Stock Code 4807

Regal Holding Co., Ltd. Annual Report 2019

Notice to readers

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

Annual report is available at Taiwan Stock Exchange Market Observation Post System: mops.twse.com.tw Regal Holding Co., Ltd. official website: www.regaljewlrygroup.com Printed on April 19, 2020

Spokesman and Deputy Spokesman

S p o k e s m a n :[LIN, JU-YING] (General Manager)

D e p u t y[LI, WEN-HSIUNG ] s p o k e s m a n[:] (General Manager, Taiwan Branch)

T E L : (662) 420-7440

Email Address : [email protected]

Information of the Designated Agent of all Litigious and Non-litigious Matters within the Republic of China

N a m e : LI, WEN-HSIUNG

T i t l e :[General Manager, Regal Holding Co., Ltd. Taiwan ] Branch T E L : (02) 2312-3797 Email Address : [email protected]

Contact Information of Head office, Branches, Subsidiaries and Factories

H e a d o f f i c e : Regal Holding Co., Ltd.

The Grand Pavilion Commercial Centre, Oleander Way, 802 A d d r e s s : West Bay Road P.O. Box 32052, Grand Cayman KY 1-1208, Cayman Islands

W e b s i t e : www.regaljewelrygroup.com

T E L[:][(662) 420-7440] Taiwan Branch : Regal Holding Co., Ltd. Taiwan Branch A d d r e s s : 15F, No. 49, Bo’ai Rd., Zhongzheng Dist., Taipei City T E L[:] (02) 2312-3797

S u b s i d i a r y : Regal Innovation Co., Ltd. ( T a i w a n )

A d d r e s s[:] 15F, No. 49, Bo’ai Rd., Zhongzheng Dist., Taipei City

T E L[:] (02)2312-3797

S u b s i d i a r y Regal Jewelry Manufacture Co., Ltd. ( T h a i l a n d )[:]

No. 84/4 Village No.7 Phet Kaseam 122 Alley, Phet Kaseam A d d r e s s : Road, Om Noi Sub-district, Krathum Baen District, Samut Sakhon Province

T E L[:] (662) 420-7440 S u b s i d i a r y GIO VAN GOGH (INTERNATIONAL) JEWELRY LIMITED ( H o n g K o n g )[:]

A d d r e s s :[RM 1005(B), 10/F, HO KING COMM CTR 2-16, FAYUEN ST, ]

MONGKOK, KL, Hong Kong T E L[:] (852) 8131-2057

S u b s i d i a r y : Chaporo Co., Ltd.

( T h a i l a n d )

A d d r e s s [:][ Offices of Portcullis (Seychelles) Ltd, of F20, 1st Floor, Eden ] Plaza, Eden Island, Seychelles.

T E L [:][ (662) 420-7440 ]

S u b s i d i a r y

[Regal Management Solution Co., Ltd. ]
( T h a i l a n d )[:]

No. 84/6 Village No.7 Phet Kaseam 122 Alley, Phet Kaseam A d d r e s s : Road, Om Noi Sub-district, Krathum Baen District, Samut Sakhon Province

T E L[: (662) 420-7440 ]

Sub-subsidiary

[Regal Plating Co., Ltd. ]
( T h a i l a n d )[:]
No. 84/4 Village No.7 Phet Kasem 122 Alley, Phet Kasem Road,

A d d r e s s : Om Noi Sub-district, Krathum Baen District, Samut Sakhon Province

T E L[:][(662) 420-7440 ]

Sub-subsidiary

[Linden Integrated Co., Ltd. ]
( T h a i l a n d )[:]
No. 84/4 Village No.7 Phet Kasem 122 Alley, Phet Kasem Road,

A d d r e s s : Om Noi Sub-district, Krathum Baen District, Samut Sakhon Province

T E L[: (662) 420-8886 ]

Sub-subsidiary
( C h i n a )[: GIO VAN GOGH (Shenzhen) JEWELRY LIMITED ]
Room 909, Tianan International Building B, Renmin South
A d d r e s s : Road, Nanhu Sub-District, Luohu District, Shenzhen City, Guangdong Province, China

T E L[: (86) 13138851717 ]

Contact Information of the Share Transfer Agency

N a m e ： Share Transfer Dept., SinoPac Securities Co., Ltd.
A d d r e s s ： 3F, No. 17, Bo’ai Rd., Zhongzheng Dist., Taipei City
W e b s i t e ： www.sinopacsecurities.com T E L ： (02) 2381-6288

Contact Information of the Certified Public Accountants for the Latest Financial Report

N a m e ： CPA Mrs. LU, LI - LY and Mrs. KUAN, CHUN-HSIU
C P A F i r m ： KPMG in Taiwan
A d d r e s s ： 68F., No.7, Sec. 5, Xinyi Rd., Xinyi Dist., Taipei City
W e b s i t e ： www.kpmg.com.tw T E L ： (02) 8101-6666

Overseas Trade Places for Listed Negotiable Securities: N/A

The Company’s Website: www.regaljewelrygroup.com

List of the Board of Directors

			April 19,2020
Title	Name	Nationality	Main Working/Education Experience
Chairman	Solar Jewelers Group Corp.	Samoa	Graduated from Engineering Dept., Shin Rong Senior High School Manager of Production Division, Regal Jewelry Manufacture Co., Ltd.
	Representative: PHACHARAPON PHAIBOONSUNTORN	Thailand
Director	Ausrine Marketing Corp.	Seychelles	Graduated from Yongjing Junior high school
	Representative: LAI, CHIN-HO	Republic of China
Director	Hyperion Trading Co., Ltd.	Seychelles	Diploma of Management courses in Management & Psychology Institute, Thailand Graduated from Suankularb high school, Thailand Manager of Production Dept., Regal Jewelry Manufacture Co., Ltd.
	Representative: SARAYUTH MUNGCHITVITSAVAKORN	Thailand
Director	Orlog Global Co., Ltd.	Samoa	Bachelor, International Business Management, Mahidol University Manager of Sales Dept., Regal Jewelry Manufacture Co., Ltd.
	Representative: LIN, CHIU-I	Republic of China
Director	Unique Global Investment Inc.	Samoa	Pepperdine University. Bachelor of Business Administration & Management. Director of Formosa Marketing Co., Ltd. Director of Elemental Creation Inc.
	Representative: LIN, CHIN-SAN	Republic of China
Director	CDIB Venture Capital Corporation	Republic of China	M.D., Business Administration, Kansas State University Supervisor of Venture Capital, CDIB Capital Group
	Representative: YOUNG, KAI- CHARN (Note 1)	Republic of China
Director	SU, CHUNG-PEI	Republic of China	Asia Institute of Technology. EMBA Chief Operating Officer, DA KONG enterprise Co., Ltd.
Independent Director	LEE, TSUNG-PEI	Republic of China	Ph. D., Economics, National Chengchi University Director of Master’s Program in Finance, Fujen Catholic University Dean of International Trade, Fujen Catholic University Project Chief Executive, Vice President Office of International Affairs, Fujen Catholic University
Independent Director	YEH, KUANG-CHOU	Republic of China	Ph. D., Law, National Chengchi University Attorney, Formosan Brothers Attorneys-at- Law Advisory, Executive Yuan Secretary, Ministry of Justice P.T. lecturer, Applied Living Science, Shih Chien University P.T. lecturer, Accounting Information, Chihlee College of Technology P.T. Assistant Professor of Taiwan Baptist

			Theological Seminary
Independent Director	GUAN, JYH-LIANG	Republic of China	Ph.D., Business Administration, National Chengchi University Member of advisory committee, Directorate General of Highways Dean of Applied Economics and Management and Director of Graduate program, National Ilan University Dean of Student Affairs, Kainan University Dean of Business and Entrepreneurial Management and Director of Graduate program, Kainan University Member of Performance Evaluation Committee of Managing Municipal Institutions,Taipei CityGovernment

Note1 : Director had expired on the date of the re-election at general meeting on June 28, 2019

C o n t e n t s

Page I. Report to the Shareholders ................................................................................................ 1 II. Company Profile A. Brief Introduction of the Company ............................................................................. 3 B. Formation History ..................................................................................................... 3 C. Risk Matters ................................................................................................................ 5 III. Corporate Governance Report A. Organization System ................................................................................................... 6 B. Information on the Company's directors, supervisors, general manager, deputy general managers, deputy assistant general managers, and the supervisors of all the Company's divisions and branch units .......................................................................................... 8 C. Remuneration paid to Directors, Supervisors, General Manager, and Deputy General Manager in the most recent fiscal year .................................................................... 14 D. The state of the Company's implementation ............................................................. 26 E. Information on CPA professional fees ...................................................................... 65 F. Alternation of CPA .................................................................................................... 65 G. The Company’s chairman, general manager, or any managerial officer in charge of finance or accounting matters has in the most recent year held a position at the accounting firm of its CPA or at an affiliated enterprise ......................................... 65 H. Transfer & pledge of stock equity by directors, supervisors, managerial officers, and holders of 10% or more of company shares ............................................................. 66 I. Information on relationships among the top ten shareholders.................................... 67 J. The total number of shares and total equity stake held in any single enterprise by the Company, its directors and supervisors, managers, and any companies controlled either directly or indirectly by the Company ........................................................................ 69 IV. Information on Capital Raising Activities A. Capital and Shares ...................................................................................................... 70 B. Section on Corporate Bonds ....................................................................................... 75 C. Preferred Share ........................................................................................................... 75 D. Global Depository Receipts (GDR) ........................................................................... 75

Page E. Subscription of warrants for employees ....................................................................... 75 F. Subscription of new shares for employee restricted stocks ........................................ 76 G. Issuance of new shares due to acquisition of shares of another company ................. 77 H. Implementation of fund usage plan ............................................................................ 77 V. Overview of Business Operations A. Description of the business ........................................................................................ 78 B. Analysis of the market and the production and marketing situation .......................... 85 C. The number of employees ............................................................................................ 94 D. Disbursements for environmental protection ............................................................. 95 E. Labor relations .............................................................................................................. 95 F. Important contracts ..................................................................................................... 97 VI. Financial Standing A. Concise consolidated balance sheets and statements of comprehensive income for the past 5 fiscal years .......................................................................................................... 98 B. Most Recent 5-Year Financial Analysis ................................................................... 100 C. Audit committee's report for the most recent year's financial statement .................... 102 D. Consolidated financial statements with subsidiaries for the most recent year, audited by CPA .......................................................................................................................... 103 E. Unconsolidated Financial Statements (not including the contents of statement of major accounting items)for the most recent year, audited by CPA ................................. 103 F. Financial Difficulties of the Company and its subsidiaries ...................................... 103 VII. Review and Analysis of the Company's Financial Status and Performance, and a List of Risks A. Financial Status .......................................................................................................... 104 B. Financial Performance .............................................................................................. 104 C. Cash Flow Analysis .................................................................................................... 105 D. Effect upon financial operations of any major capital expenditures during the most recent fiscal year ....................................................................................................... 106 E. The Company's reinvestment policy for the most recent fiscal year, the main reasons for the profits/losses generated thereby, the plan for improving re-investment profitability, and investment plans for the coming year .................................................................. 106

Page

F. Risk analysis during the most recent year and as of the Date of this Annual Report ............................................................................................................................... 107 G. Other important matters ........................................................................................... 113 VIII. Special Notes A. Information of the subsidiaries ................................................................................... 114 B. Private placement of securities during the most recent fiscal year or during the current fiscal year as to the date of publication of the annual report .................................... 119 C. Holding or disposal of shares in the Company by the Company's subsidiaries during the most recent fiscal year or during the current fiscal year as to the date of publication of the annual report ....................................................................................................... 119 D. Other matters that require additional description ..................................................... 119 E. Any of the situations listed in Article 36, paragraph 2, subparagraph 2 of the Securities and Exchange Act, which might materially affect shareholders' equity or the price of the company's securities, has occurred during the most recent fiscal year or during the current fiscal year as to the date of publication of the annual report ....................... 119 F. Material differences from the rules of the R.O.C. in relation to the protection of shareholder equity .................................................................................................... 119

I. Report to the Shareholders

In 2019, the global market was so volatile, although the global jewelry industry gradually grew by 5% per year. However, Regal Holding was affected by the strategy of inventory adjustment of major biggest client in Q1 and consideration of corporate social responsibility and difficulty of cultivating employees’ techniques. Regal Holding adopted the measure of adjustment human resources allocation led to first-time loss through the years . Management team do apologize to employees and shareholders. Therefore, Regal Holding reviewed the clients and cost structure. In Q3 2019, the order and the adjustment strategy gradually grew up, net income in September turned a loss into a profit. Although the global market still has many uncertain factors in 2020, but we believe that Regal Holding walked out of trough. The Company and management team with strong fundamental will provide boutiques with higher quality for clients and global consumers.

The revenues in 2019 were NT$1,809,297,000, which was 38.21% lower than the previous year. Net loss after tax was NT$146,304,000 and after-tax loss per share was NT$3.83. From the prospective of revenues of jewelry processing combination, the revenues in metalworking was 25.9% lower than the previous year, the revenues in plating was 65.91% lower than the previous year. The gross profit of metalworking in 2019 was down to 10.69% from 24.84% in the previous year. The gross profit of plating was down to 17.21% from 34.54% in the previous year because of biggest clients’ adjustment strategy and labor cost caused gross margin has diluted. Moreover, Baht dollar appreciated 7.88% against the US dollar in 2019 caused the realized and unrealized exchange losses totaled NT$13,865,000. The Company was also affected by clients’ accounting adjustment, financial costs totaled NT$4,228,000 in 2019 , an increase of NT$3,523,000 than the previous year.

For managing cost more effectively, Regal Holding not only improved the estimate of manpower needs and adjustment mechanism, but also used human resource integration and improved the rate of research and development in administrative cost and research expense. Therefore, in 2019, administrative expense has decreased 21.51% than the previous year, research and development expense has decreased 11.64% than the previous year. Facing our biggest client promoted the rate of self-capacity and outsource difficult crafts, we kept strengthening our production process and performing research, development and selling expense more carefully. In financial risk control, the Company adopted a strategy of separating the weak from the strong and control of currency risk. Meanwhile, we strengthened surveillance of account receivable to minimize the uncertainty factor of profit.

Facing the impact of the above external unfavorable factors, Regal Holding re-created the Company’s image and reorganized internal and external resources in 2019. The Company developed new clients also reduced OEM proportion of one single client. In response consumers’ market’s change of products with small quantities and diversities, the Company also started to distribute lines to produce small quantities, high gross profit, quick reaction capacity, and multiplex in one station. The Company also redistributes the sales channels of our own brand, online e-commerce and social platforms in end consumers' market at the same time. The Company is looking forward to the transfer of the crisis. Meanwhile, the Company is building sustainable development to develop operation vigorously.

II. Company Profile

A. Brief Introduction of the Company

Regal Holding Co., Ltd. is an investment holding company founded on October 6, 2014 in Cayman Islands. Regal Holding Co., Ltd. and the investment companies (the Company) are Regal Jewelry Manufacture Co., Ltd. (RJM), Regal Plating Co., Ltd. (RGP), Gio Van Gogh (International) Jewelry Limited, and Gio Van Gogh (Shenzhen) Jewelry Limited. Regal Jewelry Manufacture Co., Ltd. is the main operating company established in 1991. As a professional manufacturer of jewelry and accessories, Regal Jewelry Manufacture Co., Ltd. focuses on the design, manufacture, and sales of jewelry and accessories. The distributed areas are across three continents of Europe, America, and Asia.

B. Formation History

Year	Major Matters
1991	To cooperate with government’s ‘South forwarding’ policy, RJM was founded in Thailand.
1999	In response to the expanding operation, RJM was moved to the current site and the firstplant was built.
2000	As the pioneer for Thai Jewelry and Accessory OEM and ODM, 3D printing equipment was brought in to elevate the jewelry products with more exquisite and sophisticatedquality.
2002	To expand the scope of operation, the second plant was built and a total number of staffsgrew to 1,700.
2003	RJM was honored with ‘qualitysystem attestation ISO9001:2000’.
2004	Microsoft Dynamics ERP system was brought in.
2006	The thirdplant was built.
2007	Continuing to invest in sophisticated equipment such as stamping, barreling, wax casting machinery and advanced automatic equipment to boostproducingefficacy
2013	1. Honored with Thailand Jewelry Excellence Design Award 2. RJM was certificated as Green IndustrybyThailandgovernment.
2014	1. RJM was certificated as EU Societal Responsibility ‘BSCI/WCA’. 2. RJM was granted with ‘the Technique Development Certification’ by Department of Technique Development in Thailand. 3. RJM was honored with ‘Safe Working Environment’ by Bureau of Labor in Thailand. 4. Regal Holding Co., Ltd. was established in October and share swapped to reconstruct the organization with Regal Jewelry Manufacture Co., Ltd. The total capital was NT$300 million.
January, 2015	Increased the capital of NT$20 million by cash, and the sum of capital has been increased to NT$320 million

December, 2015	1. RJM was honored with Taiwan Abroad Industry Rock Award. 2. The chief executive of RJM was awarded as young entrepreneurial model of R.O.C. byYoungSelf-employed Association R.O.C.
September, 2016	Increased the capital of NT$19.2 million by cash, and the sum of capital has been increased to NT$339.2 million
November,2016	Listed on emergingmarket
February,2017	TWSE approved the Companyto be listed on the market.
April, 2017	TWSE approved the Company to increase the capital of NT$42.4 million bycash,and the sum of capital has been increased to NT$381.6 million.
June,2017	Listed on TWSE
December, 2018	Released restricted stock awards for employees with total of NT$3.4 million and the sum of capital has been increased to NT$385 million
August, 2019	Canceling released restricted stock awards for employees with total of NT$300 thousand and the sum of capital has been increased to NT$384.7 million
March, 2020	Canceling released restricted stock awards for employees with total of NT$700 thousand and the sum of capital has been increased to NT$384 million

Ⅲ . Risk Matters

1.The risk of macroeconomics, political economy environment, foreign exchange and regulations.

The registered office of the Company shall be at the Cayman Islands and the major operation place of the company is Thailand. Therefore, the Company's operation is affected by the changes in macroeconomics and political environment and foreign exchange volatility of the registered place and the operation place.

2. Risk of guarantee of shareholder rights

The laws of registered place, Cayman Islands, of the Company have many different places with the ones of Republic of China. Without contradicting the laws of Cayman Islands, the Company has amended the Articles of the Company in accordance with “Checklist for the protection of shareholders' rights and interests of foreign issuers” of Taiwan Stock Exchange Corporation. However, there are still many differences between local laws and regulations of two countries on the company’s operation. Investors cannot use the protection views of the ROC companies’ legal rights to apply them to the Cayman Islands’ companies they invest in. Investors shall fully understand and consult with experts whether it can obtain effective shareholder rights protection by investing Cayman Islands’ companies.

3. Effect on the company's manufacturing operations of technology and measures to be taken in response. Please refer to the Page 110

Corporate Governance Report

A. Organization System
Organization Chart

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Audit
Production
Committee Internal
Auditors
Sales
Shareholders' Board of
CEO office
meeting Directors
Management
Compensation
Finance
Committee
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Divisions’ Tasks

sions’ Tasks
D i v i s i o n	Tasks
B o a r d o f D i r e c t o r s	Responsible for establishing the policy indications and objectives of business operation
C E O o f f i c e	1. Report to the board of directors and shareholders’ meetings about business situation and developing plans as well as executing the resolutions of the meetings of board of directors 2. Confirm and take charge of the implementation of overall business objectives and future developing plans 3. Plan and accomplish the major managing policyand businessplans
A u d i t C o m m i t t e e	1. Establish, revise, and review the internal control system 2. Establish or revise the major financial affairs, such as acquisition or disposal of assets, derivatives transactions, lending funds to others, endorsement, or offering guarantee 3. Comply with the related regulation or matters required by competent authorities
Compensation C o m m i t t e e	Establish and review the performance evaluation of directors and managers and the policy, system, standards, and structure of salary compensation
I n t e r n a l A u d i t o r s	Review the regulations of internal control systems and perform internal audit as well as put forward proposals for improvement
P r o d u c t i o n	1. Research and development, design, and samples of new products 2. Improve the productive efficiency 3. Improve the procedure of production and increasing yield rate 4. Controlproducts’quality: supervise, inspect, coordinate and manage

D i v i s i o n	Tasks
	quality
S a l e s	1. Sales planning 2. Strengthen customer relations and exploration and development of new clients and business 3. Establish the related management system of business 4. Gather information of fashion trends and plan strategies of products and sales
Management	1. Planning and managing related affairs of the Company’s administrative and general affairs 2. Plan and manage related affairs of human resources and organization development 3. Responsible for evaluation, application, and reports of investment abroad
F i n a n c e	Responsible for matters about financial plans, accounting affairs, and investment management

B. Information on the Company's directors, supervisors, general manager, deputy general managers, deputy assistant general managers, and the supervisors of all the Company's divisions and branch units
Directors (The Company has established the Audit Committee; therefore, no supervisor is needed) a. Directors

April 19, 2019 Unit: Share;%

Title	Nationality or place of registration	Name	Gender	First Elected date	Elected date	Term	Shares held when elected	Shares held when elected	Current Sharesholding	Current Sharesholding	Shares currently held by their spouses and minor children	Shares currently held by their spouses and minor children	Shares held in the name of others	Shares held in the name of others	Main Working/Education Experience	Concurrent positions in the Company and other companies	Spouse or relatives within second degree kinship who serve managerial posts or seats of board directors/ supervisors of the company	Spouse or relatives within second degree kinship who serve managerial posts or seats of board directors/ supervisors of the company	Spouse or relatives within second degree kinship who serve managerial posts or seats of board directors/ supervisors of the company	Note
							Number	%	Number	%	Number	%	Number	%			Title	Name	relation
Chairman	Thailand	Representative: PHACHARAPON PHAIBOONSUNTORN	M	09.30.2016	06.28.2019	3 years	925,800	2.40%	925,800	2.41%	－	－	2,549,559	6.64%	Graduated from Engineering Dept., Shin Rong Senior High School Manager of Production Division, Regal Jewelry Manufacture Co., Ltd.	Chairman, Regal Jewelry Manufacture Co., Ltd. Chairman, Regal Plating Co., Ltd. Directors, Solar Jewelers Group Corp. Directors, Arianna Investment Co., Ltd. Directors, International Biz Co., Ltd. Chairman, Regal Management Solution Co., Ltd. Chairman, Chaporo Co.,Ltd.	－	－	－	-
	Samoa	Solar Jewelers Group Corp.					13,760,000	35.74%	13,760,000	35.83%	－	－	－	－			－	－	－	-
	Seychelles	Ausrine Marketing Corp.					1,276,800	3.32%	1,276,800	3.33%	－	－	－	－	Yongjing Junior high school	Directors, Olivine Fashion Corp.	－	－	－	-
Director	Republic of China	Representative: LAI, CHIN- HO	M	06.22.2017	06.28.2019	3 years	－	－	－	－	－	－	－	－			－	－	－	-

Title	Nationality or place of registration	Name	Gender	First Elected date	Elected date	Term	Shares held when elected	Shares held when elected	Current Sharesholding	Current Sharesholding	Shares currently held by their spouses and minor children	Shares currently held by their spouses and minor children	Shares held in the name of others	Shares held in the name of others	Main Working/Education Experience	Concurrent positions in the Company and other companies	Spouse or relatives within second degree kinship who serve managerial posts or seats of board directors/ supervisors of the company	Spouse or relatives within second degree kinship who serve managerial posts or seats of board directors/ supervisors of the company	Spouse or relatives within second degree kinship who serve managerial posts or seats of board directors/ supervisors of the company
							Number	%	Number	%	Number	%	Number	%			Title	Name	relation
Director	Seychelles	Hyperion Trading Co., Ltd.	M	09.30.2016	06.28.2019	3 years	1,463,682	3.80%	1,463,682	3.81%	－	－	－	－	Diploma of Management courses in Management & Psychology Institute, Thailand Graduated from Suankularb high school, Thailand Manager of Production Dept., Regal Jewelry Manufacture Co., Ltd.	Director and Deputy General Manager, Production, Regal Jewelry Manufacture Co., Ltd. Director, Regal Plating Co., Ltd. Director, Hyperion Trading Co., Ltd.	－	－	－
	Thailand	Representative: SARAYUTH MUNGCHITVITSAVAKORN					284,800	0.47%	284,800	0.74%	－	－	1,463,682	3.81%			－	－	－
Director	Samoa	Orlog Global Co., Ltd.	F	09.30.2016	06.28.2019	3 years	889,117	2.31%	889,117	2.32%	－	－	－	－	Bachelor, International Business Management, Mahidol University Manager, Sales, Regal Jewelry Manufacture Co., Ltd.	Director and Deputy General Manager, Sales, Regal Jewelry Manufacture Co., Director, Orlog Global Co., Ltd. Director, Apolo Global Business Corp.	General Manager	Lin, Ju-Ying	second- degree relative
	Republic of China	Representative: LIN, CHIU-I					244,800	0.64%	244,800	0.64%	－	－	889,117	2.31%			Juristic Person director’s rep.	Lin, Chin-San	second- degree relative
Director	Samoa	Unique Global Investment Inc.	M	09.30.2016	06.28.2019	3 years	398,000	1.03%	398,000	1.04%	－	－	－	－	Pepperdine University. Bachelor of Business Administration & Management.	Director, Formosa Marketing Co., Ltd. Director, Elemental Creation Inc. Chairman, Linden Integrated Co., Ltd.	General Manager	Lin, Ju-Ying	second- degree relative
	Republic of China	Representative: LIN, CHIN- SAN					160,000	0.42%	160,000	0.42%	－	－	989,123	2.58%			Juristic Person director’s rep. and deputy General Manager	Lin, CHIU-I	second- degree relative

Title	Nationality or place of registration	Name	Gender	First Elected date	Elected date	Term	Shares held when elected	Shares held when elected	Current Sharesholding	Current Sharesholding	Shares currently held by their spouses and minor children	Shares currently held by their spouses and minor children	Shares held in the name of others	Shares held in the name of others	Main Working/Education Experience	Concurrent positions in the Company and other companies	Spouse or relatives within second degree kinship who serve managerial posts or seats of board directors/ supervisors of the company	Spouse or relatives within second degree kinship who serve managerial posts or seats of board directors/ supervisors of the company	Spouse or relatives within second degree kinship who serve managerial posts or seats of board directors/ supervisors of the company	Note
							Number	%	Number	%	Number	%	Number	%			Title	Name	relation
Director	Republic of China	CDIB Venture Capital Corporation	F										(Note 1)
	Republic of China	Representative:YOUNG, KAI-CHARN
Director	Republic of China	SU, CHUNG-PEI	M	06.28.2019	06.28.2019	3 years	－	－	－	－	－	－	－	－	EMBA, ASIA INSTITUTE OF TECHNOLOGY Bachelor of Engineering, Feng Chia University		－	－	－	－
Independent Director	Republic of China	LEE, TSUNG-PEI	M	08.28.2015	06.28.2019	3 years	－	－	－	－	－	－	－	－	Ph. D., Economics, National Chengchi University Dean of International Trade, Fujen Catholic University Diretor of Master’s Program in Finance, Fujen Catholic University Project Chief Executive, Vice President Office of International Affairs, Fujen Catholic University	Independent director, Land Bank of Taiwan Independent director, Powertech Industrial Co., Ltd. Associate Professor, College of Management, Fujen Catholic University

Title	Nationality or place of registration	Name	Gender	First Elected date	Elected date	Term	Shares held when elected	Shares held when elected	Current Sharesholding	Current Sharesholding	Shares currently held by their spouses and minor children	Shares currently held by their spouses and minor children	Shares held in the name of others	Shares held in the name of others	Main Working/Education Experience	Concurrent positions in the Company and other companies	Spouse or relatives within second degree kinship who serve managerial posts or seats of board directors/ supervisors of the company	Spouse or relatives within second degree kinship who serve managerial posts or seats of board directors/ supervisors of the company	Spouse or relatives within second degree kinship who serve managerial posts or seats of board directors/ supervisors of the company	Note
							Number	%	Number	%	Number	%	Number	%			Title	Name	relation
Independent Director	Republic of China	YEH, KUANG-CHOU	M	08.28.2015	06.28.2019	3years	－	－	－	－	－	－	－	－	Ph. D., Law, National Chengchi University Attorney, Formosan Brothers Attorneys- at-Law Advisory, Executive Yuan Secretary, Ministry of Justice P.T. lecturer, Applied Living Science, Shih Chien University P.T. lecturer, Accounting Information, Chihlee College of Technology P.T. Assistant Professor of Taiwan Baptist Theological Seminary Attorney in charge, Bring Hope Law Firm Advisor	Attorney in charge, Bring Hope Law Firm Advisor Board of Directors, Chung Yuan Christian University	－	－	－

Title	Nationality or place of registration	Name	Gender	First Elected date	Elected date	Term	Shares held when elected	Shares held when elected	Current Sharesholding	Current Sharesholding	Shares currently held by their spouses and minor children	Shares currently held by their spouses and minor children	Shares held in the name of others	Shares held in the name of others	Main Working/Education Experience	Concurrent positions in the Company and other companies	Spouse or relatives within second degree kinship who serve managerial posts or seats of board directors/ supervisors of the company	Spouse or relatives within second degree kinship who serve managerial posts or seats of board directors/ supervisors of the company	Spouse or relatives within second degree kinship who serve managerial posts or seats of board directors/ supervisors of the company	Note
							Number	%	Number	%	Number	%	Number	%			Title	Name	relation
Independent Director	Republic of China	GUAN, JYH-LIANG	M	08.28.2015	06.28.2019	3years	－	－	－	－	－	－	－	－	Ph.D., Business Administration, National Chengchi University Member of advisory committee, Directorate General of Highways Dean of Applied Economics and Management and Director of Graduate program, National Ilan University Dean of Student Affairs, Kainan University Dean of Business and Entrepreneurial Management and Director of Graduate program, Kainan University Member of Performance Evaluation Committee of Managing Municipal Institutions, Taipei City Government	Ph.D., Business Administration, National Chengchi University Strategy Teacher, Program of “Wolf’s den” A+ Creative institution stationing and counseling, Ministry of Economic Affairs Research Teacher, Commerce Development Research Institute Dean of Applied Economics and Management and director of Graduate program, National Ilan University Dean of Student Affairs, and Dean of Business and Entrepreneurial Management, Kainan University Member of Performance Evaluation Committee of Managing Municipal Institutions, Taipei City	－	－	－

Note 1: Director had expired on the date of the re-election at general meeting on June 28, 2019

April 19, 2020

b. Major shareholders of juristic-person directors
(1) Major shareholders of juristic person’s shareholders

	April 19,2020
Name of Juristic-person shareholders	Name of major shareholders
Solar Jewelers Group Corp.	PHACHARAPON PHAIBOONSUNTORN(22.10%)、 LIN, JU-YING (14.25%)、 Sarayuth Mungchitvitsavakorn(12.83%)、 LIN, PI-YUAN (9.72%)、 LIN HUANG, A-YUAN (9.50%)、 LIN, CHIN-SAN (8.55%)、 LIN, CHIU-I(8.55%)、 LAI, CHIN-HO (4.75%)、 LAI LIN, SHU-JU (4.75%)
Ausrine Marketing Corp.	LAI, CHIN-HO (50%)、 LAI LIN,SHU-JU(50%)
Hyperion Trading Co., Ltd.	Sarayuth Mungchitvitsavakorn (100%)
Orlog Global Co., Ltd.	LIN, CHIU-I (100%)
Unique Global Investment Inc.	LIN, CHIN-SAN (100%)
CDIB Venture Capital Corporation	CDIB Capital Group (100%)

(2) Principal shareholder of corporate shareholders with a juridical person as its major shareholder: Not applicable.

c. Professional knowledge and independence check matrix of directors

	April 19, 2019	April 19, 2019	April 19, 2019	April 19, 2019	April 19, 2019	April 19, 2019	April 19, 2019	April 19, 2019	April 19, 2019	April 19, 2019	April 19, 2019	April 19, 2019	April 19, 2019	April 19, 2019	April 19, 2019	April 19, 2019
Qualification NAME	Has over five years work experience and following professionalqualifications			Independence Attribute (Note 1)												Concurrent independent director position in other listed companies
	Business, Legal Affairs, Finance, Accounting, Lecturer or above in colleges in related departments	Judge, Prosecutor, Attorney, CPA or National Certified Professionals	Business, Legal Affairs, Finance, Accounting or Related Work Experience	1	2	3	4	5	6	7	8	9	10	11	12
Solar Jewelers Group Corp. Juristic personRepresentative: PHACHARAPON PHAIBOONSUNTORN																－
Hyperion Trading Co., Ltd. Representative:SARAYUTH MUNGCHITVITSAVAKORN																－
Orlog Global Co., Ltd. Representative: LIN,CHIU-I																－
Unique Global Investment Inc. Representative: LIN,CHIN-SAN																－
Ausrine Marketing Corp. Representative: LAI,CHIN-HO																－
SU,CHUNG-PEI																－
LEE,TSUNG-PEI																2
YEH,KUANG-CHOU																－
GUAN,JYH-LIANG																－

Note 1: Directors and supervisors meet any of the following situations, please tick the appropriate corresponding boxes:

(1) Not an employee of the Company or its subsidiaries

(2) Not a director or supervisor of the Company or any of its subsidiaries. The same does not apply, however, in cases where the person is an independent director of the Company, its parent company, or any subsidiary, as appointed in accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary

(3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of one percent or more of the total number of outstanding shares of the Company or ranking in the top ten in holdings.

(4) Not a spouse, second-degree relative or third-degree relative of those listed in the above three items.

(5) Not a director, supervisor, or employee of a corporate shareholder that directly holds five percent or more of the total number of issued shares of the company, or that ranks among the top five in shareholdings, or that designates its representative to serve as a director or supervisor of the company under Article 27, paragraph 1 or 2 of

the Company Act.( not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.)

(6) Not a majority of the company's director seats or voting shares and those of any other company are controlled by the same person: a director, supervisor, or employee of that other company. ( not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.)
(7) Not the chairperson, general manager, or person holding an equivalent position of the company and a person in any of those positions at another company or institution are the same person or are spouses: a director (or governor), supervisor, or employee of that other company or institution. ( not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.)
(8) Not a director, supervisor, officer, or shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business relationship with the company. (It not apply to hold 20 percent or more and no more than 50 percent of the total number of issued shares of the public company and independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.)
(9) Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides auditing services to the company or any affiliate of the company, or that provides commercial, legal, financial, accounting or related services to the company or any affiliate of the company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof; provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Act or to the Business Mergers and Acquisitions Act or related laws or regulations.
(10) Neither a spousal relationship nor a relationship within the second degree of kinship with any other director.
(11) No violations of Article 30 of the Company Act.
(12) Not a governmental, judicial person or its representative as defined by Article 27 of the Company Act.

General manager, deputy general managers, deputy assistant general managers, and the supervisors of all the Company's divisions and branch units

gers, and the supervisors	of all the Company's divisions and branch units	of all the Company's divisions and branch units
	April 30,2020 Unit: Share;%
Education & Experience	Current Position with Other Company	Managers are Spouse or within 2 Degrees of Consanguinity Each Other
		Title Name Relation
M.D., Business Management, Beijing Institute of Economic & Management Manager, Sales, Regal Jewelry Manufacture Co., Ltd.	CEO/ General Manager, Regal Jewelry Manufacture Co., Ltd Chairman, GIO VAN GOGH (Shenzhen) JEWELRY LIMITED Director, Cordelia Global Investment Co., Ltd.	Deputy General Manager, Sales Lin, CHIU- I second- degree relative
	Director, Artemis creation co.,Ltd.

											gers, and the supervisors of all the Company's divisions and branch units	gers, and the supervisors of all the Company's divisions and branch units	gers, and the supervisors of all the Company's divisions and branch units	gers, and the supervisors of all the Company's divisions and branch units	gers, and the supervisors of all the Company's divisions and branch units
											April 30,2020 Unit: Share;%
Title	Nationality	Name	Gender	Date Effective	Shareholding		Spouse & Minor Shareholding		Shareholding by Nominee Arrangement		Education & Experience	Current Position with Other Company	Managers are Spouse or within 2 Degrees of Consanguinity Each Other
					Shares	%	Shares	%	Shares	%			Title	Name	Relation
CEO/ General Manager	Republic of China	LIN, JU-YING	F	2018/05	244,800	0.64%	－	－	1,655,203	4.31%	M.D., Business Management, Beijing Institute of Economic & Management Manager, Sales, Regal Jewelry Manufacture Co., Ltd.	CEO/ General Manager, Regal Jewelry Manufacture Co., Ltd Chairman, GIO VAN GOGH (Shenzhen) JEWELRY LIMITED Director, Cordelia Global Investment Co., Ltd. Director, Artemis creation co.,Ltd.	Deputy General Manager, Sales	Lin, CHIU- I	second- degree relative
Deputy General Manager, Production	Thailand	SARAYUTH MUNGCHITVI TSAVAKORN	M	1996/10	284,800	0.74%	－	－	1,463,682	3.81%	Diploma in Management Courses, Management & Psychology Institute, Thailand Suankularb high school, Thailand Manager, Production, Regal Jewelry Manufacture Co.,Ltd.	Director/ Deputy General Manager, Regal Jewelry Manufacture Co., Ltd. Director,Regal Plating Co., Ltd. Director,Hyperion Trading Co., Ltd.	－	－	－
Deputy General Manager, Sales	Republic of China	LIN, CHIU-I	F	2018/05	244,800	0.64%	－	－	889,117	2.331%	Bachelor, International Business Management, Mahidol University Manager, Sales, Regal Jewelry Manufacture Co., Ltd.	Director and Deputy General Manager, Sales, Regal Jewelry Manufacture Co., Director, Orlog Global Co., Ltd. Director, Apolo Global Business Corp.	General Manager	LIN, JU- YING	second- degree relative
Deputy Director, Finance/ Accountant Supervisor	Republic of China	HUANG, MING- CHENG (Note 5)	M	2019/08	－	－	－	－	－	－	Bachelor of Accounting, Chung Yuan Christian University Accounting administrator, COMPEQ MANUFACTURING CO., LTD. Accounting manager, BUIMA GROUP INC	－	－	－	－
Deputy General Manager, Management /CFO	Republic of China	CHANG, YUNG- LIANG	M	2017/11	(Note 2)
Deputy General Manager, Sales	Republic of China	CHIU, CHIN- SHENG	M	2017/11	(Note 3)

Title	Nationality	Name	Gender	Date Effective	Shareholding	Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Education & Experience	Current Position with Other Company	Managers are Spouse or within 2 Degrees of Consanguinity Each Other	Managers are Spouse or within 2 Degrees of Consanguinity Each Other	Managers are Spouse or within 2 Degrees of Consanguinity Each Other
					Shares	%	Shares	%	Shares	%			Title	Name	Relation
Auditor Supervisor	Malaysia	Wong, Hon-Fei	M	2016/01	－	－	－	－	－	－	Bachelor, Accounting, Universiti Tunku Abdul Rahman Audit Supervisor, JPP Holding Company Limited Senior Auditor, Genting Group Senior Auditor, KPMG Malaysia Kuala Lumpur Branch	Auditor Supervisor, Regal Jewelry Manufacture Co., Ltd.	－	－	－
General Manager, Regal Holding Co., Ltd. Taiwan Branch	Republic of China	LI, WEN-HSIUNG	M	2016/03	－	－	－	－	－	－	Bachelor, Engineering, National Formosa University Sales Manager, Sales, Discover Consultant Co., Ltd. Manager, Sales, Wedian Technology Co., Ltd.	－	－	－	－
General Manager, GIO VAN GOGH (Shenzhen) JEWELRY	Republic of China	HSU, HSIANG	M		(Note 4)
General Manager, Regal Plating Co., Ltd.	Republic of China	WANG, CHUN-CHIN	M	2013/08	－	－	－	－	－	－	Bachelor, Computer Information System, Business, Arizona State University, U.S.A. Deputy General Manager, Regal Plating Co., Ltd. Sales Manager, Europe Area, Yei Shien Enterprise Co., Ltd. Sales Representative, KOAN HAO TECHNOLOGY CO., LTD. Sales Representative, KING LAI HYGIENIC MATERIALS CO., LTD.	－	－	－	－

Note 1: Mainly are the effective dates in Regal Jewelry Manufacture Co., Ltd. Note 2: Resigned on November 13, 2019. Note 3: Resigned on April 10, 2019. Note 4: Resigned on May 31, 2019. Note 5: Resigned on August 7, 2019.

C. Remuneration paid to Directors, Supervisors, General Manager, and Deputy General Manager in the most recent fiscal year

1. Remunerations of Directors

												December 31,2019 Unit: NT$000	December 31,2019 Unit: NT$000	December 31,2019 Unit: NT$000	December 31,2019 Unit: NT$000	December 31,2019 Unit: NT$000	December 31,2019 Unit: NT$000	December 31,2019 Unit: NT$000	December 31,2019 Unit: NT$000	December 31,2019 Unit: NT$000	December 31,2019 Unit: NT$000	December 31,2019 Unit: NT$000
Title	Name	Compensation of Directors								Percentage of A, B, C and D to net profit after tax		Relevant remuneration as an employee								Percent of A, B, C, D, E, F and G to net profit after tax		Is there any remuneration from other invested businesses apart from subsidiaries?
		Remunerations (A)		Retirement allowance (B)		Remunerati on from distribution of earnings (C)		Business execution expenses (D)				Salary, bonus, and special expenses(E)		Retirement allowance (F)		Employees’ Profit-Sharing Bonus (G)
		The Company	All consolidated companies	The Company	All consolidated companies	The Company	All consolidated companies	The Company	All consolidated companies	The Company	All consolidated companies	The Company	All consolidated companies	The Company	All consolidated companies	The Compan y		All consolidated companies		The Company	All consolidated companies
																Cash	Stock	Cash	Stock
Director	Solar Jewelers Group Corp.	－	－	－	－	－	－	－	－	－	－	－	－	－	－	－	－	－	－	－	－	N/A
	Representative: PHACHARAPON PHAIBOONSUNTORN	2,177	5,046	－	204	－	－	－													-3.59%	N/A
									－	-1.49%	-3.59%	－	－	－	－	－	－	－	－	-1.49%

Director	Hyperion Trading Co., Ltd.	－	－	－	－	－	－	－	－	－	－	－	－	－	－	－	－	－	－	－	－	N/A
	Representative: SARAYUTH MUNGCHITVITSAVAKOR N	－	－	－	－	－	－	－													-3.32%	N/A
									－	－	－	1,760	4,142	－	713	－	－	－	－	-1.20%

Director	Orlog Global Co., Ltd.	－	－	－	－	－	－	－	－	－	－	－	－	－	－	－	－	－	－	－	－	N/A
	Representative: LIN, CHIU-I	－	－	－	－	－	－	－	－	－	－	1,418	3,331	－							-2.28%	N/A
															－	－	－	－	－	-0.97%

Director	Ausrine Marketing Corp.	－	－	－	－	－	－	－	－	－	－	－	－	－	－	－	－	－	－	－	－	N/A
	Representative: LAI, CHIN-HO	600	600	－																	-0.44%	N/A
					－	－	－	40	40	-0.44%	-0.44%	－	－	－	－	－	－	－	－	-0.44%

Title	Name	Compensation of Directors	Compensation of Directors	Compensation of Directors	Compensation of Directors	Compensation of Directors	Compensation of Directors	Compensation of Directors	Compensation of Directors	Percentage of A, B, C and D to net profit after tax	Percentage of A, B, C and D to net profit after tax	Relevant remuneration as an employee	Relevant remuneration as an employee	Relevant remuneration as an employee	Relevant remuneration as an employee	Relevant remuneration as an employee	Relevant remuneration as an employee	Relevant remuneration as an employee	Relevant remuneration as an employee	Percent of A, B, C, D, E, F and G to net profit after tax	Percent of A, B, C, D, E, F and G to net profit after tax	Is there any remuneration from other invested businesses apart from subsidiaries?
		Remunerations (A)		Retirement allowance (B)		Remunerati on from distribution of earnings (C)		Business execution expenses (D)				Salary, bonus, and special expenses(E)		Retirement allowance (F)		Employees’ Profit-Sharing Bonus (G)
		The Company	All consolidated companies	The Company	All consolidated companies	The Company	All consolidated companies	The Company	All consolidated companies	The Company	All consolidated companies	The Company	All consolidated companies	The Company	All consolidated companies	The Compan y		All consolidated companies		The Company	All consolidated companies
																Cash	Stock	Cash	Stock
Director	Unique Global Investment Inc.	600	600	－	－	－	－	30	30	-0.43%	-0.43%	－	－	－	－	－	－	－	－	-0.43%	-0.43%	N/A
	Representative: LIN, CHIN-SAN	300	300	－	－	－	－	－	－	-0.21%	-0.21%	－	－	－	－	－	－	－	－	-0.21%	-0.21%	N/A
Director	CDIB Venture Capital Corporation	－	－	－	－	－	－	20	20	-0.01%	-0.01%	－	－	－	－	－	－	－	－	-0.01%	-0.01%	N/A
	Representative: YOUNG, KAI-CHARN	300	300	－	－	－	－	20	20	-0.22%	-0.22%	－	－	－	－	－	－	－	－	-0.22%	-0.22%	N/A
Director	SU, CHUNG-PEI	600	600	－	－	－	－	50	50	-0.44%	-0.44%	－	－	－	－	－	－	－	－	-0.44%	-0.44%
Independent Director	LEE, TSUNG-PEI	600	600	－	－	－	－	50	50	-0.44%	-0.44%	－	－	－	－	－	－	－	－	-0.44%	-0.44%	N/A
Independent Director	YEH, KUANG-CHOU	600	600	－	－	－	－	50	50	-0.44%	-0.44%	－	－	－	－	－	－	－	－	-0.44%	-0.44%	N/A
Independent Director	GUAN, JYH-LIANG	600	600	－	－	－	－	－	－	0.16%	0.16%	－	－	－	－	－	－	－	－	0.16%	0.16%	N/A

2. Range of Remunerations of Directors

Range of Remunerations

Range of Remunerations of Directors	Range of Remunerations	Range of Remunerations	Range of Remunerations	Range of Remunerations
Range of remunerations paid to directors	Names of Directors
	Summation of the first 4 items (A+B+C+D)		Summation of the first 7 items (A+B+C+D+E+F+G)
	The Company	All consolidated companies	The Company	All consolidated companies
Under NT$1,000,000	(NOTE 1)	(NOTE 1)	(NOTE 1)	(NOTE 1)
NT$1,000,000 ~ NT$2,000,000			(NOTE2)
NT$2,000,000 ~ NT$3,500,000	(NOTE 5)		(NOTE 5)	(NOTE3)
NT$3,500,000~ NT$5,000,000				(NOTE 4)
NT$5,000,000~ NT$10,000,000		(NOTE 5)		(NOTE 5)
NT$10,000,000~ NT$15,000,000
NT$15,000,000~ NT$30,000,000
NT$30,000,000~ NT$50,000,000
NT$50,000,000~ NT$100,000,000
Over NT$100,000,000
TOTAL	8	8	10	10

NOTE 1: Ausrine Marketing Corp., Representative: LAI, CHIN-HO; CDIB Venture Capital Corporation Representative: YOUNG, KAI-CHARN; Unique Global Investment Inc Representative: LIN, CHIN-SAN, SU, CHUNG-PEI, LEE, TSUNG-PEI, YEH, KUANG-CHOU, GUAN, JYH-LIANG NOTE 2: Hyperion Trading Co., Ltd., Representative: SARAYUTH MUNGCHITVITSAVAKORN; Orlog Global Co., Ltd., Representative: LIN, CHIU-I NOTE 3: Orlog Global Co., Ltd., Representative: LIN, CHIU-I

NOTE 4: Hyperion Trading Co., Ltd., Representative: SARAYUTH MUNGCHITVITSAVAKORN

NOTE 5: Solar Jewelers Group Corp., Representative: PHACHARAPON PHAIBOONSUNTORN

Remunerations of Supervisors: The Company has established the Audit Committee; therefore, no supervisor is needed.

4. Remunerations paid to general managers and deputy managers in the most recent year(2019)

Dec. 31, 2019 Unit: NT$000

Title	Name	Salary (A)	Salary (A)	Retirement allowance (B)	Retirement allowance (B)	Money award and special payment etc. (C)	Money award and special payment etc. (C)	Earning distribution as dividends for personnel (D)	Earning distribution as dividends for personnel (D)	Earning distribution as dividends for personnel (D)	Earning distribution as dividends for personnel (D)	Rate of total amount of A, B, C and D to pure profits after tax (%)	Rate of total amount of A, B, C and D to pure profits after tax (%)	Shares of Employee Stock Warrants	Shares of Employee Stock Warrants	Number of new restricted employee shares	Number of new restricted employee shares	Is there any remuneration from other invested businesses apart from subsidiaries?
		The Company	All consolidated c o m p a n i e s	The Company	All consolidated c o m p a n i e s	The Company	All consolidated c o m p a n i e s	The Company		All consolidated companies		The Company	All consolidated c o m p a n i e s	The Company	All consolidated c o m p a n i e s	The Company	All consolidated c o m p a n i e s
								Cash	Stock	Cash	Stock
CEO/General Manager	LIN, JU-YING	1,538	3,697	-	108	-	-	-	-	-	-	-1.05%	-2.60%	-	-	－	－	N/A
Deputy General Manager, Production	SARAYUTH MUNGCHITVITSAVAKORN	1,760	4,142	-	713	-	-	-	-	-	-	-1.20%	-3.32%	-	-	－	－	N/A
Deputy General Manager, Sales	LIN, CHIU-I	1,418	3,331	-	-	-	-	-	-	-	-	-0.97%	-2.28%	-	-	－	－	N/A
Deputy General Manager, Management/ CFO	CHANG, YUNG-LIANG (NOTE 1)	1,466	3,559	-	-	-	-	-	-	-	-	0.99%	-2.43%	-	-	－	－	N/A

Note 1: Resigned on November 13, 2019.

5. Range of Remunerations of general managers and deputy managers

Range of Remunerations

Range of remunerations paid to general managers and deputy managers	Name ofgeneral managers and deputymanagers	Name ofgeneral managers and deputymanagers
	The Company	All consolidated companies
Under NT$1,000,000
NT$1,000,000 ~ NT$2,000,000	(NOTE1)	(NOTE 2)
NT$2,000,000 ~ NT$3,500,000		(NOTE3)
NT$3,500,000~ NT$5,000,000
NT$5,000,000~ NT$10,000,000
NT$10,000,000~ NT$15,000,000
NT$15,000,000~ NT$30,000,000
NT$30,000,000~ NT$50,000,000
NT$50,000,000~ NT$100,000,000
Over NT$100,000,000
TOTAL	4	4

Note 1: LIN, JU-YING, SARAYUTH MUNGCHITVITSAVAKORN, LIN, CHIU-I, CHANG, YUNG-LIANG Note 2: LIN, CHIU-I

Note 3: LIN, JU-YING, SARAYUTH MUNGCHITVITSAVAKORN, CHANG, YUNG-LIANG

6. The individual remuneration paid to each of the Company’s top five management personnel

Dec. 31, 2019 Unit: NT$000

														Dec. 31,2019	Dec. 31,2019	Unit: NT
Title	Name	Salary (A)		Retirement allowance (B)		Money award and special payment etc. (C)		Earning distribution as dividends for personnel (D)				Rate of total amount of A, B, C and D to pure profits after tax (%)		Shares of Employee Stock Warrants		Is there any remuneration from other invested businesses apart from subsidiaries?
		The Company	All consolidated c o m p a n i e s	The Company	All consolidated c o m p a n i e s	The Company	All consolidated c o m p a n i e s	The Company		All consolidated companies		The Company	All consolidated c o m p a n i e s	The Company	All consolidated c o m p a n i e s
								Cash	Stock	Cash	Stock
CEO/General Manager	LIN, JU-YING	1,538	3,697	-	108	-	-	-	-	-	-	-1.05%	-2.60%	-	-	N/A
Deputy General Manager, Production	SARAYUTH MUNGCHITVITSAVAKORN	1,760	4,142	-	713	-	-	-	-	-	-	-1.20%	-3.32%	-	-	N/A
Deputy General Manager, Sales	LIN, CHIU-I	1,418	3,331	-	-	-	-	-	-	-	-	-0.97%	-2.28%	-	-	N/A
Deputy General Manager, Management/ CFO	CHANG, YUNG-LIANG (NOTE 1)	1,466	3,559	-	-	-	-	-	-	-	-	0.99%	-2.43%	-	-	N/A

Note 1: Resigned on November 13, 2019.

7.Employee profit sharing granted to managers:

						Dec. 31, 2019 Unit: NT$000 Proportion of the total compensation of managers to net profit after tax 0.6% 0.3% 0.4% 0.3%
	Title	Name	Stock	Cash	Total	Proportion of the total compensation of managers to net profit after tax
Managers	General Manager	LIN, JU-YING	－	862	862	0.6%
	Deputy general managers, Sales	LIN, CHIU-I	－	397	397	0.3%
	Deputy General Manager, Management/CFO	CHANG, YUNG-LIANG (NOTE 1)	－	530	530	0.4%
	Deputy general managers,Production	SARAYUTH MUNGCHITVITSAVAKORN	－	397	397	0.3%

Note 1: Resigned on November 13, 2019.

Analysis of the proportion of the total remuneration of directors, supervisors, general managers and vice general managers of the Company paid by the Company and all companies in the consolidated financial statement to net profit after tax in individual financial statements of the recent two years and explanation of the compensation policy, standards, and makeup, the procedure for setting compensations, and the relevance with business performance and future risk. (The Company needs no supervisors)
a. The proportion of the total remuneration of directors, supervisors, general managers and vice general managers of the Company paid by the Company and all companies in the consolidated financial statement to net profit after tax in individual financial statements of the recent two years

e recent two years
	Unit: NT$000;% Year 2018 Year 2019 The Company All consolidated companies The Company All consolidated companies 11,049 27,716 9,110 17,296 3.01 7.54 (6.22) (11.82) 9,020 28,009 6,182 15,550 2.46 7.62 (4.23) (10.63)
	Year 2018		Year 2019
	The Company	All consolidated companies	The Company	All consolidated companies
Total remuneration of directors	11,049	27,716	9,110	17,296
Proportion of the total compensation of directors to net profit after tax (%)	3.01	7.54	(6.22)	(11.82)
Total remuneration of managers	9,020	28,009	6,182	15,550
Proportion of the total compensation of managers to netprofit after tax(%)	2.46	7.62	(4.23)	(10.63)

b. The compensation policy, standards, and makeup, the procedure for setting compensations, and the relevance with business performance and future risk
(1) Directors and Supervisors (The Company needs no supervisors) The Company has established the Compensation Committee that the committee members are all the independent directors and is responsible to establish and review the performance evaluation of directors and the policy, system, standards, and structure of salary compensation. Also, the committee must evaluate and establish the salary compensation and remuneration of directors after referring to the same industry pay level(according to the Company’s Articles).
(2) General Managers and Deputy General Managers
- The remunerations paid to general managers and deputy general managers are salaries, bonuses, and retirement allowance. The Company has established the Compensation Committee which members are all the independent directors and is responsible to establish and review the performance evaluation of managers and the policy, system, standards, and structure of salary compensation. The Committee has to evaluate and establish the salary compensation and remuneration of managers based on the positions, responsibilities, and contributions to the Company while referring to the same industry pay level.

D. The state of the Company's implementation

1. The state of the Board of Directors’ implementation

Five meetings were held by the Board of Directors in the most recent year (2019)with their attendance shown as follows

Title	Name	Attendance inperson	By proxy	Attendance rate inperson(%)	Remarks
Chairman	Solar Jewelers Group Corp. Representative: PHACHARAPON PHAIBOONSUNTORN	`5`	`0`	`100%`
Director	Ausrine Marketing Corp. Representative: LAI, CHIN-HO	`5`	`1`	`80%`
Director	CDIB Venture Capital Corporation Representative: YOUNG, KAICHARN	`2`	`0`	`100%`	(Note 1)
Director	SU, CHUNG-PEI	`3`	`0`	`100%`	(Note 2)
Director	Orlog Global Co., Ltd. Representative: LIN, CHIU-I	`4`	`1`	`80%`
Director	Hyperion Trading Co., Ltd. Representative: SARAYUTH MUNGCHITVITSAVAKORN	`5`	`0`	`100%`
Director	Unique Global Investment Inc. Representative: LIN, CHIN-SAN	`4`	`1`	`80%`
Independent Director	LEE, TSUNG-PEI	`5`	`0`	`100%`
Independent Director	YEH, KUANG-CHOU	`4`	`1`	`80%`
Independent Director	GUAN, JYH-LIANG	`5`	`0`	`100%`
Note 1: Director had expired on the date of the re-election at general meeting on June 28, 2019 Note 2: The re-election was held in the shareholders’ general meeting on June 28, 2019.

Note 1: Director had expired on the date of the re-election at general meeting on June 28, 2019

Other noteworthy matters:

a. State the Board Meeting’s date, session, proposal contents, all Independent Directors’ opinions and the Company’s actions in response to the opinions if any of the following occurred:

(1) Matters specified in Article 14.3 of Taiwan’s Securities and Exchange Act:

(1) Matters	specified in Article 14.3 of Taiwan’s Securities	and Exchange Act:
Meeting Sessions and Dates	Proposal contents	Independent Directors have expressed opposition or withhold opinions
2018.02.26	1. Proposal of 2017 Employees’ and Directors’ Compensation	None
	2. Proposal of Distribution of 2017 earnings	None

9thBoard meeting in 3rdTerm	3. Proposal of the statement of internal control system for year 2017	None
	4. Proposal of the Company’s and its subsidiaries’ CPA’s public fee review for year 2018	None
	IndependentDirectors’Opinions: None.
	The resolution the Company handles the independent directors’opinions: None.
	Resolution:Approved.
2018.04.11 10thBoard meeting in 3rdTerm	1. Proposal of revision of certain articles in the Company’s“Articles of Association”	None
	Independent Directors’Opinions: None.
	The resolution the Company handles the independent directors’opinions: None.
	Resolution: Approved.
2018.11.12 13thBoard meeting in 3rdTerm	1. Proposal of resolution to acquire Elex Precise Co.Ltd. onbehalfofChaporo Co.Ltd	None
	2. Proposal of endorsements and guarantees for the Company’s subsidiary, Gio Van Gogh (Shenzhen) Jewelry Limited	None
	3. Proposal of lending funds to the Company’s subsidiary, Gio Van Gogh (Shenzhen) Jewelry Limited	None
	Independent Directors’Opinions: None.
	The resolution the Company handles the independent directors’opinions: None.
	Resolution: Approved.
2019.03.08 14thBoard meeting in 3rdTerm	1. Proposal of Distribution of 2018 earnings	None
	2. Proposal of the statement of internal control system for year 2018	None
	3. Proposal of the Company’s and its subsidiaries’ CPA’s publicfeereviewforyear 2019	None
	4. Proposal to cancel the endorsements and guarantees for the Company’s subsidiary, Gio Van Gogh (Shenzhen) Jewelry Limited	None
	5. Proposal to cancel lending funds to the Company’s subsidiary, Gio Van Gogh (Shenzhen) Jewelry Limited	None
	6. Proposal to amend the revision of certain articles in the Company’s “Articles of Association”	None
	7. Proposal to amend the revision of certain articles in the Company’s “Regulations of Acquisition or Disposal of Assets”	None
	IndependentDirectors’Opinions: None.
	The resolution the Company handles the independent directors’opinions: None.
	Resolution:Approved.
2019.05.13 15thBoard meeting in 3rdTerm	1. Proposal of manager’s appointment and compensation	None
	2. Proposal to amend the revision of certain articles in the Company’s “Procedures for Lending Funds to Others”	None
	3. Proposal to amend the revision of certain articles in the Company’s “Procedures for Endorsements and Guarantees”	None
	Independent Directors’Opinions: None.
	The resolution the Company handles the independent directors’opinions: None.
	Resolution: Approved.

2019.08.14 2ndBoard meeting in 4thTerm	1. Proposal of Accountant Supervisor change and compensation	None
	2. Proposal of cancel resolution to acquire Elex Precise Co. Ltd. on behalf of Chaporo Co. Ltd	None
	IndependentDirectors’Opinions: None.
	The resolution the Company handles the independent directors’opinions: None.
	Resolution: Approved.
2019.11.13 3rdBoard meeting in 4thTerm	1. Proposal to increase funds to the Company’s subsidiary, Gio Van Gogh (Shenzhen) Jewelry Limited	None
	Independent Directors’ Opinions: None.
	The resolution the Company handles the independent directors’ opinions: None.
2019.03.13 4thBoard meeting in 4thTerm	1. Proposal of 2019 Employees’ and Directors’ Compensation	None
	2.Proposalof Distributionof 2019 earnings	None
	3. Proposal of the statement of internal control system for year 2019	None
	4. Proposal of the Company’s and its subsidiaries’ CPA’s publicfeereviewforyear 2020	None
	5 Proposal of revision of certain articles in the Company’s“Articles of Association”	None
	Independent Directors’Opinions: None.
	The resolution the Company handles the independent directors’opinions: None.
	Resolution: Approved.

(2) There were no other written or otherwise recorded resolutions on which an independent director had expressed opposition or withhold opinions.
b. The recusals of Directors due to conflicts of interests: state the directors’ name, proposals, reasons of recusals, and the state of voting:

Date / Proposal contents

2018.05.10 11[th] Board meeting in 3[rd] Term
Proposal of manager’s appointment and compensation
Reasons of recusals and the state of voting: Director LIN, CHIU-I did not participate in the discussion or vote on that proposal because of recusals. No attending director voices an objection following an inquiry by the chair, the proposal approved.
Proposal of the release of the Company’s manager from non-competition restrictions Reasons of recusals and the state of voting: Director LIN, CHIU-I did not participate in the discussion or vote on that proposal because of recusals. No attending director voices an objection following an inquiry by the chair, the proposal approved. 2018.11.12 13[th] Board meeting in 3[rd] Term
Proposal of Regal jewelry Manufacture Co. Ltd invests in the establishment of Linden Integrated Co. Ltd
Reasons of recusals and the state of voting: Director LIN, CHIN-SAN did not participate in the discussion or vote on that proposal because of recusals. Chairman Phacharapon Phaiboonsuntorn and Director LIN, CHIU-I did not participate in the discussion or vote on that proposal because of second-degree relative. No attending director voices an objection following an inquiry by the acting chair GUAN, JYH-LIANG , the proposal approved.
Proposal of the Company invests in the establishment of Chaporo Co, Ltd Reasons of recusals and the state of voting: Chairman Phacharapon Phaiboonsuntorn did not participate in the discussion or vote on that proposal because of recusals. Director LIN, CHIN-SAN and Director LIN, CHIU-I did not participate in the discussion or vote on that proposal because of second-degree relative. No attending director voices an -

objection following an inquiry by the acting chair GUAN, JYH LIANG , the proposal

approved. 3. Proposal of juristic representative’s appointment Reasons of recusals and the state of voting: Chairman Phacharapon Phaiboonsuntorn did not participate in the discussion or vote on that proposal because of recusals. Director LIN, CHIN-SAN and Director LIN, CHIU-I did not participate in the discussion or vote on that proposal because of second-degree relative. No attending director voices an objection following an inquiry by the acting chair GUAN, JYH-LIANG, the proposal approved. 4. Proposal of the release of the Company’s directors from non-competition restrictions Reasons of recusals and the state of voting: General Manager LIN, JU-YING did not participate in the discussion or vote on that proposal because of relative by marriage with chairman Phacharapon Phaiboonsuntorn and second-degree relative with Director LIN, CHIN-SAN Chairman Phacharapon Phaiboonsuntorn and Director LIN, CHIN-SAN did not participate in the discussion or vote on that proposal because of recusals. Director LIN, CHIU-I did not participate in the discussion or vote on that proposal because of seconddegree relative. No attending director voices on objection following an inquiry by the acting - chair GUAN, JYH LIANG, the proposal approved. 2019.08.14 2[nd] Board meeting in 4[th] Term 1. Proposal of 2018 Employees’ Compensation Reasons of recusals and the state of voting: Director LIN, CHIU-I and Director Sarayuth Mungchitvitsavakorn did not participate in the discussion or vote on that proposal because of recusals. Chairman Phacharapon Phaiboonsuntorn and Director LIN, CHIN-SAN did not participate in the discussion or vote on that proposal because of second-degree relative. No attending director voices on objection following an inquiry by the acting chair - LEE,TSUNG PEI, the proposal approved. 2019.11.13 3[rd] Board meeting in 4[th] Term 1. Proposal of the chairman of Regal Innovation Co, Ltd appointment Reasons of recusals and the state of voting: General Manager LIN, JU-YING did not participate in the proposal because of interested party. Chairman Phacharapon Phaiboonsuntorn, Director LIN, CHIU-I and Director LIN, CHIN-SAN did not participate in the proposal because of second-degree relative with General Manager LIN, JU-YING. No attending director voices on objection following an inquiry by the acting chair LEE,TSUNGPEI, the proposal approved.

c. The state of Self-Evaluation or Peer Evaluation of the Board of Directors: Board of Directors of the Company approved setting Self-Evaluation or Peer Evaluation of the Board of Directors on November 13,2019. The term of evaluation is from January 1,2020 to December 31, 2020.
d. Assessment of objectives and implementation status in the area of strengthening the powers of the board of directors (such as setting of an audit committee and improvement of information transparency etc.) for current and immediately past years: The Company has elected 3 independent directors in shareholders’ general meeting on August 28, 2015. The board members were re-elected in first shareholders’ temporary meeting on September 30, 2016, The board members were re-elected in shareholders’ meeting on June 28. 2019. The 3 independent directors were all re-elected and all are the members of Audit Committee and Compensation Committee who established the Audit Committee and Compensation Committee that convener of both committees is Mr. Lee, Tsung-Pei. In the future, the Company will reveal relevant information in accordance with the laws in order to improve the information transparency.

The state of the Audit Committee’s implementation

Five meetings were held by the Audit Committee in the recent year (2019) with Independent Directors’ attendance shown as follows:

Title	Name	Attendance in person	Attendance rate in person (%)	Remarks
Independent Director	LEE, TSUNG-PEI	5	100%	Re-elected (note)
Independent Director	YEH, KUANG-CHOU	4	80%	Re-elected (note)
Independent Director	GUAN, JYH-LIANG	5	100%	Re-elected (note)

Note: LEE, TSUNG-PEI, YEH, KUANG-CHOU and GUAN, JYH-LIANG were re-elected in shareholders’ meeting on June 28, 2019 and three independent directors are the members of Audit Committee, which term is from June 28, 2019 to June 27, 2022.

Other noteworthy matters:

a. State the Board Meeting’s date, session, proposal contents, all Independent Directors’ opinions and the Company’s actions in response to the opinions if any of the following occurred:

(1) Matters specified in Article 14.5 of Taiwan’s Securities and Exchange Act:

Meeting Sessions and Dates	Proposal contents	Resolutions which was not approved by the Audit Committee but was approved by two thirds or more of all directors
2018.02.26 9thBoard meeting in 3rd Term	1. Proposal of Business report, financial report 2017 and business plan for 2018	None
	2. Proposal of 2017 Employees’ and Directors’ Compensation	None
	3. Proposal of Distribution of 2017 earnings	None
	4. Proposal of the statement of internal control system for year 2017	None
	5. Proposal of the Company’s and its subsidiaries’ CPA’s public fee review for year 2018	None
	Resolution (2018.02.26): Approved.
	The resolution the Company handles the Audit Committee’s opinions: Approved.
2018.04.11 10thBoard meeting in 3rd Term	1. Proposal of revision of certain articles in the Company’s“Articles of Association”	None
	Resolution(2018.04.11):Approved.
	The resolution the Company handles the Audit Committee’s opinions: Approved.
2018.08.14 12thBoard meeting in 3rd Term	1. Proposal of financial report of Q2 2018.	None
	Resolution (2018.08.14): Approved.
	The resolution the Company handles the Audit Committee’s opinions: Approved.

2018.11.12 13thBoard meeting in 3rd Term	1. Proposal of resolution to acquire Elex Precise Co. Ltd. on behalf of Chaporo Co. Ltd.	None
	2. Proposal of endorsements and guarantees for the Company’s subsidiary, Gio Van Gogh (Shenzhen) Jewelry Limited	None
	3. Proposal of lending funds to the Company’s subsidiary, Gio Van Gogh (Shenzhen) Jewelry Limited	None
	4. Proposal of matters about issuance of Restricted Stock Awards	None
	Resolution(2018.11.12):Approved.
	The resolution the Company handles the Audit Committee’s opinions: Approved.
2019.03.08 14thBoard meeting in 3rd Term	1. Proposal of Business report, financial report 2018 and business plan for 2019	None
	2. Proposal of Distribution of 2018 earnings	None
	3. Proposal of the statement of internal control system for year 2018	None
	4. Proposal of the Company’s and its subsidiaries’ CPA’s public fee review for year 2019	None
	5. Proposal to cancel the endorsements and guarantees for the Company’s subsidiary, Gio Van Gogh (Shenzhen) Jewelry Limited	None
	6. Proposal to cancel lending funds to the Company’s subsidiary, Gio Van Gogh (Shenzhen) JewelryLimited	None
	7. Proposal to amend the revision of certain articles in the Company’s “Articles of Association”	None
	8. Proposal to amend the revision of certain articles in the Company’s “Regulations of Acquisition or Disposal of Assets”	None
	Resolution(2019.03.08): Approved.
	The resolution the Company handles the Audit Committee’s opinions: Approved.
2019.05.13 15thBoard meeting in 3rd Term	1. Proposal of manager’s appointment and compensation	None
	2. Proposal to amend the revision of certain articles in the Company’s “Procedures for LendingFunds to Others”	None
	3. Proposal to amend the revision of certain articles in the Company’s “Procedures for Endorsements and Guarantees”	None
	Resolution(2019.05.13):Approved.
	The resolution the Company handles the Audit Committee’s opinions: Approved.
2019.08.14 2ndBoard meeting in 4th Term	1. Proposal of Financial report Q2 2019	None
	2. Proposal of Accountant Supervisor change	None
	3. Proposal of cancel resolution to acquire Elex Precise Co. Ltd. on behalf of Chaporo Co. Ltd	None
	Resolution(2019.05.13): Approved.
	The resolution the Companyhandles the Audit Committee’s opinions:

	Approved.	Approved.
2019.11.13 3rdBoard meeting in 4th Term	1. Proposal to increase funds to the Company’s subsidiary, Gio Van Gogh (Shenzhen) Jewelry Limited	None
	Resolution (2019.05.13): Approved.
	The resolution the Company handles the Audit Committee’s opinions: Approved.
2020.03.13 4thBoard meeting in 4th Term	1. Proposal of Distribution of 2019 earnings	None
	2. Proposal of the statement of internal control system for year 2019	None
	3. Proposal of the Company’s and its subsidiaries’ CPA’s public fee review for year 2020	None
	4. Proposal of revision of certain articles in the Company’s“Articles of Association”	None
	Resolution (2019.05.13): Approved.
	The resolution the Company handles the Audit Committee’s opinions: Approved.

b. The recusals of Independent Directors due to conflicts of interests: state the independent directors’ name, proposals, reasons of recusals, and the state of voting: None.
c. The communications between the independent directors, the internal auditors, and the independent auditors in 2018 (which should include the material items, channels, and results of the audits on the Company’s finance and/or operations, etc.): The Audit Committee is called and discussed relevant proposals based on the “Regulations of the Audit Committee.” The internal auditors have sent the audit reports to the members of the Audit Committee regularly, and the CPA has attended in the meetings of the Audit Committee and expressed their opinions. The communication channel between the Audit Committee and the internal auditors functioned well.

The state of the Company's implementation of corporate governance, any departure of such implementation from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such difference:

Items			Implementation Status	Difference from Corporate Governance Practice Principles for TWSE/GTSM Listed Companies and reasons
	Yes	No	Description
A. Does the Company set and disclose corporate governance code of practice according to corporate governance practice principles for TWSE/GTSM- Listed companies?	V		A. The Company has set a corporate governance code of practice and disclosed on Market Observation Post System.	No major differences
B. Equity structure and shareholder rights 1. Has the Company set internal operating procedures to deal with shareholder proposals, doubts, disputes and litigation matters, and does it implement these in accordance with its procedures? 2. Does the Company have a list of those who ultimately control the major shareholders of the Company? 3. Has the Company built and executed a risk management system and “firewall” between the Company and its affiliates? 4. Has the Company established internal rules prohibiting insider trading on undisclosed information?	V V V V		1. Spokesman and Deputy Spokesman represent the Company as a communicate channel. The Company also designated the share transfer agency to handle the stock affairs and have had the stock affair specialists. The official website has a special section to deal with shareholder proposal and disputes. 2. The Company has a list of major shareholders and who ultimately controls provided by share transfer agency. 3. The Company and its affiliates have independent businesses and finances. The Company has set up the “Affiliated Corporations Management” to execute and evaluate internal risk between affiliated enterprises and established appropriate firewalls. 4. The Company has set operating procedures to prevent insider trading.	No major differences No major differences No major differences No major differences

Items	Implementation Status	Implementation Status	Implementation Status	Difference from Corporate Governance Practice Principles for TWSE/GTSM Listed Companies and reasons
	Yes	No	Description
C. Composition and Responsibilities of the Board of Directors
1. Has the Company established a diversification policy for the composition of its Board of Directors and has it been implemented accordingly?	V		1. The Company has made up the “Corporate Governance Practical Principles” and “Regulations Governing Election of Directors.” The members of the BOD have the necessary knowledge, skills, and accomplishments to execute their responsibilities and their backgrounds are diversified based on the management, operating style, and developing requirements to establish an appropriate diversification policy. There are one female among the nine members of boards and all the members are diversified and possess experience of research, development, manufacture, management, marketing in jewelry industry and finance, business, law, and management in other industries in order to established a diversification policy for the composition of its Board of Directors.	No major differences
2. Other than the Compensation Committee and the Audit Committee which are required by law, does the Company plan to set up other Board committees? 3. Has the Company established methodology for evaluating the performance of its Board of Directors,		V V	2. The Company set up a Compensation Committee and a Audit Committee; other functional committees will be set up depending on operating scale and business needs in the future. 3. The members of Board approved Self- Evaluation or Peer Evaluation. Evaluation term is from Jan 1,2020 to	Set up depending on future needs The Company will submit

Items			Implementation Status	Difference from Corporate Governance Practice Principles for TWSE/GTSM Listed Companies and reasons
	Yes	No	Description
on an annual basis and submitted the results of performance assessments to the board of directors and use them as reference in determining compensation for individual directors, their nomination and additional office term?			Dec 31, 2020. The Company will submit the results of performance assessments to the board of directors in Q1 2021.	the results of performanc e assessment s to the board of directors in Q1 2021.
4. Does the Company regularly evaluate the independence of the CPA?	V		4. Before deciding to hire CPAs, first, the Company shall review the independence and require the declarations of impartiality and independence from auditors. Also, the Company shall confirm the CPAs have no other affairs about financial interests and business relations except the attestation and the non-audit fees, are not shareholders of the Company, do not perform concurrently routine work for the Company and receiving a regular salary, do not have served a term of more than seven years as the Company’s auditors, do not have punishments, or any affair to damage the independence. The result of evaluations shall be reported to the BOD for resolutions. The Company annually assesses the performance and independence of the CPA and reported to the Audit Committee and BOD for reviewing and passed on resolution on Nov. 13,2018. The	No major differences

Items	Implementation Status	Implementation Status	Implementation Status	Difference from Corporate Governance Practice Principles for TWSE/GTSM Listed Companies and reasons
	Yes	No	Description
			Company deems that CPA LU, LI – LY and CPA KJANG, CHUN-HSIN of KPMG meet the Company’s independence requirements (Note 1) and, having issued declarations of impartiality and independence (Note 2), are sufficiently qualified to be the Company’s financial statement auditors.
D. Does the company have an adequate number of corporate governance personnel with appropriate qualifications based on the size of the company, business situations and management needs, and to appoint a chief corporate governance officer as the most senior officer to be in charge of corporate governance affairs. (including but not limited to providing information required for director/supervisor's operations, convening board/shareholder meetings in compliance with the law, apply for/change company registry, and producing meeting minutes of board/shareholder meetings)?		V	The President Secretariat is responsible for corporate governance related matters and the primary responsibilities include: a. Providing information needed by the Board of Directors to carry out its functions for independence and business in legal compliance b. Processing matters relevant to convening Board meetings in legal compliance c. Processing matters relevant to convening Shareholders’ meetings and registration of the Company in legal compliance	No major differences
E. Does the Company establish communication channels and dedicate section for stakeholder on its website to respond to important issues of corporate social responsibility concerns?	V		The Company has set “Stakeholder Zone” on the website and designated dedicated personnel to manage and organize the financial and corporate governance information for the reference of shareholders and related parties and respond to major concerns regarding corporate social	No major differences

Items			Implementation Status	Difference from Corporate Governance Practice Principles for TWSE/GTSM Listed Companies and reasons
	Yes	No	Description
			responsibilities from stakeholders.
F. Has the company appointed a professional stock affairs agency for shareholders affairs?	V		The Company authorized “SinoPac Securities Co., Ltd.” as the stock service agency to handle shareholder transactions and affairs of shareholders meetings.	No major differences
G. Disclosure of information 1. Does the Company set up website to disclose financial operations and corporate governance information? 2. Has the Company adopted other measures(such as English website, a designated person responsible for the collection and disclosure of information, implementation of the spokesman system, the legal entities announcements uploaded to website, etc.) to disclose information?	V V		1. The Company has placed financial and corporate governance information on the website (www.regaljewelrygroup.com) as well as on the MOPS. After institutional investors’ conferences, the link of complete conferences’ videos will be uploaded on the same day for the reference. 2. The Company has established the website (www.regaljewelrygroup.com) and designated dedicated personnel responsible for the collection and disclosure of information and implementation of the spokesman system.	No major differences No major differences
3. Has the Company published and reported its annual financial report within two months after the end of a fiscal year, and publish and report its financial reports for the first, second and third quarters as well as its operatingstatus for each month before		V	3. The Company reported financial report 2019 before March 31, 2020 The date comply with competent authority’s term.	No major differences

Items	Implementation Status	Implementation Status	Implementation Status	Difference from Corporate Governance Practice Principles for TWSE/GTSM Listed Companies and reasons
	Yes	No	Description
the specified deadline.
H. Does the Company have other important information for better understanding the Company’s corporate governance system (including but not limited to interests and rights of employees, care for employees, relation with investors, relation with suppliers, relation with interested parties, continuing education of directors and supervisors, execution of risk management policies and risk measuring standards, execution of customer policies, liability insurance for the Company’s directors and supervisors)?	V		1. Interests and rights of employees: in accordance with the law, the Company has edited the employees’ brochure and company’s benefit policy that has listed the rights, duties, and benefits of employees to defend the rights of employees. 2. Care for employees: Except following the local laws and regulations, the Company has host diner parties and recreational activities to adjust employees' mind and body. 3. Rights of relations with investors, with suppliers, with interested parties: The communication with investors, with suppliers, with interested parties are smooth and deserved legal rights and interests to each party are well-maintained. 4. Continuing education of directors and supervisors: The directors of the Company had participated in related curriculums about corporate governance. The Company needs no supervisors. 5. Execution of risk management policies and risk measuring standards: The Company has established the internal control	No major differences

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Implementation Status
Items
Yes No Description
system and related management
procedures and implement in
accordance with the procedures to
lower and prevent any possible risk.
6. Execution of customer policies: The
dedicated department is responsible
for the inquiry and appeal of clients.
7. Liability insurance for the Company’s
directors and supervisors: Liability
insurance has been covered for
directors and supervisors.
I. Please specify the measures adopted by the Company to improve the items listed in the corporate governance
review result from Taiwan Stock Exchange's Corporate Governance Center and the improvement plans for
items yet to be improved.
In accordance with the future standard of corporate governance review, the Company will dedicate to
improve to achieve the standards.
Listed Companies and reasons
Practice Principles for TWSE/GTSM
Difference from Corporate Governance
----- End of picture text -----

List:

(1) Continuing education of directors

Title	Name	Date	Organizer	Course	Hours
Chairman	PHACHARAPON PHAIBOONSUNTORN	2019.06.27	Taiwan Investor Relations Institute	New norms and the trend of Corporate Governance for Directors2019	3
				The strategy of corporate operations and News crisis management	3
Director	SARAYUTH MUNGCHITVITSAVAKORN	2019.06.27	Taiwan Investor Relations Institute	New norms and the trend of Corporate Governance for Directors2019	3
				The strategy of corporate operations and News crisis management

Director	Lin, Chin-San	Lin, Chin-San	2019.06.27	Taiwan Investor Relations Institute	Taiwan Investor Relations Institute	New norms and the trend of Corporate Governance for Directors2019	New norms and the trend of Corporate Governance for Directors2019	3
						The strategy of corporate operations and News crisis management
Director	SU, CHUNG-PEI		2019.08.27	Securities and Futures Institute		Directors and Supervisors (including independent) and chief corporate governance officer Workshop-Taipei		12
Director	LIN, CHIU-I		2019.06.27	Taiwan Investor Relations Institute		New norms and the trend of Corporate Governance for Directors2019		3
						The strategy of corporate operations and News crisis management		3
Director	LAI, CHIN-HO		2019.06.27	Taiwan Investor Relations Institute		New norms and the trend of Corporate Governance for Directors2019		3
						The strategy of corporate operations and News crisis management
Independent Director	LEE, TSUNG-PEI		2019.08.27	Securities and Futures Institute		Evolution from Bitcoin to discuss Enterprise against Corruption andInformation Security Awareness		3
			2019.11.22			Directors' obligations and legal liability. Topic of Anti-Money laundering		3
Independent Director	GUAN, JYH-LIANG		2019.06.27	Taiwan Investor Relations Institute		New norms and the trend of Corporate Governance for Directors2019		3
						The strategy of corporate operations and News crisis management		3
Independent Director	YEH, KUANG-CHOU		2019.10.16	Taipei Foundation Of Finance		Family business succession : Global Trends for Laws and Planning for Family succession.		3
			2019.10.23
						Family business succession : Laws and Taxes for Family succession.
	(2)Liabilityinsurance for the Company’s directors and					supervisors
	Insurant	Insurance Company			Amount		Period
All directors and important staff		AIG Asia Pacific Insurance Pte. Ltd.			US$3 million		Nov. 15, 2019~ Nov. 15, 2020

(3) Liability insurance for the Company’s directors and supervisors

(3)Liabilit	yinsurance for the Compa	ny’s director	s and superviso	rs
Title	Name	Date	Organizer	Course	Hours
Accountant Supervisor	HUANG, MING-CHENG	2019.10.01 to 2019.10.09	Accounting Research and Development Foundation	Issuers securities firm Stock Exchange Accountant SupervisorWorkshop	30
General Manager, Regal Holding Co., Ltd. Taiwan Branch	LI, WEN-HSIUNG	2019.06.12	Securities and Futures Institute	Corporate Governance and Audit Implementation - Board of Shareholders’ Meeting and Board Meetings	6
		2019.12.16	Accounting Research and Development Foundation	New Corporate Governance (2018- 2020)- Audit control Implementation	6

Note 1: Evaluation standards of CPAs’ independence

Refer to Article 47, Certified Public Accountant Act and The Bulletin of Norm of Professional Ethics for Certified Public Accountant of the Republic of China No.10

Ethics for Certified Public Accountant of the Republic of China No.10
Item	Result
1. Having not served a term of more than seven years as the Company’s auditors until the latest attestation.	■Yes	□No
2. Have material financial interest in the audit client.	■Yes	□No
3. Shall not have any inappropriate relationship with the clients.	■Yes	□No
4. Shall make sure his/her assistants truly honest, fair, and independence.	■Yes	□No
5. Shall not audit certification for the Company's financial report where he/she has served in within theprevious twoyears.	■Yes	□No
6. Shall not let others use the CPA title.	■Yes	□No
7. Not a shareholder of the Company and the subsidiaries.	■Yes	□No
8. Hasn’t lent or borrowed funds to or from the Company and the subsidiaries.	■Yes	□No
9. Not invested in the Company or the subsidiaries or shares in financial gains therewith.	■Yes	□No
10. Not employed by the Company or the subsidiaries to perform routine work for which he or she receives a fixed salary	■Yes	□No
11. Not involved with the management of the decision-making of the Company or its subsidiaries.	■Yes	□No
12. Not engaged in any other business that affect his or her independence.	■Yes	□No
13. Not a spouse, lineal relative, direct relative by marriage, or a collateral relative within the fourth degree of kinshipof anymanagerial officer of the Company.	■Yes	□No
14. Not charge any remuneration about the business.	■Yes	□No
15. Not having punishments, or any affair to damage the independence so far.	■Yes	□No

Note 2: Accountancy firm’s declaration

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Note 2: Accountancy firm’s declaration

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4. Organization, responsibilities and operation status of the Compensation Committee

a. Information on members of the Compensation Committee

Title （Note 1）	Name Qualification	Has over five years work experience and following professional qualifications	Has over five years work experience and following professional qualifications	Has over five years work experience and following professional qualifications	Independence Attribute(Note2)	Independence Attribute(Note2)	Independence Attribute(Note2)	Independence Attribute(Note2)	Independence Attribute(Note2)	Independence Attribute(Note2)	Independence Attribute(Note2)	Independence Attribute(Note2)	Independence Attribute(Note2)	Independence Attribute(Note2)	Concurrent compensation committee position in other publicly listed companies	Remarks`(Note 3)`
		Business, Legal Affairs, Finance, Accounting, Lecturer or above in Colleges in Related departments	Holds a license, obtained through national examination, for the position of judge, district attorney, lawyer, accountant, or similar	Business, Legal Affairs, Finance, Accounting or Related Work Experience	1	2	3	4	5	6	7	8	9	1 0
Independent Director	LEE, TSUNG-PEI														2	－
Independent Director	YEH, KUANG-CHOU														0	－
Independent Director	GUAN, JYH-LIANG														0	－

Note 1: Please fill in director, independent director, or other.

Note 2:If the member complies with the following conditions from 2 years before being elected and during his tenure in office, please tick the appropriate corresponding boxes:

(1) Not an employee of the Company or its subsidiaries

(4) Not a spouse, second-degree relative or third-degree relative of those listed in the above three items.

(5) Not a director, supervisor, or employee of a corporate shareholder that directly holds five percent or more

of the total number of issued shares of the company, or that ranks among the top five in shareholdings, or that designates its representative to serve as a director or supervisor of the company under Article 27, paragraph 1 or 2 of the Company Act.( not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.)

(6) Not a majority of the company's director seats or voting shares and those of any other company are controlled by the same person: a director, supervisor, or employee of that other company. ( not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.)

(7) Not the chairperson, general manager, or person holding an equivalent position of the company and a person in any of those positions at another company or institution are the same person or are spouses: a director (or governor), supervisor, or employee of that other company or institution. ( not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.)

(8) Not a director, supervisor, officer, or shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business relationship with the company. (It not apply to hold 20 percent or more and no more than 50 percent of the total number of issued shares of the public company and independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.)

(9) Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides auditing services to the company or any affiliate of the company, or that provides commercial, legal, financial, accounting or related services to the company or any affiliate of the company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof; provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Act or to the Business Mergers and Acquisitions Act or related laws or regulations.

(10) No violations of Article 30 of the Company Act.

b. Organization and Responsibilities of the Compensation Committee
The resolution of establishing the Compensation Committee had been passed by the B.O.D. of the Company on Aug. 28, 2015 and the members of the Compensation Committee are the three independent directors of the Company, Mr. Lee, Tsung-Pei, Yeh, Kuang-Chou, and Guan, Jyh-Liang. The “Organizations and Regulations of Compensation Committee” had also been passed and the responsibilities of the committee are to professionally and objectively evaluate the compensation policies and systems of the Company’s directors and managers in accordance with the laws and regulations and submit suggestions to the board of directors for its reference in decision making. The operation of Compensation Committee is also in accordance with the Article 14-6, Securities and Exchange Act and Compensation Committee Charter of a Company Whose Stock is Listed on the Stock Exchange or Traded Over the Counter. (1) The Compensation Committee consists of 3 members. (2) Current Term: From June 28, 2019 to June 27, 2022.

The Compensation Committee held four meetings in 2019. The qualifications and attendance of the Committee members are shown as follows:

Title	Name	Attendance in Person	By Proxy	Attendance rate in person(%)	Remarks
Convener	LEE, TSUNG-PEI	4	0	100%	re-elected (note)
M e m b e r	YEH,KUANG-CHOU	3	1	80%	re-elected (note)

Title	Name	Attendance in Person	By Proxy	Attendance rate in person(%)	Remarks
M e m b e r	GUAN, JYH-LIANG	4	0	100%	re-elected (note)
Other noteworthy matters: 1. The Board of Directors does not accept or amend Compensation Committee’s suggestions: None. 2. The resolutions of the Compensation Committee which Committee member has oppositions or reservations: None.

Note: The B.O.D. of the Company had re-elected three independent directors, Mr. Lee, TsungPei, Yeh, Kuang-Chou, and Guan, Jyh-Liang, as the Third members of Compensation Committee on June 28, 2019. The term is from June 28, 2019 to June 27, 2022.

5. Performance of Social Responsibilities

ormance of Social Responsibilities
Item	Implementation Status			Difference from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and reasons
	Yes	No	Description
A. Does the Company follow materiality principle to conduct risk assessment for environmental, social and corporate governance topics related to company operation, and establish risk management related policy or strategy? B. Does the Company have a dedicated (or ad-hoc) CSR organization with Board of Directors authorization for senior management, which reports to the Board of Directors? C. Environmental topic 1. Does the Company establish proper environment management systems based on its industrial features? 2. Does the Company endeavor to utilize all resources more efficiently and uses renewable materials which have a low impact on the environment? 3. Does the Company evaluate current and future climate change potential risks and opportunities and take measures related to climate related topics?	V V V V		The BOD of the Company approved Corporate Social Responsibility Best Practice Principles on June 23, 2015.The BOD of the Company approved to revise Corporate Social Responsibility Best Practice Principles on March 13, 2020. The BOD of the Company approved Corporate Social Responsibility Best Practice Principles on March 13, 2020. 1. The Company does not produce massive wastes and pollutants and the manufacturing procedures of products are complied with the relevant laws and regulations of environments. The Company has passed the certifications of ISO9001:2000, BSCI WCA, and Thailand Green Industry. 2. The Company uses all resources efficiently by utilizing ERP systems and emails and reduces the massive usage of papers to lower the impact on the environment. 3. The Company doesn’t evaluate current and future climate change potential risks and opportunities and take measures related to climate	No major differences No major differences No major differences No major differences

Item	Implementation Status	Implementation Status	Implementation Status	Difference from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and reasons
	Yes	No	Description
4. Does the Company collect data for greenhouse gas emissions, water usage and waste quantity in the past two years, and set energy conservation, greenhouse gas emissions reduction, water usage reduction and other waste management policies?	V		related topics. The Company will improve this part in the future. 4. The Company exercises and executes the spirit of reducing carbon footprint voluntarily by saving energy, reducing the emission of carbon and green procurement and is concerning the impact of environmental changes continuingly and established related strategy of environmentalprotection.	No major differences
C. Social Topic 1. Does the Company establish proper management methods and procedures in accordance with the relevant regulations and the international conventions on human rights? 2. Has the Company set up an employee complaint mechanism and proceed with care?	V V		1. The ways that the Company promotes its policies and procedures and communicates with employees are open. The employee brochure is made in accordance with the Labor Law and relevant regulations. 2. The supervisors of departments and the human resource department are responsible for employee complaints. Once receiving the complaint, they shall proceed with care immediately.	No major differences No major differences
3. Does the Company provide a safe and healthy working environment for its employees and organize training on safety and health on a regular basis?	V		3. The Company values the safe and healthy working environment for the employees. The factory management staff check and patrol the working environment regularly. The annual body check is provided to achieve the responsibilities of employees’ safety and health.	No major differences

Item			Implementation Status	Difference from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and reasons
	Yes	No	Description
4. Has the Company established an effective competency development career training program for employees? 5. Does the Company’s product and service comply with related regulations and international rules for customers ’ health and safety, privacy, sales, labelling and set polices to protect consumers’ rights and consumer appeal procedures? 6. Does the Company set supplier management policy and request suppliers to comply with related standards on the topics of environmental, occupational safety and health or labor right, and their implementation status?	V V V		4. The Company organizes annual education training programs for employees according to annual education training calendar to establish effective competency development career for employees. 5. The Company established customer mailbox online and customer service system on official website to protect customers’ equity.	No major differences No major differences No major differences
			6. The Company set up supplier's assessment and management regulations to make sure the quality. Supplier's products have to conform to ISO and comply with environmental protection, occupational safety and health or labor rights policy.
D. Does the Company refer to international reporting rules or guidelines to publish CSR Report to disclose non-financial information of the Company? Has the said Report acquire 3rd certification party verification or statement of assurance?	V		The Company refer to the Rules of Corporate Social Responsibility Best Practice Principles for TWSE/GTSM-Listed Companies and the BOD of the Company approved Corporate Social Responsibility Best Practice Principles on June 23, 2015.The BOD of the Company approved to revise Corporate Social Responsibility Best Practice Principles on March 13, 2020. Didn’t acquire 3rd certification party verification or statement of assurance	No major differences

Item	Item	Implementation Status	Implementation Status	Implementation Status	Implementation Status	Difference from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and reasons
		Yes	No		Description
E. If the Company makes its own corporate social responsibilities principles according to the Rules of Corporate Social Responsibility Best Practice Principles for TWSE/GTSM-Listed Companies, please state the differences: The Company has established the “Corporate Social Responsibilities Principles” according to the Rules of Corporate Social Responsibility Best Practice Principles for TWSE/GTSM-Listed Companies and disclosed on the website. The “Corporate Social Responsibilities Principles” emphasizes that the Company shall exercise the corporate social responsibilities and promote economics, social and environmental and ecological balance and sustainable development, therefore, we will exercise and execute the responsibilitiesgradually.
F. Other important information that helps understand the operation situation in terms of the corporate social responsibilities: Corporate Social Responsibility is the mixture of economic responsibility, legal responsibility, and moral responsibility. Based on the Principles of Ethical Corporate Management, the Company starts with the minor stuff, respect the human rights and employees’ rights, promotes the disclosure and transparency of financial information, strengthen the relationships of stakeholders, protect the equity of consumers, maintain fair competition, and strengthen anti bribery, and prevent corruption. For the purpose to feedback to society and care for vulnerable groups, the Company has also hosted and sponsored charities events in theseyears.
G. A clear statement shall be made if the corporate social responsibilities report of the Company passed the inspection of relevant certification agencies: The Company has passed quality certifications as following: ISO9001:2000 TLS8001-2010 BSCI WCA Certification of Thailand Green Industry
s	of Implementation of IntegrityOperation
	Item	Implementation Status Yes No Description				Difference from the Integrity Operation Practice Principles for TWSE/GTSM-Listed Companies and reasons
			No	Description
	A. Adopt integrity operation policy and scheme 1. Does the Company adopt integrity operation policy approved by the BOD and clarify the integrity operation	V		1. The “Integrity Operation Principles” has been adopted and resolved by the BOD and		No major differences

6. Status of Implementation of Integrity Operation

Item	Implementation Status	Implementation Status	Implementation Status	Difference from the Integrity Operation Practice Principles for TWSE/GTSM-Listed Companies and reasons
	Yes	No	Description
policy in its regulations and external documents and the commitment of board of directors and managers to active implementation? 2. Does the Company establish a risk assessment mechanism against unethical conduct, analyze and assess on a regular basis business activities within their business scope which are at a higher risk of being involved in unethical conduct, and establish prevention programs accordingly at least include preventive measures against the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies Paragraph 2, Article 7? 3. Does the company establish and revise relevant policies which are duly enforced to prevent unethical conduct and provide implementation procedures, guidelines, consequence of violation and complaint procedures in such policies regularly?	V V		approved in Shareholders’ Meeting. The BOD and managerial levels, as good managers, exercise their duties faithfully and execute business based on the principles of integrity. 2. The Company, in accordance with the integrity operation policy, strictly prohibits employees to bribe or take bribes and offer illegal political contributions. The internal auditors shall check the implementation. 3. The Company command employees to behave honestly and promote that they shall comply with Company Act, Securities and Exchange Act, Business Entity Accounting Act, and internal control regulations of the Company, and other relevant regulations and laws of business behaviors in every rally and employee trainings.	No major differences No major differences
B. Implementing integrity management 1. Does the Company assess the integrity record of its business partners and set faithful conduct policies in the terms	V		1. The Company strictly prohibits employees to conduct any dishonest business behaviors. The	No major differences

Item	Implementation Status	Implementation Status	Implementation Status	Difference from the Integrity Operation Practice Principles for TWSE/GTSM-Listed Companies and reasons
	Yes	No	Description
and conditions of its contracts? 2. Has the Company set up exclusively (or concurrently) dedicated units to be in charge of corporate integrity operation and prevent unethical conduct which report to and are supervised by the Board of Directors at least one time a year ? 3. Does the Company work out policies to prevent conflicts of interest and provide proper statement channels?	V V		Integrity Operation Policy has clearly indication. 2. The Company has set up the President’s secretariat as concurrently dedicated units to be in charge of corporate integrity operation and promote the integrity operation policy aggressively. 3. a. The “Integrity Operation Policy” has listed the recusal system for directors. If a director or a juristic person that the director represents is an interested party in relation to an agenda item, when the relationship is likely to prejudice the interest of the Company, that director may express his/her opinion and inquiry, but may not participate in discussion or voting on that agenda item and shall recuse himself or	No major differences No major differences
			herself from the discussion or the voting on the item and may not exercise voting rights as proxy for another director. b. The statement channel is implemented by each department in accordance with its responsibilities and scope, and directly to the supervisor via email.
4. Has the Company established an effective accounting system, internal control system and audit by internal auditors based on the results of	V		4. The accountants of the Company comply with relevant rules and regulations and are audited by independent CPAs as well as	No major differences

Item			Implementation Status	Difference from the Integrity Operation Practice Principles for TWSE/GTSM-Listed Companies and reasons
	Yes	No	Description
assessment of the risk of involvement in unethical conduct, devise relevant audit plans and examine accordingly the compliance with the prevention programs or CPAs to put integrity operation into practice? 5. Does the Company organize internal or external trainings in the integrity of business management regularly?	V		internal auditors. 5. The Company instructs the importance of integrity in newcomer education and also propagandas the main contents and prevention ways of integrity operation to employees irregularly.	No major differences
C. Report System operating status 1. Has the company set specific report and reward system to facilitate the report cannel and assign appropriate specialist accepting to spot the reported object? 2. Has the company set the standard operating procedures and related nondisclosure mechanisms to investigate reported matters? 3. Has the Company set follow-up measures after investigations to protect whistleblowers do not suffer for which he or she reported?	V V V		1. The Company has set up the report mailbox and has smooth report channels. The supervisors of human resource department are responsible for the reported matters. 2. The discovery of dishonest behavior can be reported directly to the relevant supervisor or internal auditor. The relevant information is treated confidentially. After verification, it is true and is punished according to internal regulations and relevant laws. 3. The Company has set measures to protect whistleblowers do not suffer for which he or she reported.	No major differences No major differences No major differences
D. Enhance information disclosure Does the company disclose the information of implementation and results of integritymanagement on its	V		The company has disclosed the information of integrity management on its website and the MOPS	No major differences

Item	Implementation Status	Implementation Status	Implementation Status
	Yes	No	Description
website and the MOPS?
E. If the company develops its own integrity operation rules according to the Integrity Operation Best Practice Principles for TWSE/GTSM-Listed Companies,please state the differences: No difference.
F. Other important information for better understanding of the integrity operation: None.

7. Other Company-established corporate governance rules and regulations:

Major rules and regulations

Query methods for disclosure

Articles of Association
Rules of Procedure for Shareholders’ Meetings
Rules of Procedure for Directors’ Meetings
Regulations of Acquisition or Disposal of Assets
Procedures for Lending Funds to Others
Procedures for Endorsements and Guarantees
Audit Committee Charter
Compensation Committee Charter
Corporate Governance Best Practice Principles
Corporate Social Responsibility Best Practice
Principles
Codes of Ethical Conduct
Ethical Corporate Management Best Practice
Principles
Insider TradingRules

MOPS：
newmops.twse.com.tw
Home > Electronic Books > Shareholders’
meetings or
Home > Summaries> Corporate Governance
Official Website:
www.regaljewelrygroup.com
“Interested Parties”/ “major rules and regulations”

8. Other Important Corporate Governance Information:

a. The material stakeholders of the Company based on its operational attribute: employees, clients, suppliers, investors/shareholders

(1) Interests and rights of employees, care for employees The Company offers diversified ways of communication to let employees able to fully express their opinions in order to maintain a harmonious relationship between employers and employees. In learning development, the Company arranges educational training to elate professional working skills and encourages employees to continue learning and self-growth to protect employees’ rights in accordance with relevant laws and regulations.
(2) Relations with clients

The Company implements the corporate integrity operation in accordance with Codes of Ethical Conduct, Ethical Corporate Management Best Practice Principles, and Corporate Social Responsibility Best Practice Principles and offers clients diversified ways of communication to response clients’ needs.

(3) Relations with suppliers

The Company engages in sustainable development and evaluates suppliers strictly and cooperates with suppliers while requesting them to follow the Supplier Corporate Social Responsibility Code to promote corporate social responsibilities, such as green environmental protection, human rights of labors, morality, hygiene, safety, risk management as well as code of ethics to maintain long and stable cooperate relations.

(4) Rights of investors/shareholders
- The Company has set up the spokesman and disclosed his contact information on the Company’s website. The spokesman is responsible to handle suggestions of shareholders and reply the problems of investors.
- The Company implements the corporate integrity operation in accordance with Codes of Ethical Conduct, Ethical Corporate Management Best Practice Principles, and Corporate Social Responsibility Best Practice Principles. The Company values the relations with investors and hosts institutional investors’ conferences to strengthen timeliness and transparency of information disclosure and protect the rights of investors.
b. Please refer to List 1 of “ 3. The state of the company's implementation of corporate governance, any departure of such implementation from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such difference” for continuing education of directors , liability insurance for the Company’s directors, and continuing education/training related to corporate governance of managers.

Status of Implementation of Internal Control System a. Statement on Internal Control

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b. CPA audit report:

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b. CPA audit report:

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Regulatory Authorities’ Legal Penalties to the Company or Its Employees, and the Company’s Resulting Punishment on Its Employees for Violations of Internal Control System Provisions, Principal Deficiencies, and the State of Any Efforts to Make Improvements in 2018 and as of the Date of this Annual Report: None.
Major Decisions of Shareholders’ Meeting and Board Meetings in 2018 and as of the Date of this Annual Report:
a. Major Resolutions of Shareholders’ Meeting and Implementation Status:

Date	Major Resolutions	Major Resolutions	Implementation Status	Implementation Status
2017.06.22	1. Approved the 2016 Business Report and Financial Report		Completed
	2.Approved theDistributionof 2016 earnings
	3. Approved the Amendment to the Company’s “Proceduresfor Acquisitionor Disposalof Assets”		Revised according to shareholders’ meeting’s resolution
	4. Approved the Amendment to the Company’s “Articles of Association”
	5.Approved theissuance of Restricted Stock Awards		Executing
	6. Re-election of one director to fill the vacancy of the Board of Directors		Completed
	7. Discussion to relieve the non-compete restriction of thenewlyre-elected director
2018.05.28	1. Approved the 2017 Business Report and Financial Report
	2. Approved the Proposal for Distribution of 2017 earnings
	3. Discussion on the Amendment to the Company’s “Articles of Association”		Revised according to shareholders’ meeting’s resolution
2019.6.28	1. 2018 Business Report and Financial Report
	2. Distribution of 2018 earnings
	3. Amendment to the Company’s “Articles of Association”
	4. Amendment to the Company’s “Procedures for Acquisitionor Disposalof Assets”
	5. Amendment to the Company’s “Rules of Procedure forShareholders’ Meetings”
	6. Amendment to the Company’s “Procedures for LendingFunds to Others”
	7. Amendment to the Company’s “Procedures for Endorsements and Guarantees”
	8. Re-elect the 4th term of directors and independent directors
	9. Discussion to relieve the non-compete restriction of the newlyre-elected director
Major Resolutions of the Board of Directors and Implementation Status:
Date		Major Resolutions		Implementation Status
2018.02.26 9thBoard meeting in 3rdTerm		1. Proposal of Business report, financial report 2017 and business plan for 2018		Approved in shareholders’ general meeting in 2018
		2. Proposal of 2017 Employees’ and Directors’ Compensation		Approved in shareholders’ general meetingin

		2018
	3. Proposal of Distribution of 2017 earnings	Approved in shareholders’ general meeting in 2018
	4. Approved the statement of internal control system for year 2017	Completed
	5. Approved the revision of “Organizational Procedures of Compensation Committee”	Completed
	6. Approved the revision of “Procedures of the issuance of Restricted Stock Awards 2017”	Completed
	7. Approved the Company’s and its subsidiaries’ CPA’s public fee review for year 2018	Completed
	8. Approved the renewal of ERP system in Regal Jewelry Manufacture Co., Ltd.	Executing
	9. Approved the time of 2018 general shareholders meetings	Completed the announcement on Feb.26,2018
2018.04.11 10thBoard meeting in 3rdTerm	1. Discussion on the Amendment to the Company’s “Articles of Association”	Approved in shareholders’ general meeting in 2018
	2. Proposal to add new discussion item in the shareholders’ general meeting	Executed and Completed the announcement
2018.05.10 11thBoard meeting in 3rdTerm	1. Approved the manager change and appointment and salary compensation	Executed and Completed the announcement
	2. Approved the appointment of chairman of GIO VAN GOGH (INTERNATIONAL) JEWELRY LIMITED	Completed
	3. Approved to relieve the non-compete restriction of the managers	Executed and Completed the announcement
	4. Approved the financial report of Q1 2018.	Executed and Completed the announcement
2018.08.14 12thBoard meeting in 3rdTerm	1. Approved the financial report of Q2 2018.	Approved and Completed the announcement
	2. Approved to ratify the Company to apply for credit line to E.Sun Commercial Bank	Completed
	3. Approved the establishment of IHQ in Thailand.	Executed and Completed the announcement
2018.11.12 13thBoard meeting in 3rdTerm	1. Approved the financial report of Q3 2018.	Approved and Completed the announcement
	2. Approved the internal auditing proposal of year 2019.	Approved and Completed the announcement
	3. Approved the evaluation of CPA's independence	Completed
	4. Approved the Company to invest and establish Linden Integrated Co., Ltd. through Regal Jewelry	Completed

	Manufacture Co. Ltd
	5. Approved the Company to invest and establish Chaporo Co. Ltd.	Completed
	6. Approved the acquirement Elex Precise Co. Ltd. on behalf of Chaporo Co. Ltd.	Executing
	7. Approved the Company to appoint the juristic person’s representative	Completed
	8. Approved to relieve the non-compete restriction of the newly re-elected directors	Been listed in the discussion item in shareholders’ general meeting in 2019
	9. Approved the application for credit line to Krung Thai Bank Public Company Limited on behalf of Regal JewelryManufacture	Completed
	10. Approved to share the credit line of E.Sun Commercial Bank	Cancelled in the board meeting on March 8, 2019
	11. Approved the endorsements and guarantees for the Company’s subsidiary, Gio Van Gogh (Shenzhen) JewelryLimited
	12. Approved to lending funds to the Company’s subsidiary, Gio Van Gogh (Shenzhen) Jewelry Limited
	13. Approved the related operating procedures of issuance of Restricted Stock Awards	Completed
	14. Approved the related operating procedures of open collective investment accounts for employees.	Completed
	15. Approved the proposal to open account to E.Sun Commercial Bank in Hong Kong	Completed
	16. Approved the revision the summary statement of the current remuneration projects of the directors, independent directors andmanagers ofthe Company.	Completed
2019.03.08 14thBoard meeting in 3rdTerm	1. Approved the Proposal of Business report, financial report 2018 and business plan for 2019	Business report and financial report 2018 has been listed in the ratifications item in shareholders’ general meeting in 2019 while business plan for 2019is executing.
	2. Approved the Proposal of 2018 Employees’ and Directors’ Compensation	Been listed in the report item in shareholders’ general meeting in 2019
	3. Approved the Proposal of Distribution of 2018 earnings	Been listed in the ratifications item in shareholders’ general meeting in 2019
	4. Approved the statement of internal control system for year 2018	Completed

	5. Approved the Company’s and its subsidiaries’ CPA’s public fee review for year 2019	Completed
	6. Approved to cancel the proposal of sharing the credit line of E.Sun Commercial Bank	Completed
	7. Approved to cancel the endorsements and guarantees for the Company’s subsidiary, Gio Van Gogh (Shenzhen) JewelryLimited	Completed
	8. Approved to cancel lending funds to the Company’s subsidiary, Gio Van Gogh (Shenzhen) Jewelry Limited	Completed
	9. Approved to apply the credit line to Bank SinoPac Hong Kong Branch	Executing
	10. Approved to amend the revision of certain articles in the Company’s “Articles of Association”	Been listed in the discussion item in shareholders’ general meeting in 2019
	11. Approved to amend the revision of certain articles in the Company’s “Regulations of Acquisition or Disposalof Assets”
	12. Approved the Revision to the Company’s “Rules of Procedure for Shareholders’ Meetings”
	13. Approved the Revision to the Company’s “Regulations Governing Board of Directors' Meeting Proceedings”.	Been listed in the report item in shareholders’ general meeting in 2019
	14. Approved to re-elect the 4thterm of directors in shareholders’ general meeting in advance	Been listed in the election item in shareholders’ general meeting in 2019
	15. Approved the time of 2019 general shareholders meetings	Completed
	16. Approved the related operating procedures for any shareholder holding 1% or more shares to submit proposals.	Completed
	17. Approved the related operating procedures for any shareholder holding 1% or more shares to write a roster for (independent) director by-election candidates.	Completed
	18. Approved the proposal to add the check authority of official seal user of Bank SinoPac Hong Kong.	Completed
2019.05.13 15thBoard meeting in 3rdTerm	1. Proposal of manager’s appointment and compensation	Completed
	2. Approved to relieve the non-compete restriction of the managers	Completed
	3. Approved the financial report of Q1 2019.	Approved and Completed the announcement
	4. Proposal to amend the revision of certain articles in the Company’s “Corporate Governance Best Practice Principles”	Completed
	5. Proposal to amend the revision of certain articles in the Company’s “Procedures for Lending Funds to Others”	Been listed in the discussion item in shareholders’ general meeting in 2019

	6. Proposal to amend the revision of certain articles in the Company’s “Procedures for Endorsements and Guarantees”	Been listed in the discussion item in shareholders’ general meeting in 2019
	7. Discussion on nomination of the list of candidates of 4th Term of directors and independent directors	Been listed in the candidates’ list in shareholders’ general meeting in 2019
	8. Proposal of removal the non-compete restriction against the newly elected directors	Been listed in the other proposal in shareholders’ general meeting in 2019
	9. Proposal to add new discussion item in the shareholders’ general meeting	Completed the announcement
2019.06.28 1stBoard meeting in 4thTerm	1.Proposalto elect4thtermchairman.	Approved and Completed the announcement
	2. Proposal to appoint 3rdterm Audit Committee’s members
	3. Proposal to establish 3rdterm Audit Committee’s members
	4. Adopt standard operating procedures for handling requests made by directors	Approved and Declared the announcement
2019.08.14 2ndBoard meeting in 4th Term	1.Approved thefinancial report ofQ2 2019	Approved and Declared the announcement
	2. Proposal of Accountant Supervisor change and compensation
	3. Proposal of 2018 Employees’ Compensation	Approved and Completed
	4. Proposal of the Company withdrawal new shares for employeerestricted stocks write offdate	Approved and Completed
	5. Proposal of the Company establish subsidiary	Completed on October 18, 2019.
	6. Proposal of the important subsidiary Jewelry Manufacture Co., Ltd. increase the budget to renew ERP	Executing
	7. Proposal of giving warrant to chairman to change subsidiary’sname
	8. Proposal of cancel resolution to acquire Elex Precise Co.Ltd. onbehalfofChaporo Co.Ltd	Approved and Completed
2019.11.13 3rdBoard meeting in 4th Term	1.Proposalofthefinancial report ofQ32019.	Approved and Completed the announcement
	2. Proposal of the Audit plan 2020
	3. Proposal of the evaluation of CPA's independence	Completed
	4. Set up the Self-Evaluation or Peer Evaluation of the Board of Directors	Approved and Executed
	5. Proposal to increase funds to the Company’s subsidiary, Gio Van Gogh (Shenzhen) Jewelry Limited	Executing
	6. Proposal of the chairman of Regal Innovation Co, Ltd appointment	Approved and Completed
2020.03.13 4thBoard meeting in	1. Proposal of Business report, financial report 2019 and business plan for 2020	Approved and Executed
	2. Proposal of 2019 Employees’ and Directors’ Compensation	Been listed in the report item in
4th Term	3. Proposal of Distribution of 2019 earnings	shareholders’ general meetingin

		2020
	4. Proposal of the statement of internal control system for year 2019	Approved and Completed the announcement
	5. Proposal of the Company’s and its subsidiaries’ CPA’s publicfeereviewforyear 2020	Approved and Declared the announcement
	6. Proposal of the Company withdrawal new shares for employeerestricted stocks write offdate
	7. Proposal to increase funds to the Company’s subsidiary,Regal InnovationCo.,Ltd.	Executing
	8. Proposal of the application for credit line to Sino Pac Bank HongKongBranch
	9. Proposal to amend the revision of certain articles in the Company’s“Articles of Association”	Been listed in the report item in shareholders’ general meeting in 2020
	10. Proposal to amend the Revision to the Company’s “Rules of ProcedureforShareholders’ Meetings”
	11. Proposal to amend “Ethical Corporate Management Best Practice Principles” and “Procedures for Ethical Management and GuidelinesforConduct”
	12. Proposal to amend the Revision to the Company’s “Regulations Governing Board of Directors' Meeting Proceedings”.
	13. Proposal to amend “Corporate Governance Best PracticePrinciples”	Approved and Executed
	14. Proposal to amend “Corporate Social Responsibility BestPracticePrinciples”
	15. Proposal to amend “Procedures for halt and resumption applications”
	16.Proposal to re-elect the 5thterm of directors in shareholders’ general meeting in advance	Approved and Completed the announcement
	17. Proposal of the time of 2020 general shareholders meetings
	18. Proposal of the related operating procedures for any shareholder holding 1% or more shares to submit proposals.
	19. Proposal of the related operating procedures for any shareholder holding 1% or more shares to write a roster for (independent) director by-election candidates.

Major Issues of Record or Written Statements Made by Any Director Dissenting to Important Resolutions Passed by the Board of Directors during 2018 and as of the Date of this Annual Report: None.
Resignation or Dismissal of Chairman, President, and Heads of Accounting, Finance, Internal Audit and R&D during 2019 and as of the Date of this Annual Report:

Title	Name	Effective date	Dismissal date
General Manager, GVG (Shenzhen)	HSU, HSIANG	2014/09/01	2019/05/31
Deputy General Manager, Management/CFO	CHANG, YUNG LIANG	- 2017/11/10	201911/13
Deputy Director, Finance / Accountant Supervisor	CIOU, JIN- SHENG	2017/11/10	2019/04/10
Accountant Supervisor	HUANG, MING- CHENG	2019/08/14	-

E. Information on CPA professional fees 1. Range of Accountants’ Fees

CPA’s FIRM	Name	Name	Inspection period	Remarks
KPMG	LU, LI - LY	KUAN, CHUN-HSIU	Jan. 01, 2019 – Dec. 31, 2019	－

Unit: NT$000

				Unit: NT$00
Fee Item Range		Audit Fee	Non-Audit Fee	Total
1	Under 2 million	－	－	－
2	2 million(included) ~ 4 million	－	－	－
3	4 million(included) ~ 6 million	5,400	－	5,400
4	6 million(included) ~8 million	－	－	－
5	8 million(included) ~ 10 million	－	－	－
6	Over 10 million (included)	－	－	－

When non-audit fees paid to the certified public accountant, to the accounting firm of the certified public accountant, and/or to any affiliated enterprise of such accounting firm are one quarter or more of the audit fees paid thereto, the amounts of both audit and non-audit fees as well as details of non-audit services shall be disclosed:

Unit: NT$000

								Unit: NT$00
FIRM	Name	A u d i t F e e	N o n - A u d i t F e e					Inspection period
			System design	Commercial registration	Human resources	Others	Subtotal
KPMG	LU, LI - LY	5,400						Jan. 01, 2019 – Dec. 31, 2019
	KUAN, CHUN-HSIU

When the FCM changes its accounting firm and the audit fees paid for the financial year in which the change took place are lower than those paid for the financial year immediately preceding the change, the amount of the audit fees before and after the change and the reason shall be disclosed: N/A
When the audit fees paid for the current financial year are lower than those paid for the immediately preceding financial year by 15 percent or more, the amount and percentage of and reason for the reduction in audit fees shall be disclosed: N/A

F. Alternation of CPA: None.

G. The Company’s chairman, general manager, or any managerial officer in charge of finance or accounting matters has in the most recent year held a position at the accounting firm of its CPA or at an affiliated enterprise: None.

H. Transfer & pledge of stock equity by directors, supervisors, managerial officers, and holders of 10% or more of company shares

Changes in shares of Directors, supervisors, managerial officers, and major shareholders

Title	Name	Year 2019	Year 2019	Year 2020 as of the Date ofthisAnnual Report	Year 2020 as of the Date ofthisAnnual Report
		Shareholding Increase/Decrease	Pledged Shares Increase/Decrease	Shareholding Increase/Decrease	Pledged Shares Increase/Decrease
Chairman/ Major shareholder	Solar Jewelers GroupCorp.	－	－	－	－
	Representative: PHACHARAPON PHAIBOONSUNTORN	－	－	－	－
Director	Ausrine MarketingCorp.	－	－	－	－
	Representative: LAI,CHIN-HO	－	－	－	－
Director	Hyperion Trading Co., Ltd.	－	－	－	－
	Representative:SARAYUTH MUNGCHITVITSAVAKORN	－	－	－	－
Director	OrlogGlobal Co.,Ltd.	－	－	－	－
	Representative: LIN,CHIU-I	－	－	－	－
Director	Unique Global Investment Inc.	－	－	－	－
	Representative: LIN,CHIN-SAN	－	－	－	－
Director	CDIB Venture Capital Corporation	－	－	(Note2)
	Representative: YOUNG, KAI-CHARN	－	－
Director	SU, CHUNG-PEI(Note 1)	－	－	－	－
Independent Director	LEE, TSUNG-PEI	－	－	－	－
Independent Director	YEH, KUANG-CHOU	－	－	－	－
Independent Director	GUAN, JYH-LIANG	－	－	－	－
General Manager	LIN, JU-YING	－	－	－	－
Deputy General Manager, Management	CHANG, YUNG-LIANG (Note3)	－	－	－	－
Accountant Supervisor	CHIU,CHIN-SHENG (Note 4)	－	－	－	－
Accountant Supervisor	HUANG, MING-CHENG(Note 5)	－	－	－	－

Note 1: Re-election at general meeting on June 28, 2019 Note 2:Re-election at general meeting on June 28, 2019 Note 3: Resigned on November 13, 2019. Note 4: Resigned on April 10, 2019. Note 5: Assumed office on August 14, 2019

Share transfer with related parties: None.

3. Share pledges with related parties: None.

I. Information on relationships among the top ten shareholders

April 19, 2020; Unit: shares

Name	Shareholding	Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shares Held through Other Parties Shares held	Shares Held through Other Parties Shares held	Name and Relationship between the Company's 10 largest shareholders	Name and Relationship between the Company's 10 largest shareholders	Remarks
	Shares	%	Shares	%	Shares	%	Name	Relationship with representative
Solar Jewelers Group Corp.	13,760,000	35.83%	─	─	─	─	(1) Arianna Investment Co., Ltd. (2)Olivia Global Marketing Co., Ltd. (3) Morning Star Group Corp.	(1) same person (2) first-degree relative (3) first-degree relative	─
Representative: PHACHARAPON PHAIBOONSUNTORN	925,800	2.41%	─	─	2,549,559	6.64%			─
Arianna Investment Co., Ltd.	2,549,559	6.64%	─	─	─	─	(1) Solar Jewelers Group Corp. (2)Olivia Global Marketing Co., Ltd. (3) Morning Star Group Corp.	(1) same person (2) first-degree relative (3) first-degree relative	─
Representative: PHACHARAPON PHAIBOONSUNTORN	925,800	2.41%	─	─	2,549,559	6.64%			─
Cordelia Global Investment Co., Ltd.	1,655,203	4.31%	─	─	─	─	(1) Elemental Creation Inc.	(1) second-degree relative	─
Representative: LIN, JU-YING	244,800	0.64%	─	─	1,655,203	4.31%			─
Hyperion Trading Co., Ltd.	1,463,682	3.81%	─	─	─	─	─	─	─
Representative: SARAYUTH MUNGCHITVITSAVAKORN	248,400	0.74%	－	－	1,463,682	3.81%			─
Ausrine Marketing Corp.	1,276,800	3.32%	─	─	─	─	─	─	─

Name	Shareholding	Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shares Held through Other Parties Shares held	Shares Held through Other Parties Shares held	Name and Relationship between the Company's 10 largest shareholders	Name and Relationship between the Company's 10 largest shareholders	Remarks
	Shares	%	Shares	%	Shares	%	Name	Relationship with representative
Representative: LAI, CHIN-HO	─	─	─	─	─	─			─
Olivia Global Marketing Co., Ltd.	1,276,800	3.33%	─	─	─	─	(1)Solar Jewelers Group Corp. (2)Arianna Investment Co., Ltd. (3)Morning Star Group Corp.	(1) first-degree relative (2) first-degree relative (3) spouse	─
Representative: LIN HUANG, A- YUAN	─	─	160,000	0.42%	1,276,800	3.32%			─
Morning Star Group Corp.	1,148,716	2.99%	─	─	─	─	(1)Solar Jewelers Group Corp. (2)Arianna Investment Co., Ltd. (3)Olivia Global Marketing Co., Ltd.	(1) first-degree relative (2) first-degree relative (3) spouse	─
Representative: LIN, PI-YUAN	160,000	0.42%	─	─	1,148,716	2.99%			─
CDIB Venture Capital Corporation	1,101,000	2.87%	─	─	─	─	(1) CDIB Capital Creative Industries Ltd.	(1) same person	─
Representative: CHIU,TE-HSIN	─	─	─	─	─	─			─
Elemental Creation Inc.	989,123	2.58%	─	─	─	─	(1) Cordelia Global Investment Co., Ltd.	(1) second-degree relative	─
Representative: LIN, CHIN-SAN	160,000	0.42%	─	─	989,123	2.58%			─
CDIB Capital Creative Industries Ltd.	926,000	2.41%	─	─	─	─	(1) CDIB Venture Capital Corporation	(1) same person	─
Representative: CHIU,TE-HSIN	─	─	─	─	─	─			─

Note: If abovementioned juristic person is also a director, the representative of the juristic person is the director or its representative is the appointed man of its juristicperson of first meeting of third-term B.O.D.; the rest of representatives are the authorized sign person of its own juristic person.

J. The total number of shares and total equity stake held in any single enterprise by the Company, its directors and supervisors, managers, and any companies controlled either directly or indirectly by the Company

Dec. 31, 2019 Unit: share; %

Shift in investment	Investment by the Company	Investment by the Company	Investment by directors, supervisors, managers, direct or indirect controlgroups	Investment by directors, supervisors, managers, direct or indirect controlgroups	Combined investment	Combined investment
	Shares	%	Shares	%	Shares	%
Regal Jewelry Manufacture Co., Ltd.	4,549,998	99.99	2	0.01	4,550,000	100.00
GIO VAN GOGH (INTERNATIONAL) JEWELRY LIMITED	5,900,000	100.00	－	－	5,900,000	100.00
Regal Management Solution Co., Ltd.	3,996,000	99.99	－	－	3,996,000	99.99
Chaporo Co.,Ltd.	3,500,000	70.00	－	－	3,500,000	70.00
Regal Innovation Co., Ltd.	2,500,000	100.00	－	－	2,500,000	100.00
Regal Plating Co., Ltd.	127,500	51.00	－	－	127,500	51.00
Linden Integrated Co., Ltd.	245,000	49.00	－	－	245,000	49.00
GIO VAN GOGH (Shenzhen) JEWELRY LIMITED	(Note 1)	100.00	－	－	－	100.00

Note 1: GIO VAN GOGH (Shenzhen) JEWELRY LIMITED is a limited company, so there is no share.

III. Information on Capital Raising Activities

A. Capital and shares
Sources of Capital
a. Process of Capital raising

		Unit: 1,000 shares;NT$000	Unit: 1,000 shares;NT$000	Unit: 1,000 shares;NT$000	Unit: 1,000 shares;NT$000	Unit: 1,000 shares;NT$000	Unit: 1,000 shares;NT$000	Unit: 1,000 shares;NT$000
Year/Month	Issued price (NT$)	Authorized Capital Shares		Paid-in Capital		Remarks
		Shares	Amount (NT$000)	Shares	Amount (NT$000)	Capital sources	Property other than cash offset by the number of shares	Others
Oct., 2014	10			0.001	0.000001	Established	Established	－
		0.001	0.000001
Dec., 2014	10	60,000	600,000	30,000	300,000	Share Exchange	Share Exchange	－
Feb., 2015	25	60,000	600,000	32,000	320,000	Capital increase bycash	－	－
Sept., 2016	83	60,000	600,000	33,920	339,200	Capital increase bycash	－	－
Apr., 2017	66	60,000	600,000	38,160	381,600	Capital increase bycash	－	－
Dec., 2018	0	60,000	600,000	38,500	385,000	new shares for employee restricted stocks	－	－
Aug.,2019	0	60,000	600,000	38,470	384,700	withdrawal new shares for employee restricted stocks	－	－
Mar.,2020	0	60,000	600,000	38,400	384,000	withdrawal new shares for employee restricted stocks	－	－

b. Type of issued shares

	April 19,2020 Unit: share	April 19,2020 Unit: share	April 19,2020 Unit: share	April 19,2020 Unit: share
Type	AuthorizedCapitalShares			Remarks
	Issued Outstanding Shares	Non-issued Shares	Total
Registered Common Shares	38,400,000 (Note 1)	21,600,000	60,000,000	－

Note 1: Including new shares for employee restricted stocks, 240,000 shares c. Information on shelf registration system: Not applicable.

2. Shareholder Structure

. Shareholder Structure	. Shareholder Structure	. Shareholder Structure	. Shareholder Structure	. Shareholder Structure	. Shareholder Structure	. Shareholder Structure
April 19,2020
Shareholder Structure Amount	Governments	Financial institutions	Other institutions	Individuals	Foreign institutions & individuals	Total
Members	－	－	138	7,299	24	7,461
Total shares held	－	－	2,624,142	7,824,257	27,951,601	38,400,000
Percentage	－	－	6.83%	20.38%	72.79%	100%

3. Distribution of Shares

a. Distribution of common shares

Distribution of common shares	Distribution of common shares	Distribution of common shares	Distribution of common shares
April 19,2020
Shares	No. of shareholders	Total Share held	Percentage
1～999	6,303	15,277	0.04%
1,000～ 5,000	895	1,818,523	4.74%
5,001～ 10,000	128	969,000	2.52%
10,001～15,000	38	495,000	1.29%
15,001～20,000	21	394,000	1.03%
20,001～30,000	21	519,000	1.35%
30,001～50,000	13	502,000	1.31%
50,001～100,000	12	740,000	1.93%
100,001～200,000	9	1,435,000	3.74%
200,001～400,000	6	1,785,400	4.65%
400,001～600,000	2	873,000	2.27%
600,001～800,000	－	－	－
800,001～1,000,000	5	4,622,040	12.04%
Over 1,000,001	8	24,231,760	63.10%
Total	7,461	38,400,000	100.00%

b. Preferred Shares: None.

4. List of major shareholders

April 19, 2020 Unit: share

4. List of major shareholders			April 19,2020 Unit: share
Shares Name of majorshareholders	Shares Held	Shareholdings (%)	Nationality or registration place
Solar Jewelers Group Corp.	13,760,000	35.83%	Samoa
Arianna Investment Co., Ltd.	2,549,559	6.64%	Seychelles
Cordelia Global Investment Co., Ltd.	1,655,203	4.31%	Samoa
Hyperion Trading Co., Ltd.	1,463,682	3.81%	Seychelles
Ausrine Marketing Corp.	1,276,800	3.33%	Seychelles
Olivia Global Marketing Co., Ltd.	1,276,800	3.33%	Samoa
Morning Star Group Corp.	1,148,716	2.99%	Seychelles
CDIB Venture Capital Corp.	1,101,000	2.87%	Republic of China
Elemental Creation Inc.	989,123	2.58%	Seychelles
CDIB Capital Creative Industries Ltd.	926,000	2.41%	Republic of China

Information on Market Price, Net Worth, Earnings Per Share, Dividend, and relevant information

Unit: NT$; shares

information					Unit: NT$;shares
Item	Year		Year 2018	Year 2019	Until April 19, 2020
Market Price Per Share	Highest		89.9	57.3	33.75
	Lowest		45.25	27.3	17.15
	Average		59.81	36.83	28.8
Net Worth Per Share	Before distribution		29.05	23.33	22.69
	After distribution		25.05	23.33	22.69
Earnings per share	Weighted average shares		38,160,000	38,160,000	38,160,000
	Earningsper share		5.41	-3.83	1.34
Dividends per share	Cash dividend (Note 2)	Earnings	3	N/A	N/A
		Capital Reserve	－	－	－
	Stock Dividends	Stock Dividends Appropriated from Retained Earnings	－	－	－
		Stock Dividends Appropriated from Capital Reserve	－	－	－
	Accumulated Unappropriated Dividends		0	0	0
Investment return analyses	P/E ratio (Note2)		11.06	-9.61	N/A
	Price-dividend ratio		14.95	-9.61	N/A
	Cash dividend yield (%)		6.69%	-10.3%	N/A

*If shares are distributed in connection with a capital increase out of earnings or capital reserve, further disclose information on market prices and cash dividends retroactively adjusted based on the number of shares after distribution
Note 1: State the highest and lowest market prices for the common stock and calculate the average market price for each year based on the turnover value and volume of each year.
Note 2: Please apply the quantity of stock already issued at the end of the year and specify based on the allocation resolved by the shareholders’ meeting of next year.
Note 3: If it is necessary to make adjustment retroactively due to distribution of bonus shares, please state the earnings per share before and after the adjustment.
Note 4: If the equity securities issuance terms and conditions provide that the stock dividend unallocated in the year may be accumulated until the year in which earnings allocable are generated, please disclose the accumulated stock dividend remaining undistributed until the then year.
Note 5: Price / Earnings Ratio = Average Market Price / Earnings per Share
Note 6: Price / Dividend Ratio = Average Market Price / Cash Dividends per Share
Note 7: Cash Dividend Yield Rate = Cash Dividends per Share / Average Market Price
Note 8: The information of net worth per share and earnings per share should be the latest quarter up to the date of publication of this annual report and reviewed and audited by the CPAs. The rest columns should be filled in annual data up to the date of publication of this annual report

Dividend Policy and Execution Status
Disclose the dividend policy adopted in the Company's Articles of Association, as well as the dividend distributions proposed at the most recent shareholders' meeting.
- a. Dividend Policy in the Company's Articles of Association
  - The Company operates in a market for specific demands and customized products and is in the growth stage. The Board shall prepare the dividend proposal by taking into account the profit of the year, overall development, financial plans, capital need, projection of the industry and the Company's prospects and so on and submit the proposal for the Members' approval. For so long as the shares are traded on the ESM or listed on the TPEx or TSE, if there are profits, in making the profits distribution recommendation, the Board shall set aside out of the profits of the Company for each financial year:
  - (1) a reserve for payment of tax for the relevant financial year;
  - (2) an amount to offset losses incurred in previous years;
  - (3) ten per cent (10%) as reserve ("Statutory Reserve"); and
  - (4) a special surplus reserve as required by the applicable securities authority of the R.O.C. under the Applicable Public Company Rules.

If there should be any remaining profits, subject to the discretion of the Directors, after combining all or part of the accumulated undistributed profits in the previous years and the reversed special surplus reserve, the combined amount shall be allocated as dividends to the Members in proportion to their shareholdings. Subject to the Law and the Applicable Public Company Rules and unless otherwise resolved by the Board and the Members, and after having considered the financial, business and operational factors of the Company, the dividends shall not be less than fifty per cent (50%) of profit after tax of the relevant year. The distribution may be made by way of cash dividends or by way of stock dividends or a combination thereof, provided that, the cash dividends shall not be less than thirty per cent (30%) of the total amount of dividends payable.

The dividends’ distribution in 2018 is as following:

Unit: NT$

	Unit: NT
Items	Year 2018
Earnings pershare	NT$5.41
Cashdividends pershare	NT$4.003
Amount ofcashdividends	NT$154,000,000
Dividend Payout Ratio	73.99%

Note: The recorded date of distribution of retained earnings was set on July 11, 2018 and the distribution was completed on August 24, 2018.

b. Proposal recommending distributing dividends

Because of net loss after tax 2019 NT$146,304,000 and deficit to be offset NT$81,256,000, on March 13, 2020, the Board of Directors approved no distribution. Proposal will list in shareholders’ general meeting in June 17, 2020.

c. Forecast of the major change of dividends’ policy: None.

Impact of planned issuance of bonus shares on the Company’s business performance and earnings per share:
- The Company’s net loss after tax 2019 is NT$146,304,000 and deficit to be offset is NT$81,256,000.The proposal of distribution of earnings in 2019 has been resolved by B.O.D. on March 13, 2020 and will be no planned issuance of bonus shares.
Remuneration to employees, directors, and supervisors (the Company needs no supervisors) a. Rate or range on remuneration to employees, directors, and supervisors, as set forth in the Company’s Articles of Association:
- According to the Article 14.4 of the Articles of Association, if there is profit for the year, the Company shall set aside no less than one percent (1%) of the pre-tax profit as employee compensation and no more than three percent (3%) of the pre-tax profit as compensation for the Directors. However, if the Company has accumulated losses in previous years, it shall reserve an amount of the pre-tax profit for offsetting the accumulated losses. The employee compensation referred to in this Article 14.4 shall be distributed in the form of stock or cash and may be distributed to employees of the Company's Subsidiaries, if such employees satisfy certain qualifications as may be resolved by the Board from time to time.
- b. The estimation basis of the remuneration amount to employees, directors, and supervisors for the current period; the estimation basis of the number of shares of stock dividend to employees; and the accounting treatment of the discrepancy, if any, between the actual distributed amount of employees’ stock bonus and estimated figure thereof:
- There will be no distribution resolved by B.O.D on March 13, 2020 because of the Company’s deficit to be offset is NT$81,256,000. There is no discrepancy.
- c. Information on any approval by the board of directors of distribution of compensation:
- (1) The amount of any employee compensation distributed in cash or stocks and compensation for directors and supervisors. If there is any discrepancy between that amount and the estimated figure for the fiscal year these expenses are recognized, the discrepancy, its cause, and the status of treatment shall be disclosed: There will be no distribution resolved by B.O.D on March 13, 2020 because of the Company’s deficit to be offset is NT$81,256,000. There is no discrepancy.
- (2) The amount of any employee remunerations distributed in stocks, and the size of that amount as a percentage of the sum of the after-tax net income stated in the parent company only financial reports or individual financial reports for the current period and total employee remuneration: Not applicable.
- d. The actual distribution of employee, director, and supervisor remuneration for the previous fiscal year (with an indication of the number of shares, monetary amount, and stock price, of the shares distributed), and, if there is any discrepancy between the actual distribution and the recognized employee, director, or supervisor remuneration, additionally the discrepancy, cause, and how it is treated: The Company distributed remunerations to employees NT$2,353,999 and to directors NT$0. The Company’s actually distributed number of employees and directors’ remunerations does not differ from the recognized one.
Share repurchases: None
B. Section on Corporate Bonds: None.
C. Preferred Share: None.
D. Global Depository Receipts (GDR): None.
E. Subscription of warrants for employees: None.

F. Subscription of new shares for employee restricted stocks has been approved by Financial Supervisory Commission (Ref. No.1060048873) 1.

F. Subscription of new shares for employee restricted stocks has been approved by Financial Supervisory Commission (Ref. No.1060048873) 1.	F. Subscription of new shares for employee restricted stocks has been approved by Financial Supervisory Commission (Ref. No.1060048873) 1.
April 19,2019
Type of new restricted employee shares (Note 1)	First grand new restricted employee shares
Date of the effective registration	Dec. 21, 2017
Issued date(Note 2)	Dec. 14, 2018
Number of new restricted employee shares issued	340,000 shares
Issuedprice	distributed gratuitously
New Restricted Employee Shares as a Percentage ofSharesIssued	0.89%
Vesting conditions of new restricted employee shares	Based on individual performance assessment. If the employees are still on duty and the personal performance of the year are at least or more than A as well as the employee has followed the relevant working rules of the Company, the ratio for the employees to acquire new restricted employee shares is as follows: One year after issuance: 0% of acquired shares; Two years after issuance: 50% of acquired shares; Three years after issuance: 50% ofacquired shares.
Restricted rights of new restricted employee shares	1. Those who have voluntarily quit their jobs, dismissed, repatriated, retired, paid a leave of absence, or transferred to a related corporation within three years from the date of acquisition, have previously been allocated a share that has not yet been acquired, and the Company will redeem the shares gratuitously. 2. Employees whose personal performance of any year are below A within three years from the date of acquisition have previously been allocated a share that has not yet been acquired, and the Company will redeem the shares gratuitously. 3. Allotment of interest in the vested period: The Company shall distribute to employees gratuitously. 4. If the employee violates this Article, subparagraph 7 before meeting the venting conditions, the Company will redeem the shares gratuitously. 5. Those who are unable to continue to serve due to physical disability caused by occupational disasters have previously been allocated a share that has not yet been acquired. From the effective day of resignation, the employee, considered that he/she has met the venting conditions, can gain 50% of shares in accordance of the regulations of which the Company will redeem another 50% of the shares gratuitously. 6. For those who die caused by occupational disasters or general, the employee who have previously been allocated a share that has not yet been acquired, upon his/her death, after the day of happened, his/her heir considered that the employee has met the venting conditions, can acquire the shares after completing legal procedures and supply relevant documents in accordance with relevant provisions on inheritance of civil law and “Regulations Governing theAdministrationofShareholderServices of Public Companies.”
Custodystatus of new restricted employee shares	custodial trust of the shares
Measures to be taken when employees fail to meet the vesting conditions	Those who have voluntarily quit their jobs, dismissed, repatriated, retired, paid a leave of absence, or transferred to a related corporation within three years from the date of acquisition, have previously been allocated a share that has not yet been acquired, the Company will redeemthe shares gratuitously.
Total number of already-issued new restricted employee sharesredeemed orbought back	100,000 shares
Number of Released New Restricted Employee Shares	0

NumberofUnreleased NewRestricted Shares	240,000 shares
Ratio of Unreleased New Restricted Shares to Total Issued Shares (%)	0.89%
Impact to shareholders’ equity	The impact on earnings per share for 2017-2021 is approximately NT$0.02, NT$0.28, NT$0.50, NT$0.19 and NT$0.01. The impact on the Company's earnings per share is limited, so there is no significant impact onshareholders'equity.
Note 1: the columns could be adjusted based on the times of issuance Note 2: if the issued dates are different, they should be listed on different columns. Note 3: number of issued shares: 38,400,000.

Names and acquisition status of managerial officers who have acquired new restricted employee shares and of employees who rank among the top ten in the number of new restricted employee shares acquired, cumulative to the date of publication of the annual report.

April 19, 2019 Unit: NT$

Unit:	NT$				p	p	p	p	,	,	,	,
	Title	Name	Number of new restricted employee shares acquisition	Ratio of new restricted employee shares acquisition	Released New Restricted Shares				Unreleased New Restricted Shares
					Number of released New Restricted Shares	Issued price	Issued amount	Ratio of released New Restricted Shares to Total Issued Shares	Number of Unreleased New Restricted Shares	Issued date	Issued amount	Ratio of Unreleased New Restricted Shares to Total Issued Shares
Manager	CEO/General Manager	LIN, JU-YING	18 2	0.4 7	0	distributedgratuitously	-	0	182	distributedgratuitously	-	0.47
	Deputy General Manager, Sales	LIN, CHIU-I
	Deputy General Manager, Production	SARAYUTH
	General Manager, Regal Holding Co., Ltd. Taiwan Branch	LI, WEN- HSIUNG
Employee	Assistant, CEO	HUANG,JUNG- SHIAN	58	0.1 5	0	distributedgratuitously	-	0	58	distributedgratuitously	-	0.15
	Assistant, Vice Chairman	PAN,PIN- SHENG
	Auditor Supervisor	WONG HON FEI
	Finance Director	NARISSA KIEATBUNYAR IT

G. Issuance of new shares due to acquisition of shares of another company: None.
H. Implementation of fund usage plan: None.

V. Overview of Business Operations

A. Description of the business

1. Description of the business

a. Scope of business

The Company is a holding company and the major subsidiary, Regal Jewelry Manufacture Co., Ltd., has the actual operating function. Regal Jewelry Manufacture Co., Ltd. focuses on the design, manufacture, and sales of jewelry and accessories. Regal Plating Co., Ltd. focuses on the jewelry plating.

b. Operational proportion

Unit:NT$000;%

Year Major products	Year 2018	Year 2018	Year 2019	Year 2019
	Amount	%	Amount	%
design, manufacture, and sales ofjewelryand accessories	2,100,901	71.75	1,432,918	79.20
Jewelry plating	827,268	28.25	376,379	20.80
Total	2,928,169	100	1,809,297	100

c. Current product items

The Company designs, manufactures, and sales jewelry, such as pendants, rings, wristbands, earrings, bracelets, necklaces, cufflinks, and pins, made of 925 sterling silver, 9k to 24k gold, and brass and alloy.

d. New products and services to be developed

In the past, people are used to treat jewelry as meaningful products for inheritance or holiday souvenirs. The more expensive the jewelry is, the more meaningful it is for people. However, with the change of fashion trends, jewelry is evolved into a product that is personalized, trend-oriented, and people’s expectations. The Company always values the skills of manufacturing jewelry and continuously innovates new prospects. In addition to accumulating experience and knowledge in manufacturing jewelry, the Company participates in major jewelry fairs and seizes the trends of international markets by media, such as newspapers and magazines in order to manufacture trend-oriented and personalized products. The directions of future products’ development are as following:

i. Fashionable products: silvers, pendants, rings, wristbands, earrings, bracelets, and necklaces that meet with the trend of the future. Develop convertible combination personalized jewelry, new metal jewelry style, and products of setting-stone-on-wax series.
ii. Themed products, like silver, earrings, necklaces, and bracelets.
iii. Brand cooperation: through authorization of brands, co-design and manufacture featured jewelry products and distribute sales in Asia markets.

iv. Strategic cooperation: Cooperate with different types of downstream clients to increase the sales channels.
e. Own brand : The Company accumulated the fashion tendency about jewelry for many years and developed own brands to provide fashion jewelry productions series by catching target audience and market positioning. We also use unique design style, unique brand image, warm customer service and channel partners’ cooperation to build loyal customers of our company’s brand.
Overview of the Industry
a. Current status and development of the industry
(1) Overview of the jewelry industry

In early days, jewelry was positioned as a rare, precious, and unique culture property. The jewelry not only symbolizes status and wealth, but also carries with human’s emotions and thoughts. However, for modern customers, using jewelry to beautify life has becoming a fashionable way. Wearing jewelry is not only represented personal style, fashion, and trends, but also with practical and aesthetic. Recently, with the rotation of the era wheel and popularity of mobile technology, the jewelry industry has well market development. The profits of jewelry brands are mostly from low price products with designs instead of precious gems products with high value. Therefore, to gaining a price advantage for profit is crucial for jewelry brands. The brand shall have not only uniqueness and high-quality image but also the price-set capabilities to attract general consuming market. In the global jewelry markets, the competitions between small and major participants are fierce. The major participants make sure their long-term status in the jewelry market by some critical strategies (such as strategical acquisition and mergers, products innovation, partnerships, joint ventures, and expansion of territory.) The most important strategy is to build jewelry brands by means of cooperation or mergers and acquisitions to enhance added value.

(2) Development status of jewelry brands.

Euromonitor data shows global jewelry market scale has reached 356.4 billion in 2018, the estimation of 2020, global jewelry market scale will reach 398.3 billion. Global jewelry market divided into global jewelry brand, luxury multi-brand operator, regional jewelry retailer and jewelry manufacturer. The jewelry market appeared highly dispersed.

	Global jewelry brand	Luxury Multi-brand Operator	Regional jewelry retailer	Jewelry manufacturer
Amount	10-20	10-20	1000	Over 10 thousand
Brands	Tiffany Cartier Bvlgari Pandora	Richmond Hermes LVMH	Amor Signet Chow Tai Fook	Most in China, India and Southeast Asia

In the report of Credence Research, North America is expected to be the fastest growing market. Among them, the young consumer groups (such as the millennial generation)

who newly came out of the society and the middle-class consumer groups will become important promoters of the growth of the jewelry industry. The millennial generation who comes into youth period gradually was born from 1980 to 1990 (Wikipedia, 2019). They have not only the strong consumer power but also high degree of independence and autonomy (Hawkins and Mothersbaugh, 2012). While pursuing life quality and enjoying life instantly, they have high sense about brands and fashion (Morton, 2002). According to the research of Bain & Company in 2015, the total number of millennial generations in China, India, and America are about 900 million and the total incomes are about US$8 trillion. The huge income brings enormous opportunities (Olya Linde, 2016). Compared to Chinese markets which has the similar Chinese culture with Taiwan and the rising economic level, according to National Bureau of Statistics in China, retail sales of gold, silver and jewelry above designated number in 2017 was 297 billion (Renminbi, increased 5.6%). It shows strong Chinese jewelry consumption because the needs of middle-class consumers are improved to stimulate the growth of retail sales of mainstream jewelry. It indicates that consumers have begun to pay attention to factors such as improving their quality of life, cultural literacy and personal taste after they have achieved considerable standards of income.

b. the links between the upstream, midstream, and downstream segments of the industry supply chain

Fine jewelry industry is one of the long historic industry. The chain of industry is pretty mature and the chain can be divided into upstream: raw material and equipment suppliers that supply the precious metals and gems for jewelry production, and production manufacture equipment for stone setting; midstream: design and manufacturers, mainly focus on jewelry designs, components, and mold manufacturing, automated process equipment, and the follow-up production and sales; downstream: distributors, mainly through the global and regional brands to enter the retails in order to sale to consumers. The Company is a jewelry design, manufacture, and sales company that belongs to midstream. The Company introduced various materials from upstream raw material suppliers, such as gold, silver, and platinum and then after the process of designing, molding, casting, stamping, grinding, stone setting, soldering, polishing, plating, and packing, finish products will be delivered to the downstream distributors to sale products to customers in need. The relations between the up, middle and down streams of the Company's industry is shown as following:

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c. Development trends of products
(1) Customize craft arts

For design and manufacture of products, the Company values the skills of jewelry manufacture and the nature of products is mainly based on metal casting and hand-set stone, including pendants, rings, wristbands, earrings, bracelets, necklaces, cufflinks, and pins. In the future, besides continuously accumulating experience and knowledge of jewelry manufacture, the Company will make products more personalized and customized by combining aesthetic designs and craft art skills as a basis for constantly innovation.

(2) Focus on design features

With the change of consumption habits, the young people nowadays prefer personalized and refined products which are sophisticated, small, delicate, not over-designed, and complied with invigorating colors. The whole piece of jewelry that are more vivid and eye-catching simplified styles are more attracted to working women. Fashionable jewelry that emphasizes design senses and personal tastes cater to the mid and high-end consumer purchase intention. Therefore, the emphasis on designing the jewelry can give consumers a lively, interesting, fashionable and expensive atmosphere, and combine jewelry with life to exude personal taste.

(3) Leading fashion trends

The predication of fashion trends and accuracy and immediacy of information acquisition are relatively important in jewelry boutique industry, in order to offer clients important basis for the latest product selection and to enhance the tightness of supply and demand between the two parties, so as to maintain good relations and interaction. The Company

collects information of jewelry and accessories by jewelry fairs and fashion newsletters, fashionable products, such as glue crystal products, bead jewelry that can be changed at will, new metal jewelry styles and wax on stone styles, etc... The Company plans new design drawings every year and introduce new products for customers to choose every quarter and feedbacks customers the latest information based on the principle of customization.

d. Competition

The company is in the fashion industry, the product changes quickly and the style is various. Although there are many manufacturers of jewelry, most of them are small processing factories, and most of them are based on imitating the products that cannot lead the trends. However, the company avoids highly competitive consumer markets, focusing on a small number of customized niche markets. In addition to producing refined jewelry, the Company also provides customized service. The Company introduces design drawings for customers to choose and produced by master craftsmen with exquisite craftsmanship. For example, the company is favored by internationally renowned jewelry boutiques, and the rose-gold series and K-gold products are the best examples. Therefore, the manufacturers without foresight of design abilities, exquisite craftsmanship, and flexibilities of producing skills are difficult to survive in competition. Therefore, as far as the Company is concerned, there is still room for growth in the future.

Overview of the technologies and its research and development work
a. Technical levels and Research development of business

Tradition jewelry industry is highly dependent on artificial technology industry, has complex procedures, long production time, and varying product quality and other characteristics. The process begins with designing, designers draw out the style images of ideas, manufacture the jewelry molds by handmade, and then, pressing, casting, stamping, grinding, stone setting, soldering, polishing, plating, and packing. The Company combines traditional craftmanship and technology to satisfy customers’ requests. From the initial design, 3D models were created using advanced 3D computer graphics to communicate with customers, reduce manual work time, and use 3D printing of jewelry wax molds before casting and other processes. In terms of production process, the Company has also improved a number of manufacturing technologies and present exquisite and good quality jewelry by lead the industry's work methods and professional and technical personnel. By above various technologies, the company can get cooperation opportunities with internationally renowned brands.

At present, there are more than 300 personnel in the R&D department, of which about 100 designers and pattern makers related to product design and development. The Company has strong creative design energy, which is an important competitive niche for the company to

expand the market. In the future, the Company will continue to train designers to develop more distinctive products and continue to invest resources to research and improve production process technology and equipment as future growth momentum.

b. R&D expenses during the current fiscal year as of the Date of this Annual Report

xpand the market. In the future, the Company will continue to train designers to develop ore distinctive products and continue to invest resources to research and improve roduction process technology and equipment as future growth momentum. R&D expenses during the current fiscal year as of the Date of this Annual Report	xpand the market. In the future, the Company will continue to train designers to develop ore distinctive products and continue to invest resources to research and improve roduction process technology and equipment as future growth momentum. R&D expenses during the current fiscal year as of the Date of this Annual Report	xpand the market. In the future, the Company will continue to train designers to develop ore distinctive products and continue to invest resources to research and improve roduction process technology and equipment as future growth momentum. R&D expenses during the current fiscal year as of the Date of this Annual Report	xpand the market. In the future, the Company will continue to train designers to develop ore distinctive products and continue to invest resources to research and improve roduction process technology and equipment as future growth momentum. R&D expenses during the current fiscal year as of the Date of this Annual Report
Unit: NT$000; %
Year Item	Year 2018	Year 2019	2020, as of the Date of this Annual Report
R&D Expenses	79,543	70,286	18,538
Revenue	2,928,169	1,809,297	506,290
R&D Expenses to Revenue %	2.72	3.88	3.66%

c. technologies and/or products successfully developed for recent years:
The Company has enhanced productions design and development and applications for intellectual property rights.
Long- and short-term business development plans
a. Short-term development plans
(1) Strategy:
- i. Familiar with market pulsations, lead the trend, develop multi-featured products
- ii. Optimize R&D technical team, enhance design process level, increase added value of products
- iii. Strengthen customization abilities, provide a full range of diversified customer needs, enhance customer adhesion.
(2) Target:
- i. Fashionable products: develop a full range of jewelry that meets the trend of the future

ii. New materials products: prompt light luxury jewelry’s products.

iii. Brand cooperation: co-design and manufacture featured jewelry by brand authorization and arrange agency and distributors in Asia market
iv. Marketing strategy cooperation: Cooperate with channel customers, formulate different marketing cooperation models and increase sales channels
(3) Research and development situation
i. Increase product developing abilities, combine aesthetic and craftsmanship skills, provide unique and more personalized products to satisfy the needs of one-stop for different customers
ii. Continuously improve the design capabilities of more advanced products and more sophisticated molds to enhance product yield and diversification and to meet customer needs through advanced proofing equipment.
iii. Improve the development of process equipment and tooling equipment for medium

and high-end products to improve process technology, shorten production time, improve product quality to reduce production costs.

iv. Dedicate to apply for patents of jewelry products and structure designs and develop high value-added intellectual property rights
b. Long-term development plans

The Company continuously innovates the competitiveness of product design craftsmanship to lead the market trends. In addition to deepen products developments and designs, the Company focuses on enhancing the added value of products that are oriented to customers and consumers. Also, in addition to maintain existed clients’ business and continuously promote ODM business, the Company enhances the relationships with clients by different strategy operation modes.

The managing team and whole staff of the Company will continuously make the efforts, overcome every possible challenge of managing environment, enhance business levels, such as process and production and sales management by managing concepts of enthusiasm, achievement, responsibility, teamwork, inspiration. In the face of future changes in the overall market, we will focus on and continue to deepen the core technology of jewelry design, enhance the added value of products, and continue to enhance the overall competitiveness, growth and profitability, and bring more feedbacks to shareholders.

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==> picture [244 x 231] intentionally omitted <==

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

Passion
Wisdom
Cherish RH Sustainable
Forever Management
Philosophy
Create
Fashion
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B. Analysis of the market and the production and marketing situation

1. Market analysis

a. Sales areas of major products

Unit: NT$000; %

Year Sales Area	Year 2018	Year 2018	Year 2019	Year 2019	Until April 19, 2020	Until April 19, 2020
	Amount	(%)	Amount	(%)	Amount	(%)
Domestic	`2,204,549`	`75.29`	`1,105,299`	`61.09`	`381,269`	`65.37`
Overseas	`723,620`	`24.71`	`703,998`	`38.91`	`202,021`	`34.63`
Total	`2,928,169`	`100.00`	`1,809,297`	`100.00`	`583,290`	`100.00`

b. Market shares

The major product of the Company is HS code 7113 (Articles of jewelry and parts thereof, of precious metal or of metal clad with precious metal. Note1) and 7117(IMITATION JEWELLERY Note2). Thailand’s jewelry and accessories exports has reached US$4120,000,000., total amount has decreased 4.50% than the previous year which affected by global economy and U.S. -China trade war in 2019. The net sales of the Company reached US$ 60,000,000., the proportion of exports that do not include domestic sales is 1.46%.

Note1:711311 Article of jewelry and parts thereof of silver, whether or not plated or clad with other precious metal.711319 Article of jewelry and parts thereof of other precious metal, whether or not plated or clad with precious metal. 711320 Imitation

jewelry of clad with precious metal and parts thereof of it.

==> picture [454 x 141] intentionally omitted <==

Note2:711711Cuff-links and studs of base metal ,whether or not plated with precious metal.711719Imitation jewelry, nes, of base metal, whether or not plated with precious Metal. 711320 Of base metal clad with precious metal.

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c. Demand and supply conditions for the market in the future and the market's growth potential During the process of branding, the jewelry industry is also facing challenges by the modern technology development and differences of consuming types (Van Gelder, 2005).
(1) Convenience of Technology- the dominance of modern virtual channels in jewelry market With the growing popularity of modern mobile technology and the Internet, the development of online virtual channels lets the jewelry market no longer only use simple offline physical channels in the past. In the past, offline physical channels dominated mainly because most of customers relied on physical channels to purchase jewelry. With the advancement of times and technology, online virtual channels will be in the state of rapid growth. Customers who can use technology well will more intend to buy jewelry online. Most brands have advantages in easily paying functions, returning policies, and customer service which are provided by electronics retailers. While doing the structure of jewelry brands, the corporation must gain an important competitive advantage and differentiate it from competitors to enhance competitiveness and brand equity for jewelry brands.
(2) Change of consuming types- counterfeit products invade in the jewelry market Problems of counterfeit products are worthy of attention in the jewelry industry (Olsen, JE, Granzin, KL, 1992; Carty, 1994). While the supply sides downsize the cost of production, the price advantages of product can be raised naturally, and it promotes customers can easily acquire products to satisfy their own interests. However, in the market where information asymmetry, online virtual channels have concerns about purchasing. Whenever there are counterfeit or imitate brands, customers are hard to distinguish, which leads them to distrust online virtual channels and products’ qualities. Besides, the invasion of counterfeit products in jewelry shall not be underestimated. When customers have limited budget, in order to pursue of great utility and satisfaction, they will make more adjustments in the allocation of their resources. Even if consumers are unable to distinguish between counterfeit products and real products, they will increase their willingness to purchase counterfeit products.
(3) The disadvantage of the image of the source countries - the sorrow of emerging countries

In the supply chains of jewelry, products are mainly manufactured by emerging countries’ OEM and sold through brands. In the long run, profits of brands are much larger than OEM foundries. If OEM foundries want to have more profits, they need to create additional value by establishing brands. However, in the past, products made by emerging countries were considered low-quality and counterfeit products. For those OEM foundries which want to establish jewelry brands, this is at a disadvantage. The image of source countries will hinder the actual sales growth of jewelry and damage the original brands’ values (Ko et.al, 2009).

The source countries of the jewelry brands on the market are mostly new countries with sophisticated craftsmanship and fashionable design. Customers can ensure products’ qualities, looks, and design styles by what they recognized brands’ countries image. Therefore, while establishing jewelry brands, OEM foundries in emerging countries will face the impact of source countries’ images and huge challenges of customers’ doubts. d. Competitive niche

(1) Quality and reputation: The products sold by the Company have undergone strict checks and have undergone rigorous safety and inspection of heavy metal content. In addition, for the plant environment, production process and labor safety, the project is also subject to the third-party notary unit appointed by the customer to obtain various certifications. The Company has been deeply involved in the European and American markets for many years, the product quality and company reputation has also been recognized and certified by well-known customers and parties in Europe and America.
(2) Professional design and R&D team: The major clients of the Company are mostly international brands and each brand has different characteristic of product, such as popularity, practicality, personalization and diversification. Therefore, the Company is on the top of fashion in order to cater the fashion trends. In addition to focus on business marketing development, the Company also made efforts to cultivate professional design R&D teams. Therefore, the Company has the ability to independently develop products. The professional designers are responsible for product design by achieving professional divisions of labor in order to be closer to the market trend; o gather market and clients’ information continuously; the Company positively participates in global major jewelry fairs to collect information to grasp the trend. Thus, the products designed by the Company can always meet the trends of the market and needs and preferences of clients, which is beneficial to improve the abilities of customization.
(3) Exquisite craftsmanship: The Company designs various exquisite styles by seizing the market trends and meeting customers’ preferences. With a large number of skilled craftsmen and masters, they create products with artistic aesthetics with its exquisite craftsmanship, and the quality is excellent, so it is deeply loved by customers.

(4) Flexible manufacture abilities: Because the market peers are mostly produced in a single material, and the Company has the advantage of flexible production, it can be diversified according to different product attributes. Whether it is silver, copper, or K gold, it can be manufactured and can be created different styles according to customers’ needs, which have a plus effect on the Company's competitiveness.
(5) Customized comprehensive integration service: The major clients of the Company are all international brands, which are concerned about designs and qualities. In addition to provide customers the market fashion trends at any time, the Company can seize customers’ needs on every phase, quickly complete customized design drawings for customers to choose and pattern making, and then produce quickly. Full service in one stop is the advantage of the Company; therefore, we can maintain a good interaction with our customers for a long time and the qualities of products are deeply trusted by the customers.
e. Positive and negative factors for future development, and the company's response to such factors
(1) Positive factors
i. Influence of epidemic
Although our company is affected by the epidemic recently, our company had well
fundamental, we made full preparations and countermeasure at the beginning of the epidemic. We strengthened our internal fundamental, and made a crisis into a favorable turn. Waiting for the market get back on track. Compared with other small competitors, under the pressure of the epidemic, they are forced to close. It will be our advantage after the epidemic because of competitors will reduce and weaken. The clients also have to face the epidemic of the market. Most of our clients are leaders with strong strength and high survival rate of the markets. Although the market is slowing down recently, many clients's employees still work from home and cooperate with us to develop new products. We hope that once the market is back, we can seize market share. In the other hand, the clients had more depanded on our Company because of other suppliers couldn't afford it. The Company is also cooperating and assisting actively. We are waiting for the market get back on track and enhancing competitiveness to grow market share.

ii. Full service in one stop

The Company has completely manufacture abilities of jewelry, from designing to pressing, casting, stamping, grinding, stone setting, soldering, polishing, plating, and packing. Therefore, the Company is more flexible and can quickly complete customized design drawings and pattern making, and then produce. At the same time,

the Company takes into account the quality to meet the needs of customers. That is the reason that the Company has become a supplier of internationally renowned brands.

iii. R&D staff are familiar with industry skills and have strong R&D capabilities

Jewelry boutique industry is closely related to fashion and is quite sensitive to popularity, design, and personalization of products. Therefore, the Company positively cultivates designers, who are in charge of products design. At the same time, the Company collects massive business information and participates in global major jewelry fairs to seize market pulsations and clients’ information, so as to enhance the customization ability and provide rich design and market trends to meet customer needs and preferences.

iv. Maintain good cooperation relationships with internationally renowned brands

The major clients of the Company are all internationally renowned brands and every regional brand, and the Company is able to quickly complete customized demands for clients; therefore, the Company has established stable relationships with the clients, which are helpful to expand the business.

(2) Negative factors and Responses
i. Price fluctuation of raw materials

As the main production materials of the jewelry industry are precious metals, the price is subject to fluctuations in international market conditions, which easily affects production costs and quotations, thus creating operational risks. Response:

When the Company undertakes clients’ orders, the quotations will be after referring to the most recent raw material market price to reduce the risk of raw material cost change. In addition, the Company will also monitor the raw material market and adjust the safety stocks in a timely manner in response to market trends in order to meet the risk of fluctuations in the prices of raw materials.

ii. Increase of labor costs

Jewelry boutique industry is a labor- and skill-intensive industry. Skilled master craftsmen are not easy to train. After the increase of basic wage of Thailand in 2013, along with the improvement of Thailand’s economy and the increased demands of job markets, it has exerted certain pressure on the Company’s operation.

Responses:

Due to the jewelry industry still emphasizes on craftsmanship texture by handmade, the Company has divided the manufacture procedures into 8 major parts and introduced automated production and improved manufacture procedures in some production processes. By appropriate skills separations, it can reduce the dependency of craftsmen in order to lower the risks of increasing salary.

iii. Sales are centralized

The biggest client of the Company is now the leading brand in jewelry boutique markets and its products are beloved by customers and its revenues increase year by year. The Company is an important supplier to this client, which has led to the Company's sales centralization.

Response:

In addition to the biggest client, the Company has long-term relationships with other major European and American clients. The company has sufficient design energy, comprehensive services, can meet the needs of various clients, has a good interaction relationship, has formed a fixed supply chain, and has been recognized for its product quality. However, considering the better growth momentum in the future, it will be based on existing customers. To expand new clients and new markets to reduce the risk of sales concentration.

Major usage and manufacturing processes for main products
a. Major usage

a. Major usage	a. Major usage
Major products		Usage
Silver, brass, alloy, gold	Necklaces, pendants, earrings, brooch, bangles bracelets, charms, rings, cufflinks, etc.	Fashion jewelry accessories are used to match the clothing and style. They are combining people’s wealth, culture and thoughts, enriching their material and mind, and at the same time both practical and aesthetic.

b. manufacturing processes

The Company has divided the manufacture procedures into 8 major parts, as following:

==> picture [85 x 56] intentionally omitted <==

==> picture [579 x 223] intentionally omitted <==

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

Casting
Stone setting
Grinding Polishing Plating Packing
Soldering
Stamping
----- End of picture text -----

3. Supply situation for major raw materials:

Major raw materials	Major suppliers	Supplycondition
silver	Supplier A,Supplier B,Supplier E,Supplier K,Supplier F	Well
gold	Supplier B,Supplier C,Supplier F	Well
gems	Supplier D, L, H, M, O, P	Well

4. The lists of major suppliers and clients

a. A list of any suppliers and clients accounting for 10 percent or more of the Company's total procurement amount in either of the 2 most recent fiscal years, the amounts bought from (sold to) each, the percentage of total procurement (sales) accounted for by each, and an explanation of the reason for increases or decreases in the above figures.

Unit: NT $ 000 ; %

								Unit: NT$000;%	Unit: NT$000;%	Unit: NT$000;%	Unit: NT$000;%
Year 2018				Year 2019				Until March31,2020
Name	Amount	Ratio of annual net purchase	Relationship with the issuer	Name	Amount	Ratio of annual net purchase	Relationship with the issuer	Name	Amount	Ratio of annual net purchase	Relationship with the issuer
Supplier A	577,875	43.28	Nil	Supplier A	195,473	20.43	Nil	Supplier A	67,074	27.08	Nil
Supplier B	159,937	11.98	Nil	Supplier B	182,370	19.06	Nil	Supplier B	35,345	14.27	Nil
Others	597,281	44.74	Nil	Others	578,856	60.51	Nil	Others	145,259	58.65	Nil
Total	1,335,093	100		Total	956,699	100		Total	247,678	100

Explanation of the reason that the same client accounting for 10 percent or more of the Company's total procurement amount in the 2 most recent fiscal years:

Supplier B was established in 2012 and is principally engaged in manufacture and sale of raw materials of precious metals(99.99% gold bars and silver particles) and has obtained the quality certification of the London Bullion Market Association. In 2018, 2019, the Company's major supplier received a total of 159,937,000 and 195,473,000, accounting for a total of 11.98% and 20.43% of the net purchase ratio respectively. The Company has been working with the Supplier B for a long time. The main reason for purchasing silver raw materials for production is because of its high quality and reasonable price. Therefore, the Company has long-term cooperation with the Supplier B to maintain a stable relationship.

b. A list of any suppliers and clients accounting for 10 percent or more of the Company's total sales amount in either of the 2 most recent fiscal years, the amounts sold to each, the percentage of total sales accounted for by each, and an explanation of the reason for increases or decreases in the above figures

list of any suppliers and clients accounting for 10 percent or more of the Company's total sales amount in either of the 2 most recent cal years, the amounts sold to each, the percentage of total sales accounted for by each, and an explanation of the reason for increases decreases in the above figures	list of any suppliers and clients accounting for 10 percent or more of the Company's total sales amount in either of the 2 most recent cal years, the amounts sold to each, the percentage of total sales accounted for by each, and an explanation of the reason for increases decreases in the above figures	list of any suppliers and clients accounting for 10 percent or more of the Company's total sales amount in either of the 2 most recent cal years, the amounts sold to each, the percentage of total sales accounted for by each, and an explanation of the reason for increases decreases in the above figures	list of any suppliers and clients accounting for 10 percent or more of the Company's total sales amount in either of the 2 most recent cal years, the amounts sold to each, the percentage of total sales accounted for by each, and an explanation of the reason for increases decreases in the above figures	list of any suppliers and clients accounting for 10 percent or more of the Company's total sales amount in either of the 2 most recent cal years, the amounts sold to each, the percentage of total sales accounted for by each, and an explanation of the reason for increases decreases in the above figures	list of any suppliers and clients accounting for 10 percent or more of the Company's total sales amount in either of the 2 most recent cal years, the amounts sold to each, the percentage of total sales accounted for by each, and an explanation of the reason for increases decreases in the above figures	list of any suppliers and clients accounting for 10 percent or more of the Company's total sales amount in either of the 2 most recent cal years, the amounts sold to each, the percentage of total sales accounted for by each, and an explanation of the reason for increases decreases in the above figures	list of any suppliers and clients accounting for 10 percent or more of the Company's total sales amount in either of the 2 most recent cal years, the amounts sold to each, the percentage of total sales accounted for by each, and an explanation of the reason for increases decreases in the above figures	list of any suppliers and clients accounting for 10 percent or more of the Company's total sales amount in either of the 2 most recent cal years, the amounts sold to each, the percentage of total sales accounted for by each, and an explanation of the reason for increases decreases in the above figures	list of any suppliers and clients accounting for 10 percent or more of the Company's total sales amount in either of the 2 most recent cal years, the amounts sold to each, the percentage of total sales accounted for by each, and an explanation of the reason for increases decreases in the above figures	list of any suppliers and clients accounting for 10 percent or more of the Company's total sales amount in either of the 2 most recent cal years, the amounts sold to each, the percentage of total sales accounted for by each, and an explanation of the reason for increases decreases in the above figures	list of any suppliers and clients accounting for 10 percent or more of the Company's total sales amount in either of the 2 most recent cal years, the amounts sold to each, the percentage of total sales accounted for by each, and an explanation of the reason for increases decreases in the above figures
Unit: NT$000;% Year 2018 Year 2019 Until March31,2020 Name Amount Ratio of annual net sales Relationship with the issuer Name Amount Ratio of annual net sales Relationship with the issuer Name Amount Ratio of annual net sales Relationship with the issuer ClientD 2,103,410 71.83 Nil ClientD 1,078,378 59.60 Nil ClientD 311,099 61.45 Nil ClientA 200,160 6.84 Nil ClientA 188,412 10.41 Nil ClientA 59,172 11.69 Nil Other 624,599 21.33 Nil Other 542,507 29.99 Nil Other 136,019 26.86 Nil net sales 2,928,169 100.00 net sales 1,809,297 100.00 net sales 506,290 100.00
Year 2018				Year 2019				Until March31,2020
Name	Amount	Ratio of annual net sales	Relationship with the issuer	Name	Amount	Ratio of annual net sales	Relationship with the issuer	Name	Amount	Ratio of annual net sales	Relationship with the issuer
ClientD	2,103,410	71.83	Nil	ClientD	1,078,378	59.60	Nil	ClientD	311,099	61.45	Nil
ClientA	200,160	6.84	Nil	ClientA	188,412	10.41	Nil	ClientA	59,172	11.69	Nil
Other	624,599	21.33	Nil	Other	542,507	29.99	Nil	Other	136,019	26.86	Nil
net sales	2,928,169	100.00		net sales	1,809,297	100.00		net sales	506,290	100.00

Client A is a well-known jewelry brand in French. It has its own brand and design, manage, and sales team that has the abilities to design different series of products. It has sales channels, both physical and e-commerce, in French and European Union’s areas.

Client D is internationally well-known fashion boutique and started business with the Company from 2014. The Company is one of the major suppliers of the client. In 2019, the major reason that cause decrease in net sales is client’s inventory adjustment.

5. Production volume for the 2 most recent fiscal years

oduction volume for the 2 most recent fiscal years	oduction volume for the 2 most recent fiscal years	oduction volume for the 2 most recent fiscal years	oduction volume for the 2 most recent fiscal years	oduction volume for the 2 most recent fiscal years	oduction volume for the 2 most recent fiscal years	oduction volume for the 2 most recent fiscal years
Unit: thousandpcs/ NT$000
Year Mainproducts	Year 2018			Year 2019
	Capacity	Yield	Value	Capacity	Yield	Value
Jewelry and Accessories	19,112	10,440	1,822,080	8,251	7,152	1,278,088

Note: Because of the diversities of products with various production processes, it shows the overall production capacities of the Company.

Cause of the Changes: In first half of 2019, the Company adjust manpower because of client’s inventory adjustment. The average capacity has decreased 56.83% than the previous year. The yield has decreased 31.49% and the output value also has decreased 29.85% than the previous year.

6. Volume of units sold for the 2 most recent fiscal years

olume of units sold for the 2 most recent fiscal years	olume of units sold for the 2 most recent fiscal years	olume of units sold for the 2 most recent fiscal years	olume of units sold for the 2 most recent fiscal years	olume of units sold for the 2 most recent fiscal years	olume of units sold for the 2 most recent fiscal years	olume of units sold for the 2 most recent fiscal years	olume of units sold for the 2 most recent fiscal years	olume of units sold for the 2 most recent fiscal years
Unit: thousandpcs/ NT$000
Year Volume Mainproducts	Year 2018				Year 2019
	Domestic		Overseas		Domestic		Overseas
	Volume	Value	Volume	Value	Volume	Value	Volume	Value
Jewelry and Accessories	8,704	2,204,549	5,367	723,620	3,943	672,675	4,728	698,589

Cause of the Changes: In 2019, domestic volume was affected by client’s inventory adjustment. There is no major changes in overseas volume of units sold in 2019 compared to 2018.

C. The number of employees for the 2 most recent fiscal years

	Unit:person;%	Unit:person;%	Unit:person;%	Unit:person;%
	Year	Year 2018	Year 2019	As of the Date of April 19, 2020
Employee Number	Managerial staff	7	20	21
	General Staff	923	659	552
	Production staff	2,732	2,319	1,980
	Total	3,662	2,980	2,553
Average Age		30.07	31.49	31.28
Average Seniority		4.03	5.2	5.08
Education Distribution Percentage	Ph. D	0	0.03	0.04
	Master	0.27	0.34	0.43
	College	12.86	10.91	12.73
	High School	21.11	24.83	25.03
	Below High School	65.76	63.89	61.77

D. Disbursements for environmental protection
According to laws and regulations if it is required to apply for a permit for installing anti-pollution facilities, or permit of pollution drainage, or to pay anti-pollution fees, or to organize and set up an exclusively responsible unit/office for environmental issues, the description of the status of such applications, payment or establishment shall be made:
- Regal Plating Co., Ltd. has obtained the approval of the competent authority to the production of electroplating. Regarding the discharge of wastewater to enterprises with wastewater recycling business license, the Company has not caused any significant adverse impact on the company's financial business due to violation of environmental protection laws and regulations.
Describing the process undertaken by the Company on environmental pollution improvement for the 2 most recent years and up to the date of publication of the annual report. If there had been any pollution dispute, its handling process shall also be described: None.
Total losses (including damage awards) and fines for environmental pollution for the 2 most recent years and up to the date of publication of the annual report, and an explanation of the measures and possible disbursements to be made in the future: None.

E. Labor relations

List any employee benefit plans, continuing education, training, retirement systems, and the status of their implementation, and the status of labor-management agreements and measures for preserving employees' rights and interests:
a. List any employee benefit plans, continuing education, training, retirement systems, and the status of their implementation, and the status of labor-management agreements and measures for preserving employees' rights and interests
(1) Welfare measures for employees:
- Welfare measures for employees are including year-end bonus, uniforms, wedding gifts and funeral condolence payments, year-end banquet, birthday gift, and full attendance bonus. In accordance with laws, the Company also provides social insurance fund, provident fund, compensation fund and annual leave. For the health of employees, welfare measures also include annual health check.
(2) Career Development and Training for Employees:
- The Company is constantly making effort to the goal of sustainable development and maintain market competitiveness based on corporate culture of integrity. With perfect education and training plans, each colleague can continuously improve work performance, develop self-potency, achieve the win-win goal of enterprise development and self-growth, and provide various professional on-the-job education according to various functions and developments in order to cultivate a wealth of professional skills.
(3) Retirement System and Its Implementation: all are complied with related laws and regulations.

(4) Labor-management agreements and measures for preserving employees' rights and interests:
Each regulation is complied with local labor laws and regulations and the Company values two-way communications with employees and set up the opinion box. So far, there are no major labor disputes. The Company will constantly strengthen the communication and coordination of employers and employees and will make efforts welfare measures to promote the harmony of the relationships with employers and employees in order to dismiss the possibility of disputes.
(5) Codes of conduct or ethics
i. Dutiful to the job, follow the Company's rules and regulations, accept the reasonable commands of supervisors at all levels, have a high degree of willingness to work, cannot be perfunctory, pay attention to the quality of work; supervisors at all levels should also kindly guide the employees. The report on the position should be reported level by level in principle.
ii. At work, employees shall be active, gregarious and enterprising spirit, with a forwardlooking vision; the implementation of duties should be realistic and must not be dragged or delayed for no reason. During work hours, employees may not leave the job without approval.
iii. In terms of behavior, self-esteem, self-respect, self-discipline; honest spirit, frugal habits, modest and courteous attitude, respect others, respect yourself.
iv. Do not arbitrarily read documents, correspondence, technology, business and other information that are not managed by you.
v. Without the written consent of the Company, employees shall not leak, tell, give, transfer, or publish to the public the information of business secrets. Without the written content of the Company, employees shall not operate or engage in related or similar business of the Company by themselves or third party. Rights and obligations to employment and confidentiality are regulated by “Employment Contract” and “Confidentiality Contract” of the Company.
vi. Employees must not accept kickbacks or other illegal interests due to their convenience in their positions. Employees may not use authorities to make their own or others.
vii. Personal salary is classified information and shall not leak on purpose or ask others’ salary.
viii. Employees shall not bring ammunition, knives and guns, hazardous items, prohibited products, or anything that has nothing to do with production, into the working spaces. Without approval, employees shall not bring public property off the Company.
ix. Employees shall follow the laws and regulations related to labor safety and hygiene and regulations of the Company and maintain the safety and hygiene and tidy of the working places. Employees shall prevent theft, fire, or other natural disasters.

(6) Insider Trading Rules

The Company has established insider trading rules and included in the internal control systems. In order to lower the risk of insider trading, the responsible unit shall notify relevant colleagues and supervisors irregularly and remind them of any major information that needs to be disclosed according to law and inform them of relevant regulations. They can be familiar with internal policy from the official website.

All directors, supervisors, managers and employees who are informed of important internal information due to their identities, occupations or controls shall practice loyalty and duty-taking obligations as a good manager. With high degree of self-discipline and prudence, they shall strictly abide by relevant regulations of the relevant competent authorities on the handling, disclosure and confidentiality of major information.

(7) Working environment and protective measures for employees’ personal safety
i. Improve the environment and maintenance of the environment condition
Re-design and re-decorate the working environment from time to time and regularly maintain various equipment to create a more comfortable and safe office environment.
ii. Safety Education

Annual education course on firefighting and emergency response drills can minimize personal and property damage in the event of an emergency.

iii. Hygiene Control
Implement environmental clean-up and sterilization, implement waste sorting system, avoid mosquito breeding and bacterial spread, and ensure a healthy working environment.
List any loss sustained as a result of labor disputes in the most recent two fiscal years, and up to the date of publication of the annual report, disclose an estimate of losses incurred to date or likely to be incurred in the future, and indicate mitigation measures being or to be taken. If the loss cannot be reasonably estimated, make a statement to that effect: None.

F. Important contracts

1. RJM

RJM
Nature	Contracting Party	Commencement and expiration dates	Major contents	Restrictive clauses
Insurance	Export-Import Bank of Thailand	July 1, 2019 - June 30, 2020	Domestic and overseas sales insurance	N/A

2. RGP

2. RGP
Nature	Contracting Party	Commencement and expiration dates	Major contents	Restrictive clauses
Supplier	RJM	Jan. 10, 2017 – Dec. 31, 2019	Plating	N/A

VI. Financial Standing

A. Concise consolidated balance sheets and statements of comprehensive income for the past 5 fiscal years

Concise Consolidated Balance Sheet- IFRS

Unit: NT$000

								Unit: NT$000
Year Items			Most Recent 5-Year Financial Information (Note 1)					Until 2020Q1
			Year 2015	Year 2016	Year 2017	Year 2018	Year 2019
Current assets			1,001,889	747,998	1,250,950	1,291,923	1,525,397	1,102,657
property, plant and equipment			338,867	321,620	333,261	347,093	348,046	330,068
Intangible assets			13,896	11,870	8,762	33,594	40,364	37,122
Otherassets			22,650	27,038	28,912	31,779	33,526	30,831
Totalassets			1,377,302	1,108,526	1,621,885	1,704,389	1,960,998	1,513,760
Current liabilities	BeforeDistribution		321,024	423,592	216,269	423,592	843,256	428,223
	After Distribution		435,504	538,072	216,269	538,072	843,256	428,223
Non-currentliabilities			47,656	44,335	68,991	89,673	70,729	72,549
Total liability		Before Distribution	365,359	492,583	309,585	492,583	913,985	500,772
		After Distribution	479,839	607,063	309,585	607,063	913,985	500,772
Equity attributable to owners ofparent			746,201	682,583	992,546	1,118,254	890,176	865,977
Share capital			320,000	339,200	381,600	385,000	384,700	384,000
Capital surplus		Before Distribution	170,160	418,370	433,262	418,370	428,182	428,882
		After Distribution	170,160	418,370	433,262	418,370	428,182	428,882
Retained earnings		Before Distribution	214,116	221,057	261,935	221,057	17,998	69,223
		After Distribution	99,636	106,577	261,935	106,577	17,998	69,223
Otherequityinterest			(33,898)	(40,893)	28,481	9,264	59,296	(16,128)
Treasury shares			-	-	-	-	-	-
Non-controllinginterests			34,030	60,584	136,756	261,378	156,837	147,011
Total equity		Before Distribution	743,167	1,129,302	1,232,429	1,129,302	1,960,998	1,513,760
		After Distribution	628,687	1,014,822	1,232,429	1,014,822	1,960,998	1,513,760

Information sources: Consolidated financial reports audited by CPA in 2015, 2016, 2017, 2018, 2019 and 2020 Q1.

Note 1: As to the date of publication of the annual report, after the resolution of the BOD on March 13,2020, the earning distribution of 20120 will be no distribution and proposal will list in shareholders’ general meeting in June 17, 2020.

2. Concise Consolidated Statement of Comprehensive Income

Concise Consolidated Statement of Comprehensive Income- IFRS

Unit: NT$000

						Unit: NT$0
Year Items	Most Recent 5-Year Financial Information (Note)					Until 2020 Q1
	Year 2015	Year 2016	Year 2017	Year 2018	Year 2019
Operatingrevenue	2,259,618	2,197,116	2,149,774	2,928,169	1,809,297	506,290
Grossprofit(loss)from operations	638,808	686,066	660,462	875,305	226,172	120,001
Net operatingincome(loss)	317,712	350,573	341,471	486,270	(103,998)	42,191
Non-operating income and expenses	21,443	995	(28,591)	18,122	(6,850)	30,021
Profit (loss) from continuing operations before tax	339,155	351,568	312,880	504,392	(110,848)	72,212
Profit (loss) from continuing operations	219,561	252,304	223,155	367,406	(118,370)	54,395
Loss from discontinuingoperations	-	-	-	-	-	-
Net Profit(loss)	219,561	252,304	223,155	367,406	(118,370)	54,395
Other comprehensive income,net	(39,464)	(9,151)	8,985	39,536	78,209	(89,654)
Total comprehensive income	180,097	243,153	232,140	406,942	(40,161)	(35,259)
Profit (loss), attributable to owners ofparent	189,441	188,578	127,007	206,394	(146,304)	51,225
Profit (loss), attributable to non- controllinginterests	30,120	63,726	96,148	161,012	27,934	3,170
Comprehensive income, attributable to owners ofparent	151,865	180,682	133,833	239,144	(79,151)	(25,433)
Comprehensive income, attributable to non-controlling interests	28,232	62,471	98,307	167,798	38,990	(9,826)
Earningsper share	5.96	5.80	3.51	5.41	(3.83)	1.34

Information sources: Consolidated financial reports audited by CPA in 2015, 2016, 2017, 2018, 2019 and 2020 Q1.

3. CPAs and Their Opinions for Most Recent 5-Years

Year	CPAs’ Firm	Name of CPA	Opinions
Year 2015	KPMG	Mrs. LU,LI - LY and Mrs. KUAN,CHUN-HSIU	No withholdingopinions
Year 2016	KPMG	Mrs. LU,LI - LY and Mrs. KUAN,CHUN-HSIU	No withholdingopinions
Year 2017	KPMG	Mrs. LU,LI - LY and Mrs. KUAN,CHUN-HSIU	No withholdingopinions
Year 2018	KPMG	Mrs. LU,LI - LY and Mrs. KUAN,CHUN-HSIU	No withholdingopinions
Year 2019	KPMG	Mrs. LU,LI - LY and Mrs. KUAN,CHUN-HSIU	No withholdingopinions

Note: The Company reorganized in 2014 and as a holding company that applied for listing in Taiwan, prepared consolidated financial statements for the most recent two years of audited by CPA.

B. Most Recent 5-Year Financial Analysis

1. Financial Analysis on Consolidated Financial Statements- IFRS

	Year (Note 1)	Most recent 5-year Financial analysis	Most recent 5-year Financial analysis	Most recent 5-year Financial analysis	Most recent 5-year Financial analysis	Most recent 5-year Financial analysis	Until
		Year	Year	Year	Year	Year	2020 Q1
Items(Note 2)		2015	2016	2017	2018	2019
Capital	Debt ratio	43.35	32.96	30.37	19.05	46.61	33.08
Structure
(%)	Long-term fund to fixed assets ratio	230.25	231.07	338.86	397.48	300.83	306.90
Liquidity (%)	Current ratio Quick ratio Interestguarantee(times)	182.36 118.55 36.20	233.00 145.24 41.39	295.32 226.96 54.07	549.56 415.39 716.45	180.89 145.88 -25.6	257.50 190.00 21.98
	Average collection turnover(times)	6.12	5.89	7.6	9.62	3.23	3.28
	Average collection days	60	62	48	38	113	111
Operating Ability	Average inventoryturnover(times) Averagepayment turnover(times) Average inventoryturnover days	4.24 16.71 86	3.94 21.04 93	4.19 27.58 87	6.79 40.39 54	5.19 29.14 70	5.29 32.06 69
	Fixed assets turnover(times)	6.44	6.65	6.57	8.61	5.21	1.49
	Total assets turnover(times)	1.81	1.77	1.57	1.76	0.99	1.34
	Return on total assets(%)	18.05	20.81	16.69	22.13	-6.46	3.13
	Return on total stockholders' equity (%)	32.58	33.12	23.84	29.29	-9.76	5.28
Profitability	PBT topay-in capital %	105.99	103.35	81.99	131.00	-28.81	18.81
	Net income to sales (%)	9.72	11.48	10.38	12.55	-6.54	10.74
	EPS(NT$)	5.96	5.80	3.51	5.41	-3.83	1.34
	Cash flow ratio(%)	47.47	101.79	89.59	98.55	-43.15	51.23
Cash flow %	Cash flow adequacyratio(%)	61.94	64.89	91.39	134.62	88.36	91.34
	Cash reinvestment ratio(%)	20.41	Note 4	14.94	8.5	-47.21	18.28
Leverage	Operatingleverage Financial Leverage	5.27 1.03	1.14 1.03	1.12 1.02	1.12 1.00	0.44 0.96	1.25 1.09

Changes that exceed 20% in the past two years and explanation for those changes:
Debt ratio: The revenue is not indubitable as expectancy and clients deferred the payment so that the Company had working capital shortage and used bridging finance. It’s the reason that ratio has increased than previous year.
Long-term fund to fixed assets ratio: The ratio has decreased than previous year because of deficit this year.
Current ratio and Quick ratio: The ratio has decreased than previous year because of the increase of current debt.
Interest guarantee: The ratio has decreased than previous year because of income before tax plus interest is negative number.
Average collection turnover (times): The ratio has decreased than previous year because of decreased in sales.
Average collection days: The days has increased than previous year because of decreased in sales and clients deferred the payment.
Average inventory turnover (times): The ratio has decreased than previous year because of decreased in sales.
Average inventory turnover days: The days has increased than previous year because of decreased in sales.
Fixed assets turnover (times): The ratio has decreased than previous year because of decreased in sales.
Return on total assets (%):The ratio has decreased than previous year because of revenue is not indubitable as expectancy and operating costs not low enough.
11.Return on total stockholders' equity (%):The ratio has decreased than previous year because of deficit this year.
12EPS (NT$): :The amount has decreased than previous year because of deficit this year
13Cash flow ratio (%):The ratio has decreased than previous year because of cash used in operating activities and revenue is not indubitable as expectancy.
14Cash flow adequacy ratio(%):The ratio has decreased than previous year because of the cash dividend in 5 years increased NT$297,531,000 than previous term.
15Cash reinvestment ratio (%):The ratio has decreased than previous year because of cash used in operating activities and revenue is not indubitable as expectancy.

100

Note 1: Information sources: Consolidated financial reports audited by CPA in 2015, 2016, 2017, 2018, 2019 and 2020 Q1.

Note 2: As to the date of publication of the annual report, after the resolution of the BOD on March 13,2020, the earning distribution of 20120 will be no distribution and proposal will list in shareholders’ general meeting in June 17, 2020.

Note 3: The data has not been annualized.

Note 4: The calculation formulas of financial analysis are as followings:

Capital Structure
(1) Debt ratio = Total Liabilities / Total Assets
(2) Long-term fund to fixed assets ratio= (Shareholders' Equity + Long-term Liabilities) / Net Properties
Liquidity
(1) Current ratio = Current Assets / Current Liabilities
(2) Quick ratio = (Current Assets–Inventories - Prepaid Expenses) / Current Liabilities
(3) Interest guarantee (times) = Earnings before Interest and Taxes / Interest Expenses
Operating Performance
(1) Average collection turnover = Net Sales / Average Trade Receivables
(2) Average collection days = 365 / Receivables Turnover rate
(3) Average inventory turnover = Cost of Sales / Average inventory
(4) Average payment turnover = Cost of Sales / Average Trade Payables
(5) Average inventory turnover days = 365 / Inventory Turnover rate
(6) Fixed assets turnover = Net Sales / Average Net Properties
(7) Total assets turnover = Net Sales / Average Total Assets
Profitability
(1) Return on total assets = {Net Income + Interest Expenses * (1 - Effective tax rate)} / Average Total Assets
(2) Return on total stockholders' equity = Net Income / Average Shareholders' Equity
(3) Net income to sales = Net Income / Net Sales
(4) Earnings per share = (Net Income–Preferred Stock Dividend) / Weighted Average Number of Share Outstanding
Cash flow
(1) Cash flow ratio = Net Cash Provided by Operating Activities / Current Liabilities
(2) Cash Flow Adequacy Ratio =Five-year sum of cash from operations / Five-year sum of capital expenditures, inventory additions, and cash dividends.
(3) Cash flow reinvestment ratio = (Cash Provided by Operating Activities - Cash Dividends) / (Gross Plant+ Investment + Other Assets + Working Capital)
Leverage
(1) Operating leverage = (Net Sales - Variable Cost) / Income from Operations
(2) Financial leverage = Income from Operations / (Income from Operations - Interest Expenses)

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C. Audit committee's report for the most recent year's financial statement

Regal Holding Co., Ltd.

Audit Committee’s Review Report

The Board of Directors has prepared the Company’s 2019 Business Report, Consolidated Financial Report and proposal for allocation of profits. The CPA firm of KPMG was retained to audit the Company’s Consolidated Financial Report and has issued an audit report relating to the Financial Statements. The aforesaid Business Report, Financial Reports and profit allocation proposal have been reviewed and determined to be correct and accurate by the Audit Committee members of the Company. According to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act, we hereby submit this report.

REGAL HOLDING CO., LTD.

Chairman of the Audit Committee: LEE, TSUNG-PEI

March 13[th] , 2020

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D. Consolidated financial statements with subsidiaries for the most recent year, audited by CPA:
Please refer to the attachments.
E. A parent company only financial statement for the most recent fiscal year, certified by a CPA, but not including the statements of major accounting items:
The Company’s Consolidated financial reports was audited by CPA.
F. Financial Difficulties of the Company and its subsidiaries for the most recent year and as of the Date of this Annual Report: None.

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VII. Review and analysis of the Company's financial status and performance, and a list of risks

A. Financial status

Comparative Analysis of Financial Position

Unit: NT$000

			Unit: NT$000	Unit: NT$000
Item	Year 2018	Year 2019	Difference
			Amount	%
Current assets	1,291,923	1,525,397	233,474	18.07
Non-current assets	412,466	435,601	23,135	5.61
Total assets	1,704,389	1,960,998	256,609	15.06
Current liabilities	235,084	843,256	608,172	258.70
Non-current liabilities	89,673	70,729	(18,944)	(21.13)
Total liabilities	324,757	913,985	589,228	181.44
Common stock	385,000	384,700	(300)	(0.08)
Capital surplus	433,262	428,182	(5,080)	(1.17)
Retained earnings	309,256	17,998	(291,258)	(94.18)
Other Equities	(9,264)	59,296	68,560	(740.07)
Non-controlling Equities	261,378	156,837	(104,541)	(40)
Total shareholders’ equities	1,379,632	1,047,013	(332,619)	(24.11)
Analysis and description will be given only if the increase/decrease in ratio reaches 20% or exceeds NT$10 million: 1. The main reason of the increase of current liabilities in 2019 is working capital shortage and use the banks’ short-term loan, NT$687,305,000. 2. The main reason of the increase of non- current liabilities is the subsidiary distributed cash dividend and decreased in profits which reflected as deferred income tax liabilities decreased. 3. The main reason of the decrease of retained earnings is distributed cash dividend NT$154,000,000 and had deficit NT$118,370,000. 4. The increase of other equities is because of Thailand Bath appreciation against the Taiwan dollar, which caused the exchange differences on translation of foreign financial statements increased NT$58,107,000. 5. The increase of non-controllingequityis because the dividend distribution of sub-subsidiaryin 2019.

2. Major Impact on Financial Performance during most recent 2 years: None.

3. Future Plan on Financial Performance: Not applicable.

B. Financial performance

1. Comparative Analysis of Financial Performance

Unit: NT$000

Item	Year 2018	Year 2019	Difference	Difference
			Amount	%
Revenues	2,928,169	1,809,297	(1,118,872)	(38.21)
Cost of revenues	2,052,864	1,583,125	(469,739)	(22.88)
Grossprofit	875,305	226,172	(649,133)	(74.16)
Operatingexpenses	389,035	330,170	(58,865)	(15.13)
Operatingincome	486,270	(103,998)	(590,268)	(121.39)
Non-operatingincome	18,122	(6,850)	(24,972)	(137.8)
Income(loss)before income taxes	504,392	(110,848)	(615,240)	(121.98)
Income tax benefit(expense)	136,986	7,522	(129,464)	(94.51)
Income(loss)after income taxes	367,406	(118,370)	(485,776)	(132.22)

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Analysis and description will be given only if the increase/decrease in ratio reaches 20% or exceeds NT$10 million during most recent 2 years:

The main reason of the decrease of the operating income is income of metalworking has decreased 26% and income of plating has decreased 62%.
2.The main reason of the decrease of the non-operating income is the increase of currency exchange loss in 2019, which is because THB is strongly appreciated, which is loss NT$12.106.000.
Major Impact on Financial Performance during most recent 2 years: None.
Future Plan on Financial Performance: Not applicable.
Sales volume forecast and the basis

The Company sets up the annual goal based on estimated demands of clients, consideration of the whole market environments, and capacity plans. In addition to maintain good relationships with existing clients, the Company continuously develops new clients and new markets. The Company’s mid- and long-term plans are to sale products by strategic alliances in order to bring growth for future business scales and sales volume.

Effect upon the company's financial operations as well as measures to be taken in response The Company will continuously dedicate in improving the ability of product designs and combining with aesthetic design and craftsmanship technology to develop more characteristic and personalized products in order to comply with market’s demands and consumption trends to escalate the competitiveness of the Company. Besides, the Company will also dedicate in product capacity and efficient uses of financial funds in order to meet the needs of future business growth.
C. Cash Flow Analysis
Liquidity Analysis of Recent Year

Unit: NT$000

ow Analysis uidity Analysis of Recent Year			Unit: NT$000	Unit: NT$000
Item	Year 2018	Year 2019	Difference
			Amount	%
Cash inflow of operating activities	231,683	(363,842)	(595,525)	(257.04)
Cash outflow of investment activities	(79,024)	(57,742)	21,282	(26.93)
Cash outflow of fund-raising activities	(405,086)	388,223	793,309	(195.84)
Variance Analysis: 1. The increase of cash inflow of operating activities is because the operating is not indubitable as expectancy and clients deferred the payment. 2. The decrease of cash outflow of investment activities is because the Company bought intangible assets for NT$17,431,000. 3. The increase of cash outflow of fund-raising activities is mainly because increase of the banks’ short-term loan.

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Corrective measures to be taken in response to illiquidity

The Company's business is in the stage of growth and profitability, and there is no shortage of capital liquidity.

Cash Flow Forecast for the Coming Year

The focus of the Company’s operation is on enforcing inventory control and shortening the days of accounts receivable. The estimated capital expenditure in the coming year is by conservatism principle. The relations with the banks are quite well and the quota of bank financing is enough.

The net cash inflow from operating activities is still enough to cash outflows.

D. Effect upon financial operations of any major capital expenditures during the most recent fiscal year: The Company has no major capital expenditures during the most recent fiscal year.

E. The Company's reinvestment policy for the most recent fiscal year, the main reasons for the profits/losses generated thereby, the plan for improving re-investment profitability, and investment plans for the coming year:

The Company's reinvestment policy

The Company’s reinvestment policy is based on the core business of the industry and does not engage in other non-business industries. The Company has established “Investment Cycle,” “Regulations Governing Acer’s Subsidiaries,” “Procedures for Management of Related Party Transactions,” and “Regulations of Acquisition or Disposal of Assets.” In the future, any related investment plan will be handled in accordance with the aforementioned regulations.

Major causes of profits and losses, and improvement in the latest fiscal year

The main reason of the deficit of GVG Shenzhen is because development of E-commerce was too slowly. Improvement: To cooperate with other channels and use parent company’s manufacture advantage to replace other manufacturer develop products.

Unit: NT$000

				Unit: NT$000
Investee Company	Shareholding % directly or indirectly	Recognition of investment gains and losses in 2018	Causes of profits and losses	Improvement’s plan
RJM	99.99%	(111,664)	Operating in good condition	N/A
RGP	51.00%	29,759	Operating in good condition	N/A
GVG Hong Kong	100.00%	(4,597)	Mainly recognized the loss of GVG Shenzhen	Improve its subsidiary’s businessperformance
GVG Shenzhen	100.00%	(4,573)		Control business risk in order to lower loss
Linden	49.00%	(197)	Still in the early stage of operation	N/A
Chaporo	70.00%	(36)	Still in the early stage of operation	N/A
Regal Innovation	100.00%	(1,197)	Still in the early stage of operation	N/A

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Dragon	100.00%			Finished operations in February 2016 and liquidated

Future investment plan for upcoming year: There is no major investment plan for the upcoming year.
F. Risk analysis during the most recent year and as of the Date of this Annual Report
Risk analysis during the most recent year and as of the Date of this Annual Report:
- a. Interest rate fluctuations

Unit: NT$000

	Year 2018	Year 2018	Year 2019	Year 2019
	Amount	ratio of net values	Amount	ratio of net values
Interest income	1,724	0.06%	3,399	0.19%
Interest expense	705	0.02%	4,228	0.23%

The income and expense of interest in the latest two years has a quite low portion of the net operating income for the year, so the change in market interest rate has not yet had a significant impact on the financial business of the Company.

b. Effects of exchange rate fluctuations

significant impact on the financial business of the Company. Effects of exchange rate fluctuations	significant impact on the financial business of the Company. Effects of exchange rate fluctuations	significant impact on the financial business of the Company. Effects of exchange rate fluctuations
Unit: NT$000
Year Item	Year 2018	Year 2019
Net Foreign exchange gain(loss)	(1,759)	(13,865)
ratio to net sales (%)	(0.06%)	(0.77%)

The Company's products are mainly quoted in US dollars, but the procurement and operation related expenses are still supported by the Thai baht. Therefore, the trend of the US dollar will affect the exchange gains and losses of the company. The risk of exchange rate changes is mainly from accounts receivable denominated in foreign currencies, which generate foreign currency exchange gains and losses when converted. Baht dollar appreciated against the US dollar in 2019 caused exchange losses totaled NT$13,865,000. c. Effect of inflation rate

With the rapid changes in the global economic environment, the Company has not yet had a significant impact on profit and loss due to the inflation crisis. In the future, the Company will continue to maintain close and good relations with suppliers, and pay attention to fluctuations in market prices at any time, adjust procurement strategies and cost structures in a timely manner, and reduce the impact of inflation changes on the Company's profit and loss.

The Company's policy regarding high-risk investments, highly leveraged investments, loans to

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other parties, endorsements, guarantees, and derivatives transactions; the main reasons for the profits/losses generated thereby; and response measures to be taken in the future:

a. Based on the management concepts of conservatism principles, the Company focuses on business operation and does not engage in high-risk and high-leveraged investments.
b. In the most recent two fiscal years, and as of the date of publication of the annual report, if RJM engages in derivatives transactions to avoid the risk of exchange rate fluctuation, it will be handled in accordance with the relevant procedures and executed by relevant units. The Company does not engage in high-risk and high-leveraged investments. Meanwhile, the Company has established “Procedures for Lending Funds to Others,” “Procedures for Endorsements and Guarantees,” “Regulations of Governing Derivatives Transactions,” and “Regulations of Acquisition or Disposal of Assets” and the Company shall handle relevant transactions in accordance with relevant regulations and procedures in the future.
Further R&D plan and expenditures expected for research and development work
a. Future R&D plans
(1) Improve development abilities of products, increase product developing abilities, combine aesthetic and craftmanship skills.
(2) R&D department has the design capabilities of more advanced products and more sophisticated molds to enhance product yield and diversification and to meet customer needs of casting and stamping processes through advanced proofing equipment.
(3) Improve the development of process equipment and tooling equipment for medium and high-end products to improve process technology, shorten production time, improve product quality to reduce production costs.
(4) Estimated investment in research and development costs
- The costs of R&D were NTD$70,286,000 in 2019. It is expected to increase in 2020 than previous year. The mainly reason is because of enhancing the customized design capabilities of jewelry, developing functional accessories, automation equipment and upgrade process molds in order to enhance mid-long term competitiveness.
Effects on the company's financial operations of important policies adopted and changes in the legal environment at home and abroad, and measures to be taken in response: The Company is registered in Cayman Islands and the main operation headquarter is in Thailand. Economic activities in Cayman Islands are mainly financial services. Thailand is one of the major economic systems in East South Asia and its economics is open without foreign exchange control. The political and economic environments are relatively stable so far. The products developed and sold by the Company belong to consumer goods, not licensed or restricted industries; therefore, there will be no effect on the Company's financial operations of important policies adopted and changes in the legal environment in Cayman Islands or in Thailand. The Company’s implementations of business all comply with important policies and laws and regulations at home and abroad. The Company also pays attention to important policy

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development trends and changes in the legal environment at home and abroad at any time in order to respond to changes of market environments and take appropriate measures promptly.

Effect on the company's financial operations of developments in science and technology as well as industrial change, and measures to be taken in response:
The Company pays attention to relevant updated technology of jewelry industries at any time and seizes the latest market information to evaluate the effect of operation. There is no such affair of effect on the Company's financial operations of developments in science and technology as well as industrial change during 2017 and as of the Date of this Annual Report.
Effect on the Company's crisis management of changes in the Company's corporate image, and measures to be taken in response:
The Company adheres to the concept of honesty, reliability and sustainable management. Since its establishment, the Company has focused on its business operations, has a good corporate image, and complies with relevant laws and regulations, and continues to maintain a good corporate image. There is no such affair of effect on the Company's crisis management of changes in the Company's corporate image during 2017 and as of the Date of this Annual Report.
Expected benefits and possible risks associated with any merger and acquisitions, and mitigation measures being or to be taken:

There is no merger and acquisitions in process as of the Date of this Annual Report.

Expected benefits and possible risks associated with any plant expansion, and mitigation measures being or to be taken:
There is no plant expansion plan as of the Date of this Annual Report. If there has any expansion plan, it shall be handled in accordance with the local laws and relevant management regulations of the Company to ensure the protection of the Company’s interests and shareholders’ equity.
Risks associated with any consolidation of sales or purchasing operations, and mitigation measures being or to be taken:
a. Risks associated with consolidation of purchasing operations and mitigation measures being or to be taken:
The Company's largest purchase suppliers in 2018 and 2019 accounted for 43.28% and 20.43% of the total purchases, respectively. The chains of upstream, midstream, downstream of jewelry factories in Thailand are complete. The industrial characteristics are mostly based on local procurement, it is beneficial to control the delivery period. The suppliers that cooperate with the Company are local well-known raw materials suppliers of precious metals and jewelry accessories in Thailand. Besides, the suppliers that cooperate with the Company all have long-term and stable relations and multiple purchase sources. The main materials of the Company are gold, silver, and precious metals which all have international quotation references. The major purchase items of the Company all have more than two suppliers. While one supplier is not able to provide sufficient goods or meet the delivery period, the Company will look for other alternative suppliers or other suitable alternative materials. The

109

sources of suppliers are stable, so risks of concentration of purchasing operations and lack of materials can be reduced.

b. Risks associated with consolidation of sales operations and mitigation measures being or to be taken:
The Company's largest sales client in 2018 and 2019 accounted for 71.8% and 59.6% of the total sales, respectively. The Company will still explore new clients and markets positively in order to reduce the risk of concentration of sales.
Effects upon and risks to the Company in the event a major quantity of shares belonging to a director, supervisor, or shareholder holding greater than a 10 percent stake in the Company has been transferred or has otherwise changed hands, and mitigation measures being or to be taken: As of the Date of this Annual Report, there were no such matters except the Company had reorganized of investment structures(no influences on the Company) in 2014 in order to apply for a listed Company in Taiwan.
Effect up on and risk to company associated with any change in governance personnel or top management, and mitigation measures being or to be taken:
As of the Date of this Annual Report, there is no such affair of effect upon and risk to the Company associated with any change in governance personnel or top management.
Litigious and non-litigious matters:
(1) involve the company and/or any company director, any company supervisor, the general manager, any person with actual responsibility for the firm, any major shareholder holding a stake of greater than 10 percent, and/or any company or companies controlled by the company; and (2) have been concluded by means of a final and unappealable judgment, or are still under litigation. Where such a dispute could materially affect shareholders' equity or the prices of the company's securities, the annual report shall disclose the facts of the dispute, amount of money at stake in the dispute, the date of litigation commencement, the main parties to the dispute, and the status of the dispute as of the date of publication of the annual report.

There is no such affair of litigious and non-litigious matter as of the Date of this Annual Report.

Effect on the company's manufacturing operations of technology and measures to be taken in response
a. Risks of overall economics, environment of politics, foreign exchanges, and regulations: The Company is registered in Cayman Islands while the main operation place is located in Thailand. Therefore, the overall economics, environment of politics, fluctuations of foreign exchange of registration and operation places will affect the operation status of the Company.
b. Risk of guarantee of shareholders’ equity
- The laws of registered place, Cayman Islands, of the Company have many different

110

places with the ones of Republic of China. Without contradicting the laws of Cayman Islands, the Company has amended the Articles of the Company in accordance with “ Checklist for the protection of shareholders' rights and interests of foreign issuers” of Taiwan Stock Exchange Corporation. However, there are still many differences between local laws and regulations of two countries on the company’s operation. Investors cannot use the protection views of the ROC companies’ legal rights to apply them to the Cayman Islands’ companies they invest in. Investors shall fully understand and consult with experts whether it can obtain effective shareholder rights protection by investing Cayman Islands’ companies.

c. The influence of technology to the business activities and mitigation measures being or to be taken

(1) The company's production and business

The company make efforts to using technology in the development of process, and will invest lots of funds every year. New technologies and new processes started to mass

produce and it will help the company's revenue growing in the future. The company has well finance currently and it is sufficient to meet technology development needs of the company in the future.

(2) Risk and measures of information security

The Company made the Cyber security to prevent information and communication system or information from being unauthorized access, use, control, disclosure, damage, alteration, destruction or other infringement to assure the confidentiality, integrity and availability of information and system. To make sure the Company operating continually.

(a) Employees lack of cyber security awareness

The company has cyber security education training regularly to improve employees’

cyber security awareness. The cyber security policy and objectives should be

communicated to all employees by education training, internal meetings, and

announcements every year, and the implementation should be reviewed.

(b) Cyber attacks and threats from virus

The company assess the risk of cyber system every year, and selects protection and control

measures according to cyber security through classification of cyber system every year.

Intellectual property (IP) rights are the results of extensive research and development.

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Therefore IP management is an important aspect of a company's innovation management. Effective IP management helps to maintain ASE's leading position in corporate innovation. Research and development activities are conducted in response to market's prospective demands, to ensure that the R&D activities are linked to key business opportunities. Through our effective IP application system and tools, R&D activities are carefully recorded and processed for intellectual property rights protection (e.g. patents, trademarks and trade secrets).

(d)Disaster Recovery

The company's important data and the core data cyber system perform backup, and the frequency of the backup should meet the requirements of the recovery time, and the implementation of remote storage quarterly to confirm the effectiveness of the backup of core cyber system data, encryption protection with confidentiality considerations.

d. Risks of statements related to this annual report
(1) Facts and statistics

Certain information and statistics of this Annual Report are from external different statistical publications, which information may not be accurate, complete, or up to date. The Company will not make any statements on the authenticity or accuracy of external information and investors shall not make investment judgements overly rely on these information.

(2) Risks and uncertainty of forward-looking statements in this Annual Report There are certain forward-looking statements and information about the Company and related companies in this Annual report. These statements and information in this Annual Report are based on beliefs, assumptions, and current information of the managing levels of the Company. In this report, while the Company or the managing levels of the Company use the terms, like “predict,” “believe,” “can,” “expect,” “future,” “intend,” “may,” “must,” “plan,” “estimate,” “seek,” “should,” “will,” “might,” “hope,” and similar phrases are forward-looking statements. Such statements reflect current views on future events, operations, fluid funds, and sources of capitals by the managing levels of the Company and some of which may not be come true or may be changed. Such statements may be affected by certain risks , uncertainties, and assumptions, including other risks factors this Annual report states. Investors shall consider carefully to rely on any forward-looking statements which involve known and unknown risks and uncertainties. The risks and uncertainties that the Company faces may affect the accuracy of forward-looking statements, excluding the following: i. the statements of Operation Overviews in this Annual Report

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  - ii. Certain statements about price, qualities, operations, trends of profits, overall market trends, risk managements, and exchange rates in this Annual Report.

  - The Company will not update forward-looking statements in this Annual Report or make changes in response to future events or information. In view of these risks and other risks, uncertainties and assumptions, the forward-looking statements and circumstances of the annual report may or may not happen in the manner expected by the Company. Therefore, investors shall not rely on any forward-looking statements.

e. The managerial team faced the challenges of becoming a listed company for the first time: Before listing, the Company has recruited qualified talents in main operating bases to organize outstanding teams as the powerful backing for the managerial team. Some from the managerial team had worked in listed companies of Taiwan and have certain levels of understanding of Taiwan’s relevant laws and regulations. Therefore, the Company is capable of facing the challenge of becoming a listed company.
f. The Company is a holding company that relies on its subsidiaries’ performances and their capabilities of dividends distributions while its dividends distribution and funds transfer are limited.
The Company is a holding company established in the Cayman Islands with no commercial operations and revenue sources. The Company's profit mainly comes from operating subsidiaries. The subsidiary in Thailand of the Company is the major profit source; therefore, the capital sources of the cash dividends are mainly from the cash dividends of the subsidiary. However, the cash dividends distributed by the subsidiaries will be subject to the laws, cash transfers and foreign exchange controls on the repatriation of local state dividends at the time and effected by exchange rates. The Company shall not fully control yet. In addition, the subsidiaries of the Company are independent juristic persons. When a subsidiary goes bankrupt, loses its solvency, reorganizes, liquidates or realizes the assets, the Company's assets or distribution order will be inferior to the creditors of the subsidiary.

The distribution of dividends or other benefits of the Company will be handled in accordance with relevant regulations. It is recommended that investors know and consult with experts about the impact of a holding company tax on their own investments.

G. Other important matters: None.

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VIII. Special Notes

A. Information of the subsidiaries
Organization Chart

==> picture [568 x 251] intentionally omitted <==

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

Regal Holding Co., Ltd.
Regal Holding Co.,
(Cayman Islands) Ltd. Taiwan Branch
99.99% 100% 70% 100% 100%
Regal Jewelry GIO VAN GOGH Chaporo Co.,Ltd. Regal Regal
Manufacture Co., Ltd. (INTERNATIONAL) (Seychelles) Management Innovation Co.,
(Thailand) Solution Co., Ltd.
JEWELRY LIMITED Ltd.(Taiwan)
(Thailand)
(Hong Kong)
51% 49% 100%
Regal Plating Linden Integrated GIO VAN GOGH (Shenzhen)
Co., Ltd. Co., Ltd. JEWELRY LIMITED
(Thailand) (Thailand) (China)
----- End of picture text -----

114

2. Information of Subsidiaries

Dec. 31, 2019; Unit: NT$000

Name	Established date	Address	Currency/Paid-up Capital	Currency/Paid-up Capital	Major Business or production
Regal Jewelry Manufacture Co., Ltd.(RJM)	Feb. 21, 1999	No. 84/4 Village No.7 Phet Kasem 122 Alley, Phet Kasem Road, Om Noi Sub-district, Krathum Baen District,Samut Sakhon Province.	THB	455,000	Design, manufacture, and sales ofjewelry
Regal Plating Co., Ltd. (RGP)	Jun. 01, 2013	No. 84/4 Village No.7 Phet Kasem 122 Alley, Phet Kasem Road, Om Noi Sub-district, Krathum Baen Distri ct,Samut Sakhon Province.	THB	25,000	Jewelry plating
GIO VAN GOGH (International ) Jewelry Limited	Nov. 13, 2014	RM 1005(B), 10/F, HO KING COMM CTR 2-16, FAYUEN ST, MONGKOK, KL	HKD	6,113	Investment
GIO VAN GOGH (Shenzhen) Jewelry Limited	Apr. 20, 2015	Room 909, Tianan International Building B, Renmin South Road, Nanhu Sub-District, Luohu District, Shenzhen City,GuangdongProvince,China	RMB	5,000	Sales of jewelry and market information gathering
Regal Management Solution Co., Ltd.	Apr. 05, 2018	No. 84/6 Village No.7 Phet Kaseam 122 Alley, Phet Kaseam Road, Om Noi Sub-district, Krathum Baen District,Samut Sakhon Province.	THB	10,000	Investment
Linden Integrated Co., Ltd.	Dec. 13, 2018	No. 84/4 Village No.7 Phet Kasem 122 Alley, Phet Kasem Road, Om Noi Sub-district, Krathum Baen District,Samut Sakhon Province.	THB	5,000	Sales of jewelry
Chaporo Co.,Ltd.	Oct. 05, 2018	Offices of Portcullis (Seychelles) Ltd, of F20, 1st Floor, Eden Plaza, Eden Island, Seychelles.	USD	5,000	Investment
Regal Innovation Co., Ltd.	Oct. 18, 2019	2F.-1, No. 72, Sec. 1, Zhongxiao W. Rd., Zhongzheng Dist., Taipei City 100, Taiwan (R.O.C.)	NTD	25,000	Sales of jewelry

Presumption of a relationship of control or subordination that have the same shareholders: None.

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4. Transact business of the Company and subsidiaries

Name	`Location`	Major Business
Regal Jewelry Manufacture Co., Ltd. (RJM)	`Thailand`	Design, manufacture, and sales ofjewelry
Regal Plating Co., Ltd. (RGP)	`Thailand`	Jewelry plating
GIO VAN GOGH (International ) Jewelry Limited	`Hong Kong`	Investment
GIO VAN GOGH (Shenzhen) Jewelry Limited	Shenzhen	Sales of jewelry and market informationgathering
Regal Management Solution Co., Ltd.	`Thailand`	Investment
Linden Integrated Co., Ltd.	`Thailand`	Sales of jewelry
Chaporo Co.,Ltd.	Seychelles	Investment
Regal Innovation Co., Ltd.	`Taiwan`	Sales of jewelry

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5. Information of directors, supervisors, and general managers of subsidiaries

Dec. 31, 2019; Unit: share/%

			Dec. 31,2019;Unit: share/%	Dec. 31,2019;Unit: share/%
Name	Title	Name or Representative	Shares holding
			Shares	Percentage
Regal Jewelry Manufacture Co., Ltd. (RJM)	Chairman Director Director Director	PHACHARAPON PHAIBOONSUNTORN SARAYUTH MUNGCHITVITSAVAKORN LIN, PI-YUAN LIN,CHIU-I	1 1 - -	0.005% 0.005% - -
Regal Plating Co., Ltd. (RGP)	Chairman Director Director	PHACHARAPON PHAIBOONSUNTORN SARAYUTH MUNGCHITVITSAVAKORN WANG,CHUN-CHIN	- - 47,500	- - 19.00%
GIO VAN GOGH (International ) Jewelry Limited	Chairman	PHACHARAPON PHAIBOONSUNTORN	Limited company	-
GIO VAN GOGH (Shenzhen) Jewelry Limited	Chairman	LIN, JU-YING	Limited company	-
Regal Management Solution Co., Ltd.	Chairman	PHACHARAPON PHAIBOONSUNTORN	-	-
Linden Integrated Co., Ltd.	Chairman	LIN, CHIN-SAN	-	-
Chaporo Co.,Ltd.	Chairman	PHACHARAPON PHAIBOONSUNTORN	-	-
Regal Innovation Co., Ltd.	Chairman	LIN, JU-YING	-	-

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6. Operation Circumstances of Subsidiaries

ation Circumstances of Subsidiaries	ation Circumstances of Subsidiaries	ation Circumstances of Subsidiaries	ation Circumstances of Subsidiaries	ation Circumstances of Subsidiaries	ation Circumstances of Subsidiaries	ation Circumstances of Subsidiaries	ation Circumstances of Subsidiaries	ation Circumstances of Subsidiaries
Dec. 31,2019;Unit: 1,000 currency Name Capital Total assets Total liabilities Net worth Regal Jewelry Manufacture Co., Ltd. (RJM) THB `455,000` THB `1,737,889` THB `852,146` THB `885,743` Regal Plating Co., Ltd. (RGP) THB `25,000` THB `326,625` THB `14,430` THB `312,195` GIO VAN GOGH (International ) Jewelry Limited HKD `7,674` HKD `(387)` HKD `19` HKD `(406)` GIO VAN GOGH (Shenzhen) Jewelry Limited RMB `5,000` RMB `1,211` RMB `2,993` RMB `(1,782)` Regal Management Solution Co., Ltd. THB `10,000` THB `7,083` THB `728` THB `6,355` Linden Integrated Co., Ltd. THB `5,000` THB `4,743` THB `157` THB `4,586` Chaporo Co.,Ltd. USD `5` USD `5` USD `-` USD `5` Regal Innovation Co., Ltd. NTD `25,000` NTD `23,971` NTD `168` NTD `23,803`
Name	Capital		Total assets		Total liabilities		Net worth
Regal Jewelry Manufacture Co., Ltd. (RJM)	THB	`455,000`	THB	`1,737,889`	THB	`852,146`	THB	`885,743`
Regal Plating Co., Ltd. (RGP)	THB	`25,000`	THB	`326,625`	THB	`14,430`	THB	`312,195`
GIO VAN GOGH (International ) Jewelry Limited	HKD	`7,674`	HKD	`(387)`	HKD	`19`	HKD	`(406)`
GIO VAN GOGH (Shenzhen) Jewelry Limited	RMB	`5,000`	RMB	`1,211`	RMB	`2,993`	RMB	`(1,782)`
Regal Management Solution Co., Ltd.	THB	`10,000`	THB	`7,083`	THB	`728`	THB	`6,355`
Linden Integrated Co., Ltd.	THB	`5,000`	THB	`4,743`	THB	`157`	THB	`4,586`
Chaporo Co.,Ltd.	USD	`5`	USD	`5`	USD	`-`	USD	`5`
Regal Innovation Co., Ltd.	NTD	`25,000`	NTD	`23,971`	NTD	`168`	NTD	`23,803`

Note: The information of incomes and benefits of subsidiaries of the Company are business secrets. In order to protect shareholders’ equity, such information is not disclosed. Besides, the recognition of investment gains and losses in the current period has been disclosed in the notes to the financial statements.

7. Statements of Consolidated Financial Statements of Subsidiaries: N/A.

Consolidated Financial Statements of Subsidiaries: N/A.

118

B. Private placement of securities during the most recent fiscal year or during the current fiscal year as to the date of publication of the annual report: None.

C. Holding or disposal of shares in the Company by the Company's subsidiaries during the most recent fiscal year or during the current fiscal year as to the date of publication of the annual report: None.

D. Other matters that require additional description: None.

E. Any of the situations listed in Article 36, paragraph 2, subparagraph 2 of the Securities and Exchange Act, which might materially affect shareholders' equity or the price of the company's securities, has occurred during the most recent fiscal year or during the current fiscal year as to the date of publication of the annual report: None.

F. Material differences from the rules of the R.O.C. in relation to the protection of shareholder equity: The Company has amended the Articles of the Company in accordance with the matters of protection of shareholder equity in “Checklist for the Protection of Shareholders' Equity of Foreign Issuers” of Taiwan Stock Exchange Corporation. However, part of material matters about protection of shareholder equity is not applicable under the laws and regulations of Cayman Islands and are not amended in the Articles of the Company. Please see the followings:

Material matters of protection of shareholder
equity

Articles of Association and reasons of
differences

A company choosing to issue no par value shares
shall not convert its shares into par value shares.

The Company issues par value shares and the
price of one common share is NT$10. Therefore,
the Article 156-1, paragraph 6 of Company Act
is not applicable.

1. Shareholders’ meetings shall be convened
within the territory of R.O.C.. If the
shareholders’ meetings are going to be
convened outside of the territory of R.O.C.,
the application of approval of Taiwan Stock
Exchange Corporation must be submitted in
two days after the resolution of BOD or
shareholders obtain the permission from
authorized governments.
2. Any or a plural number of shareholder(s) of a
company who has (have) continuously held
3% or more of the total number of
outstanding shares for a period of one year or
a longer time may, by filing a written
proposal setting forth therein the subjects for
discussion and the reasons, request the board
of directors to call a special meeting of
shareholders. If the board of directors fails to
give a notice for convening a special meeting
of shareholders within 15 days after the
filing of the request under the preceding
Paragraph,theproposingshareholder(s)

1. As for the part that shareholders convene
meetings on his/their own, there is no special
term about it in Cayman Islands’ Company
Act. Therefore, the Article 19.6 and 19.7 of
the Articles of Association does not regulate
the shareholders to report to the competent
authority for permission before convening
the shareholders' temporary meeting.
2. Besides, if the shareholders are going to
convene meeting outside of the territory of
R.O.C. on their own, they do not need to
report to the competent authority for
permission
before
convening
the
shareholders' temporary meeting. Therefore,
the Article 19.6 and 19.7 of the Articles of
Association only regulates that the meeting
shall be reported to GTSM or TWSE (as
applicable in its case) for approval instead of
“the application of approval of Taiwan Stock
Exchange Corporation must be submitted in
two days after shareholders obtain the
permission from authorizedgovernments.”

119

Material matters of protection of shareholder Articles of Association and reasons of equity differences may, after obtaining an approval from the In this part, there should have no substantial competent authority, convene a special impact on shareholders’ equity of R.O.C.. meeting of shareholders on his/their own. The Articles of the Incorporation shall be stated In respect of the exercise of voting rights by that electronic means can be one of the methods shareholders in writing or electronically, the to exercise voting rights. When the Company Cayman Islands’ Company Act does not mention holds a shareholders meeting, it may allow the whether shareholders who exercise their voting shareholders to exercise voting rights by rights in writing or electronically can be deemed correspondence or electronic means; The to have attended the shareholders' meeting in Company that holds shareholders’ meetings person and the Cayman Islands lawyers have not outside of the territory of R.O.C. may allow found any relevant cases. There will make shareholders to exercise voting rights by another arrangement. The Article 25.4 of the correspondence or electronic means. When Company’s Articles regulates “A Member who voting rights are exercised by correspondence or exercises his voting power at a general meeting electronic means, the method of exercise shall be by way of a written ballot or by electronic specified in the shareholders meeting notice. A transmission shall be deemed to have appointed shareholder exercising voting rights by the chairman of the general meeting as his proxy correspondence or electronic means will be to vote his shares at the general meeting only in deemed to have attended the meeting in person, the manner directed by his written instrument or but to have waived his/her rights with respect to electronic document. The chairman of the the extraordinary motions and amendments to general meeting as proxy shall not have the original proposals of that meeting. power to exercise the voting rights of such Members with respect to any matters not referred to or indicated in the written or electronic document and/or any amendment to resolution(s) proposed at the said general meeting. For the purpose of clarification, such Members voting in such manner shall be deemed to have waived their voting rights with respect to any extemporary matters or amendment to resolution(s) proposed at the general meeting.” And the Article 26.3 of the Company’s Articles regulates the Chairman of shareholders’ meetings being deemed appointed as proxy shall not be limited by 3% of the total voting rights of the issued shares. The preceding differences are due to the Company Act in Cayman Islands does not have the same regulation, there should have

120

Material matters of protection of shareholder
equity

Articles of Association and reasons of
differences

limited impact on shareholders’ equityof R.O.C.

1. A company may explicitly provide for in its
Articles of Incorporation that the surplus
earning
distribution
or
loss
off-setting
proposal may be proposed at the close of each
quarter or each half fiscal year.
2. The proposal of surplus earning distribution or
loss off-setting for the first three quarters or
half fiscal year, together with the business
report and financial statements, shall be
forwarded to supervisors for their auditing,
and afterwards be submitted to the board of
directors for approval.
3. A company distributing surplus earning in
accordance with the provision of the
preceding paragraph shall estimate and
reserve the taxes and dues to be paid, the
losses to be covered and the legal reserve to be
set aside. Where such legal reserve amounts to
the total paid-in capital, this provision shall
not apply.
4.A company distributing surplus earning in the
form of new shares to be issued by the
company in accordance with the provision of
Paragraph Two shall be resolved by a majority
of the shareholders present who represent two-
thirds or more of the total number of its
outstanding shares of the company. If the total
number of shares represented by the
shareholders present at a meeting of
shareholders is less than the threshold
specified in the preceding Paragraph, the
resolution may be adopted by a large majority
(2/3 or more) vote of the shareholders present
at that meeting of shareholders attended by the
shareholders representing a majority of the
total number of the outstanding shares of the
company.;if such surplus earningis

The Article 228-1 of Company Act is not
mandatory, and the Company did not adopt, so
there is no amendment in the Articles of
Association.

121

Material matters of protection of shareholder
equity

Articles of Association and reasons of
differences

distributed in the form of cash, it shall be
approved by a meeting of the board of
directors.
5.Surplus earning distribution or loss off-setting
proposal in accordance with the provisions of
the preceding four paragraphs shall be made
based on the financial statements audited or
reviewed bya certifiedpublic accountant.

Any proposal that involves major equity of
shareholders as followings shall be with a
resolution adopted by a majority of the
shareholders present who represent two-thirds
or more of the total number of its outstanding
shares. If the total number of shares represented
by the shareholders present at shareholders’
meeting is not sufficient to meet the criteria
specified in the preceding paragraph, the
resolution to be made thereto may be adopted
by two-thirds or more of the attending
shareholders who represent a majority of the
total number of its outstanding shares:
1.Enter into, amend, or terminate any contract
for lease of the company’s business in whole,
or for entrusted business, or for regular joint
operation with others; transfer the whole or
any essential part of its business or assets; or
accept the transfer of another’s whole business
or assets, which has great bearing on the
business operation of the company.
2.Modification or alteration the Company’s
Articles of Association
3.Any modification or alteration the Company’s
Articles of Association shall also be adopted
in a resolution by a meeting of special
shareholders.
4.The whole or a part of the surplus profit
distributable as dividends and bonuses
distributed in the form of new shares

1.About the methods of resolutions of
shareholders’ meetings, except the regular
resolutions and supermajority resolutions, the
Article 1.1 states the definition of Special
Resolution of Cayman Islands’ Company
Laws, is a resolution passed at a general
meeting of the Company by a majority of at
least two-thirds of the votes cast by such
Members who, being entitled to do so, vote in
person or by their proxies, or, in the case of
Members that are corporations or other non-
natural person, by their duly authorized
representatives by computing the number of
votes to which each Member is entitled.
2.According to the regulation of Cayman
Islands’ Company Laws, the followings
should be adopted by special resolutions:
(1) modification or alteration the Company’s
Articles of Association
According to Cayman Islands laws,
modification
or
alteration
the
Company’s Articles of Association
shall be adopted by special resolutions.
Therefore, in Article 12.1 of the
Company’s Articles of Association, the
thresholds of resolutions have been
modified rather than changing to
supermajority resolutions complied
with “Checklist for the Protection of
Shareholders'
Equity
of
Foreign

122

Material matters of protection of shareholder
equity

Articles of Association and reasons of
differences

5.Dissolution, consolidation or merger, or split-
up of the Company
6. Issue restricted stock for employees

Issuers.” Besides, in Article 13 of the
Company’s Articles of Association, if
any modification or alteration in the
Articles
is
prejudicial
to
the
preferential rights of any class of
shares, such modification or alteration
shall be adopted by a Special
Resolution and shall also be adopted by
a Special Resolution passed at a
separate meeting of Members of that
class of shares.
(2) Dissolution:
According to Cayman Islands’ Law,
if the Company resolves that it be
wound up voluntarily because the
Company is unable to pay its debts as
they fall due, the resolution of
dissolution shall be adopted by
shareholders’ meetings. However, if
the Company is wound up voluntarily
for reasons other than above ones, the
dissolution shall be resolved by Special
Resolution
in
accordance
with
Cayman
Islands’
Company
Act.
Therefore, in Article 12.4(a) of the
Company’s Articles of Association, the
thresholds of resolutions of dissolution
of the Company voluntarily due to
unable to pay the debts as they fall due
have been modified rather than
changing to supermajority resolutions
complied with “Checklist for the
Protection of Shareholders' Equity of
Foreign Issuers.”
(3) Consolidation or merger:
The voting methods of engaging
“within the definition of "merger"
and/or "consolidation" under the Law”
are mandatory provision in Cayman

123

Material matters of protection of shareholder
equity

Articles of Association and reasons of
differences

Islands’ Company Act. Therefore, in
Article 12.3(b) of the Company’s
Articles of Association, any Merger
(except for any Merger which falls
within the definition of "merger"
and/or "consolidation" under the Law,
which requires the approval of the
Company by Special Resolution only)
shall be adopted by supermajority
resolutions.
3.The difference between the above matters and
the
Checklist
for
the
Protection
of
Shareholders' Equity of Foreign Issuers is the
matters shall be adopted by supermajority
resolutions in important matters of protection
of shareholders’ equity are regulated to
supermajority
resolutions
and
special
resolutions respectively in the Company’s
Articles of Association. This kind of
difference is because of the Cayman Islands
laws. Since the matters shall be adopted by
supermajority
resolutions
in
important
matters of protection of shareholders’ equity
are regulated to supermajority resolutions and
special
resolutions
respectively in the
Company’s Articles of Association, the
Articles of Association shall have a limited
impact on shareholders' equityin thispart.

1.Supervisors of a company shall be elected by
the meeting of shareholders, among them at
least one supervisor shall have a domicile
within the territory of the Republic of China
2.The term of office of a supervisor shall not
exceed three years, but he may be eligible for
re-election.
3.In case all supervisors of a company are
discharged, the board of directors shall, within
60 days, convene a special meeting of
shareholders to elect new supervisors.

There is no notion of “supervisors” in Cayman
Islands’ Company Act; therefore, while applying
for the listed company, the Audit Committee is
set instead of supervisors. As a result, there is no
relevant regulations of supervisors in the Articles
of Association.

124

Material matters of protection of shareholder
equity

Articles of Association and reasons of
differences

4.Supervisors shall supervise the execution of
business operations of the company and may
at any time or from time to time investigate the
business and financial conditions of the
company, examine the accounting books and
documents, and request the board of directors
or managerial personnel to make reports
thereon.
5.Supervisors shall audit the various statements
and records prepared for submission to the
shareholders’ meeting by the board of
directors and shall make a report of their
findings and opinions at the meeting of
shareholders.
6.In performing their functional duties, the
supervisors may appoint, on behalf of the
company, a practicing lawyer and a certified
public accountant to conduct the examination.
7.Supervisors of a company may attend the
meeting of the board of directors to their
opinions. In case the board of directors or
any director commits any act, in carrying out
the business operations of the company, in a
manner in violation of the laws, regulations,
the Articles of Incorporation or the resolutions
of the shareholders’ meeting, the supervisors
shall forthwith advise, by a notice, to the board
of directors or the director, as the case may be,
to cease such act.
8.Supervisor may each exercise the supervision
power individually.
9.A supervisor shall not be concurrently a
director, a managerial officer or other
staff/employee of the company.

1.Shareholder(s)
who
has/have
been
continuously holding 1% or more of the total
number of the outstanding shares of the
company over six months may request in
writingthe supervisors of the companyto

There is no notion of “supervisors” in Cayman
Islands’ Company Act and the Company has set
up the Audit Committee, so there are no relevant
regulations of supervisors in the Articles of
Association. Onlyabout the regulation of minor

125

Material matters of protection of shareholder
equity

Articles of Association and reasons of
differences

institute, for the company, an action against a
director of the company and the jurisdiction in
the first instance is Taipei District Court in
Taiwan.
2.In case the supervisors fail to institute an
action within 30 days after having received the
request, the shareholders may institute the
action for the company and the jurisdiction of
lawsuit is Taipei District Court in Taiwan.
3.Subject to the condition that the board of
directors does not or is unable to convene a
meeting of shareholders, the supervisors or
independent directors of audit committee may,
for the benefit of the company, call a meeting
of shareholders when it is deemed necessary.

shareholders’ request to institute an action
against a director of the Company in Article 214
of Company Act, R.O.C. In Article 48.3 of the
Articles of Association, to the extent permitted
under the laws of the Cayman Islands, Members
continuously holding one per cent (1%) or more
of the total issued shares of the Company for
over six months or longer may:
(a) request in writing the Board to authorize any
Independent Director of the Audit Committee to
file a petition with the Taipei District Court,
ROC for and on behalf of the Company against
any of the Directors; or
(b) request in writing any Independent Director
of the Audit Committee to file a petition for and
on behalf of the Company against any of the
Directors; the petition may be filed with the
Taipei District Court, ROC as the court of the
first instance; or the Member(s) may, to the
extent permitted under the laws of the Cayman
Islands, file a petition with the Taipei District
Court, ROC for and on behalf of the Company
against the relevant Directors within thirty (30)
days after such Member(s) having made the
request under the preceding clause (a) or (b) if (i)
in the case of clause (a), the Board fails to make
such authorization or the Independent Director
of the Audit Committee having been authorized
by the Board fails to file such petition, or (ii) in
the case of clause (b), the Independent Director
of the Audit Committee fails to file such petition.
However, according to Cayman Islands’
regulations, about the above regulations,
Cayman
Islands’
lawyers
remind
the
followings:
The Company Act of Cayman Islands does not
have specific regulation to allow minority
shareholders institute an action against a

126

Material matters of protection of shareholder
equity

Articles of Association and reasons of
differences

director of the Company. The Articles of
Association
is
not
a
contract
between
shareholders and directors, but an agreement
between shareholders and the Company.
Therefore, even though the Articles allows
minority shareholders to institute an action
against directors, the Cayman Islands’ lawyers
think this will not be able to bond directors.
However,
under
the
regular
laws,
all
shareholders (including minority shareholders),
no matter what his/her share hold percentage is
or how long he/she holds shares, have the right
to request to institute an action (including
against a director). Once shareholders institute
an action, the Cayman Islands’ court have the
full power to decide whether the shareholders
can continue the lawsuit. Repeatedly, even
though the Articles of Association allow
minority shareholders(or shareholders with the
required shareholding ratio or shareholding
period), institute an action against a director on
behalf
of
the
Company;
however,
the
continuation of the lawsuit will ultimately
depend on the decision of the Cayman Islands
court. According to the relevant judgment of the
Grand Court of the Cayman Islands, when the
Cayman Islands courts consider whether to
approve
the
continuation
of
derivative
proceedings, the applicable criterion is whether
the Cayman Islands courts believe and accept
that the plaintiff’s request on behalf of the
company
is
ostensibly
substantive.
The
wrongdoings claimed by the company are
controlled by the controllable company, and the
controllers can prevent the company from
litigating it. According to the Cayman Islands’
Laws, the Board of Directors shall act on behalf
of the Companyas a whole(not individual

127

Material matters of protection of shareholder
equity

Articles of Association and reasons of
differences

directors)
to
make
decisions.
Therefore,
directors shall follow the resolution of the Board
of Directors to authorize any director on behalf
of the Company according to the Articles of
Association to file the charge to other directors.
The Company Act of Cayman Islands does not
regulate that shareholders may request directors
of the company to convene board of directors’
meetings to resolute specific matters. However,
the Company Act of Cayman Islands does not
prohibit the company from establishing Articles
of Association and relevant rules of procedures
of board meetings (including the regulations of
conveningboard meetings.)

1. Directors of the Company shall have the
loyalty and shall exercise the due care of a
good administrator in conducting the
business operation of the company; and if
he/she has acted contrary to this provision,
shall be liable for the damages to be sustained
by the company there-from. In case the
responsible person of a company does
anything for himself/herself or on behalf of
another person in violation of the behaviors,
the meeting of shareholders may, by a
resolution, consider the earnings in such an
act as earnings of the company
2. If directors of the Company have, in the
course of conducting the business operations,
violated any provision of the applicable laws
and/or regulations and thus caused damage to
any other person, he/she shall be liable,
jointly and severally, for the damage to such
other person.
3. The managers and supervisors, acting within
the scope of their duties, shall also be liable
for the damages, same as the directors of the
Company.

In the Article 48.4 of the Articles of
Association, “Without prejudice and subject to
the general directors’ duties that a Director owe
to the Company and its shareholders under
common law principals and the laws of the
Cayman Islands, a Director shall perform his
fiduciary duties of loyalty and due care of a
good administrator in the course of conducting
the Company’s business, and shall indemnify
the Company, to the maximum extent legally
permissible, from any loss incurred or suffered
by the Company arising from breach of his
fiduciary duties. If a Director has made any
profit for the benefit of himself or any third
party as a result of any breach of his fiduciary
duties, the Company shall, if so resolved by the
Members by way of an Ordinary Resolution,
take all such actions and steps as may be
appropriate and to the maximum extent legally
permissible to seek to recover such profit from
such relevant Director. If a Director has, in
the course of conducting the Company’s
business, violated any laws or regulations that
causes the Company to become liable for any
compensation or damages to any person,such

128

Material matters of protection of shareholder
equity

Articles of Association and reasons of
differences

Director shall become jointly and severally
liable for such compensation or damages with
the Company and if any reason such Director is
not made jointly and severally liable with the
Company, such Director shall indemnify the
Company for any loss incurred or suffered by
the Company caused by a breach of duties by
such Director. The Officers, in the course of
performing their duties to the Company, shall
assume such duties and obligations to
indemnify the Company in the same manner as
if they are Directors.”
However, according to Cayman Islands’
regulations, about the above regulations,
Cayman Islands’ lawyers remind the followings:
In Cayman Island’s law, generally speaking,
managers or supervisors do not take the same
responsibilities as the company’s directors to the
company or shareholders. However, if managers
or supervisors are authorized to represent top-
level executives, they shall share the same
responsibilities as the company’s directors. For
the avoidance of doubt, companies in Cayman
Islands generally regulate the managers’ or
supervisors’ responsibilities and obligations to
companies and shareholders in their service
contracts.
For the same reason, because the company’s
Articles of Association is the agreement
between
shareholders
and
the
company,
managers or supervisors are not litigants of the
company’s Articles of Association. Therefore,
any penalty of damages that claims to managers
or supervisors who violate their obligations shall
be regulated in their service contracts.
From the prospect of Cayman Island’s law, the
company’s Articles of Association is the
agreement between shareholders and the
applying company and directors of the applying
companyare not litigants of the company’s

129

Material matters of protection of shareholder equity	Articles of Association and reasons of differences
	Articles of Association, so lawyers of Cayman Islands think the Articles of Association do not have bonding force to directors. If the company wants to make the relevant clauses have a contractual effect on the directors, lawyers of Cayman Islands think the company shall regulate relevant rights in contracts with individual directors,such as service contracts.

130

REGAL HOLDING CO., LTD.

CHAIRMAN: PHACHARAPON PAIBOONSUNTORN

131

Stock Code:4807

REGAL HOLDING CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors' Report For the Years Ended December 31, 2019 and 2018

Address: The Grand Pavilion Commercial Centre, Oleander Way, 802 West Bay Road, P. O. Box 32052, Grand Cayman KY1-1208, Cayman Islands Telephone: 66-24-207440-1074

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

		Contents	Page
1.	Cover Page		1
2.	Table of Contents		2
3.	Independent Auditors' Report		3
4.	Consolidated Balance Sheets		4
5.	Consolidated Statements of Comprehensive Income		5
6.	Consolidated Statements of Changes in Equity		6
7.	Consolidated Statements of Cash Flows		7
8.	Notes to the Consolidated Financial Statements
	(1)	Company history	8
	(2)	Approval date and procedures of the consolidated financial statements	8
	(3)	New standards, amendments and interpretations adopted	8`～`10
	(4)	Summary of significant accounting policies	11`～`23
	(5)	Significant accounting assumptions and judgments, and major sources	23
		of estimation uncertainty
	(6)	Explanation of significant accounts	24`～`52
	(7)	Related-party transactions	52
	(8)	Pledged assets	53
	(9)	Significant commitments and contingencies	53
	(10)	Losses due to major disasters	53
	(11)	Subsequent events	53
	(12)	Other	53
	(13)	Other disclosures
		(a) Information on significant transactions	54`～`56
		(b) Information on investees	56
		(c) Information on investment in China	56
	(14)	Segment information	57`～`58

Independent Auditors' Report

To the Board of Directors of

Regal Holding Co., Ltd.:

Opinion

We have audited the consolidated financial statements of Regal Holding Co., Ltd. ("the Company") and its subsidiaries ("the Group"), which comprise the consolidated statement of balance sheets as of December 31, 2019 and 2018, and the consolidated statement of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2019 and 2018, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards ("IFRSs"), International Accounting Standards ("IASs"), Interpretation developed by the International Financial Reporting Interpretations Committee (“IFRIC”) or the former Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China ("the Code"), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Based on our judgment, the key audit matters that should be disclosed in this audit report are as follows:

Revenue recognition

Please refer to Note 4(m) and Note 6(s) of the consolidated financial statement for the related disclosures on revenue recognition.

3-1

Description of key audit matter:

Revenue is one of the key performance indicators for evaluating the financial and operational performance of the Group and draws public attention. Therefore, the revenue recognition was considered one of the key audit matters in our audit.

How the matter was addressed in our audit:

Our audit procedures included:

Assessing and testing the design, as well as the effectiveness of the operation on internal controls over sales and collection cycle; conducting trend analysis on revenues generated from top ten customers to assess the existence of any significant exception; performing tests of detail on sales transactions to assess the existence of the transactions and the accuracy of the recognized sales as well as the timing of the recognition; performing sales cut-off test over a period prior and post to the balance sheet date by vouching related documents of sales transactions to determine whether revenue have been recognized in proper period.

2. Subsequent measurement of inventories

Please refer to Note 4(h), Note 5 and Note 6(f) for the related disclosures on subsequent measurement of inventories.

Description of key audit matter:

The inventory of the Group comprises gems, jewelry and raw materials. Since fashion and trends keep changing rapidly and constantly, inventories might become out of date and difficult to meet market demand resulting in the risk that net realizable value of inventories is likely to be lower than costs.

The inventories are measured and recognized subsequently by the Group's management based on both internal and external evidence. Therefore, the subsequent measurement of inventories is considered one of the key audit matters in our audit.

How the matter was addressed in our audit:

Our audit procedures included:

Assessing the reasonableness of accounting policies for subsequent measurement of inventories; obtaining aging analysis of inventories and analyzing changes in inventory age categories to verify the appropriateness of the changes; obtaining details of subsequent measurement of inventories and understanding the reasonableness of selling prices adopted; verifying net realizable value of inventories by vouching the source documents of samples and determining whether related subsequent measurement of inventories has been appropriately disclosed .

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

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

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

3-2

Those charged with governance (including the Audit Committee) are responsible for overseeing the Group's financial reporting process.

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

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

3-3

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2019 and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors' report are Lily Lu and Chun-Hsiu Kuang.

KPMG

Taipei, Taiwan (Republic of China) March 13, 2020

Notes to Readers

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

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

Consolidated Balance Sheets

December 31, 2019 and 2018

(expressed in thousands of New Taiwan Dollars)

Assets 11xx Current assets: 1100 Cash and cash equivalents (note 6(a)) 1110 Financial assets at fair value through profit or loss`－`current (notes 6(b) and 6(u)) 1170 Trade receivables, net (notes 6(d) and 6(s)) 1200 Other receivables (note 6(e)) 1220 Current tax assets 130x Inventories (note 6(f)) 1470 Other current assets (notes 4(c) and 8) Total current assets 15xx Non-current assets: 1520 Non-current financial assets at fair value through other comprehensive income (note 6(c)) 1600 Property, plant and equipment (notes 6(h), 6(k) and 8) 1755 Right-of-use assets (notes 3(a), 6(i) and 6(l)) 1780 Intangible assets (note 6(j)) 1840 Deferred tax assets (note 6(o)) 1984 Other financial assets`－`non-current (note 8) Total non-current assets 1xxx Total assets	December 31, 2019 Amount % $ 462,759 24 - - 732,314 37 1,647 - 14,958 1 295,233 15 18,486 1 1,525,397 78 12,200 1 348,046 18 1,465 - 40,364 2 23,218 1 10,308 - 435,601 22 $ 1,960,998 100	December 31, 2018 Amount % 481,177 28 95,743 5 387,257 23 2,683 - - - 315,397 19 9,666 1 1,291,923 76 - - 347,093 20 - - 33,594 2 22,398 1 9,381 1 412,466 24 1,704,389 100 Liabilities and Equity 21xx Current liabilities: 2100 Short-term loans (notes 6(h), 6(k) and 8) 2150 Notes payables 2170 Trade payables 2200 Other payables (note 6(t)) 2230 Current tax liabilities 2280 Current lease liabilities (notes 3(a) and 6(l)) 2399 Other current liabilities Total current liabilities 25xx Non-current liabilities: 2570 Deferred tax liabilities (notes 6(o)) 2580 Non-current lease liabilities (notes 3(a) and 6(l)) 2640 Net defined benefit liabilities`－`non-current (notes 6(n)) 2645 Guarantee deposits received Total non-Current liabilities 2xxx Total liabilities 31xx Equity attributable to owners of the Company (notes 6(g), 6(p) and 6(q)) 3100 Common stock 3200 Capital surplus 33xx Retained earnings: 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings (accumulated deficits) Other equity: 3410 Exchange differences on translation of foreign financial statements 3490 Others Total equity attributable to owners of the Company: 36xx Non-controlling interests (note 6(g)) 3xxx Total equity 2-3xxx Total liabilities and equity	December 31, 2019		December 31, 2018 Amount % - - 281 - 50,831 3 163,808 10 19,143 1 - - 1,021 - 235,084 14 56,609 3 - - 29,495 2 3,569 - 89,673 5 324,757 19 385,000 23 433,262 26 50,135 3 28,481 2 230,640 13 309,256 18 7,984 - (17,248) (1) (9,264) (1) 1,118,254 66 261,378 15 1,379,632 81 1,704,389 100

See accompanying notes to consolidated financial statements.

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

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2019 and 2018

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

4000 Operating revenues (note 6(s)) 5000 Operating costs (notes 6(f), 6(h), 6(i), 6(j), 6(l), 6(m) 6(n)and 12) 5900 Gross profit 6000 Operating expenses (notes 6(d), 6(h), 6(i), 6(j), 6(l), 6(m), 6(n), 6(q), 6(t), 7 and 12): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Impairment loss determined in accordance with IFRS 9 Total operating expenses 6900 Operating income (losses) 7000 Non-operating income and expenses (notes 6(b), 6(l), and 6(u)): 7010 Other income 7020 Other gains and losses 7050 Finance costs Total non-operating income and expenses 7900 Profit (losses) before income tax 7950 Less: income tax expenses (note 6(o)) 8200 Profit (losses) for the period 8300 Other comprehensive income: 8310 Components of other comprehensive income that will not be reclassified subsequently to profit or loss 8311 Gains (losses) on remeasurements of defined benefit plans 8349 Less: income tax related to components of other comprehensive income that will not be reclassified subsequently to profit or loss Components of other comprehensive income that will not be reclassified subsequently to profit or loss 8360 Items that may be reclassified subsequently to profit or loss 8361 Exchange differences on translation of foreign operations 8399 Less: income tax related to items that may be reclassified subsequently to profit and loss Components of other comprehensive income that will be reclassified subsequently to profit or loss 8300 Other comprehensive income 8500 Total comprehensive income 8600 Profit (losses) attributable to (note 6(g)) : 8610 Owners of the Company 8620 Non-controlling interests Comprehensive income attributable to (note 6(g)): 8710 Owners of the Company 8720 Non-controlling interests Earnings (losses) per share (New Taiwan dollars) (note 6(r)) 9750 Basic earnings (losses) per share 9850 Diluted earnings (losses) per share	2019	% 100 87 13 4 10 4 - 18 (5) - (1) - (1) (6) - (6) - - - 4 - 4 4 (2) (8) 2 (6) (4) 2 (2) (3.83) (3.83)	2018
	Amount $ 1,809,297 1,583,125 226,172 68,965 180,582 70,286 10,337 330,170 (103,998) 12,578 (15,200) (4,228) (6,850) (110,848) 7,522 (118,370) 9,240 - 9,240 68,969 - 68,969 78,209 $ (40,161) $ (146,304) 27,934 $ (118,370) $ (79,151) 38,990 $ (40,161) $ $		Amount % 2,928,169 100 2,052,864 70 875,305 30 67,994 2 230,074 8 79,543 3 11,424 - 389,035 13 486,270 17 20,657 1 (1,830) - (705) - 18,122 1 504,392 18 136,986 5 367,406 13 (3,797) - - - (3,797) - 43,333 1 - - 43,333 1 39,536 1 406,942 14 206,394 8 161,012 5 367,406 13 239,144 8 167,798 6 406,942 14 5.41
			5.40

See accompanying notes to consolidated financial statements.

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

Consolidated Statements of Changes in Equity

For the years ended December 31, 2019 and 2018

(expressed in thousands of New Taiwan Dollars)

			Equity attributable to owners of the Company	Equity attributable to owners of the Company	Equity attributable to owners of the Company	Equity attributable to owners of the Company					Non-controlling interests Total equity
Common stock	Capital surplus		Retained earnings				Exchange differences on translation of foreign financial statements	Others	Total equity attributable to owners of the Company
		Legal reserve	Special reserve	Unappropriated retained earnings (accumulated deficits)		Total retained earnings
$ 381,600 - - - - - - 3,400 - 385,000 - - - - - (300) - $ 384,700	418,370 - - - - -	37,434 12,701 - - - -	40,893 - (12,412) - - - - - - 28,481 - - - - - - - 28,481		142,730 (12,701) 12,412 (114,480) 206,394 (3,715) 202,679 - - 230,640 (20,639) (154,000) (146,304) 9,046 (137,258) - - (81,257)	221,057 - - (114,480) 206,394 (3,715) 202,679 - - 309,256 - (154,000) (146,304) 9,046 (137,258) - - 17,998	(28,481) - - - - 36,465 36,465 - - 7,984 - - - 58,107 58,107 - - 66,091	- - - - - -		992,546 - - (114,480) 206,394 32,750 239,144 1,044 - 1,118,254 - (154,000) (146,304) 67,153 (79,151) - 5,073 890,176	136,756 1,129,302 - - - - (45,607) (160,087) 161,012 367,406 6,786 39,536 167,798 406,942 - 1,044 2,431 2,431 261,378 1,379,632 - - (143,531) (297,531) 27,934 (118,370) 11,056 78,209 38,990 (40,161) - - - 5,073 156,837 1,047,013
	-	-						-
	14,892 -	- -
	433,262 - - - -	50,135 20,639 - - -
	-	-
		- -
		70,774

See accompanying notes to consolidated financial statements.

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

Consolidated Statements of Cash Flows

For the years ended December 31, 2019 and 2018

(expressed in thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities:
Profit (loss) before tax
Adjustments:
Adjustments to reconcile profit (losses):
Depreciation expenses
Amortization expenses
Expected credit losses
Interest expenses
Interest income
Share-based payments
Loss on disposal of property, plant and equipment
Unrealized foreign exchange losses (gains)
Total adjustments to reconcile profit
Changes in operating assets and liabilities:
Financial assets mandatorily measured at fair value through profit or loss
Notes receivable
Trade receivable
Other receivable
Inventories
Other current assets
Total changes in operating assets
Notes payable
Trade payable
Other payable
Advance receipts
Other current liabilities
Net defined benefit liabilities
Total changes in operating liabilities
Total changes in operating assets and liabilities
Total adjustments
Cash inflows generated from (used in) operations
Interest received
Interest paid
Income taxes paid
Net cash flows from (used in) operating activities
Cash flows from (used in) investing activities:
Acquisition of financial assets at fair value through other comprehensive income
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
Increase in other financial assets－non-current
Net cash flows used in investing activities
Cash flows from (used in) financing activities:
Increase in short term loans
Increase in guarantee deposits received
Payments of lease liabilities
Cash dividends paid
Changes in non-controlling interests
Net cash flows from (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of period
Cash and cash equivalents at the end of period 2019
2018
$ (110,848)
504,392
54,308
51,837
5,544
4,899
10,337
11,424
4,228
705
(3,399)
(1,724)
5,073
1,044
1,568
164
(476)
398
77,183
68,747
100,524
(93,986)
-
2,057
(329,372)
(168,136)
1,228
(387)
38,196
(14,637)
(8,392)
3,140
(197,816)
(271,949)
(52)
(4,351)
4,341
(858)
(86,106)
53,161
-
(6,481)
3,492
(1,430)
5,760
1,461
(72,565)
41,502
(270,381)
(230,447)
(193,198)
(161,700)
(304,046)
342,692
3,399
1,724
(3,547)
(705)
(59,648)
(112,028)
(363,842)
231,683
(12,200)
-
(35,553)
(52,984)
731
73
(10,303)
(25,020)
(417)
(1,093)
(57,742)
(79,024)
687,305
(247,752)
33
322
(1,584)
-
(297,531)
(160,087)
-
2,431
388,223
(405,086)
14,943
12,294
(18,418)
(240,133)
481,177
721,310
$
462,759
481,177

See accompanying notes to consolidated financial statements.

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

Notes to the Consolidated Financial Statements

December 31, 2019 and 2018

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

(1) Company history

Regal Holding Co., Ltd. (the "Company") was established in the Cayman Islands in October 2014. The main purpose of the establishment was to restructure its group entities for application to list on Taiwan Stock Exchange ("TWSE") in the Republic of China. The Company become the holding company of Regal Jewelry Manufacture Co., Ltd. ("RJM") by using share swaps with previous shareholders of RJM to restructure the group. The Company's shares have been listed and traded on the TWSE since June 26, 2017. The main business of the Company and subsidiaries are designing, manufacturing, electroplating and selling jewelry and gems. Please refer to note 6(s).

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

The consolidated financial statements were approved by to the Board of Directors on March 13, 2020.

(3) New standards, amendments and interpretations adopted:

(a) The impact of adopting the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. (“FSC”) :

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

are effective for annual periods beginning on or after January 1, 2019.
	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
IFRS 16 “Leases”	January 1, 2019
IFRIC 23 “Uncertainty over Income Tax Treatments”	January 1, 2019
Amendments to IFRS 9 “Prepayment Features with Negative Compensation”	January 1, 2019
Amendments to IAS 19 “Plan Amendment, Curtailment or Settlement”	January 1, 2019
Amendments to IAS 28 “Long-term interests in Associates and Joint Ventures”	January 1, 2019
Annual Improvements to IFRS Standards 2015–2017 Cycle	January 1, 2019

Except for IFRS 16“Leases”, the adoption of the above IFRSs would not have any material impact on its consolidated financial statements. The extent and impact of signification changes are as follows:

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

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group applied IFRS 16 using the modified retrospective approach in measuring its right-of-use assets at an amount equal to the lease liability, with no restatement of comparative information. The details of the changes in accounting policies are disclosed below.

(i) Definition of a lease

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

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

(ii) As a lessee

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

The Group decided to apply the recognition exemptions to its short-term leases or its leases of low-value assets such as printers and other office equipment.

At transition, lease liabilities were measured at the present value of the remaining lease payments, discounted at the Group’s incremental borrowing rate as at January 1, 2019. Rightof-use assets are measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments.

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

－ Applied a single discount rate to a portfolio of leases with similar characteristics.
－ Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term.
(iii) Impacts on financial statements

On transition to IFRS 16, the Group recognized an additional amount of $3,083 thousands of both right-of-use assets and lease liabilities. When measuring lease liabilities, the Group discounted the lease payments using its incremental borrowing rate at January 1, 2019. The weighted-average rate applied was 2.60%.

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The reconciliation between operating lease commitments at the end of the period immediately preceding the date of initial application, and lease liabilities recognized in the balance sheet at the date of initial application, was disclosed as follows:

Operating lease commitments at December 31, 2018 Recognition exemption for: short-term leases leases of low-value assets Extension options reasonably certain to be exercised Discounted using the incremental borrowing rate at January 1, 2019 (Lease liabilities recognized at January 1, 2019)	January 1, 2019 $ 2,562 (754) (320) 1,680 $ 3,168 $ 3,083

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

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

1080323028 issued by the FSC on July 29, 2019:
	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
Amendments to IFRS 3 “Definition of a Business”	January 1, 2020
Amendments to IFRS 9, IAS39 and IFRS7 “Interest Rate Benchmark Reform”	January 1, 2020
Amendments to IAS 1 and IAS 8 “Definition of Material”	January 1, 2020

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

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

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

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

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(4) Summary of significant accounting policies:

The significant accounting policies presented in the consolidated financial statements are summarized below. Except for the changes in accounting policies specifically indicated in note 3 and note 4(j), the following accounting policies were applied consistently throughout the periods presented in the consolidated financial statement.

(a) Statement of compliance

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

(b) Basis of preparation

(i) Basis of measurement

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

1) Financial instruments at fair value through profit or loss are measured at fair value;
2) Financial assets at fair value through other comprehensive income are measured at fair value.
3) The defined benefit liabilities are measured at fair value of the plan assets less the present value of the defined benefit obligation with the limit explained in note 4(n).
(ii) Functional and presentation currency

The functional currency of each entity of the Group is determined based on the primary economic environment in which the entity operates. The consolidated financial statements are presented in New Taiwan dollar, which is the Company's functional currency. All financial information presented in New Taiwan dollar has been rounded to the nearest thousand.

(c) Basis of consolidation

(i) Principles of preparation of the consolidated financial statements

The consolidated financial statements comprise the Company and its subsidiaries. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Gains and losses attributable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

Intragroup balances and transactions, and any unrealized income and expenses arising from intragroup transactions are eliminated in preparing the consolidated financial statements.

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Changes in the Group's ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

(ii) List of subsidiaries in the consolidated financial statements

Name of investor	Name of subsidiary	Business activities	Percentage of ownership (%)
			December 31, 2019 December 31, 2018
The Company The Company The Company The Company The Company RJM RJM RJM GVG Hong Kong	Regal Jewelry Manufacture Co., Ltd. (RJM) GIO VAN GOGH (International) Jewelry Ltd. (GVG Hong Kong) (Note 1) Regal Management Solution Co., Ltd. (RMS) Chaporo Co., Ltd. (Chaporo) Regal Innovation Co., Ltd. (RGI) Regal Plating Co., Ltd. (RGP) Regal Management Solution Co., Ltd. (RMS) Linden Integrated Co., Ltd. (Linden) Gio Van Gogh Shen Zhen Ptd Ltd. (GVG Shen Zhen) (Note 1)	Designing, manufacturing and selling jewelry and gems Investment activities Technical services and resources consulting Investment activities Selling jewelry and gems Jewelry and gems planting Investment activities Selling jewelry and gems Selling jewelry and gems	% 99.99 % 99.99 % 100.00 % 100.00 % 99.99 (Note 2) % 99.99 (Note 2) % 70.00 (Note 3) % 70.00 (Note 3) % 100.00 (Note 4) % - % 51.00 % 51.00 % - (Note 2) % 49.00 (Note 5) % 49.00 (Note 5) % 100.00 % 100.00

Note 1: A resolution was made by the Board of Directors of the Company on November 13, 2019, for a capital injection amounting to CNY 3,100 thousand into GVG Shen Zhen for it to settle its outstanding debts and fulfill the working capital. The Company thereby made its first investment of capital amounting to CNY 1,400 thousand into GVG Shen Zhen through GVG Hong Kong in December 2019. However, as of December 31, 2019, the injected capital was on hold by GVG Shen Zhen's bank, since the registration procedures have not yet been completed. The Group recorded the injected capital as other current assets.
Note 2: RMS was registered and established by RJM on April 5, 2018, and was transferred to the Company on August 14, 2018 through group restructuring. The Company made a capital injection amounting to THB 10,000 thousand on December 14, 2018.
Note 3: To increase the production capacity of gems and jewelry, a resolution was made by the Board of Directors of the Company on November 12, 2018, for an investment amounting to USD 3,500 thousand to establish a subsidiary, Chaporo Co., Ltd., by owning 70% of its shares, and for an investment amounting to THB 110,000 thousand to acquire Elex Precise Co., Ltd through Chaporo Co., Ltd. by share subscription and acquisition from its previous shareholders. Chaporo was registered and established by the Company in Seychelles on October 5, 2018, and thereafter, the Company made a capital injection amounting to USD 5 thousand on April 30, 2019. However, after evaluating the target company, the Company found that the potential benefits of the acquisition did not meet its expectation. Therefore, the Board of Directors of the Company made a resolution on August 14, 2019, to terminate the acquisition of Elex Precise Co., Ltd.
Note 4: To expand business and manage supply chains, a resolution was made by the Board of Directors of the Company on August 14, 2019, for an investment amounting to NTD 30,000 thousand to establish a subsidiary, Regal Innovation Co., Ltd., by owning 100% of its shares. The incorporation procedures have been completed on October 18, 2019. The registered capital was NTD 30,000 thousand and paid in capital was NTD 25,000 thousand.

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REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Note 5: Linden was registered and established by RJM on December 13, 2018. A capital injection amounting to THB 2,450 thousand was made by RJM on December 26, 2018. RJM or RH is responsible for assigning personnel for Linden's management, and those in charged with governance, operating activities, and operating sites. They are also responsible for providing merchandise to Linden. Therefore, the Company has substantive rights of control over Linden.

All subsidiaries of the Company are included in the consolidated financial statements.

(d) Foreign currencies

(i) Foreign currency transactions

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

Non-monetary items denominated in foreign currencies that are measured at fair value are translated into the functional currency using the exchange rate at the date that the fair value was determined. Non-monetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of the transaction, exchange differences are generally recognized in profit or loss.

(ii) Foreign operation

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

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

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

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

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

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

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REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) It is held primarily for the purpose of trading;
(iii) It is expected to be realized within twelve months after the reporting period;
(iv) The asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

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

An entity shall classify a liability as current when:

(i) It is expected to be settled in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is due to be settled within twelve months after the reporting period, despite the fact that a long-term refinance is completed or a debt agreement is rearranged during the period between the reporting date and the approval date.
(iv) It does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.
(f) Cash and cash equivalents

Cash comprises cash on hand, demand deposits, checking deposits and fixed deposits. Cash and cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.

Bank overdrafts that are repayable on demand and form an integral part of the Company's cash management are included as a component of cash and cash equivalents for the purpose of the consolidated statement of cash flows.

(g) Financial instruments

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

Trade receivables issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the instrument. A financial asset (except for a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, in the case of a financial asset or financial liability not at fair value through profit or loss ("FVTPL"), transaction costs that are directly attributable to its acquisition or issuance of the financial asset or financial liability. A trade receivable without a significant financing component is initially measured at the transaction price.

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REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Financial assets

On initial recognition, a financial asset is classified as measured at amortized cost, fair value through other comprehensive income ("FVOCI"), or FVTPL.

Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model

1) Financial assets measured at amortized cost

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

‧ it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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

2) Fair value through other comprehensive income (FVOCI)

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

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

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

3) Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost or FVOCI described as above are classified as FVTPL.

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

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REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

4) Impairment of financial assets

The Group recognizes impairment for expected credit losses ("ECL") on financial assets measured at amortized cost (including cash and cash equivalents, accounts receivable, other receivables, refundable deposits and other financial assets).

At each reporting date, the Group performs impairment assessment on its financial assets and contract assets with significant financing components. The Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Group’s historical experience and informed credit assessment, as well as forward looking information. The Group measures impairment at an amount equal to 12 month ECL when the credit risk of a financial asset has not increased significantly. It measures impairment at an amount equal to lifetime ECL when the credit risk of a financial asset has increased significantly. Impairment for accounts receivable and contract assets which do not contain a significant financing component are measured at an amount equal to lifetime ECL.

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

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

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

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

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

Impairment for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. The Group recognizes the increase of expected credit losses (or reversal) in profit or loss, as an impairment gain or loss.

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Group determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.

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REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

5) Derecognition of financial assets

Financial assets are derecognized when the contractual rights to the cash flows from the financial assets expire, or when the Group transfers substantially all the risks and rewards of ownership of its financial assets.

(ii) Financial liabilities

1) Other financial liabilities

Financial liabilities not classified as held for trading or designated as at fair value through profit or loss are measured at fair value, including short-term loans, trade payables and other payables. Subsequent to initial recognition, those financial liabilities are measured at amortized cost calculated using the effective interest method, except for short-term financial liabilities, for which interest impacts are insignificant to the measurement. Interest expense not capitalized as capital cost is recognized in profit or loss, and is included in finance costs.

2) Derecognition of financial liabilities

The Group derecognizes a financial liability when its contractual obligation has been discharged or cancelled, or has expired. The difference between the carrying amount of a financial liability extinguished and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss, and is included in nonoperating income or expenses.

3) Offsetting of financial assets and liabilities

The Group presents financial assets and liabilities on a net basis in the balance sheet when the Group has the legally enforceable right to offset, and intends to settle such financial assets and liabilities on a net basis, or to realize the assets and settle the liabilities simultaneously.

(h) Inventories

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

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

(i) Property, plant and equipment
(i) Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset.

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REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

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

(ii) Subsequent cost

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

(iii) Depreciation

Except that land is not depreciated, depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment.

The estimated useful lives for the current and comparative years of significant items of property, plant and equipment are as follows:

Buildings	10~20 years
Machinery and equipment	5 years
Transportation equipment	5 years
Office equipment	3~5 years
Land improvement	5 years

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

(j) Lease

Applicable from January 1, 2019

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

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

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REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date discounted using the Group's incremental borrowing rate. The lease liability is subsequently measured at amortized cost using the effective interest method. When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-ofuse asset has been reduced to zero.

The lease payments shall be discounted using the interest rate implicit in the lease if that rate can be reliably determined. If that rate cannot be reliably determined, the Group shall use its incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

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

Applicable before January 1, 2019

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

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

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

Payments made under operating leases (excluding insurance and maintenance expenses) are recognized in expenses on a straight-line basis over the term of the lease. Total income provided from lessor as an incentive to achieve the agreement is recognized as a reduction of expenses on a straight-line basis over the term of the lease.

Contingent rent is recognized as expense in the period in which it is incurred

(k) Intangible assets

The Group's intangible assets are computer programs, which are measured at cost less accumulated amortization and accumulated impairment losses. The amortizable amount is the cost of an asset less its residual value. Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use. The estimated useful lives are 3~5 years.

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

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REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(l) Impairment of non-financial assets

The carrying amounts of the Group's non-financial assets, other than assets arising from inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. If it is not possible to determine the recoverable amount for the individual asset, then the Group will have to determine the recoverable amount for the asset's cash generating unit ("CGU").

The recoverable amount for an individual asset or a CGU is the higher of its fair value less costs to sell and its value in use. If, and only if, the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset shall be reduced to its recoverable amount; and that reduction will be accounted as an impairment loss, which shall be recognized immediately in profit or loss.

An assessment is made at the end of each reporting period as to whether there is any indication that an impairment loss recognized in prior periods for an asset other than goodwill may no longer exist or may have decreased. If any such indication exists, the recoverable amount of that asset is estimated. An impairment loss recognized in prior periods for an asset other than goodwill is reversed to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(m) Revenue

Revenue is measured based on the consideration to which the Group expects to be entitled in exchange for transferring goods or services to a customer. The Group recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied.

(n) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.

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REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Defined benefit plans

A defined benefit plan is a post employment benefit plan other than a defined contribution plan. The Group's net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods, based on the discounted present value of the said defined benefit obligation. The fair values of any plan assets are deducted for purposes of determining the Group's net defined benefit obligation. The discount rate used in calculating the present value is the market yield at the reporting date of high quality market corporate bonds or government bonds that have maturity dates approximating the terms of the Group's obligations and that are denominated in the same currency in which the benefits are expected to be paid.

The calculation is performed annually by a qualified actuary using the projected unit credit method. If the calculation results in a benefit to the Group, the recognized asset is limited to the total of the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. In calculating the present value of economic benefits, consideration is given to any minimum funding requirements that apply to any plan in the Group. An economic benefit is available to the Group if it is realizable during the life of the plan, or on settlement of the plan liabilities.

If the benefits of a plan are amended, the pension cost incurred from the portion of the increased benefit relating to past service provided by employees, is recognized immediately in profit or loss.

Remeasurements of the net defined benefit liability (asset), which comprise (1) actuarial gains and losses, (2) the return on plan assets (excluding interest), and (3) the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income. The Group can reclassify the amounts recognized in other comprehensive income to retained earnings.

(iii) Short-term employee benefits

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

(o) Share-based payment

The grant-date fair value of share-based payment awards granted to employees is recognized as employee expenses, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The amount recognized as an expense is adjusted to reflect the number of awards whose related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

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REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

For share-based payment awards with non-vesting conditions, the grant-date fair value of the sharebased payment is measured to reflect such conditions, and there is no true-up for differences between expected and actual outcomes.

(p) Income taxes

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

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

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

(i) temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits or losses at the time of the transaction;
(ii) temporary differences related to investments in subsidiaries and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
(iii) taxable temporary differences arising on the initial recognition of goodwill

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date.

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

(i) the Group has a legally enforceable right to set off current tax assets against current tax liabilities; and
(ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on tither:
1) the same taxable entity; or
2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

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REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Deferred tax assets are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized; such reductions are reversed when the probability of future taxable profits improves.

(q) Earnings per share

The Group discloses the Company's basic and diluted earnings per share attributable to ordinary shareholders of the Company. Basic earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding. The issued shares from capitalization of retained earnings or capitalization of capital surplus are calculated retrospectively, even the record date of capitalization aforementioned is before the submission date of financial statements.

Diluted earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding after adjustment for the effects of all potentially dilutive ordinary shares, such as employee compensation .

(r) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group). Operating results of the operating segment are regularly reviewed by the Group's chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance. Each operating segment consists of discrete financial information.

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

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

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

There are no judgments made in applying accounting policies that have significant effects on the amounts recognized in the consolidated financial statements.

Inventories are the account with assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year. As inventories are stated at the lower of cost and net realizable value, the management has to determine net realizable value of inventories at the end of reporting period by judgments and estimation. The management estimates the inventory obsolescence and decline in market value and then writes down the cost of inventories to net realizable value.

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REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(6) Explanation of significant accounts:

(a) Cash and cash equivalents

Cash Demand deposits Checking deposits Fixed deposits Cash and cash equivalents in consolidated statement of cash flows	December 31, 2019 December 31, 2018 $ 6,844 4,431 424,907 414,914 508 52 30,500 61,780 $ 462,759 481,177

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

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

Mandatorily measured at fair value through profit or loss: Offshore fund beneficiary certificate	December 31, 2019 December 31, 2018 $ - 95,743

The Group uses derivative financial instruments to hedge its foreign exchange risks. There is no outstanding forward exchange contract as of December 31, 2019.

For the net gain or loss arising from the fair value remeasurement of non-derivatives and derivative contracts in profit or loss, please refer to note 6(u).

The Group's financial assets measured at fair value through profit or loss were not pledged as collateral as of December 31, 2018.

－ (c) Financial assets at fair value through other comprehensive income non-current

Financial assets at fair value through other comprehensive income: Unlisted stocks – foreign companies	December 31, 2019 December 31, 2018 $ 12,200 -

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

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REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(d) Trade receivables

Trade receivables Less: loss allowance	December 31, 2019 December 31, 2018 $ 749,940 394,050 (17,626) (6,793) $ 732,314 387,257

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

The Group's analysis on the expected credit loss of its trade receivables in the region of Thailand as of December 31, 2019 and 2018 was as follows:

Not yet due Past due 1~30 days Past due 91~180 days Past due 181~365 days Over 1 year Not yet due Past due 1~30 days Past due 31~60 days Past due 91~180 days Over 1 year	December 31, 2019	December 31, 2019
	Book value of trade receivables Lifetime expected credit loss rate (%) Allowance for lifetime expected credit loss $ 552,982 - - 94,745 - - 462 8.31 38 293 41.67 122 5,579 100.00 5,579 $ 654,061 5,739 December 31, 2018
	Book value of trade receivables $ 267,663 3,450 211 1 5,266 $ 276,591	Lifetime expected credit loss rate (%) Allowance for lifetime expected credit loss - - - - - - 5.56 - 100.00 5,266 5,266

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REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group’ s analysis on the expected credit loss of its trade receivables in other regions as of December 31, 2019 and 2018 was as follows:

		December 31, 2019	December 31, 2019
				Allowance for
			Lifetime	lifetime
		Book value of	expected credit	expected credit
	trade receivables		loss rate (%)	loss
Not yet due	$	48,022	0.40	190
Past due 1~30 days		36,513	1.59	582
Past due 31~60 days		274	11.96	33
Past due 61~90 days		349	21.16	74
Past due 91~180 days		178	33.98	60
Past due 181~365 days		218	57.42	125
Over 1 year		10,325	100.00	10,325
	$	95,879		11,389
		December 31, 2018
				Allowance for
			Lifetime	lifetime
		Book value of	expected credit	expected credit
	trade receivables		loss rate (%)	loss
Not yet due	$	41,542	0.66	272
Past due 1~30 days		52,834	2.00	1,059
Past due 31~60 days		17,682	3.98	703
Past due 61~90 days		3,702	7.18	266
Past due 91~180 days		10	16.79	2
Past due 181~365 days		137	36.09	50
Over 1 year		1,552	100.00	1,552
	$	117,459		3,904
The movements of the loss allowance for trade receivables were			as follows:
			2019	2018
Balance at the beginning		$	6,793	5,530
Impairment losses recognized			10,337	11,424
Amounts written off			-	(10,393)
Foreign currency translation effects			496	232
Balance at the end		$	17,626	6,793

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(e) Other receivables

Other receivables Less: loss allowance	December 31, 2019 December 31, 2018 $ 1,647 2,683 - - $ 1,647 2,683

The Group did not have any past due other receivables as of December 31, 2019 and 2018.

For further credit risk information, please refers to note 6(v).

(f) Inventories

Raw materials Work in process Finished goods Supplies and spare parts Raw materials Work in process Finished goods Supplies and spare parts	December 31, 2019	December 31, 2019
	Cost Allowance for devaluation and obsolescence Net realizable value $ 246,238 51,842 194,396 85,653 10,442 75,211 20,083 5,107 14,976 14,533 3,883 10,650 $ 366,507 71,274 295,233 December 31, 2018
		Allowance for devaluation and obsolescence Net realizable value 57,182 193,506 5,375 89,692 5,098 20,223 2,194 11,976 69,849 315,397

The movements of the allowance for devaluation and obsolescence in inventories were as follows:

Beginning balances Reversal of the allowance for devaluation and obsolescence of inventory Foreign currency translation effects Ending balances	2019 2018 $ 69,849 75,590 (2,550) (8,479) 3,975 2,738 $ 71,274 69,849

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

In addition to the regular costs of goods sold, the following profit and loss were the components included in the Group's operating costs:

Reversal gain on the allowance for inventory devaluation and obsolescence Revenue from sales of scrap	2019 2018 $ (2,550) (8,479) (10,919) (15,028) $ (13,469) (23,507)

As of December 31, 2019 and 2018, the Group did not pledge the inventories as collateral.

(g) Material non-controlling interests of subsidiaries

The material non-controlling interests of subsidiaries were as follows:

Subsidiary Regal Plating Co., Ltd.	Main operation place/ country of incorporation Thailand	Percentage of non- controlling interests
		December 31, 2019 December 31, 2018 % 49 % 49

The following information of the aforementioned subsidiary has been prepared in accordance with the IFRSs endorsed by the FSC. Intra-group transactions were not eliminated in this information.

Regal Plating Co., Ltd.'s collective financial information

Current assets Non-current assets Current liabilities Non-current liabilities Net assets Non-controlling interests Sales revenue Net income Other comprehensive income Profit for current period attributable to non-controlling interests Comprehensive income attributable to non-controlling interests	December 31, 2019 December 31, 2018 $ 303,083 562,582 26,743 27,070 (13,706) (60,291) (866) (885) $ 315,254 528,476 $ 154,474 258,953 2019 2018 $ 517,506 1,326,895 $ 57,427 328,609 22,272 13,848 $ 79,699 342,457 $ 28,139 161,018 $ 39,053 167,804

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Net cash flows from operating activities Net cash flows used in financing activities Net increase (decrease) in cash and cash equivalents Dividends to non-controlling interests	2019 2018 $ 201,697 136,480 (292,920) (93,075) $ (91,223) 43,405 $ (143,531) (45,607)

(h) Property, plant and equipment

The cost, depreciation, and impairment losses of the property, plant and equipment of the Group for the years ended December 31, 2019 and 2018, were as follows:

Land $ 166,532 - - - 9,888	Buildings 235,535 1,069 - 13 13,996	Machinery and equipment 306,509 14,566 (28,047) 7,414 18,139	Transportation equipment 26,438 5,255 (1,986) 2 1,599	Office equipment 123,628 10,042 (1,997) 324 7,356	Land improvement 9,936 419 - - 593
$ 176,420	250,613	318,581	31,308	139,353	10,948
$ 160,312 - - 6,220	201,678 25,610 - 8,247	277,782 22,529 (4,866) 11,064	17,173 8,459 - 806	108,316 16,567 (5,606) 4,351	9,503 74 (10) 369
$ 166,532	235,535	306,509	26,438	123,628	9,936
$ - - - -	149,210 14,644 - 8,992	252,349 23,163 (26,513) 14,948	16,542 3,357 (1,255) 1,001	97,481 11,481 (1,963) 5,842	9,803 60 - 583
$ -	172,846	263,947	19,645	112,841	10,446
$ - - - -	130,212 13,719 - 5,279	223,512 24,678 (4,838) 8,997	12,995 2,993 - 554	88,957 10,401 (5,397) 3,520	9,402 46 (10) 365
$ -	149,210	252,349	16,542	97,481	9,803
$ 176,420	77,767	54,634	11,663	26,512	502
$ 166,532	86,325	54,160	9,896	26,147	133
$ 160,312	71,466	54,270	4,178	19,359	101

Please refer to note 8 for the disclosure of assets pledged as collateral for loans.

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Right-of-use assets

The Group leases buildings. Information about leases for which the Group as a lessee was presented below:

Cost:
Balance at January 1, 2019
Effects of retrospective application
Balance at January 1, 2019 after adjustment
Foreign currency translation effect
Balance at December 31, 2019
Accumulated depreciation:
Balance at January 1, 2019
Effects of retrospective application
Balance at January 1, 2019
Depreciation
Foreign currency translation effect
Balance at December 31, 2019
Carrying amount:
Balance at December 31, 2019

Buildings
$ -
3,083
3,083
(45)
$
3,038
$ -
-
-
1,603
(30)
$
1,573
$
1,465

The Group leases its office space under operating lease for the year ended December 31, 2018, please refer to note 6(m).

(j) Intangible assets

The cost, amortization, and impairment losses of the intangible assets of the Group for the years ended December 31, 2019 and 2018, were as follows:

Costs: Balance at January 1, 2019 Additions Foreign currency translation effect Balance at December 31, 2019	Computer software $ 73,786 9,454 4,412 $ 87,652	Trademark Total - 73,786 849 10,303 8 4,420 857 88,509

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Balance at January 1, 2018 Additions Disposals Reclassification Foreign currency translation effect Balance at December 31, 2018 Amortization and impairment loss: Balance at January 1, 2019 Amortization Foreign currency translation effect Balance at December 31, 2019 Balance at January 1, 2018 Amortization Disposals Foreign currency translation effect Balance at December 31, 2018 Carrying amount: Balance at December 31, 2019 Balance at December 31, 2018 Balance at January 1, 2018	Computer software $ 42,755 25,020 (89) 3,999 2,101 $ 73,786 $ 40,192 5,544 2,409 $ 48,145 $ 33,993 4,899 (89) 1,389 $ 40,192 $ 39,507 $ 33,594 $ 8,762	Trademark Total - 42,755 - 25,020 - (89) - 3,999 - 2,101 - 73,786 - 40,192 - 5,544 - 2,409 - 48,145 - 33,993 - 4,899 - (89) - 1,389 - 40,192 857 40,364 - 33,594 - 8,762

(k) Short-term loans

Letters of credit Secured bank loans Unused credit lines Interest rate (%)	December 31, 2019 December 31, 2018 $ 248,753 - 444,312 - $ 693,065 - $ 1,481,013 1,873,991 1.25~2.8 -

Please refer to note 8 for the information of the collateral for loans.

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(l) Lease liabilities

Less than one year Between one and five years Current Non-current	December 31, 2019	December 31, 2019
	Future minimum lease payments $ 1,227 280 $ 1,507 $ 1,227 $ 280	Interests Present value of minimum lease payments 21 1,206 2 278 23 1,484 21 1,206 2 278

There were no significant issuance, repurchases and repayments of lease liabilities for the year ended December 31, 2019.

The amounts recognized in profit or loss were as follows:

Interests on lease liabilities Expenses relating to short-term leases Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets	2019	2019
	$ 61 $ 655 $ 334

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

Total cash outflow for leases	2019
	$ 2,634

(i) Building leases

As of December 31, 2019, the Group leases buildings for its office space, which typically run for a period of 1 to 2 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.

(ii) Other leases

The Group also leases printers and other office equipment with contract terms of one to five years. These leases are short-term leases or leases of low-value items. The Group has elected not to recognize its right-of-use assets and lease liabilities for these leases.

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

`－` (m) Operating leases lessee

There were not any non-cancellable operating lease agreements at December 31, 2018.

Operating lease expenses were as follows:

Operating costs Operating expenses Total	2018 $ 222 3,283 $ 3,505

(n) Employee benefits

(i) Defined benefit plans

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

Net defined benefit liabilities	December 31, 2019 December 31, 2018 $ 27,735 29,495

1) Movements in present value of the defined benefit obligations

The movements in present value of the defined benefit obligations for the Group were as follows:

Defined benefit obligations at the beginning

Current service costs and interest cost
Remeasurements of the net defined benefit
liabilities
－Actuarial gains and losses arising from
changes in adjustments based on experiences
－Actuarial gains and losses arising from
changes in demographic assumptions
－Actuarial gains and losses arising from
changes in financial assumptions
Past service costs
Effect of movements in exchange rates
Benefits paid
Defined benefit obligations at December 31 2019
2018
$ 29,495
23,249
6,910
4,624
(2,237)
13,083
(9,976)
(9,814)
2,973
528
2,357
-
1,802
927
(3,589)
(3,102)
$
27,735
29,495

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Expenses recognized in profit or loss

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

Current service costs Net interest of net liabilities for defined benefit obligations Past service costs Operating costs Administration expenses	2019 2018 $ 5,838 3,942 1,072 682 2,357 - $ 9,267 4,624 $ 5,583 2,913 3,684 1,711 $ 9,267 4,624

3) Remeasurement of defined benefit liabilities recognized in other comprehensive income

The Group's remeasurements of the defined benefit liabilities recognized in other comprehensive income for the years ended December 31, 2019 and 2018, were as follows:

Accumulated amounts at the beginning Amounts recognized during the period Accumulated amounts at December 31	2019 2018 $ (15,981) (12,184) 9,240 (3,797) $ (6,741) (15,981)

4) Actuarial assumptions

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

Discount rate (monthly paid employees) Discount rate (daily paid employees) Future salary increase rate (monthly paid employees) Future wages increase rate (daily paid employees)	December 31, 2019 December 31, 2018 1.52%~1.71% 3.38%~3.56% 1.50%~1.89% 3.56%~3.66% 4.26% 5.04% 2.86% 3.04%

The expected payments to be made by the Group to the defined benefit plans for the oneyear period after the reporting date is $5,461 thousand.

The weighted average lifetimes of the defined benefits plans for daily paid and monthly paid employees are 18 years and 14 years, respectively.

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

5) Sensitivity analysis

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

December 31, 2019 Discount rate (changes: 0.50%) Future salary increasing rate (changes: 0.50%) December 31, 2018 Discount rate (changes: 0.50%) Future salary increasing rate (changes: 0.50%)	Impact on defined benefit obligations Increased 0.50% Decreased 0.50% (457) 864 470 (438) (899) 949 445 (411)

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

There is no change in the method and assumptions used in the preparation of sensitivity analysis for 2019 and 2018.

(ii) Defined contribution plans

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

The pension costs incurred from the contributions to the Bureau of the Labor Insurance amounted to $280 thousand and $193 thousand for the years ended December 31, 2019 and 2018, respectively.

(o) Income taxes

(i) The Company was incorporated in the Cayman Islands, where corporate income tax is not required to be paid. RJM, RGP, RMS, Linden and RGI’s statutory income tax rate is 20%. GVG Hong Kong 's statutory income tax rate is 16.5%. GVG Shenzhen's statutory income tax rate is 25%.

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) The components of income tax in the years 2019 and 2018 were as follows:

Current tax expense Current period Deferred tax expenses (benefits) Origination and reversal of temporary differences Income tax expense	2019 2018 $ 24,724 123,640 (17,202) 13,346 $ 7,522 136,986

Reconciliation of income tax and profit before tax for 2019 and 2018 was as follows:

Profit (losses) excluding income tax Income tax using the statutory tax rate at each jurisdictions Estimated tax arising from subsidiary's earning distribution Non-deductible expenses Total	2019 2018 $ (110,848) 504,392 $ 11,485 108,458 (7,357) 26,651 3,394 1,877 $ 7,522 136,986

(iii) Deferred tax assets and liabilities

1) Unrecognized deferred tax assets

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

The carryforward of unused tax losses	December 31, 2019 December 31, 2018 $ 24,281 -

Based on the tax regulations in the respective jurisdictions where the subsidiaries are located, tax-losses incurred from the tax exempt business during the tax exemption period can be carried forward and deducted for income tax reporting purposes within five years after the expiry of the tax exemption period. Tax losses derived from non-tax exempt business can be carried forward and deducted for tax reporting purposes within five years after the year when the tax losses are incurred.

Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will be available against which the Group can utilize the benefits therefrom.

As of December 31, 2019, the unrecognized deferred tax assets was RJM's estimated 2019 tax losses amounting to $121,407 thousand, which can be carried forward up to five years until 2024.

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Recognized deferred tax assets and liabilities

Changes in the amount of deferred tax assets and liabilities for 2019 and 2018 were as follow:

Deferred tax liabilities:

Balance at January 1, 2019 Recognized in profit or loss Balance at December 31, 2019 Balance at January 1, 2018 Recognized in profit or loss Balance at December 31, 2018	Taxable investment income $ (56,609) 17,707 $ (38,902) $ (42,621) (13,988) $ (56,609)

Deferred tax assets:

Balance at January 1, 2019 Recognized in profit or loss Effect of exchange rate changes Balance at December 31, 2019 Balance at January 1, 2018 Recognized in profit or loss Effect of exchange rate changes Balance at December 31, 2018	Impairment losses on trade receivables $ 1,359 2,067 99 $ 3,525 $ 920 396 43 $ 1,359	Impairment losses on inventories 13,669 (529) 807 13,947 15,117 (2,002) 554 13,669	Accrued pension liabilities 5,821 (696) 344 5,469 4,572 1,051 198 5,821	Others Total 1,549 22,398 (1,347) (505) 75 1,325 277 23,218 323 20,932 1,197 642 29 824 1,549 22,398

(iv) Examination and approval

The Company is not required to pay income tax in the country where it is incorporated.

In Thailand, where RJM, RGP, RMS, and Linden operates, the corporate income tax returns are examined by the tax authority without issuing official approval certificates. Income taxes paid in prior years have received income tax receipts up to 2018. Corporate income tax returns submitted by GVG Hong Kong and GVG Shen Zhen had been approved by the revenue department through 2018.

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(p) Capital and other equity

Reconciliation of share outstanding for the years ended December 31, 2019 and 2018 was as follow:

Balance of outstanding shares onDecember 31(as of balance of outstanding shares on January 1) Restricted shares issued to employees at January 1 Restricted shares granted to employees Restricted shares canceled Balance of restricted shares issued to employees on December 31 Balances of total shares issued on December 31	Unit: thousand shares Common Stock 2019 2018 38,160 38,160 340 - - 340 (30) - 310 340 38,470 38,500

As of December 31, 2019 and 2018, the total value of authorized ordinary shares each amounted to $600,000 thousand, with a par value of $10 per share. There were $384,700 thousand and $385,000 thousand ordinary shares issued at December 31, 2019 and 2018, respectively.

(i) Issuance of common stock

During the shareholders' meeting, the shareholders approved a resolution on June 22, 2017 to issue 340 thousand restricted shares to employees amounting $3,400 thousand, with par value of $10 per share. Only full-time employees of the Group that meet certain conditions are eligible to be granted. The application for issuance of the restricted shares was registered at the Securities and Futures Bureau of the FSC. on December 21, 2017. A resolution was made by Board of Directors on November 12, 2018, to issue those restricted shares and to decide November 28, 2018, as the record date of the issuance. The registration for capital increase had been completed. The company granted 340 thousand restricted shares to employees in 2018, － resulting in increase in capital surplus restricted shares amounting $14,892 thousand.

A resolution was made by the Board of Directors on August 14, 2019 to cancel a total of 30 thousand shares which were recalled on April 18, 2019 and June 5, 2019, with a par value of $10 per share. The record date of the transaction was August 16, 2019. The registration for the cancellation has been completed. These procedures resulted in adjusting capital surplus– restricted shares to employees for $1,314 thousand and employee’s unearned remuneration for $1,614 thousand.

As of November 19, 2019, the Company recalled 70 thousand restricted shares due to the resignation of the employees, with a par value of $10 per share, and correspondingly adjusted － its capital surplus restricted shares to employees and employee's unearned remuneration for $3,766 thousand, respectively. A resolution was made by the Board of Directors on March 13, 2020, to cancel the recalled shares, with the record date of the cancellation on March 17, 2020.

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Capital surplus

The balance of capital surplus was as follows:

Additional paid-in capital Restricted shares to employees	December 31, 2019 December 31, 2018 $ 418,370 418,370 9,812 14,892 $ 428,182 433,262

(iii) Retained earnings

1) Special reserve

In accordance with Ruling No. 1010012865 issued by FSC on April 6, 2012, the Company shall set aside a special reserve before earnings distribution equal to the net balance of other deductions in shareholders' equity in the current period from the net income in the current period and the unappropriated retained earnings. The special reserve set aside based on the deductions in shareholders' equity that resulted from prior periods cannot be distributed to shareholders. The Company can distribute its special reserve with an amount not exceeding that of the reversal of such deductions.

The Company decided to reverse a special reserve of $12,412 as a reduction of other equity based on the resolution of the shareholders' meeting held on May 28, 2018.

2) Earnings distribution

Dividends distributed to shareholders: Cash	2018 Amount per share Total Amount $ 4.000 154,000	2017
	Amount per share $ 4.000	Amount per share Total Amount 3.000 114,480

The Company recalled 30 thousand restricted employee shares, wherein the dividend per share for 2018 was adjusted from NT $4 to NT $4.003.

The earnings distribution information resolved during the meeting of the Board of Directors and shareholders would be available on the Market Observation Post System Website.

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(q) Share-based payment

During the shareholders' meeting, the shareholders approved a resolution on June 22, 2017 to issue 340 thousand restricted shares to employees amounting $3,400 thousand, with par value of $10 per share. Only full time employees of the Group that meet certain conditions are eligible to be granted. The application for issuance of the restricted shares was registered at the Securities and Futures Bureau of the FSC. on December 21, 2017. A resolution was made by Board of Directors on November 12, 2018, to issue those restricted shares and to decide November 28, 2018, as the record date of the issuance. The registration for capital increase had been completed.

The restricted stocks are kept by a trust, which is appointed by the Company, before those are vested. These shares shall not be sold, pledged, transferred, gifted, or disposed of by any other means to third parties prior to vesting. Except for the restricted rights due to custodian and vesting conditions, other rights are equal to the issued common stocks. If an employee fails to meet the vesting conditions, the Company will recall its restricted shares.

Grant date Number of shares granted Vesting periods Vesting conditions Exercise price (dollars) Adjusted exercise price (dollars)	Restricted to employees shares issued in 2018
	November 12, 2018 340,000 2`～`3 Note 0 0

Note: For employees whose years of service and performance meet the conditions under the Restricted Shares Plan, the shares are proportionately vest as follows: Over 1 year: 0%; over 2 years: 50%; over 3 years: 50%.
(i) The fair value of share-based payment is based on closing price at the grant date.
(ii) Details on restricted shares are as follows:

Details on restricted shares are as follows:
	Unit: thousand shares
	2019
Number of shares on January 1	340
Forfeited during the year	(100)
Number of shares on December 31	240

(iii) The share-based payment cost in 2019 was $5,073 thousand. The unvested share-based payment as of December 31, 2019 was $6,795 thousand, as a reduction of other equity. Please refer to note 6(p) for the changes in share capital and other equity.

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(r) Earnings per share

The calculation of basic and diluted earnings (losses) per share was as follows:

Basic earnings (losses) per share:
Net income (losses) attributable to common stocks
Weighted-average number of common stocks outstanding
Basic earnings (losses) per share (New Taiwan dollars)
Diluted earnings (losses) per share:
Net income (losses) attributable to common stocks
Weighted-average number of common stocks outstanding
Potential dilutive effect on common stocks
Influence of employee stock remuneration
Restricted shares granted to employees
Weighted-average number of common shares outstanding
－diluted
Diluted earnings (losses) per share (New Taiwan dollars) Unit: thousand shares
2019
2018
$
(146,304)
206,394
38,160
38,160
$
(3.83)
5.41
$
(146,304)
206,394
38,160
38,160
-
49
-
4
38,160
38,213
$
(3.83)
5.40

The potential shares with dilutive effect were anti-dilutive in 2018 due to the net losses incurred and thus were not included in calculating diluted earnings per share.

(s) Revenue from contracts with customers

(i) Disaggregation of revenue

Primary geographical markets: Thailand United States France United Kingdom Other	2019 2018 $ 1,105,299 2,204,549 240,936 252,247 190,511 202,267 154,913 153,984 117,638 115,122 $ 1,809,297 2,928,169

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Main product/service line Designing, manufacturing and selling jewelry and gems Electroplating	2019 2018 $ 1,432,918 2,100,901 376,379 827,268 $ 1,809,297 2,928,169

(ii) Remaining balances of contracts

Accounts receivables Trade receivable Less: loss allowance Total	December 31, 2019 $ - 749,940 (17,626) $ 732,314	December 31, 2018 December 31, 2018 - 2,013 394,050 225,033 (6,793) (5,530) 387,257 221,516

For details on trade receivables and impairments, please refer to note 6(d).

(t) Employee compensation and directors' remuneration

According to the amendment of the Company's Articles of Incorporation which was approved during the shareholders' meeting at May 20, 2016, no less than 1% of the current-year profit before tax, excluding employee compensation and directors' remuneration, shall be distributed as employee compensation, and no more than 3% of the profit as remuneration to directors. However, if the Company has an accumulated deficit, the profit should first be used to offset the deficit. The compensation and remuneration shall be made by way of cash or stock, or a combination of both, wherein the recipients may include the employees of the Company's affiliated companies who meet certain conditions decided by the Board of Directors of the Company.

The Company did not accrue its employee compensation and directors' remuneration for the year ended December 31, 2019, since it suffered a net loss before taxation. The Company accrued $2,354 thousand for employees’ remuneration and $0 for the remunerations to directors for the year ended December 31, 2018. These amounts were calculated using the Company's net income before tax without the remuneration to employees and directors for each period, multiplied by the proposed percentage which is stated under the Company's Article of Incorporation. These remunerations were expensed under operating costs or expenses for each period. The relevant information would be available on the Market Observation Post System website. The amounts, as stated in the consolidated financial statements, were identical to those of the actual distributions for 2019 and 2018.

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(u) Non-operating income and expenses

(i) Other income

The details of other income were as follows:

Interest income Others Total	2019 2018 $ 3,399 1,724 9,179 18,933 $ 12,578 20,657

(ii) Other gains and losses

The details of other gains and losses were as follows:

Losses on disposal of property, plant and equipment Foreign exchange losses, net Profit from FVTPL Others Total	2019 2018 $ (1,568) (164) (13,865) (1,759) 343 416 (110) (323) $ (15,200) (1,830)

(iii) Finance costs

The details of finance costs were as follows:

Interest expenses on loans from banks Interest expenses on lease liabilities	2019 2018 $ 4,167 705 61 - $ 4,228 705

(v) Financial instruments

(i) Credit risk

1) Risk exposure

The carrying amount of financial assets represents the maximum amount exposed to credit risk.

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Concentration of credit risk

The Group's exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, the management also considers the statistical information on the Group's customer base, including the default risk of the industry and country in which customers operate. These factors may have an influence on credit risk. The Group's trade receivables were obviously concentrated on three main customers, which accounted for 92% and 76% of the total amount of trade receivables as of December 31, 2019 and 2018. As of December 31, 2019 and 2018 the Group's trade receivables concentrated on three main customers were $674,089 thousand and $293,490 thousand, respectively.

3) Credit risk of receivables

Please refer to note 6(d) for information on credit risk of trade receivables; and note 6(f) for details of other receivables. Other receivables were primarily miscellaneous receivables from employees, which would be deducted from payrolls. Therefore, other receivables were determined to have a low credit risk.

(ii) Liquidity Risk

The following table shows the contractual maturity of the financial liabilities excluding the impact of estimated interest.

December 31, 2019 Non-derivative financial liabilities Short-term loans Payables Lease liabilities Guarantee deposits received December 31, 2018 Non-derivative financial liabilities Payables Guarantee deposits received	Carrying amount $ 693,065 116,720 1,484 3,814 $ 815,083 $ 137,303 3,569 $ 140,872	Contractual cash flows 693,065 116,720 1,484 3,814 815,083 137,303 3,569 140,872	Less than 1 year 693,065 116,720 1,206 - 810,991 137,303 - 137,303	1-2 years More than 2 years - - - - 278 - - 3,814 278 3,814 - - - 3,569 - 3,569

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

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Currency risk
1) Currency risk exposure

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

Fi	D	ecember 31, 2019		December 31, 2018
	Foreign currency (in thousands) $ 13,580 2,127	Exchange rate 29.98 29.98	Foreign currency (in thousands) 10,286 -	Exchange rate Amount 30.72 315,943 - -
Fi

2) Sensitivity analysis

The Group's exposure to foreign currency risk mainly arises from the translation of the foreign currency exchange gains and losses on trade receivables and short-term loans, which are denominated in foreign currency.

A strengthening (weakening) of the TWD against the USD for 1% as of December 31, 2019 and 2018, would have decreased (increased) net profit (loss) before tax for the years ended December 31, 2019 and 2018, by $3,434 thousand and $3,159 thousand, respectively. The analysis is performed on the same basis for the prior year.

3) Exchange gains and losses of monetary items

Due to the different types of functional currency of the Group, the Group discloses its exchange gains and losses of monetary items aggregately. The Company's exchange gain (loss), including realized and unrealized, were $13,865 thousand and $1,759 thousand for the years ended December 31, 2019 and 2018, respectively.

(iv) Interest rate analysis

The following sensitivity analysis is based on the exposure to interest rate risk for derivative and non-derivative financial instruments on the reporting date

If the interest rate had increased / decreased by 1%, the Group's net income(loss) before taxation would have decreased / increased by $6,931 thousand and $0 thousand for the years ended December 31, 2019 and 2018 with all other variable factors remaining constant. This was mainly due to the Group's borrowing at variable rate.

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(v) Fair value information

1) Categories and fair value of financial instruments

The carrying amount and the fair value of financial assets and financial liabilities, including fair value hierarchy disclosures were as follows; except for financial instruments not measured at fair value whose carrying amount is a reasonable approximation of the fair value and disclosure of fair value information for such instruments is not required:

Financial assets at fair value through other comprehensive income Unlisted equity instruments measured at fair value Financial assets measured at amortized cost Cash and cash equivalents Trade receivables Other receivables Other financial assets `－`non-current Total Financial liabilities measured at amortized cost Short-term loans Notes and accounts payables Other payables Lease liabilities Guarantee deposits received Total		December 31, 2019	December 31, 2019	December 31, 2019
	Carrying amount $ 12,200 462,759 732,314 1,647 10,308 $ 1,219,228 $ 693,065 57,544 59,176 1,484 3,814 $ 815,083		Fair value
		Level 1 - - - - - - - - - - - -	Level 2 - - - - - - - - - - - -	Level 3 Total 12,200 12,200 - - - - - - - - 12,200 12,200 - - - - - - - - - - - -

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Financial assets measured at fair value through profit or loss Non-derivative financial assets mandatorily measured at fair value through profit or loss Financial assets measured at amortized cost Cash and cash equivalents Trade receivables Other receivables Other financial assets `－`non-current Subtotal Total Financial liabilities measured at amortized cost Notes and accounts payables Other payables Guarantee deposits received Total		December 31, 2018	December 31, 2018	December 31, 2018
	Carrying amount $ 95,743 481,177 387,257 2,683 9,381 880,498 $ 976,241 $ 51,112 86,191 3,569 $ 140,872		Fair value
		Level 1 95,743 - - - - - 95,743 - - - -	Level 2 - - - - - - - - - - -	Level 3 Total - 95,743 - - - - - - - - - - - 95,743 - - - - - - - -

－ 2) Valuation techniques for financial instruments measured at fair value non-derivative

The fair value of offshore fund beneficiary certificate financial instruments was estimated based on the quoted prices in an active market set by the fund management company. The fair value of unlisted equity instruments is estimated and calculated by using the discounted cash flow method on an assumption that the fair values are the present value of the future cash flows that the investee companies expect to produce, using the discount rate which reflects the time value of money and the investment risk premium.

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

3) The Group seeks to use market observable inputs when measuring the fair values of assets and liabilities. Different levels of the fair value hierarchy to be used in determining the fair value of financial instruments are as follows:
‧ Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
‧ Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. such as prices) or indirectly (i.e. derived from calculation of prices).
‧ Level 3: inputs for the assets or liability that are not based on observable market data (unobservable inputs).
4) Reconciliation of Level 3 fair values

Reconciliation of Level 3 fair values
		Unlisted equity
		instruments
Balance at January 1, 2019		-
Acquisition		12,200
Balance at December 31, 2019	$	12,200

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

Quantified information of significant unobservable inputs was as follows:

Item Financial assets at fair value through other comprehensive income`－`equity investments without an active market	Valuation technique Discounted Cash Flow Method	Significant unobservable inputs Inter-relationship between significant unobservable inputs and fair value measurement ‧ Annual revenue growth rate forecast ‧ Weighted average cost of capital ‧ Liquidity discount ‧ Minority interest discount The estimated fair value would increase (decrease) if: ‧ Weight average cost of capital, minority interest discount, and liquidity discount were lower (higher); or

‧ Weight average cost of capital, minority interest discount, and liquidity discount were lower (higher); or
‧ Sustainable return rate ‧ Sustainable return rate were higher (lower); or
‧ Annual revenue growth forecast were higher (lower).

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

The Group's measurement of fair values for financial instrument is reasonable. However, a different valuation technique or possible changes to one of the significant unobservable inputs would have different effects. For fair value measurements in Level 3, one of the key significant unobservable inputs is the annual revenue growth rate forecast. The Group did not disclose the sensitivity analysis of that forecast because the possible changes in the annual revenue growth rate forecast would not cause significant potential financial impact.

(w) Financial risk management
(i) Overview

The Group's exposures to the following risks from its financial instruments:

1) credit risk
2) liquidity risk
3) market risk

The following likewise discusses the Group's objectives, policies and processes for measuring and managing the above-mentioned risks. For more disclosures about the quantitative effects of these risks’ exposures, please refer to the respective notes in the accompanying consolidated financial statements.

(ii) Structure of risk management

The Group identifies and analyzes its risks to set appropriate control procedures to ensure the effectiveness of risk management.

The Group uses derivatives to hedge risks. In order to lower the exchange rate risk, interest risk and credit risk, derivatives and non-derivative financial instruments are monitored by its finance management committee and regulated by its internal policies. The internal auditors continuously undertake reviews on policy compliance and maximum risk exposures.

The Group does not trade in financial instruments, including derivatives, for the purpose of arbitrage.

Finance management committee regularly reports to the Board of Directors on operation of derivative and non-derivative financial instruments.

(iii) Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group's receivables from customers.

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

1) Trade and other receivable

In order to reduce the credit risk from receivables, the Group evaluate customers' financial status and obtain insurance coverage for trade receivables from overseas customers. In addition, the Group regularly assesses the collectability and records allowance for expected credit loss. In conclusion, the Company's management is able to control credit risk from trade receivable effectively.

In accordance with the credit policy, all of operating units in the Group are required to perform an analysis of each new customer's credit risk and management before offering payment and delivery terms. The internal risk management evaluates customer credit quality based on financial status, past experience and other factors. An individual risk limit is set on the basis of internal and external ratings. The used credit limit is monitored regularly.

2) Investments

The exposure to credit risk for the bank deposits and other financial instruments is measured and monitored by the Group's finance management committee, and is properly reviewed and approved based on the approval authority. The Group deals with banks and financial institutions with good credit rating, and selects target companies with caution to control its exposure. Consequently, there is no significant credit risk arising from these counterparties.

3) Guarantees

The Group's policy is to provide endorsements and guarantees only to counter parties who meet the requirements in the Group's Regulations Governing Making Endorsements/ Guarantees. As of December 31, 2019 and 2018, the endorsement and guarantees provided by the Group were $0 and $9,234 thousand, respectively.

(iv) Liquidity risk

The finance management committee monitors working capital demand based on forecasts. The Group maintains sufficient fund to fulfill operational requirements and retain sufficient credit line to avoid violation of related terms and conditions. The forecast is in consideration of finance project and compliance with the terms of loan agreements. Besides, as of December 31, 2019 and 2018, the Group’s unused credit line were $1,525,983 thousand and $1,873,991 thousand, respectively.

(v) Market risk

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

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

1) Currency risk

The Group is exposed to currency risk on sales and borrowings that are denominated in a currency other than the respective functional currencies of the Group’s entities, such as NTD, Thai Baht(THB), Hong Kong dollar(HK) and Chinese Yuan (RMB). The currencies used in these transactions are the US Dollar (USD).

The Group does not have significant net exposure to currency risk arising from its receivables and payables denominated in a foreign currency. The Group uses natural hedge as its policy to hedge currency risk.

2) Interest rate risk

The Group’s financial assets with exposure to fluctuation in fair value due to changes in interest rates are bank deposits; financial liabilities with that exposure are short-term loans. However, the changes in fair value of financial instrument due to changes in interest rates are immaterial.

3) Other price risk

The Group held unlisted investments for which there is no quoted market price in active markets. These are strategic investments and are not held for trading. The Group does not actively trade the investment positions. The Group does not expect that there is a significant market risk related to these investments.

(x) Capital management

The Group's objectives for managing capital to safeguard the capacity to continue to operate, to continue to provide a return on shareholders, to maintain the interest of other related parties, and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the dividend payments to the shareholders, reduce the capital for return to shareholders, issue new shares, or sell assets to settle any liabilities.

The Group use the debt-to-equity ratio to manage capital. This ratio is the total debt divided by the total equity. The total debt is derived from the total liabilities in the balance sheet. The total equity includes common stocks, capital surplus, retained earnings, other equity and non-controlling interest.

The Group's collective quantitative data is as follows:

Total liabilities Total equity Debt-to-equity ratio	December 31, 2019 December 31, 2018 $ 913,985 324,757 $ 1,047,013 1,379,632 % 87.29 % 23.54

As of December 31, 2019, there were no changes in the Group’s approach to manage capital.

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

The Group's investing and financing activities which did not affect the current cash flow were derived from the acquisition of its right-of-use assets from its lease transactions. Please refer to notes 6(i) and 6(l).

Reconciliation of liabilities arising from financing activities was as follows:

Short-term loans Lease liabilities Total liabilities from financing activities	January 1, 2019 $ - 3,083 $ 3,083	Cash flows 687,305 (1,584) 685,721	Non-cash changes Foreign exchange movement December 31, 2019 5,760 693,065 (15) 1,484 5,745 694,549

The Group had neither investing nor financing activity which did not affect the current cash flow for the year ended December 31, 2018. The cash flow arising from financing activities was as follows:

Short-term loans	January 1, 2018 $ 247,752	Cash flows (247,752)	Non-cash changes Foreign exchange movement December 31, 2018 - -

(7) Related-party transactions:

Key management personnel compensation comprised:

Short-term employee benefits Post-employment benefits	2019 2018 $ 16,354 17,769 384 (29) $ 16,738 17,740

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(8) Pledged assets:

The carrying amounts of pledged assets were as follows:

			December 31,	December 31,	December 31,
Pledged assets	Object		2019		2018
Restricted bank deposits	Please refer to 4(c)		$	6,027	-
	Note 1
Property, plant and equipment:
Land	Short-term loans			176,420	166,532
Buildings	Short-term loans			38,905	45,452
Other financial assets`－`non-current:
Refundable deposits	Guarantee for			4,730	4,411
	electricity supply
			$	226,082	216,395
Significant commitments and contingencies:
The credit line of guarantee provided by bank was as follows:
			December	31,	December 31,
			2019		2018
Electricity guarantee		$		4,460	4,158

(9) Significant commitments and contingencies:

(10) Losses due to major disasters: None

(11) Subsequent events: None

(12) Other:

A summary of personnel costs, depreciation, depletion and amortization, by function, is as follows:

Function Account	2019	2019	2019	2018	2018	2018
	Operating cost	Operating expenses	Total	Operating cost	Operating expenses	Total
Personnel costs Salaries Health insurance Pension Remuneration of director Other personnel expense Depreciation Depletion Amortization	427,188 - 5,583 - 17,610 35,273 - 1,127	169,839 546 3,964 3,860 25,821 19,035 - 4,417	597,027 546 9,547 3,860 43,431 54,308 - 5,544	674,571 - 2,913 - 18,787 34,627 - 86	206,915 280 1,904 3,230 33,658 17,210 - 4,813	881,486 280 4,817 3,230 52,445 51,837 - 4,899

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(13) Other disclosures:

(a) Information on significant transactions:

The following were the information on significant transactions required by the "Regulations Governing the Preparation of Financial Reports by Securities Issuers" for the Group for the year ended December 31, 2019:

(i) Lending to other parties:

Number (note 1)	Name of lender	Name of borrower	Account name	Related party	Maximum balance of financing to other parties during the period (note 4)	Ending balance (note 5)	Actual usage amount during the period	Range of interest rates during the period	Purposes of fund financing for the borrower (note 2)	Transaction amount for business between two parties	Reasons for short- term financing	Allowance for bad debt	Colla	teral	Individua funding loan limits (note 3)	l Maximum limit of fund financing (note 3)
													Item	Value
0	The Company	GVG Shen Zhen	Receivable from related party	Yes	8,828	-	-	-	2	-	Operating capital	-	-	-	178,035	356,070

Note 1: The number representation as follows:

No.0 represents the Company.
No.1 and thereafter represent the subsidiary companies.

Note 2: The nature of financing is classified as follows:

No.1 represents the business-related
No.2 represents the short-term financing
Note 3: For business-related, the total amount available for lending shall not exceed 40% of the amount of the net value of the Company. The total amount for lending to a company shall not exceed the amount of inter-company's sales or purchase, whichever is higher.

For short-term financing, the total amount available for lending shall not exceed 40% of the amount of the net value of the Company. The total amount for lending to a company shall not exceed 20% of the amount of the net value of the Company.

The net value of the Company is in accordance with its latest financial statements.

Note 4: The maximum balance of financing to other parties beginning from the reporting period to the month the Company issued its financial statements.

Note 5: The balance was cancelled by the Board of Directors during the meeting held on March 8, 2019.

(ii) Guarantees and endorsements for other parties:

No. (note 1)	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 (note 3)	Maximum balance for guarantees and endorsements during the period (note 4)	Balance of guarantees and endorsements as of reporting date (note 5)	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 (note 3)	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 (note 2)
0	The Company	GVG Shen Zhen	2	178,035	9,234	-	-	-	-	356,070	Y	N	Y

Note 1: The number representation as follows:

No.0 represents the Company.
No.1 and thereafter represent subsidiary companies.

Note 2: The relationship between guarantor a guarantee is as follows. Only category is required to be filled:

Ordinary business relationship.
A subsidiary whose common stock is more than 50% owned by the guarantors.
An investee whose common stock is more than 50% owned by the parent company and its subsidiary is agreeable.
The parent company owns, directly or indirectly via subsidiaries, more than 50% of the guarantor’s commons stock.
A company in the same trade that is mutually guaranteed pursuant to the covenants of a construction contract upon contracting a project.
A company that is guaranteed proportionately according to the guarantor’s ownership percentage due to co-investee by various investors.
The endorsements/guarantees that joint companies in the same industry provide among themselves and several security for a performance guarantee of a sales contract for pre-construction homes pursuant to Consumer Protection Act for each other.

Note 3: The total amount of endorsements/guarantees of the Group shall not exceed 40% of the amount of the net value of the Company. The total amount of external endorsements/guarantees of the Company shall not exceed 40% of the amount of the net value of the Company.

The total amount of endorsements/guarantees for each party shall not exceed 20% of the amount of the net value of the Company. However, subsidiaries whose voting shares are 100% owned, directly or indirectly, by the Company are not subject to the above restrictions.

Note 4: The maximum balance of endorsements/guarantees for other parties beginning from the reporting period to the month the Company issued its financial statements.

Note 5: The balance was cancelled by the Board of Directors during the meeting held on March 8, 2019.

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Category and name of security	Relationship with company	Account	Ending balance	Ending balance	Ending balance		Note
			Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
SELF PICK INC. SELF TOKEN INC.	- -	Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income	2,400 500	7,200 5,000	15.93 6.25	7,200 5,000

(iv) Information regarding purchase or sale of securities for the period exceeding 300 million or 20% of the Company’s paid-in capital:

capital:
											(In thousands of		New Taiwan Dollars)
Name of company	Category and name of security	Account	Name of counter- party	Relationship with the company	Beginning Balance		Purc	hases		Sa	les		Ending Balance
					Shares	Amount	Shares	Amount	Shares	Price	Cost (note)	Gain (loss) on disposal (note)	Shares	Amount
RGP	Bualuang Thanasarn Plus 25/18	Financial assets mandatorily measured at fair value through profit or loss `－`current	-	-	10,000	95,743	-	-	10,000	100,867	100,867	343	-	-

Note : Cost includes evaluation of profit and loss of $343 thousand and foreign currency translation effect $4,781 thousand.

(v) Information on acquisition of real estate with purchase amount exceeding 300 million or 20% of the Company’s paid-in capital: None
(vi) Information regarding receivables from disposal of real estate exceeding 300 million or 20% of the Company’s paid-in capital: None
(vii) Information regarding related-parties purchases and/or sales exceeding 100 million or 20% of the Company’ s paid-in capital:

capital:
Name of company	Counterparty	Nature of relationship		Transaction details			Transactions in terms other than the regular terms		Note and accounts receivable (payable)		Note
			Purchase/Sale	Amount	Percentage of total purchases (sales)(%)	Credit terms (days)	Unit price	Payment terms	Ending balance of notes and accounts receivable (payable)	Percentage of total notes and accounts receivable (payable)
RGP	RJM s	RJM's ubsidiary	Sales	(141,127	) (24.66)	45~60 days	Note 1	-	53,578	6.67	Note 2

Note 1: The price was determined by mutual agreements.

Note 2: Related-party transactions have been eliminated in the preparation of the consolidated financial statements.

(viii) Information regarding receivables from related-parties exceeding 100 million or 20% of the Company’s paid-in capital: None
(ix) Information regarding trading in derivative financial instruments: None
(x) Significant transactions and business relationship between the parent company and its subsidiaries for the year ended December 31, 2019:

No. (note 1)	Name of company	Name of counter-party	Nature of relationship (note 2)		Intercompany transactions	Intercompany transactions	Intercompany transactions
				Account	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
1 1	RGP RGP	RJM RJM	1 1	Sales Tradereceivables	141,127 53,578	The price calculation is made by the consent of the both parties. 45~60 days	7.80% 2.73%

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Note 1: Company numbering as follow: No.1 represents RGP.

Note 2: The numbering of the relationship between transaction parties as follows:

No.1 represents a subsidiary to the parent company.

Note 3: The account should be disclosed if the amount is over 1% of the total assets from the statement of financial position and total operating revenue from the statement of comprehensive income.

(b) Related information on investee companies:

The following is the information on investees for the year ended December 31, 2019 (excluding information on investees in China):

China):	China):	China):	China):
				(In Thousands of New Taiwan Dollars)
Name of investor	Name of investee	Location	Main businesses and products	Original investment amount		Balance as of December 31, 2019 Shares (thousands) Percentage of ownership Carrying value (note 1)			Net income (losses) of investee (note 1)	Share of profits/losses of investee (note 1)	Note
				December 31, 2019	December 31, 2018
The Company The Company The Company The Company The Company RJM RJM	RJM GVG Hong Kong RMS Chaporo RGI RGP Linden	Thailand Hong Kong Thailand Seychelles Taiwan Thailand Thailand	Designing, Manufacturing and Selling jewelry and gems Investment activities Investment activities Investment activities Selling jewelry and gems Plating jewelry and gems Selling jewelry and gems	300,000 31,605 9,560 154 25,000 11,647 2,335	300,000 25,510 9,560 - - 11,647 2,335	4,549,998 5,900,000 3,996,000 3,500,000 2,500,000 127,500 245,000	% 99.99 % 100.00 % 99.99 % 70.00 % 100.00 % 51.00 % 49.00	894,423 (1,564) 6,417 115 23,803 160,548 2,269	(111,664) (4,597) (3,463) (36) (1,197) 57,427 (401)	(111,664) (4,597) (3,463) (36) (1,197) (note 2) 29,759 (note 2) (197)	Eliminated in the consolidated financial statements `〞` `〞` `〞` `〞` `〞`

Note 1: Investment gains (losses) have been recognized based on the financial statements of the investee companies audited by the Company's auditor.

Note 2: The investment gains included the inter-company gross profit amounting to $471 thousand.

(c) Information on investment in China:
(i) The names of investees in China, the main businesses and products, and other information:

					(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	Major business project	Paid-in Capital	Investment Method (note 1)	Accumulated outflow of Cumulated investment amount remitted from Taiwan at beginning of period	Investment amount remitted or recovered Remittance Recovery		Cumulated investment amount remitted from Taiwan at end of period	Current profit of investee company (note 3)	Shareholding ratio of direct or indirect investment of the company	Investment gains or losses (note 2 and 3)	Book value of investment at end of year (note 2 and 3)	Accumulated investment income remitted
						Recovery
GVG (Shen Zhen	Selling jewelry and gems	CNY 5,000	2	(note 4)	(note 4)	(note 4)	(note 4)	(4,573)	% 100.00	(4,573)	(7,670)	-

Note1: Investment methods are divided into the following three kinds:

(1)Invest in China directly

(2)Invest in GVG Hong Kong, and then invest in China

(3)Other methods

Note 2: Long-term investment at the period end and investment gains or losses have been eliminated in the preparation of the consolidated financial statements.

Note 3: Financial statements of the investee company were examined by the auditors of the parent company. Those investment gains (losses) have been recognized based on the financial statements of the investee company.

Note 4: The Company is not a Taiwan registered company, so no investment amount is shown.

(ii) Limitation on investment in China: None
(iii) Significant inter-company transactions with China investee company: None

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(14) Segment information:

(a) General information

The Group has two reportable segments: manufacturing and selling gems and jewelry department and electro-plating department. The Group did not allocate income tax expense to reportable segments. Each reportable segment profit or loss included depreciation expenses, amortization expenses, and all other significant non-cash items. The reportable amount is consistent with that in the report used by the chief operating decision maker. The accounting policies of the operating segments are the same as described in note (4) significant accounting policies. The Group's operating segments' profits and losses are measured based on the income before income tax, and used as the basis for assessing the segments' performance. Adjustments and eliminations mainly arose from inter-segment transaction.

Revenue: Revenue from external customers Revenue from transactions with other operating segments Interest income Total revenue Interest expense Depreciation and amortization Reportable segment profit or loss Revenue: Revenue from external customers Revenue from transactions with other operating segments Interest income Total revenue Interest expense Depreciation and amortization Reportable segment profit or loss		2019 Electro- plating department Adjustments and eliminations Total 376,379 - 1,809,297 141,127 (141,127) - 1,682 - 3,399 519,188 (141,127) 1,812,696 - - 4,228 8,715 - 59,852 57,427 - (110,848) 2018 Electro- plating department Adjustments and eliminations Total 827,268 - 2,928,169 499,627 (501,265) - 799 - 1,724 1,327,694 (501,265) 2,929,893 - - 705 7,015 - 56,736 328,609 - 504,392
	Manufacturing and selling gems and jewelry department $ 1,432,918 - 1,717 $ 1,434,635 $ 4,228 $ 51,137 $ (168,275)
	Manufacturing and selling gems and jewelry department $ 2,100,901 1,638 925 $ 2,103,464 $ 705 $ 49,721 $ 175,783	Electro- plating department 827,268 499,627 799 1,327,694 - 7,015 328,609

For the years ended December 31, 2019 and 2018, the adjustments and eliminations of operating segments were (141,127) thousand and (501,265) thousand, respectively.

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Product and service information

For the details refer to note 6(s).

(c) Geographic information

In presenting information on the basis of geography, segment revenue is based on the geographical location of customers and segment assets are based on the geographical location of the assets.

Revenue from external customers: please refer to notes 6(s).

Non-current assets:

Geographical information Thailand Other countries Total	December 31, 2019 December 31, 2018 $ 387,945 379,826 1,930 861 $ 389,875 380,687

Non-current assets include property, plant and equipment, and intangible assets excluding noncurrent financial assets at fair value through other comprehensive income, deferred tax assets and － other financial assets non-current.

(d) Major customers

Customer D from manufacturing and selling jewelry and gems department Customer D from electro-plating department	2019 2018 $ 702,276 $ 1,276,230 376,103 826,574 $ 1,078,379 2,102,804

AI assistant

RH — Annual Report 2019

52432_rns_2020-07-29_5653ae55-9f29-4060-a893-408c389c6fe3.pdf

Notice to readers

Spokesman and Deputy Spokesman

Information of the Designated Agent of all Litigious and Non-litigious Matters within the Republic of China

Contact Information of Head office, Branches, Subsidiaries and Factories

Contact Information of the Share Transfer Agency

Contact Information of the Certified Public Accountants for the Latest Financial Report

List of the Board of Directors

C o n t e n t s

Page

I. Report to the Shareholders

II. Company Profile

A. Brief Introduction of the Company

B. Formation History

Ⅲ . Risk Matters

1.The risk of macroeconomics, political economy environment, foreign exchange and regulations.

2. Risk of guarantee of shareholder rights

3. Effect on the company's manufacturing operations of technology and measures to be taken in response. Please refer to the Page 110

Corporate Governance Report

c. Professional knowledge and independence check matrix of directors

C. Remuneration paid to Directors, Supervisors, General Manager, and Deputy General Manager in the most recent fiscal year

1. Remunerations of Directors

2. Range of Remunerations of Directors

4. Remunerations paid to general managers and deputy managers in the most recent year(2019)

5. Range of Remunerations of general managers and deputy managers

Range of Remunerations

6. The individual remuneration paid to each of the Company’s top five management personnel

7.Employee profit sharing granted to managers:

D. The state of the Company's implementation

1. The state of the Board of Directors’ implementation

Date / Proposal contents

Other noteworthy matters:

List:

(1) Continuing education of directors

4. Organization, responsibilities and operation status of the Compensation Committee

5. Performance of Social Responsibilities

6. Status of Implementation of Integrity Operation

7. Other Company-established corporate governance rules and regulations:

8. Other Important Corporate Governance Information:

F. Alternation of CPA: None.

3. Share pledges with related parties: None.

I. Information on relationships among the top ten shareholders

III. Information on Capital Raising Activities

2. Shareholder Structure

3. Distribution of Shares

a. Distribution of common shares

b. Preferred Shares: None.

4. List of major shareholders

b. Proposal recommending distributing dividends

F. Subscription of new shares for employee restricted stocks has been approved by Financial Supervisory Commission (Ref. No.1060048873) 1.

V. Overview of Business Operations

A. Description of the business

1. Description of the business

a. Scope of business

b. Operational proportion

c. Current product items

d. Competition

B. Analysis of the market and the production and marketing situation

1. Market analysis

a. Sales areas of major products

b. Market shares

ii. Full service in one stop

b. manufacturing processes

3. Supply situation for major raw materials:

4. The lists of major suppliers and clients

5. Production volume for the 2 most recent fiscal years

6. Volume of units sold for the 2 most recent fiscal years

C. The number of employees for the 2 most recent fiscal years

E. Labor relations

F. Important contracts

1. RJM

2. RGP

VI. Financial Standing

2. Concise Consolidated Statement of Comprehensive Income

3. CPAs and Their Opinions for Most Recent 5-Years

B. Most Recent 5-Year Financial Analysis

1. Financial Analysis on Consolidated Financial Statements- IFRS

Regal Holding Co., Ltd.

RH Annual Report 2019