the Risk Management Regulations, and the risk management includes customer risk, financial risk, supply risk, personnel risk, climate change risk, information risk and other risks. In addition, relevant operating units are requested to establish or revise the execution procedures of various risk controls in order to implement risk management. 8. Implementation of customer policies: The Company is committed to the quality improvement and professional technology improvement such that through vertical integration of production and sales,the Companyis	None

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Evaluation Item	Implementation status	Implementation status	Implementation status	deviation from the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”and Reasons
	Yes	No	Abstract Illustration
			able to perform fast development and production in order to provide one-stop shopping service to satisfy the demands from fabric to garment production for customers, thereby providing competitive products to customers. 9. Status of liability insurance purchased for directors by the Company: The Company had specified in the Articles of Incorporation that insurance may be purchased for the directors and supervisors, and the board of directors is empowered to handle relevant insurance enrollment matters with full authorization. Staring from April 2015, the Company had purchased liability insurances for directors and managers. After review and approval through the resolution of the board of directors meeting, insurance renewal for the period from April 2019 to March 2021 had been completed. 10. Continuing education of managerial officers, financial report preparation personnel and internal audit officer: (Note 5)
9. Please explain the improvements made, based on the latest Corporate Governance Evaluation results published by TWSE Corporate Governance Center, and propose enhancement measures for any issues that areyet to be rectified.(Note 7)

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Note 1: Implementation status of policy on diversity of board members:

Item				Director	Director				Independent Director	Independent Director	Independent Director
	Chen-Hai Hung	Kun-Tang Chen	Shu-Wen Wang	Jen-Chieh Lo	Hsien-Chin Tsai	Li-Chen Wang	Shou-Chun Yeh	Kuo-Sung Hsieh	Ya-Kang Wang	Cheng-Ping Yu	Nai-Ming Liu
Leadership, decision making, operation, judgment and crisis handling abilities	V	V	V		V	V	V	V	V	V	V
Contribution to public welfare	V			V	V	V			V	V
Expertise in the operating business	V	V	V	V	V	V	V	V		V	V
Expertise in finance, legal			V	V			V	V	V		V

Note 2:Independence and Competency of CPA Assessment Item:

No.	Independence and competency assessment item	Yes	No
1	CPA himself or herself or his or her spouse and relative within the second degree of kinshipis not a relatedpartyof the Companyor its affiliates.	V
2	Without any direct or material indirect financial interest relationship with the Company.	V
3	Without close business relationship and potential employment relationship with the Company.	V
4	CPA and audit team members presently do not assume the position of director, manager or duties having material impact on the audit case presently or in the last twoyears.	V
5	Not providing non-audit services to the Company that may directly affect the audit works.	V
6	Without collection of fees related to audited cases.	V
7	Without providingservice of audit cases of the Company in a longterm.	V
8	Not subject to anyconditions defined in Article 30 of the CompanyAct.	V
9	Other effective reference information: External Auditors’ Declaration of Independence	V

Note 3:Corporate Governance Officer continuing education status:

Organizer	Course Name	Training Hours
Accounting Research and Development Foundation	Applicability of “Business Judgment Rules” in Economic Crime and Discussion on Legal Liabilities	3
Corporate Operation Association	Corporate Governance and Board of Directors Operation	3
Accounting Research and Development Foundation	Aspects of Internal Control and Internal Audit - Past, Present, Future	3
Taiwan Corporate Governance Association	Improvement in Implementation of Corporate Governance: Discussion on Role and Responsibility of Corporate Governance Officer	3
Accounting Research and Development Foundation	Corporate governance and securities laws	3

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Organizer Securities & Futures Institute Accounting Research and DevelopmentFoundation Accounting Research and Development Foundation	Course Name	Training Hours
	2019 Public Listed and Non-TWSE/TPEx Listed Companies Insider Share Transfer Transaction Legal Compliance PromotionSeminar	3
	“Innovative” Application of The Art of War: Occupation and Investment	3
	Insider and Ethical Management Related Case Study and Analysis	2

Note 4: Continuing education of directors and supervisors:

Directors and supervisors List	Organizer	Course Name	TrainingHours
Chairman: Cheng-Hai Hung	Accounting Research and Development Foundation	Applicability of “Business Judgment Rules” in Economic Crime and Discussion on Legal Liabilities	3
Director Li-Chen Wang
Director Hsien-Chin Tsai
Director Kun-TangChen
DirectorJen-Chieh Lo		Corporate governance and securities laws	3
Director Shu-Wen Wang
Director Shou-Chun Yeh
Director Kuo-SungHsieh
Independent Director Ya-Kang Wang		Insider and Ethical Management Related Case Study and Analysis	2
Independent Director Cheng-PingYu
Independent Director Nai-MingLiu
Independent Director Ya-Kang Wang	Accounting Research and Development Foundation	Applicability of “Business Judgment Rules” in Economic Crime and Discussion on Legal Liabilities	3
		Insider and Ethical Management Related Case Studyand Analysis	2
	Taiwan Corporate Governance Association	Directors’ Responsibilities and Risk Management Under Latest Corporate Governance Roadmap	3
		Multinational management and Sustainable development	3
Independent Director Nai-Ming Liu	CPA Associations R.O.C. (Taiwan)	2018 Profit-seeking Enterprise Income Tax Declaration Key Points and Concerns Analysis	3
		Latest Interpretation and Analysis on Profit-seeking Income Tax and Taxpayer Rights Protection Act Tax Administrative Remedy Case Study	3
		Accounting Firm Anti-Money Laundering and Counter Terrorism Financial Internal System Application	3
Director Jen-Chieh Lo	Securities and Futures Institute	2019 Public Listed and Non-TWSE/TPEx Listed	3

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Directors and supervisors List	Organizer	Course Name	TrainingHours
		Companies Insider Share Transfer Transaction Legal Compliance
	Taiwan Stock Exchange Corporation	Promotional Seminar on Effective Implementation of Functions of Directors	3
Director Shu-Wen Wang	Accounting Research and Development Foundation	Aspects of Internal Control and Internal Audit - Past, Present,Future	3
		“Innovative” Application of The Art of War: Occupation and Investment	3
	Taiwan Corporate Governance Association	Improvement in Implementation of Corporate Governance Discussion on Role and Responsibility of Corporate Governance Officer	3
	Securities and Futures Institute	2019 Public Listed and Non-TWSE/TPEx Listed Companies Insider Share Transfer Transaction Legal Compliance	3

Note5: Continuing education of managerial personnel, financial report preparation personnel and internal audit officer:

audit officer:
List of Managerial Officers	Organizer	Course Name	Training Hours
Financial and accounting supervisor Jen-Chieh Lo	Accounting Research and Development Foundation	Issuer, securities firm, securities exchange accounting manager continuingeducationprogram	12
Accounting manager functional substitute Lai-Kuei Chen	Accounting Research and Development Foundation	Issuer, securities firm, securities exchange accounting supervisor continuingeducationprogram	12
		Applicability of “Business Judgment Rules” in Economic Crime and Discussion on Legal Liabilities	3
		Corporate governance and securities laws	3
Financial report preparation personnel Tsai-Fang Jan	Taiwan Stock Exchange Corporation	Educational Seminars for the 2019 Corporate Governance Evaluation	3
	Accounting Research and Development Foundation	Applicability of “Business Judgment Rules” in Economic Crime and Discussion on Legal Liabilities	3
Financial report preparation personnel Yu-Wen Kung	Accounting Research and Development Foundation	Applicability of “Business Judgment Rules” in Economic Crime and Discussion on Legal Liabilities	3
		Corporate governance and securities laws	3
Internal audit manager Ssu-Miao Liu	Accounting Research and Development Foundation	Applicability of “Business Judgment Rules” in Economic Crime and Discussion on Legal Liabilities	3
		Corporate governance and securities laws	3
		Insider and Ethical Management	2

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List of Managerial Officers	Organizer	Course Name	Training Hours
		Related Case Studyand Analysis

Note 6: Status of internal audit related personnel acquiring relevant licenses designated by competent authority:

authority:
License	Unit	Number of shareholders
Certified Internal Auditor(CIA)	Audit	3
Certified Internal Auditor(CIA)	Accounting	1

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Note 7: The Company provides the explanation on the improvements made for the corporate assessment result of the Company and propose enhancement measures for any issues that are yet to be rectified as follows:

• I. Maintain shareholders’ equity and fair treatment to shareholders 1. For the adoption of candidate nomination system for the election of all directors, the Articles of Incorporation have been amended and resolved on the 2019 annual general shareholders’ meeting .

• 1. The Company had uploaded the English version of annual report 7 days before the 2019 annual general shareholders’ meeting.

• II. Strengthen the structure and operation of the board of directors 1. Regarding the formation and successor planning for members of the board and important management, to improve the functions of the board of directors and to strengthen the human resource management mechanism, the Company has established the nomination and committee charter accordingly in 2020.

• 1. The Company has already disclosed the discussion process and resolution made by the Remuneration Committee as well as the Company’s handling of the opinions made by its members in the 2019 annual report in detail.
• 1. The Company had enhanced the disclosure of assessment on the independence procedure of CPA on the annual report.
• 1. The Company had amended the Regulations Governing Board of Directors and Functional Committee Performance Evaluation, and specifies that external evaluation shall be performed at least once every three years. It is expected to perform board of directors’ external performance evaluation operation in 2020.

• III. Enhancing Information Transparency 1. The is simultaneously report English versions of material information in 2019. 2. The Company will make the best effort to announce the 2020 financial statements within two months after the end of accounting fiscal year ~~.~~

• IV. Implementation of corporate social responsibility 1. The company had already disclosed the governance structure on the annual report and the Company’s website.

• 1. The Company has established the waste, energy and water resource management policies as well as the climate change risk management operation procedure in order to cope with the issues of climate change ~~a~~ nd to implement the sustainable environmental operation in the corporate social responsibility report, which has been verified by KPMG and disclosed on the Company's website.
• 1. The Company has established the “Ethical Corporate Management Best Practice Principles”, and in 2019, the human rights protection policy implementation status has been disclosed on the Company's website, and also disclosed in the 2019 annual report.
• 1. The Company has established the “Rules for Handling Complaints” and provided a complaint channel for internal and external personnel on the Company website.

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(IV) Formation, responsibilities and operation status of Remuneration Committee

(1) Information of Remuneration Committee members:

Identity (Note 1)	Condition Name	Professional qualifications (Note1)	Professional qualifications (Note1)	Professional qualifications (Note1)			Independence	Independence	Independence	Status (Note 2)	Status (Note 2)	Status (Note 2)			Number of positions as Remuneration Committee member in other public companies	Remark (Note 3) End of content
		A	B	C	1	2	3	4	5	6	7	8	9	10
Independent Director	Cheng-Ping Yu	V		V	V	V	V	V	V	V	V	V	V	V	None	None
Independent Director	Ya-Kang Wang		V	V	V	V	V	V	V	V	V	V	V	V	3	None
Others	Tien-Wei Shih	V		V	V	V	V	V	V	V	V	V	V	V	1	None

• Note 1: Please state whether the person is a Director, an Independent Director, or other in the “Status” column.

• Note 2: Check in each box with “v”, if the member meets one of the following qualification requirements or independence criterias.

• A An instructor at a public or private college, in a department of commerce, law, finance, accounting, or other academic departments related to the business of the Company.

• B A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist, in a profession necessary for the business of the Company, who has passed a national examination and been awarded a certificate.

• C Have work experience in the area of commerce, law, finance, accounting, or work experience needed by the Company.

• 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 to the independent director of any company, its parent company, or subsidiaries to which the Company holds more than 50% direct or indirect voting interest.

• 3 Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the company or ranking in the top 10 in holdings.

• 4 Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three subparagraphs.

• 5 Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of outstanding shares of the Company or who holds shares ranking in the top five holdings, or a representative appointed to assume the position of director or supervisor of the Company according to Paragraph 1 or Paragraph 2 of Article 27 of the Company Act (provided that if the position of an independent director is held concurrently for the company and its parent company, a subsidiary or a subsidiary of the same parent company according to this law or laws of the local country, such restriction shall not be applied).

• 6 Not a director, supervisor, or employee of other company if a majority of the Company's director seats or voting shares and those of that other company are controlled by the same person (provided that if the position of an independent director is held concurrently for the company and its parent company, a subsidiary or a subsidiary of the same parent company according to this law or laws of the local country, such restriction shall not be applied).

• 7 Not a director (managing director), supervisor (managing supervisor) or employee of other company or institution being the same person holding the position of Chairman, President or equivalent position in the company or a spouse thereof (provided that if the position of an independent director is held concurrently for the company and its parent company, a subsidiary or a subsidiary of the same parent company according to this law or laws of the local country, such restriction shall not be applied).

• 8 Not a director, supervisor, officer, or shareholder holding 5% or more of the shares, of a specified company or institution which has a financial or business relationship with the Company. (provided that if the specific company or institution holds 20% or more and no more than 50% of the total number of issued shares of the company, and the position of an independent director is

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held concurrently for the company and its parent company, a subsidiary or a subsidiary of the same parent company according to this law or laws of the local country, such restriction shall not be applied).

9 Not a professional individual who is an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that provides commercial, legal, financial, accounting services or consultation to the Company with accumulated service fee over 500 thousdnd in two years or to any affiliate of the Company, or a spouse thereof. These restrictions do not apply to any member of the Remuneration Committee who exercises powers pursuant to Securities and Exchange Act as well as Business Mergers And Acquisitions Act, the review committee who exercises powers pursuant to Public Tender Offers for Securities of Public Companies and a special committee for merger /consolidation and acquisition.

10 Not been a person of any conditions defined in Article 30 of the Company Law.

• (2) Information of Operation Status of Remuneration Committee.

• The Company’s Remuneration Committee consists of 3 members.

The Remuneration Committee is responsible for assisting the board of directors to establish the policy and relevant measures for the performance evaluation and salary/remuneration of directors, supervisors and managerial personnels of the Company according to the comprehensive consideration of factors of the business operation performance, individual performance, standard adopted in the same industry and future risk etc., and conducts periodic assessments. For the Remuneration Committee Charter of the Company, please refer to the Company's website.

Up to the end of March 2020, the Company has completed the review of the remuneration system of the Company. The 2019 directors’ remuneration issuance plan and managers’ remuneration issuance plan as well as the 2020 managerial personnel’ salary adjustment proposal, and relevant review results will be submitted to the board of directors meeting for resolution and approval.

1. Term of office of the current Committee members: From August 2nd, 2018 to June 13, 2021. The Remuneration Committee held 2 meetings (A) in the most recent year, and details of members’ eligibility and attendance are as follows:

Title	Name	Actual number of attendance (B)	By Proxy	Attendance Rate (%) (B/A)	Remark
Convener	Ya-Kang Wang	2	0	100%	August 2nd, 2018 re-elected
Member	Cheng-Ping Yu	2	0	100%	August 2nd, 2018 re-elected
Member	Tien-Wei Shih	2	0	100%	August 2nd, 2018 re-elected

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Other matters that shall be recorded:

1. In the event where the Remuneration Committee’s proposal is rejected or amended in a board of directors meeting, please describe the date and session of the meeting, details of the proposal, the resolution of the board of derectors, and how the company had handled the Remuneration Committee’s proposals (describe the differences and reasons, if any, should the board of directors approve a solution that was more favorable than the one proposed by the Remuneration Committee): None.

2. Should any member object or express qualified opinions to the resolution made by the Remuneration Committee, whether on-record or in writing, please describe the date and session of the meeting, details of the proposal, the entire members’ opinions, and how their opinions were addressed, the resolutions resolved in 2019 were as follows：

Meeting Dates and session	Contents	Independent Directors’ Suggestion and React
	1. Ya-Kang Wang was elected as
The 1stmeeting of	the convener of the	Not applicable.
the 4thsession	Remuneration Committee. 2. Ratification the suggestion of
(January 14, 2019)	2018 yearend bonus to the	Not applicable.
	management.
The 2ndmeeting of
the 4thsession	Salary Ratification of all staff and	Not applicable.
	manager.
(March 15,2019)

Note:

• (1) Date of resignation is shown for members of the Remuneration Committee who had resigned prior to the close of the financial year. The percentage of actual attendance (%) is calculated based on the number of Remuneration Committee meetings held and the number of meetings actually attended during active duty.

• (2) If a re-election of Remuneration Committee members had taken place prior to the close of the financial year, members of both the previous and the current Remuneration Committee will be listed; in which case, the remarks column will specify whether the committee member was elected in the previous board, the new board, or both. The percentage of actual (proxy) attendance (%) will be calculated based on the number of Remuneration Committees held during active duty and the number of actual (proxy) attendance.

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(V) Fulfillment of social responsibilities:

Assessment criteria	Assessment criteria			Operation Status(Note 1) (Note 4)	Deviation and causes of deviation from Corporate Social Responsibility Best Practice Principles for TPEx-Listed Companies
		Y	N	Summary (Note 2)
I.	Has the Company conducted risk	V		The Company establishes the corporate social responsibility report and adopts the questionnaire and interview method, reviews the survey results of all units and senior officers, and assesses relevant operational risks according to the materiality principle, in order to specify risks identified in the existing Risk Management Regulations. For the operation status, please refer to section “1.2 Sustainability Strategy and Risk Management” on page 10 and section “1.4 Major issues identification” on page 16 of the 2018 Corporate Social Responsibility Report (referred to as the “Report”).	None
	assessment on
	the environment, society and corporate governance issues related to the company’s operation according to the materiality
	principle, and has the company established relevant risk management policy or strategy? (Note 3)
II.	Does the Company have a unit that specializes (or is involved) in CSR practices? Is the CSR unit run by senior management and reports its progress to the board of directors?	V		In 2017, the Company has established the “CSR Executive Committee”, and three directors assumed the position of committee chairperson. The committee chairperson and the conventors of each team are elected by the board of directors. The responsibilities of the CSR Executive Committee are to identify sustainable operation topics, to execute action plans and to propose sustainable development related topics, and to report to the board of directors directly semi-annually, in order to ensure the implementation of the Corporate Social Responsibility Best Practice Principles. In 2019, 16 team meetings and one committee meeting were convened. In addition, the annual plan and actual execution status are reported to the board of directors in the current year. Please refer to “Organization of the CSR Executive Committee” on page 11 of the report.	None

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	Assessment criteria			Operation Status(Note 1) (Note 4)	Deviation and causes of deviation from Corporate Social Responsibility Best Practice Principles for TPEx-Listed Companies
		Y	N	Summary (Note 2)
	III. Environmental Topic A.Does the Company have an appropriate environmental management system established in accordance with its industrial characteristics?	V		The Company truly understands that it is the joint responsibility of the mankind to protect the earth’s environment; therefore, for all aspects of the management, the Company considers the environmental protection. The Company has identified the material environmental topics, potential risks and opportunities as well as responsive measures according to the risk management policy, which has also been disclosed in the content of page 56 of Chapter 5 “Guardian Angel of Environmental Resources” of the Company’s 2018 Corporate Social Responsibility Report. Please refer to the description in “Eclat Environmental Safety, Health and Policy” on page 57 of the Corporate Social ResponsibilityReport.	None
	B.Is the Company committed to achieving efficient use of resources, and using renewable materials that has less impact on the environment?	V		Please refer to the description in “5.1 Energy and Environment Management” on page 56 of the Corporate Social Responsibility Report.	None
	C	V		Based on the philosophy of sustainable operation and fulfillment of corporate social responsibility, the Company has included the climate change risk in the “Risk Management Regulations” in 2018, and has also established the Eclat Textile Co, Ltd. “Procedures for Task Force on Climate-related Financial Management” according to the framework of the Task Force on Climate-related Financial Disclosures (TCFD) in 2019 in order to provide guidance to all units in performing the identification of climate change related risks and opportunities. Such operation procedure specifies the risk opportunity assessment, responsive method, execution frequency performed by Eclat with respect to the climate change in detail. In addition, operation meetings with senior officers and relevant responsible unit are convened in order to assign various works. The operationprocedure has been uploaded	None

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	Assessment criteria			Operation Status(Note 1) (Note 4)	Deviation and causes of deviation from Corporate Social Responsibility Best Practice Principles for TPEx-Listed Companies
		Y	N	Summary (Note 2)
				onto the Company’s website. The identification result of material risks and opportunities as well as responsive methods have been disclosed in Section 1 of Chapter 5 of the 2019 Corporate Social Responsibility Report.
	D.Has the Company statistically analyzed the greenhouse gas emission, water usage and waste total weight over the past years, and has the company established policies for energy saving, carbon reduction, greenhouse emission reduction, reduction of water usage or other waste management?	V		Please refer to the description in “5.1 Energy and Environment Management” on page 58 of the Corporate Social Responsibility Report.	None
IV. Social Issues A. Has the Company formulated the administrative policies and procedure in compliance with relevant laws and international convention on human right? B. as the Company established and implement reasonable welfare measures (incl.		V		A.The Company complies with the local laws of each operating sites globally. The Company treats each current employee with respect according to the internally recognized human rights standards of the“International Bill of Human Rights”, “Core Labor Standards of International Labour Convention” and the social responsibility standard system etc. as well as the local laws and regulations. Most importantly, in terms of the policy and management aspects, the Company has established management mechanism in order to protect the human rights of employees. The human rights policy of the Company is as follows: 1. Respect humanity/care employees 2. Prohibit and prevent discrimination 3. Fair employment	None

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Operation Status (Note 1) (Note 4) Assessment criteria Y N Summary (Note 2) remuneration, 4. Prohibition on child labor. vacation and 5. Legitimate working hour management other benefits), 6. Care for employees’ physical and and properly mental health based employees’ 7. Implement employee trainings and remuneration on occupational development business 8. Provide healthy and safe working performance?

1. Legitimate working hour management

2. Care for employees’ physical and mental health

3. Implement employee trainings and occupational development

4. Provide healthy and safe working environment

Relevant employee welfares, employee safety and health as well as employee career development and training implementation have been disclosed in the Corporate Social Responsibility Report of the Company. Please refer to “3.2 Labor Human Rights Protection” on page 52 of the Report.

C. Has the Company provided a safe and healthy workplace, and delivered safety and health education to its workers periodically?

• B.Please refer to “2.3 Remuneration, Benefits, and Care” on page 31 of the report.

• C.Please refer to “3.1 Worker Safety and Health” on page 39 of the report.

D. Has the Company offered effective training programs for vocational skills development to its workers?

• D.Please refer to “2.2 Human Resource Management” on page 26 of the report.

E.The product sales target of the Company vocational skills refers to international brand makers, development to and the products provided by the its workers? Company must comply with relevant regulations and international standards. E. Has the With regard to the research and Company development, procurement, conformed to manufacturing, operation and service relevant laws and processes, the Company establishes the international inspection procedure, including the use standards, and of non-toxic dyes, metal testing probe, established autonomous or third party verification policies on institution to conduct test reports etc. in consumer rights order to ensure the rights and benefits protection and of consumers. Please refer to ”4.2 complaint system, Service Quality and Customer in regard to the Management” on page 39 of the report. health and safety In our business model, the Company of its customers, doesn’t sell its products to end client consumers but to the global brands, and confidentiality, the global brands sell them directly to product consumers and deal with consumer marketing and complaint. However, once the labeling? Company’s clients convey any consumer complaint to it, the Company must F. Has the investigate its cause and reply to its Company enforced clients as soon as possible. policies on F.The Company has officially established supplier the “Corporate Social Responsibility management that Best Practice Principles” and has

Deviation and causes of deviation from Corporate Social Responsibility Best Practice Principles for TPEx-Listed Companies

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Assessment criteria	Assessment criteria	Operation Status(Note 1) (Note 4)	Operation Status(Note 1) (Note 4)	Operation Status(Note 1) (Note 4)	Deviation and causes of deviation from Corporate Social Responsibility Best Practice Principles for TPEx-Listed Companies
		Y	N	Summary (Note 2)
request the suppliers to comply with the regulations – incl. environmental protection, occupational safety and health and labor rights, etc. and that track their actual practice?				explicitly specifies that the contract content of suppliers shall include the signing of the “Supplier Code of Conduct”, and the impacts of the suppliers on the overall environment and society is incorporated into the assessment in order to request suppliers for compliance and to prevent occurrence of matters violating the corporate social responsibility. The Company has completed the signing of renewed contracts with all outsourced and contracted suppliers in 2019. Please refer to ” Supplier Management” onpage 54 of the report.
V.	Has the Company stipulated standards or guidelines according to the	V		The Company entrusts the independent Ernst & Young (EY) with credibility to assist the Company to perform limited assurance according to the report prepared by GRI Standards, Assurance Standards No. 1 “Non-historical Financial Information Audit or Review Assurance Cases”announced by the Accounting Research and Development Institute (established based on ISAE3000), and to issue the limited assurance report of independent auditor.	None
	internationally accepted report, prepared corporate social
	responsibility report etc. and reports for disclosing non-financial information of the Company? Has the aforementioned
	reports obtained the assurance or guarantee opinions from a
	third verification unit?
VI. Where the Company establishes its own CSR according to the “Corporate Social Responsibility Best Practice Principles for TWSE/ TPEx Listed Companies”, please describe the discrepancy between its operation and the principles established: The Company has established the “CSR Best Practice Principles” and has established the “CSR Promotion Committee” in order to allow various business development strategies of the Company to further comply with the concept of corporate social responsibility sustainable development and implementation of the execution thereof.
VII. Other important information to facilitate the understanding of CSR operation: 1. Eclat is deeply rooted in Taiwan, and the global logistics center is located at Wugu District of New Taipei City and there are factories located at Dayuan District, Taoyuan City, and Houlong Township, Miaoli Countyetc.,creating job opportunities locally.

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Operation Status (Note 1) (Note 4) Deviation and causes of deviation from Corporate Assessment Social Responsibility Best criteria Y N Summary (Note 2) Practice Principles for TPEx-Listed Companies

1. The Company establishes the industry-university collaboration relationship with various universities, In 2019, the Company provided 29 students with the paid internship opportunities at the company, and 18 of them became company’s full-time regular employee.In addition, the Company donated and established Eclat Educational Fundation to provide scholarships to outstanding students. As well as,the business management level also participates in various seminar courses in light of cultivating textile industry talents and to providing students with practical participation experience.

2. For a consecutive of 9 years, Eclat clothing design contest has been held in order to improve the creativity and beauty of sports recreation clothing industry, to discover domestic outstanding design talents and to activate the industry overall atmosphere. In 2019, the Company jointly organized the clothing design contest with the Eclat Education Foundation in order to provide a total prize reaching NT$ 1.53 million, and approximately 400 outstanding design talents participated in the contest.

3. Community Interaction:

4. (1) Dayuan plant: adopts the upstream section of the Laojchieh River at Taoyuan City, and periodically inspects the cleanness as well as river section maintenance operation.

5. (2) Miaoli Plant: participates in the Houlong Township community neighborhood caring activities, the Company sponsors approximately NT$ 523,750 in community environmental services, and helps cleaning nearby elementary schools campus and public spaces from time to time.

6. (3)Hsichou Plant: participates in the Houlong Township neighborhood caring activities, the Company also sponsors NT$215,000 in local police and fire department activities. Organizes the watermelon festival and purchased watermelon planted by farmers at the neighborhood areas of the plant at a price higher than the market price and shares them to employees and customers. A total of 1,300 pcs of watermelon were purchased and the investment amount was NT$ 344,000.

7. For further information, please refer to “3.3 Co-prosperity With Community and Society” on page 44 of the Report.

8. Note 1: Regardless of whether “Yes” or “No” is checked for the operation status, description shall be provided at the summary explanation field.

9. Note 2: When a company has prepared the corporate social responsibility report, the operation status may be replaced by notes describing the method of review of the corporate social responsibility and the indicating the page number instead.

10. Note 3: Materiality principle refers to relevant environment, society and corporate governance issues having material impacts on the investors and other interested parties of the company.

11. Note 4: Up to the date when the annual report of the shareholders’ meeting is submitted for printing, the 2019 Corporate Social Responsibility Report has not been prepared completely. Accordingly, the page numbers of the 2018 Corporate Social Responsibility Report are to be used as reference. Once the 2019 Corporate Social Responsibility Report is completed, relevant contents can be reviewed according to the headings disclosed in the Report.

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(VI) The status of the Company’s fulfillment of ethical corporate management and measures adopted:

measures adopted:	measures adopted:
Assessment criteria				Implementation status	Deviation and causes of deviation from Ethical Corporate Management Best Practice Principles for TPEx-Listed Companies
		Yes	No	Explanation
1. Establishing ethical management policies and plans (I) Has the Company established the ethical management policies approved by the board of directors, and stated in its Memorandum or external correspondence about the policies and practices it has to maintain business integrity? Are the board of directors and the management level committed to fulfilling this commitment?		V		The Company has established the “Ethical Corporate Management Best Practice Principles” and has been approved by the board of directors. The board of directors and management of the Company uphold the principle of ethics to establish the Ethical Management Best Practice Principles, actively implement the ethical management policies.	None
(II) Has the Company establish a risk assessment mechanism against unethical conduct, analyze and assess on a regular basis business activities within their business scope which are at a higher risk of being involved in unethical conduct, and establish prevention programs accordingly and review their adequacy and effectiveness on a regular basis, which shall at least include preventive measures listed in Paragraph 2, Article 7 of “Ethical Corporate Management Best Practice Principles for TWSE/ TPEx Listed Companies”?		V		The Company has established the ethical corporate management best practice principles, and gradually requests suppliers to sign the anti-corruption policy declaration in order to prevent operations risk due to unethical management.	None
(III) Has the company established any measures against unethical conduct? Are these measures supported by proper procedures, behavioral guidelines, disciplinary actions and complaint systems? In addition,is the aforementioned plan reviewed and revised periodically?		V		The Company performs educational trainings on employees in order to prevent unethical conducts. The operation status is proper, and in the employee management rules, the rules specifies relevant requirements.	None
	revised periodically?
2. (I)	Implement ethical policies Does the Company evaluate the integrity of all counter parties it has business relationships with? Are there any integrity clauses in the agreements it signs with business partners?	V		For the business activities of the Company, dealings with parties with unethical records are prevented. Before dealings with suppliers, the suppliers are requested to sign the anti-corruption policy declaration in order to ensure ethical conducts.	None

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	Assessment criteria	Implementation status	Implementation status	Implementation status	Deviation and causes of deviation from Ethical Corporate Management Best Practice Principles for TPEx-Listed Companies
		Yes	No	Explanation
(II)	Does the Company have a unit established under the board of directors that specializes (or is involved) in business integrity? Does this unit report to the board of directors on a regular basis(at least once a year) forethical policies, programs for preventing unethical conduct and implements on supervision?	V		The Company had established the “CSR Promotion Committee” in 2017, and under its organizational structure, it establishes the adjunct unit to promote the corporate ethical management, and provides reports to the board of directors on relevant execution status regularly. The latest date reported to the BoD was August 6, 2019.	None
(III)	Does the Company have any policy that prevents conflict of interest, and channels that facilitate the reporting of conflicting interests and is executed properly?	V		The Company provides appropriate communication channels to prevent conflict of interest or occurrence of unethical conducts.	None
(IV)	Has the Company implemented effective accounting and internal control systems for the purpose of maintaining ethical operation? In addition, has the internal audit unitestablished relevant audit plan according to the risk assessment result of unethical conduc~~t~~ ~~a~~nd audited the status of compliance with the prevention against unethical conduct plan,or entrust CPA to audit?	V		To implement ethical management, the Company has established relevant accounting system, internal control system and audit unit to perform audits, and the operation status is proper.	None
(V)	Has the Company provided internal and external educational training on ethical operation on a regular basis?	V		The Company has provided internal and external educational training on ethical operation on a regular basis.	None
3. (I)	Reporting of misconducts Does the Company provide incentives and means for employees to report misconducts? Does the Company assign dedicated personnel to investigate the reported misconducts?	V		The Company establishes the whistleblowing channel and punishment as well as complaint filing system for violation of ethical management rules, and the operation status thereof is proper.	None
(II)	Has the Company implemented any standard procedures of investigations, follow-up measures after investigations of cases reported are completedand confidentiality mechanisms for handling reported misconducts?	V		The Company has implemented the standard procedures of investigations or confidentiality mechanisms for handling reported misconducts.	None
(III) Has the Company provided proper whistleblower protection from inappropriate handling?		V		The Company has provided proper whistleblower protection from inappropriate handling.	None

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Assessment criteria	Implementation status	Implementation status	Implementation status	Deviation and causes of deviation from Ethical Corporate Management Best Practice Principles for TPEx-Listed Companies
	Yes	No	Explanation
4. Enhance information disclosure Has the Company disclose the content of the ethical corporate management best practice principles and their implementation results on its website and the MOPS?	V		Please refer to the official website of the Company.	None
V. If the Company establishes its own ethical corporate management best practice principles according to the “Ethical Corporate Management Best Practice Principles for TWSE/ TPEx Listed Companies”, please describe the discrepancy between its operation and the Company’s ethical corporate management best practice principles: The Company has established the “Ethical Corporate Management Best Practice Principles” and has been approved by the board of directors in order to ensure the directors, managerial personnel and employees of the Company properly comply with relevant rules, and it has been executed according to the regulations established.
VI. Other important information that is helpful in understanding the ethical corporate management operation of the Company? (Such as, the Company reviews the amendment of the ethical corporate management best practice principles etc.): None.

• (VII) If the Company has established corporate governance principles or other relevant guidelines, references to such principles must be disclosed:

The Company has established the “Corporate Governance Principles” and the “Procedures for Prevention of Insider Trading and Handling Material Inside Information” and has approved by the board of directors for execution in order to ensure the directors, managerial personnel and employees of the company to comply with relevant rules in light of establishing proper handling and disclosure mechanism for material inside information of the company, thereby preventing improper disclosure of information and ensuring the consistency and accuracy of the information announced by the company to the external.

• (VIII) Other important information to understanding of corporate governance within the Company: None.

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(IX) Disclosures relating to the execution of internal control policies:

1. Internal Control system Statement:

Eclat Textile Co., Ltd.

Management's Reports on Internal Control

Date: March 5, 2020

According to the Company’s internal control policy, The following statement had been made based on the results of self-assessment in 2019:

1. The Company acknowledges and understands that it is the Board of Directors’ and the management team’s responsibility to establish, implement, and sustain an internal control system, and that such a system has already been established throughout the Company. The purpose of this system is to provide reasonable assurance in terms of business performance, efficiency (including profitability, performance, asset security etc.), reliable, timely and transparent financial reporting, and compliance of relevant regulations and relevant laws etc.

2. The internal control system has inherent limitations, no matter how comprehensively it is well-designed. As such, an effective internal control system can only reasonably assure achievement of the three goals mentioned above. Furthermore, changes in the environment and circumstances may all affect the effectiveness of the internal control system. However, self-supervision measures were embedded within the internal control system and it is able to facilitate immediate rectification once flaws have been identified.

3. The Company evaluates the effectiveness of its internal control policy design and execution based on the criteria specified in “Regulations Governing Establishment of Internal Control Systems by Public Companies” (hereinafter referred to as the “Regulations”). The criteria introduced by the “Regulations” consisted of five major elements, each representing a different stage of internal control: 1. Control environment, 2. Risk evaluation, 3. Control procedures, 4. Information and communication, 5. Supervision activities. Each element further contains several items. Please refer to the Regulations for the details.

4. The Company adopted the above-mentioned criteria to evaluate the effectiveness of its internal control policy design and execution.

5. Based on the assessments described above, the Company considered the design and execution of its internal control system to be effective as at December 31, 2019. This system (including the supervision and management of the Company’s subsidiaries) has provided assurance with regards to the Company’s business results, target accomplishments, reliability, timeliness and transparency of reported financial information, and its compliance with relevant laws.

6. This Statement constitutes a part of the Company’s annual report and prospectus, and shall be disclosed to the public. Any illegal misrepresentation or non-disclosure in the public statement above are subject to legal consequences described in Articles 20, 32, 171, and 174 of the Securities and Exchange Act.

7. This Statement was approved by the Company’s board of Directorson March 5, 2020. None of the 11 board directors present to the meeting held any objections, and unanimously agreed to the contents of this Statement.

Eclat Textile Co., Ltd.

Chairperson: Signature President: Signature

1. If the internal control policy was reviewed by an external auditor, the result of such review must be disclosed: None.

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• (X) Penalties imposed against the Company for regulatory violation, or penalties against employees for violation of internal control policy in the most recent year up till the publication date of this annual report; describe areas of weakness and any corrective actions taken: None.

• (XI) Major resolutions made by the Shareholders’ Meeting and the Board of Directors during the latest financial year up until the publication date of this annual report:

• The 2019 Annual General shareholders’ meeting was convened on June 18, 2019 in Miaoli. Resolutions of attending shareholders and execution status are as follows:

  • (1) Adoption of 2018 Business Report and Financial Statements.

  • Execution status: Approved through resolution.

  • (2) Adoption of the Proposal for 2017 appropriation of profits.

  • Execution status: Approved through resolution. In addition, according to the resolution of the shareholders’ meeting, the date of July 17, 2019 was the ex-dividend base date, and completed the profit appropriation for the issuance of cash dividend of NT$3,018,038,221( Cash dividend $11 per share).

  • (3) Approve the amendment to the internal regulations of the Company：

  • Articles of Incorporation

  • Procedures for Acquisition and Disposal of Assets

  • Regulations for Making of Endorsements/Guarantees

  • Operational Procedures for Loaning Funds to Others

  • Execution status:Approved through resolution, and execution according to the regulation of the shareholders’ meeting has been completed, in addition, the 1st proposal was approved by the MoEA, above regulations are published on the Company website.

• Major resolutions made by the Board of directors’ Meeting for 2019 and up to the printing date of the annual report:

  • (1) Board of directors’ meeting on January 14, 2019:

  • Approved the proposal of 2017 employees’ remuneration appropriation.

  • Approved the proposal of 2018 managerial personnel yearend bonus reviewed by the Remuneration Committee.

  • Approved 2019 financing facility of the Company.

  • Approved 2019 endorsement and guarantee matters of the Company.

  • Approved the loaning limit of the Company's subsidiary funds to the affiliates.

  • Approved 2019 business plan - financial budget proposal.

  • Approved the assignment of 2019 FY independent auditor.

  • Approved the machine purchase project of the Hsichou Plant.

  • Execution status: Already handled completely according to the resolution of the board of directors’ meeting.

  • (2) Board of directors’ meeting on March 14, 2019:

  • Adoption of 2018 Business Report and Financial Statements.

  • Approved the proposal of 2018 earnings distribution.

  • Approved the proposal of 2018 Employees’ remuneration appropriation.

  • Approved the proposal of the Company’s 2018 annual general shareholders’ meeting convention.

  • Approved the amendments to the Company’s ” Articles of Incorporation”.

  • Approved the proposal for the amendments to the Company’s “Regulations Governing the Acquisition and Disposal of Assets”.

  • Approved 2018 internal control system effectiveness review and issued the “Management's Reports on Internal Control”.

  • Approved the enrollment of liability insurance for directors and managerial personnel.

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1. Approved the construction budget of HQ and sub-contractor.

Execution status: Except that No. 9 proposals is still in the process of execution, the rest of proposals have already been executed completely according to the resolution of the board of directors’ meeting. in addition, the No.1 to No.6 proposals were reported, approved or resolved in 2020 AGM

• (3) Board of directors’ meeting on May 7, 2019:

• Approved the amendments of ”Regulations for Making of Endorsements/ Guarantees”.

• Approved the amendments of ”Operational Procedures for Loaning Funds to Others”.

• Approved the proposal for the donation of NT$ 2 million to Eclat Education Foundation.

Execution status: All proposals have been executed completely according to the resolution of the board of directors’ meeting.

• (4) Board of director’s meeting on August 6, 2019:

• Approved the amendments of “Regulations Governing the Exercise of Powers by Audit Committees”.

• Approved the abolishment to the “Operational Procedures for Loaning Funds to Other” of GRAND ELITE HOLDINGS INC.

Execution status: All proposals have been executed completely according to the resolution of the board of directors’ meeting.

• (5) Board of directors’ meeting on September 17, 2019:

• Approved the amendments of the Company’s “ Procedures for Election of Directors”. 2. Approved the investment project.

Execution status: Except that No. 1 proposals is to be resolved in 2020 AGM, the other proposal was implemented according to the resolution of the board of directors’ meeting.

• (6) Board of directors’ meeting on November 7, 2019:

• Approved the 2020 Internal Auditing plan.

• Approved the proposal for the amendments to the Company’s an internal control system ”Production cycle”.

• Approved the investment project in Indonesia.

• Approved the cancellation of the loaning of fund facility of US$42,850 thousand which was approved by the BoD at January 14, 2019.

• Approved the re-locate proposal of Miao-Li Plant.

Execution status: All proposals have been executed completely according to the resolution of the board of directors’ meeting.

• (7) Board of directors’ meeting on January 14, 2020:

• Approved the proposal of 2018 employees’ remuneration appropriation.

• Approved the proposal of 2019 managerial personnel yearend bonus reviewed by the Remuneration Committee.

• Approved 2020 financing facility of the Company.

• Approved the proposal of 2020 business plan - financial budget.

• Approved the assignment of 2020 FY independent auditor.

• Approved the proposal of the set-up of Nominating Committee and the adoption”Organizational Charter of Nominating Committee”.

• Execution status: Except that No. 3 and No. 4 proposals are still in the process of execution, the rest of proposals have already been executed completely according to the resolution of the board of directors’ meeting.

• (8) Board of director’s meeting on March 5, 2020:

• Adoption of 2019 Business Report and Financial Statements.

• Approved the proposal of 2019 earnings distribution.

• Approved the proposal of 2019 Employees’ remuneration appropriation.

• Approved the proposal of the Company’s 2019 annual general shareholders’ meeting

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convention.

1. Approved the amendments to the Company’s “Articles of Incorporation”.

2. Approved the amendment to the Company’s “ Rules Governing the Procedures for Shareholders’ Meetings”.

3. Approved the amendment to the Company’s “Regulations Governing Procedure for Board of Directors Meetings”.

4. Approved the amendment to the Company’s “Remuneration Committee Charter”.

5. Approved 2019 internal control system effectiveness review and issued the “ ” Management's Reports on Internal Control .

6. Approved the enrollment of liability insurance for directors and managerial personnel.

Execution status: Except that the No.1 to No. 6 proposals are still pending for the adoption, resolution or report of the shareholders’ meeting, the rest of proposals have already been executed completely according to the resolution of the board of directors’ meeting.

• (9) Board of directors’ meeting on May 7, 2020:

• Approved the amendments to the Company’s “Articles of Incorporation”.

• Approved the amendment to the Company’s “Rules Governing the Procedures for Shareholders’ Meetings”.

• Approved the proposal for the donation of NT$ 2 million to Eclat Education Foundation.

Execution status: The first two proposals are to be resolved in 2020 AGM, and No. 3proposals is in the process of execution.

• (XII) Documented opinions or written statement made by Directors or Supervisors against board resolutions in the most recent year, up till the publication date of this annual report: None.

• (XIII) Resignation or discharge of the Chairman, President, head of accounting, head of finance, chief internal auditor, or head of R&D in the most recent year up till the publication date of this annual report: None.

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3.4 Information Regarding the Company’s Audit Fee and Independence

• (I) Audit Fees:

The content of the amounts of both audit and non-audit fees and the details of the non-audit services for non-audit fees paid to the CPA, to the accounting firm of the CPA, and to any affiliated enterprise of such accounting firm are equivalent to one quarter or more of the audit fees paid:

Name of CPA firm	Name of CPA	Name of CPA	Auditperiod	Remark
KPMG	Hui-Chih Kou	Hsin-Yi Kuo	January 1 to December 31,2019	None

Note: If the Company changes independent auditor or accounting firm in the current year, please respectively indicate their respective audit period, and provide explanation on the reasons of such change in the remarks field.

Item Range	Item Range	Audit fee	Non-audit fee	Sub-total
1	Less than NT$2,000,000		V	V
2	NT$ 2,000,000(inclusive)~ NTS 4,000,000(exclusive)
3	NT$ 4,000,000(inclusive)~ NTS 6,000,000(exclusive)	V		V
4	NT$ 6,000,000(inclusive)~ NTS 8,000,000(exclusive)
5	NT$ 8,000,000(inclusive)~ NTS 10,000,000(exclusive)
6	NT$ 10,000,000 and above

Unit: NT$1,000

								Unit: NT$1,000
CPA Name	Audit Fee		Non-audit fees				CPA’s Audit Period	Remark
		System Design	Company Registration	Human Resource	Others (Note)	Sub-total
Hui-Chih Kou	4,800	0	8	0	500	508	January 1 to December 31, 2019	Non-audit service includes the transfer pricing files
Hsin-Yi Kuo

• (II) When the accounting firm is changed and the audit fees paid for the financial year in which the change took place are lower than those paid for the financial year immediately preceding the change, the amount of the audit fees before and after the change and the reason shall be disclosed: None.

• (III) When the audit fees paid for the current financial year are lower than those paid for the immediately preceding financial year by 10 percent or more, the amount and percentage of and reason for the reduction in audit fees: None.

3.5 Information regarding Change of CPA : None.

• (I) Information relating to the former CPAs: Not applicable.

• (II) Information relating to the successor CPAs: Not applicable.

• (III) Replay of former auditor to item 1 and item 2-3 of Subparagraph 5 of Article 10 of these Regulations: Not applicable.

• 3.6 The Company’s chairman, president or managers in charge of finance and accounting operations, who holds any positions within the CPA firm or its affiliates in the most recent year, the name, job title and the employment period at the independent audit firm or its affiliates : None.

• 3.7 Transfer or pledge of stock rights of directors, supervisors, managers, shareholder with a stake of more than 10 percent in the most recent fiscal year and up till the publication date of this annual report

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(1) Equity transfer and change status of directors, supervisors, managerial personnel and major shareholders:

				Unit: share	Unit: share
Title	Name	2019		As of April 20,2020
		Increase (decrease) of shareholding	Increase (decrease) of pledged shares	Increase (decrease) of shareholding	Increase (decrease) of pledged shares
Chairman and R&D Supervisor	Cheng-Hai Hung	0	0	0	0
Director	Li-Chen Wang	0	0	0	0
Director	Hsien-Chin Tsai	0	0	0	0
Director and President	Kun-Tang Chen	-9,000	0	0	0
Director	Yih-Yuan Investment Corp.	0	0	0	0
	Representative- Kuo-SungHsieh	0	0	0	0
Director	Shou-Tsun Yeh	0	0	0	0
Director and Vice President	Jen-Chieh Lo	0	0	0	0
Director and Executive Vice President	Shu-Wen Wang	0	0	0	0
Independent Director	Yea-Kang Wang	0	0	0	0
Independent Director	Cheng-Ping Yu	0	0	0	0
Independent Director	Nai-Ming Liu	0	0	0	0
President	Chun-Chin Tsai	0	0	0	0
Vice President	Sheng-Tien Lee	-4,565	0	-0	0
Vice President	Cheng-Chin Tsai	0	0	0	0
Vice President	Li-Fen Cheng	-5,000	0	0	0
Assistant Vice President	Jui-Li Fang	0	0	0	0
Assistant Vice President	Chia-Chun Chiang	0	0	0	0
Assistant Vice President	Ping-Chi Hsu	-10,000	0	0	0
Assistant Vice President	Lai-Kuei Chen	-10,000	0	0	0
Assistant Vice President	Hao-He Chen	0	0	0	0
Assistant Vice President	Lien-Tsai Chen	0	0	0	0
Assistant Vice President	Wei-Yeh Huang	0	0	0	0
Assistant Vice President	Shih-Tu Chen	0	0	0	0
Assistant Vice President	Chu-Chang Ou	0	0	0	0
Assistant Vice President	Jui-Ting Hung	0	0	0	0
Assistant Vice President	Heng-Wei Hsu	-2,000	0	1,000	0
Assistant Vice President	Chi-Feng Huang	0	0	1,800	0

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(2) Equity transfer information:

Name	Reason of equity transfer	Reason of equity transfer	Transaction date	Transaction date	Transaction counterparty	Transaction counterparty	Relationship of transaction counterparty with the Company, directors, supervisors and shareholders with shareholding percentage exceeding10%	Relationship of transaction counterparty with the Company, directors, supervisors and shareholders with shareholding percentage exceeding10%	Relationship of transaction counterparty with the Company, directors, supervisors and shareholders with shareholding percentage exceeding10%	Number of shareholding	Number of shareholding	Transaction price
None	-		-		-		None			-		-
(3) The information of Pledge of Stock Rights:
Name (Note 1)	Reason for pledge (Note 2)	Date of change		Transaction counterparty		Relationship of transaction counterparty with the Company, directors, supervisors and shareholders with shareholding percentage exceeding10%		Number of shareholding	Percentage of Shareholding Ratio		Percentage of Pledge Ratio	Pledge (redemption) amount
Hsien-Chin Tsai	Pledge	24, 5, 2017		Chang Hwa Commercial								NT$ 100 million
Hsien-Chin Tsai	Redeemed	23, 3, 2018		Bank Mucha Branch		None		700,000	7.89%		3.24%	(NT$ 20 million)

Note 1: Information on the name the Company’s directors, supervisors, managers and shareholders with shareholding percentage exceeding 10%.

Note 2: Information on pledge or redemption.

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3.8 Relationship among the Top 10 Shareholders

Name	Current shareholding	Current shareholding	Spouse and Minor shareholding	Spouse and Minor shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Relationship characterized as spouse or the second degree relative or closer among the top 10 shareholders.	Relationship characterized as spouse or the second degree relative or closer among the top 10 shareholders.	Remarks
	Shares	%	Shares	%	Shares	%	Name	Relation
Yih-Yuan Investment Corp. - Shih-Fan Chen	25,790,335	9.40%	0	0	0	0	Cheng-Hai Hung Ching-Fang Chen	Seconddegree kinship	-
Hsien-Chin Tsai	21,634,993	7.89%	0	0	0	0	None	None	-
Nan Shan Life Insurance Co., Ltd.- Ying Tsung Tu (Deputy: Tang Chen)	10,100,000	3.68%	0	0	0	0	None	None	-
Ching-Fang Chen	9,543,332	3.48%	9,035,318	3.29%	0	0	Cheng-Hai Hung	Spouses	-
Cheng-Hai Hung	9,035,318	3.29%	9,543,332	3.48%	0	0	Ching-Fang Chen	Spouses	-
Cathay Life Insurance Co. Ltd. – Tiao Kuei Huang	8,854,000	3.23%	0	0	0	0	None	None	-
Chin-Chih Wang Cheng	8,362,129	3.05%	7,932,435	2.89%	0	0	Li-Chen Wang	Spouses	-
Li-Chen Wang	7,932,435	2.89%	8,362,129	3.05%	0	0	Chin-Chih Wang Cheng	Spouses	-
Fubon Life Assurance Co.,LTD-Ming-Xin Tsai	7,126,000	2.60%	0	0	0	0	None	None	-
Harding Loevner Institutional Emerging Markets Portfolio Fund	5,203,031	1.90%	0	0	0	0	None	None	-

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3.9 Comprehensive Shareholding Percentage

Unit: In Thousand Shares, %

Investee	Held by the Company	Held by the Company	Held by Directors, Supervisors, managers, and directly or indirectly controlled entities	Held by Directors, Supervisors, managers, and directly or indirectly controlled entities	Aggregate investment	Aggregate investment
	Shares	%	Shares	%	Shares	%
Grand Elite	21	100%	－	－	21	100%
Eclat Cayman	123,759	100%	－	－	123,759	100%
ECLAT TEXTILE (CAMBODIA)CO.,LTD.	8,000	100%	－	－	8,000	100%
Eclat Enterprise	1	100%	－	－	1	100%
TAI-YUAN GARMENTS CO.,LTD.	6,800	100%	－	－	6,800	100%
COLLTEX GARMENT MFY CO., LTD.(VN)	16,800	100%	－	－	16,800	100%
E-TOP (VIETNAM) CO., LTD	36,000	100%	－	－	36,000	100%
ECLAT TEXTILE CO., LTD (VIETNAM)	22,000	100%	－	－	22,000	100%
ECLAT FABRICS CO., LTD (VIETNAM)	40,000	100%	－	－	40,000	100%
Unison (Wuxi) Textile Garment Co.,Ltd.(Note 1)	Note 2	100%	－	－	Note 2	100%
PT Eclat Textile International	2,500	100%			2,500	100%

Note 1: According to the resolution of the board of directors’ meeting on December 7, 2016, the Company decided to end the business of Unison (Wuxi) Textile Garment Co., Ltd., and the liquidation procedure is currently in process.

Note 2: There is no issuance of shares; therefore, the equity ratio fields expressed in investment contribution ratio.

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IV. Capital Overview

4.1 Capital and Shares

1. Source of capital

Year/Month	Par Value (NT$)	Authorized capital	Authorized capital	Paid-in capital	Paid-in capital		Remark	Remark
		Shares	Amount (NT$)	Shares	Amount (NT$)	Source of capital	Capital Increased by Assets Other than cash	Others
1977.11	1,000	500	500,000	500	500,000	Registration	-	-
1981.09	1,000	1,000	1,000,000	1,000	1,000,000	Cash capital increase	-	-
1987.11	1,000	7,000	7,000,000	7,000	7,000,000	Cash capital increase	-	-
1988.08	1,000	52,000	52,000,000	52,000	52,000,000	Cash capital increase	-	-
1991.03	1,000	65,333	65,333,000	65,333	65,333,000	Capitalization of earnings	-	-
1992.03	1,000	110,333	110,333,000	110,333	110,333,000	Cash capital increase of NT$ 9,000,000 Capitalization of earnings of NT$ 15,000,000 Creditor's right for payment of shares of NT$ 21,000,000	-	-
1992.12	10	19,500,000	195,000,000	19,500,000	195,000,000	Cash capital increase of NT$ 44,667,000 Capitalization of earnings of NT$ 40,000,000	-	-
1997.06	10	160,000,000	1,600,000,000	72,430,896	724,308,960	Cash capital increase of NT$ 200,000,000 Capitalization of earnings of NT$ 156,000,000 Consolidated capital increase of NT$ 173,308,960	-	(1997) Tai-Tsai-Zheng(1) No. 51666 Letter
1998.09	10	160,000,000	1,600,000,000	79,673,986	796,739,860	Capitalization of earnings of NT$ 72,430,900	-	(1998) Tai-Tsai-Zheng(1) No. 59366 Letter
1999.08	10	160,000,000	1,600,000,000	86,047,896	860,478,960	Capitalization of earnings of NT$ 63,739,100	-	(1999) Tai-Tsai-Zheng(1) No. 63075 Letter
2000.09	10	160,000,000	1,600,000,000	91,210,766	912,107,660	Capitalization of earnings of NT$ 51,628,700	-	(2000) Tai-Tsai-Zheng(1) No. 60720 Letter
2004.08	10	160,000,000	1,600,000,000	95,771,304	957,713,040	Capitalization of earnings of NT$ 45,605,380	-	Tai-Tsai-Zheng(1)-Zi No. 0930128923
2005.06	10	160,000,000	1,600,000,000	109,179,286	1,091,792,860	Capitalization of earnings of NT$ 134,079,820	-	Jin-Guan-Zheng-Yi-Zi No. 0940125666

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Year/Month	Par Value (NT$)	Authorized capital	Authorized capital	Paid-in capital	Paid-in capital		Remark	Remark
		Shares	Amount (NT$)	Shares	Amount (NT$)	Source of capital	Capital Increased by Assets Other than cash	Others
2005.12	10	160,000,000	1,600,000,000	129,179,286	1,291,792,860	Cash capital increase of NT$ 200,000,000	-	Jin-Guan-Zheng-Yi-Zi No. 0940148057
2006.07	10	160,000,000	1,600,000,000	143,389,007	1,433,890,070	Capitalization of earnings of NT$ 142,097,210	-	Jin-Guan-Zheng-Yi-Zi No. 0950132152
2007.06	10	250,000,000	2,500,000,000	159,161,797	1,591,617,970	Capitalization of earnings of NT$ 157,727,900	-	Jin-Guan-Zheng-Yi-Zi No. 0960033202
2007.07	10	250,000,000	2,500,000,000	184,161,797	1,841,617,970	Cash capital increase of NT$ 250,000,000	-	Jin-Guan-Zheng-Yi-Zi No. 0960032162
2008.09	10	250,000,000	2,500,000,000	189,686,651	1,896,866,510	Capitalization of earnings of NT$ 55,248,540		Jin-Guan-Zheng-Yi-Zi No. 0970033483
2009.09	10	250,000,000	2,500,000,000	193,480,384	1,934,803,840	Capitalization of earnings of NT$ 37,937,330		Jin-Guan-Zheng-Fa-Zi No. 0980033696
2010.09	10	250,000,000	2,500,000,000	199,284,795	1,992,847,950	Capitalization of earnings of NT$ 58,044,110		Jin-Guan-Zheng-Fa-Zi No. 0990039425
2011.09	10	250,000,000	2,500,000,000	211,241,882	2,112,418,820	Capitalization of earnings of NT$ 119,570,870		Jin-Guan-Zheng-Fa-Zi No. 1000036962
2012.09	10	300,000,000	3,000,000,000	226,028,813	2,260,288,130	Capitalization of earnings of NT$ 147,869,310		Jin-Guan-Zheng-Fa-Zi No. 1010030287
2012.10	10	300,000,000	3,000,000,000	246,028,813	2,460,288,130	Cash capital increase of NT$ 200,000,000		Jin-Guan-Zheng-Fa-Zi No. 1010030728
2013.09	10	300,000,000	3,000,000,000	250,949,389	2,509,493,890	Capitalization of earnings of NT$ 49,205,760		Jin-Guan-Zheng-Fa-Zi No. 1020029077
2014.09	10	300,000,000	3,000,000,000	260,987,364	2,609,873,640	Capitalization of earnings of NT$ 100,379,750		Jin-Guan-Zheng-Fa-Zi No. 1030027248
2016.02	10	300,000,000	3,000,000,000	268,987,364	2,689,873,640	Cash capital increase of NT$ 80,000,000		Jin-Guan-Zheng-Fa-Zi No. 1040046754
2017.09	10	300,000,000	3,000,000,000	274,367,111	2,743,671,110	Capitalization of earnings of NT$ 53,797,470		Report effective date of June 22, 2017

				Unit: share
Type of share	Authorized capital			Remarks
	Issued shares	Unissued shares	Total
Common shares	274,367,111	25,632,889	300,000,000	-

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April 20, 2020

2. Shareholders structure:

Structure Quantity	Government agencies	Financial institutes	Other juridical persons	Individuals	Foreign institutions and foreign individuals	Total
Number of shareholders	5	14	106	10,954	635	11,714
Number of shareholding	5,550,507	31,969,368	42,754,132	97,881,221	96,211,883	274,367,111
Percentage of Shareholding	2.02%	11.65%	15.59 %	35.67 %	35.07 %	100.00%

Note: The shareholding percentage of Mainland China investment shall be disclosed. The “Mainland China Investment” refers to the people, corporate, organization, other institutions or companies invested at third region specified in Article 3 of the Regulations Governing Permission for People from the Mainland Area to Invest in Taiwan.

3. Shareholding distribution status:

			April 20, 2020
Class of Shareholding (Unit: Share)	Number of shareholders	Number of shareholding	Percentage of Shareholding%
1~999	4,480	503,956	0.18
1,000~5,000	6,106	9,879,998	3.60
5,001~10,000	409	3,029,113	1.10
10,001~15,000	152	1,884,381	0.69
15,001~20,000	73	1,323,214	0.48
20,001~30,000	99	2,450,083	0.89
30,001~50,000	104	3,971,360	1.45
50,001~100,000	89	6,370,913	2.32
100,001~200,000	62	8,659,463	3.16
200,001~400,000	46	13,671,766	4.98
400,001~600,000	25	12,400,188	4.52
600,001~800,000	12	8,321,874	3.03
800,001~1,000,000	10	9,085,635	3.31
1,000,001 and above	47	192,815,167	70.29
Total	11,714	274,367,111	100

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4. List of major shareholders:

4. List of major shareholders:
Shareholding List of major shareholders	Number of shareholding	Percentage of Shareholding
Yih-Yuan Investment Corp. - Shih-Fan Chen	25,790,335	9.40%
Hsien-Chin Tsai	21,634,993	7.89%
Nan Shan Life Insurance Co., Ltd.- Ying Tsung Tu (Deputy: TangChen)	10,100,000	3.68%
Ching-FangChen	9,543,332	3.48%
Cheng-Hai Hung	9,035,318	3.29%
CathayLife Insurance Co. Ltd. – Tiao Kuei Huang	8,854,000	3.23%
Chin-Chih WangCheng	8,362,129	3.05%
Li-Chen Wang	7,932,435	2.89%
Fubon Life Assurance Co.,LTD-Ming-Xin Tsai	7,126,000	2.60%
Harding Loevner Institutional Emerging Markets Portfolio Fund	5,203,031	1.90%

5. Market Price , net value, Earnings, Dividend per Share and relevant information for the last two years:

Unit: NT$

Items	Year	Year	2018	2019	Year-to-date March 31, 2020 (Note 8)
Market Price Per Share (Note 1)	Highest		425.00	458.50	416.00
	Lowest		263.50	336.00	201.00
	Average		352.10	396.87	314.12
Net worth Per share (Note 2)	Before distribution		61.71	66.06	68.73
	After distribution		50.71	(Note 2)	-
Earnings Per Share (Note 3)	Weighted average outstanding shares		274,367 thousand shares	274,367 thousand shares	274,367 thousand shares
	Earnings Per Share - before adjustment		15.96	15.67	2.54
	Earnings Per Share - after adjustment		15.96	(Note 2)	2.54
Dividend Per share	Cash dividend Per Share		11	(Note 2)	-
	Stock grants	Earnings distribution	-	(Note 2)	-
		Capital surplus distribution	-	-	-
	Accumulated undistributed dividends (Note 4)		-	-	-
Return on Investment	Price/Earnings Ratio(PER) (Note 5)		25.09 times	(Note 2)	-
	Price/Dividend Ratio(PDR) (Note 6)		36.08 times	(Note 2)	-
	Cash Dividendyield (Note 7)		2.73%	(Note 2)	-

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• If shares are distributed in connection with a capital increase out of earnings or capital reserve, further disclose information on market prices and cash dividends retroactively adjusted based on the number of shares after distribution.

• Note 1: Indicates the highest and lowest market price of common shares in each year, and the average market price of each year is calculated according to the closing trading value and trading volume of each year.

• Note 2: Pending for shareholders’ approval.

• Note 3: In case of any Issuance of bonus shares such that there is a need for retroactive adjustment, the earnings per share before and after the adjustment shall be indicated.

• Note 4: If the issuance criteria of equity securities specify that dividends undistributed in the current year are to be accumulated to the year with earnings for issuance, then the accumulated unissued dividends up to the current year shall be disclosed respectively.

• Note 5: Price-to-Earnings Ratio (PER) = Average Market Price / Earnings Per Share (EPS)

• Note 6: Price-to-Dividend Ratio (PDR) = Average Market Price / Cash dividend per share.

• Note 7: Cash Dividend yield = Cash dividend per share / Average Market Price.

• Note 8: Net worth Per share, EPS shall indicate the information audited by CPA for the most recent quarter up to the printing date of the annual report; the remaining fields shall be indicated with the current year information up to the printing date of the annual report.

• Dividend policy and implementation:

• (1) Dividend policy specified in the Articles of Incorporation:

Where the Company has a profit after settlement (the term “profit” refers to the income before deducting the distribution of employee remuneration from the income before tax), no less than 0.1% shall be appropriated for the employee’s remuneration for the distribution according to the resolution of the Board of Directors’ meeting, and be reported to the shareholders’ meeting. For the surplus earnings after the settlement with the appropriation of the employee’s remuneration, after tax is paid according to the law, it shall be used to cover the accumulated loss (including adjustment of undistributed surplus earnings amount) first, following which, 10% thereof shall be set aside as the legal reserve; however, when the legal reserve has reached the paid-in capital of the Company, it may be exempted from such appropriation. For the remaining amount, after special reserve is further set aside or reversed according to the laws. it is combined with the undistributed surplus earnings (including adjustment of undistributed surplus earnings amount) at the beginning of the same period, for proposing to the shareholders’ meeting for resolution on the distribution of shareholders’ dividends and bonuses.

Where the Company has accumulated loss (including adjustment of undistributed surplus earnings amount) from the previous years, for a profit gained in the current year (the term “profit” refers to the income before deducting the distribution of employee remuneration from the income before tax), before the appropriation of employee’s remuneration, it shall be used to cover the accumulated loss first, followed by executing the appropriation of the remaining balance according to the percentage described in the preceding paragraph. The distribution of employee’s remuneration may be made in the form of shares or cash.

In terms of industrial development, the Company is at a growing stage currently; and there are plans for expansion of production lines and fund demands. Consequently, during the distribution of surplus earnings,

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the Board of Directors shall consider the investment plan, financial structure, future fund demand and profit status of the Company. If there are no other special conditions, it shall not be lower than 50% of the net income of the current year after the deduction of the compensation accumulated loss according to the preceding paragraph, for the Board of Directors to submit proposal to the shareholders’ meeting for resolution before the execution thereof. However, the total amount of dividends shall not be less than 20% of amount of cash dividends distributed.

• (2) Status of distribution of dividends proposed for resolution in the present shareholders’ meeting:

In the present shareholders’ meeting, it is proposed to distribute cash dividend of NT$ 11, and the proposal is yet to be approved by the annual general shareholders’ meeting scheduled to be held on June 18, 2020. After the aforementioned cash dividend proposal is approved through the resolution of the annual general shareholders’ meeting, the Chairman is authorized to further specify the ex-dividend base date for the distribution.

7. Impact to Business Performance and EPS Resulting from Stock Dividend:

distribution. 7. Impact to Business Performance and EPS Resulting from Stock	distribution. 7. Impact to Business Performance and EPS Resulting from Stock	distribution. 7. Impact to Business Performance and EPS Resulting from Stock	Dividend:
Item			2019(Note 1)
BeginningPaid-in Capital(in thousands of NT$)			2,743,671
Current dividend distribution	Cash dividend per share (NT$)		11
	Dividend per share for capitalization of earnings		None
	Dividend per share for capitalization of Capital Surplus		None
Changes in Operating performance	Operating profit(in thousands of NT$)		Not applicable (Note 2)
	Operating profit increase (decrease) ratio from same period of lastyear
	Net income(in thousand NT$)
	Net income increase (decrease) ratio from same period of lastyear
	Earningsper Share(EPS) (NT$)
	EPS increase(decrease)ratio from sameperiod of lastyear
	Annual average return on investment (annual average PER reciprocal)
Pro Forma EPS and PER	Capitalization of earnings changed to distribution of cash dividend in full	Pro Forma EPS(NT$)
		Pro Forma annual average return ratio
	Without capitalization of Capital Surplus	Pro Forma EPS(NT$)
		Pro Forma annual average return ratio
	Without capitalization of Capital Surplus and capitalization of earnings changed to issuance of cash dividends	Pro Forma EPS(NT$)
		Pro Forma annual average return ratio

Note 1: Pending for resolution of 2020 annual general shareholders’ meeting.

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• Note 2: According to the “Regulations Governing the Publication of Financial Forecasts of Public Companies”, the Company is not required to publish the 2020 financial forecast information.

• Employees’ remunerations and remuneration of directors and supervisors:

• (1) The Articles of Incorporation specifies the percentage or range of the employees’ remuneration: Please refer to 6.(1) for detail.

• (2) Estimation of employees’ remuneration and remuneration of directors for the present period:

• (A) The distribution amount proposed by the board of directors and the recognized expense annual estimation amount are as follows: (NT$)

Item ______ Employee cash remuneration Remuneration of directors and supervisors	Distribution amount proposed by the _ board of directors __ Recognized expense annual estimation ___amount ______ 6,000,000 6,000,000 0 0	_ Difference _
		None None

• (B) Cause of difference: Not applicable.

• (C) Handling of difference amount:If the distribution amount approved by the shareholders’ meeting differs from the amount proposed by the board of directors, the difference amount shall be recognized based on the accounting estimation after the approval of the shareholders’ meeting.

• (D) EPS recalculated: NT$ 15.67.

• (3) Distribution of employees’ bonus and remunerations of directors and supervisors for the previous year:

Resolution of shareholders meeting __ Item __ Actual distribution ___ Quantity Distribution status: (Unit: NT$) Employees’ cash remuneration 6,000,000 The remuneration of directors and supervisors 0	Originally approved by the board of directors Proposed distribution quantity 6,000,000 0	Difference
		None None

• (1) Distribution status: (Unit: NT$)

Cause of difference: Not applicable.

Handling of difference amount: If the distribution amount approved by the

shareholders’ meeting differs from the amount proposed by the board of directors, the difference amount shall be recognized based on the accounting estimation after the approval of the shareholders’ meeting.

• (2) Information on EPS: (unit: NT$)

Original EPS NT$ 15.96 Calculated EPS NTS 15.96

1. Repurchase of the Company’s shares: None

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• 4.2 Issuance of corporate bonds : None.

• 4.3 Issuance of preferred shares : None.

• 4.4 Issuance of overseas depository receipts : None.

• 4.5 Status of employee stock option plan and status of employee restricted stock : None.

• 4.6 Issuance of new shares in connection with mergers or acquisitions or with acquisitions of shares of other companies : None

• 4.7 Capital plans and execution : None.

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V. Operational Highlights

5.1 Business Activities:

5.1.1 Business scope

1. Main areas of business operations:

2. a. Manufacturing, processing, trading business of knitting and dyeing of fabrics, garments and textile raw materials.

3. b. Manufacturing, processing, trading business of various types of textiles of fabrics, garments, yarns, chemical synthetic fibers and silks etc.

4. c. Relevant import and export business of aforementioned items.

2. Revenue distribution:

Revenue distribution:
Item	2019 OperatingPercentage
Knitted fabrics	30.48%
Garments	69.52%
Total	100.00%

1. Main products: Various elastic knitted fabrics and garments.

4. New products development:

Product development direction aims at diverse and differentiated product characteristics, specialized in functional fabrics, and sportswear series in order to establish complete production lines, such that the Company is able to provide comprehensive and differentiated services in order to satisfy the customer demand for a one-stop shop for all. Continue to research and develop technologies, improve product quality, collect latest domestic and foreign information, provide latest market trends, fabric types and styles to customers, in order to use such information as reference guides in determining the consumer market demands and to satisfy the needs of consumers.

5.1.2 Industry Overview

1. Industry Current Status and Development:

The development of the textile industry (including complete and large production system of man-made fiber, spinning, knitting, dyeing and clothes manufacturing etc.) in Taiwan has a history of more than 60 years. With the drive for technological improvements and market demands,

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vertical specialization of upstream, midstream and downstream sectors has been established and the supply chain is relatively complete. Regarding the upstream sector, the raw materials are plentiful and the processing techniques are skillful, it includes outstanding basis for the production scale and technologies of man-made fiber production that are extremely competitive internationally. It is also one of the main supply sources of man-made fiber products around the globe. The midstream sector has always achieved remarkable export business performance, and business operators in this sector have been the best cooperating partners of international brands. For the downstream sector, the garment industry has been one of the leading industries to establish operations worldwide under the pressure of labor wages.

Presently, the development of textile industry in Taiwan has gradually developed from the traditional labor-intensive clothes manufacturing factories (such as garment processing, sweaters etc.) into a complete textile production system from upstream, midstream to downstream sectors. In addition, the products manufactured have also expanded from traditional yarns, fabrics, man-made fibers and garments to non-woven fabrics with specific functions, industrial specialized fabrics, building material and furniture fabrics etc. Therefore, it has indeed become an industry with diverse development. Furthermore, the textile industry development in Taiwan has also shifted from OEM manufacturing model into an international cooperative production and sales system with vertical integration and horizontal specialization, which has certainly established solid foundation in the global textile industry with undeniable contribution worldwide.

According to the information from the Taiwan Textile Federation, in 2019, the total value of exported textile garment from our nation as US$ 9.18 billion, a decline of 8.9% from 2018; among which, the value of exported fabric was US$ 6.23 billion, a decline of 6.4% from the previous year. The value of exported yarn was US$ 1.44 billion, a decline of 14.1% from the previous year. In terms of the structure of export the largest product is the fabrics with an export ratio of 67.9%, indicating that the fabric industry is important for the development of the textile industry in terms of the manufacturing, and it is also the most important export product for the textile industry. The next largest export product is yarns, accounting for 15.7% of the export ratio. The third largest exported product is fibers, accounting for 6.6% of the export ratio. In the textile industry, the export ratios for the midstream and upstream fibers, yarns and fabrics account for a total exceeding 90%.

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	Weight	Weight	Weight
				Amount (in hundred million US$)				Unit price (US$/Kg)
	(in ten thousand tons)
Product			Increase			Increase				Increase
							Weight
	2018	2019	(decrease)	2018	2019	(decrease)		2018	2019	(decrease)
							%
			%			%				%
1. Fibers	50.3	43.5	-13.4	8.06	6.04	-25.1	6.6	1.60	1.39	-13.5
2. Yarns	58.7	52.8	-10.1	16.76	14.39	-14.1	15.7	2.85	2.72	-4.5
3. Fabrics	85.2	78.4	-7.9	66.55	62.26	-6.4	67.9	7.81	7.94	1.6
4. Garment and clothing
	2.7	2.5	-7.5	5.10	4.71	-7.7	5.1	19.24	19.19	-0.2
5. Miscellaneous textiles
	8.7	8.3	-3.8	4.27	4.36	2.0	4.7	4.94	5.23	6.0
1-5 Total of textiles
	205.5	185.6	-9.7	100.74	91.76	-8.9	100.0	4.90	4.94	0.9

Source of Information: Statistics of Customs Administration, MOF; Summarized by Taiwan Textile Federation (February 2020)

The textile industry in Taiwan is an industry that is highly export-oriented with foreign exchange earnings. Due to the downstream business operators in our nation requiring sufficient labor manpower, they tend to spread to overseas and most operators still rely on the import of high performance and fabrics with high quality from Taiwan. Consequently, it serves as the driving force for the upstream and midstream industries in Taiwan. The textile garment industry in our nation is export-oriented, and from the table below, it can be understood that the average export dependence for textile garment industry (calculated based on the export value over the production value weight) reaches 79%. In addition, the import value of textile garment industry in 2019 was US$ 3.55 billion, and the trade surplus reached US$ 5.63 billion, which was the industry of the 4th largest trade surplus in Taiwan. Over the past decade, the textile industry continues to drive the economic development in Taiwan and is one of the main industry for generating foreign exchange earnings. The textile industry generates appropriately an average of foreign exchange earnings of US$ 7.5 billion, which has significant benefits to the balance of payments of our nation.

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(unit: in 100 million US$)

Item	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019
Production value	150.2	168.0	153.5	151.9	148.2	133.6	121.3	126.4	129.1	116.6
Export value	113.0	127.2	118.2	117.0	115.6	108.0	99.3	100.7	100.7	91.8
Import value	29.1	35.7	33.2	33.0	34.3	34.6	33.4	33.6	36.8	35.5
Trade surplus	83.9	91.5	85.0	84.0	81.3	73.5	65.9	67.1	63.9	56.3
Export degree of dependence	75%	76%	77%	77%	78%	81%	82%	80%	78%	79%

Source of Information: Department of Statistics, MOEA; Statistics of Customs Administration, MOF; Exchange rate based on the annual average exchange rate of Central Bank of R.O.C.; Summarized by Taiwan Textile Federation (February 2020)

Fabrics is the key factor driving the textile export of Taiwan, and its export value had increased from US$ 4.36 billion in 1990 to US$ 6.23billion in 2019, with an export percentage increasing from 42% to 68%. The export percentages of fibers and yarns in 2019 respectively account for 7% and 16% of the exported textile becoming an essential supply for the upstream and downstream products in the global textile industry supply chain.

(unit: in 100 million US$)

	1990	1990	1995	1995	2000	2000	2005	2005	2010	2010	2019	2019
Item
	Amount	Percentage	Amount	Percentage	Amount	Percentage	Amount	Percentage	Amount	Percentage	Amount	Percentage
Fibers	6.0	6%	10.0	6%	9.5	6%	11.5	10%	11.7	10%	6.0	7%
Yarns	15.5	15%	26.3	17%	18.1	12%	22.7	19%	22.5	20%	14.4	16%
Fabrics	43.6	42%	87.7	57%	94.4	62%	67.7	57%	67.2	59%	62.3	68%
Garment	31.9	31%	23.5	15%	26.4	17%	13.2	11%	7.8	7%	4.7	5%
Miscellaneous	5.8	6%	7.9	5%	4.3	3%	3.4	3%	3.8	3%	4.4	5%
Total	102.9	100%	155.0	100%	152.7	100%	118.4	100%	113.0	100%	91.8	100%

Source of Information: Statistics of Customs Administration, MOF; Summarized by Taiwan Textile

Federation (February 2020)

The textile industry in Taiwan is a high export-oriented and foreign exchange earning industry. Due to the regional integration of the textile industry in Taiwan, for market competitiveness and seeking discounts in tariffs or reducing production element costs, business operators show increasing overseas investments and production capacities in foreign countries. Among which, the overseas investment in Vietnam is most prominent. Functional and high quality fabrics are characteristics of

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Taiwanese textiles, and business operators shall actively and continuously invest in research and development, and also utilize the plentiful supply of chemical fiber raw materials and innovative fabric knitting and dyeing technologies in Taiwan in order to establish the country’s value chain and aggregation advantage for the functional textile industry. They will also push forward with the development of differentiated and high value-added products such that the competitive advantages can be maintained.

In view of the competitions due to various countries of Korea, China and the emerging Sri Lanka and India etc., textile enterprises in Taiwan shall establish the core abilities of innovative research and development and production of niche products in order to increase the added value of products as well as to establish the fast response ability to the upstream research and development and downstream customer demands, along with the integration of the fast response advantage in the integration of industry value chain and production cluster, such that the overall industry competitiveness can be increased.

Looking forward to 2020, with the significant growth of the trend of globalization and online shopping behavior, giant leading brands will continue to maintain their market shares and will demand closer cooperation of the supply chains, value the issues of the production capacity, diversify production base inventory management, corporate social responsibility etc. of their suppliers significantly. the company is of the opinion that continuous research and development, prompt response to terminal market demands, a focus on niche market expansion are the keys to the stable growth of an enterprise in the industry.

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2. Correlation among upstream, midstream and downstream in the industry:

Structure of Textile Industry

==> picture [508 x 426] intentionally omitted <==

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

Production and Sales of Natural and Man-made Fibers
Vertical
Yarn spinning Yarn twisting integrated
factory factory textile factory
Yarn
production
Textile
Contractor of Grey fabric
factory
dyeing, production
printing and
Dyeing,
Dyeing
setting
printing and
factory
setting
Exporter/Importer
Production of
Broker/Dealer/Wholesaler
finished fabric
Production of Production of home Production of
clothing decorative industrial products
Exporter/Importer
Market of clothing Wholesale and
and home decorative Supply
Department stores Direct stores Distributors Other retailers Industry and institutions
----- End of picture text -----

Consumer

The scope of the textile industry is relatively broad, and the upstream, midstream and downstream of the industry include six main fields of yarn, spinning, knitting, dyeing, garment and retail etc. Presently, in the domestic textile industry, there are several large companies exploiting their corporate competitive advantages making the most appropriate development direction in different fields in order to construct a vertically integrated industry and are active in establishing their own textile territory internationally, such as Formosa Nan Ya Group, Far Eastern Group, Shin Kong Group, Tainan Spinning Group and Eclat Group.

1. Product development direction:

According to the survey conducted by the market research

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institution Technavio, the global demand for activewear including fitness and sports continues to grow, and the sales of sportswear in North America accounts for over 37% worldwide. It is expected to increase rapidly at a compound annual growth rate above 4.34% by the year of 2020, reaching a market size of USD 196.6 billion

With the increasing popularity in the sporty and healthy trend, in addition to standard sportswear, comfortable and fitted sportswear has become the main stream of daily wears. A lot of fashion brands and channel brands have started to launch relevant series of products, indicating the growth of sportswear is more prominent than the performance of the overall clothing.

Based on the consideration of the fast growth in the sports wear market and consumers have higher standard on functional products, domestic and foreign manufacturers are actively engaging in innovative research and development in relevant production technologies, such as: use of microporous membranes in the knitting and dyeing process methods, high-density fabrics, other special auxiliary treatment; use of special cutting, attachment ...etc. technologies for garment, in order to achieve the functional effects of low resistance, abrasion resistance, high strength, light and thin, insulation, UV protection, absorbing and fast drying, breathable and waterproof, anti-bacterial and deodorization etc. In recent years, the textile industry in Germany has also successfully developed biomedical technology and electronic technology textiles with the use of polymer and fiber materials in order to integrate the concepts of telecommunication, information processing, medical and sensor etc. into textiles, such that textiles are able to be equipped with the functions of being capable of responding to toxic substances or gases, temperature, heart rate, pulse, pressure, movement, breath, self-cleaning, temperature regulation, protection and healthcare etc.; consequently, consumer demands on health, sports and recreation can be satisfied.

The textile industry in Taiwan is known as the “Trillion Dollar Industry”, and under the influence of the global regional trading agreements signed, the global development of the Taiwanese supply chain is accelerating. Despite that there is a declining trend in the domestic production value, the percentages of order received and global production in Taiwan increases year after year. With the labor advantages in terms of quantity and lower wage, China and various Southeast countries are gradually causing greater pressure to be put on Taiwanese manufacturers in the international market of general sportswear, garment and decorative, and they also threaten the

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development of Taiwanese manufacturers in the professional OEM market. Accordingly, the company is of the opinion that enterprises having their own research and development abilities in order to continuously achieve innovations in products and manufacturing processes while being equipped with the differentiation ability to move from OEM to high value-added ODM business, is the key competitive ability for the continuous development of the industry. This is the main direction for the future operation strategic development of enterprises, and is also essential for the sustainable operation of the textile industry in Taiwan.

1. Competition:

2. Competitiveness of the Company

3. A. Quality: The Company has accumulated extensive manufacturing experience and is of great commitment to quality. In 1993, the company received the “Q Mark” quality certification from DuPont to come the first enterprise to receive such great honor in the Asia-Pacific region.

4. B. Technology:

5. (A). Fabrics: Since knitted fabrics are made from elastic yarns and general non-elastic yarns, to blend the two types of elastic and non-elastic yarns and to allow them to interlace with each other firmly without interferences while maintaining the original characteristics of long and short fibers, the technology level required is relatively higher. The company owns various knitting machines of different specifications, and since 1989, the company has cooperated with DuPont such that presently, the technology of the company is mature and leads the industry.

6. (B). Dyeing: Since elastic fibers behave in a way similar to rubber bands, such that during dyeing process at high temperature, the elastic yarn can be in a molten state or generate ripples. Through continuous research and development as well as testing for different high/low dyeing solution temperatures, curve graphs, the company has been able to achieve most optimal control on such process.

7. (C). Garment: The Company establishes a dedicated unit in collecting the market trend information. In addition, the headquarters of the company has established a fast sample center of the largest scale in Taiwan, and in conjunction with various latest equipment of sewing machines, pattern making software and operators, such that the company is able to provide the one-stop shop service

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including on-site fitting and ODM etc. to customers.

• (D). Lead time: The headquarter of the company is a global logistics center, capable of achieving fast order receiving, selecting appropriate production site according to the customer demands, lead time and cost etc., in order to maintain the competitiveness of the company. In addition, the company also strengthens the cooperation with raw material suppliers and various relevant manufacturing process vendors in order to effectively manage the manufacturing process and to control the delivery date.

• (E). Research and development: Obtain the market trend, develop various fabrics of modern technology materials, and jointly develop garment styles with customers in order to satisfy the modern consumer demands on the diverse textile products.

• (F). Consumer demands: Actively participate in domestic and international trade shows, collect themes and colors of the current market trend, as well as actively participate in projects and events organized by various professional institutions entrusted by the Ministry of Economic Affairs in order to increase the design and competitiveness of the company.

5.1.3 Research and Development:

1. Research and development budget invested in recent years up to the printing date of annual report: Unit: NTD 1,

printingdate	of annual report:		Unit: NTD 1,000
			R&D budget to
	R&D budget	Current operating
			current operating
	invested	revenue
			revenue ratio
2019	145,162	28,125,136	0.52%
January to
	36,827	6,010,927	0.61%
March,2020

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2. Technology or product developed successfully:

Product Type	Product Name	Usage and Description
Eco-Friendly Series of Fabrics - Sustainable Series	Carbon reduction and energysaving- Reduce
	Tencel® Eco-friendly fiber fabric	A. As the issues of environmental protection continue to be considered significantly, Eclat and Lenzing Corporation jointly developed the Tencel fiber products, and the raw materials are obtained from the nature, such that the raw materials can be decomposed naturally in order to reduce impacts on the environment and the earth. B. The fiber product is equipped with the touch feels of softness, skin-friendly and excellent drape property along with the integration of high moisture-absorbing fibers, making Tencel to have great advantages in its appearance and functionality. C. Applicable to the sports field of recreation wear and yoga.
	Polypropylene Eco-friendly fiber fabric	A. Polypropylene fiber is an eco-material, and its specific weight is smaller than the water with low heat conductivity, allowing it to have the characteristics of lightweight and heat insulation. In addition, with the fiber characteristics of hydrophobic and non-coloring, it satisfies the environmental friendly concept of water saving. B. It is a functional product that has low water content and that is equipped with fast drying functions and wearable comfort. C. Applicable to the sports field of outdoor base layer and running
	Water-free Dyeing Fabric	A. With technology of water-free dyeing, the company can reduce the resource and solve the environmental problems of sewage discharge. B. A new dyeing machine which replaces water with carbon dioxide. C. Reduce usage of water and chemical auxiliaries, improve the environment in factories. D. Apply to fabric which is 100% polyester. It has considerable application scope for brands that value sustainable environmental issues.
	Recycle and reuse - Recycle

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Product Type	Product Name	Usage and Description
	Recycle PET/Recycle Nylon of eco-friendly fiber fabrics	A. Through consumer end waste recycle or industrial waste recycle with raw material treatment, eco-friendly fibers are obtained through recycle and reuse treatment processes. B. It is equipped with the function and characteristics of dry and wearing comfort. C. It can be used in sports wear series.
	Renew type
	Sorona® Eco-friendly fiber fabric	A. DuPont’s Sorona fibers use the raw material extracted from corn and protein carbohydrates, which is different from man-made fibers using raw material extracted from petroleum. B. Sorona exhibits the characteristics of softness, wearing comfort, elasticity and restoration performance. C. It complies with the innovation concept of global sustainable development.
	Bioenergy nylon fiber series of fabrics	A. Eclat and the international giant manufacturer in Germany, BASF, cooperate with each other to launch, the first bioenergy nylon textile in the world. B. It uses 100% renewable raw material alternative production - regenerated from organic waste oil, organic wastes, food industry waste substances of vegetable oil etc. Its production process is eco-friendly and is able to effectively reduce 35% of the greenhouse gas emission. C. It complies with the company’s commitment in sustainable development.
Functional series of fabrics	Sunlight Management
	BodyCare® UV Resistance series	A. BodyCare® is an own brand of Eclat. B. Its trademarks registered in all major countries worldwide (including US, European Union and Asia). C. This series of fabric mainly focuses on performance and functionality. It utilizes the technology and development in fibers, interlacing or after-processing treatment in order to achieve the function of UV resistance. D. It is applied to outdoor sportswear series.

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Product Type	Product Name	Usage and Description
	Graphene series	A. Apply the thermal property of graphene to summer fabrics. B. Its conductive properties could also release static electric charge promptly, then thereby suppressing and reducing static electric charge. C. It could also combine with design of layered structures, apply to internal heating materials, and suitable for winter outdoors sportsproducts.
	UV reaction series	A. Through the utilization of special fibers or after-processing, in conjunction with interlacing design to achieve UV color-changing function, such that consumers are provided with the selection for the function of over sunlight exposure or diversity in colors and styles. B. This series of fabric is applied to various summer outdoor sportswear series.
	FIR warmth series	A. With the utilization of the insulation and warmth characteristics of fibers, the fabrics can be made to have excellent insulation and wearing comfort. B. Through professional design, diverse applications can be provided for selection. C. This series is suitable to fall, winter outdoor sportswear.

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Product Type	Product Name	Usage and Description
	Reflection safety display series	A. This series of fabric is provided for safety protection of sportsman performing exercises in the morning or night time. The fabrics are equipped with the night luminous and light reflective functions in order to satisfy the demand of consumers during the outdoor walking or exercising, such that the fabric is equipped with the function for warning others while maintaining a pleasing appearance. B. Night luminous series: Through the utilization of yarns and special manufacturing process, light is absorbed in the fabric in order to maintain a certain level of effect. C. Light reflective series: Through special manufacturing process, the light reflection principle of vehicle headlights is utilized to achieve the light reflective effect. D. It is a fabric that is suitable to the exercises of jogging, cyclingin the morningor at night.
	Air Management
	BodyCare® Anti-bacterial series	A. BodyCare® is an own trademark brand of Eclat. B. This trademark has been registered in all major countries worldwide (including US, European Union and Asia). C. This series of fabric mainly focuses on performance and functionality. It utilizes the technology and development in fibers, interlacing or after-processing treatment in order to allow the fabric to become a BodyCare® product with anti-bacterial function. D. It is widely used in sportswear, recreation wear, home wear series.
	Cool Sensation series	A. With the use of natural fibers or fibers with addition of cool elements, textiles can have cool sensation for wearing. B. Wear with cool sensation to increase the wearing comfort and sensation. C. It is suitable to wear under long period of sunlight exposure.

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Product Type	Product Name	Usage and Description
	3-in-1 multi-functional series	A. Use of specially modified fibers, along with texture design in order to allow textiles to have the functions of UV resistance, heat isolation and deodorization. B. Deodorization function: Long lasting of reduction of odor due to the breeding of microorganisms. C. UV resistance function: Capable of isolating and reducing skin damages caused by UV radiation, capable of preventing skin sunburn, and suitable for outdoor sports. D. Heat isolation function: Equipped with UV shielding capability and reflecting visible light, reducing heat conduction speed in order to increase the wearing comfort of sportsman. E. It can be applied to wear for the exercise of jogging, outdoor sports and recreation wear.
	Moisture Management
	BodyCare® Moisture Management series	A. BodyCare® is an own brand of Eclat. B. Its trademark has been registered in all major countries worldwide (including US, European Union and Asia). C. This series of fabric mainly focuses on performance and functionality. It utilizes the technology and development in fibers, interlacing or after-processing treatment in order to allow the fabric to become a fabric with moisture absorbing and perspiration drying functions. D. It can be applied to sportswear and recreation wear.
	3XDRY® series	A. Eclat cooperates with the internationally well-known manufacturer Schoeller in the joint development of such fabric. B. Auxiliaries and special manufacturing processes are utilized to develop a fabric with waterproof and breathable function such that the outer layer of the fabric is water repellent, and the inner layer has breathability and drying functions. C. It is applied to outdoor sportswear.

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Product Type	Product Name	Usage and Description
	Nanosphere® series	A. Eclat cooperates with the internationally well-known manufacturer Schoeller in the joint development of such fabric. B. Through the use of auxiliaries and special manufacturing processes, fabrics equipped with waterproof and dirt repellent functions is developed, and the company is the first knitted textile factory to receive the approval thereof. C. The outer layer of the textile is equipped with the functions of being water and soil repellent. D. It is suitable to outdoor sportswear and recreation wear.
	Umorfil® skin-friendly series	A. Through nanotechnology, ocean collagen peptide amino acid is injected into fiber to achieve new functional material. It is able to achieve the functions of moisture retention and wearing comfort; in addition, its base uses an eco-friendly material and is biodegradable naturally. B. This series of product utilizes fiber in combination with high absorbing physical phenomena fiber design in order to achieve the heat isolation and cool sensation wearing comfort. C. It is a bionic fiber with skin-friendly characteristic, which is suitable to intimate apparel and home wear applications.
	Aqua-Guide® Moisture transferring and fast drying series	A. It is an own trademark brand of Eclat. B. It is of the characteristics of moisture transferring and fast drying. Perspiration can be absorbed by the absorbing layer and transferred to the medium moisture storage layer for absorbing, which is then swiftly exhausted to the fabric surface layer. Consequently, under the condition of large amounts of perspiration, it is able to prevent moisture from returning back to the fabric to cause skin attachment; as a result, wearing comfort can be increased. C. It is applied to outdoor sportswear and recreation wear.

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Product Type	Product Name	Usage and Description
High Performance series of products	X-POLE®
	X-POLE® Thermal Warmth series	A. It is a patented technology and a trademark of Eclat, and has received the recognition of Top 10 in the ISPO exhibition. B. With the utilization of fiber cross section principle, it is able to achieve insulation effect by preventing the loss of warm airflow, in conjunction with special fleece processing technology to enhance the warmth and breathable functions. C. High CLO value and pilling resistance characteristics in order to increase the added value of the textile. D. It can be used with hiking and light mountain climbing activities.
	X-POLE® Windbreaker series	A. It is a patented technology and a trademark of Eclat. This series of fabric has received the recognition of Outer Layer Top 10 in the ISPO exhibition. B. It utilizes Eclat’s patented technology - Windbreaker knitted fabric. C. In comparison to conventional windbreaker jacket available in the market, such type of fabric is lighter and slimmer, along with the warmth and wearing comfort with elasticity. D. It is applied to outdoor sportswear series.

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Product Type	Product Name	Usage and Description
	X-POLE® Waterproof and breathable series	A. It is a patented technology of Eclat - windbreaker knitted fabric. In addition, this series of fabric has also received the recognition of Outer Layer Top 10 in the ISPO exhibition. B. It utilizes the high-density knitting method and X-POLE Thermal Warmth fleece series, along with the application of film and waterproof breathable processing technologies, such that the fabric is equipped with elastic fiber series of characteristic in order to increase the wearing comfort during exercises. C. Protective products of 2.5 Layers and 3 Layers etc. are manufactured through combined processing technologies, and eco-friendly C6 and non-fluoride waterproof products are developed for consumers’ selection. D. It is suitable to outdoor sports of mountain climbing and cyclingetc.

5.1.4 Long-term and Short-term Development

• (1). Short-term development plan:

• Plan the training of new knitting technical and machines learning, continue innovation, increase production and competitiveness, root in Taiwan, and global manufacturing. Establish the design, research and development as well as the high-level production technical center in Taiwan, utilize raw materials of excellent quality and use quality system to improve the product competitiveness, achieve global market expansion, in light of increasing production capacity, reducing costs and shortening lead time.

• Integration strategy for upstream, midstream and downstream:

• Reduce the number of suppliers and centralize the management of suppliers, strengthening the cooperation relationship with suppliers.

• Establish raw material joint development model, improve quantity and quality, and increase value of suppliers.

• Cooperate with suppliers to develop new technical guidance and new materials. Strengthen supply chain capabilities and breadth.

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1. Product development from fabric to garment:

2. Provide customers a complete service from fabric to garment, establish vertically integrated order receiving operation model.

3. Obtain market trend, provide products satisfying customer demands, and establish service value of excellent quality and short lead time.

4. Cooperate with world first-class suppliers, utilize innovative technologies in research and development of fabrics and garment styles in order to increase the differentiation with competitors and to create values in the overall value chain.

5. (2). Long-term development plan:

6. Collaborate with customers in designs to create values jointly:

7. Strengthen brand manufacturers, cultivate medium and small customers, and drive the company revenue performance with customers’ growth.

8. Cultivate designers to co-design with clients on customized fabric patterns and garment styles. Develop new garment brands, products or markets with professional experiences of production.

9. R&D personnel collaborate with customers in the development of fabrics, anticipate customer demands, coordinate production through the order and planned production methods in order to accelerate the product supply capabilities, to strengthen relationships with customers and to create joint value.

10. Development of eco-friendly sustainable textile:

11. Focus on the global trend on environmental protection awareness, actively develop products complying with the eco-friendly concept.

12. In 2006, the company has received the organic cotton manufacturing process certification from CONTROL UNION and IMO. Since Europe and American countries emphasize on the environmental protection issue more and more, the company has cooperate with the development strategy of brand manufacturers on organic cotton products in order to satisfy the market demand and to actively develop new products for business opportunities.

13. To cope with the global trend of environment protection awareness, the company has also received the bluesign certification in 2011 in compliance with the specification of brand manufacturers in order to establish a closer cooperation relationship with customers and to fulfill the international social responsibility.

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5.2 Market and Sales Overview

5.2.1 Market analysis

1. Sales region:

Sales region:	Sales region:
						Unit: NTD 1,000
Year Region		2017		2018		2019
		Amount	%	Amount	%	Amount	%
Domestic Sales		60,568	0.25	367,008	1.33	235,826	0.84
	America	14,032,846	57.91	16,216,054	58.80	16,244,418	57.76
Export	Asia	7,337,111	30.28	7,749,994	28.10	7,845,054	27.89
Sales	Others	2,801,445	11.56	3,245,153	11.77	3,779,838	13.51
		24,171,402	99.75	27,211,201	98.67	27,889,310	99.16
	Sub-total
Total		27,578,209	100.00	27,578,209	100.00	28,125,136	100.00

1. Market Share (%) of Major Product Categories in the Last Two Years According to the Taiwan Top 2,000 survey by the CommonWealth Magazine, Eclat is ranked 130[th] in the manufacturing industry, and for the textile industry, Eclat is the 4[th] in terms of the operating revenue, 4[th] in terms of the net income after tax, and 2[nd] in terms of the profitability. Since 2019, the monthly production capacity for knitted fabrics of the company reaches above 15 million yards, and the monthly production capacity for garments reaches above 10 million pieces. The production capacity scale of Eclat is also ranked high among the top domestic manufacturers.

2. Market Analysis of Major Product Categories:

3. (1). Market future supply and demand outlook – textile and dyeing industry:

For spun, with the fast emerging origins of natural fiber raw materials of China, Pakistan and Indonesia etc., and due to the excessive factory expansion by the domestic manufacturers, production capacity is in excess. This has led to price competition and significant reduction in profit for domestic natural fiber yarns and textiles manufacturers, such that a great number of manufacturers move out of the country. Regarding Synthetic fiber, in terms of the woven fabrics, with the significant increase in the demand for functional textiles, and since such type of functional textiles are mostly made from the modification and processing from man-made fibers, the future market for functional textiles is

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expected to continue to grow. Post-processing fabric are closely related to the market information trend.

Regarding the knitted fabrics, in recent years, due to the short product life cycle of knitted fabrics, low entrance barrier and the trend of low product price in the international market, traders and distributors tend to seek sources in the regions of China and Southeast Asia. Under the influence of technical guidance over the past years, the manufacturers in the regions of China and Southeast Asia are now able to produce products of competent level to the products made by Taiwanese Manufacturers. Despite of the fact that the quality of products from China and Southeast Asia are still unstable, their prices are nevertheless far more attractive then Taiwanese products, such that the domestic export quantity of knitted fabrics is decreasing year after year.

Countermeasure and Required Criteria:

The countermeasures that can be adopted by the knitted fabrics and dyeing industry include reinforcement of the differentiation, technology alliance, local market rooting, branding management and global market expansion. The required criteria include product planning and innovative research and development abilities; investment in research and development budget; increase of successful rate in new products; maintaining excellent cooperation relationship with vendors; market keenness and ambition of leaders; excellent financial ability; equipped with market development type of sales talents; outstanding management team; and the ability to completely satisfy the demands of branded customers and purchasers in terms of the criteria of quality, price, research and development, service, lead time, human rights, environmental protection etc.

(2) Market future supply and demand outlook -- garment industry: Garment industry is characterized by its labor-intensive industry, and the factory establishment cost and capital technology level are relatively low. In recent years, due to the continuous increase of the wage in Taiwan, the basic employee labor supply is clearly insufficient such that garment manufacturing operation environment is difficult. In addition to the cheap labor cost advantages in China and new emerging countries, manufacturers in the industry continue to move out of Taiwan.

Countermeasure and Required Criteria:

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The strategy combinations recommended to be adopted by the garment industry include the three strategies of global market expansion, branding management and local market rooting etc. The required criteria include sound financial standing, outstanding management talents, market keenness and ambition of leaders, equipped with product planning and R&D talents, and the ability to satisfy the basic demands of branded customers in terms of the criteria of quality, price, research and development, service, lead time, human rights, environmental protection etc. completely.

Future growth:

The main products of the company include elastic knitted fabrics and professional/functional clothes. The main raw materials of such fabrics and clothes are natural fiber yarns, man-made fiber yarns and elastic fiber yarns. Since the petrochemical industry in Taiwan is mature, there is no concern on the semi-finished petroleum raw materials. With the complete industry structure, the production capacity for fibers and processed yarns is ranked high worldwide. As a result, the raw materials can be obtained relatively easily, the source of supply is abundant and the quality is also stable. Regarding elastic fibers, Eclat mainly uses the elastic fibers of “Lycra” produced by Invista, and such elastic fiber is at the leading position in the industry. In terms of the market demand, all developed and emerging countries worldwide are gradually focusing on recreation lifestyles, and the outdoor activity time generally increases. This is particularly so in developed countries in Europe and America, which place great emphasis on health and recreational lifestyles. So much so that the demand for recreation, functional and healthy wear is being driven to increase, and the scale of relevant market is expanding significantly. Knitted fabric of the characteristics of small-volume with large-variety have earned great recognition from professional designers such that knitted fabric is used as the material for high-end fashion wear and is of great potential in fashion trend development. The future outlook of the elastic fabric of the company demonstrates great market potential.

1. Competitive niche and favorable, unfavorable factors in future development outlook and countermeasures: Competitive niche:

The main products of the company include circular elastic

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knitted fabric and garment manufacturing thereof, which utilizes elastic yarn and conventional synthetic fiber and spun mixed knitting as well as special post-processing fabric treatment technology. The company is active in the research and development of trendy, sporty, recreational, eco-friendly, health and multi-functional fabric in conjunction of trendy style designs. This allows the company’s fabrics to be widely applied to diverse product series of sportswear, recreation wear, underwear and pajamas, yoga wear etc., for sales to all well-known brands, department stores and major retailers worldwide.

Main competitive advantages:

• 1) Provide excellent brand reputation to customers, establish reliable partnership.

• 2) Own factory with complete vertical integration (from knitting→dyeing→setting→garment) as a key in earning customer trust.

• 3) Production reaches the economies of scale, equipped with greater price bargain power in raw material purchase, along with the utilization of mature Synthetic fiber industry in Taiwan in order to obtain quality raw materials at low price.

• 4) Technology integration with upstream vendors in order to reduce production errors, improve quality and increase product competitiveness.

• 5) Product innovation ability and high added value, excellent and stable production quality, equipped with relatively greater competitiveness; strong ability in global logistics management, capable of achieving short fast delivery. Local offices established in New York, Los Angeles and Hong Kong, capable of satisfying the all-round service demands of customers from raw materials to finished products.

• 6) The operation management level of the company is committed to the sustainable operation.

Favorable factors to business development:

A.Stable raw material source:

• (a) Synthetic fiber: In recent years, with the rapid development of the petrochemical industry in Taiwan, the production capacity of the downstream man-made fibers, processed yarns are driven to expand, and the production capacity of polyester fibers is

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also ranked top 4th worldwide. For knitted fabric, synthetic fiber can be obtained easily and the supply source is stable while the price of raw material is also lower than other competitors in, such as Japan and the US.

• (b) Spun: Under the impact of global climate change, the annual production quantity and price of natural fibers also fluctuate. To ensure the stable raw material supply source, the company engages in long-term cooperation with well-known suppliers, such as: Tai Yuen Textile and Far Eastern New Century, in order to ensure the stable source of yarns such that the Company is able to cooperate with the production progress and to arrange the lead time.

• (c) Elastic fiber yarns: The elastic fiber yarns used by the company mainly refer to the elastic fiber yarn of “Lycra” manufactured by Invista. In addition, the company signs contracts with suppliers for planned procurement such that the expected procurement quantity is arranged according to the annual order demand on a quarterly basis, and reasonable price are negotiated in order to ensure the quantity and quality of elastic yarns of the company.

• B. Leading technology:

• (a) Knitting technology: Since elastic knitted fabrics are made from elastic yarns and general non-elastic yarns, to blend the two types of elastic and non-elastic yarns and to allow them to interlace with each other firmly without interferences while maintaining the original characteristics of synthetic fiber and spun, it is clear that requirements for the technology level are high. Since 1989, the company has cooperated with DuPont and accepted the technical guidance of DuPont engineers. Presently, the technology of the company is mature and is at the leading position in the industry.

• (b) Dyeing technology: Since elastic fibers behave in a way similar to rubber bands, and dyeing on rubber band is known to be difficult. This is mainly due to the reason that during the dyeing process at high temperature, the elastic yarn can be in a molten state or generate ripples. Through continuous research and development as well as testing for different high/low dyeing solution temperatures, curve graphs, the company has been able to achieve most optimal control on such process.

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C. Strong R&D department:

The company established the R&D Department in 1993, and it is presently under the Planning Department, which is in charge of the research and development of new fabrics. This includes knitting, dyeing and post-processing treatment technologies. In addition, the company also establishes the Test Center for testing various qualification standards of textiles, such as: shrinkage rate test, color fastness test, physical test etc. The Planning and R&D Departments irregularly participate in the international textile trade shows, including the ISPO in Germany, Outdoor Retailer in US, PV in France etc., in order to provide fabrics successfully developed by and garment styles from Eclat on its own for buyer's selection, creating excellent brand image and reputation for the company as well as establishing reliable partnership with customers or branded manufacturers.

D. Global market expansion:

Except for the Taiwanese Headquarter, the company also established offices in Hong Kong to promote business as well as to obtain local consumer market information, to collect trend information and to receive orders and service customers locally. In addition, in all major consumer markets worldwide, the company has agents in a long-term relationship with the company in order to represent the company in the business and sales of fabrics and garments.

Regarding the production site, for the production of knitted fabrics, due to the factors that the production technology requirement is high, investment cost is large, and customer designates for products made in Taiwan, Eclat has established knitting, setting, digital printing and quality inspection packaging factories in Hsichou, Miaoli, and dyeing factory in Dayuan, Taoyuan. In terms of overseas factories, the company’s Vietnam dyeing factory has started its operation officially in 2009 as party of the production team of the company. Regarding the production of garments, the company has established Eclat Textile Co., Ltd(Vietnam), Colltex Garment Mfy Co., Ltd.( Vietnam), E-Top (Vietnam) Co., Ltd, Tai-Yuan Garments Co., Ltd. and Eclat Textile (Cambodia) Co., Ltd. etc. In addition, the company has also established strategic alliance OEM factories in various areas of Lesotho of South Africa, Vietnam and China. Presently, the company production site layout is as shown in the table below:

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Operating Offices	Taiwan Taipei Headquarter, Hong Kong Office	Taiwan Taipei Headquarter, Hong Kong Office
Production Sites	Fabrics	Garments
	Hsichou knitting, setting, digital printing and packaging factory, Tashan knitting factory, Dayuan dyeing factory, Eclat Fabrics (Vietnam) Co., Ltd.	Eclat Textile Co., Ltd(Vietnam), Colltex Garment Mfy Co., Ltd.( VN), E-Top (Vietnam) Co., Ltd., Tai-Yuan Garments Co., Ltd., Eclat Textile (Cambodia) Co., Ltd. and strategic alliance OEM factories in Lesotho, Vietnam and China etc.

Unfavorable factors affecting future development and countermeasures:

• A. Unfavorable factors:

• a. For the textile market, the price competition is more intense due to the low price products from Southeast Asia countries, such as Vietnam, India, Pakistan, and countries of Korea and China etc.

• b. After the global market expansion, the localization ratio of the management team is insufficient, causing difficulty in the management thereof.

• c. Labor cost is high, and OEM profit is low.

• d. Formation of regional economy, leading to greater trade protection.

• B. Countermeasures:

• a. Production innovation:

• Innovation in production design:

• R&D personnel shall obtain the trend information at all times, perform self-development or collect latest products, provide such products to sales personnel.

• Innovation in marketing and sales: Sales personnel shall provide services based on the customer-oriented approach, and cooperate closely with the R&D personnel in order to jointly design and provide products demanded by the customers, or even generate additional customer demand.

• Innovation in administrative operation:

• Introduction of e-system; through the establishment of ERP, provide the production and sales enterprise mode that is of fast

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innovation, fast R&D, fast production and fast sales to customers and suppliers.

Through the creation of corporate innovation culture and global logistics electronic assistance, provide value-added products to customers in order to increase the competitiveness of the company.

• b. Marketing and sales strategy:

• Short-term:

• Prompt response, close to market, enhance the cooperation with customers, establish close relationship with customers as partners, and increase the efficiency of the supply chain. In addition, when customers choose to cooperate with suppliers with advanced operation procedures and systems in the future, the company is able to reduce the risk, lower the production development cost and improve the production capability.

• Medium-term:

Based on the concern of a more efficient supply chain management, European and American customers will shift their procurement subjects to suppliers with the vertical integration ability and capable of providing the complete service from raw material to finished product or even design service. Accordingly, the company will exploit its advantage in vertical integration as a supplier in order to provide a complete solution and service in ODM model to customers such that the relationship with customers is strengthened further.

Establish “Brand Partner”. Based on the consideration of the trend that large scale of international buyers and brand retailers tend to become greater in scale, the primary markets will be gradually dominated by several large brand companies. Regardless of whether it is for the agency of foreign brands, seeking agency for new brands, obtaining licensed production from foreign well-known brand manufacturers, the company will provide a one-stop shop for all model of production service from finished fabrics to finished garments in order to satisfy the demands of customers completely.

1. Long-term:

2. Establish excellent branding reputation as an ODM supplier, and improve product added values. Actively establish the global logistics channel mapping, spread out the production locations, and choose a production region with competitiveness for

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manufacturing. Regarding strategy, Taiwan serves as the operation center in charge of design, research and development, order receiving, management of order distribution and customer service in Taiwan. In addition, in view of the global regional economy development, the company will establish domestic factories for production for countries with greater tariff advantages in order to increase competitiveness.

5.2.2 Production Procedures of Main Products:

1. Key purpose of main products

The main products of the company include fabrics for garments that are made from man-made fibers, natural fibers and blended yarn fibers; among which, circular knitting elastic knitted fabric is a key product of the company. The fabrics manufactured by the company are widely used in recreation wear, sportswear and yoga wear etc. following the latest fashion trend in the market.

1. Production process of main products

2. (1) Yarn-dye:

==> picture [430 x 146] intentionally omitted <==

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

Raw yarn
Quality
Defining Color Knitting Setting
Assurance
Dyeing Inspection Inspection Finished fabric Packaging
----- End of picture text -----

(2) Piece-dye:

==> picture [430 x 146] intentionally omitted <==

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

Raw yarn
Quality
Knitting Defining Color Setting
Assurance
Inspection Fabric dyeing Inspection Finished fabric Packaging
----- End of picture text -----

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(3) Post-processing:

According to different types of fabrics, the processes of printing, embossing, folding, burn-out printing, fleece finishing, brushing, shearing.

• (4) Finished garment:

==> picture [442 x 121] intentionally omitted <==

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

Finished fabric Fabric relaxing
Quality
Cutting Garment
Assurance
Pattern making Marker
Sewing Ironing Packaging
----- End of picture text -----

5.2.3 Supply Status of Main Materials:

Main industrial Division	Product Name		Main raw material	Main raw material
		Raw material name	Main supply source	Supply status
Fabric Division	Knitted fabric	Grey yarn	Taiwan and Vietnam	Stable
		Elastic yarn	Singapore, Vietnam and Taiwan	Stable
Garment Division	Garment	Finished fabric	Self-manufactured and Taiwan,Vietnam	Stable

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• 5.2.4 Name of customers accounted for more than 10% of total purchase/sales amount of the company in the most recent two years or in any year and the purchase/sales amount and ratio thereof:

• Name of customers accounted for more than 10% of total sales amount of the company in the most recent two years and its sales amount and ratio:

Unit: NTD 1,000

									Unit: NTD 1,000	Unit: NTD 1,000	Unit: NTD 1,000	Unit: NTD 1,000
		2018				2019			Up to the last quarter of 2020
Item	Company Name	Amount	Percent	Relation with Issuer	Company Name	Amount	Percent	Relation with Issuer	Company Name	Amount	Percent	Relation with Issuer
1	A	3,435,550	12.46	None	A	4,289,609	15.25	None	A	1,216,979	20.25	None
2	-	-	-	-	-	-	-	-	-	-	-	-
3	Others	24,142,659	87.54		Others	23,835,527	84.75		Others	4,793,948	79.25
	Net sales amount	27,578,209	100.00		Net sales amount	28,125,136	100.00		Net sales amount	6,010,927	100.00

1. Name of suppliers accounted for more than 10% of total purchase amount of the company in the most recent two years and its purchase amount and ratio:

Unit: NTD 1,000

									Unit: NTD 1,000	Unit: NTD 1,000	Unit: NTD 1,000	Unit: NTD 1,000
		2018				2019			Up to the last quarter of 2020
Item	Company Name	Amount	Percent	Relation with Issuer	Company Name	Amount	Percent	Relation with Issuer	Company Name	Amount	Percent	Relation with Issuer
1	-	-	-	-	A	1,131,952	10.36	-	-	-	-	-
	Others	10,602,523	100.00	-	Others	9,793, 415	89.64	-	Others	2,533,077	100.00	-
	Net purchase amount	10,602,523	100.00	-	Net purchase amount	10,925, 367	100.00	-	Net purchase amount	2,533,077	100.00	-

The main raw materials of the knitted fabrics manufactured by the Company are synthetic, spun and elastic fibers. For elastic fibers, the Company uses the “Lycra” manufactured by the Lycra Company, and spandex manufactured by Formosa Asahi and Hyosung. For synthetic fibers, the main suppliers include Toung Loong, Zig Sheng, Nan Ya, Italon and Shin Kong. For staple fibers, they are from well-known manufacturers, such as Tai Yuen etc., are suppliers in long-term relationship with the Company. The Company has established long-term relationship with the suppliers, and the supply sources are stable such that there is no concern in the situation of the shortage, interrupt or overly concentrated supply.

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5.2.5 Production in the Last Two Years

Unit: NTD 1,000

						Unit:	NTD 1,000
Product	Year		2018			2019
		Capacity	Quantity	Amount	Capacity	Quantity	Amount
Knitted fabric	Tons	21,057	18,979	8,658,810	21,616	18,771	8,749,654
Garment	Dozen	-	4,494,114	13,019,589	-	4,441,382	12,772,660

5.2.6 Sales quantity table for the most recent two years

Unit: NTD 1,000

								Unit: NTD 1,000	Unit: NTD 1,000
Product	Year	2018						2019
		Domestic Sales		Export Sales		Domestic Sales		Export Sales
		Quantity	Value	Quantity	Value	Quantity	Value	Quantity	Value
Knitted fabric	Tons	1,404	302,145	15,220	7,858,635	1,151	186,430	14,491	8,387,062
Garment	Dozen	-	-	7,765,789	19,417,429	-	-	7,678,204	19,551,644

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5.3 Human Resources:

		Year	2018	2019	Up to 2020.3.31 of the currentyear
Number of employees		Direct labor	12,258	11,913	12,004
		Indirect labor	2,425	2,359	2,372
		Companystaff	1,939	2,098	2,070
		Total	16,622	16,370	16,446
		Average age	30.37	30.75	31.03
Average service year			3.8	4.18	4.79
Education	PhD		0	0	0
	Masters		1%	1%	1%
	Bachelor’s Degree		12%	12%	12%
	Senior High School		24%	32%	31%
	Below Senior High		63%	55%	56%
	~~S h~~ ~~l~~

5.4 Environmental Protection Expenditure

1. According to the laws and regulations, regarding the application of pollution facility installation permit license or pollution emission permit license or required payment for pollution control fees or requirement on the installation of dedicated unit/personnel for environmental protection, please refer to the following description on the application, payment or establishment status thereof:

2. (1) Waste water, air emission, discarded fabrics and residual yarns possibly generated during the production process of textiles of the company. Regarding the waste water and air emission treatment, the company has installed the waste water and air emission treatment equipment in the factories of the company. For the waste treatment, presently the company follows the waste classification requirements, and performs the preliminary collection inside the factories, followed by handling such wastes to professional environmental service contractors approved by the Environmental Protection Administration for handling.

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(2) According to the laws and regulations, relevant permit licenses obtained by the company are as follows:

Factory name	Application unit	Permit license type	Relevant laws	Certificate No.	Valid period
Miao-li Plant	Miaoli County Government	Stationary pollution source Installation permit license	Air Pollution Control Act	Miao-Fu-Huan-She Certificate No. 0607-00	2016.04.01 -2021.03.31
Miao-li Plant	Miaoli County Government	Stationary pollution source Operational permit license	Air Pollution Control Act	Miao-Fu-Huan-Tsao Certificate No. K0338-07	2015.02.13 -2020.02.12
Miao-li Plant	Miaoli County Government	Stationary pollution source Operational permit license	Air Pollution Control Act	Miao-Fu-Huan-Tsao Certificate No. K0922-01	2018.02.07 -2023.02.06
Miao-li Plant	Miaoli County Government	Water pollution control permit license	Water Pollution Control Act	Miao-Hsien-Huan-Pai Permit No. 00543-05	2019.04.01 -2023.03.19
Miao-li Plant	Miaoli County Government	Waste disposal plan	Waste Disposal Act	Fu-Huan-Certificate No. 1080000766	2019.01.07 -2024.01.07
Hsichou Plant	Miaoli County Government	Water pollution control permit license	Water Pollution Control Act	Miao-Hsien-Huan-Pai Permit No. 00031-10	2018.02.07 -2023.05.31
Hsichou Plant	Miaoli County Government	Stationary pollution source Operational permit license	Air Pollution Control Act	Miao-Fu-Huan-Tsao Certificate No. K0308-06	2018.11.29 -2023.11.28
Hsichou Plant	Miaoli County Government	Stationary pollution source Operational permit license	Air Pollution Control Act	Miao-Fu-Huan-Tsao Certificate No. K0309-07	2018.05.24 -2023.05.23
Hsichou Plant	Miaoli County Government	Stationary pollution source Operational permit license	Air Pollution Control Act	Miao-Fu-Huan-Tsao- Certificate No. K0878-04	2018.12.02 -2023.12.01
Hsichou Plant	Miaoli County Government	Stationary pollution source Operational permit license	Air Pollution Control Act	Miao-Fu-Huan-Tsao- Certificate No. K0984-00	2020.03.06 -2025.03.05
Hsichou Plant	Miaoli County Government	Waste disposal plan	Waste Disposal Act	Fu-Huan-Certificate No. 1080000766	2020.02.12 -2025.02.12
Dayuan Plant	Taoyuan City Government	Stationary pollution source Operational permit license	Air Pollution Control Act	Tsao Certificate No. H2978-07	2018.01.10 -2023.01.09
Dayuan Plant	Taoyuan City Government	Stationary pollution source Operational permit license	Air Pollution Control Act	Tsao Certificate No. H5175-04	2018.01.28 -2023.01.27
Dayuan Plant	Taoyuan City Government	Water pollution control permit license	Water Pollution Control Act	Tao-Shi-Huan-Pai Permit No. H3241-06	2019.06.13 -2021.10.05

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Factory name	Application unit	Permit license type	Relevant laws	Certificate No.	Valid period
Dayuan Plant	Taoyuan City Government	Waste disposal plan	Waste Disposal Act	Fu-Huan-Certificate No. 100003507	2015.08.19 -2022.12.31
E-Top (Vietnam) Co., Ltd	Resource Environmental Protection Agency	Environmental Protection Assessment Report Decision	Environmental Protection Act (55 / 2014 / QH13)	128 / QD-BQL-MT	Permanent
E-Top (Vietnam) Co., Ltd	Resource Environmental Protection Agency	Hazardous Waste Gas Source Registration Log	Regulations Governing Hazardous Wastes 12 / 2011 / TTBTNMT	QLCTNH: 77.000742.T	Permanent
Eclat Textile Co., Ltd(Vietnam )	Resource Environmental Protection Agency	Environmental Protection Assessment Report Decision	Environmental Protection Act (55 / 2014 / QH13)	3905 / QD-UBND	Permanent
Eclat Textile Co., Ltd(Vietnam )	Resource Environmental Protection Agency	Hazardous Waste Gas Source Registration Log	Regulations Governing Hazardous Wastes 12 / 2011 / TTBTNMT	QLCTNH: 75.001016.T	Permanent
Eclat Fabrics Co., Ltd (Vietnam)	Resource Environmental Protection Agency	Hazardous Waste Gas Source Registration Log	Regulations Governing Hazardous Wastes 12 / 2011 / TTBTNMT	QLCTNH: 77.000715.T	Permanent
Eclat Fabrics Co., Ltd (Vietnam)	Resource Environmental Protection Agency	Environmental Protection Assessment Report Decision	Environmental Protection Act (55 / 2014 / QH13)	394 / QD-STNMT	Permanent
Eclat Fabrics Co., Ltd (Vietnam)	Industrial Zone Management Bureau	Environmental Protection Assessment Report and Environmental Protection Construction Acceptance Confirmation Letter	Environmental Protection Act (55 / 2014 / QH13)	421 / XN-BQL-MT	Permanent
Eclat Fabrics Co., Ltd (Vietnam)	Provincial Government	Waste water discharge license	Environmental Protection Act (55 / 2014 / QH13)	77 / GP-UBND	2020/12/02
Tai-Yuan Garments Co., Ltd.	Resource Environmental Protection Agency	Environmental Protection Assessment Report Decision	Environmental Protection Act (29 / 2011 / ND-CP)	H3 / QD-BQLKKT	Permanent
Colltex Garment Mfy Co., Ltd.(VN)	Resource Environmental Protection Agency	Environmental Protection Assessment Report Decision	Environmental Protection Act (29 / 2011 / ND-CP)	1184 / QD-UBND	Permanent
Colltex Garment Mfy Co., Ltd.(VN)	Resource Environmental Protection Agency	Hazardous Waste Gas Source Registration Log	Regulations Governing Hazardous Wastes 12 / 2011 / TTBTNMT	QLCTNH: 72.000174.T	Permanent

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Factory name	Application unit	Permit license type	Relevant laws	Certificate No.	Valid period
Colltex Garment Mfy Co., Ltd.(VN)	Resource Environmental Protection Agency	Environmental Protection Assessment ReportDecision	Environmental Protection Act (18 / 2015 / ND-CP)	1037 / QD-UBND	Permanent
Eclat Textile (Cambodia) Co., Ltd.	Bureau of Environment	Environmental Protection Assessment Report Decision	Labor’s Act 1269 / 36 / 19961224	Bureau of Environment Certificate SORCHONO160	Permanent

• (3) Payment of pollution control fees according to the laws and regulations.

• (4) Environmental protection dedicated personnel required to be staffed according to the scale, manufacturing process characteristics and regulatory requirements for each production factory:

Factory name	Name	Dedicated Technology	Qualification Certification No.
Miao-li Plant	Mei-Hua Chen	Class A Waste water treatment dedicated person	Environmental Protection Administration, Executive Yuan (2001) EPA-Training Certificate No.
Miao-li Plant	Li-Guan Liu	Class B Waste Treatment Technician	Environmental Protection Administration, Executive Yuan (2005) EPA-Training Certificate No.
Hsichou Plant	Pao-Kuei Wang	Class B Waste Treatment Technician	(2003) EPA-Training Certificate No. HB090773
Hsichou Plant	Yuan-Ming Chung	Class B Waste water treatment dedicated	(2000) EPA-Training Certificate No. GB120347
Dayuan Plant	Kuan-En Lin	Class A Waste water treatment dedicated	(2011) EPA-Training Certificate No. GA150559
Dayuan Plant	Yu-Hui Peng	Class A Waste Professional Engineer	(2016) EPA-Training Certificate No. HA310394
Eclat Fabrics Co., Ltd (Vietnam)	Hu Thi đào	Environmental protection technician	Environmental Technology University No. 00113573

1. Investment in main equipment for environmental control pollution and its purpose and possible benefits:

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December 31, 2019; Unit: NTD 1,000

Equipment name	Quantity	Acquisition date	Investment and modification cost	Nondepreciating balance amount	Purpose and expected possible benefit
Miao-li Plant waste water treatment construction	1 set	1992.05.01	14,250	0	Treatment of waste water to comply with the discharge standard
Hsichou Plant electrostatic precipitator	1 set	1998.10.31	8,781	0	Treatment of waste gas to comply with the emission standard
Hsichou Plant electrostatic precipitator	1 set	2012.03.14	6,705	641	Treatment of waste gas to comply with the emission standard
Hsichou Plant setting electrostatic precipitator	1 set	2015.11.09	9,834	3,044	Treatment of waste gas to comply with the emission standard
Hsichou Plant waste water treatment construction	1 set	1999.11.16	9,910	587	Treatment of waste water to comply with the discharge standard
Hsichou Digital Print Plant electrostatic precipitator	1 set	2019.08.01	5,750	5,351	Treatment of waste gas to comply with the emission standard
Dayuan Plant setting electrostatic precipitator	1 set	2010.10.01	6,816	4	Treatment of waste gas to comply with the emission standard
Dayuan Plant waste water treatment system improvement construction	1 set	2013.10.28	22,202	482	Treatment of waste water to comply with the discharge standard
Dayuan Plant waste water treatment equipment Phase 2 construction	1 set	2014.07.01	10,733	959	Treatment of waste water to comply with the discharge standard
Eclat Textile Co., Ltd (Vietnam) living sewage treatment system	1 set	2015.12.28	4,726	945	Treatment of waste water to comply with the discharge standard

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Equipment name	Quantity	Acquisition date	Investment and modification cost	Nondepreciating balance amount	Purpose and expected possible benefit
Eclat Fabrics Co., Ltd (Vietnam) waste water system equipment	1 set	2015.01.01	28,665	19,295	Treatment of waste water to comply with the discharge standard (Class A standard)
Eclat Fabrics Co., Ltd (Vietnam) setting electrostatic precipitator	1 set	2009.06.01	9,245	0	Treatment of waste gas to comply with the emission standard
Eclat Fabrics Co., Ltd (Vietnam) setting electrostatic precipitator	1 set	2018.12.06	17,758	15,834	Treatment of waste gas to comply with the emission standard
Tai-Yuan Garments Co., Ltd. living sewage treatment system	1 set	2015.03.26	2,409	1,944	Treatment of waste water to comply with the discharge standard
Colltex Garment Mfy Co., Ltd.(VN) living sewage treatment system	1 set	2016.03.16	2,471	535	Treatment of waste water to comply with the discharge standard
Colltex Garment Mfy Co., Ltd.(VN) living sewage treatment system	1 set	2018.04.03	2,354	1,569	Treatment of waste water to comply with the discharge standard
E-TOP (Vietnam) Co., Ltd. living sewage treatment system	1 set	2018.09.05	8,786	7,866	Treatment of waste water to comply with the discharge standard

1. History of environment protection improvement of the company in the recent years to the printing date of the annual report:

Factory	Project	2018	2019
Hsichou Plant	Replacement of lighting into high power LED lightingfixtures	Saving electricity of 101,280 kWh	Saving electricity of 23,371 kWh
Miao-li Plant	Sludge drying and weight reduction operation	Reduction amount of 597 tons	Reduction amount of 597 tons
Dayuan Plant	Sludge drying and weight reduction operation	Reduction amount of 1,203 tons	Reduction amount of 1,166 tons

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Factory	Project	2018	2019
Dayuan Plant	Team condensing water recyclingand reuse	Saving water of 67,944 tons	Saving water of 89,245 tons
Eclat Fabrics Co., Ltd (Vietnam)	Replacement of lighting into high power LED lightingfixtures	-	Saving electricity of 158,000 kWh
Eclat Fabrics Co., Ltd (Vietnam)	Sludge drying and weight reduction operation	-	Reduction amount of 1,305 tons
Eclat Fabrics Co., Ltd (Vietnam)	Blower efficiency improvement plan	-	Saving electricity of 73,300 kWh

1. Total amount of losses (including indemnification) and penalties of the company in recent years and up to the printing of the annual report due to environmental pollution and future countermeasures as well as possible expenses: According to notification no. 1080042318 issued by Environmental Protection Administration Executive Yuan on September 16, 2019, since the discharged wastewater that Miaoli mill of the company released did not meet the standard of drainage water standard, which violated Article 7, Paragraph 1 of the Water Pollution Crime Law ; as a result, Miaoli mill was disciplined by fine of NTD$120,000 and was asked to improve by October 15, 2019. The company had finished the improvement on October 7, 2019 and related competent authority evaluated the effectiveness at the mill on October 15, 2019.

5.5 Labor Relations

5.5.1 Employee Welfare

The company values humanity and people caring the most, as one of the operation principles. Caring employees both physically and mentally and providing them sufficient hygiene factors, the company often initiates and sponsors employee welfare relevant programs to enable employees to concentrate at work with their best efforts. Moreover, an Employee Welfare Committee is established to plan and execute welfare related activities for all employees. The current employee welfare programs mainly consists of as follows:

1. Regular benefits:

National health insurance, labor insurance, group insurance, traveling safety insurance, appropriation of pension reserve, appropriation of overdue wage repayment fund and appropriation of occupational disaster insurance.

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2. Special benefits:

Happy day (Getting off work one hour earlier) once a week, health examination, commute vehicle, overseas employee dormitory (application based), meal and dining subsidy, library, fitness center, yoga class, nursery room, rent and education allowance for overseas employee

3. Employee Welfare Committee activities:

Monthly birthday gift giving, employees and department gathering lunch/dinner twice a year, company trips, and welfare fund subsidy for marriage and funeral events, holiday benefits.

5.5.2 Employee Development and Training Programs:

The Company provides training courses to employees timely, including the new employee orientation, on-the-job training (OJT), management skills training and other advanced trainings. In addition, the company also provides customized training on professional knowledge and skills to employees of different job functions.

In 2019, the trainings (including internal and external trainings) organized by the company have a total of 55,598 personnel participating in such trainings; approximately 230,686 training hours; the annual training expense is approximately NTD 1,529 thousand.

5.5.3 Retirement Program and Status quo:

The Company handles the employee retirement program in accordance with relevant laws of competent authority, and the retirement program covers all officially employed staff. According to the requirements of the regulations, the “Labor Standards Act” is applicable to the payment of employee pension fund, and the calculation of the pension is based on the base figure obtained from the service period and the average of monthly salary of six months before the retirement. Regarding the aforementioned number of bases, two bases are given to each full year of service rendered for the service of the first 15 years, and starting from the sixteenth year, one base is given to each full year of service rendered. Under such retirement regulations, the full amount of the pension payment is completely borne by the company.

Since the implementation of the “Labor Pension Act” (hereinafter referred to as the “new system”) on July 1, 2005, employees may choose to apply the “Labor Standards Act” or choose to use the new system and reserve the service years before the application of the Act. For employees with the applicability of the original “Labor Standards Act” choose to the use of the new system for the service year or employees on board at work

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after the implementation of the new system, then their service years are changed to the defined contribution plan, and the payment of the pension is handled by the company through the appropriation of no less than 6% of the monthly wage on a monthly basis for saving into each worker's individual pension account.

• 5.5.4Important Agreements between Labor and Employer:

With an approval of the board of directors in this fiscal year, under the circumstance that the company continue to grow and make profit, all employees are entitled a salary raise of 2.5% to 5% in average to keep up with inflation, in addition to the distribution of individual performance bonus.

• 5.5.5Preservation mechanism of welfare and benefits of employees People managers of each department not only have effective

• communication with their staff through periodic business meetings, production and sales meetings, as well as individual performance review occasions, but through a yearly employee opinion survey, in which both parties have transparent two-way communication and confirmation about improvement directions. All of such activities make a harmonic labor relation.

Besides, the company sets up a suggestion box and various grievance channels, served by the designated staff to give instant response and make sure no infringement on employees’ rights.

• 5.5.6 Up to date, there have been no labor disputes in the company; therefore, the company has not suffered loss due to labor dispute. Under the harmonic labor relations, the possibility of loss due to labor dispute in the future is slim.

5.6 Important contracts: None.

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VI. Financial Overview

6.1 Five-Year Financial Summary

• (1) Condensed Balance Sheet and Comprehensive Income Statement - International Financial Reporting Standards (IFRS) – Consolidated

Condensed Balance sheet

		Condensed Balance sheet	Condensed Balance sheet	Condensed Balance sheet	Condensed Balance sheet	Condensed Balance sheet	Condensed Balance sheet
		Unit : NTD1,000
Year Item		Financial information for the most recent 5 years (Note 1)					Year-to-date Financial information on March 31, 2020 (Note 2)
		2015	2016	2017	2018	2019
Current assets		10,671,694	12,953,047	9,554,854	11,393,505	12,148,471	12,631,117
Property, plant and equipment		6,591,047	6,416,816	9,916,705	10,037,149	10,600,139	10,361,687
Intangible assets		22,084	37,889	24,969	20,547	18,619	25,103
Other assets		397,343	500,314	569,886	689,681	552,191	863,806
Total assets		17,682,168	19,908,066	20,066,414	22,140,882	23,319,420	23,881,713
Current liabilities	Before distribution	5,494,197	4,605,016	4,856,740	5,194,388	5,106,826	4,929,527
	After distribution	8,318,564	7,429,383	7,463,227	8,212,426	Undistributed	Undistributed
Non-current liabilities		413,642	206,850	137,428	15,464	88,842	95,344
Total Liabilities	Before distribution	5,907,839	4,811,866	4,994,168	5,209,852	5,195,668	5,024,871
	After distribution	8,732,206	7,636,233	7,600,655	8,227,890	Undistributed	Undistributed
Equity attributable to Shareholders of the parent		11,774,329	15,096,200	15,072,246	16,931,030	18,123,752	18,856,842
Share capital		2,609,874	2,689,874	2,743,671	2,743,671	2,743,671	2,743,671
Capital surplus		1,289,437	3,769,437	3,769,437	3,769,547	3,769,547	3,769,437
Retained Earnings	Before distribution	7,662,568	8,482,497	8,663,238	10,424,674	11,699,576	12,396,188
	After distribution	4,838,201	5,604,333	6,056,751	7,406,636	Undistributed	Undistributed
Other equity		212,450	154,392	(104,100)	(6,862)	(89,042)	(52,564)
Treasury shares		0	0	0	0	0	0
Non-controlling interests		0	0	0	0	0	0
Total Equity	Before distribution	11,774,329	15,096,200	15,072,246	16,931,030	18,123,752	18,856,842
	After distribution	8,949,962	12,271,833	12,465,759	13,912,992	Undistributed	Undistributed

• If the Company has prepared individual financial report, the Individual Condensed Balance Sheet and Comprehensive Income Statement for the Most Recent Five Years shall be prepared.

Note 1: Please refer to the financial information adopting the financial accounting standards of the R.O.C.

Note 2: 2019 1st quarter financial information had been reviewed by the independent auditor.

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Unit : NTD1,000

Condensed Comprehensive Income Statement

Year Item	Financial information for the most recent 5 years (Note 1)	Financial information for the most recent 5 years (Note 1)	Financial information for the most recent 5 years (Note 1)	Financial information for the most recent 5 years (Note 1)	Financial information for the most recent 5 years (Note 1)	Year-to-date Financial information on March 31, 2020 (Note 2)
	2015	2016	2017	2018	2019
Operating Revenue	25,520,749	24,525,694	24,231,970	27,578,209	28,125,136	6,010,927
Gross profit	7,153,553	7,009,916	6,666,213	7,947,510	8,114,159	1,557,644
Operating Income (Loss)	4,838,471	4,701,573	4,198,922	5,305,282	5,470,784	922,628
Non-operating income and expenses	282,564	(50,921)	(436,304)	167,867	(48,784)	(30,421)
Profit before tax	5,121,035	4,650,652	3,762,618	5,473,149	5,422,000	892,207
Continuing operations Net income	4,173,780	3,764,689	3,068,019	4,381,938	4,303,043	697,056
Loss of discontinuing operation	0	(105,172)	(15,964)	(2,184)	(3,794)	(444)
Net income	4,173,780	3,659,517	3,052,055	4,379,754	4,299,249	696,612
Total other comprehensive income (loss) (Net,after tax)	73,558	(73,279)	(251,642)	85,407	(86,440)	36,478
Total comprehensive income	4,247,338	3,586,238	2,800,413	4,465,161	4,212,809	733,090
Net profit attributed to Shareholders of the Parent	4,173,780	3,659,517	3,052,055	4,379,754	4,299,249	696,612
Net profit attributed to non-controlling interests	0	0	0	0	0	0
Total comprehensive income attributed to owners of theparent	4,247,338	3,586,238	2,800,413	4,465,161	4,212,809	733,090
Comprehensive income attributable to non-controlling shareholders	0	0	0	0	0	0
Earnings Per Share	15.99	13.40	11.12	15.96	15.67	2.54

• If the Company has prepared individual financial report, the Individual Condensed Balance Sheet and Comprehensive Income Statement for the Most Recent Five Years shall be prepared.

Note 1: Please refer to the financial information adopting the financial accounting standards of the R.O.C. Note 2: 2019 1st quarter financial information has been reviewed by the independent auditor.

Note 3: Earnings per share has been calculated based on the issued common shares with the weighted average method. For the increased number of shares due to capitalization from earnings or capital surplus, retroactive adjustment is made for the calculation.

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(2) Condensed Balance Sheet and Comprehensive Income Statement - IFRS - Individual

Condensed Balance sheet

Unit : NTD1,000

Year Item	Year Item	Financial information for the most recent 5 years (Note 1)	Financial information for the most recent 5 years (Note 1)	Financial information for the most recent 5 years (Note 1)	Financial information for the most recent 5 years (Note 1)	Financial information for the most recent 5 years (Note 1)	Year-to-date Financial information on March 31,2020
		2015	2016	2017	2018	2019
Current assets		9,664,748	11,383,151	8,356,609	9,976,078	10,025,838	Not applicable
Investment accounted for using the equitymethod		2,790,302	3,967,051	3,690,579	3,860,948	4,516,119
Property, plant and equipment		2,546,506	2,627,834	6,158,612	6,149,445	6,716,581
Intangible assets		9,081	27,339	15,713	9,104	5,111
Other assets		155,528	74,383	86,947	210,834	161,559
Total assets		15,166,165	18,079,758	18,308,460	20,206,409	21,425,208
Current liabilities	Before distribution	3,068,210	2,808,860	3,107,052	3,265,929	3,261,834
	After distribution	5,892,577	5,633,227	5,713,539	6,283,967	Undistributed
Non-current liabilities		323,626	174,698	129,162	9,450	39,622
Total liabilities	Before distribution	3,391,836	2,983,558	3,236,214	3,275,379	3,301,456
	After distribution	6,216,203	5,807,925	5,842,701	6,293,417	Undistributed
Equity attributable to Shareholders of theparent		Not applicable	Not applicable	Not applicable	Not applicable	Not applicable
Share capital		2,609,874	2,689,874	2,743,671	2,743,671	2,743,671
Capital surplus		1,289,437	3,769,437	3,769,437	3,769,547	3,769,547
Retained Earnings	Before distribution	7,662,568	8,482,497	8,663,238	10,424,674	11,699,576
	After distribution	4,838,201	5,604,333	6,056,751	7,406,636	Undistributed
Other equity		212,450	154,392	(104,100)	(6,862)	(89,042)
Treasuryshares		0	0	0	0	0
Non-controlling interests		Not applicable	Not applicable	Not applicable	Not applicable	Not applicable
Total Equity	Before distribution	11,774,329	15,096,200	15,072,246	16,931,030	18,123,752
	After distribution	8,949,962	12,271,833	12,465,759	13,912,992	Undistributed

• If the Company has prepared individual financial report, the Individual Condensed Balance Sheet and Comprehensive

Income Statement for the Most Recent Five Years shall be prepared.

Note 1: Please refer to the financial information adopting the financial accounting standards of the R.O.C.

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Unit : NTD1,000

Condensed Comprehensive Income Statement

	Condensed Comprehensive Income Statement Unit	Condensed Comprehensive Income Statement Unit	Condensed Comprehensive Income Statement Unit	Condensed Comprehensive Income Statement Unit	Condensed Comprehensive Income Statement Unit	: NTD1,000
Year Item	Financial information for the most recent 5 years (Note 1)					Year-to-date Financial information on March 31, 2020
	2015	2016	2017	2018	2019
Operating Revenue	25,508,528	24,506,137	24,196,831	27,558,271	28,074,641	Not applicable
Gross profit	6,679,228	6,548,812	6,163,277	7,307,776	7,519,402
Operating Income (Loss)	4,804,733	4,630,026	4,134,585	5,188,123	5,333,674
Non-operating income and expenses	301,435	(94,803)	(407,742)	266,326	66,422
Profit before tax	5,106,168	4,535,223	3,726,843	5,454,449	5,400,096
Continuing operations Net income	4,173,780	3,659,517	3,052,055	4,379,754	4,299,249
Loss of discontinuing operations	0	0	0	0	0
Net income (loss)	4,173,780	3,659,517	3,052,055	4,379,754	4,299,249
Total other comprehensive income (loss) (Net, aftertax)	73,558	(73,279)	(251,642)	85,407	(86,440)
Total comprehensive income	4,247,338	3,586,238	2,800,413	4,465,161	4,212,809
Net profit Attributable to Shareholders of the parent
Net profit attributed to non-controlling interests
Total comprehensive income attributed to owners of the parent
Comprehensive income attributable to non-controlling shareholders
Earnings Per Share	11.51	15.99	13.4	11.12

• If the Company has prepared individual financial report, the Individual Condensed Balance Sheet and

Comprehensive Income Statement for the Most Recent Five Years shall be prepared.

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Note 1: Please refer to the financial information adopting the financial accounting standards of the R.O.C. Note 2: Earnings per share has been calculated based on the issued common shares with the weighted average method. For the increased number of shares due to capitalization from earnings or capital surplus, retroactive adjustment is made for the calculation.

(II) Names of auditors and audit opinions for the most recent 5 years

Year	Name of auditors’firm	Name of auditors	Audit opinion
2015	KPMG	Hui-Chih Kou, Hsin-Yi Kuo	Unqualified opinion
2016	KPMG	Hui-Chih Kou, Hsin-I Kuo	Unqualified opinion
2017	KPMG	Hsin-I Kuo, Hsiu-Lan Chen	Unqualified opinion
2018	KPMG	Hsin-I Kuo, Hsiu-Lan Chen	Unqualified opinion
2019	KPMG	Hui-Chih Kou, Hsin-I Kuo	Unqualified opinion

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6.2 Five-Year Financial Analysis:

(I) Financial Analysis - International Financial Reporting Standards (IFRS) - Consolidated

		(IFRS) - Consolidated	(IFRS) - Consolidated	(IFRS) - Consolidated	(IFRS) - Consolidated	(IFRS) - Consolidated
Analysis Item (Note 3)	Year (Note 1)	Financial analysis for the most recent 5 years					As of March 31, 2020 （Note 2）
		2015	2016	2017	2018	2019
Financial structure (%)	Debt to assets ratio	33.41	24.17	24.89	23.53	22.28	21.04
	Long-term capital to property, plant & equipment ratio	184.92	238.48	153.37	168.84	171.81	182.91
Solvency %	Current ratio	194.24	281.28	196.73	219.34	237.89	256.23
	Quick ratio	127.76	206.65	106.08	134.39	153.39	163.92
	Times interest earned	14,219.98	14,604.73	14,109.30	11,912.89	8,698.16	6,867.86
Management capacity	Receivables turnover ratio(times)	8.75	7.97	7.44	7.63	8.22	7.17
	Average collection days	42	46	49	47	44	50
	Inventory turnover ratio(times)	5.51	5.07	4.60	4.58	4.71	4.12
	Payables turnover ratio(times)	12.22	11.27	10.25	11.29	12.01	10.42
	Days sales outstanding	66	72	79	79	77	88
	Property, plant and equipment turnover ratio(times)	3.88	3.77	2.97	2.76	2.73	2.36
	Total asset turnover (times)	1.57	1.30	1.21	1.31	1.24	1.04
Profitability	Return on asset(%)	25.79	19.61	15.38	20.93	19.19	12.29
	Return on equity (%)	39.28	27.24	20.23	27.37	24.53	15.57
	Income before tax to Paid-in Capital ratio (%)	196.22	172.89	137.14	199.48	197.62	32.52
	Net Profit Margin (%)	16.35	14.92	12.60	15.88	15.29	11.59
	Earnings per Share (EPS) (NT$)	15.99	13.40	11.12	15.96	15.67	2.54
Statement of Cash Flows	Cash flow ratio(%)	84.88	93.25	58.60	95.44	114.90	14.02
	Cash flow adequacy ratio(%)	99.29	104.82	77.91	88.79	96.89	91.86

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Analysis Item (Note 3)	Year (Note 1)	Financial analysis for the most recent 5 years	Financial analysis for the most recent 5 years	Financial analysis for the most recent 5 years	Financial analysis for the most recent 5 years	Financial analysis for the most recent 5 years	As of March 31, 2020 （Note 2）
		2015	2016	2017	2018	2019
	Cash reinvestment ratio(%)	16.40	7.62	0.11	10.62	12.22	2.83
Leverage	Operating leverage	1.84	1.90	1.83	1.72	1.76	2.12
	Financial leverage	1.01	1.01	1.01	1.01	1.01	1.01
Explanations for the variations of financial ratios for the last 2 years. (If the variation of increase/decrease is less than 20%, analysis may be exempted.) * Explanations for the variations of financial ratios reaching 20% for the last 2 years: 1. The main reason for decreasing of times interest earned is as follows : 1.1 The amount of accounts receivable factor increases year by year, introducing to the increase of interest payment. 1.2 Recognizing interest expense of financial leases since the IFRS16 be adopted in 2019FY. 2. Cash flow ratio increased due to excellent overall profit status, and the cash flow from operating activities increased.

＊ If the Company has prepared individual financial report, the Individual Financial Ratio Analysis of the Company shall be further prepared.

Note 1: The fiscal year not yet audited by the independent auditors shall be indicated.

Note 2: Publicly listed company or companies with stocks traded at securities firm business places shall also incorporate the financial information up to the quarter before the printing date of the annual report for that year into analysis.

Note 3: Calculation formulas as follows:

1. Financial structure

2. (1) Debt to asset ratio = Total liabilities / Total assets

3. (2) Long-term capital to property, plant & equipment ratio = (Total equity + non-current liabilities) / net property, plant & equipment.

4. Solvency

5. (1) Current ratio = current assets / current liabilities.

6. (2) Quick ratio = (current assets-inventory-prepaid expenses) / current liabilities.

7. (3) Times interest earned = net profit before interest and tax / interest expenses for the current period.

8. Management capacity

9. (1) Receivables turnover ratio (including account receivables and note receivables from operating activities) = net sales / average receivables balance (including account receivables and note receivables from operating activities).

10. (2) Average collection days = 365 / receivables turnover ratio.

11. (3) Inventory turnover ratio = cost of sales / average inventory.

12. (4) Payables turnover ratio (including account payables and note payables from operating

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activities) = cost of sales / average payables balance (including account payables and note payables from operating activities).

• (5) Days sales outstanding = 365 / Inventory turnover ratio.

• (6) Property, plant and equipment turnover ratio = net sales / average net property, plant and equipment.

• (7) Total asset turnover = net sales / average total assets.

• Profitability

• (1) Return on assets = (net Income + interest expenses * (1 - effective tax rate)) / average total assets.

• (2) Return on equity = net income / average equity.

• (3) Net profit margin = net Income / net Sales

• (4) Earnings per share = (net profit or loss attributed to shareholders of the parent - preference dividend) / weighted average number of shares outstanding (Note 4)

• Cash flow

• (1) Cash flow ratio = net cash provided by operating activities / current liabilities

• (2) Cash flow adequacy ratio = five-year sum of cash from operations / five-year (sum of capital expenditures, inventory additions, and cash dividend)

• (3) Cash reinvestment ratio = (net cash provided by operating activities - cash dividends)/ (gross property, plant and equipment + long-term investments + other non-current assets + working capital) (Note 5)

• Leverage:

• (1) Operating leverage = (net operating revenue - operating variable cost and expense) / operating income (Note 6).

(2) Financial leverage = operating income / (operating income - interest expenses)

• Note 4: The aforementioned calculation equation for earnings per share, please be aware of the following during the measurement:

• It is calculated based on the number of weighted average outstanding common shares, rather than based on the number of shares already issued by the end of year.

• For cash capital increase or treasury shares transactions, the circulation period has been considered in order to calculate the number of weighted average shares.

• For earning converting into capital increase or capital surplus converting into capital increase, during the calculation of the earning per share for the previous year and semi-annually, retroactive adjustment has been made according to the ratio of the capital increase, but the issuance period of the capital increase is not yet considered.

• Note 5: During the measurement of the cash flow analysis, please be aware of the following:

• Net cash flow from operating activities refers to the net cash inflow from operating activities in the statement of cash flows.

• Capital expense refers to the cash outflow of capital investment in each year.

• Inventory increase is only counted when the ending balance is greater than the opening balance. If the inventory at the end of year decreases, then it is counted as zero for the

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calculation.

1. Cash dividends include the cash dividends of common stocks and preference shares.

2. Gross property, plant and equipment refer to the total amount of property, plant and equipment before deduction of accumulated depreciation.

3. Note 6: Issuer shall classify the operating cost and operating expense into fixed and variable. In case where estimation or subjective judgment is involved, issuer shall be aware of its reasonability and shall maintain the consistency of such cost and expense.

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(II) Financial Analysis - International Financial Reporting Standards

(IFRS) - Individual

Analysis	Year	Financial analysis for the most recent 5 years	Financial analysis for the most recent 5 years	Financial analysis for the most recent 5 years	Financial analysis for the most recent 5 years	Financial analysis for the most recent 5 years	As of March 31, 2020
		2015	2016	2017	2018	2019
Financial structure (%)	Debt to assets ratio	22.36	16.50	17.68	16.21	15.41	Not applicable
	Long-term capital to property, plant & equipment ratio	475.08	581.12	246.83	275.48	270.43
Solvency %	Current ratio	315.00	405.26	268.96	305.46	307.37
	Quick ratio	213.75	301.19	147.57	195.41	198.57
	Times interest earned	848,301	1,007,350	791,362	80,668	37,961
Management capacity	Receivables turnover ratio (times)	8.75	7.97	7.44	7.63	8.20
	Average collection days	42.00	46.00	49.00	48.00	45.00
	Inventory turnover ratio (times)	6.86	6.10	5.49	5.61	5.88
	Payables turnover ratio (times)	12.28	10.89	10.20	11.47	12.01
	Days sales outstanding	53.00	60.00	66.00	61.00	61.00
	Property, plant and equipment turnover ratio (times)	10.02	9.33	3.93	4.48	4.18
	Total asset turnover (times)	1.86	1.47	1.33	1.43	1.35
Profitability	Return on asset (%)	30.39	22.02	16.78	22.77	20.71
	Return on equity (%)	39.28	27.24	20.23	27.37	24.53
	Income before tax toPaid-in Capitalratio (%)	195.65	168.60	135.83	198.80	196.82
	Net Profit Margin(%)	16.36	14.93	12.61	15.89	15.31

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Analysis	Year	Financial analysis for the most recent 5 years	Financial analysis for the most recent 5 years	Financial analysis for the most recent 5 years	Financial analysis for the most recent 5 years	Financial analysis for the most recent 5 years	As of March 31, 2020
		2015	2016	2017	2018	2019
	Earnings per Share (EPS) (NT$)	15.99	13.40	11.12	15.96	15.67
Statement of Cash Flows	Cash flow ratio (%)	133.88	135.82	79.03	135.09	163.26
	Cash flow adequacy ratio (%)	122.82	125.22	88.63	98.53	106.79
	Cash reinvestment ratio (%)	14.67	5.81	(2.14)	9.52	13.56
Leverage	Operating leverage	1.38	1.37	1.44	1.33	1.34
	Financial leverage	1.00	1.00	1.00	1.00	1.00
Explanations for the variations of financial ratios for the last 2 years. (If the variation of increase/decrease is less than 20%, analysis may be exempted.) * Explanations for the variations of financial ratios reaching 20% for the last 2 years: 1. The main reasons of lower interest coverage ratio 1.1 The amount of accounts receivable factor increases year by year, introducing to the increase of interest payment. 1.2 Recognizing interest expense of financial leases since the IFRS16 be adopted in 2019FY. 2. Cash flow ratio and cash reinvestment ratio are increased due to excellent overall profit status, and the cash flow from operating activities increases.

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[Explanation] Calculation formulas as follows:

1. Financial structure

2. (1) Debt to asset ratio = Total liabilities / Total assets

3. (2) Long-term capital to property, plant & equipment ratio = (Total equity + non-current liabilities) / net property, plant & equipment.

4. Solvency

5. (1) Current ratio = current assets / current liabilities.

6. (2) Quick ratio = (current assets- inventory - prepaid expenses) / current liabilities.

7. (3) Times interest earned = net profit before interest and tax / interest expenses for the current period.

8. Management capacity

9. (1) Receivables turnover ratio (including account receivables and note receivables from operating activities) = net sales / average receivables balance (including account receivables and note receivables from operating activities).

10. (2) Average collection days = 365 / receivables turnover ratio.

11. (3) Inventory turnover ratio = cost of sales / average inventory

12. (4) Payables turnover ratio (including account payables and note payables from operating activities) = cost of sales / average payables balance (including account payables and note payables from operating activities).

13. 。

14. (5) Days sales outstanding = 365 / Inventory turnover ratio

15. (6) Property, plant and equipment turnover = net sales / average net Property, plant and equipment.

16. (7) Total asset turnover = net sales / average total assets.

17. Profitability

18. (1) Return on assets = (net Income + interest expenses * (1 - effective tax rate)) / average total assets.

19. (2) Return on equity = net Income / Average equity.

20. (3) Net profit margin = net Income / net Sales

21. (4) Earnings per share = (Profit after tax - Preference dividend) / weighted average number of shares outstanding. (Note 4)

22. Cash flow

23. (1) Cash flow ratio = net cash provided by operating activities / current liabilities

24. (2) Cash flow adequacy ratio = five-year sum of cash from operations / five-year (sum of capital expenditures, inventory additions, and cash dividend).

25. (3) Cash reinvestment ratio = (Net cash provided by operating activities - cash dividends)/ (gross property, plant and equipment + long-term investments + other non-current assets + working capital). (Note 5)

26. Leverage:

27. (1) Operating leverage = (net operating revenue - operating variable cost and expense) / operating income (Note 6).

28. (2) Financial leverage = operating income / (operating income - interest expenses)

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6.3 Audit Committee’s Review Report in the Most Recent Year

Audit Committee’s Review Report

The Board of Directors prepares and submits the 2019 Business Report, Financial Statements and Profit Distribution Proposal etc., where the financial statements had been audited by KPMG’s CPA Hui-Chih Kou and Hsin-I Kuo, and financial reports (including consolidated financial report) are issued. The aforementioned Business Report, Financial Statements and Profit Distribution Proposal have been reviewed by the Audit Committee and are considered to be conformed to requirements. Consequently, it is reported for review according to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act.

Respectfully submitted

The Company’s 2020 Annual General Shareholders’ Meeting

Eclat Textile Co., Ltd.

Audit Committee Convener: Ya-Kang Wang

March 5, 2020

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• 6.4 Consolidated Financial Statements for the Years Ended December 31, 2019 and 2018, and Independent Auditors’ Report

Independent Auditors’ Report

To the Board of Directors of ECLAT TEXTILE CO., LTD.:

Opinion

We have audited the accompanying consolidated financial statements of ECLAT TEXTILE CO., LTD. and its subsidiaries (the “Group”), which comprise the consolidated balance sheets as of December 31, 2019 and 2018, the consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of 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 as of December 31, 2019 and 2018, and its consolidated financial performance and its consolidated cash flows for the years ended December 31, 2019 and 2018 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (“IFRSs”), International Accounting Standards (“IASs”), interpretation as well as related guidance endorsed 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 Certification of Financial Statements by Certified Public Accountants” and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditor’ s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. 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 for the year ended December 31, 2019. 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.

Key audit matter for the Group is stated as follow:

Revenue recognition and cut-off

Please refer to note 4(o) for details of the accounting policies of the recognition of revenue and note 6(n) operating revenues.

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How the matter was addressed in our audit

Revenue recognition of the Group is the main concern of the consolidated financial report users. Therefore, the assessment of revenue recognition is the key audit items in our audit.

Our principal audit procedures included:

Testing the design and implementation of internal control over revenue recognition, inspecting the accuracy of revenue recognition, and reconciling between sales systems and general ledger; the Group’s main sources of revenues to evaluate whether there are major anomalies; conditions for revenue recognition and to further inspect related transaction documents to ensure that the revenue is recorded in the appropriate period.

Other Matter

ECLAT TEXTILE CO., LTD has prepared its individual financial statements as of and for the years ended December 31, 2019 and 2018, on which we have issued an unqualified 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 IFRSs, IASs,IFRIC,SIC, interpretation as well as related guidance endorsed 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 free from material misstatement 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 (including members of the Audit Committee) are responsible for overseeing the Group’s financial reporting process.

Auditors’ 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 due to fraud or error, and to issue an auditors’ 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 auditing standards generally accepted in 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 auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the consolidated financial statements 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.

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1. 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.

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

3. 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 auditors’ 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 auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

4. 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.

5. 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 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 for the year ended December 31, 2019 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 Hui-Chih Kou and HsinYi Kuo.

KPMG

Taipei, Taiwan (Republic of China) March 5, 2020

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.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2019 and 2018

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

(1) Company history

ECLAT TEXTILE CO., LTD. (the “Company”) was incorporated in November 1977. The Company has established the Tashan Plant, Miao-li Plant and Hsichou Plant in Miao-li, and Dayuan Plant in Taoyuan. The Company and its subsidiaries (the “ Group” ) have mainly been involved in the manufacturing and marketing of knitwear. Please refer to note 4(c) for more details about the operation of the Group.

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

On March 05, 2020 the board of directors approved and noted the consolidated financial statements as of and for the year ended December 31, 2019.

(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. (“FSC”) which have already been adopted.

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2019.

	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
IFRS 16 “Leases”	January 1, 2019
IFRIC 23 “Uncertainty over Income Tax Treatments”	January 1, 2019
Amendments to IFRS 9 “Prepayment features with negative compensation”	January 1, 2019
Amendments to IAS 19 “Plan Amendment, Curtailment or Settlement”	January 1, 2019
Amendments to IAS 28 “Long-term interests in associates and joint ventures”	January 1, 2019
Annual Improvements to IFRS Standards 2015–2017 Cycle	January 1, 2019

Except for the following items, the Group believes that the adoption of the above IFRSs would not have any material impact on its consolidated financial statements. The extent and impact of signification changes are as follows:

(i) IFRS 16“Leases”

IFRS 16 replaces the existing leases guidance, including IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases – Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group applied IFRS 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognized in retained earnings on January 1, 2019. The details of the changes in accounting policies are disclosed below:

1) Definition of a lease

Previously, the Group determined at contract inception whether an arrangement is or contains a lease under IFRIC 4. Under IFRS 16, the Group assesses whether a contract is or contains a lease based on the definition of a lease, as explained in Note 4(l).

On transition to IFRS 16, the Group elected to apply the practical expedient to grandfather the assessment of which transactions are leases. The Group applied IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed for whether there is a lease. Therefore, the definition of a lease under IFRS 16 was applied only to contracts entered into or changed on or after January 1, 2019.

2) As a lessee

As a lessee, the Group previously classified leases as operating or finance leases based on its assessment of whether the lease transferred significantly all of the risks and rewards incidental to ownership of the underlying asset to the Group. Under IFRS 16, the Group recognizes right-of-use assets and lease liabilities for most leases – i.e. these leases are on-balance sheet.

• Leases classified as operating leases under IAS 17

At transition, lease liabilities were measured at the present value of the remaining lease payments, discounted at the Group’s incremental borrowing rate as at January 1, 2019. Right-of-use assets are measured at either:

• － their carrying amount as if IFRS 16 had been applied since the commencement date, discounted using the lessee’ s incremental borrowing rate at the date of initial application – the Group applied this approach to its largest property leases; or

• － an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments – the Group applied this approach to all other lease.

In addition, the Group used the following practical expedients when applying IFRS 16 to leases.

• － Applied a single discount rate to a portfolio of leases with similar characteristics.

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• － Excluded initial direct costs from measuring the right-of-use asset at the date of initial application.

• － Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease.

• 3) Impacts on financial statements

On transition to IFRS 16, the Group recognized additional $109,120 thousands of right-

of-use assets and $111,169 thousands of lease liabilities, recognizing the difference in retained earnings. When measuring lease liabilities, the Group discounted lease payments using its incremental borrowing rate at January 1, 2019. The weighted-average rate applied is 1.95%.

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

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2020 in accordance with Ruling No. 1080323028 issued by the FSC on July 29, 2019:

	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
Amendments to IFRS 3 “Definition of a Business”	January 1, 2020
Amendments to IFRS 9, IAS39 and IFRS7 “Interest Rate Benchmark Reform”	January 1, 2020
Amendments to IAS 1 and IAS 8 “Definition of Material”	January 1, 2020

The Group assesses that the adoption of the abovementioned standards would not have any material impact on its consolidated financial statements.

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

As of the date, the following IFRSs that have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

Board (IASB), but have yet to be endorsed by the FSC:
	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between	Effective date to
an Investor and Its Associate or Joint Venture”	be determined
	by IASB
IFRS 17 “Insurance Contracts”	January 1, 2021
Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”	January 1, 2022

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)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(4) Summary of significant accounting policies:

The significant accounting policies presented in the consolidated financial statements are summarized as follows. Except for Note 3 and 4(l), the following accounting policies were applied consistently through all reporting periods presented in the consolidated financial statements.

(a) Statement of compliance

The 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 by the Financial Supervisory Commissions (hereinafter referred to as IFRS as endorsed by the FSC).

(b) Basis of preparation

(i) Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis except for the net defined benefit liabilities are measured at the fair value of the plan assets, less the present value of the defined benefit obligation.

(ii) Functional and presentation currency

The functional currency of the Group is determined based on the primary economic environment in which the entities operate. The consolidated financial statements are presented in New Taiwan Dollar, which is the Company’s functional currency. All financial information presented in New Taiwan Dollar has been rounded to the nearest thousand.

(c) Basis of Consolidation

(i) Principles of preparation consolidated financial statements

The consolidated financial statements comprise the Company and its subsidiaries. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

The financial statements of the subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Transactions balances and any unrealized gains or losses between the Group and its subsidiaries have been eliminated while compiling the consolidated financial statements. The comprehensive income of the subsidiary is attributed to the parent, within equity.

Accounting policies of the subsidiaries have been adjusted to ensure consistency with the policies adopted by the Group.

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.

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) The subsidiaries in the consolidated financial statements:

Investor	The name of subsidiaries	Business activity	December 31, 2019	December 31, 2018	Note
The Company	GRAND ELITE HOLDING INC.(Grand Elite)	Investments in securities, real estate, and manufacturingindustry	% 100.00	% 100.00
The Company	ECLAT CAYMAN ISLAND HOLDINGS(Eclat Cayman)	Investments in securities, real estate, and manufacturingindustry	% 100.00	% 100.00
The Company	PT ECLAT TEXTILE INTERNATIONAL (ECLAT TEXTILE(ID))	Design, manufacture, processing, sale of clothing, knit fabrics mill, printing, dyeingand finishingmill	% 100.00	% -	Note 2
Grand Elite	ECLAT TEXTILE (CAMBODIA) CO., LTD. (Eclat Textile(Cambodia))	Design, manufacture, processing and sale of clothing	% 100.00	% 100.00
Eclat Cayman	Unison (Wuxi) Textile and Garment Inc.(Unison)	Design, manufacture, processing and sale of clothing	% 100.00	% 100.00	Note 1
Eclat Cayman	ECLAT TEXTILE CO., LTD. (Vietnam) (Eclat Textile(VN))	Design, manufacture, processing and sale of clothing	% 100.00	% 100.00
Eclat Cayman	ECLAT FABRICS (VIETNAM) CO., LTD.(Fabrics)	Knit fabrics mill, printing, dyeing and finishingmill	% 100.00	% 100.00
Eclat Cayman	E-TOP (VIETNAM) CO., LTD. (E-TOP(VN))	Design, manufacture, processing and sale of clothing	% 100.00	% 100.00
Eclat Cayman	COLLTEX GARMENT MFY CO., LTD.(VN) (Colltex)	Design, manufacture, processing and sale of clothing	% 100.00	% 100.00
Eclat Cayman	ECLAT ENTERPRISE LTD. (Eclat Enterprise)	Investments in securities, real estate, and manufacturingindustry	% 100.00	% 100.00
Eclat Cayman	TAI-YUAN GARMENTS CO., LTD.(TAI-YUAN(VN))	Design, manufacture, processing and sale of clothing	% 100.00	% 100.00
Eclat Cayman	PT ECLAT TEXTILE INTERNATIONAL (ECLAT TEXTILE(ID))	Design, manufacture, processing, sale of clothing, knit fabrics mill, printing, dyeingand finishingmill	% -	% -	Note2

Note 1 : There is no longer any advantage in investing due to the rising cost of labor, material and supply in Mainland China, consequently, the BOD approved the dissolution and liquidation of Unison on December 7, 2016. Please refer to Note 6(d) for further information.

Note 2 : The Company’s BOD approved the investment in Indonesia on September 17, 2019 and mutually set up ECLAT TEXTILE (ID) by the Company and Eclat Cayman. ECLAT TEXTILE (ID) was established on December 20, 2019, and the shareholding ratio of the Company and Eclat Cayman are 99.9996% and 0.0004% respectively.

(iii) The subsidiaries are not included in the consolidated financial statements: none.

• (d) Foreign currency

• (i) Foreign currency transaction

Transactions in foreign currencies are translated into the respective functional currencies of the Group 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 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 transaction.

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the Group’s functional currency at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the Group’s functional currency at the average rate. Foreign currency differences are recognized in other comprehensive income, and presented in the translation reserve in equity.

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 any 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 non-controlling interest. When the Group disposes only part of investment in an associate of joint venture that includes a foreign operation while retaining significant or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future. The foreign currency exchange gains and losses arising from such items are considered to form part of a net investment in the foreign operation and are recognized in other comprehensive income, and presented in the translation reserve in equity.

• (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 intends to sell or consume it, in its normal operating cycle;

• (ii) The Group holds the asset primarily for the purpose of trading;

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

• (iv) The asset is cash or 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:

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

• (ii) The Group holds the liability primarily for the purpose of trading;

• (iii) The liability 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 the issue of equity instruments do not affect its classification.

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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 which are subject to an insignificant risk of changes in value. Term deposits that meet the above requirements 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

All other financial assets and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the instrument. A trade 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. 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.

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)

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, notes and accounts receivable, other receivable, refundable deposits and other financial assets).

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group measures loss allowances at an amount equal to lifetime expected credit loss (ECL), except for the following which are measured as 12-month ECL:

‧ bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for accounts receivable is always measured at an amount equal to lifetime ECL.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

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.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Group’s historical experience and informed credit assessment as well as forward-looking information.

The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 60 days past due.

The Group considers a financial asset to be in default when the financial asset is more than 180 days past due.

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 past due; or

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

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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. For corporate customers, 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.

3)

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.

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

1) Financial liabilities

Financial liabilities are classified as measured at amortized cost.

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.

2) Derecognition of financial liabilities

The Group derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire.

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.

3)

• Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet, 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.

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(h) Inventories

Inventories are necessary expenditures and charges for bringing the inventory to a salable and useable condition and location. In the case of manufactured overhead, cost includes an appropriate share of production overheads based on normal operating capacity of labor hours or machine hours and is allocated to finish goods and work-in-progress. Inventories are measured at the lower of cost and net realizable value subsequently and the cost of inventories is calculated using the monthly weighted-average method. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

• (i) Non-current assets held for sale and discontinued operations

• (i) Non-current assets held for sale

Non-current assets or disposal groups comprising assets and liabilities that are highly probable to be recovered primarily through sale rather than through continuing use are reclassified as held for sale. Immediately before classification as held for sale, the assets, or components of a disposal group are remeasured in accordance with the Group’s accounting policies. Thereafter, the assets or disposal groups are generally measured at the lower of their carrying amount and fair value less costs to sell.

Once classified as held for sale, intangible assets and property, plant and equipment, are no longer amortized or depreciated.

(ii) Discontinued operations

A discontinued operation is a component of the Group's which it has disposed of or held for sale and is solely a main practice or operation district. An operation will be classified as a discontinued operation upon disposal or when the operation meets the criteria to be classified as held for sale, whichever comes first.

(j) Investment in associates

Associates are those entities in which the Group has significant influence, but not control, over the 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 equity accounted investees, after adjustments to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases.

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

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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.

• (k) Property, plant and equipment

• (i) Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing cost, 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 cost

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: 5 to 60 years.

• 2) Machinery and equipment: 2 to 25 years.

• 3) Transportation equipment: 3 to 8 years.

• 4) Office equipment: 5 to 9 years.

• 5) Miscellaneous equipment: 3 to 15 years.

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

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (l) Leases

Applicable from January 1, 2019

(i) Identifying a lease

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. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

• 1) the contract involves the use of an identified asset – this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; and

• 2) the Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

• 3) the Company has the right to direct the use of the asset throughout the period of use only if either:

• the Company has the right to direct how and for what purpose the asset is used throughout the period of use; or

• the relevant decisions about how and for what purpose the asset is used are predetermined and:

• － the Company has the right to operate the asset throughout the period of use, without the supplier having the right to change those operating instructions; or

• － the Company designed the asset in a way that predetermines how and for what purpose it will be used throughout the period of use.

(ii) 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.

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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 an extension or termination option; or

• there is any lease modifications.

• (iii) As a lessor

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.

The lessor recognizes a finance lease receivable at an amount equal to its net investment in the lease. Initial direct costs, such as lessors to negotiate and arrange a lease, are included in the measurement of the net investment. The interest income is recognized over the lease term based on a pattern reflecting a constant periodic rate of return on the net investment in the lease. The Group recognizes lease payments received under operating leases as income on a straight-line basis over the lease term as part of ‘other income’.

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Applicable before January 1, 2019

(i) Lessor

A finance lease asset is recognized on a net basis as lease receivable. Initial direct costs incurred in negotiating and arranging an operating lease are added to the net investment in the leased asset. The finance income is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the receivable.

Lease income from an operating lease is recognized in income on a straight-line basis over the lease term. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset, and recognized as an expense over the lease term on the same basis as the lease income. Incentives granted to the lessee to enter into the operating lease are spread over the lease term on a straight-line basis so that the lease income received is reduced accordingly.

Contingent rents are recognized as income in the period when the lease adjustments are confirmed.

(ii) Lessee

Leases in which the Group assumes substantially all of the risks and rewards of ownership are classified as finance leases. On initial recognition, the lease asset is measured at an amount equal to the lower of its fair value or the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to the asset.

Minimum lease payments made under finance leases are apportioned between the finance cost and the reduction of the outstanding liability. The finance cost is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Other leases are operating leases and are not recognized in the Group’s balance sheets.

Payments made under operating leases (excluding insurance and maintenance expenses) are recognized in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognized as an integral part of the total lease expense, over the term of the lease.

Contingent rent is recognized as expense in the period in which it is incurred. Recognition of income arising from a sale and leaseback transaction depends upon the type of lease involved. If a sale and leaseback transaction results in a finance lease, any excess of sales proceeds over the carrying amount is deferred and amortized over the lease term. If a sale and leaseback transaction results in an operating lease, and it is clear that the transaction is established at fair value, any profit or loss is recognized immediately. If the sales price is below fair value, any profit or loss shall be recognized immediately except that if the loss is compensated for by future lease payments at below-market price, it is deferred and amortized in proportion to the lease payments over the period for which the asset is expected to be used. If the sales price is above fair value, the excess over fair value is deferred and amortized over the period for which the asset is expected to be used.

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

For operating leases, if the fair value at the time of a sale and leaseback transaction is less than the carrying amount of the asset, a loss equal to the amount of the difference between the carrying amount and the fair value shall be recognized immediately.

(m) Intangible assets

• (i) Recognition and measurement

Goodwill arising on the acquisition of subsidiaries is measured at cost, less accumulated impairment losses.

Other intangible assets are acquired by the Group and have finite useful lives are measured at cost less accumulated amortization.

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditures are recognized in profit or loss as incurred.

(iii) Amortization

Except for goodwill, amortization is calculated over the cost of the asset, less its residual value, and is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use.

The estimated useful lives for current and comparative periods are as follows:

Software ： 2 to 10 years.

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

(n) Impairment of non-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.

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 CGUs.

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.

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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.

• (o) 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 Group manufactures and sells elastic fabrics and clothing. The Group recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied.

A receivable is recognized when the goods are delivered as this is the point in time that the Group has a right to an amount of consideration that is unconditional.

(p) Employee benefits

• (i) Defined contribution plans

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

• (ii) Defined benefit plans

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.

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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 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.

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.

• (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.

(q) 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 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 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, and associates 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 reverse, using tax rates enacted or substantively enacted at the reporting date.

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

• (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.

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; such reductions are reversed when the probability of future taxable profits improves.

(r)

Earnings per share

The Group reports the basic earnings per share and the diluted earnings per share. The basic earnings per share are calculated based on the profit attributable to the ordinary shareholder of the Company divided by weighted average number of ordinary shares outstanding. The diluted earnings per share is calculated based on the profit attributable to ordinary shareholders of the Company, divided by weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares.

(s)

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 segments are regularly reviewed by the Group’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance. Each operating segment consists of standalone finance information.

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

The preparation of the consolidated financial statements in conformity with the Regulations and the IFRSs endorsed by the FSC requires management to make 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.

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(6) Explanation of significant accounts:

• (a) Cash and cash equivalents

		December 31,	December 31,
		2019	2018
Cash	$	7,289	7,833
Bank deposits		3,024,060	2,026,374
Term deposits		1,412,922	870,903
Cash and cash equivalents	$	4,444,271	2,905,110
Please refer to note 6(q) for the exchange risk, interest rate risk, and sensitivity analysis of th
financial assets and liabilities of the Group.
Notes receivable and accounts receivable
	December 31,		December 31,
		2019	2018
Notes receivable—operating activities	$	13,245	2,065
Accounts receivable		3,039,480	3,831,559
Less：allowance for doubtful accounts		(24,086)	(24,086)
Total	$	3,028,639	3,809,538

Please refer to note 6(q) for the exchange risk, interest rate risk, and sensitivity analysis of the financial assets and liabilities of the Group.

• (b) Notes receivable and accounts receivable

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, notes and accounts receivable have been grouped based on shared credit risk characteristics and the days past due, as well as incorporated forward looking information, including the macroeconomic and related industrial information.

The loss allowance provisions were determined as follows:

Current Within 30 days past due 31~120 days past due Over 121 days past due	December 31, 2019	December 31, 2019
	Gross carrying amount $ 2,984,132 60,736 7,233 624 $ 3,052,725	Weighted- average loss rate Loss allowance provision 0.41% 12,335 16.14% 9,804 18.30% 1,323 100.00% 624 24,086

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Current Within 30 days past due 31~120 days past due Over 121 days past due	December 31, 2018	December 31, 2018
	Gross carrying amount $ 3,711,713 117,174 4,223 514 $ 3,833,624	Weighted- average loss rate Loss allowance provision 0.49% 18,067 3.22% 3,771 41.05% 1,734 100.00% 514 24,086

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

Beginning balance (Ending balance)	For the years ended December 31
	2019 2018 $ 24,086 24,086

None of notes receivable and accounts receivable held by the Group were pledged, collateralized or discounted as of December 31, 2019 and 2018.

Accounts receivable of the Group have been insured accounts receivable credit risk. The insured amounts are $154,100 thousand and $514,914 thousand as of December 31, 2019 and 2018. Guaranteed fraction is 90% of reviewed credit of policyholder; the recoverable amount of the insurance is considered when deciding impairment amount of accounts receivable.

The Group has signed accounts receivable factoring contracts without recourse with financial institutions. As stated in the contract, the Group doesn't have to bear the risks of uncollectable accounts receivables but the loss incurred due to commercial arguments, and hence meets the criteria of derecognition of financial assets. Factored accounts receivable which are not due as of the report date are as follows:

date are as follows:
		December 31, 2019
Counterparty	Factored amount $ 774,381 $ 182,833	Acceptable advances Amount collected in advance 574,719 774,381 653,609 182,833 December 31, 2018		Interest rate Pledged items 2.42%~2.57% None 2.27%~2.38% None
E.sun Bank SHANGHAI Bank
Counterparty		Acceptable advances 1,265,971	Amount collected in advance 240,600	Interest rate Pledged items 2.87%~3.44% None
E.sun Bank

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(c) Inventories

Raw materials Supplies Work in progress Finished goods	December 31, 2019 December 31, 2018 $ 2,344,082 2,458,806 567,678 527,431 1,103,380 1,135,855 204,822 142,495 $ 4,219,962 4,264,587

In 2019 and 2018, the inventory write-down to net realizable value resulted in recognition of inventory loss; and the original factors led to the loss were improved subsequently, resulting in gain from price recovery of inventory. These changes were recognized as an addition or subtraction item of cost of goods sold, respectively.

The details are as follows:

Loss on decline of inventory market price (gain from recovery in the value of inventories)	For the years ended December 31 2019 2018 $ 3,881 (1,124)

None of inventories held by the Group were pledged as of December 31, 2019 and 2018.

• (d) Non-current assets classified as held for sale

The Group's board of directors approved a resolution of Unison's dissolution on December 7, 2016. Unison commenced the liquidation procedure in 2017, and reported the related assets as held for sale. The details were as follows:

Cash and cash equivalents $	December 31, 2019 December 31, 2018 8,772 11,257

• (e) Property, plant and equipment

The cost and depreciation of the property, plant and equipment of the Group are as follows:

Cost: Balance at January 1, 2019 Additions Disposals Reclassification Effect of exchange rates changes Balance as of December 31, 2019	Land $ 4,817,823 - - - (663) $ 4,817,160	Buildings 4,065,638 85,395 (67) 275,983 (71,524) 4,355,425	Machinery and equipment 4,840,509 113,917 (77,682) 191,464 (73,525) 4,994,683	Transportation equipment 107,383 2,802 (505) - (1,511) 108,169	Office equipment 218,809 4,884 (2,004) 803 (2,574) 219,918	Miscellaneous equipment 1,180,089 70,329 (11,901) (10,210) (25,240) 1,203,067	Construction in progress Total 298,900 15,529,151 1,009,032 1,286,359 - (92,159) (308,607) 149,433 (14,797) (189,834) 984,528 16,682,950

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Balance at January 1, 2018 Additions Disposals Reclassification Effect of exchange rate changes Balance as of December 31, 2018 Depreciation: Balance at January 1, 2019 Depreciation Reclassification Disposals Effect of exchange rate changes Balance as of December 31, 2019 Balance at January 1, 2018 Depreciation Disposals Effect of exchange rate changes Balance as of December 31, 2018 Carrying amounts: Balance as of December 31, 2019 Balance as of December 31, 2018	Land $ 4,816,961 - - - 862 $ 4,817,823 $ - - - - - $ - $ - - - - $ - $ 4,817,160 $ 4,817,823	Buildings 3,497,333 6,314 - 478,894 83,097 4,065,638 1,189,508 179,666 - (66) (19,420) 1,349,688 1,005,556 165,327 - 18,625 1,189,508 3,005,737 2,876,130	Machinery and equipment 4,449,568 324,237 (59,389) 36,566 89,527 4,840,509 3,286,446 440,472 - (70,825) (53,098) 3,602,995 2,786,154 488,216 (42,164) 54,240 3,286,446 1,391,688 1,554,063	Transportation equipment 100,014 5,306 (2,011) 2,149 1,925 107,383 72,409 9,697 - (505) (1,149) 80,452 61,189 12,036 (2,011) 1,195 72,409 27,717 34,974	Office equipment 203,330 12,340 - - 3,139 218,809 175,026 15,561 - (2,004) (2,124) 186,459 154,813 17,966 - 2,247 175,026 33,459 43,783	Miscellaneous equipment 1,039,316 110,545 (1,335) 2,749 28,814 1,180,089 768,613 141,813 (17,291) (11,670) (18,248) 863,217 615,885 136,319 (1,335) 17,744 768,613 339,850 411,476	Construction in progress Total 433,780 14,540,302 339,674 798,416 - (62,735) (489,228) 31,130 14,674 222,038 298,900 15,529,151 - 5,492,002 - 787,209 - (17,291) - (85,070) - (94,039) - 6,082,811 - 4,623,597 - 819,864 - (45,510) - 94,051 - 5,492,002 984,528 10,600,139 298,900 10,037,149

The property, plant and equipment are pledged or mortgaged as collateral for loans as of December 31, 2019 and 2018, please refer to Note 8.

(f) Right-of-use assets

The Group leases assets including land, buildings, transportation equipment, office equipment and miscellaneous equipment. Information about leases for which the Group as a lessee was presented below:

Cost: Balance at January 1, 2019 Effect of retrospective application Restated balance at January 1, 2019 Additions Disposal Effect of exchange rates changes Balance at December 31, 2019 Accumulated depreciation and impairment losses: Balance at January 1, 2019 Effect of retrospective application Restated balance at January 1, 2019 Depreciation Disposal Balance at December 31, 2019 Carrying amount: Balance at December 31, 2019	Land $ 51,184 51,184 (1,170) $ 50,014 $ - - 1,769 - $ 1,769 $ 48,245	Buildings 46,230 46,230 3,889 - 50,119 12,394 12,394 14,191 - 26,585 23,534	Transportation equipment 40,380 40,380 10,248 (283) - 50,345 18,129 18,129 13,645 (94) 31,680 18,665	Office equipment 628 628 2,102 - 2,730 28 28 930 - 958 1,772	Miscellaneous equipment Total 2,272 140,694 2,272 140,694 16,239 (283) - (1,170) 2,272 155,480 1,023 31,574 1,023 31,574 227 30,762 - (94) 1,250 62,242 1,022 93,238

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(g) Other current or non-current assets

Current:

Tax refund receivables Payment in advance Prepaid expense Prepaid sales tax Other financial assets Others	December 31, 2019 December 31, 2018 $ 93,639 130,912 42,356 65,065 44,123 71,805 94,227 24,736 2,389 4,113 96,428 20,310 $ 373,162 316,941

Non-current:

Prepayments for equipment Long-term prepaid rents Refundable deposits Other financial assets Others	December 31, 2019 December 31, 2018 $ 61,151 281,507 328,205 357,916 2,945 3,161 3,013 - 616 633 $ 395,930 643,217

Long-term prepaid rents are the contracts for right of use of land for constructing factories and dorms. This contract was signed among the Group, and local authorities of Vietnam.

(h) Short-term borrowings

Details of short-term borrowings of the Group are as follows:

Unsecured bank loans Unused quota Range of interest rates	December 31, 2019 December 31, 2018 $ 1,572,451 1,629,979 $ 5,384,289 6,150,541 2.1%~2.94% 1.8%~3.65%

None of the Group's assets were pledged as collaterals to secure bank loans.

(i) Lease liabilities

Group's lease liabilities were as follow:

Current Non-current	December 31, 2019
	$ 18,387 $ 68,946

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

For the maturity analysis, please refer to note 6(q).

The amounts recognized in profit or loss were as follows:

The amounts recognized in profit or loss were as follows:
Interest on lease liabilities Expenses relating to short-term leases Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets	For the year ended December 31, 2019
	$ 2,278 $ 17,251 $ 2,137

The amounts recognized in the statement of cash flows for the Group was as follows:

Total cash outflow for leases	For the year ended December 31, 2019
	$ 54,881

• (i) Real estate leases

As of December 31, 2019, the Group leases land and buildings for its office space and dormitory, leases period are 2 to 35 years.

(ii) Other leases

The Group leases transportation, office and miscellaneous equipment that leases period are 2 to 10 years.

The Group also leases miscellaneous equipment with contract terms of 1 to 3 years. These leases are short-term or leases of low-value items. The Group has elected not to recognize right-of-use assets and lease liabilities for these leases.

(j) Employee benefits

(i) Defined benefit plan

Reconciliation for present value of defined benefit obligation and fair value of plan assets are as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities	December 31, 2019 December 31, 2018 $ 242,514 244,210 (237,382) (242,194) $ 5,132 2,016

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group’s employee benefit liabilities were as follows:

Long-term compensated absences liability	December 31, 2019 December 31, 2018 $ 57,727 57,983

Under the Company’ s employee benefit retirement plan, contributions are made to an independent fund that is deposited with Bank of Taiwan. Employees are eligible for retirement and payments of retirement benefits are based on years of service and the average salary for the last six months before the employee’s retirement according to the Labor Standards Law.

• 1) Composition of the plan asset

The retirement funds deposited by the Company according to the Labor Standards Law are managed by the Bureau of Labor Funds, Ministry of Labor (the “BLF”). According to Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, the usage of funds and their minimum amount of return distributed by the final accounts shall not be less than the income calculated by the two-year deposit interest rate of local bank.

As of December 31, 2019, the Company’s pension fund with Bank of Taiwan amounted to $237,382 thousand. Please refer to the related information published on the website of the Labor Pension Supervisory Committee concerning the utilization of the labor pension fund, related yield rate and its allocation.

• 2) Changes in present value of the defined benefit obligations were as follows:

Defined benefit obligations at January 1 Current service cost and interest Remeasurement of defined benefit liability - Actuarial gains and losses of experience adjustments - Actuarial losses of financial assumptions change Benefits paid Defined benefit obligations at December 31	For the years ended December 31 2019 2018 $ 244,210 226,084 4,301 4,797 7,728 8,181 3,474 7,239 (17,199) (2,091) $ 242,514 244,210

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 3) Changes in the fair value of the plan assets were as follows:

Fair value of plan assets at January 1 Remeasurement of net defined benefit liability - Return on plan assets (excluding current interest) Appropriated amount to the plan Benefits paid Fair value of plan assets at December 31	For the years ended December 31 2019 2018 $ 242,194 98,777 9,663 4,937 2,724 140,571 (17,199) (2,091) $ 237,382 242,194

• 4) Expense recognized as profit or loss

Expense recognized as profit or loss for 2019 and 2018 were as follows:

Current service cost Interest of net defined benefit liability Operating cost Selling expense Administrative expense	For the years ended December 31
	2019 2018 $ 1,572 1,705 8 1,744 $ 1,580 3,449 For the years ended December 31

• 5) Remeasurement of net defined benefit liabilities recognized in other comprehensive income

The Group’ s remeasurement of net defined benefit liabilities recognized in other comprehensive income for 2019 and 2018, were as follows:

Accumulated amount at January 1 Recognized in current period Accumulated amount at December 31	For the years ended December 31
	2019 2018 $ 34,811 22,980 4,260 11,831 $ 39,071 34,811

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

6) Actuarial assumptions

Major assumptions used to determine the present value of the defined benefit obligations were as follows:

Discount rate Future salary increases	December 31, 2019 December 31, 2018 % 1.000 % 1.125 % 3.000 % 3.000

Expected appropriated amount paid to defined benefit plan by the Group during 1 year after the reporting date of 2019 is $2,741 thousand.

The weighted average duration of the defined benefit plan is 13.13 years.

7) Sensitivity analysis:

As of December 31, 2019 and 2018, the effects of the present value of the defined benefit obligation arising from changes in principal actuarial assumptions were as follows:

December 31, 2019 Discount rate (change 0.25％) Future salary increases rate (change 0.25％) December 31, 2018 Discount rate (change 0.25％) Future salary increases rate (change 0.25％)	Effect of defined benefit obligations Increase 0.25％ Decrease 0.25％ $ (6,913) 7,182 6,901 (6,686) (7,239) 7,527 7,254 (7,006)

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. The sensitivity analysis adopts the same methods for determining the defined benefit assets at the balance sheet date.

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Defined contribution plan

The Company contributes an amount equal to 6% of the employee’s monthly wages to the Labor Pension personal account of the Bureau of the Labor Insurance in accordance with the provisions of the Labor Pension Act, under which, the Company is not required to bear the regulated or putative obligation subsequent to the payment of fixed-rate contribution.

Colltex, Fabrics, E-TOP (VN), Eclat TEXTILE (VN) and TAI- YUAN (VN) are restricted by local regulations in Vietnam, contributing an amount equal to specific percent of the employee’s monthly total wages to labor pension fund in accordance with local government regulation and paying to relevant authorities.

ECLAT TEXTILE (ID) was founded on December 20, 2019. None of employee was hired as of December 31, 2019,nor did any pension cost occur.

The Group’s pension costs under the defined contribution pension plan amounted to $108,847 thousand and $92,517 thousand for 2019 and 2018, respectively. Those pension costs have been contributed to Bureau of the Labor Insurance or local relevant authorities.

(k) Income tax

(i) Income tax expense

The details of income tax expense were as follows:

		For the years ended	For the years ended
		December 31
		2019	2018
Current tax expense	$	1,125,833	1,069,586
Deferred tax expense
Temporary differences		(6,876)	32,278
Change of income tax rate		-	(10,653)
Total income tax expense	$	1,118,957	1,091,211
The details of income tax expense under other comprehensive		income were as follows:
		For the years ended
		December 31
		2019	2018
Components of other comprehensive income that will be
reclassified to profit or loss
Exchange differences on transaction of foreign financial
statements.	$	(20,544)	24,308

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The reconciliation between income tax expense and income before income tax were as follow:

Income before tax Income tax using the individual Company’s domestic tax rate Change of income tax rate Estimated in prior periods Undistributed earnings additional tax Others	For the years ended December 31 2019 2018 $ 5,422,000 5,473,149 1,084,400 1,094,630 - (10,653) (6,381) 100 50,457 4,311 (9,519) 2,823 $ 1,118,957 1,091,211

• (ii) Deferred tax assets and liabilities

• 1) Recognized deferred tax assets and liabilities

Changes in deferred tax assets and liabilities for 2019 and 2018 were as follows:

Deferred tax assets:

Deferred tax assets:
January 1, 2019	$	20,381
Recognized in expense		13,155
Exchange differences on translation of foreign financial statements		20,544
December 31, 2019	$	54,080
January 1, 2018	$	60,735
Recognized in income		(16,046)
Exchange differences on translation of foreign financial statements		(24,308)
December 31, 2018	$	20,381
Deferred tax liability:
January 1, 2019	$	5,946
Recognized in expense		6,279
December 31, 2019	$	12,225
January 1, 2018	$	367
Recognized in income		5,579
December 31, 2018	$	5,946

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Income tax approved

The Company’ s income tax returns through 2017 have been examined by the R.O.C. tax authority.

(l) Stockholders’ equity

(i) Common stock

As of December 31, 2019 and 2018, the Company’s authorized share capital both amounted to $3,000,000 thousand dollars, divided into 300,000 thousand shares of stock with $10 par value per share. The total number of issued shares were 274,367 thousand shares.

(ii) Capital surplus

The balances of capital surplus were as follows:

Paid-in capital in excess of par value Treasury stock transactions Unpaid compensation to directors and supervisors Net assets from merger with Everbright Garment Unpaid dividend payables Employee stock options	December 31, 2019 December 31, 2018 $ 3,550,000 3,550,000 396 396 1,377 1,377 15,866 15,866 113 113 201,795 201,795 $ 3,769,547 3,769,547

According to Company Law, realized capital surplus can be transferred to common stock or distributed as cash dividends after deducting the accumulated deficit, if any. Realized capital surplus includes the additional paid-in capital from issuance of common stock in excess of the common stock’s par value and donation from others. Paid-in capital in excess of par value is transferrable to common stock annually but shall not exceed 10% of total issued and outstanding common stock according to Regulations Governing the Offering and Issuance of Securities by Securities Issuers.

(iii) Retained earnings

According to the Company’ s articles of incorporation, 10% of annual net earnings (net of income taxes), after deducting accumulated deficits, must be set aside as legal reserve. The remaining portion is to be distributed upon a proposal by the board of directors and approval in an annual shareholders’ meeting.

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Company is now in the growth stage and has a plan to expand the product line. Due to the need for capital to fulfill the plan, the policy for dividend distribution should reflect factors such as investment planning, financial structure, future fund requirements, and status of earnings. In a normal consideration, the percentage of earnings distribution shall not be less than fifty percent of the net earnings of the current year after compensating for accumulated deficits, if any. The board of directors shall make the distribution proposal, and it is then approved at the shareholders’ meeting. The ratio for distributing cash dividends shall not be lower than 20% of the total distribution.

1) Legal reserve

If the Company experienced profit for the year, the distribution of the statutory earnings reserve, either by new shares or by cash, shall be decided at the shareholders meeting, and the distribution amount is limited to the portion of legal reserve which exceeds 25% of the paid-in capital.

2) Special reserve

A regulation issued by the Securities and Futures Bureau requires a special reserve be made from the unappropriated earnings, equivalent to current income or loss and prior period-undistributed earnings from the reduction of other equity; the special reserve appropriated from prior period-undistributed earnings cannot be distributed. If the reductions of other equity reverse, the reverse parts can be distributed. The Company is applicable to the regulations in Interpretation No.1010012865 by FSC for recognizing special reserve.

3) Earnings appropriation and distribution

Earnings distributions for 2018 and 2017 were decided via the annual general meeting of the shareholders held on June 18, 2019 and June 14, 2018, respectively. The relevant dividend distributions to shareholders were as follows:

Dividends distributed to ordinary shareholders: Cash dividends	For the years ended December 31	For the years ended December 31	For the years ended December 31
	2018 per share (dollars) amount $ 11.00 3,018,038		2017
	per share (dollars)		per share (dollars) amount 9.50 2,606,487
	$ 11.00

As mentioned above, please browse through the relative information approved during the board of directors’ and shareholder’ s meeting on Market Observation Post System website of the Taiwan Stock Exchange.

The appropriation of the Company’s 2019 earnings was subject to a resolution approved by the board of directors and the annual shareholders’ meetings. Following the approval of those resolutions, related information can be obtained from the Market Observation Post System website of the Taiwan Stock Exchange.

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iv) Other equity (net of income tax)

Balance, January 1, 2019 Exchange differences on translation of foreign financial statements Balance, December 31, 2019 Balance, January 1, 2018 Exchange differences on translation of foreign financial statements Balance, December 31, 2018	Financial statements translation differences from foreign operations $ (6,862) (82,180) $ (89,042) $ (104,100) 97,238 $ (6,862)

(m) Earnings per share

The earnings per share were calculated as follows:

Basic earnings per share Profit attributable to ordinary stockholders Weighted average number of ordinary shares outstanding (in thousands) Basic earnings per share(in dollars) Diluted earnings per share Profit attributable to ordinary stockholders Weighted average number of ordinary shares outstanding (basic) (in thousands) Effect on employee's profit-sharing bonus (in thousands) Weighted average number of ordinary shares outstanding (diluted) (in thousands) Diluted earnings per share (in dollars)	For the years ended December 31
	2019 2018 $ 4,299,249 4,379,754 274,367 274,367 $ 15.67 15.96 For the years ended December 31

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (n) Revenue from contracts with customers

Main market： Americas Asia Europe the Middle East Africa Others Main product： Knitted fabrics Clothing	For the years ended December 31	For the years ended December 31
	2019 Clothing Knitted $ 15,724,763 519,655 1,389,468 6,691,412 2,075,759 4,384 74,160 696,678 23,286 448,916 264,208 212,447 $ 19,551,644 8,573,492 2019 $ 8,573,492 19,551,644 $ 28,125,136	2018
	Clothing $ 15,724,763 1,389,468 2,075,759 74,160 23,286 264,208 $ 19,551,644 2019 $ 8,573,492 19,551,644 $ 28,125,136	Clothing Knitted 15,883,257 332,797 1,576,552 6,540,450 1,667,564 2,039 49,121 736,275 19,919 455,604 221,016 93,615 19,417,429 8,160,780 2018 8,160,780 19,417,429 27,578,209

(o) Employees' profit-sharing bonus

The Company’s articles of incorporation require that earnings shall first be offset against any deficit, then, a minimum of 0.1% will be distributed as employee profit sharing bonus which is to be decided upon a proposal by the board of directors, and then approved at the shareholders’ meeting. Qualified employees are entitled to stock and cash distribution of the Company.

For the years ended December 31, 2019 and 2018, the estimated amounts of employee’ s profit sharing bonus amounted to $6,000 thousand, which was calculated based on the Company’s profit excluding tax as well as employee profit sharing bonus and earnings allocation a minimum of 0.1% as stated under the Company’s articles of incorporation. These employee’s bonuses were reported under cost of goods sold and operating expenses for the years ended December 31, 2019 and 2018. If there is the change after released financial reporting date in the following year, the difference is treated as a change in accounting estimate, and is charged to profit or loss for 2020 and 2019.

There was no difference between the estimated and distributed employee's profit sharing bonuses approved by the BOD for the year ended December 31, 2018, related information can be obtained from the Market Observation Post System website of the Taiwan Stock Exchange.

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(p) Results from non-operating activities

(i) Other income

The Group’s other income were as follows:

Interest income-bank deposit Rental income	For the years ended December 31
	2019 2018 $ 26,975 11,846 9,708 9,708 $ 36,683 21,554

• (ii) Other gains and losses, net

The Group’s other gains and losses were as follows:

Foreign exchange (loss)gain Loss on transaction for property Gain on disposal of investments Others Finance costs The details of finance costs were as follows: Interest expense-bank borrowings Interest expense-lease liabilities	For the years ended December 31 2019 2018 $ (17,663) 206,379 (6,532) (16,496) 217 - 6,127 7,372 $ (17,851) 197,255 For the years ended December 31 2019 2018 $ 60,782 46,332 2,278 - $ 63,060 46,332

• (iii) Finance costs

• (q) Financial instruments

• (i) Credit risk

1) Exposure to credit risk

The carrying amount of financial assets represents the maximum exposed amount to credit risk.

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Concentration of credit risk

As the Group has numerous clients, does not make concentrated transactions with any single client and scatters the sales region, there is no concentration of credit risk for accounts receivable.

• 3) Credit risk of accounts receivables

For details on credit risk of notes and accounts receivable, please refer to note 6(b).

(ii) Liquidity risk

The following are the contractual maturities of financial liabilities, including the estimated interest payments but excluding the impact of netting agreements.

December 31, 2019 Non-derivative financial liabilities Lease liabilities Unsecured bank loans Accounts and notes payable (related parties included) December 31, 2018 Non-derivative financial liabilities Secured bank loans Accounts and notes payable (related parties included)	Carrying amount $ 87,333 1,572,451 1,714,287 $ 3,374,071 $ 1,629,979 1,618,813 $ 3,248,792	Contractual cash flow 113,151 1,577,087 1,714,287 3,404,525 1,630,737 1,618,813 3,249,550	Within 12 months 21,206 1,577,087 1,714,287 3,312,580 1,630,737 1,618,813 3,249,550	1-2years 19,319 - - 19,319 - - -	2-5years Over 5 years 13,869 58,757 - - - - 13,869 58,757 - - - - - -

The Group is not expecting the cash flows included in the maturity analysis would occur significantly earlier or at significantly different amounts.

• (iii) Exchange rate risk

• 1) Exposure to currency risk

The Group’s significant exposure to foreign currency risk was as follows:

Financial assets Monetary items USD Financial liabilities Monetary items USD	December 31, 2019 Foreign currency Exchange rate NTD $ 177,157 29.98 5,311,167 43,536 29.98 1,305,209	December 31, 2019 Foreign currency Exchange rate NTD $ 177,157 29.98 5,311,167 43,536 29.98 1,305,209	December 31, 2018	December 31, 2018
	Foreign currency $ 177,157 43,536	Exchange rate 29.98 29.98	Foreign currency 188,341 39,572	Exchange rate NTD 30.715 5,784,894 30.715 1,215,454

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Sensitivity analysis

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, bank borrowings and accounts payable. A 1% depreciation or appreciation of the TWD against the USD as of December 31, 2019 and 2018 would have increased or decreased the net income after tax by $32,048 thousand and $36,556 thousand respectively. The analysis assumes that all other variables remain constant and ignores any impact of forecasted sales and purchases. The analysis is based on the same basis.

• 3) Foreign currency gain or loss on monetary items

The amounts of conversion gains and losses (including realized and unrealized) of monetary items of the Group which was converted into functional currency (that is the Group’ s expression currency), and the exchange rate information converted to the Company’s functional currency, NTD, are as follows:

USD	2019 Realized and unrealized exchange loss Average rate $ (17,663) 30.912	2018
	Realized and unrealized exchange loss $ (17,663)	Realized and unrealized exchange gain Average rate 206,379 30.149

• (iv) Interest rate analysis

The Group’ s exposure to interest rate risk arising from financial assets and liabilities is described in the liquidity risk part of this note.

The following sensitivity analysis is determined through the exposure to interest rate risk of derivative and non-derivative instruments on the reporting date. For floating rate liabilities, the analysis assumes that the balances of outstanding liabilities on the reporting date have been outstanding for the whole period, and their rational change intervals are being estimated. If the interest rate increases/decreases by 1%, representing the reasonable interest rates changes made by management.

If the interest rate increases/decreases by 1%, the Group's net income will decrease/increase by $1,829 thousand and $2,005 thousand for the years ended December 31, 2019 and 2018, respectively, with all other variable factors that remain constant. This is mainly due to the Group's borrowings in variable rates.

• (v) Fair value

The Group’s management considers its financial assets and financial liabilities measured at amortized cost to be the approximation of the fair value.

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(r) Financial risk management

• (i) Nature and extent

The Group has exposure to the following risks from its financial instruments:

• 1) Credit risk

• 2) Liquidity risk

• 3) Market risk

This note expresses the information of risk exposure and goals, policies and procedures for the Group to measure and manage risks. Please refer to notes in consolidated financial statements for further quantitative disclosures.

(ii) Risk management framework

The board of directors is responsible for the supervision of the Group’ s risk management framework.

The risk management policies are established to identify and analyze the Group’s exposure to risks, 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 changes in market conditions and the Group’ s activities. The Group, through its training and management standards and procedures, aim to develop a disciplines and constructive control environment, in which all employees understand their roles and obligations.

The audit committee of the Group oversees how the management complies in monitoring 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 internal audit sector of the Group reviews the risk management controls and procedure on scheduled and nonscheduled basis, and reports the results to the audit committee.

(iii) 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, and arises principally from the Group’s receivables from customers.

1) Accounts receivable

Every single client affects the credit risk exposure of the Group, but still, the management should consider the status of its clients, including the industry the client belongs to and the default risk of the country where the client is located. Because the transaction of the Group is not concentrated in one single client for 2019 and 2018, therefore, there is no concentration on credit risk for accounts receivable.

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

To minimize the risk of accounts receivable, the Group established a risk management procedure relating to the financial condition of the client, credit risk rating, historical transactions inside the Group, and the current economic situation that may affect the clients’ ability to pay up the bills. The Group also uses some credit-improved tools such as prepayments and credit insurance in order to reduce specific client’s credit risk.

2) Financial investments

The credit risk exposure in the bank deposits, fix income investments and other financial instruments are measured and monitored by the Group’ s finance department. As the Group deals with the banks and other external parties with good credit standing and financial institutions, corporate organization and government agencies 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) Guarantee

The Group only provide guarantee to wholly owned subsidiaries. The Group did not provide guarantee to any third party as of December 31, 2019 and 2018.

(iv) Liquidity risk

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

The Group estimates the cost of products and services based on accounting policy in order to assist in monitoring its cash flow requirements and optimizing its cash return on investments. Generally, the Group ensures that there is sufficient cash to cover expected operating expenditure demand, but excluding potential influence under unexpected extremely condition (i.e. nature disaster). In addition, the total amount of unused credit term as of December 31, 2019 and 2018 amounted to $5,384,289 thousand and $6,150,541 thousand respectively.

(v) Market risk

Market risk is the risk that comes from changes in market prices such as changes of foreign exchange rates, interest rates and equity prices, impacting the Group’s income or the value of financial instruments held by the Group. The objective of market risk management is to manage and control market risk exposures within acceptable range and optimize the return on investments.

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group buys and sells derivatives, and also incurs financial liabilities, in order to manage market risks. All such transactions are carried out within the guidelines set by the board of directors.

1) Exchange rate risk

The Group’s exposure to currency risk is on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of the Group, primarily the New Taiwan Dollars (NTD). The currencies used in these transactions are denominated in NTD, USD, VND and CNY.

At any point of time, the Group’s principle is to regularly hedge using the net value after offsetting assets and liabilities. The choice of hedging exchange rate risk instruments is based on the cost and the period of hedging. The Group mainly hedges its currency risk using the foreign exchange contracts.

2) Interest rate risk

All of the Group’s assets and liabilities bear floating interest rates, and thus suffer from cash flow interest rate risk exposure. The detail of floating interest rates of the Group’s assets and liabilities are described in note of liquidity risk management.

(s) Capital management

The Board’ s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence, and to sustain the future development of the business. The capital includes common stock, capital surplus, retained earnings and other equities. Therefore, the capital management of the Group focuses on ensuring necessary financial resources and increase stockholders’ value, examining the capital return periodically. The Group’s return on capital as of December 31, 2019 and 2018 were as follows:

Net income Total capital Return on capital	For the years ended December 31
	2019 2018 $ 4,299,249 4,379,754 $ 18,123,752 16,931,030 % 23.72 % 25.87

The Group does not have any plan of purchasing treasury stock.

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(7) Related-party transactions:

• (a) Names and relationship with related parties

The followings are entities that have had transactions with related party during the periods covered in the consolidated financial statements.

Name of related party	Relationship with the Group
E&I Printing Company Limited (E&I printing)	Associate
Best Information Co., Ltd (Best) (Note)	Associate
Yi Yuan CO., Limited (Yi Yuan)	The entity’s chairman is the second immediate
	family of the Company’s chairman
Eclat Education Foundation(Eclat foundation)	Founded by donation of the Company

• Note: The Company sold the entire shareholding of Best on April 15, 2019. Henceforth Best is not the Company’s associate any more.

• (b) Material transactions among related parties

• (i) Operating revenue

Operating revenue
Associates	For the years ended December 31
	2019 2018 $ 75 132

Selling price to associates is the same as to general sales. The term for receivables is O/A 30 to 60 days.

• (ii) Purchasing and processing

Associates	For the years ended December 31
	2019 2018 $ 26,807 15,689

Purchasing price to subsidiaries is the same as to general purchases. The term for payables is O/A 30 to 60 days.

• (iii) Receivables from related parties

Account	Types of related parties Associates	December 31, 2019 December 31, 2018 $ - 53
Notes receivable

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (iv) Payables to related parties

Account	Types of related parties Associates	December 31, 2019 December 31, 2018 $ 2,394 1,926
Accounts payable -related parties

• (v) Guarantees and endorsements

The company guarantees and endorsements for related parties are as follows:

Types of related parties Subsidiaries-Eclat Cayman	December 31, 2019 December 31, 2018 $ - 1,489,678

• (vi) Leases

Types of related parties Associates Other related parties	For the years ended December 31
	2019 2018 $ 150 600 300 300 $ 450 900

The Group charged their rentals based on the local market prices which are paid monthly.

(vii) Others

Associates Other related parties	Software Maintenance For the years ended December 31	Software Maintenance For the years ended December 31	Donations
			For the years ended December 31
	2019 $ 122 - $ 122	2018 428 - 428	2019 2018 - - 2,000 2,000 2,000 2,000

• (c) Key management personnel transactions

Key management personnel compensation comprised:

Short-term employee benefits	For the years ended December 31
	2019 2018 $ 112,437 107,783

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Cars provided to key management personnel:

Cost Numbers Book value	December 31, 2019 December 31, 2018 $ 28,638 28,638 $ 8 8 $ 5,806 7,843

(8) Pledged assets:

The Group’s pledged assets are as follows:

Pledged assets	Pledged to secure Natural gas and electricity security deposit Electricity security deposit Medium to long term financing	December 31, 2019 December 31, 2018 $ 2,389 4,113 3,013 - 3,381,772 3,381,772 $ 3,387,174 3,385,885
Other financial assets-current Other financial assets-non-current Land

(9) Commitments and contingencies:

(a) The balance of unused letters of credit of the Group was as follows:

	December 31,	December 31,
	2019	2018
$	61,255	137,617

(b) Contingent liabilities:

The Group served as the guarantor of Eclat Cayman, and the balances of short-term borrowings with the banks were as follows:

December	December	31,	December 31,
	2019		2018
US$	-		16,500

(10) Losses due to major disasters:None.

(11) Subsequent events:None.

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(12) Other:

(a) The Group’s employee benefits, depreciation and amortization expenses, categorized by function, were as follows:

	For the years ended December 31, 2019	For the years ended December 31, 2019	For the years ended December 31, 2019	For the years ended December 31, 2018	For the years ended December 31, 2018	For the years ended December 31, 2018
	Operating costs	Operating expenses	Total	Operating costs	Operating expenses	Total
Employee benefits Salary Labor and health insurance Pension Director's remuneration Others Depreciation Amortization	2,235,144 196,480 69,072 - 155,755 687,363 10,297	1,278,306 99,390 41,355 5,082 60,380 130,608 10,788	3,513,450 295,870 110,427 5,082 216,135 817,971 21,085	2,024,583 183,848 55,908 - 142,041 693,432 3,260	1,167,310 89,445 40,058 4,040 62,752 126,432 10,250	3,191,893 273,293 95,966 4,040 204,793 819,864 13,510

(b) Discontinued operation

The Group's board of directors approved Unison's dissolution on December 7, 2016, and launched its liquidation procedure in 2017. The operation result and cash flow of discontinued operation were as follows:

Result of discontinued operations: Operating expenses Gross loss Non-operating income and expense Loss from discontinued operations, net of tax Basic earnings per share Diluted earnings per share Cash flow of discontinued operations Cash outflow generated from operating activities

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(14) Segment information:

• (a) General information

The Group has two reportable segments: knitted division, which produces and sells flexible textile and clothing division, which produces, process and sells clothing.

These two reportable segments are regional operating units and provide different products. Because every regional operating unit needs different techniques and marketing strategy, each should be managed separately; most of operating units are acquired separately and the management team at the time of acquisition is kept.

The Group does not allocate income tax expense (gain), investment income or loss under equity method and extraordinary gain or loss to reportable segments. The reported amount is the same as the amount of the financial statements used by operating decision makers.

• (b) Information about income/loss, assets, liabilities, basis for measurement and reconciliation for reportable segments

The Group’ s operating departments accounting policies are all the same as note4 “ Summary of accounting policies”. The Group’s operating department measures its income or loss at operating income or loss before income tax and treats operating income or loss before income tax as the basis of assessing performance; the Group treats sales and transfers among departments as related parties’ transactions and is measured at current fair value.

Revenue: From external clients Intersegments Interest income Total revenue Interest expense Depreciation and amortization Profit or loss from reportable segment Profit or loss from reportable discontinued operations Non-current assets capital expenditure Assets of reportable segments Liabilities of reportable segments	For	the year ended December 31, 2019 Clothing Adjustments and write off Total 19,551,644 - 28,125,136 3,496,414 (8,278,516) - 25,071 (8,752) 26,975 23,073,129 (8,287,268) 28,152,111 43,504 (8,752) 63,060 388,438 - 839,056 3,899,247 (14,421) 5,422,000 52,206 (56,000) (3,794) 817,790 - 1,295,127 17,075,602 (4,901,405) 23,319,420 3,150,442 (364,787) 5,195,668
	Knitted $ 8,573,492 4,782,102 10,656 $ 13,366,250 $ 28,308 450,618 $ 1,537,174 $ - $ 477,337 $ 11,145,223 $ 2,410,013	Clothing 19,551,644 3,496,414 25,071 23,073,129 43,504 388,438 3,899,247 52,206 817,790 17,075,602 3,150,442

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Revenue: From external clients Intersegments Interest income Total revenue Interest expense Depreciation and amortization Profit or loss from reportable segment Profit or loss from reportable discontinued operations Non-current assets capital expenditure Assets of reportable segments Liabilities of reportable segments	For	the year ended December 31, 2018	the year ended December 31, 2018
	Knitted $ 8,160,780 4,647,305 9,641 $ 12,817,726 $ 23,562 426,056 $ 1,194,819 $ - $ 541,457 $ 9,922,213 $ 2,239,162	Clothing 19,417,429 3,486,272 15,571 22,919,272 36,136 407,318 4,327,023 (2,184) 265,715 16,977,131 3,859,778	Adjustments and write off Total - 27,578,209 (8,133,577) - (13,366) 11,846 (8,146,943) 27,590,055 (13,366) 46,332 - 833,374 (48,693) 5,473,149 - (2,184 - 807,172 (4,758,462) 22,140,882 (889,088) 5,209,852

• (c) Geographical information

Geographical information of the Group is as follows; revenue is based on the place where clients locate and non-current assets are based on the place where assets locate.

Region Revenue from external clients: Americas Asia Europe the Middle East Africa Other countries Region Non-current assets Taiwan Asia Total	For the years ended December 31
	2019 2018 $ 16,244,418 16,216,054 8,080,880 8,117,002 2,080,143 1,669,603 770,838 785,396 472,202 475,523 476,655 314,631 $ 28,125,136 27,578,209 For the years ended December 31

Non-current assets include property, plant and equipment, right-of-use assets, intangible assets and other assets, excluding financial instruments and deferred tax assets.

(Continued)

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ECLAT TEXTILE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(d) Major Customers A Customer	For the years ended December 31
	2019 2018 $ 4,289,609 3,435,550

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6.5 Financial Statements for the Years Ended December 31, 2019 and 2018, and Independent Auditors’ Report

Independent Auditors’ Report

To the Board of Directors of Eclat Textile Co., Ltd.:

Opinion

We have audited the accompanying financial statements of Eclat Textile Co., Ltd. (the “ Company”), which comprise the balance sheets as of December 31, 2019 and 2018, and the statements of comprehensive income, statements of changes in equity and statements of 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, 2019 and 2018, and its financial performance and its cash flows for the years ended December 31, 2019 and 2018 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (“ IFRSs” ), International Accounting Standards (“ IASs” ), interpretation as well as related guidance endorsed 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 Certification of Financial Statements by Certified Public Accountants” and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditor’ s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. 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 for the year ended December 31, 2019. 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.

Key audit matter for the Company is stated as follow:

Revenue recognition and cut-off

Please refer to Note 4(n) for details of the accounting policies of the recognition of revenue and Note 6(m) operating revenues.

How the matter was addressed in our audit

Revenue recognition of the Company is the main concern of the financial report users. Therefore, the assessment of revenue recognition is the key audit items in our audit.

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Our principal audit procedures included:

Testing the design and implementation of internal control over revenue recognition, inspecting the accuracy of revenue recognition, and reconciling between sales systems and general ledger; analyzing the company's main sources of revenues to evaluate whether there are major anomalies; conditions for revenue recognition and to further inspect related transaction documents to ensure the revenue is recorded in the appropriate 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 Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs, IASs, interpretation as well as related guidance endorsed 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 financial statements free from material misstatement 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 (including members of the Audit Committee) are responsible for overseeing the Company’s financial reporting process.

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 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 auditing standards generally accepted in 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 auditing standards generally accepted in Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the financial statements 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.

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1. 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 auditors’ 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 auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

2. 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.

3. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the Company audit.

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 for the year ended December 31, 2019 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 Hui-Chih Kou and HsinYi Kuo.

KPMG

Taipei, Taiwan (Republic of China) March 5, 2020

Notes to Readers

The accompanying 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 financial statements are those generally accepted and applied in the Republic of China.

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

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					December 31, 2018	Amount %			262,688		1,092,205 6	276,118	871,006 4	728,433 4		35 479	3 265 929___	3 265 929___		5,946		2,016	1 488	9 450	3 275 379___		2 743 671- 3 769 547-	2 743 671- 3 769 547-	2 743 671- 3 769 547-	2 743 671- 3 769 547-	2,318,613 11	104,100	8 001 961_	IO 424 674_	(6,862) _	16 931 030___	20,206,409100	20,206,409100
					December 31, 2019	Amount %			$ 263,601 I		1,168,715 5	359,240 2	815,999 4	591,039 3	17,229	46Oil	3 261 834 _			12,225	19,726	5,132	2 539	39 622	3 301 456 _		2 743 671___		3 769 547___		2,756,589 13	6,862	8 936 125_	11 699 576_	(89,042) _	18 123 752 _	$ 21,425,208100
(English Translation of Financial Statements Originally Issued in Chinese)	ECLAT TEXTILE CO., LTD.	Balance Sheets	December 31, 2019 and 2018	(Expressed in Thousands of New Taiwan Dollars)	December 31, 2019 December 31, 2018	Amount % Amount % Liabilities and Equity		Current liabilities:	$ 3,289,321 16 2,397,986 12 2150 Noles paale		13,245 2,065 2170 Accouots paable	3,016,695 14 3,811,947 19 2180 Accounts paale to relaed paties (note 7)	9,196 69,429 2200 Oter paables (note 6 (i))	3,490,168 16 3,498,815 17 2230 Curent ta liabilities	207 213 195 836 2280 Curent lease liabilities (note 6 (h))	10,025,838_ 9 976 078- 2399 Oter current liabilities, others	Total current liabilities		4,516,119 21 3,860,948 19 Non-current liabilities:	6,716,581 32 6,149,445 31 2570 Defered ta liabilities (note 6())	44,993 2580 Non-curent lease liabilities (note 6 (h))	5,111 9,104 2640 Net defned beneft liability, non-current (note 6 (i))	54,080 20,381 2645 G tee deposits received	62 486 190 453___ Total non-current liabilities	11,399,370 53 10,230,331 51 Total liabilities	**Equity (Note 6 (k : **	3110 Ordina share		3200 Caital surlus	Retained earings:	3310 Lega reserve	3320 Specia reserve	3350 Unappropriated retaied eags	Total retained earnings	3490 Oter equity, oters	Total equity	$ 21,425,208100 20,206,409100 Total liabilities and equity
						Assets		Current assets:	Cash ad cash equivalents (note 6 (a))		Notes receivable, net (includig relaed parties) (notes 6 (b) ad 7)	Accounts receivable, net (note 6 (b))	Other receivables, net	Inventories, net (note 6 (c))	Other curent assets (notes 6(g) ad 8)	Total current assets	Non-current assets:	Investents accounted fr using equity metod (note 6 ( d))		Property, plat ad equipment (notes 6 (e) ad 8)	Right-of-use assets (note 6 (f	lntagible assets	Defred ta assets (note 6())	Other non-current assets (note 6 (g))	Total non-current assets												Total assets
									1100		1150	1170	1200	1310	1470				1550	1600	1755	1780	1840	1900

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(English Translation of Financial Statements Originally Issued in Chinese) ECLAT TEXTILE CO., LTD.

Notes to the Financial Statements

For the years ended December 31, 2019 and 2018

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

(1) Company history

Eclat Textile Co., Ltd. (the “ Company” ) was incorporated in November 1977. The Company has established the Tashan Plant, Miao-li Plant and Hsichou Plant in Miao-li, and Dayuan Plant in Taoyuan. It has mainly been involved in the manufacturing and marketing of knitwear.

(2) Approval date and procedures of the financial statements

On March 05, 2020, the board of directors approved and noted the financial statements as of and for the year ended December 31, 2019.

(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. (“FSC”) which have already been adopted.

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2019.

are effective for annual periods beginning on or after January 1, 2019.
	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
IFRS 16 “Leases”	January 1, 2019
IFRIC 23 “Uncertainty over Income Tax Treatments”	January 1, 2019
Amendments to IFRS 9 “Prepayment features with negative compensation”	January 1, 2019
Amendments to IAS 19 “Plan Amendment, Curtailment or Settlement”	January 1, 2019
Amendments to IAS 28 “Long-term interests in associates and joint ventures”	January 1, 2019
Annual Improvements to IFRS Standards 2015–2017 Cycle	January 1, 2019

Except for the following items, the Company believes that the adoption of the above IFRSs would not have any material impact on its financial statements. The extent and impact of signification changes are as follows:

• (i) IFRS 16“Leases”

IFRS 16 replaces the existing leases guidance, including IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases – Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

The Company applied IFRS 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognized in retained earnings on January 1, 2019. The details of the changes in accounting policies are disclosed below:

1) Definition of a lease

Previously, the Company determined at contract inception whether an arrangement is or contains a lease under IFRIC 4. Under IFRS 16, the Company assesses whether a contract is or contains a lease based on the definition of a lease, as explained in Note 4(k).

On transition to IFRS 16, the Company elected to apply the practical expedient to grandfather the assessment of which transactions are leases. The Company applied IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed for whether there is a lease. Therefore, the definition of a lease under IFRS 16 was applied only to contracts entered into or changed on or after January 1, 2019.

2) As a lessee

As a lessee, the Company previously classified leases as operating or finance leases based on its assessment of whether the lease transferred significantly all of the risks and rewards incidental to ownership of the underlying asset to the Company. Under IFRS 16, the Company recognizes right-of-use assets and lease liabilities for most leases – i.e. these leases are on-balance sheet.

• Leases classified as operating leases under IAS 17

At transition, lease liabilities were measured at the present value of the remaining lease payments, discounted at the Company’ s incremental borrowing rate as at January 1, 2019. Right-of-use assets are measured at either:

• － their carrying amount as if IFRS 16 had been applied since the commencement date, discounted using the lessee’ s incremental borrowing rate at the date of initial application – the Company applied this approach to its largest property leases; or

• － an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments – the Company applied this approach to all other lease.

In addition, the Company used the following practical expedients when applying IFRS 16 to leases.

• － Applied a single discount rate to a portfolio of leases with similar characteristics.

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

• －

  • Excluded initial direct costs from measuring the right-of-use asset at the date of initial application.

• － Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease.

• 3) Impacts on financial statements

On transition to IFRS 16, the Company recognized additional $57,936 thousands of rightof-use assets, $58,405 thousands of lease liabilities and $1,580 of investments accounted for using equity method, recognizing the difference in retained earnings. When measuring lease liabilities, the Company discounted lease payments using its incremental borrowing rate at January 1, 2019. The weighted-average rate applied is 1.095%.

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

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2020 in accordance with Ruling No. 1080323028 issued by the FSC on July 29, 2019:

	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
Amendments to IFRS 3 “Definition of a Business”	January 1, 2020
Amendments to IFRS 9, IAS39 and IFRS7 “Interest Rate Benchmark Reform”	January 1, 2020
Amendments to IAS 1 and IAS 8 “Definition of Material”	January 1, 2020

The Company assesses that the adoption of the abovementioned standards would not have any material impact on its financial statements.

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

As of the date, the following IFRSs that have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

Board (IASB), but have yet to be endorsed by the FSC:
	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between	Effective date to
an Investor and Its Associate or Joint Venture”	be determined
	by IASB
IFRS 17 “Insurance Contracts”	January 1, 2021
Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”	January 1, 2022

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

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

(4) Summary of significant accounting policies:

The significant accounting policies presented in the financial statements are summarized as follows. Except for Note 3 and 4(k), the following accounting policies were applied consistently through all reporting periods presented in the financial statements.

(a) Statement of compliance

The 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

The financial statements have been prepared on the historical cost basis except for the net defined benefit liabilities are measured at the fair value of the plan assets, less the present value of the defined benefit obligation.

(ii) Functional and presentation currency

The functional currency of the Company is determined based on the primary economic environment in which the entities operate. The financial statements are presented in New Taiwan Dollar, which is the Company’ s functional currency. All financial information presented in New Taiwan Dollar has been rounded to the nearest thousand.

(c) Foreign currency

• (i) Foreign currency transaction

Transactions in foreign currencies are translated into the respective functional currencies of the 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. 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 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 transaction.

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the Company’s functional currency at the exchange rates at the reporting date. The income and expenses of foreign operation are translated into the Company’ s functional currency at the average rate. Foreign currency differences are recognized in other comprehensive income, and presented in the translation reserve in equity.

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

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 Company disposes any 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 non-controlling interest. When the Company disposes only part of investment in an associate of joint venture that includes a foreign operation while retaining significant or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, the foreign currency exchange gains and losses arising from such items are considered to form part of a net investment in the foreign operation and are recognized in other comprehensive income, and presented in the translation reserve in equity.

• (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 intends to sell or consume it, in its normal operating cycle;

• (ii) The Company holds the asset primarily for the purpose of trading;

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

• (iv) The asset is cash or 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.

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

• (ii) The Company holds the liability primarily for the purpose of trading;

• (iii) The liability 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 the issue of equity instruments do not affect its classification.

• (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 which are subject to an insignificant risk of changes in value. Term deposits that meet the above requirements 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.

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

(f) Financial instruments

All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument. A trade 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. 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.

• 2) 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, notes and accounts receivable, other receivables, refundable deposits and other financial assets).

The Company measures loss allowances at an amount equal to lifetime expected credit loss (ECL), except for the following which are measured as 12-month ECL:

• ‧ bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

Loss allowance for accounts receivable is always measured at an amount equal to lifetime ECL.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

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.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Company’ s historical experience and informed credit assessment as well as forwardlooking information.

The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 60 days past due.

The Company considers a financial asset to be in default when the financial asset is more than 180 days past due.

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 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 past due; or

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

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

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

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. For corporate customers, 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.

3) 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

1) Financial liabilities

Financial liabilities are classified as measured at amortized cost.

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.

2) Derecognition of financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire.

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.

3)

• Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet, 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.

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

(g) Inventories

Inventories are necessary expenditures and charges for bringing the inventory to a salable and useable condition and location. In the case of manufactured overhead, cost includes an appropriate share of production overheads based on normal operating capacity of labor hours or machine hours and is allocated to finish goods and work-in-progress. Inventories are measured at the lower of cost and net realizable value subsequently and the cost of inventories is calculated using the monthly weighted-average method. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(h) Investment in associates

Associates are those entities in which the Company has significant influence, but not control, over the 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 Company’s financial statements include the Company’s share of the profit or loss and other comprehensive income of equity accounted investees, after adjustments to align the accounting policies with those of the Company, from the date that significant influence commences until the date that 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.

• (i) Investment in subsidiaries

In preparing the financial statements, the Company appraises its investees by using equity method. Under equity method, current income and other comprehensive income from financial statement is the same as the consolidated income and other comprehensive income attributable to parent. Shareholders’ equity is the same as the consolidated shareholders’ equity.

The Company treated the changes of subsidiaries’ equity as transactions among owners.

• (j) Property, plant and equipment

• (i) Recognition and measurement

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

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

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 cost

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: 5 to 60 years.

• 2) Machinery and equipment: 2 to 25 years.

• 3) Transportation equipment: 3 to 8 years.

• 4) Office equipment: 5 to 9 years.

• 5) Miscellaneous equipment: 3 to 15 years.

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

• (k) Leases

Applicable from January 1, 2019

• (i) Identifying a lease

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. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

• 1) the contract involves the use of an identified asset – this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; and

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

• 2) the Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

• 3) the Company has the right to direct the use of the asset throughout the period of use only if either:

  • the Company has the right to direct how and for what purpose the asset is used throughout the period of use; or

  • the relevant decisions about how and for what purpose the asset is used are predetermined and:

  • － the Company has the right to operate the asset throughout the period of use, without the supplier having the right to change those operating instructions; or

  • － the Company designed the asset in a way that predetermines how and for what purpose it will be used throughout the period of use.

• (ii) 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.

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

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

• － 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 an extension or termination option; or

• －

• there is any lease modifications

(iii) 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.

The lessor recognizes a finance lease receivable at an amount equal to its net investment in the lease. Initial direct costs, such as lessors to negotiate and arrange a lease, are included in the measurement of the net investment. The interest income is recognized over the lease term based on a pattern reflecting a constant periodic rate of return on the net investment in the lease. The Company recognizes lease payments received under operating leases as income on a straight-line basis over the lease term as part of ‘other income’.

Applicable before January 1, 2019

• (i) Lessor

A finance lease asset is recognized on a net basis as lease receivable. Initial direct costs incurred in negotiating and arranging an operating lease are added to the net investment in the leased asset. The finance income is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the receivable.

Lease income from an operating lease is recognized in income on a straight-line basis over the lease term. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset, and recognized as an expense over the lease term on the same basis as the lease income. Incentives granted to the lessee to enter into the operating lease are spread over the lease term on a straight-line basis so that the lease income received is reduced accordingly.

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

Contingent rents are recognized as income in the period when the lease adjustments are confirmed.

(ii) Lessee

Leases in which the Company assumes substantially all of the risks and rewards of ownership are classified as finance leases. On initial recognition, the lease asset is measured at an amount equal to the lower of its fair value or the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to the asset.

Minimum lease payments made under finance leases are apportioned between the finance cost and the reduction of the outstanding liability. The finance cost is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Other leases are operating leases and are not recognized in the Company’s balance sheets.

Payments made under operating leases (excluding insurance and maintenance expenses) are recognized in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognized as an integral part of the total lease expense, over the term of the lease.

Contingent rent is recognized as expense in the period in which it is incurred. Recognition of income arising from a sale and leaseback transaction depends upon the type of lease involved. If a sale and leaseback transaction results in a finance lease, any excess of sales proceeds over the carrying amount is deferred and amortized over the lease term. If a sale and leaseback transaction results in an operating lease, and it is clear that the transaction is established at fair value, any profit or loss is recognized immediately. If the sales price is below fair value, any profit or loss shall be recognized immediately except that if the loss is compensated for by future lease payments at below-market price, it is deferred and amortized in proportion to the lease payments over the period for which the asset is expected to be used. If the sales price is above fair value, the excess over fair value is deferred and amortized over the period for which the asset is expected to be used.

For operating leases, if the fair value at the time of a sale and leaseback transaction is less than the carrying amount of the asset, a loss equal to the amount of the difference between the carrying amount and the fair value shall be recognized immediately.

(l) Intangible assets

• (i) Recognition and measurement

Other intangible assets are acquired by the Company and have finite useful lives are measured at cost less accumulated amortization.

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditures are recognized in profit or loss as incurred.

(iii) Amortization

Amortization is calculated over the cost of the asset, less its residual value, and is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use.

The estimated useful lives for current and comparative periods are as follows:

Software ： 2 to 3 years.

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

(m) Impairment of non-financial assets

At each reporting date, the Company 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.

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 CGUs.

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 recognition

• (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.

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

The Company manufactures and sells elastic fabrics and clothing. The Company recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’ s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied.

A receivable is recognized when the goods are delivered as this is the point in time that the Company has a right to an amount of consideration that is unconditional.

(o) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution plan 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.

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

• (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 combination 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 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 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 and associates 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 taxes are measured at tax rates that are expected to be applied to temporary differences when they reverse, 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.

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

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; such reductions are reversed when the probability of future taxable profits improves.

(q) Earnings per share

The Company reports the basic earnings per share and the diluted earnings per share. The basic earnings per share are calculated based on the profit attributable to the ordinary shareholder of the Company divided by weighted average number of ordinary shares outstanding. The diluted earnings per share is calculated based on the profit attributable to ordinary shareholders of the Company, divided by weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares.

(r) Operating segments

The Company has already disclosed the segment information in the consolidated financial statement; therefore, the Company need not disclose the segment information again in the financial statement.

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

The preparation of the financial statements in conformity with the Regulations and the IFRSs endorsed by the FSC requires management to make 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.

(6) Explanation of significant accounts:

(a) Cash and cash equivalents

Cash Bank deposits Term deposits Cash and cash equivalents	December 31, 2019 December 31, 2018 $ 2,732 2,413 1,994,689 1,595,520 1,291,900 800,053 $ 3,289,321 2,397,986

Please refer to note 6 (p) for the exchange risk, interest rate risk, and sensitivity analysis of the financial assets and liabilities of the Company.

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

(b) Notes receivable and accounts receivable

Notes receivable—operating activities Accounts receivable Less：allowance for doubtful accounts Total	December 31, 2019 December 31, 2018 $ 13,245 2,065 3,040,781 3,836,033 (24,086) (24,086) $ 3,029,940 3,814,012

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, notes and accounts receivable have been grouped based on shared credit risk characteristics and the days past due, as well as incorporated forward looking information, including the macroeconomic and related industrial information.

The loss allowance provisions were determined as follows ：

Current Within 30 days past due 31~120 days past due Over 121 days past due Current Within 30 days past due 31~120 days past due Over 121 days past due	December 31, 2019	December 31, 2019
	Gross carrying amount Weighted- average loss rate Loss allowance provision $ 2,985,433 0.42% 12,335 60,736 16.14% 9,804 7,233 18.30% 1,323 624 100.00% 624 $ 3,054,026 24,086 December 31, 2018
	Gross carrying amount $ 3,716,187 117,174 4,223 514 $ 3,838,098	Weighted- average loss rate Loss allowance provision 0.49% 18,067 3.22% 3,771 41.05% 1,734 100.00% 514 24,086

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

Beginning balance (Ending balance)	For the years ended December 31
	2019 2018 $ 24,086 24,086

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

None of notes receivable and accounts receivable held by the Company were pledged, collateralized or discounted as of December 31, 2019 and 2018.

Accounts receivable of the Company have been insured accounts receivable credit risk. The insured amounts are $154,100 thousand and $514,914 thousand as of December 31, 2019 and 2018. Guaranteed fraction is 90% of reviewed credit of policyholder; the recoverable amount of the insurance is considered when deciding impairment amount of accounts receivable.

The Company has signed accounts receivable factoring contracts without recourse with financial institutions. As stated in the contract, the Company doesn't have to bear the risks of uncollectable accounts receivables but the loss incurred due to commercial arguments, and hence meets the criteria of derecognition of financial assets. Factored accounts receivable which are not due as of the report date are as follows ：

		December 31, 2019	December 31, 2019
Counterparty	Factored amount $ 774,381 $ 182,833	Acceptable advances Amount collected in advance 574,719 774,381 653,609 182,833 December 31, 2018		Interest rate Pledged items 2.42%~2.57% None 2.27%~2.38% None
E.sun Bank SHANGHAI Bank
Counterparty		Acceptable advances 1,265,971	Amount collected in advance 240,600	Interest rate Pledged items 2.87%~3.44% None
E.sun Bank

(c) Inventories

Raw materials Supplies Work in progress Finished goods	December 31, 2019 December 31, 2018 $ 2,093,187 2,116,561 549,175 512,323 656,412 733,524 191,394 136,407 $ 3,490,168 3,498,815

There was no recognized loss of inventory price due to write-downs from inventories to net realizable value for 2019 and 2018.

None of inventories held by the Company were pledged as of December 31, 2019 and 2018.

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

(d) Investment under equity method

A summary of the Company’s financial information for equity-accounted investees at the reporting date is as follows:

Subsidiaries Associates	December 31, 2019 December 31, 2018 $ 4,516,119 3,846,176 - 14,772 $ 4,516,119 3,860,948

• (i) Subsidiaries: Please refer to consolidated financial statements.

• (ii) None of investment under equity method held by the Company was pledged as of December 31, 2019 and 2018.

(e) Property, plant and equipment

The cost and depreciation of the property, plant and equipment of the Company are as follows:

Cost: Balance at January 1, 2019 Additions Disposals Reclassification Balance as of December 31, 2019 Balance at January 1, 2018 Additions Disposals Reclassification Balance as of December 31, 2018 Depreciation: Balance at January 1, 2019 Depreciation Reclassification Disposals Balance as of December 31, 2019 Balance at January 1, 2018 Depreciation Disposals Balance as of December 31, 2018 Carrying amounts: Balance as of December 31, 2019 Balance as of December 31, 2018	Land $ 4,790,091 - - - $ 4,790,091 $ 4,790,091 - - - $ 4,790,091 $ - - - - $ - $ - - - $ - $ 4,790,091 $ 4,790,091	Buildings 1,192,721 81,807 - 187,448 1,461,976 1,190,268 2,453 - - 1,192,721 541,082 50,130 - - 591,212 494,770 46,312 - 541,082 870,764 651,639	Machinery and equipment 1,841,173 86,260 (75,146) 157,713 2,010,000 1,837,583 15,001 (42,073) 30,662 1,841,173 1,418,637 162,150 (3,637) (68,290) 1,508,860 1,278,569 172,992 (32,924) 1,418,637 501,140 422,536	Transportation equipment 43,697 2,734 - - 46,431 42,554 4 (1,011) 2,150 43,697 31,407 3,616 - - 35,023 27,553 4,865 (1,011) 31,407 11,408 12,290	Office equipment 113,802 3,283 (1,623) - 115,462 111,219 2,583 - - 113,802 98,142 5,777 - (1,623) 102,296 91,277 6,865 - 98,142 13,166 15,660	Miscellaneous equipment 208,846 11,097 (11,901) (17,243) 190,799 204,144 5,591 (1,335) 446 208,846 153,823 24,524 (17,291) (11,670) 149,386 125,078 30,081 (1,336) 153,823 41,413 55,023	Construction in progress Total 202,206 8,392,536 468,514 653,695 - (88,670) (182,121) 145,797 488,599 9,103,358 - 8,175,859 202,206 227,838 - (44,419) - 33,258 202,206 8,392,536 - 2,243,091 - 246,197 - (20,928) - (81,583) - 2,386,777 - 2,017,247 - 261,115 - (35,271) - 2,243,091 488,599 6,716,581 202,206 6,149,445

The property, plant and equipment are pledged or mortgaged as collateral for loans as of December 31, 2019 and 2018, please refer to note 8.

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

(f) Right-of-use assets

The Company leases assets including buildings, transportation equipment, office equipment and miscellaneous equipment. Information about leases for which the Company as a lessee was presented below:

Cost: Balance at January 1, 2019 Effects of retrospective application Restated balance at January 1, 2019 Additions Disposal Balance at December 31, 2019 Accumulated depreciation: Balance at January 1, 2019 Effects of retrospective application Restated Balance at January 1, 2019 Depreciation Disposal Balance at December 31, 2019 Carrying amount: Balance as of December 31, 2019	Buildings $ - 46,230 46,230 3,889 - $ 50,119 $ 12,394 12,394 14,191 - $ 26,585 $ 23,534	Transportation equipment - 40,380 40,380 10,248 (283) 50,345 18,129 18,129 13,645 (94) 31,680 18,665	office equipment - 628 628 2,102 - 2,730 28 28 930 - 958 1,772	Miscellaneous equipment Total - - 2,272 89,510 2,272 89,510 16,239 - (283) 2,272 105,466 1,023 31,574 1,023 31,574 227 28,993 - (94) 1,250 60,473 1,022 44,993

(g) Other current or non-current assets

Current:

Tax refund receivables Payment in advance Prepaid expense Other prepaid Temporary payments Office supplies Other financial assets Prepaid sales tax	December 31, 2019 December 31, 2018 $ 42,285 77,921 42,356 65,065 8,501 23,477 7,904 6,798 46,065 8,072 1,713 1,961 2,000 2,000 56,389 10,542 $ 207,213 195,836

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

Non-current:

Prepayments for equipment Refundable deposits (h) Lease liabilities Company's lease liabilities were as follow: Current Non-current For the maturity analysis, please refer to note 6(p). The amounts recognized in profit or loss were as follows:	December 31, 2019 December 31, 2018 $ 59,610 187,578 2,876 2,875 $ 62,486 190,453 December 31, 2019 $ 17,229 $ 19,726	December 31, 2019 December 31, 2018 $ 59,610 187,578 2,876 2,875 $ 62,486 190,453 December 31, 2019 $ 17,229 $ 19,726	December 31, 2019 December 31, 2018 $ 59,610 187,578 2,876 2,875 $ 62,486 190,453 December 31, 2019 $ 17,229 $ 19,726	December 31, 2019 December 31, 2018 $ 59,610 187,578 2,876 2,875 $ 62,486 190,453 December 31, 2019 $ 17,229 $ 19,726
			$ 17,229 $ 19,726

			For the years	For the years
			ended
		December		31,
			2019
Interest on lease liabilities		$		700
Expenses relating to short-term leases		$	3,611
Expenses relating to leases of low-value assets, excluding short-term leases of		$		447
low-value assets
The amounts recognized in the statement of cash flows for	Company was as follows:
			For the years
			ended
		December		31,
			2019
Total cash outflow for leases		$	35,236

(i) Real estate leases

As of December 31, 2019, the Company leases buildings for its office space and dormitory, leases period are 2 to 5 years.

(ii) Other leases

The Company leases transportation, office and miscellaneous equipment that leases period are 2 to 10 years.

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

The Company also leases miscellaneous equipment with contract terms of 1 to 3 years. These leases are short-term or leases of low-value items. The Company has elected not to recognize right-of-use assets and lease liabilities for these leases.

(i) Employee benefits

(i) Defined benefit plan

Reconciliation for present value of defined benefit obligation and fair value of plan assets are as follows:

	December 31,	December 31,	December 31,
		2019	2018
Present value of defined benefit obligation	$	242,514	244,210
Fair value of plan assets		(237,382)	(242,194)
Net defined benefit liabilities	$	5,132	2,016
Employee’s benefits liabilities of the Company are as follows:
	December 31,		December 31,
		2019	2018
Long-term compensated absences liability	$	45,263	41,633

Under the Company's employee benefit retirement plan, contributions are made to an independent fund that is deposited with Bank of Taiwan. Employees are eligible for retirement and payments of retirement benefits are based on years of service and the average salary for the last six months before the employee’s retirement according to the Labor Standards Law.

1) Composition of the plan asset

The retirement funds deposited by the Company according to the Labor Standards Law are managed by the Bureau of Labor Funds, Ministry of Labor (the “BLF”). According to Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, the usage of funds and their minimum amount of return distributed by the final accounts shall not be less than the income calculated by the two-year deposit interest rate of local bank.

As of December 31, 2019, the Company’s pension fund with Bank of Taiwan amounted to $237,382 thousand. Please refer to the related information published on the website of the Labor Pension Supervisory Committee concerning the utilization of the labor pension fund, related yield rate and its allocation.

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

• 2) Changes in present value of the defined benefit obligations were as follows:

Defined benefit obligations at January 1 Current service cost and interest Remeasurement of defined benefit liability - Actuarial gains and losses of experience adjustments - Actuarial losses of financial assumptions change Benefits paid Defined benefit obligations at December 31	For the years ended December 31 2019 2018 $ 244,210 226,084 4,301 4,797 7,728 8,181 3,474 7,239 (17,199) (2,091) $ 242,514 244,210

3) Changes in the fair value of the plan assets were as follows:

Fair value of plan assets at January 1 Remeasurement of net defined benefit liability - Return on plan assets (excluding current interest) Appropriated amount to the plan Benefits paid Fair value of plan assets at December 31	For the years ended December 31 2019 2018 $ 242,194 98,777 9,663 4,937 2,724 140,571 (17,199) (2,091) $ 237,382 242,194

• 4) Expense recognized as profit or loss

Expense recognized as profit or loss for 2019 and 2018 were as follows:

Current service cost Interest of net defined benefit liability Operating cost Selling expense Administrative expense	For the years ended December 31
	2019 2018 $ 1,572 1,705 8 1,744 $ 1,580 3,449 For the years ended December 31 2019 2018 $ 376 852 543 1,193 661 1,404 $ 1,580 3,449
	$ $

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

• 5) Remeasurement of net defined benefit liabilities recognized in other comprehensive income

The Company’ s remeasurement of net defined benefit liabilities recognized in other comprehensive income for 2019 and 2018, were as follows:

Accumulated amount at January 1 Recognized in current period Accumulated amount at December 31	For the years ended December 31
	2019 2018 $ 34,811 22,980 4,260 11,831 $ 39,071 34,811

• 6) Actuarial assumptions

Major assumptions used to determine the present value of the defined benefit obligations were as follows:

Discount rate Future salary increases rate	December 31, 2019 December 31, 2018 % 1.000 % 1.125 % 3.000 % 3.000

Expected appropriated amount paid to defined benefit plan by the Company during 1 year after the reporting date of 2019 is $2,741 thousand.

The weighted average duration of the defined benefit plan is 13.13 years.

• 7) Sensitivity analysis

As of December 31, 2019 and 2018, the effects of the present value of the defined benefit obligation arising from changes in principal actuarial assumptions were as follows:

December 31, 2019 Discount rate (change 0.25％) Future salary increases rate (change 0.25％) December 31, 2018 Discount rate (change 0.25％) Future salary increases rate (change 0.25％)	Effect of defined benefit obligations Increase 0.25％ Decrease 0.25％ $ (6,913) 7,182 6,901 (6,686) (7,239) 7,527 7,254 (7,006)

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. The sensitivity analysis adopts the same methods for determining the defined benefit assets at the balance sheet date.

(ii) Defined contribution plan

The Company contributes an amount equal to 6% of the employee’s monthly wages to the Labor Pension personal account of the Bureau of the Labor Insurance in accordance with the provisions of the Labor Pension Act, under which, the Company is not required to bear the regulated or putative obligation subsequent to the payment of fixed-rate contribution.

The Company’ s pension costs under the defined contribution pension plan amounted to $49,112 thousand and $46,382 thousand for 2019 and 2018, respectively. Those pension costs have been contributed to Bureau of the Labor Insurance or local relevant authorities.

(j) Income tax

(i) Income tax expense

The details of income tax expense were as follows:

Current tax expense Deferred tax expense Temporary differences Change of income tax rate Total income tax expense	For the years ended December 31 2019 2018 $ 1,107,723 1,053,070 (6,876) 32,278 - (10,653) $ 1,100,847 1,074,695

The details of income tax expense under other comprehensive income were as follows:

Components of other comprehensive income that will be reclassified to profit or loss Exchange differences on transaction of foreign financial statements.	For the years ended December 31 2019 2018 $ (20,544) 24,308

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

The reconciliation between income tax expense and profit before tax are as follow:

Income before tax Income tax using the individual Company’s domestic tax rate Change of income tax rate Estimated in prior periods Undistributed earnings additional tax Others	For the years ended December 31 2019 2018 $ 5,400,096 5,454,449 1,080,019 1,090,890 - (10,653) (6,381) 100 50,457 4,311 (23,248) (9,953) $ 1,100,847 1,074,695

• (ii) Deferred tax assets and liabilities

• 1) Recognized deferred tax assets and liabilities

Changes in deferred tax assets and liabilities for 2019 and 2018 were as follows:

Deferred tax assets:
January 1, 2019	$	20,381
Recognized in expense		13,155
Exchange differences on translation of foreign financial statements		20,544
December 31, 2019	$	54,080
January 1, 2018	$	60,735
Recognized in income		(16,046)
Exchange differences on translation of foreign financial statements		(24,308)
December 31, 2018	$	20,381
Deferred tax liability:
January 1, 2019	$	5,946
Recognized in expense		6,279
December 31, 2019	$	12,225
January 1, 2018	$	367
Recognized in income		5,579
December 31, 2018	$	5,946

(iii) Income tax approved

The Company’ s income tax returns through 2017 had been examined by the R.O.C. tax authority.

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

(k) Stockholders’ equity

(i) Common stock

As of December 31, 2019 and 2018, the Company’s authorized share capital both amounted to $3,000,000 thousand dollars, divided into 300,000 thousand shares of stock with $10 par value per share. The total number of issued shares were 274,367 thousand shares.

(ii) Capital surplus

The balances of capital surplus were as follows:

Paid-in capital in excess of par value Treasury stock transactions Unpaid compensation to directors and supervisors Net assets from merger with Everbright Garment Unpaid dividend payables Employee stock options	December 31, 2019 December 31, 2018 $ 3,550,000 3,550,000 396 396 1,377 1,377 15,866 15,866 113 113 201,795 201,795 $ 3,769,547 3,769,547

According to Company Law, realized capital surplus can be transferred to common stock or distributed as cash dividends after deducting the accumulated deficit, if any. Realized capital surplus includes the additional paid-in capital from issuance of common stock in excess of the common stock’s par value and donation from others. Paid-in capital in excess of par value is transferrable to common stock annually but shall not exceed 10% of total issued and outstanding common stock according to Regulations Governing the Offering and Issuance of Securities by Securities Issuers.

(iii) Retained earnings

According to the Company’ s articles of incorporation, 10% of annual net earnings (net of income taxes), after deducting accumulated deficits, must be set aside as legal reserve. The remaining portion is to be distributed upon a proposal by the board of directors and approval in an annual shareholders’ meeting.

The Company is now in the growth stage and has a plan to expand the product line. Due to the need for capital to fulfill the plan, the policy for dividend distribution should reflect factors such as investment planning, financial structure, future fund requirements, and status of earnings. In a normal consideration, the percentage of earnings distribution shall not be less than 50% of the net earnings of the current year after compensating for accumulated deficits, if any. The board of directors shall make the distribution proposal, and it is then approved at the shareholders’ meeting. The ratio for distributing cash dividends shall not be lower than 20% of the total distribution.

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

1) Legal reserve

If the Company experienced profit for the year, the distribution of the statutory earnings reserve, either by new shares or by cash, shall be decided at the shareholders meeting, and the distribution amount is limited to the portion of legal reserve which exceeds 25% of the paid-in capital.

2) Special reserve

A regulation issued by the Securities and Futures Bureau requires a special reserve be made from the unappropriated earnings, equivalent to current income or loss and prior period-undistributed earnings from the reduction of other equity; the special reserve appropriated from prior period-undistributed earnings cannot be distributed. If the reductions of other equity reverse, the reverse parts can be distributed. The Company is applicable to the regulations in Interpretation No.1010012865 by FSC for recognizing special reserve.

3) Earnings appropriation and distribution

Earnings distributions for 2018 and 2017 were decided via the annual general meeting of the shareholders held on June 18, 2019 and June 14, 2018, respectively. The relevant dividend distributions to shareholders were as follows:

Dividends distributed to ordinary shareholders: Cash dividends	For the years ended December 31 2018 2017 per share (dollars) amount per share (dollars) amount $ 11.00 3,018,038 9.50 2,606,487	For the years ended December 31 2018 2017 per share (dollars) amount per share (dollars) amount $ 11.00 3,018,038 9.50 2,606,487	For the years ended December 31 2018 2017 per share (dollars) amount per share (dollars) amount $ 11.00 3,018,038 9.50 2,606,487
	2018 per share (dollars) amount $ 11.00 3,018,038
	per share (dollars)		per share (dollars) amount 9.50 2,606,487
	$ 11.00

As mentioned above, please browse through the relative information approved during the board of directors’ and shareholder’ s meeting on Market Observation Post System website of the Taiwan Stock Exchange.

The appropriation of the Company’s 2019 earnings was subject to a resolution approved by the board of directors and the annual shareholders’ meetings. Following the approval of those resolutions, related information can be obtained from the Market Observation Post System website of the Taiwan Stock Exchange.

• (iv) Other equity (net of income tax)

Balance at January 1, 2019 Exchange differences on translation of foreign financial statements Balance at December 31, 2019	Financial statements translation differences from foreign operations
	$ (6,862) (82,180) $ (89,042)

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

Balance at January 1, 2018 Exchange differences on translation of foreign financial statements Balance at December 31, 2018 (l) Earnings per share	Financial statements translation differences from foreign operations $ (104,100) 97,238 $ (6,862)

The earnings per share were calculated as follows:

Basic earnings per share Profit attributable to ordinary stockholders Weighted average number of ordinary shares outstanding (in thousands) Basic earnings per share (in dollars) Diluted earnings per share Profit attributable to ordinary stockholders Weighted average number of ordinary shares outstanding (basic) (in thousands) Effect on employee's profit sharing bonus (in thousands) Weighted average number of ordinary shares outstanding (diluted) (in thousands) Diluted earnings per share (in dollars)

For the years ended December 31

2019 2018 $ 4,299,249 4,379,754 274,367 274,367 $ 15.67 15.96 For the years ended December 31 2019 2018 $ 4,299,249 4,379,754 274,367 274,367 18 21 274,385 274,388 $ 15.67 15.96

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

(m) Revenue from contracts with customers

Main market： Americas Asia Europe the Middle East Africa Others Main product： Knitted fabrics Yarn Clothing	For the years ended December 31	For the years ended December 31
	2019 Clothing Knitted $ 15,724,764 519,655 1,388,726 6,643,934 2,075,759 4,384 74,160 696,678 23,286 448,916 264,208 210,171 $ 19,550,903 8,523,738 2019 $ 8,519,836 3,902 19,550,903 $ 28,074,641	2018
	Clothing $ 15,724,764 1,388,726 2,075,759 74,160 23,286 264,208 $ 19,550,903 2019 $ 8,519,836 3,902 19,550,903 $ 28,074,641	Clothing Knitted 15,883,257 330,902 1,587,926 6,513,706 1,667,564 2,039 49,121 736,275 19,919 455,604 221,016 90,942 19,428,803 8,129,468 2018 8,113,109 16,359 19,428,803 27,558,271

(n) Employees' profit sharing bonus

The Company’s articles of incorporation require that earnings shall first be offset against any deficit, then, a minimum of 0.1% will be distributed as employee profit sharing bonus which is to be decided upon a proposal by the board of directors, and then approved at the shareholders’ meeting. Qualified employees are entitled to stock and cash distribution of the Company.

For the years ended December 31, 2019 and 2018, the estimated amounts of employee's profit sharing bonus amounted to $6,000 thousand, which was calculated based on the Company’s profit excluding tax as well as employee profit sharing bonus and earnings allocation a minimum of 0.1% as stated under the Company’s articles of incorporation. These employee's bonuses were reported under cost of goods sold and operating expenses for the year ended December 31, 2019 and 2018. If there is the change after released financial reporting date in the following year, the difference is treated as a change in accounting estimate, and is charged to profit or loss for 2020 and 2019.

There was no difference between the estimated and distributed employee's profit sharing bonus approved by the BOD for the year ended December 31, 2018, related information can be obtained from the Market Observation Post System website of the Taiwan Stock Exchange.

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

(o) Results from non-operating activities

(i) Other income

The Company’s other income were as follows:

Interest income-bank deposit Rental income	For the years ended December 31
	2019 2018 $ 18,867 9,831 9,708 9,708 $ 28,575 19,539

(ii) Other gains and losses, net

The company’s other gains and losses were as follows:

Foreign exchange (loss) gain Loss on transaction for property Others	For the years ended December 31 2019 2018 $ (16,989) 200,938 (6,530) (8,419) 7,609 10,177 $ (15,910) 202,696

(p) Financial instruments

• (i) Credit risk

1) Exposure to credit risk

The carrying amount of financial assets represents the maximum exposed amount to credit risk.

2) Concentration of credit risk

As the Company has numerous clients, does not make concentrated transactions with any single client and scatters the sales region, there is no concentration of credit risk for accounts receivable.

3) Credit risk of accounts receivables

For details on credit risk of notes and accounts receivable, please refer to note 6(b).

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

(ii) Liquidity risk

The following are the contractual maturities of financial liabilities, including the estimated interest payments but excluding the impact of netting agreements.

December 31, 2019 Non-derivative financial liabilities Accounts and notes payable (related parties included) Lease liabilities December 31, 2018 Non-derivative financial liabilities Accounts and notes payable (related parties included)	Carrying amount $ 1,791,556 36,955 $ 1,828,511 $ 1,631,011	Contractual cash flow 1,791,556 38,456 1,830,012 1,631,011	Within 12 months 1,791,556 18,545 1,810,101 1,631,011	1-2years 2-5years - - 16,665 3,246 16,665 3,246 - -

The Company is not expecting the cash flows included in the maturity analysis would occur significantly earlier or at significantly different amounts.

• (iii) Exchange rate risk

1) Exposure to currency risk

The Company’s significant exposure to foreign currency risk was as follows:

Financial assets Monetary items USD Financial liabilities Monetary items USD	December 31, 2019 Foreign currency Exchange rate NTD $ 136,732 29.98 4,099,225 36,895 29.98 1,106,112	December 31, 2019 Foreign currency Exchange rate NTD $ 136,732 29.98 4,099,225 36,895 29.98 1,106,112	December 31, 2018	December 31, 2018
	Foreign currency $ 136,732 36,895	Exchange rate 29.98 29.98	Foreign currency 153,287 30,325	Exchange rate NTD 30.715 4,708,210 30.715 931,432

• 2) Sensitivity analysis

The Company’ 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, bank borrowings and accounts payable. A 1% depreciation or appreciation of the TWD against the USD as of December 31, 2019 and 2018 would have increased or decreased the net income after tax by $23,945 thousand and $30,214 thousand respectively. The analysis assumes that all other variables remain constant and ignores any impact of forecasted sales and purchases. The analysis is based on the same basis.

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

• 3) Foreign currency gain or loss on monetary items

The amounts of conversion gains and losses (including realized and unrealized) of monetary items of the Company, which was converted into functional currency (that is the Company’s expression currency), and the exchange rate information converted to the Company’functional currency, NTD, are as follows:

USD	2019	2019	2018
	Realized and unrealized exchange loss $ (16,989)	Average rate	Realized and unrealized exchange gain Average rate 200,938 30.149
		30.912

(iv) Interest rate analysis

The Company’ s exposure to interest rate risk arising from financial assets and liabilities is described in the liquidity risk part of this note.

The following sensitivity analysis is determined through the exposure to interest rate risk of derivative and non-derivative instruments on the reporting date. For floating rate liabilities, the analysis assumes that the balances of outstanding liabilities on the reporting date have been outstanding for the whole period, and their rational change intervals are being estimated. If the interest rate increases/decreases by 1%, representing the reasonable interest rates changes made by management.

(v) Fair value

The Company’s management considers its financial assets and financial liabilities measured at amortized cost to be the approximation of the fair value.

(q) Financial risk management

• (i) Nature and extent

The Company has exposure to the following risks from its financial instruments:

• 1) Credit risk

• 2) Liquidity risk

• 3) Market risk

This note expresses the information of risk exposure and goals, policies and procedures for the Company to measure and manage risks. Please refer to notes in financial statements for further quantitative disclosures.

(ii) Risk management framework

The board of directors is responsible for the supervision of the Company’s risk management framework.

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

The risk management policies are established to identify and analyze the Company’s exposure to risks, 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 changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aim to develop a disciplines and constructive control environment, in which all employees understand their roles and obligations.

The audit committee of the Company oversees how the management complies in monitoring 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 internal audit sector of the Company reviews the risk management controls and procedure on scheduled and non-scheduled basis, and reports the results to the audit committee.

(iii) 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, and arises principally from the Company’s receivables from customers.

1) Accounts receivable

Every single client affects the credit risk exposure of the Company, but still, the management should consider the status of its clients, including the industry the client belongs to and the default risk of the country where the client is located. Because the transaction of the Company is not concentrated in one single client for 2019 and 2018, therefore, there is no concentration on credit risk for accounts receivable.

To minimize the risk of accounts receivable, the Company established a risk management procedure relating to the financial condition of the client, credit risk rating, historical transactions inside the Company, and the current economic situation that may affect the clients’ ability to pay up the bills. The Company also uses some credit-improved tools such as prepayments and credit insurance in order to reduce specific client’s credit risk.

2) Financial investments

The credit risk exposure in the bank deposits, fix income investments and other financial instruments are measured and monitored by the Company’s finance department. As the Company deals with the banks and other external parties with good credit standing and financial institutions, corporate organization and government agencies 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) Guarantee

The Company only provide guarantee to wholly owned subsidiaries. The Company did not provide guarantee to any third party as of December 31, 2019 and 2018.

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

(iv) Liquidity risk

Liquidity risk is the 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 have 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.

The Company estimates the cost of products and services based on accounting policy in order to assist in monitoring its cash flow requirements and optimizing its cash return on investments. Generally, the Company ensures that there is sufficient cash to cover expected operating expenditure demand, but excluding potential influence under unexpected extremely condition (i.e. nature disaster). In addition, the total amount of unused credit term as of December 31, 2019 and 2018 amounted to $3,458,745 thousand and 4,094,379 thousand respectively.

(v) Market risk

Market risk is the risk that comes from changes in market prices such as changes of foreign exchange rates, interest rates and equity prices, impacting the Company’s income or the value of financial instruments held by the Company. The objective of market risk management is to manage and control market risk exposures within acceptable range and optimize the return on investments.

The Company buys and sells derivatives, and also incurs financial liabilities, in order to manage market risks. All such transactions are carried out within the guidelines set by the board of directors.

1) Exchange rate risk

The Company’s exposure to currency risk is on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of the Company, primarily the New Taiwan Dollars (NTD). The currencies used in these transactions are denominated in NTD, USD, VND and CNY.

At any point of time, the Company’s principle is to regularly hedge using the net value after offsetting assets and liabilities. The choice of hedging exchange rate risk instruments is based on the cost and the period of hedging. The Company mainly hedges its currency risk using the foreign exchange contracts.

2) Interest rate risk

All of the Company’s assets and liabilities bear floating interest rates, and thus suffer from cash flow interest rate risk exposure. The detail of floating interest rates of the Company’s assets and liabilities are described in note of liquidity risk management.

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

(r) Capital management

The Board’ s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence, and to sustain the future development of the business. The capital includes common stock, capital surplus, retained earnings and other equities. Therefore, the capital management of the Company focuses on ensuring necessary financial resources and increase stockholders’ value, examining the capital return periodically. The Company’s return on capital as of December 31, 2019 and 2018 were as follows:

Net income Total capital Return on capital		For the years ended December 31

The Company does not have any plan of purchasing treasury stock.

(7) Related-party transactions:

(a) Names and relationship with related parties

The followings are entities that have had transactions with related party during the periods covered in the financial statements.

Name of related party	Relationship with the Company
Grand Elite Holdings Inc. (Grand Elite)	Subsidiaries
Eclat Cayman Islands Holdings (Eclat Cayman)	Subsidiaries
PT Eclat Textile International (Eclat Textile (ID))	Subsidiaries
Eclat Textile (Cambodia) Co., Ltd (Eclat Textile	Subsidiaries
(Cambodia))
Unison (Wuxi) Textile and Garment Inc. (Unison)	Subsidiaries
Eclat Textile Co., Ltd (Vietnam) (Eclat Textile (VN))	Subsidiaries
Eclat Fabrics (Vietnam) Co., Ltd. (Fabrics)	Subsidiaries
E-TOP (Vietnam) Co., Ltd. (E-TOP(VN))	Subsidiaries
Colltex Garment MFY Co., Ltd. (VN) (Colltex)	Subsidiaries
Eclat Enterprise Ltd. (Eclat Enterprise)	Subsidiaries
Tai-Yuan Garments Co., Ltd. (TAI-YUAN(VN))	Subsidiaries
E&I Printing Company Limited (E&I Printing)	Associates indirectly held by the
	Company
Best Information Co. Ltd.(Best) (Note)	Associates

Best Information Co., Ltd.(Best) (Note)

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

Name of related party	Relationship with the Company
Yi Yuan Co., Limited	The entity’s chairman is the second
	immediate family of the
	Company's chairman
Eclat Education Foundation	Founded by donation of the
	Company

Note: The Company sold the entire shareholding of Best on April 15, 2019. Henceforth Best is not the Company's associate any more.

• (b) Material transactions among related parties

• (i) Operating revenue

Subsidiaries	For the years ended December 31,
	2019 2018 $ 72 13,993

Sales term to subsidiaries is the same as general sales. The term for receivables is O/A 30 to 60 days.

• (ii) Purchasing and processing

Subsidiaries－Eclat Textile (VN) Subsidiaries－Fabrics Subsidiaries－Colltex Subsidiaries－E-Top (VN) Subsidiaries－Others Associates	For the years ended December 31
	2019 2018 $ 1,486,567 1,666,482 1,745,851 1,648,401 487,183 599,206 929,637 669,419 544,599 490,810 - 86 $ 5,193,837 5,074,404

Purchasing price to subsidiaries is the same as to general purchases. The term for payables is O/A 30 to 60 days.

• (iii) Receivables from related parties

Account	Types of related parties Associates	December 31, 2019 December 31, 2018 $ - 53
Notes receivable

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

• (iv) Payables to related parties

Account	Types of related parties Subsidiaries-Eclat Textile (VN) Subsidiaries-others Associates	December 31, 2019 December 31, 2018 $ 190,347 73,547 168,893 202,473 - 98 $ 359,240 276,118
Accounts payable-related parties Accounts payable-related parties Accounts payable-related parties

• (v) Guarantees and endorsements

The Company guarantees and endorsements for related parties are as follows:

(vi)	Types of related parties Subsidiaries-Eclat Cayman Leases	December 31, 2019 December 31, 2018 $ - 1,489,678

Types of related parties Associates Other related parties	For the years ended December 31
	2019 2018 $ 150 600 300 300 $ 450 900

The Company charged their rentals based on the local market prices, which are paid monthly.

(vii) Others

Associates Other related parties	Software Maintenance For the years ended December 31	Software Maintenance For the years ended December 31	Donations
			For the years ended December 31
	2019 $ 122 - $ 122	2018 428 - 428	2019 2018 - - 2,000 2,000 2,000 2,000

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

(c) Key management personnel transactions

Key management personnel compensation comprised:

Short-term employee benefits Cars provided to key management personnel: Cost Numbers Book value	For the years ended December 31,
	2019 2018 $ 111,771 107,132 December 31, 2019 December 31, 2018 $ 28,638 28,638 $ 8 8 $ 5,806 7,843

(8) Pledged assets:

The Company’s pledged assets are as follows:

Pledged assets	Pledged to secure Natural gas security deposit $ Medium to long term financing $	December 31, 2019 December 31, 2018 2,000 2,000 3,381,772 3,381,772 3,383,772 3,383,772
Other financial assets-current Land

(9) Commitments and contingencies:

(a) The balance of unused letters of credit of the Company was as follows:

	December 31,	December 31,
	2019	2018
$	61,255	78,824

(b) Contingent liabilities:

The Company served as the guarantor of Eclat Cayman, and the balances of short-term borrowings with the banks were as follows:.

December	December	31,	December 31,
	2019		2018
US$	-		16,500

(Continued)

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ECLAT TEXTILE CO., LTD. Notes to the Financial Statements

(10) Losses due to major disasters:None.

(11) Subsequent events:None.

(12) Other:

The Company’s employee benefits, depreciation and amortization expenses, categorized by function, were as follows:

	For the years ended December 31, 2019	For the years ended December 31, 2019	For the years ended December 31, 2019	For the years ended December 31, 2018	For the years ended December 31, 2018	For the years ended December 31, 2018
	Operating costs	Operating expenses	Total	Operating costs	Operating expenses	Total
Employee benefits Salary Labor and health insurance Pension Director's remuneration Others Depreciation Amortization	428,591 36,894 12,469 - 20,086 204,967 -	1,118,643 84,870 38,223 5,082 47,530 70,223 6,006	1,547,234 121,764 50,692 5,082 67,616 275,190 6,006	401,639 33,127 12,323 - 19,425 200,485 505	1,028,309 76,261 37,508 4,040 43,325 60,630 9,899	1,429,948 109,388 49,831 4,040 62,750 261,115 10,404

The numbers of employees and employee benefits are as follows:

The numbers of employees Non-employee directors Average employee benefits Average employee salary Adjustment of average employee salary		For the years ended December 31,

(Continued)

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• 6.6 Any financial distress experienced by the Company or its affiliated enterprises and impacts on the Company’s financial position in the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report: None.

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VII. Review of Financial Status, Financial Performance, and Risk Management

7.1 Analysis of Financial Status:

			Unit: NT$ 1,000	Unit: NT$ 1,000
Year Item	2018	2019	Variance
			Amount	Percentage
Current assets	11,393,505	12,148,471	754,966	6.63
Property, plant and equipment	10,037,149	10,600,139	562,990	5.61
Intangible assets	20,547	18,619	-1,928	-9.38
Other assets	689,681	552,191	-137,490	-19.94
Total assets	22,140,882	23,319,420	1,178,538	5.32
Current liabilities	5,194,388	5,106,826	-87,562	-1.69
Other liabilities	15,464	88,842	73,378	474.51
Total liabilities	5,209,852	5,195,668	-14,184	-0.27
Share capital	2,743,671	2,743,671	0	0.00
Capital surplus	3,769,547	3,769,547	0	0.00
Retained earnings	10,424,674	11,699,576	1,274,902	12.23
Translation adjustment and others	-6,862	-89,042	-82,180	-1,197.61
Total equity	16,931,030	18,123,752	1,192,722	7.04

Explanation of material variation:

For amount variance exceeding NT$ 10,000 thousand and the percent variance exceeds 20%, the causes are analyzed as follows:

• (1) Other liabilities: It was mainly due to the adoption of IFRS 16 “Lease”, the Group recognized Lease Liability since 2019.

• (2) Accumulated translation adjustment and others: Due to the exchange rate fluctuation, the exchange difference calculated on the foreign operating institution financial statements is significantly increased.

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7.2 Analysis of Financial Performance

7.2 Analysis of Financial Performance	7.2 Analysis of Financial Performance
			Unit: NT$ 1,000
Year Item	2018	2019	Variance	Percent Variance
Operatingrevenue,net	27,578,209	28,125,136	546,927	1.98
Operatingcost	19,630,699	20,010,977	380,278	1.94
Grossprofit	7,947,510	8,114,159	166,649	2.10
Operatingexpenses	2,642,228	2,643,375	1,147	0.04
Operating profit	5,305,282	5,470,784	165,502	3.12
Non-operating income and expenses	167,867	-48,784	-216,651	-129.06
Profit before tax from continuing operations	5,473,149	5,422,000	-51,149	-0.93
Income tax expense	1,091,211	1,118,957	27,746	2.54
Profit after tax from continuing operations	4,381,938	4,303,043	-78,895	-1.80
Loss after tax from discontinued operation	-2,184	-3,794	-1,610	73.72
Net income	4,379,754	4,299,249	-80,505	-1.84
Other comprehensive income(net,after tax)	85,407	-86,440	-171,847	-201.21
Total comprehensive income	4,465,161	4,212,809	-252,352	-5.65

Explanation of material variation:

For amount variance exceeding NT$ 10,000 thousand and the percent variance exceeds 20%, the causes are analyzed as follows:

• (1) Non-operating income and expense: The exchange (loss) gain difference of the two periods was mainly affected by the exchange rate fluctuation.

• (2) Other comprehensive income: Increase in other comprehensive income is mainly due to the exchange differences resulting from the translation of foreign operations.

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7.3 Analysis of Cash Flow

7.3.1 Liquidity analysis for the last 2 years

Year Item	2018	2019	Percent Variance
Cash flow ratio	95.44	114.90	20.39
Cash flow adequacy ratio	88.79	96.89	9.12
Cash reinvestment ratio	10.62	12.22	15.07

For the percent variance exceeds 20%, the causes are analyzed as follows:

 Cash flow ratio:

This was mainly due to the Average Collection of Accounts receivables increasing rapidly in 2019, and the net cash flow generated from operating activities increased significantly from the previous period, such that the cash flow ratio was increased by approximately 20% from the previous period.

7.3.2 Cash liquidity analysis for the next year

				Unit: NT$ 1,000	Unit: NT$ 1,000
Cash and Cash Equivalents, Beginning of Year(1)	Net Cash Flow from Operating Activities (2)	Cash Outflow (3)	Cash Surplus (Deficit) (1)+(2)-(3)	Leverage of Cash Deficit
				Investment Plans	Financing Plans
4,444,271	4,847,193	4,388,038	4,903,426	－	－

• (1) Operating activities: Based on the order acceptance status of the Company up to the printing date of the annual report and the expected operating status for the next year, it is expected that the Company’s operation will continue to profit such that the net cash from operating activities is increased.

• (2) Investment activities: Based on the expected payment of NT$1.2 billion for the corporate headquarters building construction design fee and NT$1.17 billion for land and plant construction payments from PT Eclat Textile International, the expected net cash outflow from investment activities is NT$2.37 billion.

• (3) Financing activities: This is mainly due to the expected cash outflow for cash dividends at an amount of NT$ 3.02 billion, and the expected cash inflow from bank borrowing for working capital of NT$ 1 billion, so as to incur cash outflow from financing activities of NT$2.02 billion

Expected cash deficiency amount remedies: None.

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7.4 Major Capital Expenditure Items and Source of Capital

Unit: NT$/USD$ 1,000

				Unit: NT$/USD$ 1,000	Unit: NT$/USD$ 1,000	Unit: NT$/USD$ 1,000
Plan items	Actual or expected source of fund	Actual or expected completion date	Fund needed Total	Actual or expected fund utilization status
				2018	2019	2020
Headquarter building - Construction	Working capital and bank borrowing	2022.02	3,000,000	-	811,517	1,200,000
His-chou digital printing plant investment project	Working capital	2019.04	947,379	363,000	308,379	-
PT Eclat Textile International investment	Working capital and bank borrowing	2021.06	5,250,000 (US175,000)	-	372,000 (US12,400)	1,170,000 (US39,000)

Note: USD exchange rate: 30

Due to the continuous expansion of business scale of the Company, the office space becomes insufficient, and presently, the rented facilities and employee dormitories are spread out at various locations such the management thereof is difficult. Therefore, the Company has purchased land in Xinzhuang Fuduxin, New Taipei City, as the base for the corporate headquarters. The headquarters construction is expected to be completed in 2022.

To satisfy the market demands, to increase the product added-value and strengthen the product vertical benefit, the Company invested in a digital printing factory in Taiwan, and the Company purchased nearby land of Hsichou Plant for construction of factory in November 2017. The construction was completed and put into use in 2019.

For the purpose of diversifying the risk of over concentrated in Vietnam capacity and the order transferring effect from the trade war between the U.S and China, the Company plans to establish new factory in Indonesia. The Company expects to further fortify its overseas capability of manufacturing. The estimated investment amount is USD175 million. The investment project will be completed in three phases, starting from October 2019. The vertical integration factory is expected to ramp up in June, 2021.

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7.5 Investment Policy in Last Year, Main Causes for Profits or Losses, Improvement Plans and the Investment Plans for the Coming Year

				Unit: NT$ /US$1,000	Unit: NT$ /US$1,000
Description Item	Investment Amount	Reinvestment policy	Profit or loss Main reasons	Improvement plan	Investment plan for nextyear
ECLAT CAYMAN ISLANDS HOLDINGS (CAYMAN)	3,839,988	To expedite the global garment manufacturing planning, to seek production site with greater cost benefit, the Company actively expands the factory establishment in Vietnam, including the garment factories of Eclat Textile Co., Ltd(Vietnam), Colltex Garment Mfy Co., Ltd.(Vn), E-Top (Vietnam) Co., Ltd, Tai-Yuan Garments Co., Ltd. etc., Eclat Fabrics Co., Ltd (Vietnam) and Eclat printing factory, in order to serve as garment and textile order production sites, thereby increasing product competitiveness.	Since the benefit of economies of scale and production efficiency of the Eclat Textile Co., Ltd (Vietnam) and E-Top (Vietnam) Co., Ltd have been increased after the factory expansion, the operations of the plants have been stable and profiting. Due to the rearrangement of production lines, the workers’ learning curve and efficiency was optimal, and thus Colltex Garment Mfy Co., Ltd. (Vn) reported operating losses in 2019. For the Tai-Yuan Garments Co., Ltd., due to the workers’ level of skills and production efficiency have been improved, therefore the loss occurs in 2019 was obviously	To enhance production management and expand economies of scale, in order to increase the production efficiency, and to reduce production costs and to increase profits.	-

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Description Item	Investment Amount	Reinvestment policy	Profit or loss Main reasons	Improvement plan	Investment plan for nextyear
			decreased. As for the Eclat Fabrics (Vietnam) Co., Ltd, since it is at the early stage of factory expansion, the Capacity utilization and production efficiency is not efficient such that loss occurs. In addition, as the Eclat Printing Plant operation has not demonstrated production efficiency improvement, loss occurs. Unison (Wuxi) Textile & Garment Co Ltd. is currently in the process of dissolution and liquidation.
GRAND ELITE HOLDINGS INC.(GRAND ELITE)	421,789	For the purpose of vertical integration of production capability and the increase of overseas garment production sites, the Company indirectly invests in Eclat Textile (Cambodia) Co., Ltd. through GRAND ELITE.	As the workers’ skills and production efficiency have been improved at the Eclat Textile (Cambodia) Co., Ltd., the operation of the plant has been stable and profitable.	Continuing to track costs and strengthen production management in order to increase production efficiency.	-

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Description Item	Investment Amount	Reinvestment policy	Profit or loss Main reasons	Improvement plan	Investment plan for nextyear
PT Eclat Textile International	749,503	To diversify the concentration risk of production sites, the Company invested in knitting, dyeing, finishing and garment plants in Indonesia to expand production scale, implement risk diversification, integrate the supply chains, and to enhance global strategy.	PT Eclat Textile International was established on December 20, 2019. That construction period is expected to be 1-2 years, it is not yet operational.	Not applicable	The total investment plan is US$175 million, the Company has invested USD $25 million, and there are no plans to invest in 2020.

7.6 Analysis of Risk Management

1. Impact of interest rate, exchange rate fluctuation and inflation condition on the profit/loss of the company and future countermeasures:

(1) Interest rates:

The working capital of the consolidated company mainly comes from the operating cash income and the amount gained from the bank loan. Assuming that the short term outstanding loan balance was NT$ 1.572 billion at the end of 2019, if the interest rate is increased or decreed by 1%, then under the condition where all other variables remain unchanged, it will cause an increase or decrease of interest expense at an amount of approximately NT$ 1.829 million for the Company.

Future countermeasures:

In addition to the improvement in the product development, the consolidated company also executes business expansion and cost control in order to increase the profitability and the own fund such that the loan amount can be reduced and the interest expense be further decreased. Moreover, to reduce the risk of interest rate, the bank loan interest rate is evaluated regularly or irregularly. The company also actively negotiates with banks in order to obtain financing interest rate of greater discount; therefore, the interest rate fluctuations cannot cause major risk to the Company.

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(2) Regarding the exchange rate fluctuation:

The main income and partial expense of the consolidated company is in USD; therefore, exchange rate fluctuation can still have impact on profit/loss in the foreign currency exchange transactions of the company. At the end of 2019, the USD net asset with exchange rate risk is NTD 133.621 million. If the exchange rate of NTD to USD depreciates or appreciates by 1%, under those conditions where all other factors remain unchanged, then it will cause an increase or decrease of net income after tax of the company by approximately NTD 32.048 million.

Future countermeasures:

The consolidated company will timely perform foreign exchange accounts receivable factoring in order to reduce the foreign currency holding position, and will utilize foreign exchange forward as well as hedging process according to the market exchange rate fluctuation in order to reduce the loss caused by the exchange rate fluctuation.

• (3) Regarding the inflation: Up to the printing date of the annual report, the impact of inflation on the company is not significant. However, in view of the uncertainty of the global economic situation, the company cannot guarantee whether the future inflation or deflation can cause major changes, impact consumer confidence or reduce consumers’ purchase intention, leading to major adverse impacts on the business operation result of the company.

• Policies on engaging in high risk, high leverage investments, loaning funds to others, endorsement and guarantee as well as derivative transactions, main causes of profit and loss as well as future countermeasures:

The Company does not engage in the investment action involving high risk or high leverage investments. The Company provides endorsements and guarantees to subsidiaries, and the purpose is mainly for the fund financing needs of each re-investment company in order to increase the flexibility in the utilization of the operating capital. such that there is no significant risk on the Company.

1. Future R&D projects and expected investment in R&D budget:

2. (1) Innovative textile development project: Based on aesthetics, the Company focuses on functionality and environment to develop functional knitted elastic fabrics with efficiency and durability. By applying from raw material to production techniques and auxiliaries,

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we expect to achieve our goals with integrating industrial technologies or cross-industry alliance.

 Environmental protection

To implement the company’s environmental policy of “Reduce our impact on the environment”, during the production process, the company uses low-pollution or renewable objects or energies as much as possible in order to achieve continuous improvement through the environmental management system. Each year, through the certifications of Bluesign® and ISO 14001, the company ensures the production factory site properly fulfills the responsibility on the environmental protection. In addition, Eclat Da-Yuan dye house has participated in the 2017 manufacturing industry energy management demonstrative guidance project of the Industrial Development Bureau, MOEA, in order to construct the ISO 50001 energy management system. In addition, the Company also successfully reduces the energy use through change of corporate energy strategy. The goal of 10% reduction of energy consumption by 2020 originally established had been achieved in 2016, and the total energy use reduction achieved 27.95%. In 2019, the Company continued to implement the plans of replacement of light fixtures and equipment update etc. in order to management the use of energy.

 Comfort

Appealing to light weight, comfort and warm keeping, the Company augments the characteristics of fabric’s moisture absorbing and warm keeping functions by utilizing fiber and layer structure. The applied structure is able to better transmit sweat and create heat convection. The development is expected to be accomplished by October, 2020.

 Health

Bionic fiber combines environmental raw materials. Bionic yarn equipped with characteristics of skin-friendly along with environment topic. It has different hand feelings and marketing highlights to increase product unique. Its functionality contains thermal adjustment, anti-static, and deodorization. It’s expected to be completed by August, 2020.

 Appealing

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Catering to the requirements toward fabric for pants from brands, we combine fashionable elements by utilizing double jersey jacquard with pattern design, yarn appearance and texture variety. The company aims to offer complex patterns and touch feelings from our fabrics. It is expected to be accomplished by October, 2020.

 Safety

Through the integration of light reflectiveness with the pattern printing technology application, cross-industry technical cooperation, revolutionary reflective fibers are developed, which is particularly designed for outdoor sports. It is a functional fabric incorporating the consideration of safety and comfort along with the application of colors and patterns, thereby the appealing and fashion style can be achieved on top of the safety protection function for functional clothing. The product development was completed in January 2020.

(2) High performance textiles development project:

• a. Functional textiles with high moisture guiding and high moisture absorbing: The Company cooperates with Industrial Technology Research Institute (I.T.R.I) to develop biodegradable functional fabrics. This is to solve the environment damage problems at the end phase of synthetic fabrics around the globe. By changing the molecular structure with appropriate buried conditions, the long-chain synthetic fabrics will be degradable. It is expected to be completed by December, 2020.

• b. Versatility and universality of functional fabrics: The fashion and universalness of functional fabrics: International major brands require complex design on touch feelings and appearance to respond consumer market’s fashion demand. By applying the new technique and knitting method via double jersey jacquard, designers are more easily to increase interesting and variability on pattern. It is expected to be accomplished by August, 2020.

In 2020, the Company implements the functional fabric and garment development projects and it is expected to invest an amount of NT$ 140 million in the budget for the product development and promotion.

1. Impacts of domestic/foreign important policies and changes of laws on the

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financial business of the Company and countermeasures:

(1) The contents of various free trade agreements on regional economy or bilateral relationship may have impacts on the export market competition, production site export tariff etc. of the company, such as FTA, AGOA. (2) The amendments on the laws related to human rights, basic wage, pollution control etc. made Impacts by the local government of the production site can impact production cost. (3) Changes on the imported textile quality certification standard in the export market can cause improvement of the processing raw materials and manufacturing technologies of manufacturers. (1) Regarding the information on the changes in domestic/foreign important policies and laws, the company has established a dedicated unit in charge of timely collect and summarizes responsive solutions in order to provide such Countermeasures solutions to the management level for decision-making. (2) All business units and production sites of the company comply with various regulations of local and external laws.

1. Impacts of changes in technology and industry on the financial business of the Company and countermeasures:

(1) In terms of the raw materials, changes in technologies can allow the terminal products to have broader applications. Impacts (2) In terms of the manufacturing, changes in technologies can improve textile manufacturing as well as dyeing equipment and technology such that the production capacity and energy

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saving of the company can be further improved. (3) Garment manufacturing has a high labor reliance percentage. The impact of technology change is mainly on the utilization of information equipment, as well as the management tools and technologies for enhancing the industrial engineering. (1) Engage in joint development of customized raw materials and equipment with raw material suppliers and manufacturing process equipment suppliers in order to control the Countermeasures manufacturing know-how. (2) Utilize information technology to continuously improve ERP system and to increase management performance.

1. Impacts of change of corporate image on the corporate crisis management and countermeasures:

Impacts

Since the establishment of the company, the company has valued integrity as the cornerstone with the commitment in providing services and products of excellent quality to customers in order to create the greatest value for customers, employees and shareholders. Up to the present day, the company has not faced any cooperate operational crisis caused by change of cooperate image. The Company honorably receives the certification of “Sports Enterprise” issued by the Sports Administration, MOE, and one of the Top 300 enterprises in Asia by the Nikkei.

Countermeasures

(1) For any unjust and non-objective reports on the company reported by the media, the company will provide clarification immediately. If it is considered to be significant information, public announcement will be made according to the law immediately.

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(2) The company values the relationship with its customers, suppliers and investors. For the corporate governance, the company upholds the principle of transparent and open information in order to establish proper image of the company. 7. Expected benefit, possible risk and countermeasure for merger: (1) Expand production scale, exploit the benefits of economies of scale. Expected benefit (2) Promptly establish own production capacity, actively seize market business opportunities. (1) Whether the managing team, system and culture can swiftly accept and adapt to the merger. (2) Whether there is an error in the prior Possible risk assessment due to insufficient information or experience. (3) Operation performance not reaching the expected level. (1) To allow the merger to achieve synergy, before the merger, the reserve management team shall establish the plan for system and culture incorporation in order to reduce the mutual fusion time. Countermeasures (2) Careful selection in subject matter for merger, actively consult professional institutions of accountants and attorneys etc. in order to prevent erroneous information or insufficient experience.

1. Expected benefit, possible risk and countermeasure for expansion of facilities:

acilities:
Expected benefit	(1) Expand production scale to exploit the benefits of economies of scale. (2) Replacement of obsolete equipment in order to increase production performance.
Possible risk	(1) Whether financial planning is appropriate.

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(2) Operation performance not reaching the expected level. (1) Establish sufficient and proper financial planning in order to prevent impacts on the operating capital. (2) The three aspects of expansion of business, manufacturing of niche products, establishment of own production capacity shall cooperate Countermeasures with each other in order to achieve the operational growth target, strengthen the production technical team of the company and protect the manufacturing process technologies for niche products in order to maintain cooperate competitiveness.

1. Possible risks that may cause when centralizing the purchases and sales and the countermeasures.

The product sales of the current session of the consolidated company are mainly centralized at the regions of America and Asia. The customers of the product sales are not overly centralized, and the sales amount of one single customer is not accounted for more than 10% of the consolidated revenue total amount of the company as much as possible. In addition, the purchase amount of the largest supplier of raw yarn and garment fabric is not to be more than 10% of the total consolidated purchase amount of the company, as far as possible. During the material incoming, the company evaluates the supply quality, price of suppliers and also considers the market status in order to determine the incoming material suppliers. In view of the above, there are no possible risks for the company caused by overly centralized material incoming or product sales.

1. Impacts, risks and countermeasure of directors, supervisors or major shareholders with shareholding percentage exceeding 10%, large equity transfer or change to the company: Not applicable.

2. Impacts, risks and countermeasure of change in management rights: Not applicable.

3. Where any director, supervisor, General Manager, substantial person in charge, major shareholder with shareholding percentage exceeding 10%

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and affiliate of the company has received any affirmative ruling or is involved in any pending major litigation, non-contentious case or administrative dispute event, and the result thereof may have major impacts on the shareholders’ rights or stock price. The relevant dispute facts, subject matter amount, litigation starting date, main parties involving in the litigation and the handling status up to the printing date of annual report: Not applicable.

1. Other significant risks and countermeasures: In order to elevate risk management of information security, the Company has “Program of Information Security Operation” based on the “Risk Management Regulation” by adopting PDCA (Plan-Do-Check-Act) measurements. Effectiveness and Feasibility are supervised under the “Information Security Checklist”.

 Policy of Information Security

To ensure the confidentiality, completeness and accessibility is secured during the process of data processing and circulation. Avoiding company’s resources from being interfered, damaged, invaded or any other malicious attempts by inadequate factors. Every internal department should comply with all kinds of information security measures and norms to ensure the firm’s operation and development.

• Management structure of information security

• Top management: Approving policy of information security, providing resources and auditing significant security procedures.

• IT office: Responsible for planning, executing and promoting information security. Conduct independent and objective assessment periodically each year to reflect the latest status quo of the Company’s information security management policy, regulation, technology and business, so as to ensure the effectiveness and feasibility of information security practical operation.

• Internal audit office: Responsible for regular or irregular information security checking. Reporting the auditing results to the Audit Committee and then submitting to the Board of Directors.

• All the staff: Complying with all kinds of information security policies, procedures and operation requirements.

• Information security management measures

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1. The Company establishes the “Information Security Management Essentials” to norm the executive requirements of information security

2. Examining the information security environment periodically each year based on the “Information Security Auditing Checklist”. Conducting risks assessment to implement controlling measures.

3. The Company has “Disaster Recovering Plans” to disclose the reporting procedures, authority units and execution steps when information accident happens.

4. The measures of information security are listed below

Item	Description	Measurements
Environmental safety	Rule of engine room Training Regulate equipment procurement and services contract Compliance	Engine room management and in-out registration Novice information security education IT equipment destroy procedures Employee profile offering, searchingand deleting
System availability	System status reporting Abnormal status process Recovery from unavoidable damage	System and internet status survelliance/reporting Data and offsite backup Regular drill
Access control	Control measurements of accessing to internal and external data	Authority set up Account management Regulate portable access devices Preservingaction trace
External threats	System weakness detection and reinforcement Establish protection measurements	Firewalls Virus protection and malicious program detection

7.7 Other important Items: None.

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VIII. Special Disclosure

8.1. Summary of Affiliated Companies

8.1.1. Consolidated Business Report of the Subsidiary

1.Subsidiary Chart：

==> picture [544 x 307] intentionally omitted <==

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

ECLAT
99.9996% 100% 100%
PT Eclat Textile 0.0004% Eclat Cayman Grand Elite
International
(CAYMAN) (B.V.I)
(Indonesia)
100%
100% 100% 100% 100% 100% 100% 100%
Wuxi Eclat Eclat E-TOP Colltex Tai-Yuan Eclat Eclat
Unison Fabrics Textile Vietnam Vietnam Vietnam Enterprise Textile
Vietnam Vietnam (Cambodia) (Cambodia)
----- End of picture text -----

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2. Subsidiaries Profile

				Unit:NT$1000/USD$1000
Company	Date of Incorporation	Place of Registration	Paid-in Capital	Business Activities
Grand Elite Holdings Inc.	1997.12.08	Palm Grove House, P.O. Box 438,Roadtown,Tortola British Virgin Islands	USD14,069	Investments in securities, real estate, and manufacturingindustry.
Eclat Cayman Islands Holdings	1997.12.03	Po Box 613,3THFloor, Harbour Centre, George Town, Grand Cayman, Cayman Islands	USD123,759	Investments in securities, real estate, and manufacturingindustry.
Unison (Wuxi) Textile and Garment Inc. (Note 1)	1998.04.16	25, Chun Xiang Road, Dongting Town, Xishan Distric, Wuxi, Jiangsu, 214010 China	USD5,625	Design, manufacture, processing and sale of clothing.
Eclat Textile Co., Ltd (Vietnam)	2006.02.15	Nhon Trach 2 IZ, Nhon Trach District, Dong Nai province, Vietnam	USD22,000	Design, manufacture, processing and sale of clothing.
Eclat Fabrics (Vietnam) Co., Ltd	2007.11.29	My Xuan A2 Industrial Zone, My Xuan Ward, Phu My Town, Ba Ria Vung Tau Province,Vietnam	USD40,000	Knit fabrics mill, printing, dyeing and finishing mill.
Colltex Garment Mfy Co., Ltd. (VN)	2010.11.29	Lot 28 Road No.7 Trang Bang Industrial Park An Tinh Village Trang Bang District Tay Ninh Province Vietnam	USD16,800	Design, manufacture, processing and sale of clothing.
E-TOP (Vietnam) Co., Ltd	2010.10.20	Lot IX-1; IX-2; IX-3; IX-4, My Xuan B1 Tien Hung Industrial Zone, My Xuan Ward, Phu My Town, Ba Ria – Vung Tau Province,Vietnam	USD36,000	Design, manufacture, processing and sale of clothing.

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Company	Date of Incorporation	Place of Registration	Paid-in Capital	Business Activities
Eclat Enterprise Ltd	2012.03.12	PLOEUV LOUM CHOL WAT ANGTRAKET PHUM ANGTAKEAT, SANGKAT KANTOUK, KHAN PORSENCHEY PHNOM PENH	USD1	Investments in securities, real estate, and manufacturing industry.
Eclat Textile (Cambodia) Co.,Ltd	2012.09.05	PLOEUV LOUM CHOL WAT	USD8,000	Design, manufacture, processing and sale of clothing.
		ANGTRAKET PHUM ANGTAKEAT,
		SANGKAT KANTOUK, KHAN
		PORSENCHEY PHNOM PENH
Tai-Yuan Garments Co., Ltd	2013.09.01	Lot LE11 and LE12, Xuyen A Industrial Park, My Hanh Bac Commune, Duc Hoa District,LongAn Province	USD6,800	Design, manufacture, processing and sale of clothing.
PT Eclat Textile International	2019.12.20	KAWASAN EKONOMI KHUSUS KENDAL, Jl. SAPTARENGGA No. 11, Kel. Wonorejo, Kec. Kaliwungu, Kendal Regency,CentralJava Province	USD25,000 (Note2)	Design, manufacture, processing, sale of clothing, Knit fabrics mill, printing, dyeingand finishingmill.

The exchange rate as of December 31, 2019 was 29.98.

(Note 1) There is no longer any advantage in investing due to the rising cost of labor, material and supply in Mainland China, consequently, the BOD approved the dissolution and liquidation of Unison on December 7, 2016.

• (Note2) The BOD of the Company has approved the investment project on September 17, 2019. The Company and Eclat Cayman jointly invest in the Eclat Textile International PT with shares holding of 99.9996% and 0.0004%, respectively. By the end of December 31, 2019, the Company and Eclat Cayman have invested in USD25,000,000 in total.

3. Shareholders and Its Subsidiaries with Deemed Control and Subordination: None.

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4. Status of Business Allocation among Affiliated Company:

• A. The Company indirectly invests in the following companies through Grand Elite Holdings Inc.:

• Eclat Textile (Cambodia) Co., Ltd.: Overseas production site for the garment orders of the Company.

• B. The Company indirectly invests in the following companies through Eclat Cayman Islands Holdings:

• Eclat Textile Co., Ltd. (Vietnam), Colltex Garment Mfy Co., Ltd.(Vn), E-Top (Vietnam) Co., Ltd., Tai-Yuan Garments Co., Ltd. and Unison (Wuxi) Textile & Garment Co Ltd. (under dissolution and liquidation process): Overseas production sites for garment orders of the Company.

• Eclat Fabrics (Vietnam) Co., Ltd.: a dyeing and knitting factory in Vietnam that cooperates with the Vietnam garment

• factories in order to allow the company to become an all-in-one manufacturer with the vertical integration from the manufacturing processes of knitting, dyeing and garment production, such that a complete service can be offered to customers at once.

• Eclat Enterprise Ltd.: In charge of the assets management for the Company's investment in the region of Cambodia.

• C. The Company and Eclat Cayman Islands Holdings have formed a joint venture in Indonesia as following:

• *PT Eclat Textile International: PT Eclat Textile International is a vertical integration factory with functions of knitting, dyeing and finishing and garment manufacturing. The Company established the factory to diversify the risk of production base concentration and expand production scale to meet capacity requirement.

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5. Information of Directors, Supervisors, and General Managers of the affiliates

Unit：Share；%

			Unit：Share；%	Unit：Share；%
Company Name	Position (Note1)	Name / Representative	Shareholding (Note2) (Note3)
			Share	Percentage
Grand Elite Holdings Inc.	Director Director Director	Hsien-Chin Tsai Li-Chen Wang Jen-Chieh Lo	- - -	- - -
Eclat Cayman Islands Holdings	Director Director Director	Hsien-Chin Tsai Li-Chen Wang Jen-Chieh Lo	- - -	- - -
PT Eclat Textile International	Director Supervisor	Hsien-Chin Tsai Shu-Wen Wang	- -	- -
Unison (Wuxi) Textile and Garment Inc.	Chairman Director Director Supervisor	Cheng-Hai Hung Ho-Kuan Shenh Hsien-Chin Tsai Jen-Chieh Lo	- - --	- - --
Eclat Textile Co., Ltd (Vietnam)	Chairman Director Director Director Director	Cheng-Hai Hung Kun-Tang Chen Jen-Chieh Lo Hsu, Heng-Wei Shu-Wen Wang	- - - - -	- - - - --
Eclat Fabrics (Vietnam) Co., Ltd	Chairman Director Director Director Director Director	Cheng-Hai Hung Hsien-Chin Tsai Kun-Tang Chen Jen-Chieh Lo Li-Chen Wang Shu-Wen Wang	- - - - - -	- - - - - -

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Company Name	Position (Note1)	Name / Representative	Shareholding (Note2) (Note3)	Shareholding (Note2) (Note3)
			Share	Percentage
Colltex Garment Mfy Co., Ltd. (VN)	Chairman Director Director	Cheng-Hai Hung Kun-Tang Chen Jen-Chieh Lo	- - -	- - -
E-TOP (Vietnam) Co., Ltd	Chairman Director Director	Cheng-Hai Hung Kun-Tang Chen Jen-Chieh Lo	- - -	- - -
Eclat Enterprise Ltd	Chairman Director Director	Cheng-Hai Hung Kun-Tang Chen Jen-Chieh Lo	- - -	- - -
Eclat Textile (Cambodia) Co., Ltd	Chairman Director Director	Cheng-Hai Hung Kun-Tang Chen Jen-Chieh Lo	- - -	- - -
Tai-Yuan Garments Co., Ltd	Chairman Director Director	Cheng-Hai Hung Kun-Tang Chen Jen-Chieh Lo	- - -	- - -

Note 1: If an affiliate is a foreign company, equivalent job positions thereof are listed.

Note 2: If an investee is a corporate limited by shares, please indicate the number of shares and shareholding percentage. For others, please indicate the capital contribution amount and capital contribution percentage with notes. Note 3: When a director or supervisor is a corporate, please further disclose relevant information of its representative.

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6. Operational Highlights of Subsidiaries

Unit : NT$ 1,000, except EPS (NT$)

Company	Capital Stock	Assets	Liabilities	Equity	Revenues	Operating Income	Net Income	EPS
Eclat Cayman Islands Holdings	3,710,295	3,881,061	0	3,881,061	0	-340	68,202	-
Grand Elite Holdings Inc.	255,430	-91,499	0	-91,499	0	-124	4,718	-
PT Eclat Textile International	749,500	747,092	17	747,075	0	-77	-2,500	-
Unison (Wuxi) Textile And Garment Inc.	168,638	8,784	120	8,664	0	-2,164	52,206	-
Eclat Textile Co., Ltd (Vietnam)	659,560	1,026,395	224,880	801,515	1,487,516	37,713	26,001	-
Eclat Fabrics (Vietnam) Co., Ltd	1,199,200	2,567,097	1,130,096	1,437,001	1,801,891	-20,649	-44,009	-
Colltex Garment MfyCo.,Ltd.	503,664	523,901	61,759	462,142	495,241	-34,096	-36,068	-
E-Top (Vietnam)Co.,Ltd	1,079,280	1,292,018	120,670	1,171,349	953,017	88,563	84,690	-
Eclat Enterprise,Ltd	30	28,091	29,650	-1,559	618	247	-323	-
Eclat Textile (Cambodia) Co., Ltd	239,840	316,799	425,446	-108,648	369,182	12,828	4,509	-
Tai-Yuan Garments Co.,Ltd	203,864	205,423	345,130	-139,707	191,593	-9,830	-19,279	-

The exchange rate as of December 31, 2019 was 1: 29.98; the average exchange rate for 2019 was 1:30.912

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8.1.2. Consolidated Financial Statements of Subsidiaries and Affiliation Reports Representation Letter

Representation Letter

Our Company hereby declares that the companies required to be incorporated into the preparation of the consolidated financial statement of the affiliates according to the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” are identical to the companies required to be incorporated into the preparation of the consolidated financial statement of affiliates and parent company according to the “International Financial Reporting Standards 10 (IFRS 10)” approved by the Financial Supervisory Commission for the period from January 1, 2019 to December 31, 2019; in addition, relevant information required to be disclosed in the consolidated financial statement of the affiliates has been disclosed completely in the consolidated financial statement of affiliates and parent company. Accordingly, no separate consolidated financial statement of the affiliates is further provided.

Declared by

Company Name: Eclat Textile Co., Ltd.

Chairman: Cheng-Hai Hung

Date: March 5, 2020

8.1.3. Consolidated Financial Statements of Affiliates and Affiliation Reports Representation Letter : Not available.

• 8.2. Private Placement Securities in the Most Recent Years and as of the Date of this Annual Report : None.

• 8.3. Securities of the Company Held by or Disposed of by Subsidiaries in the Most Recent year and as of the Date of this Annual Report : None.

• 8.4. Other Necessary Supplement: None.

• 8.5. Any of the Situations Listed in Article 36, Paragraph 3, Subparagraph 2 of the Securities and Exchange Act, Which Might Materially Affect Shareholders' Equity or the Price of the Company's Securities, Has Occurred during the Most Recent Fiscal Year or during the Current Fiscal Year Up to the Date of Publication of the Annual Report : None.

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Eclat Textile Co., Ltd.

Chairman ： Cheng-Hai, Hung