Stock Code:1477

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors’ Review Report For the Six Months Ended June 30, 2021 and 2020

Address: 8F, No. 550, Sec. 4, Zhongxiao E. Rd., Taipei City Telephone: (02)2345-5588

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

Contents 1. Cover Page 2. Table of Contents 3. Independent Auditors’ Review Report 4. Consolidated Balance Sheets 5. Consolidated Statements of Comprehensive Income 6. Consolidated Statements of Changes in Equity 7. Consolidated Statements of Cash Flows 8. Notes to the Consolidated Financial Statements (1) Company history (2) Approval date and procedures of the consolidated financial statements (3) New standards, amendments and interpretations adopted (4) Summary of significant accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Commitments and contingencies (10) Losses Due to Major Disasters (11) Subsequent Events (12) Other (13) Other disclosures (a) Information on significant transactions (b) Information on investees (c) Information on investment in mainland China (d) Major shareholders (14) Segment information	Page
	1 2 3 4 5 6 7 8 8 8～9 10～11 12 12～34 34～35 36 36 36 36 37 38～41 42 43 43 44

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

Page

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KPMG

台北市110615信義路5段7號68樓(台北101大樓) Telephone 電話 + 886 2 8101 6666 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, Fax 傳真 + 886 2 8101 6667 Xinyi Road, Taipei City 110615, Taiwan (R.O.C.) Internet 網址 home.kpmg/tw

Independent Auditors’ Review Report

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

Introduction

We have reviewed the accompanying consolidated balance sheets of Makalot Industrial Co., Ltd. and its subsidiaries (the “ Group” ) as of June 30, 2021 and 2020, and the related consolidated statements of comprehensive income for the three months and six months then ended, as well as the changes in equity and cash flows for the six months then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. 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 International Accounting Standard 34, “ Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

Except as explained in the Basis for Qualified Conclusion paragraph, we conducted our reviews in accordance with Statement of Auditing Standard 65, “ Review of Financial Information Performed by the Independent Auditor of the Entity”. A review of the consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the generally accepted auditing standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Conclusion

As stated in Note 4(b), the consolidated financial statements included the financial statements of certain nonsignificant subsidiaries, which were not reviewed by independent auditors. These financial statements reflect total assets amounting to $4,000,831 thousand and $3,527,222 thousand, constituting 20.51% and 21.84% of the consolidated total assets; the total liabilities amounting to $1,450,100 thousand and $1,565,556 thousand, constituting 20.19% and 21.34% of the consolidated total liabilities as of June 30, 2021 and 2020, respectively; as well as the total comprehensive income (loss) amounting to $(67,409) thousand, $(29,575) thousand, $(98,242) thousand and $(66,457) thousand, constituting (14.09)%, (10.32)%, (8.69)% and (8.99)% of the consolidated total comprehensive income (loss), and the total net loss amounting to $(41,982) thousand, $(7,827) thousand, $(72,022) thousand and $(58,478) thousand, constituting (7.45)%, (2.16)%, (5.93)% and (7.43)% of the consolidated total net income for the three months and six months ended June 30, 2021 and 2020, respectively.

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

3-1

Furthermore, as stated in Note 6(e), investments accounted for using equity method of the Group amounting to $209,959 thousand and $210,089 thousand as of June 30, 2021 and 2020, respectively, and the share of profit (loss) of investments accounted for using equity method from these investee companies amounting to $7,515 thousand, $38,393 thousand, $10,113 thousand and $39,878 thousand for the three months and six months ended June 30, 2021 and 2020, respectively, were recognized solely on the financial statements prepared by these investee companies, but not reviewed by independent auditors.

Qualified Conclusion

Except for the adjustments, if any, as might have been determined to be necessary had the financial statements of certain consolidated subsidiaries and equity accounted investee companies described in the Basis for Qualified Conclusion paragraph above been reviewed by independent auditors, based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as of June 30, 2021 and 2020, and of its consolidated financial performance for the three months and six months then ended, as well as its consolidated cash flows for the six months then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “ Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

The engagement partners on the reviews resulting in this independent auditors’ review report are Pei-Chi Chen and Heng-Shen Lin.

KPMG

Taipei, Taiwan (Republic of China) August 5, 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 review such consolidated financial statements are those generally accepted and applied in the Republic of China.

							%		7	-		-	16	-	9	7	2	-	2	-	-	43		-	-	2	-	2	45		14	20	21		(1)	54	1	55	100
						June 30, 2020	Amount		1,123,023	45		786	2,487,565	8,888	1,449,458	1,099,283	323,648	44,034	298,750	76,939	34,091	6,946,510		13,198	39,889	332,690	3,096	388,873	7,335,383		2,198,566	3,251,354	3,442,767		(163,883)	8,728,804	85,744	8,814,548	16,149,931
						December 31, 2020	Amount %		3,348,835 18	- -		1,301 -	1,839,400 10	23,134 -	1,808,234 10	- -	599,331 3	45,002 -	295,508 2	46,539 -	19,949 -	8,027,233 43		17,216 -	54,188 -	369,932 2	3,078 -	444,414 2	8,471,647 45		2,198,566 12	3,447,704 19	4,716,849 25		(278,231) (1)	10,084,888 55	79,276 -	10,164,164 55	18,635,811 100
							%		6	-		-	14	-	9	-	2	-	2	1	-	34		-	1	2	-	3	37		12	32	21		(2)	63	-	63	100
(English Translation of Consolidated Financial Statements Originally Issued in Chinese.)	Reviewed only, not audited in accordance with generally accepted auditing standards as of June 30, 2021 and 2020	MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES	Consolidated Balance Sheets	June 30, 2021, December 31, 2020, and June 30, 2020	(Expressed in thousands of New Taiwan Dollars)	June 30, 2021 December 31, 2020 June 30, 2020 June 30, 2021	Amount % Amount % Amount % Liabilities and Equity Amount	Current liabilities:	1,977,144 10 2,367,059 13 2,312,797 14 2100 Short-term borrowings (notes 6(j)(t) and 8) $ 1,135,670	2120 Current financial liabilities at fair value through -	173,563 1 163,897 1 97,608 1 profit or loss(notes 6(b)(t))	1,493,680 7 2,473,471 13 1,588,202 10 2150 Notes payable (note 6(t)) 583	5,597,678 29 4,026,065 22 3,729,852 23 2170 Accounts payable (note 6(t)) 2,802,249	3,884,393 20 3,435,726 18 2,062,812 13 2180 Accounts payable to related parties (notes 6(t) and 7) 35,587	328,601 2 280,092 2 410,742 2 2200 Other payables (note 6(t)) 1,737,783	13,455,059 69 12,746,310 69 10,202,013 63 2216 Dividends payable (note 6(o)(t)) -	2230 Current tax liabilities 357,097	209,959 1 203,674 1 210,089 1 2251 Current provisions for employee benefits 45,723	2259 Other short-term provisions (note 6(k)) 327,781	5,034,342 26 5,077,346 27 4,819,153 30 2280 Current lease liabilities (notes 6(l)(t)(w)) 82,722	396,019 2 191,898 1 213,682 2 2399 Other current liabilities-others 25,126	36,030 - 35,948 - 40,549 - 6,550,321	142,509 1 167,176 1 172,362 1 Non-Current liabilities:	233,719 1 213,459 1 492,083 3 2570 Deferred tax liabilities 17,571	6,052,578 31 5,889,501 31 5,947,918 37 2580 Non-current lease liabilities (notes 6(l)(t)(w)) 221,155	2640 Net defined benefit liability—non-current 388,559	2670 Other non-current liabilities-others 3,078	630,363	Total liabilities 7,180,684	Equity (note 6(o))	3100 Ordinary shares 2,418,566	3200 Capital surplus 6,214,704	3300 Retained earnings 3,984,104	3410 Exchange differences on translation of foreign	financial statements (362,276)	Total equity attributable to owners of parent 12,255,098	36XX Non-controlling interests 71,855	Total equity 12,326,953	19,507,637 100 18,635,811 100 16,149,931 100 Total liabilities and equity $ 19,507,637
									$																														$
							Assets	Current assets:	Cash and cash equivalents (notes 6(a)(t))	Current financial assets at fair value through profit	or loss (notes 6(b)(t))	Accounts receivable, net (notes 6(c)(q)(t))	Inventories, manufacturing (note 6(d))	Other financial assets-current (notes 6(c)(t) and 7)	Other current assets-others (note 6(i))		Non-current assets:	Investments accounted for using equity method	(note 6(e))	Property, plant and equipment (notes 6(f) and 8)	Right-of-use assets (notes 6(g)(w))	Other intangible assets, net (note 6(h))	Deferred tax assets	Other non-current assets (notes 6(i)(t) and 8)															Total assets
									1100	1110		1170	1310	1476	1479			1550		1600	1755	1821	1840	1900

(English Translation of Consolidated Financial Statements Originally Issued in Chinese.) Reviewed only, not audited in accordance with generally accepted auditing standards

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the three months and six months ended June 30, 2021 and 2020

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

For the three m June	onths ended 30 2020 Amount % 4,725,535 100 3,690,222 78 1,035,313 22 323,201 7 235,291 5 33,403 1 591,895 13 443,418 9 4,636 - 11,496 - 13,735 1 (10,709) - 38,393 1 57,551 2 500,969 11 139,411 3 361,558 8 - - - - (75,067) (2) - - (75,067) (2) (75,067) (2) 286,491 6 353,611 8 7,947 - 361,558 8 278,742 6 7,749 - 286,491 6 1.61	For the six m Jun	onths ended e 30
2021 Amount % $ 6,120,983 100 4,762,608 78 1,358,375 22 292,075 5 305,209 5 (16,966) - 580,318 10 778,057 12 4,531 - 16,715 - (75,891) (1) (16,953) - 7,515 - (64,083) (1) 713,974 11 150,445 2 563,529 9 - - - - (85,113) (1) - - (85,113) (1) (85,113) (1) $ 478,416 8 $ 551,481 9 12,048 - $ 563,529 9 $ 466,501 8 11,915 - $ 478,416 8 $ 2.28 $ 2.28		2021 Amount % 12,937,782 100 9,974,476 77 2,963,306 23 712,727 6 697,254 5 (19,099) - 1,390,882 11 1,572,424 12 7,419 - 25,641 - (41,385) - (34,127) - 10,113 - (32,339) - 1,540,085 12 326,099 3 1,213,986 9 (461) - 461 - (84,246) - - - (84,246) - (83,785) - 1,130,201 9 1,201,647 9 12,339 - 1,213,986 9 1,118,063 9 12,138 - 1,130,201 9 5.17 5.16	2020
			Amount % 10,856,419 100 8,617,925 79 2,238,494 21 646,174 6 519,216 5 33,521 - 1,198,911 11 1,039,583 10 7,904 - 17,809 - 17,176 - (37,088) - 39,878 - 45,679 - 1,085,262 10 298,049 3 787,213 7 - - - - (47,979) - - - (47,979) - (47,979) - 739,234 7 780,694 7 6,519 - 787,213 7 733,057 7 6,177 - 739,234 7 3.55
	1.60		3.53

See accompanying notes to financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese.) Reviewed only, not audited in accordance with generally accepted auditing standards MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Consolidated Statements of Changes in Equity For the six months ended June 30, 2021 and 2020 (Expressed in thousands of New Taiwan Dollars) Equity attributable to owners of parent Retained earnings Other equity Ordinary shares Capital surplus Legal reserve Special reserve Unappropriated retained earnings Total Exchange differences on translation of foreign financial statements Total equity attributable to owners of parent Non-controlling interests Total equity Balance at January 1, 2020 $ 2,198,566 3,251,635 1,825,607 27,898 1,907,851 3,761,356 (116,246) 9,095,311 102,296 9,197,607 Profit - - - - 780,694 780,694 - 780,694 6,519 787,213 Other comprehensive income - - - - - - (47,637) (47,637) (342) (47,979) Total comprehensive income - - - - 780,694 780,694 (47,637) 733,057 6,177 739,234 Appropriation and distribution of retained earnings: Legal reserve - - 190,243 - (190,243) - - - - - Special reserve - - - 88,347 (88,347) - - - - - Cash dividends of ordinary share - - - - (1,099,283) (1,099,283) - (1,099,283) - (1,099,283) Changes in ownership interests in subsidiaries - (281) - - - - - (281) 281 - Changes in non-controlling interests - - - - - - - - (23,010) (23,010) Balance at June 30, 2020 $ 2,198,566 3,251,354 2,015,850 116,245 1,310,672 3,442,767 (163,883) 8,728,804 85,744 8,814,548 Balance at January 1, 2021 $ 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 Profit - - - - 1,201,647 1,201,647 - 1,201,647 12,339 1,213,986 Other comprehensive income - - - - 461 461 (84,045) (83,584) (201) (83,785) Total comprehensive income - - - - 1,202,108 1,202,108 (84,045) 1,118,063 12,138 1,130,201 Appropriation and distribution of retained earnings: Legal reserve - - 205,477 - (205,477) - - - - - Special reserve - - - 161,986 (161,986) - - - - - Cash dividends of ordinary share - - - - (1,934,853) (1,934,853) - (1,934,853) - (1,934,853) Capital increase by cash 220,000 2,767,000 - - - - - 2,987,000 - 2,987,000 Changes in non-controlling interests - - - - - - - - (19,559) (19,559) Balance at June 30, 2021 $ 2,418,566 6,214,704 2,221,327 278,231 1,484,546 3,984,104 (362,276) 12,255,098 71,855 12,326,953	9,197,607	787,213 (47,979)	739,234	- - (1,099,283) - (23,010)	8,814,548	10,164,164	1,213,986 (83,785)	1,130,201	- - (1,934,853) 2,987,000 (19,559)	12,326,953

(English Translation of Consolidated Financial Statements Originally Issued in Chinese.) Reviewed only, not audited in accordance with generally accepted auditing standards

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the six months ended June 30, 2021 and 2020

(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 of gains of investments accounted for using equity method 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: Increase in financial assets designated at fair value through profit or loss Increase in long-term prepayments Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease (increase) in refundable deposits Acquisition of intangible assets Increase in other financial assets Net cash flows used in investing activities Cash flows from (used in) financing activities: Increase (decrease) in short-term borrowings Payment of lease liabilities Cash dividends paid Capital increase by cash Cash dividends 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	For the six mo June	nths ended 30 2020 1,085,262 258,029 8,933 33,521 (27,591) 37,088 (7,904) (39,878) (847)
	2021 $ 1,540,085 253,473 8,944 (19,099) (29,604) 34,127 (7,419) (10,113) (21) 230,288 998,890 (1,571,613) 457,561 (40,115) (155,277) (718) 962,849 12,453 (73,781) 5,177 18,627 35,892 960,499 805,222 1,035,510 2,575,595 6,187 (29,028) (550,819) 2,001,935 19,938 (20,287) (199,105) 1,776 (1,980) (9,244) (902,829) (1,111,731) (2,213,165) (66,352) (1,934,853) 2,987,000 (19,559) (1,246,929) (33,190) (389,915) 2,367,059 $ 1,977,144
		261,351
		(1,025,741) (326,969) 762,510 (101,238)
		(691,438)
		478 761,007 (76,358) (207,497) 20,895 17,446 (65,083)
		450,888
		(240,550)
		20,801
		1,106,063 7,802 (34,744) (322,320)
		756,801
		- (261,037) (189,539) 1,278 2,444 (17,380) (22,554)
		(486,788)
		304,160 (59,244) - - (23,010)
		221,906
		(17,678) 474,241 1,838,556
		2,312,797

See accompanying notes to financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese.) Reviewed only, not audited in accordance with generally accepted auditing standards MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

June 30, 2021 and 2020

(Expressed in thousands of New Taiwan Dollars, unless otherwise specified)

(1) Company history

Makalot Industrial Co., Ltd. (the Company) was incorporated on January 10, 1990 and registered with the Ministry of Economic Affairs, R.O.C. The address of the Company’s registered office is 8F, No.550, Sec. 4 Zhongxiao E. Rd., Taipei City. The Company and its subsidiaries (the Group) is primarily involved in the manufacturing and processing of garments.

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

The consolidated financial statements were reported to the Board of Directors for issuance on August 5, 2021.

(3) New standards, amendments and interpretations adopted:

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

The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2021:

●Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”
●Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform— Phase 2”

The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from April 1, 2021:

●Amendments to IFRS 16 “Covid-19-Related Rent Concessions beyond June 30, 2021”
(b) The impact of IFRS issued by the FSC but not yet effective

The Group assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2022, would not have a significant impact on its consolidated financial statements:

－
●Amendments to IAS 16 “Property, Plant and Equipment Proceeds before Intended Use”
－
●Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a Contract”
●Annual Improvements to IFRS Standards 2018–2020
●Amendments to IFRS 3 “Reference to the Conceptual Framework”

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

Standards or
Interpretations
Amendments to IAS 1
“Classification of Liabilities
as Current or Non-current”
Amendments to IAS 12
“Deferred Tax related to
Assets and Liabilities arising
from a Single Transaction”

Content of amendment
Effective date per
IASB
The
amendments
aim
to
promote
consistency in applying the requirements
by helping companies determine whether,
in the statement of balance sheet, debt and
other
liabilities
with
an
uncertain
settlement date should be classified as
current (due or potentially due to be settled
within one year) or non-current.
The amendments include clarifying the
classification requirements for debt a
company might settle by converting it into
equity.
January 1, 2023
The amendments narrowed the scope of the
recognition exemption so that it no longer
applies to transactions that, on initial
recognition, give rise to equal taxable and
deductible temporary differences.
January 1, 2023

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

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

●Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”
●IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”
●Amendments to IAS 1 “Disclosure of Accounting Policies”
●Amendments to IAS 8 “Definition of Accounting Estimates”

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(4) Summary of significant accounting policies

(a) Statement of compliance

These consolidated financial statements have been prepared in accordance with the preparation and guidelines of IAS 34 “Interim Financial Reporting” which are endorsed and issued into effect by FSC, and do not include all of the information required by the Regulations and International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations endorsed and issued into effect by the FSC (hereinafter referred to IFRS endorsed by the FSC) for a complete set of the annual consolidated financial statements.

Except the following accounting policies mentioned below, the significant accounting policies adopted in the consolidated financial statements are the same as those in the consolidated financial statement for the year ended December 31, 2020. For the related information, please refer to Note 4 of the consolidated financial statements for the year ended December 31, 2020.

(b) Basis of consolidation

(i) List of subsidiaries in the consolidated financial statements

Name of Investor	Name of Subsidiary	Principal activity		Ownership %	June 30, 2020 Note
			June 30, 2021	December 31, 2020
The Company The Company The Company The Company The Company The Company The Company The Company The Company Global Global Global Global Fortune Star Fortune Star Fortune Star	PT Crystal Garment (PT Crystal) Global Trading Int'l Corp. (Global) Leader Garments Corp. (Leader PH) Diamond Apparel Mfg., Inc. (Diamond) Primeline Fashion, Inc. (Primeline) Fortune Star Investment Limited (Fortune Star) Triple Int'1 Corp. (Triple) Ecolot Textile Co., Ltd. (Ecolot) Glida Athletics Co., Ltd. (Glida) PT Glory Industrial Semarang (PT Glory) Makalot Garments (Cambodia) Co., Ltd. (Makalot Cambodia) Makalot Garments (Vietnam) Co., Ltd. (Makalot Vietnam) PT Starlight Garment Semarang (PT Starlight) Wintop Industrial Limited (Wintop) Crown Era Industrial Limited (Crown Era) Crownway International Development Limited (Crownway)	Manufacture of garments Investment holding Manufacture of garments Manufacture of garments Manufacture of garments Investment holding Investment holding Trade services Manufacture and sales of garments Manufacture of garments Manufacture of garments Manufacture of garments Manufacture of garments Investment holding Investment holding Investment holding	% 99.776 % 100.00 % 99.99 % 99.99 % 99.99 % 100.00 % 100.00 % 61.65 % 100.00 % 95.00 % 100.00 % 100.00 % 5.00 % 100.00 % 100.00 % 100.00	% 99.776 % 100.00 % 99.99 % 99.99 % 99.99 % 100.00 % 100.00 % 61.65 % 100.00 % 95.00 % 100.00 % 100.00 % 5.00 % 100.00 % 100.00 % 100.00	% 99.776 % 100.00 % 99.99 % 99.99 % 99.99 % 100.00 % 100.00 % 61.65 % 100.00 % 95.00 Note 1 % 100.00 % 100.00 % 5.00 % 100.00 % 100.00 % 100.00

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of Investor	Name of Subsidiary	Principal activity		Ownership %	June 30, 2020 Note
			June 30, 2021	December 31, 2020
Fortune Star Fortune Star Triple Triple Triple Top Trend Crownway Crownway Wintop Crown Era Ecolot Top Shiny	PT Starlight Garment Semarang (PT Starlight) PT Glory Industrial Semarang (PT Glory) Moha Garments Co., Ltd. (Moha) Triple Garment (Vietnam) Co., Limited (Triple Vietnam) Top Trend Global Inc. (Top Trend) Leader Garment (Vietnam) Co., Ltd. (Leader Vietnam) Jiaxing Ruiyang Garment Co., Limited (CJR) Jiaxing Rising Garment Co., Limited (CJY) Shanghai Makalot Garment Co., Limited (CMK) Jiaxing Suntex Garment Co., Limited (CMZ) Top Shiny Industrial Limited (Top Shiny) Eco-Lot Textile Co., Ltd. (CBS)	Manufacture of garments Manufacture of garments Manufacture of garments Manufacture of garments Investment holding Manufacture of garments Manufacture of garments Manufacture of garments Manufacture of garments Manufacture of garments Investment holding Trade services	% 95.00 % 5.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00	% 95.00 % 5.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00	% 95.00 % 5.00 Note 1 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00

Note 1: The financial statements for the six months ended June 30, 2021 and 2020 have been reviewed.

(ii) List of subsidiaries which are not included in the consolidated financial statements: None.

(c) Employee benefits

The pension cost in the interim period is calculated and disclosed on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior fiscal year. Any material volatility of the market after the report date, material reimbursement and settlement or other material one-time events should be adjusted.

(d) Income taxes

The income tax expenses have been prepared and disclosed in accordance with paragraph B12 of International Financial Reporting Standards 34, Interim Reporting.

Income tax expenses for the period are best estimated by multiplying pre-tax income for the interim reporting period by the effective annual tax rate as forecasted by the management.

Temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases shall be measured based on the tax rates that have been enacted or substantively enacted at the time of the asset or liability is recovered or settled, and be recognized directly in equity or other comprehensive income as tax expense.

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

The preparation of the consolidated financial statements in conformity with the Regulations and IFRSs (in accordance with IAS 34 “Interim Financial Reporting” and endorsed by the FSC) requires management to make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Except for the following, the preparation of the consolidated interim financial statements, estimates and underlying assumptions are reviewed on an ongoing basis which are in conformity with the consolidated financial statements for the year ended December 31, 2020. For the related information, please refer to Note 5 of the consolidated financial statements for the year ended December 31, 2020.

(6) Explanation of significant accounts

Except for the following disclosures, there is no significant difference as compared with those disclosed in the consolidated financial statements for the year ended December 31, 2020. Please refer to Note 6 of the 2020 annual consolidated financial statements.

(a) Cash and cash equivalents

Cash Checking accounts and demand deposits Time deposits	June 30, 2021 $ 4,593 1,730,956 241,595 $ 1,977,144	December 31, 2020 4,617 2,314,323 48,119 2,367,059	June 30, 2020
			5,368 1,706,585 600,844
			2,312,797

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

(b) Financial assets and liabilities at fair value through profit or loss

Mandatorily measured at fair value through profit or loss： Derivative instruments not used for hedging: Foreign exchange swap Non-derivative financial assets Stocks listed on domestic markets Fund	June 30, 2021 $ 1,095 126,236 46,232 $ 173,563	December 31, 2020 - 123,767 40,130 163,897	June 30, 2020
			- 97,608 -
			97,608

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Held-for-trading financial liabilities Derivative instruments not used for hedging Forward exchange contract	June 30, 2021 $ -	December 31, 2020 -	June 30, 2020
			45

The Group holds derivative financial instruments to hedge certain foreign exchange risk the Group is exposed to, arising from its operating activities. The following derivative instruments, without the application of hedge accounting, were classified as held-for-trading financial liabilities:

Amount (in thousands) Foreign exchange swap USD 33,000 Amount (in thousands) Forward exchange sold USD 1,000 There was no such transaction as of December 31, 2020.		June 30, 2021
	Amount (in thousands) USD 33,000	Currency Maturity dates USD to TWD 2021.7.1 June 30, 2020
		Currency Maturity dates USD to CNY 2020.7.23

Accounts receivable－measured as amortized cost Other financial assets－current Less: loss allowance	June 30, 2021 $ 1,511,402 3,884,393 (17,722) $ 5,378,073	December 31, 2020 2,510,292 3,435,726 (36,821) 5,909,197	June 30, 2020 1,627,594 2,062,812 (39,392) 3,651,014

－ As of June 30, 2021, December 31, 2020 and June 30, 2020, other financial asset current comprised time deposits with maturity of more than three months, amounting to $1,772,545 thousand, $867,124 thousand and $234,530 thousand, respectively.

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

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The loss allowance provision was determined as follows:

	June 30, 2021
Gross carrying amount Weighted- average loss rate $ 1,496,107 1%~1.2% 14,249 1%~1.2% 1,046 1%~1.2% $ 1,511,402 December 31, 2020		Loss allowance provision
		17,568 143 11
		17,722

	Weighted- average loss rate 1%~1.5% 1%~1.5% 1%~1.5% June 30, 2020	Loss allowance provision
		36,810 9 2
		36,821

	Weighted- average loss rate 1%~2.5%	Loss allowance provision
		39,392

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

Balance on January 1 Impairment losses recognized (reversed) Balance on June 30	For the six months ended, June 30	For the six months ended, June 30
	2021 $ 36,821 (19,099) $ 17,722	2020
		5,871 33,521
		39,392

None of the accounts receivable held by the Group were pledged or collateralized as of June 30, 2021, December 31, 2020 and June 30, 2020.

Accounts receivable of the Group had been insured accounts receivable credit risk. The insured amounts were $315,243 thousand, $329,706 thousand and $0 thousand as of June 30, 2021, December 31, 2020 and June 30, 2020, respectively.

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group has signed accounts receivable factoring contracts with financial institution. The terms of the contracts do not meet the criteria of derecognition of financial assets. Factored accounts receivable which were not derecognized as of the report date were as follows:

Counterparty		June 30, 2021	June 30, 2021
	Factored amount 35,789	Acceptable advances Amount collected in advance USD 3,000 thousand $ - December 31, 2020		Interest rate Pledged items 0.55%~0.64% Promissory note USD54,280 thousand (Note 1)
HSBC Bank Counterparty
	Factored amount 695,373 27,526	Acceptable advances Amount collected in advance USD 25,700 thousand $ - USD 3,000 thousand $ - June 30, 2020		Interest rate Pledged items 0.40%~2.85% None 0.60%~2.02% Promissory note USD54,280 thousand (Note 1)
CTBC Bank HSBC Bank Counterparty
	Factored amount 63,715	Acceptable advances USD 8,200 thousand	Amount collected in advance $ -	Interest rate Pledged items 0.60%~2.02% Promissory note USD54,280 thousand (Note 1)
HSBC Bank

Note 1: The aggregate credit limit of the promissory note includes letters of credit, export bill negotiations, borrowings, derivative, and accounts receivable factored.

The Group entered into separate factoring agreements with different financial institutions to sell its accounts receivable. Under the agreement the Group does not have the responsibility to assume the default risk of the transferred accounts receivable within the factoring credit limit. The factored accounts receivable conform to the derecognition criteria when the ownership and the significant risks of the factored accounts receivable are transferred to the financial institutions. As of June 30, 2021, December 31, 2020 and June 30, 2020, the factored accounts receivable were $1,926,158 thousand, $2,328,196 thousand and $1,645,125 thousand, respectively, and they were included in － “other financial assets current” in the accompanying balance sheets.

As of June 30, 2021, December 31, 2020 and June 30, 2020. the relevant information on derecognized accounts receivable factored was as follows:

Factoring financial institution		Jun	e 30, 2021
	Factoring credit limit USD 23,200 thousand USD 210,410 thousand USD 29,000 thousand USD 10,000 thousand USD 3,000 thousand	Advance amount credit limit USD 20,880 thousand USD 177,696 thousand USD 26,100 thousand USD 10,000 thousand USD - thousand	Factored amount (Derecognized amount) $ 249,043 3,065,077 332,995 13,825 24,801 $ 3,685,741		Advance amount interest rate Important derecognized provision Collateral 78,643 (Note 2) (Note 1) Promissory note USD54,280 thousand (Note 3) 1,554,088 〞〞 None 126,852 〞〞 None - 〞 None - 〞〞 None 1,759,583
HSBC Bank CTBC Bank Bank Mizuho Sumitomo Mitsui Bank Bank SinoPac Total

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

	Decem	ber 31, 2020
Factoring credit limit USD 22,000 thousand USD 111,700 thousand USD 29,000 thousand USD 10,000 thousand USD 3,000 thousand	Advance amount credit limit USD 19,800 thousand USD 100,530 thousand USD 26,100 thousand USD 10,000 thousand USD - thousand Jun	Factored amount (Derecognized amount) $ 230,874 2,883,571 510,956 17,369 1,429 $ 3,644,199 e 30, 2020	Advance amount interest rate Important derecognized provision Collateral 113,429 (Note 2) (Note 1) Promissory note USD54,280 thousand (Note 3) 1,202,574 〞〞 None - 〞〞 None - 〞〞 None - 〞〞 Promissory note USD25,200 thousand 1,316,003

Factoring credit limit USD 68,500 thousand USD 84,700 thousand USD 29,000 thousand USD 10,000 thousand USD 32,450 thousand	Advance amount credit limit USD 68,400 thousand USD 76,230 thousand TWD 26,120 thousand USD 10,000 thousand USD 26,505 thousand		Advance amount interest rate Important derecognized provision Collateral - (Note 2) (Note 1) Promissory note USD54,280 thousand (Note 3) 569,385 〞〞 None - 〞〞 None - 〞〞 None 69,393 〞〞 Promissory note USD25,200 thousand 638,778

Note 1: According to the accounts receivable purchase agreements or the approval letters issued by the factoring financial institutions, the accounts receivable were factored without recourse. The funds are transferred to the appointed reserve accounts or directly to the factoring financial institutions.

Note 2: For the three months and six months ended June 30, 2021 and 2020, the average interest rates on factored accounts receivable were 0.45% ~ 0.64% , 0.42%~1.60%, 0.45%~0.65% and 0.42% ~ 2.85% , respectively.

Note 3: The aggregate credit limit of the promissory note includes letters of credit, export bill negotiations, borrowings, derivatives, and accounts receivable factored.

(d) Inventories

Raw materials Work in progress Finished goods (including merchandise)	June 30, 2021 $ 4,563,384 324,218 710,076 $ 5,597,678	December 31, 2020 3,119,052 361,539 545,474 4,026,065	June 30, 2020
			2,948,502 431,074 350,276
			3,729,852

During the three months and six months ended June 30, 2021, the reversal of write-downs amounted to $55,416 thousand and $53,777 thousand, respectively. During the three months and six months ended June 30, 2020, the write-downs of inventories amounted to $18,046 thousand and $81,193 thousand, respectively. The write-downs and reversals are included in cost of sales.

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

None of the inventories held by the Group were pledged as collateral as of June 30, 2021, December 31, 2020 and June 30, 2020.

(e) Investments accounted for using equity method

The components of investments accounted for using the equity method at the reporting date were as follows:

Associates	June 30, 2021 $ 209,959	December 31, 2020 203,674	June 30, 2020
			210,089

The Group’ s investments in the associate companies were not listed and none of the investment accounted for using equity method held by the Group was pledged as collateral.

Investments were accounted for by the equity method, and the share of profit or loss and other comprehensive income of those investments were calculated based on the financial statements that have not been reviewed.

(f) Property, plant and equipment

The cost, depreciation and impairment loss of the property, plant and equipment of the Group were as follows:

Cost： Balance at January 1, 2021 Additions Disposals Reclassification Exchange difference on translation Balance at June 30, 2021 Balance at January 1, 2020 Additions Disposals Reclassification Exchange difference on translation Balance at June 30, 2020 Depreciation and impairment loss: Balance at January 1, 2021 Depreciation Disposals Exchange difference on translation Balance at June 30, 2021	Land $ 2,725,594 8,306 - 133 (4,189) $ 2,729,844 $ 2,698,876 - - - (2,372) $ 2,696,504 $ - - - - $ -	Buildings 1,639,187 5,295 - 114,487 (23,900) 1,735,069 1,623,451 18,451 - - (19,999) 1,621,903 505,373 41,629 - (6,637) 540,365		Machinery	Office and other equipment 1,357,025 37,628 (10,280) 18,653 (26,323) 1,376,703 1,289,100 34,873 (47,450) 1,123 (18,619) 1,259,027 1,012,434 61,962 (9,064) (19,758) 1,045,574	construction in progress 251,204 92,896 - (133,613) (4,365) 206,122 44,562 18,185 - (1,214) (583) 60,950 - - - - -	Total 8,019,112 202,676 (41,213) - (102,213) 8,078,362 7,600,331 185,073 (73,319) (87) (71,570) 7,640,428 2,941,766 198,791 (39,458) (57,079) 3,044,020
				2,046,102 58,551 (30,933) 340 (43,436) 2,030,624 1,944,342 113,564 (25,869) 4 (29,997) 2,002,044 1,423,959 95,200 (30,394) (30,684) 1,458,081

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Balance at January 1, 2020 Depreciation Disposals Reclassification Exchange difference on translation Balance at June 30,2020 Carrying amounts: Balance at January 1, 2021 Balance at June 30, 2021 Balance at January 1, 2020 Balance at June 30, 2020	Land $ - - - - - $ - $ 2,725,594 $ 2,729,844 $ 2,698,876 $ 2,696,504	Buildings 425,139 44,101 - - (6,304) 462,936 1,133,814 1,194,704 1,198,312 1,158,967		Machinery	Office and other equipment 953,342 61,430 (15,133) (1,264) (15,098) 983,277 344,591 331,129 335,758 275,750	construction in progress - - - - - - 251,204 206,122 44,562 60,950	Total 2,732,511 205,028 (72,888) (1,264) (42,112) 2,821,275 5,077,346 5,034,342 4,867,820 4,819,153
				1,354,030 99,497 (57,755) - (20,710) 1,375,062 622,143 572,543 590,312 626,982

Please refer to Note 8 for assets pledged as collateral for loans as of June 30, 2021, December 31, 2020 and June 30, 2020.

(g) Right-of-use assets

The cost and depreciation of leased land and buildings of the Group were as follows：

Cost: Balance at January 1, 2021 Additions Reductions Exchange difference on translation Balance at June 30, 2021 Balance at January 1, 2020 Additions Exchange difference on translation Balance at June 30, 2020 Depreciation: Balance at January 1, 2021 Depreciation for the period Reductions Exchange difference on translation Balance at June 30, 2021 Balance at January 1, 2020 Depreciation Exchange difference on translation Balance at June 30, 2020	Land $ 153,008 127,991 (38,426) (2,869) $ 239,704 $ 160,367 - (2,664) $ 157,703 $ 49,457 14,682 (38,426) (538) $ 25,175 $ 26,063 12,987 (497) $ 38,553	Buildings 232,252 130,878 (71,938) (4,159) 287,033 214,298 2,053 (2,442) 213,909 143,905 39,476 (71,938) (1,711) 109,732 80,583 40,014 (1,220) 119,377	Other - 4,713 - - 4,713 - - - - - 524 - - 524 - - - -	Total 385,260 263,582 (110,364) (7,028) 531,450 374,665 2,053 (5,106) 371,612 193,362 54,682 (110,364) (2,249) 135,431 106,646 53,001 (1,717) 157,930

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Carrying amounts: Balance at January 1, 2021 Balance at June 30, 2021 Balance at January 1, 2020 Balance at June 30, 2020	Land $ 103,551 $ 214,529 $ 134,304 $ 119,150	Buildings 88,347 177,301 133,715 94,532	Other - 4,189 - -	Total 191,898
				396,019
				268,019
				213,682

(h) Intangible assets

Carrying amounts: Balance at January 1, 2021 Balance at June 30, 2021 Balance at January 1, 2020 Balance at June 30, 2020	Intangible assets
	$ 35,948 $ 36,030 $ 32,045 $ 40,549

There were no significant additions, disposals, and reversal of impairment losses of intangible assets for the six months ended June 30, 2021 and 2020. Information on amortization for the period is discussed in Note 12. Please refer to Note 6(h) of the 2020 annual consolidated financial statements for other related information.

(i) Other current and other non-current assets

The details of other current and other non-current assets were as follows:

Prepayments for land and equipment Prepaid input tax Refundable deposits Other financial assets—non-current (restricted time deposits) Prepayment for purchase Other	June 30, 2021 $ 22,822 173,053 85,022 125,289 33,422 122,712 $ 562,320	December 31, 2020 2,535 187,849 83,042 127,881 23,504 68,740 493,551	June 30, 2020
			276,004 221,381 83,810 132,271 63,264 126,095
			902,825

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Non-current financial assets derived from the earnings distributed by the investee companies, Loyal and Global, in accordance with the Management, Utilization, and Taxation of Repatriated Offshore Funds Act. The funds should be deposited in the segregated foreign exchange deposit account for five years. After the expiry of the said period, the funds could be withdrawn over a period of three years according to the aforementioned regulations. The funds shall not be used for purposes other than those specified in the aforementioned regulations, nor pledged, nor provided as security, nor by any other use which reduce their value.

Please refer to Note 8 for pledged as refundable deposits.

(j) Short-term borrowings

The details of short-term borrowings were as follows:

Unsecured bank loans Unused facilities Range of interest rates	June 30, 2021 $ 1,135,670 $ 8,640,057 0.39%~0.69%	December 31, 2020 3,348,835 6,966,691 0.50%~3.20%	June 30, 2020
			1,123,023
			6,290,406
			0.54%~3.20%

Please refer to Note 8 for assets pledged as collateral for loans.

(k) Provisions

Provisions
Carrying amounts:
Balance at January 1, 2021	$	295,508
Balance at June 30, 2021	$	327,781
Balance at January 1, 2020	$	375,028
Balance at June 30, 2020	$	298,750

There was no significant movement for the six months ended June 30, 2021 and 2020. Please refer to Note 6(k) of the 2020 annual consolidated financial statements for other related information.

(l) Lease liabilities

The Group’s lease liabilities were as follows:

Current Non-current	June 30, 2021 $ 82,722 $ 221,155	December 31, 2020 46,539 54,188	June 30, 2020
			76,939
			39,889

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

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The amounts recognized in profit or loss were as follows：

For the three months ended June 30 2021 2020 Interest on lease liabilities $ 2,865 1,294 Expenses relating to short-term leases $ 10,552 13,934 Expenses relating to leases of low- value assets, excluding short- term leases of low-value assets $ 218 99	For the six months ended June 30 2021 2020 5,341 2,888 20,216 19,001 1,208 1,040	For the six months ended June 30 2021 2020 5,341 2,888 20,216 19,001 1,208 1,040
	2021 5,341 20,216 1,208
		2,888
		19,001
		1,040

The amounts recognized in the statement of cash flows in financing activities for the Group was as follows:

Total cash outflow for leases	For the six months ended June 30	For the six months ended June 30
	2021 $ 66,352	2020 59,244

(i) Real estate leases

As of June 30, 2021, the Group leases land and buildings for its office, factory facilities and warehouses. The leases of land typically run for 3 to 50 years, and of buildings for 2 to 8 years. Some leases include an option to renew the lease for an additional period of the same duration after the end of the contract term.

Some leases provide for additional rent payments that are based on changes in local price indices.

Some leases of office buildings contain extension options exercisable by the Group before the end of the non-cancellable contract period. These leases are negotiated and monitored by local management, and accordingly, contain a wide range of different terms and conditions. The extension options are exercisable only by the Group and not by the lessors. In which lessee is not reasonably certain to use an optional extended lease term, payments associated with the optional period are not included within lease liabilities.

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(m) Employee benefits

(i) Defined benefit plans

Management believes that there was no material volatility of the market, no material reimbursement and settlement or other material one-time events since prior fiscal year. As a result, the pension cost in the accompanying interim period was measured and disclosed according to the actuarial report as of December 31, 2020 and 2019.

The Group’s pension costs under the defined pension plans amounted to $21,713 thousand, $16,496 thousand, $41,426 thousand and $32,502 thousand for the three months and six months ended June 30, 2021 and 2020, respectively.

(ii) Defined contribution plans

The Group’s pension costs under the defined contribution pension plans amounted to $15,095 thousand, $8,308 thousand, $29,836 thousand and $16,209 thousand for the three months and six months ended June 30, 2021 and 2020, respectively.

(n) Income tax

(i) The components of income tax for the three months and six months ended June 30, 2021 and 2020 were as follows:

2020 were as follows:
Current income tax expense Deferred income tax expense Total income tax expense	For the three months ended June 30 2021 2020 $ 147,913 136,840 2,532 2,571 $ 150,445 139,411	For the six months ended June 30
	2021 $ 147,913 2,532 $ 150,445	2021 300,616 25,483 326,099	2020
			296,394 1,655
			298,049

(ii) The amounts of income tax (benefit) recognized in other comprehensive income for the three months and six months ended June 30, 2021 and 2020 were as follows:

Items that will not be reclassified subsequently to profit or losses: Re-measurement of defined benefit plans	For the three months ended June 30 2021 2020 $ - -	For the six months ended June 30	For the six months ended June 30
	2021 $ -	2021 (461)	2020
			-

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Assessment of income tax

The Company’ s income tax returns of the year through 2019 were assessed by the Taipei National tax Administration.

(o) Capital and other equity

Except for the following disclosure, there was no significant change for capital and other equity for the six months ended June 30, 2021 and 2020. For the related information, please refer to note 6(o) of the consolidated financial statements for the year ended December 31, 2020.

(i) Ordinary shares

The issuance of 22,000 thousand shares through cash capital increase was resolved by the Board of Directors on November 24, 2020. The issue price is $136 per share, with March 19, 2021 as the date of capital increase. The relevant statutory registration procedures have since been completed.

As of June 30, 2021, December 31, 2020 and June 30, 2020, the authorized capital of the Company amounted to $3,000,000 thousand, $2,500,000 thousand and $2,500,000 thousand, consisting of 300,000 thousand shares, 250,000 thousand shares and 250,000 thousand shares with par value of $10 per share, respectively. The issued capital consisted of 241,857 thousand shares, 219,857 thousand shares and 219,857 thousand shares, respectively. All proceeds from the shares issued have been collected.

The movements in outstanding shares for the six months ended June 30, 2021 and 2020 were as follows:

Beginning balance at January 1 Addition: capital increase by cash Ending balance at June 30	Ordinary shares (thousand shares)	Ordinary shares (thousand shares)
	2021 $ 219,857 22,000 $ 241,857	2020 219,857 - 219,857

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Capital surplus

The components of capital surplus were as follows:

Surplus arising from bond conversion option Paid-in capital in excess of par value Capital surplus－premium from combination Capital surplus－interest payable reimbursement Expired stock options Gain or loss on disposal of subsidiaries Adjustments to share of changes in equity of subsidiaries Share-based payment	June 30, 2021 $ 1,618,137 4,505,919 593 17,181 43,950 4,914 24,010 - $ 6,214,704	December 31, 2020 1,618,137 1,586,212 593 17,181 307 4,914 24,010 196,350 3,447,704	June 30, 2020
			1,618,137 1,586,212 593 17,181 307 4,914 24,010 -
			3,251,354

According to the R.O.C. Company Act, capital surplus can only be used to offset a deficit, and only the realized capital surplus can be used to increase the common stock or be distributed as cash dividends. The aforementioned realized capital surplus includes capital surplus resulting from premium on issuance of capital stock and earnings from donated assets received. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, capital increases by transferring capital surplus in excess of par value should not exceed 10% of the total common stock outstanding.

(iii) Retained earnings

According to the Company’ s articles of incorporation, 10% of annual net earnings (net of income taxes), after deducting accumulated deficits, must be set aside as legal reserve. Unless and until the accumulated legal reserve equals the Company’s total capital, the Company may set aside a special reserve in accordance with Article 41 of the Securities and Exchange Act. The board of directors considers the Company’s budget for funding needs, financial structure, current-period earnings, and steady profit distribution when proposing the distribution of earnings. For the issuance of new shares, the proposal should be resolved during the shareholders’ meeting. In accordance with the Article 240, paragraph 5 of the Company Act, the Company authorizes the Board of Directors, with the presence of more than two-thirds of the directors and the approval of a majority of the directors, to distribute all or part of the dividends and bonuses payable by way of cash, and to report to the shareholders’ meeting.

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Company is now in the growth stage, and profits may be distributed by cash dividends or stock dividends. The type of dividend distribution will be based on the future capital needs and the capital dilution. Cash dividends shall not be lower than 10% of the total distribution.

On March 22, 2021, the Company’ s Board of Directors resolved to distribute the 2020 earnings. On June 16, 2020, the shareholder’s meeting resolved to distribute the 2019 earnings. The relevant dividend distributions to the shareholders were as follows:

Cash	2020 Amount per share (in dollars) Total amount $ 8.00 1,934,853	2019	2019
	Amount per share (in dollars) $ 8.00	Amount per share (in dollars) 5.00	Total amount
			1,099,283

(p) Earnings per share

The Company’s basic and diluted earnings per share were calculated as follows:

Basic earnings per share: Profit attributable to ordinary shareholders of the Company Weighted-average number of outstanding ordinary shares (in thousands) Basic earnings per share (in dollars) Diluted earnings per share: Profit attributable to ordinary shareholders of the Company (basic) Profit attributable to ordinary shareholders of the Company (diluted) Weighted-average number of outstanding ordinary shares (basic) (in thousands) Effect of employee stock dividends (in thousands) Weighted-average number of outstanding ordinary shares (diluted) (in thousands) Diluted earnings per share (in dollars)	For the three months ended June 30 2021 2020 $ 551,481 353,611 241,857 219,857 $ 2.28 1.61 $ 551,481 353,611 $ 551,481 353,611 241,857 219,857 315 827 242,172 220,684 $ 2.28 1.60	For the six months ended June 30 2021 2020 1,201,647 780,694 232,376 219,857 5.17 3.55 1,201,647 780,694 1,201,647 780,694 232,376 219,857 627 1,176 233,003 221,033 5.16 3.53 (Continued)
	2021 $ 551,481 241,857 $ 2.28 $ 551,481 $ 551,481 241,857 315 242,172 $ 2.28	2021 1,201,647 232,376 5.17 1,201,647 1,201,647 232,376 627 233,003 5.16

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(q) Revenue from contracts with the customers
(i) Disaggregation of revenue

For the three	months ended June 30, 2021	months ended June 30, 2021
Selling and manufacturing of garments $ 4,374,582 1,457,422 $ 5,832,004	Other segments - 288,979 288,979	Total
		4,374,582 1,746,401
		6,120,983

Primary geographical markets:

For the three	months ended June 30, 2020	months ended June 30, 2020
Selling and manufacturing of garments $ 3,019,926 1,577,257 $ 4,597,183	Other segments - 128,352 128,352	Total
		3,019,926 1,705,609
		4,725,535

Primary geographical markets:

For the six months ended June 30, 2021	For the six months ended June 30, 2021	For the six months ended June 30, 2021
Selling and manufacturing of garments $ 9,413,179 3,178,141 $ 12,591,320	Other segments - 346,462 346,462	Total
		9,413,179 3,524,603
		12,937,782

Primary geographical markets:

For the six months ended June 30, 2020	For the six months ended June 30, 2020	For the six months ended June 30, 2020
Selling and manufacturing of garments $ 7,007,088 3,681,320 $ 10,688,408	Other segments - 168,011 168,011	Total
		7,007,088 3,849,331
		10,856,419

Primary geographical markets:

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Contract balances

Accounts receivable Less: allowance for impairment	June 30, 2021 $ 1,511,402 (17,722) $ 1,493,680	December 31, 2020 2,510,292 (36,821) 2,473,471	June 30, 2020 1,627,594 (39,392) 1,588,202

For details on accounts receivable and allowance for impairment, please refer to Note 6(c).

(iii) Transaction price allocated to the remaining performance obligations

The contract has an original expected duration of less than one year, thus the Group applies the practical expedient of IFRS 15 and does not disclose information about the transaction price allocated to the remaining performance obligations of the contract.

(r) Employee compensation and directors’ remuneration

In accordance with the Articles of incorporation , the Company should contribute at least 1% and not more than 8% of the profit as employee remuneration and not exceed 5% as directors’ remuneration when there is profit for the year. However, if the Company has accumulated deficits, the profit should be reserved to offset the deficit.

For the three months and six months ended June 30, 2021 and 2020, the Company estimated its employee remuneration amounting to $39,937 thousand, $27,839 thousand, $86,187 thousand and $60,502 thousand, respectively. For the three months and six months ended June 30, 2021 and 2020, the directors’ remuneration amounting to $17,137 thousand, $11,946 thousand, $36,983 thousand and $25,962 thousand, respectively. The estimated amounts mentioned above were calculated based on the net profit before tax, excluding remuneration to employee and directors of each period, multiplied by the percentage of remuneration to employees and directors as specified in the Company’s articles. The remunerations were expensed under operating expenses for each period. The differences between the amounts approved in the shareholders’ meeting and those recognized in the financial statements, if any, are accounted for as changes in accounting estimates and recognized as profit or loss in next year.

The amounts of employees’ remuneration, as estimated in consolidated financial statements, were identical to those amount approved for 2020 and 2019.

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The differences between actual approved amount directors’ remuneration and those estimated in the financial statements in 2020 and 2019 were as follows:

Directors’remuneration Directors’ remuneration		2020	Difference (12,545) Difference (23,662)
	Actual approved amount $ 53,375	Estimated amount in financial statement 65,920 2019
		Estimated amount in financial statement 58,812

The information of employees’ and directors’ remuneration approved by the Board of Directors is available on the Market Observation Post System website.

(s) Non-operating income and expenses
(i) Interest income

The Group’s interest income was as follows:

Interest income from bank deposits	For the three months ended June 30 2021 2020 $ 4,531 4,636	For the six months ended June 30	For the six months ended June 30
	2021 $ 4,531	2021 7,419	2020
			7,904

(ii) Other income

The Group’s other income was as follows:

For the three months ended June 30	For the three months ended June 30	For the six months ended June 30 2021 2020 7,969 7,437 519 - 17,153 10,372 25,641 17,809
2021 $ 3,987 - 12,728 $ 16,715	2020 3,706 - 7,790 11,496	2020
		7,437 - 10,372
		17,809

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Other gains and losses

The Group’s other gains and losses were as follows:

For the three months ended June 30 2021 2020 Foreign exchange loss $ (17,923) (16,019) Gain on disposals of investments 691 - Net gains (loss) on financial assets at fair value through profit or loss (13,190) 29,148 Net gains on derivative financial assets at fair value through profit or loss 1,095 1,429 Gain on disposals of property, plant and equipment 705 61 Others (47,269) (884) $ (75,891) 13,735	For the six months ended June 30 2021 2020 (21,683) (8,634) 920 - 28,508 27,636 1,959 572 21 847 (51,110) (3,245) (41,385) 17,176
	2021 (21,683) 920 28,508 1,959 21 (51,110) (41,385)

For the three months ended
June 30
2021
2020
Foreign exchange loss
$ (17,923)
(16,019)
Gain on disposals of
investments
691
-
Net gains (loss) on financial
assets at fair value through
profit or loss
(13,190)
29,148
Net gains on derivative
financial assets at fair
value through profit or
loss
1,095
1,429
Gain on disposals of
property, plant and
equipment
705
61
Others
(47,269)
(884)
$
(75,891)
13,735

For the six months ended
June 30
2021
2020
(21,683)
(8,634)
920
-
28,508
27,636
1,959
572
21
847
(51,110)
(3,245)
(41,385)
17,176

2021
(21,683)
920
28,508
1,959
21
(51,110)
(41,385)

(iv) Finance costs

The Group’s of finance expenses were as follows:

Interest expense－bank borrowings Expenses from accounts receivable factoring Interest expense－lease Interest expense－others	For the three months ended June 30 2021 2020 $ (5,153) (6,618) (8,714) (2,762) (2,865) (1,294) (221) (35) $ (16,953) (10,709)	For the six months ended June 30	For the six months ended June 30
	2021 $ (5,153) (8,714) (2,865) (221) $ (16,953)	2021 (11,058) (17,482) (5,341) (246) (34,127)	2020 (21,729) (12,300) (2,888) (171) (37,088)

(t) Financial Instruments

Except for the following disclosures, there was no significant change in the fair value of the Group’s financial instruments and degree of exposure to credit risk, liquidity risk and market risk arising from financial instruments. For the related information, please refer to Note 6(u) of the consolidated financial statements for the year ended December 31, 2020.

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Liquidity risk

The following table shows the contractual maturities of financial liabilities, including the estimated interest payments and excluding the impact of netting agreements.

Contractual cash flow	Within 6 months	1~2 years	2~5 years	Over 5 years - - (42,666)
(1,136,640) (4,576,202) (349,826) (6,062,668) (3,351,233) (3,672,069) (121,809) (7,145,111) (1,124,527) (3,946,697) (1,099,283) (137,031) (57) (6,307,595)	(1,136,640) (4,576,202) (49,831) (5,762,673) (3,351,233) (3,672,069) (33,149) (7,056,451) (1,124,527) (3,946,697) (1,099,283) (50,078) (57) (6,220,642)	- - (83,511) (83,511) - - (20,203) (20,203) - - - (18,480) - (18,480)	- - (130,039) (130,039) - - (29,384) (29,384) - - - (15,204) - (15,204)
				(42,666)
				- - (22,842)
				(22,842)
				- - - (23,728) -
				(23,728)

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

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Market risk

1) Exposure to currency risk

The Group’s significant exposure to foreign currency risk was as follows:

Fin Fin	ancial assets Monetary items USD CNY IDR VND Non-monetary items USD ancial liabilities Monetary items USD CNY IDR VND	June 30, 2021			December 31, 20	20	June 30, 2020 Foreign currency Exchange rate TWD 120,952 29.660 3,587,428 75,282 4.1893 315,377 20,975,979 0.002074 43,501 8,365,746 0.001283 10,735 7,083 29.660 210,089 131,899 29.660 3,912,114 87,356 4.1893 365,957 73,697,707 0.002074 152,837 214,577,500 0.001283 275,335
		Foreign currency Exchange rate	TWD		Foreign currency Exchange rate	TWD
		$ 132,950 27.870 90,655 4.3142 52,337,765 0.001917 15,202,559 0.001216 7,534 27.870 142,376 27.870 74,201 4.3142 92,114,588 0.001917 229,224,020 0.001216	3,705,321 391,103 100,331 18,486 209,959 3,968,027 320,118 176,584 278,736		190,511 28.508 22,947 4.3740 15,988,953 0.002021 10,403,960 0.001238 7,144 28.508 157,956 28.508 14,213 4.3740 78,640,730 0.002021 254,327,116 0.001238	5,431,088 100,370 32,314 12,880 203,674 4,502,998 62,169 158,933 314,857

The Group’s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts receivable, other receivables, loans, accounts payable, and other payables. A 1% depreciation or appreciation of the TWD against the USD, CNY, IDR and VND as of June 30, 2021 and 2020, would have decreased or increased the net income after tax by $5,282 thousand and $7,492 thousand, respectively. The analysis assumes that all other variables remain constant. The analysis is performed on the same basis for both periods.

As the Company deals in diverse foreign currencies, gains or losses on foreign exchange were summarized as a single amount. For the three months and six months ended June 30, 2021 and 2020, foreign exchange loss, including realized and unrealized, amounted to $(17,923) thousand, $(16,019) thousand, $(21,683) thousand and $(8,634) thousand, respectively.

2)

Interest rate analysis

The Group’s borrowings are mainly with fixed interest rates; thus, there is no significant interest rate risk.

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Fair value of financial instruments
1) Fair value hierarchy

The Group’s financial assets at fair value through profit or loss were measured by fair value based on duplication. The carrying amount, fair value, and fair value hierarchy for the financial assets and financial liabilities of the Group were as followed (excluding the disclosure of financial assets and liabilities for which the book value is close to this fair value, and lease liabilities):

	June 30, 2021	June 30, 2021	June 30, 2021
Book value $ 172,468 1,095 173,563 1,977,144 1,493,680 3,884,393 125,289 7,480,506 85,022 $ 1,135,670 4,576,202 5,711,872	Fair value Level 1 Level 2 Level 3 172,468 - - - 1,095 - 172,468 1,095 - - - - - - - - - - - - - - - - - - - - - - - - - - - - December 31, 2020	Fair value
				Total 172,468 1,095
				173,563
				- - - -
				-
				-
				- -
				-

	Level 1 163,897 - - - - - - - - -	Fair value
		Level 2 - - - - - - - - - -	Level 3 - - - - - - - - - -	Total 163,897
				- - - -
				-
				-
				- -
				-

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

	June 30, 2020	June 30, 2020	June 30, 2020
Book value $ 97,608 $ 2,312,797 1,588,202 2,062,812 132,271 6,096,082 83,810 $ 45 $ 1,123,023 3,946,697 1,099,283 116,828 6,285,831	Level 1 97,608 - - - - - - - - - - - -	Fair value
		Level 2 - - - - - - - 45 - - - - -	Level 3 - - - - - - - - - - - - -	Total 97,608
				- - - -
				-
				-
				45
				- - - -
				-

2) Valuation techniques for financial instruments measured at fair value

a) Non-derivative financial instruments

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

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

Except for the aforementioned financial instruments, the fair value of other financial instruments is determined by using valuation techniques or the quoted price from a counterparty. Fair value measured by a valuation technique can be extrapolated from similar financial instruments, the discounted cash flow method, or other valuation techniques including a model using observable market data at the reporting date.

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

b) Derivative financial instruments

Measurement of the fair value of derivative instruments is based on the valuation techniques generally accepted by market participants. The fair value of a forward exchange contract is usually determined by the forward exchange rate. Measurement of the fair value of an embedded derivative financial instrument is based on an option pricing model or other valuation technique.

3) Transfer between fair value hierarchy

There were no transfers in either direction for the six months ended June 30, 2021 and 2020.

(u) Financial risk management

There were no significant changes in the Group's financial risk management and policies as disclosed in Note 6(v) of the consolidated financial statements for the year ended December 31, 2020.

(v) Capital management

Management believes that the objectives, policies and processes of capital management of the Group has been applied consistently with those described in the consolidated financial statements for the year ended December 31, 2020. Also, management believes that there were no significant changes in the Group's capital management information as disclosed for the year ended December 31, 2020. Please refer to Note 6(w) of the consolidated financial statements for the year ended December 31, 2020 for further details.

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

The Group’s investing and financing activities which did not affect the cash flow in the six months ended June 30, 2021 were acquisition of right-of-use assets by leasing. Please refer to note 6(g) and (l).

(7) Related-party transactions

(a) Parent company and ultimate controlling Company

The Company is the ultimate controlling party of the Company and its subsidiaries.

(b) Names and relationship with related parties

The followings are entities that have had transactions with the Group during the periods covered in the consolidated financial statements.

Name of related party	Relationship with the Group
Namtex Co., Ltd. (Namtex)	An associate
Makalot Humanities Development Education	Some Directors of the Company served as
Foundation (Makalot Foundation)	Directors of the foundation

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(c) Significant transactions with related parties

(i) Purchasing

The amounts of significant purchases by the Group from related parties were as follows:

Associates	For the three months ended June 30 2021 2020 $ 58,220 52,630	For the six months ended June 30	For the six months ended June 30
	2021 $ 58,220	2021 105,429	2020
			114,564

Purchasing prices and payment terms with associates are the same as those of general purchases.

(ii) Related-party payables

Account name Types of related parties Accounts payable －related parties Associates Related-party receivables Account name Types of related parties Other financial assets－current Associates	Types of related parties	June 30, 2021 $ 35,587 June 30, 2021 $ 476	December 31, 2020 23,134 December 31, 2020 418	June 30, 2020
				8,888
				June 30, 2020
	Associates			473

(iii) Related-party receivables

(iv) Donations

Details of donations to related parties were as follows:

Makalot Foundation	For the three months ended June 30 2021 2020 $ - -	For the six months ended June 30	For the six months ended June 30
	2021 $ -	2021 146	2020
			1,146

(v) Key management personnel compensation

Key management personnel compensation comprised:

For the three months ended June 30 2021 2020 $ 35,625 20,048 19 43 $ 35,644 20,091	For the six months ended June 30	For the six months ended June 30
2021 $ 35,625 19 $ 35,644	2021 73,957 38 73,995	2020
		41,808 87
		41,895

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(8) Pledged assets

The Group’s pledged assets were as follows:

Pledged assets Pledged to secure Land Security of bank loans facility Property, plant and equipment Security of bank loans facility Refundable deposits Lease deposit, etc. Commitments and contingencies Unrecognized significant commitments: (a) Unused letters of credit Unused letters of credit	Pledged to secure	June 30, 2021 $ 2,484,818 215,397 85,022 $ 2,785,237 June 30, 2021 $ 1,063,245	December 31, 2020 2,484,818 223,424 83,042 2,791,284 December 31, 2020 606,012	June 30, 2020
				2,484,818 231,452 83,810
				2,800,080
				June 30, 2020
				885,002

(9) Commitments and contingencies

(b) The Group issued promissory notes to the banks to apply for borrowings, export bills negotiation, derivatives, and factoring of accounts receivable. The issued promissory notes were as follows:

Issued promissory notes	June 30, 2021 $ 9,748,985	December 31, 2020 10,895,099	June 30, 2020
			10,274,764

(10) Losses Due to Major Disasters: None

(11) Subsequent Events: None

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(12) Other

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

follows:
By function By item	For the three months ended June 30
	2021			2020
	Cost of sales	Operating expenses	Total	Cost of sales	Operating expenses	Total
Employee benefits Salaries Labor and health insurance Pension Directors’ remuneration Others Depreciation Amortization	970,982 68,469 26,213 - 67,044 100,324 2,027	276,430 23,600 10,595 17,497 20,979 27,071 2,317	1,247,412 92,069 36,808 17,497 88,023 127,395 4,344	881,981 64,183 16,167 - 58,738 97,314 2,444	366,762 19,978 8,637 12,562 18,645 29,183 2,085	1,248,743 84,161 24,804 12,562 77,383 126,497 4,529

By function By item	For the six months ended June 30	For the six months ended June 30	For the six months ended June 30	For the six months ended June 30	For the six months ended June 30	For the six months ended June 30
	2021			2020
	Cost of sales	Operating expenses	Total	Cost of sales	Operating expenses	Total
Employee benefits Salaries Labor and health insurance Pension Directors’ remuneration Others Depreciation Amortization	1,927,142 136,553 50,514 - 136,568 200,728 4,422	772,128 53,475 20,748 37,675 42,273 52,745 4,522	2,699,270 190,028 71,262 37,675 178,841 253,473 8,944	1,852,153 133,574 30,976 - 125,883 205,593 4,965	645,100 47,331 17,735 26,831 40,765 52,436 3,968	2,497,253 180,905 48,711 26,831 166,648 258,029 8,933

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(13) Other disclosures

(a) Information on significant transactions:

The followings were the information on significant transactions required by the “ Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Group for the six months ended June 30, 2021:

(i) Lending to other parties:

(In thousands of New Taiwan Dollars/shares)

Number	Name of lender	Name of borrower	Account name	Related party	Highest balance of financing to other parties during the period	Ending balance	Actual usage amount during the period	Range of interest rates during the period	Purposes of fund financing for the borrower	Transaction amount of business between two parties	Reasons for short-term financing	Loss allowance	Collateral	Collateral	Individual funding loan limits	Maximum limit of fund financing
													Item	Value
0 0 0 0 0 0 0 1	The Company The Company The Company The Company The Company The Company The Company CMZ (Note 4)	PT Glory PT Starlight Makalot Cambodia Moha Makalot Vietnam Triple Vietnam Leader Vietnam CJR (Note 4)	Other receivable- related parties Other receivable- related parties Other receivable- related parties Other receivable- related parties Other receivable- related parties Other receivable- related parties Other receivable- related parties Other receivable	Yes Yes Yes Yes Yes Yes Yes Yes	718,980 170,901 198,267 249,361 285,310 71,328 452,216 21,919	702,325 166,941 193,673 243,584 278,700 69,675 441,740 21,571	702,324 166,941 193,673 243,584 247,764 69,675 358,130 -	% 2.0 % 2.0 2.0% 2.0% 2.0% 2.0% 2.0% % 3.85	1 1 1 1 1 1 1 2	Processing 1,667,432 Processing 571,514 Processing 1,375,922 Processing 816,051 Processing 1,309,264 Processing 653,491 Processing 453,672 -	None None None None None None None Operating capital	- - - - - - - -	None None None None None None None None	- - - - - - - -	1,667,432 571,514 1,375,922 816,051 1,309,264 653,491 453,672 37,965	4,902,039 4,902,039 4,902,039 4,902,039 4,902,039 4,902,039 4,902,039 63,275

Note: The ceiling on total loans granted by the Company to all parties is 40% of its net assets in the financial statements; the ceiling on the short-term financing for each entity’s operating capital granted by the Company is 20% of its net assets in the financial statements; the ceiling on the loan granted by the Company to each entity which has business transactions with the Company is the transaction amount within a year. The policy for loans granted mutually between its overseas subsidiaries of which the Company directly or indirectly holds 100% of their voting shares is as follows:

The ceiling on total loans granted by an on overseas subsidiary to all overseas subsidiaries is 50% of the lender’s net assets in the most currently financial statement audited or reviewed by independent auditors; the limit on loans granted by an overseas subsidiary to each overseas subsidiary is 30% of the lender’s net assets in the most currently financial statement audited or reviewed by independent auditors.

Note 1: Nature of financing: 1. Business transaction purpose. 2. Short-term financing purpose.

Note 2: Ending facility balance approved by BOD.

Note 3: The trading companies purchase materials from the Company and sell the final products back to the Company after processing. The Company provides the materials to its subsidiaries for productions. According to the regulation, the Company only discloses the amount of processing; however, the ceiling on the loan to the above entities is the actual amount of the transactions involving the final products.

Note 4: The credit limit between subsidiaries in China.

Note 5: The aforementioned transactions have been eliminated when preparing the consolidated financial statements.

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Guarantees and endorsements for other parties:

No.	Name of guarantor	Counter-party of guarantee and endorsement	Counter-party of guarantee and endorsement	Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company
0	The Company	Makalot Vietnam	2	2,451,020	855,930	836,100	278,700	-	% 6.82	6,127,549	Y	N	N

Note: The ceiling on guarantees and endorsements by the Company to all parties is 50% of its net assets in the financial statements；the ceiling on guarantees and endorsements by the Company to each entity is 20% of its net assets in the financial statements.
Note 1: Relationship between guarantee provider and receiver is as follows:
(1) The company having transaction with the counterparty.
(2) The company holding more than 50% of common shares of the subsidiary.
(3) The company and its subsidiaries holding more than 50% of the common shares of the investee company.
(4) The parent company holding more than 50% of the outstanding common shares of the investee company, directly or indirectly through a subsidiary.
(5) Companies in same type of business and providing mutual endorsement and / or guarantees in favor of each other in accordance with the contractual obligations in order to fulfill the needs of the construction project.
(6) Shareholders making endorsements and/or guarantees for their mutually invested company in proportion to their shareholding percentage.
(iii) Information regarding securities held at the reporting date (subsidiaries, associates and joint ventures not included):

(In thousands of New Taiwan Dollars/thousand shares)

Name of holder	Category and name of security	Relationship with company	Account title		June 30, 2021			Note
				Shares	Carrying value	Percentage of ownership (%)	Fair value
The Company The Company The Company The Company	Dimerco Data System Corporation (DDSC) Taiwan Hon Chuan Enterprise Co., Ltd. Yuanta/P shares Taiwan Top 50 ETF' Yuanta/P shares Taiwan Dividend Phis ETF	None None None None	Financial assets at fair value through profit or loss－current 〃〃〃	1,769 75 170 646	120,469 5,767 23,622 22,610	% 2.82 % 0.03 % - % -	120,469 5,767 23,622 22,610

(iv) Information regarding purchase or sale of securities for the period exceeding NT$300 million or 20% of the Company’s paid-in capital: None
(v) Information on acquisition of Company’s real estate with purchase amount exceeding NT$300 million or 20% of the Company’s paid-in capital: None
(vi) Information regarding receivables from disposal of real estate exceeding NT$300 million or 20% of the Company’s paid-in capital: None

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(vii) Information regarding related-parties purchases and or sales exceeding NT$100 million or 20% of the Company’s paid-in capital:

(In thousands of New Taiwan Dollars)

Name of company	Related party	Nature of relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transactio different	ns with terms from others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase /Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company CBS	Ecolot Namtex PT Glory Makalot Cambodia Makalot Vietnam Moha Triple Vietnam PT Starlight Leader Vietnam CJR CJY CMZ Ecolot	Subsidiary Investee under equity method Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Parent Company	Purchase Purchase Processing Processing Processing Processing Processing Processing Processing Purchase Purchase Purchase Sale	444,640 105,429 929,058 531,323 718,714 348,885 335,467 285,916 256,824 194,916 150,476 155,804 211,163	% 6 % 1 % 26 % 15 % 20 % 10 % 9 % 8 % 7 % 3 % 2 % 2 % 96	45~60 days 45~60 days 30~90 days 30~90 days 30~90 days 30~90 days 30~90 days 30~90 days 30~90 days 30~90 days 30~90 days 30~90 days 45~60 days	- - - - - - - - - - - - -	- - - - - - - - - - - - -	(213,648) (35,587) (261,005) - (195,155) - (117,527) (93,548) (71,027) (8,465) (9,268) (19,576) 102,934	6% 1% 8% -% 6% -% 4% 3% 2% -% -% 1% 96%

Note: The aforementioned transactions have been eliminated when preparing the consolidated financial statements.

Note 1: The mark-up price is based on the cost or re-sale price with a fixed ratio which is based on the cost and expense that the subsidiary incurred.

(viii) information regarding receivables from related parties exceeding NT$100 million or 20% of the Company’s paid-in capital:

the Company’s paid-in capital:	the Company’s paid-in capital:	the Company’s paid-in capital:	the Company’s paid-in capital:	the Company’s paid-in capital:
					(In thousands of New Taiwan Dollars)
Name of company	Related party	Nature of relationship	Ending balance	Turnover days	Overdue		Amounts received in subsequent period	Loss allowance
					Amount	Action taken
The Company The Company The Company The Company The Company The Company PT Glory Makalot Vietnam Triple Vietnam Ecolot CBS	PT Glory Makalot Vietnam Moha Leader Vietnam Makalot Cambodia PT Starlight The Company The Company The Company The Company Ecolot	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Parent company Parent company Parent company Parent company Parent company	Other receivables 705,484 Other receivables 248,954 Other receivables 257,840 Other receivables 358,130 Other receivables 194,506 Other receivables 167,693 261,005 195,155 117,527 213,648 102,934	- - - - - - 14.24 12.17 6.72 6.94 8.20	- - - - - - - - - - -	- - - - - - - - - - -	- (Note 1) 1,190 (Note 1) 14,256 (Note 1) - (Note 1) 833 (Note 1) - (Note 1) 113,536 130,706 52,442 67,227 25,442	- - - - - - - - - - -

Note: The aforementioned transactions have been eliminated when preparing the consolidated financial statements. Note 1: The uncollected accounts receivable primarily consisted of loans.

Note 2: The amount was collected before July 20, 2021.

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ix) Information regarding trading in derivative financial instruments: Please refer to note 6(b).

(x) Business relationships and significant intercompany transactions:

No.	Name of company	Name of counter- party	Nature of relationship		Intercompany transaction	Intercompany transaction	s
				Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 2	The Company 〃〃〃〃〃〃〃〃〃〃〃〃〃〃〃〃〃〃〃〃 CBS CBS Ecolot	Ecolot Leader Vietnam PT Glory Makalot Cambodia Makalot Vietnam Moha Triple Vietnam PT Starlight CJR CJY CMZ PT Glory Makalot Vietnam Triple Vietnam PT Glory PT Starlight Makalot Cambodia Moha Makalot Vietnam Leader Vietnam Makalot Cambodia Ecolot Ecolot The Company	1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 3 2	Operating cost 〃〃〃〃〃〃〃〃〃〃 Accounts payable 〃〃 Other non- current receivables 〃〃〃〃〃 Prepayment for purchases Operating revenue Accounts receivable Accounts receivable	444,640 256,824 929,058 531,323 718,714 348,885 335,467 285,916 194,916 150,476 155,804 261,005 195,155 117,527 702,324 166,941 193,673 243,584 247,764 358,130 135,765 211,163 102,934 213,648	Purchase order price multiplied by a fixed ratio Processing cost based on the market price 〃〃〃〃〃〃〃〃〃 30～90 days 〃〃 Financing 〃〃〃〃〃 30~90 days Purchase order price multiplied by a fixed ratio 45~60 days 45~60 days	3% 2% 7% 4% 6% 3% 3% 2% 2% 1% 1% 1% 1% 1% 4% 1% 1% 1% 1% 2% 1% 2% 1% 1%

Note 1: 0 represents the parent company. The subsidiaries start sequentially from 1 in Arabic numerals. Note 2: The relationships between transaction parties are as follows:

1.parent to subsidiary

2.subsidiary to parent

3.subsidiary to subsidiary

Note 3: The aforementioned transactions have been eliminated when preparing the consolidated financial statements.

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Information on investees:

The following is the information on investees for the six months ended June 30, 2021 (excluding information on investments in Mainland China):

(In thousands of New Taiwan Dollars/share)

Name of investor	Name of investee	Location	Main businesses and products	Original inves	tment amount	Balanc	e as of June 30, 2021	e as of June 30, 2021	Net income (losses) of investee	Share of profits/losses of investee	Note
				June 30, 2021	December 31, 2020	Shares	Percentage of ownership	Carrying value
The Company The Company The Company The Company The Company The Company The Company The Company The Company Global Global Global Global Triple Triple Triple Top Trend Fortune Star Fortune Star Fortune Star Fortune Star Fortune Star Wintop Ecolot	Global PT Crystal Leader PH Diamond Primeline Fortune Star Triple Ecolot Glida PT Glory PT Starlight Makalot Cambodia Makalot Vietnam Moha Triple Vietnam Top Trend Leader Garment Wintop Crown Era Crownway PT Starlight PT Glory Namtex Top Shiny	British Virgin Islands Indonesia Philippines Philippines Philippines Samoa Samoa Taiwan Taiwan Indonesia Indonesia Cambodia Vietnam Cambodia Vietnam Samoa Vietnam Hong Kong Hong Kong Hong Kong Indonesia Indonesia Vietnam Hong Kong	Investment holding Manufacture of garments Manufacture of garments Manufacture of garments Manufacture of garments Investment holding Investment holding Trade service Sale of garments Manufacture of garments Manufacture of garments Manufacture of garments Manufacture of garments Manufacture of garments Manufacture of garments Investment holding Manufacture of garments Investment holding Investment holding Investment holding Manufacture of garments Manufacture of garments Wearing Investment holding	971,515 84,948 7,281 - 9,945 609,846 567,031 - 5,000 538,708 3,645 153,340 315,263 94,524 81,171 390,160 390,700 277,755 59,440 162,422 61,532 30,452 270,979 17,016	971,515 84,948 7,281 - 9,945 637,846 443,831 - 5,000 538,708 3,645 153,340 315,263 94,524 81,171 266,960 267,500 277,755 87,440 162,422 61,532 30,452 270,979 17,016	31,622 2,673,191 249,995 149,995 99,995 18,929,091 18,400,000 3,699,000 500,000 179,740 1,050 1,000 - 1,000 - 12,800,000 - 9,070,000 1,580,000 4,560,000 19,950 9,460 - 540,026	% 100.00 % 99.776 % 99.99 % 99.99 % 99.99 % 100.00 % 100.00 % 61.65 % 100.00 % 95.00 % 5.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 95.00 % 5.00 % 50.00 % 100.00	883,099 5,299 17,643 3,049 58 558,112 293,322 115,489 4,981 477,487 3,758 (44,119) 359,385 (53,426) 137,525 232,132 232,178 243,338 97,678 122,481 71,393 25,131 209,959 42,246	(94,454) 38 (4,459) (35) (1) (1,083) (21,816) 38,994 - (31,839) (6,436) (39,110) (25,364) (13,099) 371 (8,919) (8,919) 6,188 773 (166) (6,436) (31,839) 23,978 11,494	(101,048) 38 (4,459) (35) (1) (1,707) (19,800) 20,925 - (30,247) (322) (39,110) (25,364) (13,099) 371 (8,919) (8,919) 6,188 773 (166) (6,114) (1,592) 10,113 11,494	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiaries Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary The Company indirectly holds 50% of ownership Subsidiary

Note : The aforementioned transactions between the Company and subsidiaries have been eliminated when preparing the consolidated financial statements.

Note 1: Investment gain or loss recognized in the current period included sales from subsidiaries to parent company.

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(c) Information on investment in mainland China:
(i) The names of investees in Mainland China, the main businesses and products, and other information for the nine months ended June 30, 2021:

					(In thousands of New Taiwan Dollars)	(In thousands of New Taiwan Dollars)	(In thousands of New Taiwan Dollars)	(In thousands of New Taiwan Dollars)	(In thousands of New Taiwan Dollars)	(In thousands of New Taiwan Dollars)	(In thousands of New Taiwan Dollars)	(In thousands of New Taiwan Dollars)
Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investment	Accumulated investment paid by Taiwan as of January 1, 2021	Investment flows		Accumulated investment paid by Taiwan as of June 30, 2021	Net income (losses) of the investee	Percentage of highest ownership	Investment income (losses)	Carrying value as of March 31, 2019	Accumulated remittance of earnings as of this year
					Outflow	Inflow
CMK CMZ CJY CJR CBS	Manufacture of garments Manufacture of garments Manufacture of garments Manufacture of garments Trade service	27,033 87,440 68,120 94,302 11,039	2 2 2 2 2	27,033 87,440 68,120 94,302 11,039	- - - - -	- 28,000 - - -	27,033 59,440 68,120 94,302 11,039	(4,297) 787 (275) 148 11,494	% 100.00 % 100.00 % 100.00 % 100.00 % 100.00	(4,297) 787 (275) 148 11,494	32,734 97,669 59,815 62,652 42,245	14,378 7,304 - - -

Note : There are three kinds of investments

1.Invest directly in Mainland China companies.
2.Invest in Mainland China by remitting through a third region.
3.Others.
(ii) Upper limit on investment in Mainland China:

Accumulated investment in Mainland China as of June 30, 2021	Investment amounts authorized by Investment Commission, MOEA	Upper limit on investment
259,934	407,382	7,353,059

(iii) Significant transactions:

The significant inter-company transactions with the subsidiaries in Mainland China, which were eliminated in the preparation of consolidated financial statements, are disclosed in “Information on significant transactions”.

(d) Major shareholders:

Unit: shares

		Unit: shares
Shareholding Shareholder’s Name	Shares	Percentage
Fubon Life Insurance Co., Ltd.	13,261,216	% 5.48
Labor Pension Fund-2020 1st mandated managed by Nomura Asset Management Taiwan Ltd.	12,364,383	% 5.11

(Continued)

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(14) Segment information

The Group’s operating segment information and reconciliation are as follows:

For the three months ended June 30,2021	Selling and manufacturing of garments Other segments Adjustments and cancellation $ 5,832,004 288,979 - $ 5,832,004 288,979 - (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) Selling and manufacturing of garments Other segments Adjustments and cancellation $ 4,597,183 128,352 - $ 4,597,183 128,352 - (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) Selling and manufacturing of garments Other segments Adjustments and cancellation $ 12,591,320 346,462 - $ 12,591,320 346,462 - (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) Selling and manufacturing of garments Other segments Adjustments and cancellation $ 10,688,408 168,011 - $ 10,688,408 168,011 - (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1)	Total 6,120,983 6,120,983 (Note 1) (Note 1) Total 4,725,535
Revenue Revenue from external customers Total revenue Segment income or loss Segment total assets For the three months ended June 30,2020 Revenue Revenue from external customers Total revenue Segment income or loss Segment total assets For the six months ended June 30,2021 Revenue Revenue from external customers Total revenue Segment income or loss Segment total asset For the six months ended June 30,2020 Revenue Revenue from external customers Total revenue Segment income or loss Segment total asset
		4,725,535
		(Note 1) (Note 1) Total 12,937,782
		12,937,782
		(Note 1) (Note 1) Total 10,856,419
		10,856,419
		(Note 1) (Note 1)

Note 1: The Group discloses the amounts as zero due to the fact that the amounts of its segment income or loss and total assets were not provided to the chief operating decision maker.

AI assistant

Makalot — Interim / Quarterly Report 2021

51834_rns_2021-12-28_a5191809-2001-4eb9-a5ee-e3919574505c.pdf

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

Table of contents

KPMG

Independent Auditors’ Review Report

Introduction

Scope of Review

Basis for Qualified Conclusion

Qualified Conclusion

KPMG

Notes to Readers

(English Translation of Consolidated Financial Statements Originally Issued in Chinese.) Reviewed only, not audited in accordance with generally accepted auditing standards

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the three months and six months ended June 30, 2021 and 2020

(English Translation of Consolidated Financial Statements Originally Issued in Chinese.) Reviewed only, not audited in accordance with generally accepted auditing standards

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the six months ended June 30, 2021 and 2020

(English Translation of Consolidated Financial Statements Originally Issued in Chinese.) Reviewed only, not audited in accordance with generally accepted auditing standards MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

June 30, 2021 and 2020

(1) Company history

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

(3) New standards, amendments and interpretations adopted:

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(4) Summary of significant accounting policies

(a) Statement of compliance

(b) Basis of consolidation

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(c) Employee benefits

(d) Income taxes

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

(6) Explanation of significant accounts

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(d) Inventories

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(e) Investments accounted for using equity method

(f) Property, plant and equipment

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(g) Right-of-use assets

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Other current and other non-current assets

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(j) Short-term borrowings

(k) Provisions

(l) Lease liabilities

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(m) Employee benefits

(i) Defined benefit plans

(ii) Defined contribution plans

(n) Income tax

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Assessment of income tax

(o) Capital and other equity

(i) Ordinary shares

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Capital surplus

(iii) Retained earnings

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Contract balances

(r) Employee compensation and directors’ remuneration

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Other gains and losses

(iv) Finance costs

(t) Financial Instruments

MAKALOT INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Liquidity risk

Makalot Interim / Quarterly Report 2021