Makalot - AGM Information 2021 | FinancialReports.eu

Stock Code ： 1477

==> picture [211 x 46] intentionally omitted <==

Makalot Industrial Co., Ltd.

2021 Annual Shareholders’ Meeting Handbook (Translation)

Time: 9:00am, Friday, June 18, 2021 Venue: Cathay Financial Holdings

1[st] Floor, No. 9, Songren Rd., Xinyi Dist., Taipei

	Table of Contents
	Page
1.	Meeting Procedure .................................................................. 1
2.	Meeting Agenda ....................................................................... 2
3.	Report Items.............................................................................. 3
4.	Proposed Resolutions .............................................................. 4
5.	Discussion Items ...................................................................... 6
6.	Extempore Motions ................................................................. 6
7.	Attachment
	I. Business Report ............................................................. 7
	II. Audit Committee’s Review Report ............................ 12
	III. Report on Specific Promotion Plan of CSR ............. 13
	IV. Financial Statement of 2020 ......................................... 14
	V. Comparison Table for the Article of Incorporation . 31
	VI. Rules of Procedure for Shareholders Meetings ........ 37
	VII. Articles of Incorporation (Before Revision) ............ 47
	VIII. Shareholdings of All Directors ................................... 54

Makalot Industrial Co., Ltd. 2021 Annual Shareholders’ Meeting Procedure

Call Meeting to Order
Chairman’ Address
Report Items
Proposed Resolution
Discussion Items
Extempore Motions
Adjournment
1 -

Makalot Industrial Co., Ltd. 2021 Annual Shareholders’ Meeting Agenda

Time: 9:00am, Friday, June 18, 2021
Venue: Cathay Financial Holdings,

1st Floor, No. 9, Songren Rd., Xinyi Dist., Taipei

Report the shares of attendance and the opening of meeting
Chairman’s Address
Report Items
(1) To report the business of 2020
(2) The Audit Committee’s review report on 2020 financial statements
(3) To report the 2020 directors’ and employees’ compensations
(4) To report 2020 earnings distribution of cash dividends
(5) To report the specific promotion plan of Corporate Social Responsibility
(6) Other report matters
Proposed Resolutions
(1) To accept the 2020 Business Report and Financial Statements
(2) To accept the earning distribution of 2020
Discussion Items
(1) To revise the “Article of Incorporation”
Extempore Motions
Adjournment
2 -

Report Items

The business report of 2020

Explanatory Note

Please refer to the Attachment I of business report.

The Audit Committee’s review report on 2020 financial statements Explanatory Note Please refer to the Attachment II of Audit Committee’s Review report.
The distribution of the 2020 directors’ and employees’ compensations Explanatory Note
(1) The Board of Directors approved to distribute the employee’s compensation in the amount of NT$153,623,110 in cash.
(2) The Board of Directors approved to distribute the directors’ compensation in the amount of NT$53,375,000 in cash. The difference between the distribution amount and book amount is of NT$12,545,364 which shall be regarded as the accounting estimates change and the difference was handled based on the resolution of BOD.
Report on 2020 earning distribution of cash dividends Explanatory Note
Makalot’s Annual Shareholders’ Meeting approved the amendments of “Article of Incorporation” on June 16, 2020 to authorize the Board of Directors to resolute the earning distribution of cash dividends after the close of fiscal year. The respective amount of 2020 cash dividends approved by Makalot’s Board of Directors is NT$1,934,852,648 (NT$8.00/per share) with the payment date of May 13, 2021.
Report on specific promotion plan of Corporate Social Responsibility Explanatory Note This plan was executed based on the “ Corporate Social Responsibility ”

Principle and Guideline, article 4 . Please refer to the Attachment III of “Report on specific promotion plan of Corporate Social Responsibility”.

Others reporting matters

Explanatory Note

The Company didn’t receive any shareholders’ proposal during the period for shareholder’s right to issue proposal.

Proposed Resolution

To accept the 2020 Business Report and Financial Statements (Proposed by the Board of Directors)
Explanatory Note
(1) The Company’s business report and financial report of 2020 was approved by the Board of Directors on Mar. 22, 2021 and had submitted to the Audit Committee and reviewed; and the Audit Committee Review Report was duly issued accordingly.
(2) Please refer to the Attachment I & IV of “Business Report” and “Financial Statement”.
(3) Submitted for recognition

Resolution

To accept the earning distribution of 2020 (Proposed by the Board of Directors) Explanatory Note
(1) To plus the 2020 net income after tax amounted NT$2,056,437,316 and the adjusted initial retained profit earning amounted NT$528,316,358, the accumulated distributable earning is of NT$2,584,753,674. After the Company removed the legal reserve of NT$205,477,575, special reserve of NT$161,984,925, and the deduction of shareholders’ cash dividends distribution amounted NT$1,934,852,648, the retained profit earning is of NT$282,438,526.
(2) Submitted for recognition
4 -

Makalot Industrial Co., Ltd

The Earnin Distribution Table of 2020 g

Item		Total
Retained profit earning at the beginning of year Plus(Less)`：` Remeasuremen~~ts~~of defined benefit Obligaiton of 2020 Net Profit after tax of this year Earnings available for distribution Less`：` Legal reserve Special reserve—Deduct of total equity Distribution`：` Cash dividends (NT$8.0 per share) Unappropriated Retained Earnings		529,977,925 (1,661,567) 2,056,437,316 2,584,753,674 205,477,575 161,984,925 1,934,852,648
		282,438,526

Chairman:	Manager:	Accounting
Chou Li-Ping	Chou Li-Ping	Supervisor:
		Lin Yu-Hsin

Resolution:

Discussion Items

1. To revise the “Article of Incorporation”

(Proposed by the Board of Directors)

Explanatory Note

Due to the requirements of business operation, the Company will revise partial terms of the “Article of Incorporation”. Please refer to the Attachment V of “Comparison Table for the Article of Incorporation” (Before and After Revision).

Resolution

Extempore Motions

Attachment I Business Report

Makalot Industrial Co., Ltd Business Report

I. Preface

2020 was a year full of challenges but also a year full of opportunities. Makalot’s business of 2020 1[st] half was influenced by the worldwide impact caused by Covid-19; but, due to the team’s quick response and our positive attitude to face the difficulties along with our clients, we caught the business chance after the market stabilized in the 2[nd] half. We controlled the annual revenue reduction within 10% even though we there was an unfavorable influence of exchange rate. Again, Makalot joined the national epidemic prevention team to respond our government call after the epidemic of SARS. Our solid speedy R&D and fully production on protective apparel has been displayed completely. We are honored by the president Tsai’s personal visit and awarded with the “Epidemic Prevention Metal”. Covid-19 has significantly affected human lifestyle and business models. Only by "keeping up with the times", there is possibility to survive in this ever-changing environment. In this year, Makalot starts on a 3A project in response to the current demand from clients cause of supply shortage and to accelerate its production layout. In view of the new situation of the post-epidemic era, except the enforcement of manufacture capability and innovative R&D , Makalot also continues to promote the realization of the core concept of all-employee management. We have confidence that Makalot will have more outstanding operational performance with all the preparations.

II. Report of 2020 Business Execution and Performance

2020 Business Execution Report
(1) Deepen client management and expand cooperation range

After the epidemic being subsided, major consumer markets such as the U.S. gradually loosen the restrictions. At the first moment, Makalot has grasped the positive orders placed by clients after they stabilized, and also enhanced the profitability through the optimization of product structure on full order capacity. On the other hand, in response to the change of consumers' lifestyle, the demand for home wear, casual wear and sports & leisure wear has grown significantly. Makalot's diversified and flexible characteristics and R&D capabilities have driven us to be the first choice on cooperation for clients. The comprehensiveness and competition value of Makalot's supply chain are greatly upgraded by our deep cooperation with clientss and gradual expansion on product range.

(2) Innovative R&D, Digital Applications

During the pandemic period of Covid-19, remote working has become has become the norm and the importance of digital applications has been highlighted. The Makalot 3D team is dedicated to researching various 3D software and hardware applications to provide a complete virtual fitting solution. In comparison with the traditional process of design, prototype simulation, and proofing, we can reduce time and material waste through digital virtual process. We can also create a unique product development experience for our clientss with the virtual imitation of different garment sizes, colors, and model appearances, or even simulating the animation of models' catwalk in a runway. Our continuous efforts to refine the scope and depth of 3D applications have been highly appreciated by our clientss.

(3) Value Chain Integration, Global Operations

The international situation in 2020, fueled by the epidemic, has become more volatile, and the rise of geopolitics has renewed people's concern for diversified and flexible deployment strategies and localized supply chain issues. For a long time, Makalot has been adopting a global layout strategy in its supply chain, which exists the advantages of diversified flexibility and quick response. Asia is the home base for Maklot's production capacity since in Asia, the textile and apparel industry is well-developed and workers are generally highly skilled, and the vertical integration of the localized supply chain is conducive to improve efficiency and shorten timelines. In addition, Makalot is also building up its production model outside of Asia and cultivating partnerships with African foundries. Through the strategic promotion of client projects, Makalot is able to enhance its competitiveness with multiple production layouts and flexible adjustment.

2. The execution of Business Plan and Budget

(1) The Company’s revenue was NT$24,924,170 thousand in 2020, which was 7.9% decreased in comparison with the 2019 revenue of NT$27,047,502 thousand; the net profit after tax in 2020 was NT$2,078,913 thousand which was 7.8% growth in comparison with the 2019 net profit after tax of NT$1,929,001 thousand.
(2) Execution of Budget: Based on the regulation of “Public Issuing Companies’ Public Financial Forecast Information Processing Standards”, there was no need to public the budget execution of 2020 since the Company didn’t public the financial forecast of 2020
Analyzation of Financial Income & Expense and Profitability
8 -

Unit: NT$ thousand

Item	Year	2019	2020
Financial Receipts & Expenditure	Net Revenue	27,047,502	24,924,170
	Gross Profit	5,425,206	5,571,406
	OperatingProfit	2,489,769	2,665,758
	Net Profit	1,929,001	2,078,913
Profitability	Return on Assets(%)	14.03%	12.76%
	Return on Equity (%)	21.34%	21.47%
	Operating Profit to paid -in Capital Ratio(%)	113.25%	121.25%
	Pre-tax Profit to Paid-in Capital Ratio(%)	111.43%	123.57%
	Net Profit Ratio(%)	7.13%	8.34%
	Earings Per Share(NT$)	8.66	9.35

III. Business Plan of 2021

Business Operation of 2021
(1) Focus on Business Opportunities of Athleisure, Display Advantages of Diversified Marketing
Deepen partnership with clients having high growth potential to expand product lines.
Focus on high value, high profitability and high strategic value orders to optimize product structure and adjust the balance of low and high seasons
。
Aggressively develop the international major sports brand clients
(2) Diversify Production Capacity and Strengthen Vertical Integration
In response to the anti-fragile trend after the epidemic, under our diversified production area layout, Makalot strengthen the scale of localized supply chain cooperation, upgrade the benefits of vertical integration, improve efficiency, speed up flexibility and response speed.
To take Asia as the main production base, we are expanding our production capacity in response to the demand of clients’ orders and creating long-term relationships with quality sub-contractors; and together with our African operations, Makalot's competitive advantage of diversity and flexibility are reinforced.
In order to reinforce our operation and management performance, an efficiently intelligent operation mechanism and system has been established by enhancing the digitalization of the value chain, such as the development and introduction of various automated equipment.
9 -
(3) To Advance R&D, To Enrich Technical Capability
We promote our up, mid, and downstream independent research and development capabilities which combine design and material development, and collaborate with American designers. Through our internal brand management model, we strengthen our value chain and whole range services to offer our clients abundant experience in product development.
In response to the trend of sustainable environmental protection in the fashion industry, we are working with the upstream industry to actively develop environmentally friendly materials such as degradable, Recycled Poly, BCI Cotton, and vegetable-dyed materials. Due to the extreme climate, we are also developing the designs of year-round and cross-seasonal styles to expand the market together with our brand clients.
Based on the theme of healthy life, we will continue to promote large-scale government projects. Through the horizontal integration of resources among the government, corporations, and cross-industries, we shall focus on products such as temperature control, ECG/heartbeat detection, and thermal/intelligent cooling temperature control to create more advanced intelligent products and develop an industrial ecosystem.
(4) To strive for ESG and link up with the international community
Complying with international standards, we set up (corporate governance, social participation, and environmental sustainability) goals and press ahead with their implementation.
The Sustainability Committee was established to execute the various projects, including: employee care and co-glory with society, public welfare activities co-worked with suppliers, and improving the well-being of employees in the manufacture basement. Meanwhile, in considering energy saving and land conservation, the energy management mechanism has been set up. Our suppliers are invited to join the energy saving actions. And, the energy information and data capability of manufacture basement has been built up. Accordingly, targets are set to promote improvement to meet international standards.

2. R&D Plan in 2021

The global economy gradually gets stabilized in the year of 2021. In the post-epidemic era, the enterprises still need to maintain excellent resilience and sensitivity to market changes in order to seize the opportunities to plan ahead and maintain good operation and sustainable growth. The ability to re-engineer and refine creativity and innovation of R&D is the key for which Makalot can hold a position in the ever-changing market.

10 -

(1) Digitalization `、` Automation

As the epidemic accelerates the step of digitalization of the global industries, Makalot continuously introduce new innovative applications into company, including big data, AI, 5G applications, etc., which are applied to enhance risk prediction and prevention control, improve service quality and efficiency, etc. On the other hand, Makalot also actively adopt automated equipment to improve production efficiency and increase production value.

(2) Sustainable Environment Protection

With the upward tendency of global environmental protection awareness, the fashion industry, one after another, makes various declarations on environmental protection and set clear short, medium and long-term goals. To reply our clients policies, Makalot commit to develop the various environmental protection and earth-friendly materials. We work together with our clientss to achieve the goals of environmental protection and contribute our efforts to protect the earth.

(3) Development of High End Product

The technical research and development team continues to focus on the development of high-end sports/functional apparel, introducing innovative process technologies and techniques, and striving to improve quality and efficiency. Our R&D team strive to improve quality and efficiency by introducing innovative manufacturing techniques and process on premium athletic/functional apparels.

(4) Cross-industry Collaboration of Smart Apparels

Through the resources integration of cross-industry, we devote ourselves to research and commercialize products in the fields of smart fitness and medical care. We also create new operation models and actively build the ecosystem of smart apparel.

Chairman: Chou Li-Ping

Manager: Chou Li-Ping

Accounting Supervisor: Lin Yu-Hsin

11 -

Attachment II Audit Committee’s Review Report

Audit Committee’s Review Report

The Board of Directors has prepared the 2020 Business Report, Financial Statements and the proposal of Earning Distribution. The Financial Statements have been duly audited by the CPAs, Chen Bei-Chi & Lin, Heng-Shen of KPMG Taiwan and the relative report has been issued accordingly. The Audit Committee reviewed the above mentioned Business Report, Financial Statements and the proposal of Earning Distribution with the comment of accuracy and correct. By the regulation of the Article 14-4 of the Securities and Exchange Act and the Article 219 of Company Act, the Audit Committee’s Review Report was submitted for review.

The Shareholders’ Meeting of 2021

Sincerely Makalot Industrial Co., Ltd Audit Committee

Chairman: Su Yu-Hui

Date: Mar. 22, 2021

12 -

Attachment III Report on Specific Promotion Plan of CSR

The Company will execute the various duty on promotion plans in 2021 as follows:

Item	Duty	Promotion Highlight
Sustainable Governance Section	Based on sustainable management, the company will plan the development direction of corporate governance and put into practice	▪To protect the benefit of shareholder and keep improving the transparency ▪To enhance the structure and operation of Board of Directors ▪To identifyrisks and upgrade risk management capabilities
Sustainable Supply Chain Section	To utilize the corporate influence to work on the development plan of sustainable raw materials and collaborate with suppliers on ESG issues	▪To commit to promoting and using sustainable raw materials ▪Through our own influence, we will keep working with our suppliers to improve the condition of labor human rights and environmental sustainability to achieve SDGs of the United Nations
Sustainable Environment Section	To formulate environmental strategies, plan and promote various environmental issues such as mitigate the impact of global	▪Enhancing the environmental management system and strengthening the inspection mechanism as well as the capability of greenhouse gas emission ▪Planning and promoting the direction, policies and programs to reduce the risk of climate change ▪The Company will promote the environmental conservation concept byeducating youngergeneration
Sustainable Employees Caring Section	Based on the goal of mutual growth of employees and company, to promote the various employee caring policies and activities	▪To improve the staffs' welfare and create a happy working atmosphere ▪To provide an appropriate career enhancement working environment for employees to reach mutual growth of labor and management
The Common Good Section	To benefit all the communities around our business locations and relatively expand to the whole society, the company will arrange the resources and guide the direction for the commongood	▪Our company will utilize our resources to assist the youth and teenagers in building their future competitiveness ▪To improve the development of the neighbor communities by working with the communities/society

13 -

Attachment IV Financial Statement of 2020

Independent Auditors ’ Report

To the Board of Directors of Makalot Industrial Co., Ltd.:

Opinion

We have audited the consolidated financial statements of Makalot Industrial Co., Ltd. and its subsidiaries (“the Group”), which comprise the consolidated balance sheets as of December 31, 2020 and 2019, the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors (please refer to Other Matter paragraph), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“IFRSs”), International Accounting Standards ( “IASs”), Interpretations developed by the International Financial Reporting Interpretations Committee (“IFRIC”) or the former Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit of the consolidated financial statements as of and for the year ended December 31, 2020 in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants, and the auditing standards generally accepted in the Republic of China. Furthermore, we conducted our audit of the consolidated financial statements as of and for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants, Rule No. 1090360805 issued by the Financial Supervisory Commission, and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the 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. Based on our audits and the reports of other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

14 -

Key Audit Matters

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

Revenue recognition

Please refer to Note 4(o) “Revenue” to the consolidated financial statements.

Description of key audit matter

The Group is primarily involved in the manufacturing and processing of garments. Revenue recognition is the main concern of the users of the financial statements. Therefore, we determined that the revenue recognition is a key audit matter.

How the matter was addressed in our audit

Our principal audit procedures included: understanding the design and effectiveness of the Group’s internal controls on revenue recognition; assessing whether the revenue recognition was performed in accordance with the Group’s policy; performing trend and comparison analysis on revenue from major clients to assess the significant exceptions; performing sales cut-off test of a period before and after the reporting date by vouching relevant documents of sales transactions to determine whether sales transactions have been appropriately recognized.

Derecognition of financial assets

Please refer to Note 4(g) “Financial assets” and Note 6(c) “Factoring and derecognition of accounts receivable” to the consolidated financial statements.

Description of key audit matter

The Group factored its accounts receivable to certain financial institutions to manage its credit risk on accounts receivable. The judgments on derecognition of financial assets involved particular accounting treatments. Therefore, we determined that the derecognition of financial asset is a key audit matter.

How the matter was addressed in our audit

Our principal audit procedures included: understanding the internal controls of the Group applied in factoring its accounts receivable; reviewing the factoring agreements with banks; assessing whether the factoring of accounts receivable was performed in accordance with the Group’s policy; assessing whether the disclosure of factoring transactions was appropriate, including performing the confirmation procedure.

Inventory valuation

Please refer to Note 4(h) “Inventories”, Note 5 “Significant accounting assumptions and judgments, and major sources of estimation uncertainty”, and Note 6(d) “Inventory” of the consolidated financial statements.

Description of key audit matter

The inventories of the Group are measured at the lower of cost and net realizable value. Since the amount of inventories has significant impact on the financial statements of the Group and the environment in the industry changes rapidly, the cost of inventories might have a risk to exceed the net realizable value. Therefore, we determined that the assessment of inventory valuation is a key audit matter.

15 -

How the matter was addressed in our audit

Our principal audit procedures included: understanding the Group’s inventory management policies, such as the policy of management and valuation of inventories; assessing whether the inventory management and valuation were performed in accordance with the Group’s policy; performing sampling procedures to understand the net realizable values used by management and prices in a period after the reporting date to ensure the appropriateness of the valuation; sampling and inspecting the accuracy of the inventory aging report; assessing whether the disclosure of provision for inventory valuation and obsolescence was appropriate at the reporting date.

Other Matter

We did not audit the financial statements of certain subsidiaries of the Group. Those statements were audited by other auditors, whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the subsidiaries, is based solely on the report of other auditors. The financial statements of the subsidiaries audited by other auditors reflect the total asset each constituting 4% of the consolidated total assets as of December 31, 2020 and 2019, respectively, and the net revenue each constituting 0% of the consolidated total net revenue for the both years ended.

We did not audit the financial statements of certain investments, which represented investments accounted for using equity method of the Group. Those statements were audited by other auditors, whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included below, is based solely on the reports of other auditors. The investments accounted for using equity method audited by other auditors both constituted 1% of the consolidated total assets as of December 31, 2020 and 2019, and the related shares of profit or loss of associates accounted for using equity method both constituted 1% of the profit before income tax for the years then ended, respectively.

Makalot Industrial Co., Ltd. has prepared its parent-company-only financial statements as of and for the years then ended December 31, 2020 and 2019, on which we have expressed an unqualified opinion with other matters paragraph.

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 the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the IFRSs, IASs, interpretations 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 that are free from material misstatement, whether due to fraud or error.

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

’ Those charged with governance (including audit committees) are responsible for overseeing the Group s financial reporting process.

16 -

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

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the 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:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
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 auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
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.
Obtain sufficient and appropriate audit evidence regarding the financial information of the components within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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.

17 -

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ 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 Pei-Chi Chen and Heng-Shen Lin.

KPMG

Taipei, Taiwan (Republic of China) March 22, 2021

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’ audit 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’ audit report and consolidated financial statements, the Chinese version shall prevail.

18 -

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

Consolidated Balance Sheets

December 31, 2020 and 2019

(Expressed in thousands of New Taiwan Dollars)

December 31, 2020 Amount % $ 2,367,059 13 163,897 1 2,473,471 13 4,026,065 22 3,435,726 18 280,092 2	December 31, 2020	December 31, 2020	December 31, 2020
	Amount	%	Amount
12,746,310 69
203,674 1 5,077,346 27 191,898 1 35,948 - 167,176 1 213,459 1
	8,027,233 43 5,153,457 35
	17,216 - 13,042 - 54,188 - 70,748 1 369,932 2 315,244 2 3,078 - 3,096 -
5,889,501 31
	444,414 2 402,130 3
	8,471,647 45 5,555,587 38
	2,198,566 12 2,198,566 15 3,447,704 19 3,251,635 22 4,716,849 25 3,761,356 25 (278,231) (1) (116,246) (1)
	10,084,888 55 9,095,311 61
	79,276 - 102,296 1
	10,164,164 55 9,197,607 62
$ 18,635,811 100	$ 18,635,811 100 14,753,194 100

See accompanying notes to financial statements.

19 -

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

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

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

2020	% 100 78	2019	% 100 80
Amount $ 24,924,170 19,352,764		Amount 27,047,502 21,622,296
5,571,406 1,525,357 1,349,341 30,950	22 6 5 -	5,425,206 1,582,363 1,356,299 (3,225)	20 6 5 -
2,905,648	11	2,935,437	11
2,665,758	11	2,489,769	9
15,578 58,358 441 (63,668) 40,333	- - - - -	14,352 41,557 1,348 (119,389) 22,286	- - - - -
51,042	-	(39,846)	-
2,716,800 637,887	11 3	2,449,923 520,922	9 2
2,078,913	8	1,929,001	7
(2,499) (838)	- -	(2,594) (482)	- -
(1,661)	-	(2,112)	-
(161,742) -	- -	(88,722) -	- -
(161,742)	-	(88,722)	-
(163,403)	-	(90,834)	-
$ 1,915,510	8	1,838,167	7
$ 2,056,437 22,476	8 -	1,904,540 24,461	7 -
$ 2,078,913	8	1,929,001	7
$ 1,892,791 22,719	8 -	1,814,080 24,087	7 -
$ 1,915,510	8	1,838,167	7
$	9.35		8.66 8.62
$	9.30

See accompanying notes to financial statements.

20 -

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

Consolidated Statements of Changes in Equity

For the years ended December 31, 2020 and 2019

(Expressed in thousands of New Taiwan Dollars)

		Equity attributable to owners of parent	Equity attributable to owners of parent	Equity attributable to owners of parent	Equity attributable to owners of parent			Non-controlling interests	Total equity 8,880,758
Ordinary shares	Capital surplus		Retained earnings			Other equity Exchange differences on translation of foreign financial statements	Total equity attributable to owners of parent
		Legal reserve	Special reserve 114,601	Unappropriated retained earnings 1,556,070	Total
$ 2,093,872	3,356,329	1,674,906			3,345,577	(27,898)	8,767,880	112,878
- -	- -	- -	- -	1,904,540 (2,112)	1,904,540 (2,112)	- (88,348)	1,904,540 (90,460)	24,461 (374)	1,929,001 (90,834)
-	-	-	-	1,902,428	1,902,428	(88,348)	1,814,080	24,087	1,838,167
- - - 104,694 -	- - - (104,694) -	150,701 - - - -	- (86,703) - - -	(150,701) 86,703 (1,486,649) - -	- - (1,486,649) - -	- - - - -	- - (1,486,649) - -	- - - - (34,669)	- - (1,486,649) - (34,669)
2,198,566 - -	3,251,635 - -	1,825,607 - -	27,898 - -	1,907,851 2,056,437 (1,661)	3,761,356 2,056,437 (1,661)	(116,246) - (161,985)	9,095,311 2,056,437 (163,646)	102,296 22,476 243	9,197,607 2,078,913 (163,403)
-	-	-	-	2,054,776	2,054,776	(161,985)	1,892,791	22,719	1,915,510
- - - - - -	- - - (281) 196,350 -	190,243 - - - - -	- 88,347 - - - -	(190,243) (88,347) (1,099,283) - - -	- - (1,099,283) - - -	- - - - - -	- - (1,099,283) (281) 196,350 -	- - - 281 - (46,020)	- - (1,099,283) - 196,350 (46,020)
$ 2,198,566	3,447,704	2,015,850	116,245	2,584,754	4,716,849	(278,231)	10,084,888	79,276	10,164,164

See accompanying notes to financial statements.

21 -

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

Consolidated Statements of Cash Flows

For the years ended December 31, 2020 and 2019

(Expressed in thousands of New Taiwan Dollars)

Cash flows from operating activities: Profit before tax Adjustments: Adjustments to reconcile profit: Depreciation expense Amortization expense Expected credit loss (gain) Net gain on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Share-based payments transactions Share of gains of investments accounted for using equity method Loss (gain) on disposal of property, plant and equipment Total adjustments to reconcile profit Changes in operating assets and liabilities: Changes in operating assets: Accounts receivable Inventories Other financial assets Other operating assets Total changes in operating assets Changes in operating liabilities: Notes payable Accounts payable Accounts payable－related parties Other payables Other current liabilities Accrued pension liabilities Other operating liabilities Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Interest paid Income taxes paid Net cash flows from operating activities Cash flows used in investing activities: Acquisition of financial assets designated at fair value through profit or loss Decrease (increase) in long-term prepayments Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease in refundable deposits Acquisition of intangible assets Increase in other financial assets Net cash flows used in investing activities Cash flows used in financing activities: Increase in short-term borrowings Payment of lease liabilities Cash dividends paid Capital reduction to non-controlling interests Cash dividends and dividends from capital surplus paid to non-controlling interests Net cash flows from (used in) financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2020 $ 2,716,800 515,788 18,630 30,950 (27,258) 63,668 (15,578) 196,350 (40,333) (581)	2019 2,449,923 504,496 14,242 (3,225) (12,852) 80,856 (14,352) - (22,286) 408
	741,636	547,287
	(1,908,439) (623,181) 48,310 14,563	331,899 (225,071) (880,620) (87,894)
	(2,468,747)	(861,686)
	993 112,841 (62,112) 157,499 6,753 52,189 (73,889)	(422) (254,577) 11,217 210,359 2,291 66,130 97,217
	194,274	132,215
	(2,274,473)	(729,471)
	(1,532,837)	(182,184)
	1,183,963 15,780 (58,904) (388,009)	2,267,739 14,309 (73,540) (517,599)
	752,830	1,690,909
	(66,667) 12,431 (723,949) 1,548 3,212 (23,047) (650,758)	- (8,930) (487,802) 6,407 2,075 (27,423) -
	(1,447,230)	(515,673)
	2,529,973 (111,960) (1,099,283) (23,010) (23,010)	422,406 (105,806) (1,486,649) (15,340) (19,329)
	1,272,710	(1,204,718)
	(49,807) 528,503 1,838,556	(46,451) (75,933) 1,914,489
	$ 2,367,059	1,838,556

See accompanying notes to financial statements.

22 -

Independent Auditors ’ Report

To the Board of Directors of Makalot Industrial Co., Ltd.:

Opinion

We have audited the financial statements of Makalot Industrial Co., Ltd. (“the Company”), which comprise the balance sheets as of December 31, 2020 and 2019, the statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors (please refer to Other Matter paragraph), the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and its financial performance and cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audit of the financial statements as of and for the year ended December 31, 2020 in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants, and the auditing standards generally accepted in the Republic of China. Furthermore, we conducted our audit of the financial statements as of and for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants, Rule No. 1090360805 issued by the Financial Supervisory Commission, and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the 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. Based on our audits and the reports of other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

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

Revenue recognition

Please refer to Note 4(o) “Revenue” to the financial statements.

Description of key audit matter

The Company is primarily involved in the manufacturing and processing of garments. Revenue recognition is the main concern of the users of the financial statements. Therefore, we determined that the revenue recognition is a key audit matter.

23 -

How the matter was addressed in our audit

’ Our principal audit procedures included: understanding the design and effectiveness of the Company s internal controls on revenue recognition; assessing whether the revenue recognition was performed in accordance with the Company’s policy; performing trend and comparison analysis on revenue from major clients to assess the significant exceptions; performing sales cut-off test of a period before and after the reporting date by vouching relevant documents of sales transactions to determine whether sales transactions have been appropriately recognized.

Derecognition of financial assets

Please refer to Note 4(f) “Financial assets” and Note 6(c) “Factoring and derecognition of accounts receivable” to the financial statements.

Description of key audit matter

The Company factored its accounts receivable to certain financial institutions to manage its credit risk on accounts receivable. The judgments on derecognition of financial assets involved particular accounting treatments. Therefore, we determined that the derecognition of financial asset is a key audit matter. How the matter was addressed in our audit

Our principal audit procedures included: understanding the internal controls of the Company applied in factoring its accounts receivable; reviewing the factoring agreements with banks; assessing whether the factoring of accounts receivable was performed in accordance with the Company’s policy; assessing whether the disclosure of factoring transactions was appropriate, including performing the confirmation procedure.

Inventory valuation

Please refer to Note 4(g) “Inventories”, Note 5 “Significant accounting assumptions and judgments, and major sources of estimation uncertainty” and Note 6(d) “Inventories” of the financial statements. Description of key audit matter

The inventories of the Company are measured at the lower of cost and net realizable value. Since the amount of inventories has significant impact on the financial statements of the Company and the environment in the industry changes rapidly, the cost of inventories might have a risk to exceed the net realizable value. Therefore, we determined that the assessment of inventory valuation is a key audit matter. How the matter was addressed in our audit

Our principal audit procedures included: understanding the Company’s inventory management policies, such as the policy of management and valuation of inventories; assessing whether the inventory management and valuation were performed in accordance with the Company’s policy; performing sampling procedures to understand the net realizable values used by management and the prices in a period after the reporting date to ensure the appropriateness of the valuation; sampling and inspecting the accuracy of the inventory aging report; assessing whether the disclosure of provision for inventory valuation and obsolescence was appropriate at the reporting date.

Investment accounted for using equity method

Please refer to Note 4 (h) and (i) “investment accounted for using equity method” and Note 6 (e) “Details of investment accounted for using equity method” to the financial statements. Description of key audit matter

The investments of the Company accounted for using equity method are mainly its subsidiaries all across the globe, wherein amounts of the investments has significant impact on the assets of the Company. Therefore, we determined that the investment accounted for using equity method is a key audit matter.

24 -

How the matter was addressed in our audit

Our principal audit procedures included: understanding the internal controls of the Company applied in the investment accounted for using equity method; acquiring the detail movements of the investment accounted for using equity method and examining their transaction records and related documents; assessing whether the investment accounted for using equity method was performed in accordance with the Company’s policy; acquiring the detailed calculation of the investment accounted for using equity method and evaluating whether the Company recognizes the share of profit or loss of its subsidiaries and associates accounted for equity method and the exchange difference on translation of foreign operations according to the appropriate percentage of the investment; understanding whether the difference between the cost of the investment accounted for using equity method and the net equity held by the Company was addressed appropriately by the nature of their differences.

Other Matter

We did not audit the financial statements of certain investments, which represented investments accounted for using equity method of the Company. Those statements were audited by other auditors, whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included below, is based solely on the reports of other auditors. The investments accounted for using equity method audited by other auditors both constituted 1% of the total assets as of December 31, 2020 and 2019, and the related shares of profit or loss of subsidiaries and associates accounted for using equity method constituted 0% and 1% of the profit before income tax for the years then ended, respectively.

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

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

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

’ Those charged with governance (including audit committees) 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, whether 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 financial statements.

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
25 -
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.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
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.
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.
Obtain sufficient and appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ 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 Pei-Chi Chen and Heng-Shen Lin.

KPMG

Taipei, Taiwan (Republic of China) March 22, 2021

Notes to Readers

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

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

26 -

(English Translation of Financial Statements Originally Issued in Chinese.) MAKALOT INDUSTRIAL CO., LTD.

Balance Sheets

December 31, 2020 and 2019

(Expressed in thousands of New Taiwan Dollars)

December 31, 2020 Amount % $ 803,108 5 163,897 1 2,406,387 14 9,092 - 3,138,529 18 3,028,776 18 354,469 2	December 31, 2020	December 31, 2020	December 31, 2020
	Amount	%	Amount
9,904,258 58
1,961,589 12 2,929,450 17 11,469 - 24,638 - 49,103 - 2,027,465 12 134,234 1
	6,878,555 41 5,301,346 37
	16,914 - 12,609 - - - 11,641 - 58,847 - 55,213 - 3,002 - 3,020 -
7,137,948 42
	78,763 - 82,483 -
	6,957,318 41 5,383,829 37
	2,198,566 13 2,198,566 15 3,447,704 20 3,251,635 23 4,716,849 28 3,761,356 26 (278,231) (2) (116,246) (1)
	10,084,888 59 9,095,311 63
$ 17,042,206 100	$ 17,042,206 100 14,479,140 100

See accompanying notes to financial statements.

27 -

(English Translation of Financial Statements Originally Issued in Chinese) MAKALOT INDUSTRIAL CO., LTD.

Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

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

2020	% 100 82	2019	% 100 84
Amount $ 24,420,679 19,910,986		Amount 26,246,190 22,118,229
4,509,693 1,152,609 765,161 30,917	18 5 3 -	4,127,961 1,126,958 689,132 (2,730)	16 4 3 -
1,948,687	8	1,813,360	7
2,561,006	10	2,314,601	9
66,734 40,091 (6,122) (56,676) 41,526	- - - - -	76,433 29,401 (33,363) (107,690) 81,772	- - - - -
85,553	-	46,553	-
2,646,559 590,122	10 2	2,361,154 456,614	9 2
2,056,437	8	1,904,540	7
(6,139) 2,749 (1,729)	- - -	(4,331) 1,328 (891)	- - -
(1,661)	-	(2,112)	-
(161,985) -	- -	(88,348) -	- -
(161,985)	-	(88,348)	-
(163,646)	-	(90,460)	-
$ 1,892,791	8	1,814,080	7
$ 9.35		8.66
$ 9.30		8.62

See accompanying notes to financial statements.

28 -

(English Translation of Financial Statements Originally Issued in Chinese) MAKALOT INDUSTRIAL CO., LTD.

Statements of Changes in Equity

For the years ended December 31, 2020 and 2019

(Expressed in thousands of New Taiwan Dollars)

Ordinary shares	Capital surplus		Retained	earnings		Other equity	Total equity 8,767,880
		Legal reserve	Special reserve	Unappropriated retained earnings	Total retained earnings	Exchange differences on translation of foreign financial statements
$ 2,093,872	3,356,329	1,674,906	114,601	1,556,070	3,345,577	(27,898)
- -	- -	- -	- -	1,904,540 (2,112)	1,904,540 (2,112)	- (88,348)	1,904,540 (90,460)
-	-	-	-	1,902,428	1,902,428	(88,348)	1,814,080
- - - 104,694	- - - (104,694)	150,701 - - -	- (86,703) - -	(150,701) 86,703 (1,486,649) -	- - (1,486,649) -	- - - -	- - (1,486,649) -
2,198,566 - -	3,251,635 - -	1,825,607 - -	27,898 - -	1,907,851 2,056,437 (1,661)	3,761,356 2,056,437 (1,661)	(116,246) - (161,985)	9,095,311 2,056,437 (163,646)
-	-	-	-	2,054,776	2,054,776	(161,985)	1,892,791
- - - - -	- - - (281) 196,350	190,243 - - - -	- 88,347 - - -	(190,243) (88,347) (1,099,283) - -	- - (1,099,283) - -	- - - - -	- - (1,099,283) (281) 196,350
$ 2,198,566	3,447,704	2,015,850	116,245	2,584,754	4,716,849	(278,231)	10,084,888

See accompanying notes to financial statements.

29 -

(English Translation of Financial Statements Originally Issued in Chinese) MAKALOT INDUSTRIAL CO., LTD.

Statements of Cash Flows

For the years ended December 31, 2020 and 2019

(Expressed in thousands of New Taiwan Dollars)

Cash flows from operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Expected credit loss (gain) Net gain on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Share-based payment transactions Share of profit of investments accounted for using equity method Loss on disposal of property, plant and equipment Loss on disposal of investments accounted for using equity method Total adjustments to reconcile profit Changes in operating assets and liabilities: Changes in operating assets: Accounts receivable Other receivable due from related parties Inventories Other financial assets Other operating assets Total changes in operating assets Changes in operating liabilities: Notes payable Accounts payable Accounts payable to related parties Other payables Other payables to related parties Other current liabilities Accrued pension liabilities Other operating liabilities Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Interest paid Income taxes paid Net cash flows from (used in) operating activities Cash flows from (used in) investing activities: Acquisition of financial assets at fair value through profit or loss Proceeds from disposal of property, plant and equipment Acquisition of investments accounted for using equity method Proceeds from disposal of investments accounted for using equity method (Increase) decrease in long-term prepayments Proceeds from capital reduction of investments accounted for using equity method Acquisition of property, plant and equipment Decrease in refundable deposits Increase in other receivables due from related parties Decrease in other receivables due from related parties Acquisition of intangible assets Increase in other financial assets Dividends received Net cash flows used in investing activities Cash flows used in financing activities: Increase in short-term loans Payment of lease liabilities Cash dividends paid Net cash flows from (used in) financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2020 $ 2,646,559 61,056 6,396 30,917 (27,258) 56,676 (66,734) 196,350 (41,526) 260 16,192	2019 2,361,154 54,630 5,089 (2,730) (12,852) 69,158 (76,433) - (81,772) 801 -
	232,329	(44,109)
	(1,852,988) 270,890 (524,538) (50,041) (290,135)	248,283 (273,586) (173,005) (830,308) 4,937
	(2,446,812)	(1,023,679)
	994 74,185 (1,109,362) 120,124 (13,348) 96,045 (2,505) (45,252)	(422) 120,453 (25,341) 129,832 (1,464) (73,351) (122) 42,533
	(879,119)	192,118
	(3,325,931)	(831,561)
	(3,093,602)	(875,670)
	(447,043) 66,618 (56,643) (292,219)	1,485,484 76,629 (70,624) (446,499)
	(729,287)	1,044,990
	(66,667) 52 (275,476) 14,821 (6,103) 36,990 (40,790) (394) - 39,276 (9,079) (677,881) 243,597	- 13 (166,745) - (535) 54,960 (36,859) (130) (124,571) - (12,226) - 31,072
	(741,654)	(255,021)
	2,184,171 (11,722) (1,099,283)	422,406 (11,722) (1,486,649)
	1,073,166	(1,075,965)
	(397,775) 1,200,883	(285,996) 1,486,879
	$ 803,108	1,200,883

See accompanying notes to financial statements.

30 -

Attachment V Comparison Table for the Article of Incorporation (Before and After Revision)

After Revision	Before Revision	Explanatory Note
Article 5: The Company's capital authorized is NT$3 billion, which is divided into300million shares, at a par value of Ten New Taiwan Dollars (NT$ 10) per share, and the Board of Directors has been authorized to issue them in installments.	Article 5: The Company's capital authorized is NT$ 2.5 billion, which is divided into 250 million shares, at a par value of Ten New Taiwan Dollars (NT$ 10) per share, and the Board of Directors has been authorized to issue them in installments.	Update the capital authorized
Article 7: All of the shares issued by the Company shall be name-bearing and signed or sealed by the directors represented the Company and. Shares can be issued after certified by the visa bank.The Company may print a consolidated share certificate representing the total number of the new shares and may be exempted from printing any share certificate, but shall appoint a centralized securities depository for safekeeping or registration.	Article 7: All of the shares issued by the Company shall be name-bearing and signed or sealed by at least three of the Company's Directors. Shares can be issued by the competent authority or the competent authority's approved share-issuing institution after the shares are recorded. Following the public offering of the Company's stock, the Company may print a consolidated share certificate representing the total number of the new shares and may be exempted from printing any share certificate, but shall appoint a centralized securities depository for safekeeping or registration.	To revise the wording in compliance with the regulation
Article 12: Unless otherwise stated in relevant laws and regulations, resolutions of shareholders’ meeting shall be agreed by the majority of votes represented by the attendingshareholders orproxiesauthorizedwho	Article 12: Unless otherwise stated in relevant laws and regulations, resolutions of shareholders’ meeting shall be agreed by the majority of votes represented by the attendingshareholders orproxies who represents the	To revise the wording in compliance the regulation

31 -

After Revision	Before Revision	Explanatory Note
represents the majority of the total number of issued shares. In accordance with the regulations of the competent authorities, shareholders of the Company may also exercise their voting rights by electronic means, and shareholders who exercise their voting rights by electronic means are deemed to be present in person, all matters relating thereto shall be governed bylaw.	majority of the total number of issued shares. In accordance with the regulations of the competent authorities, shareholders of the Company may also exercise their voting rights by electronic means, and shareholders who exercise their voting rights by electronic means are deemed to be present in person, all matters relating thereto shall be governed by law.
Article 13: The Company shall appoint 9 to 15 Directors for a term of three-years. They shall be elected among persons of adequate capacity by the shareholders' meeting and may be re-elected for consecutive terms. The number of Directors to be appointed shall be determined by the Board of Directors. Among them, there shall be at least two independent Directors and not less than one-fifth of the total number of Director seats. The Company's election of Directors follows the candidate nomination system provided in Article 192-1 of the Company Act. The shareholders shall elect Directors from the list of directors candidates. The total shareholding of all Directors shall be determined by regulations of the competent authority of securities.	Article 13: The Company shall appoint 9 to 15 Directors for a term of three-years. They shall be elected among persons of adequate capacity by the shareholders' meeting and may be re-elected for consecutive terms. The number of Directors to be appointed shall be determined by the Board of Directors. Among them, there shall be at least two independent Directors and not less than one-fifth of the total number of Directors’ seats. The Company's election of Directors follows the candidate nomination system provided in Article 192-1 of the Company Act. The shareholders shall elect Directors from the list of directors candidates. Following the public offering of the Company's shares, the total shareholding of all Directors shall be determined by regulations of the competent authority of Securities.	Words revised
Article 15-1: Directors mayauthorize the other directors to act,on	Article 15-1: Directors of the Board of Directors mayauthorize	To revise the wordingin

32 -

	After Revision		Before Revision	Explanatory Note
	behalf of him, in a meeting of BOD,with the listed items of authorization on meeting called,but such authorization is limited to one person only.		another director to act on behalf in a board meeting, who may then exercise his/her voting rights on all matters put forward at the meeting, but such authorization is limited to oneperson only.	compliance with the regulation
	Article 21: The dividend policy of the Company is as follows: 1. The current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ accumulated losses and then set aside 10% as legal reserve. When such legal reserve amounts to the total paid-in capital, the Company shall not be subject to this requirement. The Company may then appropriate or reserve a certain amount as special reserve according to Article 41 of the Securities and Exchange Act. The remaining earnings, plus the accumulated undistributed earnings, may be appropriated to shareholders as dividends or bonuses according to the distribution plan proposed by the Board of Directors. When new shares are to be issued, they shall be distributed after a resolution has been submitted to the shareholders' meeting. In accordance with the Article 240, paragraph 5 of the Company Act, the Company shall authorize the Board of Directors, with the presence of more than two-thirds of the Directors and a majority of the Directors present, to distribute all orpart of the dividends and		Article 21: The dividend policy of the Company is as follows: 1. The current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ accumulated losses and then set aside 10% as legal reserve. When such legal reserve amounts to the total paid-in capital, the Company shall not be subject to this requirement. The Company may then appropriate or reserve a certain amount as special reserve according to Article 41 of the Securities and Exchange Act. The remaining earnings, plus the accumulated undistributed earnings, may be appropriated to shareholders as dividends or bonuses according to the distribution plan proposed by the Board of Directors. When new shares are to be issued, they shall be distributed after a resolution has been submitted to the shareholders' meeting. In accordance with the Article 240, paragraph 5 of the Company Act, the Company shall authorize the Board of Directors, with the presence of more than two-thirds of the Directors and a majority of the Directors present, to distribute all or part of the dividends and bonusespayable bywayof cash and	To revise the wording in compliance with the regulation, No. 1090150022, issued by FSC.

33 -

	After Revision	Before Revision	Explanatory Note
2. 3.	bonuses payable by way of cash and to report the same to the shareholders' meeting. After taking into account of the Company’s current and future development plan, investment environment, fund requirements, and domestic and international competition and the interests of shareholders, the dividend policy of the Company is to set aside no less than 10% of distributable earnings as shareholders’ dividends and bonuses. For the net decrease in other equity of the current period, the same amount of special reserve is provided from the current period's net income and the income of items other than current period's net income included in the current period's undistributed earnings, and if there is still a shortfall, the same amount is provided from prior period's undistributed earnings. For the net decrease in other equity accumulated in prior periods, a special reserve of the same amount was provided from undistributed earnings of prior periods. If there is still a shortfall, both of the net profit after tax of the current period and those items other than the net profit after tax of the current period shall be included in the amount of undistributed earnings of the current period. If there is a subsequent reversal of the net decrease in other equity, the reversal may be reversed to a	to report the same to the shareholders' meeting. 2. After taking into account of the Company’s current and future development plan, investment environment, fund requirements, and domestic and international competition and the interests of shareholders, the dividend policy of the Company is to set aside no less than 10% of distributable earnings as shareholders’ dividends and bonuses. 3. Notwithstanding the foregoing, when there is any reduction in shareholders’ equity, the Company shall appropriate or reserve a certain amount as special reserve prior to distribution of the earnings. Afterwards, if there is any reversal of the reduced items in shareholders’ equity, such reversal amount may be recorded as the profit of the current years, which shall be distributed as mentioned above. 4. If the Company has no earnings for distribution in the current year, or if the amount of earnings, although available, is substantially less than the actual earnings distributed in the previous year, or if the Company has no accumulated deficit, taking into account the Company's financial, business and operating conditions, the Company may distribute all or part of the surplus in cash as ordered by law or as prescribed by the competent authority, the Board of Directors may resolve to do so in accordance with Article 241 of the CompanyAct and report the same

34 -

	After Revision	Before Revision	Explanatory Note
4.	special reserve for distribution of earnings. If the Company has no earnings for distribution in the current year, or if the amount of earnings, although available, is substantially less than the actual earnings distributed in the previous year, or if the Company has no accumulated deficit, taking into account the Company's financial, business and operating conditions, the Company may distribute all or part of the surplus in cash as ordered by law or as prescribed by the competent authority, the Board of Directors may resolve to do so in accordance with Article 241 of the Company Act and report the same to the shareholders' meeting.	to the shareholders' meeting.
Article 23: These Articles of Incorporation were established on December12, 1989. The 1st revision was made on April 30, 1990. The 2nd revision was made on October 25, 1992. The 3rd revision was made on June 28, 1993. The 4th revision was made on October 20, 1993. The 5th revision was made on March 20, 1997. The 6th revision was made on October 1, 1997. The 7th revision was made on May 5, 1998. The 8th revision was made on July 25, 1998. The 9th revision was made on November 23, 1998. The 10th revision was made on June 9, 1999. The 11th revision was made on December 21,1999.		Article 23: These Articles of Incorporation were established on December12, 1989. The 1st revision was made on April 30, 1990. The 2nd revision was made on October 25, 1992. The 3rd revision was made on June 28, 1993. The 4th revision was made on October 20, 1993. The 5th revision was made on March 20, 1997. The 6th revision was made on October 1, 1997. The 7th revision was made on May 5, 1998. The 8th revision was made on July 25, 1998. The 9th revision was made on November 23, 1998. The 10th revision was made on June 9, 1999. The 11th revision was made on December 21,1999.	To add the revision date of the newly revision.

35 -

	After Revision	Before Revision	Explanatory Note
	The 12th revision was made on June 26, 2000. The 13th revision was made on May 27, 2002. The 14th revision was made on November 22, 2002. The 15th revision was made on June 2, 2003. The 16th revision was made on June 14, 2005. The 17th revision was made on June 13, 2007. The 18th revision was made on June 9, 2010. The 19th revision was made on June 18, 2012. The 20th revision was made on June 23, 2014. The 21st revision was made on June 16, 2016. The 22ndrevision was made on June 16, 2020. The 23rdrevision was made on June 18, 2021.	The 12th revision was made on June 26, 2000. The 13th revision was made on May 27, 2002. The 14th revision was made on November 22, 2002. The 15th revision was made on June 2, 2003. The 16th revision was made on June 14, 2005. The 17th revision was made on June 13, 2007. The 18th revision was made on June 9, 2010. The 19th revision was made on June 18, 2012. The 20th revision was made on June 23, 2014. The 21st revision was made on June 16, 2016. The 22ndrevision was made on June 16, 2020.

36 -

Attachment XI Rules of Procedures for Shareholders Meetings

Rules of Procedures for Shareholders Meetings

Article 1

To establish a strong governance system and sound supervisory capabilities for this Corporation's shareholders meetings, and to strengthen management capabilities, these Rules are adopted pursuant to Article 5 of the Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies.

Article 2

The rules of procedures for this Corporation's shareholders meetings, except as otherwise provided by law, regulation, or the articles of incorporation, shall be as provided in these Rules.

Article 3

Unless otherwise provided by law or regulation, this Corporation's shareholders meetings shall be convened by the board of directors.

This Corporation shall prepare electronic versions of the shareholders meeting notice and proxy forms, and the origins of and explanatory materials relating to all proposals, including proposals for ratification, matters for deliberation, or the election or dismissal of directors or supervisors, and upload them to the Market Observation Post System (MOPS) before 30 days before the date of a regular shareholders meeting or before 15 days before the date of a special shareholders meeting. This Corporation shall prepare electronic versions of the shareholders meeting agenda and supplemental meeting materials and upload them to the MOPS before 21 days before the date of the regular shareholders meeting or before 15 days before the date of the special shareholders meeting. In addition, before 15 days before the date of the shareholders meeting, this Corporation shall also have prepared the shareholders meeting agenda and supplemental meeting materials and made them available for review by shareholders at any time. The meeting agenda and supplemental materials shall also be displayed at this Corporation and the professional shareholder services agent designated thereby as well as being distributed on-site at the meeting place.

The reasons for convening a shareholders meeting shall be specified in the meeting notice and public announcement. With the consent of the addressee, the meeting notice may be given in electronic form.

Election or dismissal of directors, amendments to the articles of incorporation, capital reduction, application for cessation of public offering, directors'

37 -

permission to compete, transfer of capital from earnings, transfer of capital from surplus, the dissolution, merger, or demerger of the corporation, or any matter under Article 185, paragraph 1 of the Company Act, shall be set out in the notice of the reasons for convening the shareholders meeting. None of the above matters may be raised by an extraordinary motion. The major content shall be publicized at the web assigned by the Security governing organization and the relative web address shall be clearly indicated in the notice of Shareholders’ Meeting.

The convening of the shareholders 'meeting has stated the full re-election of directors and the date of appointment. After the re-election being done, the appointment date shall not be changed by extraordinary motion or other means.

A shareholder holding 1 percent or more of the total number of issued shares may submit to this Corporation a written proposal for discussion at a regular shareholders meeting. Such proposals, however, are limited to one item only, and no proposal containing more than one item will be included in the meeting agenda. But, if shareholders’ proposals are pushing the Corporation to improve the public welfare or social responsibility, the BOD still need to add the relative proposals into the proposals of shareholders’ meeting. In addition, when the circumstances of any subparagraph of Article 172-1, paragraph 4 of the Company Act apply to a proposal put forward by a shareholder, the board of directors may exclude it from the agenda.

Prior to the book closure date before the annual shareholders meeting is held, this Corporation shall publicly announce that it will receive shareholder proposals, and the location and time period for their submission; the period for submission of shareholder proposals may not be less than 10 days in written or electronic form.

The proposals submitted by shareholders are limited to 300 words, and any proposal containing more than 300 words will be rejected into the meeting agenda. The shareholder making the proposal shall present in person or by proxy at the shareholders meeting and take part in discussion of the proposal.

Prior to the date for issuance of notice of a shareholders meeting, this Corporation shall inform the shareholders who submitted proposals of the proposal screening results and shall list in the meeting notice the proposals that conform to the provisions of this article. At the shareholders meeting the board of directors shall explain the reasons for exclusion of any shareholder proposals not included in the agenda.

Article 4

38 -

For each shareholders meeting, a shareholder may appoint a proxy to attend the meeting by providing the proxy form issued by this Corporation and stating the scope of the proxy's authorization.

A shareholder may issue only one proxy form and appoint only one proxy for any given shareholders meeting and shall deliver the proxy form to this Corporation 5 days before the date of the shareholders meeting. When duplicate proxy forms are delivered, the one received earliest shall prevail unless a declaration is made to cancel the previous proxy appointment.

After a proxy form has been delivered to this Corporation, if the shareholder intends to attend the meeting in person or to exercise voting rights by correspondence or electronically, a written notice of proxy cancellation shall be submitted to this Corporation 2 business days before the meeting date. If the cancellation notice is submitted after that time, votes cast at the meeting by the proxy shall prevail.

Article 5

The venue for a shareholders meeting shall be the premises of this Corporation, or a place easily accessible to shareholders and suitable for a shareholders meeting. The meeting may begin no earlier than 9 a.m. and no later than 3 p.m. Full consideration shall be given to the opinions of the independent directors with respect to the place and time of the meeting.

Article 6

This Corporation shall specify in its shareholders meeting notices the time during which shareholder attendance registrations will be accepted, the place to register for attendance, and other matters for attention.

The time during which shareholder attendance registrations will be accepted, as stated in the preceding paragraph, shall be at least 30 minutes prior to the time the meeting commences. The place at which attendance registrations are accepted shall be clearly marked and a sufficient number of suitable personnel assigned to handle the registrations.

Shareholders and their proxies (collectively, "shareholders") shall attend shareholders meetings based on attendance cards, sign-in cards, or other certificates of attendance. This Corporation may not arbitrarily add requirements for other documents beyond those showing eligibility to attend presented by shareholders. Solicitors soliciting proxy forms shall also bring identification documents for verification.

This Corporation shall furnish an attendance book to sign, or attending shareholders may hand in a sign-in card in lieu of signing in.

39 -

This Corporation shall furnish attending shareholders with the meeting agenda book, annual report, attendance card, speaker's slips, voting slips, and other meeting materials. Where there is an election of directors, pre-printed ballots shall also be furnished.

When the government or a juristic person is a shareholder, it may be represented by more than one representative at a shareholders meeting. When a juristic person is appointed to attend as proxy, it may designate only one person to represent it in the meeting.

Article 7

If a shareholders meeting is convened by the board of directors, the meeting shall be chaired by the chairperson of the board. When the chairperson of the board is on leave or for any reason unable to exercise the powers of the chairperson, the vice chairperson shall act in place of the chairperson; if there is no vice chairperson or the vice chairperson also is on leave or for any reason unable to exercise the powers of the vice chairperson, the chairperson shall appoint one of the managing directors to act as chair, or, if there are no managing directors, one of the directors shall be appointed to act as chair. Where the chairperson does not make such a designation, the managing directors or the directors shall select from among themselves one person to serve as chair.

When a managing director or a director serves as chair, as referred to in the preceding paragraph, the managing director or director shall be one who has held that position for six months or more and who understands the financial and business conditions of the Company. The same shall be true for a representative of a juristic person director that serves as chair.

It is advisable that shareholders meetings convened by the board of directors shall be chaired by the chairperson of the board in person and attended by more than half of the directors and at least one member of each functional committee on behalf of the committee. The attendance shall be recorded in the meeting minutes.

If a shareholders meeting is convened by a party with power to convene but other than the board of directors, the convening party shall chair the meeting. When there are two or more such convening parties, they shall mutually select a chair from among themselves.

This Corporation may appoint its attorneys, certified public accountants, or related persons retained by it to attend a shareholders meeting in a non-voting capacity.

40 -

Article 8

This Corporation, beginning from the time it accepts shareholder attendance registrations, shall make an uninterrupted audio and video recording of the registration procedure, the proceedings of the shareholders meeting, and the voting and vote counting procedures.

The recorded materials of the preceding paragraph shall be retained for at least 1 year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Act, the recording shall be retained until the conclusion of the litigation.

Article 9

Attendance at shareholders meetings shall be calculated based on numbers of shares. The number of shares in attendance shall be calculated according to the shares indicated by the attendance book and sign-in cards handed in plus the number of shares whose voting rights are exercised by correspondence or electronically.

The chair shall call the meeting to order at the appointed meeting time. However, when the attending shareholders do not represent a majority of the total number of issued shares, the chair may announce a postponement, provided that no more than two such postponements, for a combined total of no more than 1 hour, may be made. If the quorum is not met after two postponements and the attending shareholders still represent less than one third of the total number of issued shares, the chair shall declare the meeting adjourned.

If the quorum is not met after two postponements as referred to in the preceding paragraph, but the attending shareholders represent one third or more of the total number of issued shares, a tentative resolution may be adopted pursuant to Article 175, paragraph 1 of the Company Act; all shareholders shall be notified of the tentative resolution and another shareholders meeting shall be convened within 1 month.

When, prior to conclusion of the meeting, the attending shareholders represent a majority of the total number of issued shares, the chair may resubmit the tentative resolution for a vote by the shareholders meeting pursuant to Article 174 of the Company Act.

Article 10

If a shareholders meeting is convened by the board of directors, the meeting agenda shall be set by the board of directors. All the proposals, including the extempore motion and the revised motions, shall be discussed and resolute one

41 -

by one. The meeting shall be proceeded in the order of agenda, which may not be changed without a resolution of the shareholders meeting.

If the shareholders’ meeting is convened by the other conveners, not by BOD, the previous regulations shall be accordingly executed.

The chair may not declare the meeting adjourned prior to completion of deliberation on the meeting agenda of the preceding two paragraphs (including extraordinary motions), except by a resolution of the shareholders meeting. If the chair declares the meeting adjourned in violation of the rules of procedure, the other members of the board of directors shall promptly assist the attending shareholders in electing a new chair in accordance with statutory procedures, by agreement of a majority of the votes represented by the attending shareholders, and then continue the meeting.

The chair shall allow ample opportunity during the meeting for explanation and discussion of proposals and of amendments or extraordinary motions put forward by the shareholders; when the chair is of the opinion that a proposal has been discussed sufficiently to put it to a vote, the chair may announce the discussion closed and call for a vote; and the enough voting time shall be arranged accordingly.

Article 11

Before speaking, an attending shareholder must specify on a speaker's slip the subject of the speech, his/her shareholder account number (or attendance card number), and account name. The order in which shareholders speak will be set by the chair.

A shareholder in attendance who has submitted a speaker's slip but does not actually speak shall be deemed to have not spoken. When the content of the speech does not correspond to the subject given on the speaker's slip, the spoken content shall prevail.

Except with the consent of the chair, a shareholder may not speak more than twice on the same proposal, and a single speech may not exceed 5 minutes. If the shareholder's speech violates the rules or exceeds the scope of the agenda item, the chair may terminate the speech.

When an attending shareholder is speaking, other shareholders may not speak or interrupt unless they have sought and obtained the consent of the chair and the shareholder that has the floor; the chair shall stop any violation.

When a juristic person shareholder appoints two or more representatives to attend a shareholders meeting, only one of the representatives so appointed may speak on the same proposal.

42 -

After an attending shareholder has spoken, the chair may respond in person or direct relevant personnel to respond.

Article 12

Voting at a shareholders meeting shall be calculated based the number of shares.

With respect to resolutions of shareholders meetings, the shares held by a shareholder with no voting rights shall not be calculated as part of the total number of issued shares.

When a shareholder is an interested party in relation to an agenda item, and there is the likelihood that such a relationship would prejudice the interests of this Corporation, that shareholder may not vote on that item, and may not exercise voting rights as proxy for any other shareholder.

The number of shares for which voting rights may not be exercised under the preceding paragraph shall not be calculated as part of the voting rights represented by attending shareholders.

With the exception of a trust enterprise or a shareholder services agent approved by the competent securities authority, when one person is concurrently appointed as proxy by two or more shareholders, the voting rights represented by that proxy may not exceed 3 percent of the voting rights represented by the total number of issued shares. If that percentage is exceeded, the voting rights in excess of that percentage shall not be included in the calculation.

Article 13

A shareholder shall be entitled to one vote for each share held, except when the shares are restricted shares or are deemed non-voting shares under Article 179, paragraph 2 of the Company Act.

When this Corporation holds a shareholders meeting, it shall allow the shareholders to exercise voting rights by electronic means and may also by correspondence. When this Corporation holds a shareholder meeting, it shall adopt exercise of voting rights by electronic means and may adopt exercise of voting rights by correspondence. When voting rights are exercised by correspondence or electronic means, the method of exercise shall be specified in the shareholders meeting notice. A shareholder exercising voting rights by correspondence or electronic means will be deemed to have attended the meeting in person, but to have waived his/her rights with respect to the extraordinary motions and amendments to original proposals of that meeting; it is therefore advisable that this Corporation is better to avoid the submission of

43 -

extraordinary motions and amendments to original proposals. A shareholder intending to exercise voting rights by correspondence or electronic means under the preceding paragraph shall deliver a written declaration of intent to this Corporation before 2 days before the date of the shareholders meeting. When duplicate declarations of intent are delivered, the one received earliest shall prevail, except when a declaration is made to cancel the earlier declaration of intent.

After a shareholder has exercised voting rights by correspondence or electronic means, in the event the shareholder intends to attend the shareholders meeting in person, a written declaration of intent to retract the voting rights already exercised under the preceding paragraph shall be made known to this Corporation, by the same means by which the voting rights were exercised, before 2 business days before the date of the shareholders meeting. If the notice of retraction is submitted after that time, the voting rights already exercised by correspondence or electronic means shall prevail.

When a shareholder has exercised voting rights both by correspondence or electronic means and by appointing a proxy to attend a shareholders meeting, the voting rights exercised by the proxy in the meeting shall prevail.

Except as otherwise provided in the Company Act and in this Corporation's articles of incorporation, the passage of a proposal shall require the more than half affirmative votes of the voting rights represented by the attending shareholders. At the time of a vote, for each proposal, the chair or a person designed by the chair shall first announce the total number of voting rights represented by the attending shareholders, followed by a poll of the shareholders. After the conclusion of the meeting, on the same day it is held, the results for each proposal, based on the numbers of votes for, against and the number of abstentions, shall be entered into the MOPS.

When there is an amendment or an alternative to a proposal, the chair shall present the amended or alternative proposal together with the original proposal and decide the order in which they will be put to a vote. When any one among them is passed, the other proposals will then be deemed rejected, and no further voting shall be required.

Vote monitoring and counting personnel for the voting on a proposal shall be appointed by the chair, provided that all monitoring personnel shall be shareholders of this Corporation.

Vote counting for shareholders meeting proposals or elections shall be conducted in public at the place of the shareholders meeting. Immediately after vote counting has been completed, the results of the voting, including the statistical tallies of the numbers of votes, shall be announced on-site at the meeting, and a record of the vote shall be made.

44 -

Article 14

The election of directors at a shareholders meeting shall be held in accordance with the applicable election and appointment rules adopted by this Corporation, and the voting results shall be announced on-site immediately, including the names of those elected as directors and the numbers of votes with which they were elected.

The ballots for the election referred to in the preceding paragraph shall be sealed with the signatures of the monitoring personnel and kept in proper custody for at least 1 year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Act, the ballots shall be retained until the conclusion of the litigation.

Article 15

Matters relating to the resolutions of a shareholders meeting shall be recorded in the meeting minutes. The meeting minutes shall be signed or sealed by the chair of the meeting and a copy shall be distributed to each shareholder within 20 days after the conclusion of the meeting. The meeting minutes may be produced and distributed in electronic form.

The meeting minutes shall accurately record the year, month, day, and place of the meeting, the chair's full name, the methods by which resolutions were adopted, and a summary of the deliberations and their results, including the voting numbers. Once the election of directors held, the voting number of each candidate shall be clearly recorded. And all the relative data shall be retained for the duration of the existence of the Corporation, permanently.

Article 16

On the day of a shareholders meeting, this Corporation shall compile in the prescribed format a statistical statement of the number of shares obtained by solicitors through solicitation and the number of shares represented by proxies and shall make an express disclosure of the same at the place of the shareholders meeting.

If matters put to a resolution at a shareholders meeting constitute material information under applicable laws or regulations or under Taiwan Stock Exchange Corporation (or GreTai Securities Market) regulations, this Corporation shall upload the content of such resolution to the MOPS within the prescribed time period.

Article 17

45 -

Staff handling administrative affairs of a shareholders meeting shall wear identification cards or arm bands.

The chair may direct the proctors or security personnel to help maintain order at the meeting place. When proctors or security personnel help maintain order at the meeting place, they shall wear an identification card or armband bearing the word "Proctor."

At the place of a shareholders meeting, if a shareholder attempts to speak through any device other than the public address equipment set up by this Corporation, the chair may prevent the shareholder from so doing.

When a shareholder violates the rules of procedure and defies the chair's correction, obstructing the proceedings and refusing to heed calls to stop, the chair may direct the proctors or security personnel to escort the shareholder from the meeting.

Article 18

When a meeting is in progress, the chair may announce a break based on time considerations. If a force majeure event occurs, the chair may rule the meeting temporarily suspended and announce a time when, in view of the circumstances, the meeting will be resumed.

If the meeting venue is no longer available for continued use and not all of the items (including extraordinary motions) on the meeting agenda have been addressed, the shareholders meeting may adopt a resolution to resume the meeting at another venue.

A resolution may be adopted at a shareholders meeting to defer or resume the meeting within 5 days in accordance with Article 182 of the Company Act.

Article 19

These Rules, and any amendments hereto, shall be implemented after adoption by shareholders meetings.

The 1st version was set on May 15, 1990.

The 1st revision was made on Apr. 15, 2002.

The 2nd revision was made on Jun. 19, 2013. The 3[rd] revision was mad on Jun. 16, 2020

46 -

Attachment XII Articles of Incorporation (Before Revision)

Articles of Incorporation

Chapter 1 General Provisions

Article 1: The Company was organized in accordance with the Company Act. Its English name is Makalot Industrial Co., Ltd.
Article 2: The scope of business of the Company shall be as follows:
C306010 Outwear Knitting Mills;
C307010 Apparel, Clothing Accessories and Other Textile Product Manufacturing;
C399990 Other Textile Products Manufacturing;
F204110 Retail sale of cloths, clothes, shoes, hats, umbrellas and apparel, clothing accessories and other textile products;
F399040 Retail business without shop;
F401010 International trade;
CF01011 Medical Materials and Equipment Manufacturing;
F108031 Wholesale of Drugs, Medical Goods;
F208031 Retail sale of Medical Equipment;
ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval.
Article 2-1: The Company may provide guarantees externally when it is necessary.
Article 2-2: The Company's total amount of investment shall not be restricted by Article 13 of the Company Act.
Article 3: The Company shall have its head-office in Taipei City, and if necessary, may set up branches domestically or abroad upon a resolution of its Board of Directors.
Article 4: Deleted

Chapter 2 Shares

Article 5: The Company's capital authorized is NT$ 2.5 billion, which is divided into 250 million shares, at a par value of Ten New Taiwan Dollars (NT$ 10) per share, and the Board of Directors has been authorized to issue them in installments.
Article 6: Deleted.
Article 7: All of the shares issued by the Company shall be name-bearing and signed or sealed by at least three of the Company's Directors. Shares can be issued by the competent authority or the competent authority's approved share-issuing institution after the shares are recorded. Following the public
47 -
offering of the Company's stock, the Company may print a consolidated share certificate representing the total number of the new shares to be issued at the same time of issue and may be exempted from printing any share certificate for the shares issued, but shall appoint a centralized securities depository for safekeeping or registration.
Article 8: The transfer of shares shall be suspended within 60 days prior to the convening date of an annual general meeting, or within 30 days prior to the convening date of an extraordinary general meeting, or within 5 days prior to the base date fixed by the Company for distribution of dividends, bonus or other benefits.
Article 8-1: The Company’s shareholders shall comply with the “Regulations Governing the Administration of Shareholder Services of Public Companies”, unless otherwise provided by law and securities regulations, in connection with stock transfer, pledge of rights, loss, inheritance, gift, loss of seal or change of address.

Chapter 3 Shareholders' Meeting

Article 9: A shareholders’ meeting may be recognized as an annual and extraordinary general meeting. An annual general meeting shall be called once a year within six months after the closing of each fiscal year, and a notice shall be sent to each shareholder no later than 30 days prior to the scheduled meeting date by the Board of Directors. An extraordinary general meeting may be called when necessary based on the laws, and a notice shall be sent to each shareholder 15 days prior to the scheduled meeting date.
Article 10: When a shareholder is unable to attend the shareholder's meeting, he/she may appoint a proxy through a letter of appointment printed by the Company, stating the scope of authorization to the proxy. Shareholders' attendance by proxy shall be conducted in accordance with Article 177 of the Company Act, as well as meeting the requirements provided in the Regulations Governing the Use of Proxies for Attendance at Shareholder meetings of Public Companies.
Article 11: Each of the Company's share is entitled to one voting right. However, those stipulated in the Company Act shall be complied with priority.
Article 12: Unless otherwise stated in relevant laws and regulations, resolutions of shareholders’ meeting shall be agreed by the majority of votes represented by the attending shareholders or proxies who represents the majority of the total number of issued shares. In accordance with the regulations of the competent authorities, shareholders of the Company may also exercise their voting rights by electronic means, and shareholders who exercise
48 -

their voting rights by electronic means are deemed to be present in person, all matters relating thereto shall be governed by law.

Article 12-1: When a shareholders' meeting is convened by the Board of Directors, the meeting shall be chaired by the Chairman. In case the Chairman is on leave, the vice chairman shall act in place of the Chairman. If the vice chairman is also on leave, the Chairman shall appoint one of the managing Directors to act as the chair, or, if managing Directors have not been appointed, one of the Directors shall be appointed to act as the chair. Where the Chairman does not make such appointment, the managing Directors or the Directors shall elect one person from among themselves to serve as chair. When the meeting is called by a person outside of the Board of Directors, the convener shall preside as the chair, and when there are two or more conveners, a person among them shall be elected to preside as the chair.
Article 12-2: Resolutions made during the shareholders' meeting shall be recorded in the meeting minutes, containing full information of the year, month, day, place of the meeting, full name of the chair, the mode adopted for resolutions, and a summary of the deliberations and their results. The meeting minutes shall be signed and sealed by the chair of the shareholders' meeting, then distributed to each shareholder within 20 days after the meeting and retained for the duration of the existence of the Company. Distribution of the meeting minutes mentioned above shall be handled in accordance with the Company Act.
A copy of the attendance book and the letters of proxy appointment for the shareholders' meeting shall be kept for a period of at least one year. However, if a shareholder files a lawsuit pursuant to Article 189 of the Company Act, the documents shall be kept until the termination of the lawsuit.

Chapter 4 Directors and the Audit Committee

Article 13: The Company shall appoint 9 to 15 Directors for a term of three-years. They shall be elected among persons of adequate capacity by the shareholders' meeting and may be re-elected for consecutive terms. The number of Directors to be appointed shall be determined by the Board of Directors. Among them, there shall be at least two independent Directors and not less than one-fifth of the total number of Directors seats.
The Company's election of Directors follows the candidate nomination system provided in Article 192-1 of the Company Act. The shareholders shall elect Directors from the list of director candidates.
49 -

Following the public offering of the Company's shares, the total shareholding of all Directors shall be determined by regulations of the competent authority of securities.

Article 13-1: When the number of Directors falls short by one-third of the total number or all Independent Directors have been dismissed, the Board of Directors shall call an extraordinary general meeting within 60 days from the date of occurrence to carry out a by-election to fill the vacancies.
Article 13-2: The more than half of the Company’s Directors shall not have one of the following relationships.
I. Spouse
II. Kinship within second-degree
Article 13-3: In accordance with the provisions of Articles 14-4 of the Securities and Exchange Act, the Company may set up an Audit Committee. The duties of the supervisor stipulated by the Company Act, Securities and Exchange Act and other legal requirements shall be executed by the Audit Committee.
The Audit Committee shall be formed by all Independent Directors. The number of members shall not less three. One of them shall be the convener and, at least, there is one who shall have the expertise of accounting or finance.
Article 14: The Board of Directors shall be organized by Directors, and three managing Directors may be elected among them with the attendance of more than two-thirds of all Directors and the consent of the majority of the Directors present. A Chairman and a vice chairman shall be elected among the managing Directors in the same manner. When managing Directors have not been appointed, a Chairman and a vice chairman shall be elected among the Directors with two-thirds or more of all Directors in attendance and the consent of the majority of the Directors present. The Chairman shall represent the Company externally. The Board of Directors may also set up various functional committees and approve the rules and procedures for each committee.
Article 15: In case the Chairman of the Board of Directors is on leave or absent or cannot exercise his power and authority for any cause, his representative shall be selected according to Article 208 of the Company Act.
Article 15-1: Directors of the Board of Directors may authorize another director to act on behalf in a Board meeting, who may then exercise his/her voting rights on all matters put forward at the meeting, but such authorization is limited to one person only.
Article 16: When the Directors of the Company perform the duties on behalf of the Company, regardless whether the Company makes a profit or loss, the
50 -
Company may compensate the Directors and Supervisors and authorize the Board of Directors to set a compensation standard based on the degree of their participation in and contribution to the operations of the Company within the highest standard set in the Company's Procedure for Compensation Management. If the Company operates with earnings, compensations are distributed pursuant to Article 20.
Article 16-1: The Company shall purchase liability insurance for the Directors executing their duty in their terms of office.

Chapter 5 Managers

Article 17: The Company may have several managers whose appointment, dismissal and remuneration shall be handled in accordance with Article 29 of the Company Act.

Chapter 6 Accounting

Article 18: After the close of each fiscal year, the Board of Directors shall prepare the following documents to the general shareholders’ meeting for acceptance: (1) the business report, (2) financial statements and (3) proposals for surplus earning distribution or loss offsetting.
Article 19: Deleted.
Article 20: If the Company makes a profit in the year, one to eight percent of the profit shall be allocated for employee compensations and no more than five percent shall be allocated for remuneration of the Directors. But the Company shall reserve a portion of profit to make up for accumulated losses, if any.
Article 21: The dividend policy of the Company is as follows:
The current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ accumulated losses and then set aside 10% as legal reserve. When such legal reserve amounts to the total paid-in capital, the Company shall not be subject to this requirement. The Company may then appropriate or reserve a certain amount as special reserve according to Article 41 of the Securities and Exchange Act. The remaining earnings, plus the accumulated undistributed earnings, may be appropriated to shareholders as dividends or bonuses according to the distribution plan proposed by the Board of Directors. When new shares are to be issued, they shall be distributed after a resolution has been submitted to the shareholders’ meeting. In accordance with the Article 240, paragraph 5 of the Company Act, the Company shall authorize the Board of Directors, with the presence of more than
51 -

two-thirds of the directors, with the presence of more than two-thirds of directors and a majority of directors present, to distribute all or part of the dividends and bonuses payable by way of cash and to report the same to the shareholder’s meeting.

After taking into account of the Company’s current and future development plan, investment environment, fund requirements, and domestic and international competition and the interests of shareholders, the dividend policy of the Company is to set aside no less than 10% of distributable earnings as shareholders’ dividends and bonuses.
Notwithstanding the foregoing, when there is any reduction in shareholders’ equity, the Company shall appropriate or reserve a certain amount as special reserve prior to distribution of the earnings. Afterwards, if there is any reversal of the reduced items in shareholders’ equity, such reversal amount may be recorded as the profit of the current years, which shall be distributed as mentioned above.
If the Company has no earnings for distribution in the current year, or if the amount of earnings, although available, is substantially less than the actual earnings, distributed in the previous year, or if the Company has no accumulated deficit, taking into account the Company’s financial, business and operating conditions, the Company may distribute all or part of the surplus in cash as ordered by law or as prescribed by the competent authority, the Board of Directors may resolve to do so in accordance with the Article 241 of the Company Act and report the same to the shareholders’ meeting.

Chapter 7 Supplementary Provisions

Article 22: Matters not specified in these Articles shall be conducted in compliance with the Company Act.
Article 23: These Articles of Incorporation were established on December12, 1989. The 1st revision was made on April 30, 1990. The 2nd revision was made on October 25, 1992.
The 3rd revision was made on June 28, 1993.
The 4th revision was made on October 20, 1993.
The 5th revision was made on March 20, 1997.
The 6th revision was made on October 1, 1997.
The 7th revision was made on May 5, 1998.
The 8th revision was made on July 25, 1998.
The 9th revision was made on November 23, 1998.
52 -

The 10th revision was made on June 9, 1999. The 11th revision was made on December 21, 1999. The 12th revision was made on June 26, 2000. The 13th revision was made on May 27, 2002. The 14th revision was made on November 22, 2002. The 15th revision was made on June 2, 2003. The 16th revision was made on June 14, 2005. The 17th revision was made on June 13, 2007. The 18th revision was made on June 9, 2010. The 19th revision was made on June 18, 2012. The 20th revision was made on June 23, 2014. The 21st revision was made on June 16, 2016. The 22[nd] revision was made on June 16, 2020

Makalot Industrial Co., Ltd.

Chairman: Chou, Li-Ping

53 -

Attachment XII Shareholdings of All Directors

Makalot Industrial Co., Ltd.

Shareholdings of All Directors

The Company’s paid-in capital is NT$2,418,565,810 and shares issued are 241,856,581 shares.
In accordance with the “Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies”, the minimum accumulated shares of all directors shall be of 12,000,000 shares.

Apr. 20, 2021

Title	Name	Shareholdings	Ratio (%)
Chairman & President	Chou, Li-Ping	6,831,415	2.82%
Director	Lin, Hsien Chang	202,666	0.08%
Director	Huang, Hung-Jen	2,896,131	1.20%
Director	Wang, Chien	3,075,723	1.27%
Director	Ho, Huang-Ching	1,426,130	0.59%
Director	Chou, Chiu-Ling	449,825	0.19%
Director	Liu, Shuang-Chuang	4,047,342	1.67%
Director	Lin, Yu-Ya	26,513	0.01%
Director	Chen, Ku-Lung	1,661,286	0.69%
Director	Chou, Hsin-Peng	2,575,613	1.06%
Director	Sung, Pei-Feng	331,626	0.14%
Director	Huang, Yu-Ching	347,633	0.14%
Independent Director	Chung, Ling-I	0	0.00%
Independent Director	Su, Yu-Hui	0	0.00%
Independent Director	Yang, Si-Wei	0	0.00%
Total		23,871,903	9.86%

54 -

AI assistant

Makalot — AGM Information 2021

51834_rns_2021-08-27_ff9f1377-b565-46b9-9e57-3b5d93c2882b.pdf

Makalot Industrial Co., Ltd.

2021 Annual Shareholders’ Meeting Handbook (Translation)

Table of Contents

Makalot Industrial Co., Ltd. 2021 Annual Shareholders’ Meeting Procedure

Makalot Industrial Co., Ltd. 2021 Annual Shareholders’ Meeting Agenda

Report Items

Explanatory Note

Explanatory Note

Proposed Resolution

Resolution

Makalot Industrial Co., Ltd

The Earnin Distribution Table of 2020 g

Discussion Items

1. To revise the “Article of Incorporation”

Explanatory Note

Resolution

Extempore Motions

Attachment I Business Report

Makalot Industrial Co., Ltd Business Report

I. Preface

(2) Innovative R&D, Digital Applications

(3) Value Chain Integration, Global Operations

2. The execution of Business Plan and Budget

III. Business Plan of 2021

2. R&D Plan in 2021

(1) Digitalization 、 Automation

(2) Sustainable Environment Protection

(3) Development of High End Product

(4) Cross-industry Collaboration of Smart Apparels

Attachment II Audit Committee’s Review Report

Audit Committee’s Review Report

Attachment III Report on Specific Promotion Plan of CSR

The Company will execute the various duty on promotion plans in 2021 as follows:

Attachment IV Financial Statement of 2020

Independent Auditors ’ Report

Opinion

Basis for Opinion

Key Audit Matters

Description of key audit matter

How the matter was addressed in our audit

Description of key audit matter

How the matter was addressed in our audit

Description of key audit matter

How the matter was addressed in our audit

Other Matter

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

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

KPMG

Notes to Readers

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

Consolidated Balance Sheets

December 31, 2020 and 2019

(Expressed in thousands of New Taiwan Dollars)

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

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

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

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

Consolidated Statements of Changes in Equity

For the years ended December 31, 2020 and 2019

(Expressed in thousands of New Taiwan Dollars)

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

Consolidated Statements of Cash Flows

For the years ended December 31, 2020 and 2019

(Expressed in thousands of New Taiwan Dollars)

Independent Auditors ’ Report

Opinion

Basis for Opinion

Key Audit Matters

Description of key audit matter

How the matter was addressed in our audit

How the matter was addressed in our audit

Other Matter

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

Auditor ’ s Responsibilities for the Audit of the Financial Statements

KPMG

Notes to Readers

Makalot AGM Information 2021

(1) Digitalization `、` Automation