Stock Code:4807

REGAL HOLDING CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors' Report For the Years Ended December 31, 2021 and 2020

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

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KPMG

台北市110615信義路5段7號68樓(台北101大樓) 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, Xinyi Road, Taipei City 110615, Taiwan (R.O.C.)

電話 Tel + 886 2 8101 6666 傳真 Fax + 886 2 8101 6667 網址 Web home.kpmg/tw

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, 2021 and 2020, 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, 2021 and 2020, 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 Attestation 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(r) of the consolidated financial statement for the related disclosures on revenue recognition.

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

3-1

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(e) 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, 2021 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 Chun I Chang and MinJu Chao.

KPMG

Taipei, Taiwan (Republic of China) March 11, 2022

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, 2021 and 2020

(expressed in thousands of New Taiwan Dollars)

Assets 11xx Current assets: 1100 Cash and cash equivalents (note 6(a)) 1170 Trade receivables, net (notes 6(c) and 6(r)) 1200 Other receivables (note 6(d)) 1220 Current tax assets 130x Inventories (note 6(e)) 1470 Other current assets Total current assets 15xx Non-current assets: 1517 Total non-current financial assets at fair value through other comprehensive income (note 6(b)) 1600 Property, plant and equipment (notes 6(g), 6(j) and 8) 1755 Right-of-use assets (notes 6(h) and 6(l)) 1780 Intangible assets (note 6(i)) 1840 Deferred tax assets (note 6(n)) 1984 Other financial assets－non-current (note 8) Total non-current assets 1xxx Total assets	December 31, 2021 Amount % $ 270,283 17 535,849 35 7,766 - 14,982 1 371,176 24 12,001 1 1,212,057 78 294 - 300,895 19 1,186 - 9,114 1 19,465 1 9,196 1 340,150 22 $ 1,552,207 100	December 31, 2020 Amount % 674,257 35 475,210 25 22,145 1 26,947 1 344,661 18 14,558 1 1,557,778 81 882 - 326,511 17 2,075 - 12,110 1 21,771 1 9,698 - 373,047 19 1,930,825 100 Liabilities and Equity 21xx Current liabilities: 2100 Short-term loans (notes 6(g), 6(j) and 8) 2120 Financial liabilities at fair value through profit or loss (note 6(k)) 2150 Notes payables 2170 Trade payables 2200 Other payables 2230 Current tax liabilities 2280 Current lease liabilities (note 6(l)) 2321 Bonds payable, current portion (note 6(k)) 2399 Other current liabilities (note 6(r)) Total current liabilities 25xx Non-current liabilities: 2500 Non-current financial liabilities at fair value through profit or loss (note 6(k)) 2530 Bonds payable (note 6(k)) 2570 Deferred tax liabilities (note 6(n)) 2580 Non-current lease liabilities(note 6(l)) 2640 Net defined benefit liabilities－non-current (note 6(m)) 2645 Guarantee deposits received Total non-current liabilities 2xxx Total liabilities 31xx Equity attributable to owners of the Company (notes 6(f), 6(k), 6(o) and 6(p)) 3100 Common stock 3200 Capital surplus 33xx Retained earnings: 3310 Legal reserve 3320 Special reserve 3350 Accumulated deficits Other equity: 3410 Exchange differences on translation of foreign financial statements 3420 Losses from investments in equity instruments measured at fair value through other comprehensive income 3491 Other equity－unearned compensation Total equity attributable to owners of the Company: 36xx Non-controlling interests (note 6(f) and 6(o)) 3xxx Total equity 2-3xxx Total liabilities and equity	December 31, 2021		December 31, 2020 Amount % 370,140 19 - - 440 - 30,795 2 105,482 5 29,479 2 884 - - - 5,020 - 542,240 28 1,000 - 234,781 12 35,367 2 1,204 - 28,170 2 3,801 - 304,323 16 846,563 44 383,860 20 439,036 23 70,774 4 28,481 1 (1,123) - 98,132 5 18,686 1 (11,318) (1) (1,750) - 5,618 - 926,646 48 157,616 8 1,084,262 56 1,930,825 100
			Amount %
			$ 44,264 3 1,075 - 144 - 17,380 1 101,309 7 36,979 2 900 - 239,789 16 4,902 - 446,742 29 - - - - 61,537 4 304 - 25,467 2 3,593 - 90,901 6 537,643 35 383,893 25 439,099 28 70,774 4 - - 133,870 9 204,644 13 (116,635) (7) (11,906) (1) - - (128,541) (8) 899,095 58 115,469 7 1,014,564 65 $ 1,552,207 100

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, 2021 and 2020

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

4000 Operating revenues (note 6(r)) Net sales revenue (note) 5000 Operating costs (notes 6(e), 6(g), 6(h), 6(i), 6(l), 6(m) and 12) 5900 Gross profit 6000 Operating expenses (notes 6(c), 6(d), 6(g), 6(h), 6(i), 6(l), 6(m), 6(p), 6(s), 7 and 12): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Impairment loss (reversal of impairment loss) determined in accordance with IFRS 9 Total operating expenses 6900 Operating income 7000 Non-operating income and expenses (notes 6(k), 6(l) and 6(t)): 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs Total non-operating income and expenses 7900 Profit before income tax 7950 Less: income tax expenses (note 6(n)) 8200 Profit for the period 8300 Other comprehensive income (notes 6(m) and 6(o)): 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 8316 Unrealized losses from investments in equity instruments measured at fair value through other comprehensive income 8349 Less: income tax related to components of other comprehensive income that will not be reclassified 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 or 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 attributable to (note 6(f)): 8610 Owners of the Company 8620 Non-controlling interests Comprehensive income attributable to (note 6(f)): 8710 Owners of the Company 8720 Non-controlling interests Earnings per share (New Taiwan dollars) (note 6(q)) 9750 Basic earnings per share 9850 Diluted earnings per share	2021 Amount % $ 2,088,363 100 2,088,363 100 1,600,569 77 487,794 23 62,662 3 169,104 8 57,697 3 17,114 1 306,577 15 181,217 8 368 - 10,928 1 18,699 1 (8,245) - 21,750 2 202,967 10 65,291 3 137,676 7 (1,306) - (588) - - - (1,894) - (151,658) (7) - - (151,658) (7) (153,552) (7) $ (15,876) - $ 126,949 6 10,727 1 $ 137,676 7 $ (10,204) - (5,672) - $ (15,876) - $ 3.32 $ 2.83	2020 Amount % 1,765,557 100 1,765,557 100 1,363,969 77 401,588 23 69,764 4 166,382 9 60,775 3 (10,228) - 286,693 16 114,895 7 643 - 7,238 - 10,196 - (8,678) - 9,399 - 124,294 7 26,646 2 97,648 5 (8,175) - (11,318) (1) - - (19,493) (1) (55,965) (3) - - (55,965) (3) (75,458) (4) 22,190 1 88,343 5 9,305 - 97,648 5 21,411 1 779 - 22,190 1 2.31 2.29

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, 2021 and 2020

(expressed in thousands of New Taiwan Dollars)

			Equity attributable to	Equity attributable to	Equity attributable to	wners of the Company	wners of the Company					Non-controlling interests	Total equity
Common stock	Capital surplus		Retained	earnings				Other equity			Total equity attributable to owners of the Company
							Exchange differences on translation of foreign financial statements	Unrealized losses on financial asset measured at fair value through other comprehensive income	s	Others
		Legal reserve	Special reserve		Unappropriated retained earnings (accumulated deficits)	Total retained earnings
$ 384,700 - - - - (840) - 383,860 - - - - - 33 - - - $ 383,893	428,182 10,767 - - - 87 - 439,036 - - - - - 63 - - - 439,099	70,774 - - -	28,481 - - -		(81,257) - 88,343 (8,209) 80,134 - - (1,123) 28,481 (19,193) 126,949 (1,244) 125,705 - - - - 133,870	17,998 - 88,343 (8,209) 80,134 - - 98,132 - (19,193) 126,949 (1,244) 125,705 - - - - 204,644	66,091 - - (47,405) (47,405) - - 18,686 - - - (135,321) (135,321) - - - - (116,635)	- - - (11,318) (11,318) - - (11,318) - - - (588) (588) - - - - (11,906)		(6,795) - - - - 753 4,292 (1,750) - - - - - - 1,750 - - -	890,176 10,767 88,343 (66,932) 21,411 - 4,292 926,646 - (19,193) 126,949 (137,153) (10,204) 96 1,750 - - 899,095	156,837 - 9,305 (8,526) 779 - - 157,616 - - 10,727 (16,399) (5,672) - - 439 (36,914) 115,469	1,047,013 10,767 97,648 (75,458)
		-	-										22,190
		- -	- -										- 4,292
													1,084,262 - (19,193) 137,676 (153,552)
													(15,876)
													96 1,750 439 (36,914)
													1,014,564

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, 2021 and 2020

(expressed in thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (losses): Depreciation expenses Amortization expenses Expected credit losses (gains) Interest expenses Interest income Share-based payments Gains on disposal of property, plant and equipment Losses on disposal of intangible assets Gains on lease modification Unrealized losses on financial liabilities at fair value through profit or loss Unrealized foreign exchange losses (gains) Expense arising from derecognition of intangible assets Transaction cost of issuance of convertible bonds related to derivative instruments Total adjustments to reconcile profit Changes in operating assets and liabilities: Trade receivables Other receivables Inventories Other current assets Total changes in operating assets Notes payables Trade payables Other payables 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 operations Interest received Interest paid Income taxes paid Net cash flows from operating activities Cash flows from (used in) investing activities: Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Decrease (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 Decrease in short-term loans Proceeds from bond issuance Increase in guarantee deposits received Payments of lease liabilities Cash dividends paid Cash dividends paid to non-controlling interests Changes in non-controlling interests Net cash flows used in financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of period Cash and cash equivalents at the end of period	2021 $ 202,967 51,390 3,766 17,114 8,245 (368) 1,750 (1,409) - - 75 (9) 247 - 80,801 (145,496) 12,804 (73,374) 757 (205,309) (309) (9,940) 9,785 452 (334) (346) (205,655) (124,854) 78,113 368 (2,885) (19,792) 55,804 (67,367) 1,727 (2,549) (715) (68,904) 620,100 (920,009) - 289 (914) (19,193) (36,914) 439 (356,202) (34,672) (403,974) 674,257 $ 270,283	2020 124,294 51,731 3,094 (10,228) 8,678 (643) 4,292 (219) 33 (17) 200 390 11,131 17 68,459 226,324 (3,008) (65,424) 3,266 161,158 207 (23,249) 21,917 613 (9,859) (10,371) 150,787 219,246 343,540 643 (7,340) (8,555) 328,288 (48,060) 496 (7,753) 90 (55,227) - (286,317) 245,930 190 (1,042) - - - (41,239) (20,324) 211,498 462,759 674,257

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, 2021 and 2020

(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(r).

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

The consolidated financial statements were reported to the Board of Directors on March 11, 2022.

(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.

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

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

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

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

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

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

(Continued)

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

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

Standards or
Interpretations
Amendments to IAS 8
“Definition of Accounting
Estimates”
Amendments to IAS 12
“Deferred Tax related to
Assets and Liabilities arising
from a Single Transaction”

Content of amendment
Effective date per
IASB
The
amendments
introduce
a
new
definition
for
accounting
estimates:
clarifying that they are monetary amounts
in the financial statements that are subject
to measurement uncertainty.
The
amendments
also
clarify
the
relationship between accounting policies
and accounting estimates by specifying that
a company develops an accounting estimate
to achieve the objective set out by an
accounting policy.
January 1, 2023
The amendments narrowed the scope of the
recognition exemption so that it no longer
applies to transactions that, on initial
recognition, give rise to equal taxable and
deductible temporary differences.
January 1, 2023

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

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

●Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”
●IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”
●Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”
●Amendments to IAS 1 “Disclosure of Accounting Policies”

(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. 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.

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

(Continued)

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

(ii) List of subsidiaries in the consolidated financial statements

Name of investor	Name of subsidiary	Business activities	Percentage of ownership (%)
			December 31, 2021 December 31, 2020
The Company The Company The Company The Company The Company 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. (RIC)(Note 3) Regal Plating Co., Ltd. (RGP) Linden Integrated Co., Ltd. (Linden) (Note 4) 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 Selling jewelry and gems Selling jewelry and gems	% 99.99 % 99.99 % 100.00 % 100.00 % 99.99 (Note 2) % 99.99 % 70.00 % 70.00 % 100.00 % 100.00 % 51.00 % 51.00 % 49.00 % 49.00 % 100.00 % 100.00

Note 1: The Company made an investment in GVG Hong Kong on February 3, 2020 for CNY 1,700 thousand. The Company then made its investment of capital amounting to CNY 1,700 thousand into GVG Shen Zhen through GVG Hong Kong separately on June 3, August 20, and September 21, 2020. The aforementioned registration procedures were completed on September 24, 2020.
Note 2: The Company made a resolution by the Board of Directors of the Company on October 5, 2020 for a capital injection amounting to THB 6,000 thousand. In addition, a resolution was made by the Board of Directors of the Company on March 19, 2021 for a capital injection amounting to THB 4,000 thousand.
Note 3: The Company made a resolution by the Board of Directors of the Company for capital injections amounting to TWD 40,000 thousand and TWD 20,000 thousand separately on March 13 and October 5,2020.
Note 4: 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. In addition, a resolution was made by the Board of Directors of the Company on August 26, 2021 for a capital injection amounting to THB 492 thousand.

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.

(Continued)

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

(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;
(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.

(Continued)

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

(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 and checking deposits. Cash equivalents are shortterm, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Fixed deposits which meet the above definition and are held for the purpose of meeting short-term cash commitments rather than for investments or other purposes are recognized as cash equivalents.

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, for an item 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.

(i) Financial assets

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

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.

(Continued)

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

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.

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.

(Continued)

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

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 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.

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 or when the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

(ii) Financial liabilities

1) Classification of debt or equity

Debt and equity instruments issued by the Group are classified as financial liabilities or equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

2) Equity instrument

An equity instrument is any contract that evidences residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued are recognized as the amount of consideration received, less the direct cost of issuing.

(Continued)

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

3) Convertible bonds

Convertible bonds issued by the Group can be converted to ordinary shares at the option of the holders. The number of shares to be issued is fixed and does not vary when the fair value of the convertible bond changes.

The liability component of the convertible bonds is initially recognized at the fair value of a similar liability that does not have an equity conversion option. Embedded call option and bondholders' put option are measured at fair value and reported as financial liabilities at fair value through profit or losses. The equity component is initially recognized at the difference between the fair value of the convertible bonds as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a convertible bonds is measured at amortized cost using the effective interest method. The equity component is not remeasured. The put options and call options of the corporate bonds payable are based on Binary Tree Model to estimate the fair value. The changes in fair value are reported in profit or loss.

Interest expense related to the financial liability is recognized in profit or loss. The financial liability is reclassified to equity upon conversion and no gain or loss is recognized.

4) 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.

5) 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.

6) 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.

(Continued)

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

(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.

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.

(Continued)

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

(j) Lease

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

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

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date discounted using the 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.

(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.

(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").

(Continued)

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

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.

(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.

(Continued)

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

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.

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.

(Continued)

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

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 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.

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.
(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.

(Continued)

REGAL HOLDING CO., LTD. AND SUBSIDIARIES Notes to the Consolidated 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. The Group’s dilutive potential ordinary shares include the estimation of employee remuneration and convertible bonds.

(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.

(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, 2021 $ 888 248,429 40 20,926 $ 270,283	December 31, 2020
		1,004 625,336 48 47,869
		674,257

(Continued)

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

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

－
(b) 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, 2021 $ 294	December 31, 2020
		882

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.

Trade receivables Less: loss allowance	December 31, 2021 $ 537,664 (1,815) $ 535,849	December 31, 2020 481,598 (6,388) 475,210

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, 2021 and 2020 was as follows:

December 31, 2021	December 31, 2021
Book value of trade receivables $ 316,748 128,753 584 62 $ 446,147	Lifetime expected credit loss rate (%) - - - 12.14	Allowance for lifetime expected credit loss
		- - - 8
		8

(Continued)

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

December 31, 2020	December 31, 2020
Book value of trade receivables $ 194,209 105,746 85,205 1 5,219 $ 390,380	Lifetime expected credit loss rate (%) - - - - 100.00	Allowance for lifetime expected credit loss
		- - - - 5,219
		5,219

The Group’ s analysis on the expected credit loss of its trade receivables in other regions as of December 31, 2021 and 2020 was as follows:

December 31, 2021	December 31, 2021
Book value of trade receivables Lifetime expected credit loss rate (%) $ 60,763 0.57 18,667 1.56 9,239 7.57 788 16.68 462 34.53 264 98.34 1,334 100.00 $ 91,517 December 31, 2020		Allowance for lifetime expected credit loss
		347 291 699 131 160 260 1,334
		3,222

Book value of trade receivables $ 72,936 16,509 436 389 316 632 $ 91,218	Lifetime expected credit loss rate (%) 0.54 2.23 14.37 44.53 82.68 100.00	Allowance for lifetime expected credit loss
		395 368 63 173 261 632
		1,892

(Continued)

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

The movements of the loss allowance for trade receivables were as follows:

Balance at the beginning Impairment losses recognized (reversed) Amounts written off Foreign currency translation effects Balance at the end Other receivables Other receivables Less: loss allowance	2021 $ 6,388 937 (4,952) (558) $ 1,815 December 31, 2021 $ 23,070 (15,304) - $ 7,766	2020 17,626 (10,228) - (1,010) 6,388 December 31, 2020 22,145 - - 22,145

(d) Other receivables

The movements of the loss allowance for other receivables were as follows:

Balance at the beginning Impairment losses recognized Foreign currency translation effects Balance at the end	2021 $ - 16,177 (873) $ 15,304	2020
		- - -
		-

The Group did not have any past due other receivables as of December 31, 2021 and 2020.

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

(e) Inventories

December 31, 2021	December 31, 2021
Cost $ 269,967 129,969 29,554 12,437 $ 441,927	Allowance for devaluation and obsolescence 50,482 10,183 7,380 2,706 70,751	Net realizable value
		219,485 119,786 22,174 9,731
		371,176

(Continued)

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

December 31, 2020	December 31, 2020
Cost $ 262,919 118,750 25,454 13,029 $ 420,152	Allowance for devaluation and obsolescence 52,958 9,914 8,063 4,556 75,491	Net realizable value
		209,961 108,836 17,391 8,473
		344,661

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

Beginning balance Provision of the allowance for inventory devaluation and obsolescence Foreign currency translation effects Ending balance	2021 $ 75,491 4,692 (9,432) $ 70,751	2020 71,274 7,879 (3,662) 75,491

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

Loss on the allowance for inventory devaluation and obsolescence Revenue from sales of scrap	2021 $ 4,692 (12,131) $ (7,439)	2020 7,879 (24,982) (17,103)

As of December 31, 2021 and 2020, the Group did not pledge the inventories as collateral.

(f) 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, 2021 December 31, 2020 % 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.

(Continued)

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

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 Total comprehensive income attributable to non-controlling interests Net cash flows from operating activities Net cash flows used in investing activities Net cash flows used in financing activities Net increase (decrease) in cash and cash equivalents Dividends paid to non-controlling interests	December 31, 2021 $ 227,124 26,819 (17,999) (1,264) $ 234,680 $ 114,993 2021 $ 365,675 $ 23,677 (33,280) $ (9,603) $ 11,602 $ (4,705) $ 59,190 (1,557) (75,336) $ (17,703) $ (36,914)	December 31, 2020 300,936 41,405 (21,564) (1,160) 319,617 156,612 2020 416,658 21,488 (17,125) 4,363 10,529 2,138 59,228 (27,462) - 31,766 -

(g) 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, 2021 and 2020, were as follows:

Land $ 166,951 - - - (21,122)	Buildings 239,723 535 (129) 6,684 (30,711)	Machinery and equipment 309,352 32,122 (13,627) 10,571 (40,710)	Transportation equipment 28,933 555 (9,625) - (3,170)	Office equipment 136,930 9,155 (4,707) 5,549 (17,856)	Land improvement 10,271 405 - - (1,199)	Equipment to be inspected 3,994 24,595 - (22,804) (602)	Total 896,154 67,367 (28,088) - (115,370)
$ 145,829	216,102	297,708	16,693	129,071	9,477	5,183	820,063
$ 176,420 - - - (9,469)	250,613 2,545 - - (13,435)	318,581 27,993 (22,118) 2,039 (17,143)	31,308 496 (1,189) - (1,682)	139,353 11,167 (6,554) 247 (7,283)	10,948 119 (208) - (588)	548 5,740 - (2,286) (8)	927,771 48,060 (30,069) - (49,608)
$ 166,951	239,723	309,352	28,933	136,930	10,271	3,994	896,154

(Continued)

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

Land $ - - - -	Buildings 176,580 11,944 (129) (22,978)	Machinery and equipment 250,168 23,627 (13,513) (32,196)	Transportation equipment 20,552 2,868 (9,454) (2,244)	Office equipment 112,547 11,893 (4,674) (14,654)	Land improvement 9,796 169 - (1,134)	Equipment to be inspected - - - -	Total 569,643 50,501 (27,770) (73,206)
$ -	165,417	228,086	11,722	105,112	8,831	-	519,168
$ - - - -	172,846 12,930 - (9,196)	263,947 22,507 (22,008) (14,278)	19,645 3,124 (1,170) (1,047)	112,841 11,999 (6,406) (5,887)	10,446 119 (208) (561)	- - - -	579,725 50,679 (29,792) (30,969)
$ -	176,580	250,168	20,552	112,547	9,796	-	569,643
$ 145,829	50,685	69,622	4,971	23,959	646	5,183	300,895
$ 166,951	63,143	59,184	8,381	24,383	475	3,994	326,511
$ 176,420	77,767	54,634	11,663	26,512	502	548	348,046

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

(h) Right-of-use assets

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

Cost: Balance at December 31, 2021 (the same as the balance at January 1, 2021) Balance at January 1, 2020 Additions Disposal Foreign currency translation effect Balance at December 31, 2020 Accumulated depreciation: Balance at January 1, 2021 Depreciation Balance at December 31, 2021 Balance at January 1, 2020 Depreciation Disposal Foreign currency translation effect Balance at December 31, 2020	Buildings $ 2,668 $ 3,038 2,668 (3,032) (6) $ 2,668 $ 593 889 $ 1,482 $ 1,573 1,052 (2,029) (3) $ 593

(Continued)

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

Carrying amount: Balance at December 31, 2021 Balance at December 31, 2020 Balance at January 1, 2020	Buildings
	$ 1,186 $ 2,075 $ 1,465

(i) Intangible assets

The cost, amortization, and impairment losses of the intangible assets of the Group for the years ended December 31, 2021 and 2020, were as follows:

Costs: Balance at January 1, 2021 Additions Reclassification Foreign currency translation effect Balance at December 31, 2021 Balance at January 1, 2020 Additions Disposals Reclassification Foreign currency translation effect Balance at December 31, 2020 Amortization and impairment loss: Balance at January 1, 2021 Amortization Foreign currency translation effect Balance at December 31, 2021 Balance at January 1, 2020 Amortization Disposals Foreign currency translation effect Balance at December 31, 2020 Carrying amount: Balance at December 31, 2021 Balance at December 31, 2020 Balance at January 1, 2020	Computer software $ 59,536 2,475 (288) (7,331) $ 54,392 $ 87,652 7,291 (40) (30,554) (4,813) $ 59,536 $ 48,690 3,723 (5,996) $ 46,417 $ 48,145 3,082 (7) (2,530) $ 48,690 $ 7,975 $ 10,846 $ 39,507	Trademark 1,276 74 41 (168) 1,223 857 462 - - (43) 1,276 12 43 29 84 - 12 - - 12 1,139 1,264 857	Total 60,812 2,549 (247) (7,499) 55,615 88,509 7,753 (40) (30,554) (4,856) 60,812 48,702 3,766 (5,967) 46,501 48,145 3,094 (7) (2,530) 48,702 9,114 12,110 40,364

(Continued)

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

(j) Short-term loans

Credit loans Secured bank loans Unused credit lines Interest rate (%)	December 31, 2021 $ 44,264 - $ 44,264 $ 925,093 0.96~2.10	December 31, 2020
		169,464 200,676
		370,140
		745,000
		0.96~2.10

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

(k) Corporate bonds payable

Total convertible corporate bonds issued Unamortized discounted corporate bonds payable Cumulative converted amount Corporate bonds balance at year-end Embedded derivative – remeasurment of call and put options (recorded as financial liabilities at fair value through profit or loss) Equity component – conversion options (recorded as capital surplus– stock options) Remeasurment losses of call and put options (recorded as other gains and losses) Interest expense	December 31, 2021 $ 250,000 (10,111) (100) $ 239,789 $ 1,075 $ 10,763 2021 $ 75 $ 5,104	December 31, 2020 250,000 (15,219) - 234,781 1,000 10,767 2020 200 401

A resolution had been made during the board meeting held on October 5, 2020 for the Company to issue its unsecured convertible bonds in the principal amount of $250,000 thousand for loan repayment and working capital enrichment, with an coupon rate of 0% for 3 years and issued at 100.5% of the par value.

(Continued)

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

The Company issued its unsecured convertible bonds amounting to $251,250 thousand on December 3, 2020 upon the approval by the Financial Supervisory Commission on November 11, 2020. The Company recognize liability and equity components of convertible bonds separately as follows:

Discounted present value of convertible bonds on the date of issuance Embedded derivative financial instruments on the date of issuance (put option and call option) Equity component on the date of issuance (conversion option)	December 31, 2020
	$ 239,450 800 11,000 $ 251,250

The transaction costs of $5,320 thousand that related to the issuance of aforementioned convertible bonds were allocated to the components of liabilities, equity and derivative instruments in proportion to their relative fair value. The transaction cost of $17 thousand related to derivative instruments was directly recognized in profit and loss. The transaction cost of $5,070 thousand related to the liability would be amortized at the effective interest rate over the duration of the convertible bond; and the transaction cost of $233 thousand related to the equity component will not be remeasured after the initial recognition.

(i) Terms of issuing unsecured convertible bonds are as follows:
。
1) Coupon rate: 0%
2) Duration period: 3 years (December 2, 2020, to December 2, 2023)
3) Repayment term: the bond are repayable in cash upon maturity of the bonds, except for those which were repurchased by the Company, sold back to the Company, or converted to common stock before maturity.
4) Conversion period: beginning from three month after the issuance date (March 3, 2021) until maturity (December 2, 2023), bondholders may convert the bonds into common stock according to the conversion rate set in the agreement.
5) The Company's call option (right of redemption): beginning from three month after the issuance date (March 3, 2021) until 40 days before maturity (October 23, 2023), if the stock closing price exceeds 30% of the conversion price for 30 consecutive working days, or the remaining principal amount of bonds payable, which have not yet been converted into shares is lower than 10% of the total principal, the Company is entitled to send a "bond redemption notification" to the bondholders and publish an announcement through the TPEx to exercise its call option.
6) Bondholders' put option: bondholders are entitled to exercise the put option on December 2, 2022 with an exercise price at 101.0025% (annual yield rate of the put option is 0.5%) of the par value of the bonds. Upon receipt of a sell back request, the Company shall pay the amount to the bondholders by cheque or electronic transfer within 5 working days of the put date.

(Continued)

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

7) Conversion price and adjustment:

The conversion price at the issue date is TWD 30.5 per share. If there is any increase in the Company's common stock (including but not limited to cash injection by public offering or private offering, capital increase from retained earnings or capital surplus, issuance of new shares for consolidation purposes or as the consideration payable by the Company for its acquisition of another company's shares, stock split, or cash injection by participating in the issuance of overseas depository receipts) except for increases in shares from conversion of securities in which a stock conversion right or stock warrant was embedded or from issuance of new shares as employees' bonus, the Company shall calculate and adjust the conversion price based on the formula stated in the conversion arrangement before publishing an announcement through the TPEx. The adjustment shall be made at the ex rights date when issuing new shares. However, the adjustment will be made at the date when the new share subscriptions are fully collected if the issuance of new shares involves share subscription collection. If the issue price of new shares changes after the ex rights date for issuing new shares, the conversion price should be adjusted based on the revised issue price by using the formula stated in the conversion arrangement. If such recalculated conversion price is lower than that announced to the public through the TPEx before the ex rights date for issuing new shares, the Company should re announce the adjustment of the conversion price through the TPEx. The conversion price as of December 31, 2020 is NT$30.5 per share.

The conversion price was adjusted to $29.9 per share on September 10, 2021.

(ii) Financial liabilities measured at fair value through profit or loss are as follows:

Embedded derivative financial instruments (put option and call option) Balance at the beginning Addition in the period Valuation loss in the period Converted in the period	December 31, 2021 $ 1,000 - 75 - $ 1,075	December 31, 2020
		- 800 200 -
		1,000

The bondholders are entitled to exercise the put option on December 2, 2022 to sell back the bonds to the Company. As such, the Company reported the bonds payable and the embedded derivative financial instruments under current liabilities on December 31, 2021.

(Continued)

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

－
(iii) The balance of the equity component recorded as capital surplus stock options are as follows:

Balance at the beginning Addition in the period Less: underwriting expenses Converted in the period Balance at the end	December 31, 2021 $ 10,767 - - (4) $ 10,763	December 31, 2020 - 11,000 (233) - 10,767

(l) Lease liabilities

December 31, 2021 Future minimum lease payments Interests Less than one year $ 914 14 Between one and five years 305 1 $ 1,219 15 Current $ 914 14 Non-current $ 305 1 December 31, 2020 Future minimum lease payments Interests Less than one year $ 914 30 Between one and five years 1,219 15 $ 2,133 45 Current $ 914 30 Non-current $ 1,219 15 The amounts recognized in profit or loss were as follows: 2021 Interests on lease liabilities $ 30 Expenses relating to short-term leases $ 2,122 Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets $ 476	December 31, 2021
	Future minimum lease payments Interests $ 914 14 305 1 $ 1,219 15 $ 914 14 $ 305 1 December 31, 2020	Present value of minimum lease payments
		900 304
		1,204
		900
		304

		Present value of minimum lease payments
		884 1,204
		2,088
		884
		1,204
		2020
		40
		1,426
		318

(Continued)

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

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

Total cash outflow for leases	2021 $ 3,542	2020 2,826

(i) Building leases

As of December 31, 2021, the Group leases buildings for its office space, which typically run for a period of 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.

(m) Employee benefits

(i) Defined benefit plans

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

December 31, 2021 Net defined benefit liabilities $ 25,467 1) Movements in present value of the defined benefit obligations	December 31, 2020 28,170

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 Effect of movements in exchange rates Benefits paid Defined benefit obligations at December 31	2021 $ 28,170 3,878 6,378 (4,418) (654) (3,539) (4,348) $ 25,467	2020 27,735 2,680 8,351 166 (342) (1,528) (8,892)
		28,170

(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 Operating costs Administration expenses	2021 $ 3,540 338 $ 3,878 $ 2,483 1,395 $ 3,878	2020
		2,421 259
		2,680
		1,504 1,176
		2,680

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, 2021 and 2020, were as follows:

Accumulated amounts at the beginning Amounts recognized during the period Accumulated amounts at December 31	2021 $ (14,916) (1,306) $ (16,222)	2020 (6,741) (8,175) (14,916)

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, 2021 December 31, 2020 2.22%~2.85% 1.68%~1.97% 2.14%~2.87% 1.98%~1.99% 3.59% 3.91% 2.74% 3.00%

The expected payments to be made by the Group to the defined benefit plans for the oneyear period after the reporting date is $3,706 thousand.

The weighted average lifetimes of the defined benefits plans for daily paid and monthly paid employees are 11~19 years and 12~18 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, 2021 Discount rate (changes: 0.50%) Future salary increasing rate (changes: 0.50%) December 31, 2020 Discount rate (changes: 0.50%) Future salary increasing rate (changes: 0.50%)	Impact on defined benefit obligations Increased 0.50% Decreased 0.50% (642) 684 223 (210) (760) 964 503 (468)

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 2021 and 2020.

(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 Labor Insurance amounted to $533 thousand and $528 thousand for the years ended December 31, 2021 and 2020, respectively.

(n) 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 2021 and 2020 were as follows:

Current tax expense Current period Deferred tax expenses (benefits) Origination and reversal of temporary differences Income tax expense	2021 $ 51,751 13,540 $ 65,291	2020 29,981 (3,335) 26,646

Reconciliation of income tax and profit before tax for 2021 and 2020 was as follows:

Profit excluding income tax Income tax using the statutory tax rate at each jurisdictions Tax estimation (reversal) on subsidiary's earning distribution Adjustment according to tax act Total	2021 $ 202,967 $ 48,816 14,013 2,462 $ 65,291	2020 124,294 32,283 (3,535) (2,102) 26,646

(iii) Deferred tax assets and liabilities

1) Recognized deferred tax assets and liabilities

Changes in the amount of deferred tax assets and liabilities for 2021 and 2020 were as follow:

Deferred tax liabilities:

Balance at January 1, 2021 Recognized in profit or loss Reclassification Balance at December 31, 2021 Balance at January 1, 2020 Recognized in profit or loss Balance at December 31, 2020	Taxable investment income $ (35,367) (14,013) (12,157) $ (61,537) $ (38,902) 3,535 $ (35,367)

(Continued)

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

Deferred tax assets:

Balance at January 1, 2021 Recognized in profit or loss Effect of exchange rate changes Balance at December 31, 2021 Balance at January 1, 2020 Recognized in profit or loss Effect of exchange rate changes Balance at December 31, 2020	Impairment losses on trade receivables $ 1,277 (925) (111) $ 241 $ 3,525 (2,046) (202) $ 1,277	Impairment losses on inventories 14,468 974 (1,883) 13,559 13,947 1,262 (741) 14,468	Accrued pension liabilities 5,556 143 (721) 4,978 5,469 382 (295) 5,556	Others 470 281 (64) 687 277 202 (9) 470	Total 21,771 473 (2,779) 19,465 23,218 (200) (1,247) 21,771

(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 2020. Corporate income tax returns of GVG Hong Kong and GVG Shenzhen have been submitted to the revenue department through 2020. Corporate income tax returns submitted by the Company’s Taiwan branch RIC had been approved by the revenue department through 2020.

(o) Capital and other equity

Reconciliation of share outstanding for the years ended December 31, 2021 and 2020 was as follow:

Balance of outstanding shares on January 1 Restricted shares vested in the year Conversion of convertible bonds Balance of outstanding shares on December 31 Restricted shares granted to employees at January 1 Restricted shares vested in the year Restricted shares canceled Balances of total shares issued on December 31	Unit: thousand shares Common Stock 2021 2020 38,273 38,160 113 113 3 - 38,389 38,273 113 310 (113) (113) - (84) 38,389 38,386
	2021 38,273 113 3 38,389 113 (113) - 38,389

As of December 31, 2021 and 2020, the total value of authorized ordinary shares each amounted to $600,000 thousand, with a par value of $10 per share. There were $383,893 thousand and $383,860 thousand ordinary shares issued at December 31, 2021 and 2020, respectively.

(Continued)

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

(i) Issuance of common stock

As of 2021, the Company issued 3 thousand new shares due to the exercise of conversion rights by the holders of convertible corporate bonds, which were issued at par value, with a total value of $33 thousand.There was no such event in 2020.

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. The registration for the cancellation has been completed, resulting in adjusting capital surplus － restricted shares to employees for $700 thousand.

As of July 3, 2020, the Company recalled 14 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 $$753 thousand, respectively. A resolution was made by the Board of Directors on August 13, 2020, to cancel the recalled shares, with the record date of the cancellation on August 27, 2020. The － registration for the cancellation has been completed, resulting in adjusting capital surplus restricted shares to employees for $140 thousand.

(ii) Capital surplus

The balance of capital surplus was as follows:

The balance of capital surplus was as follows:
Additional paid-in capital Restricted shares to employees Issuance of convertible bonds－stock options	December 31, 2021 $ 418,437 9,899 10,763 $ 439,099	December 31, 2020
		418,370 9,899 10,767
		439,036

A resolution was made by the Board of Directors on March 11, 2021, to distribute $63,726 thousand from the additional paid-in capital as cash dividends to shareholders.

The aforesaid matters will be decided at the shareholders’ meeting to be held in June 2022.

The 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

(iii) Retained earnings

According to the Company's Articles, if there are profits for the year, the profits should first be used to pay income tax; thereafter, offset the prior year’ s deficit, if any. Of the remaining balance, 10% is to be appropriated as legal reserve. Any remainder will be allocated as special surplus reserve as required by the applicable securities authority of the ROC under the applicable public company rules. The remaining profit, if any, after combining all or part of the accumulated undistributed profits in the previous years and the reversed special surplus reserve, shall be allocated as dividends to the shareholders in proportion to their shareholdings based on the resolution approved during the board meeting. Subject to the law of Cayman Islands and the applicable public company rules, and unless otherwise resolved by the Board and the shareholders, as well as after having considered the financial, business and operational factors of the Company, the dividends shall not be less than fifty percent (50%) of the profit after tax of the relevant year. The distribution may be made by way of cash dividends or stock dividends, or a combination thereof, provided that, the cash dividends shall not be less than 30% of the total amount of dividends payable.

1) Special reserve

In accordance with Ruling issued by FSC, 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.

2) Earnings distribution

Earnings distribution for 2020 was decided during the shareholders’ meeting held on July 30, 2021 as follow:

Dividends distributed to shareholders: Cash	2020	2020
	Amount per share $ 0.500	Total Amount
		19,193

The Company's cash dividends for 2021 earnings distribution was resolved during the meeting of the Board of Directors on March 11, 2022 for $0 thousand.

The earnings distribution for 2021 will be decided at the shareholders’ meeting to be held in June 2022.

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

(iv) Other equity

Balance at January 1, 2021 Exchange differences on foreign operations Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Share-based payments Balance at December 31, 2021 Balance at January 1, 2020 Exchange differences on foreign operations Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Restricted shares to employees Share-based payments Balance at December 31, 2020	Exchange differences on translation of foreign financial statements $ 18,686 (135,321) - - $ (116,635) $ 66,091 (47,405) - - - $ 18,686	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income (11,318) - (588) - (11,906) - - (11,318) - - (11,318)	Share-based payments－ unearned compenssation (1,750) - - 1,750 - (6,795) - - 753 4,292 (1,750)	Total 5,618 (135,321) (588) 1,750 (128,541) 59,296 (47,405) (11,318) 753 4,292 5,618

(v) Non-controlling interests of subsidiaries, net of tax

Balance at January 1, 2020 Share attributable to non-controlling interests： Net income Exchange differences on foreign operations Actruarial gains and losses Changes in non-controlling interests Subsidiary distributes cash dividends to non- controlling interests	2021 $ 157,616 10,727 (16,337) (62) 439 (36,914) $ 115,469	2020 156,837 9,305 (8,526) - - - 157,616

(p)	Share-based payment
	Details on restricted shares are as follows:

Number of shares on January 1 Vested during the year Forfeited during the year Number of shares on December 31	Unit: thousand shares 2021 2020 113 240 (113) (113) - (14) - 113

(Continued)

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

The share-based payment costs for 2021 and 2020 were $1,750 thousand and $4,292 thousand, respectively; and the unvested share-based payments amounted to $0 thousand and $1,750 thousand, respectively, which were recorded as reductions of other equity. Please refer to note 6(o) for the changes in share capital and other equity.

(q) Earnings per share

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

Basic earnings per share:
Net income attributable to common stocks
Weighted-average number of common stocks outstanding
Basic earnings per share (New Taiwan dollars)
Diluted earnings per share:
Net income attributable to common stocks
Interest expenses of convertible bonds
Losses from remeasurement of financial liabilities at fair
value through profit or loss
Net income attributable to common stocks
Weighted-average number of common stocks outstanding
Potential dilutive effect on common stocks
Conversion of convertible bonds
Unvested restricted employee shares
Weighted-average number of common shares outstanding
－diluted
Diluted earnings per share (New Taiwan dollars)
(r)
Revenue from contracts with customers
(i)
Disaggregation of revenue
Primary geographical markets:
Thailand
United States
France
United Kingdom
Canada
Other

Unit: thousand shares
2021
2020
$
126,949
88,343
38,283
38,170
$
3.32
2.31
$ 126,949
88,343
5,104
401
75
200
$
132,128
88,944
38,283
38,170
8,358
672
-
52
46,641
38,894
$
2.83
2.29
2021
2020
$ 1,162,811
888,254
305,635
330,576
157,365
188,694
166,453
128,759
146,887
97,232
149,212
132,042
$
2,088,363
1,765,557

(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	2021 $ 2,006,792 81,571 $ 2,088,363	2020
		1,631,729 133,828
		1,765,557

(ii) Remaining balances of contracts

Trade receivables Less: loss allowance Total Contract liabilities (recorded as other current liabilities)	December 31, 2021 $ 537,664 (1,815) $ 535,849 $ 1,766	December 31, 2020 481,598 (6,388) 475,210 3,663	January 1, 2020 749,940 (17,626) 732,314 997

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

The amounts of revenue recognized for the years ended December 31, 2021 and 2020 that were included in the contract liability balance at the beginning of the period were $3,605 thousand and $866 thousand, respectively.

The major changes in the balance of contract liabilities were the differences between the time frame in the performance obligation to be satisfied and the payment received.

(s) 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 accrued $0 thousand for employees’ remuneration and $0 for the remunerations to directors for the year ended December 31, 2021.

(Continued)

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

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.

If there is a difference between the actual distribution amount in the next year and the estimated amount, it will be treated according to the change in accounting estimates, and the difference will be recognized as the profit and loss of the following year.

If the board of directors decides to pay employees in stock, the basis for calculating the number of shares for stock compensation is based on the closing price on the day before the decision of the board of directors.

Since the profit for this period shall be used to offset the Company's accumulated deficits, the Company did not accrue any remunerations to its employees and directors for 2020.

The Company's employee compensation and directors' remuneration approved by the Board of Directors for the year ended December 31, 2020 was $360 thousand and $0, respectively. The difference between the estimated amount in the 2020 consolidated financial report and the approved amount was $360 thousand. The Company recognized the difference as profit or loss in 2021.

The Company's employee compensation and directors' remuneration approved by the Board of Directors for the year ended December 31, 2021 was $2,819 thousand and $1,410 thousand, respectively. The difference between the estimated amount in the 2021 consolidated financial report and the approved amount was $2,819 thousand and $1,410 thousand, respectively. The Company will recognized the difference as profit or loss in 2022. The employee compensation and directors' remuneration information would be available on the Market Observation Post System Website.

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

The details of interest income were as follows:

Interest income from bank deposits

(ii) Other income The details of other income were as follows: Others

==> picture [167 x 108] intentionally omitted <==

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

2021 2020
$ 368 643
2021 2020
$ 10,928 7,238
----- End of picture text -----

(Continued)

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

(iii) Other gains and losses

The details of other gains and losses were as follows:

Gains on disposal of property, plant and equipment Losses on disposal of intangible assets Gains on lease modification Foreign exchange gains, net Losses from financial liabilities at FVTPL Others Total Finance costs The details of finance costs were as follows: Interest expenses on loans from banks Corporate bonds payable Interest expenses on lease liabilities	2021 $ 1,409 - - 17,371 (75) (6) $ 18,699 2021 $ 3,111 5,104 30 $ 8,245	2020 219 (33) 17 10,463 (200) (270) 10,196 2020 8,237 401 40 8,678

(iv) Finance costs

(u) Financial instruments

(i) Credit risk

1) Risk exposure

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

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 84% and 74% of the total amount of trade receivables as of December 31, 2021 and 2020. As of December 31, 2021 and 2020 the Group's trade receivables concentrated on three main customers were $444,817 thousand and $353,248 thousand, respectively.

3) Credit risk of receivables

Please refer to note 6(c) for information on credit risk of trade receivables; and note 6(d) for details of other receivables.

(Continued)

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

(ii) Liquidity Risk

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

December 31, 2021 Non-derivative financial liabilities Short-term loans Payables Lease liabilities Corporate bonds payable (including embedded derivative financial instruments) Guarantee deposits received December 31, 2020 Non-derivative financial liabilities Short-term loans Payables Lease liabilities Corporate bonds payable (including embedded derivative financial instruments) Guarantee deposits received	Carrying amount $ 44,264 118,833 1,204 240,864 3,593 $ 408,758 $ 370,140 136,717 2,088 235,781 3,801 $ 748,527	Contractual cash flows 44,264 118,833 1,204 240,864 3,593 408,758 370,140 136,717 2,088 235,781 3,801 748,527	Less than 1 year 44,264 118,833 900 240,864 - 404,861 370,140 136,717 884 - - 507,741	1-2 years - - 304 - - 304 - - 1,204 - - 1,204	More than 2 years
					- - - - 3,593
					3,593
					- - - 235,781 3,801
					239,582

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

(iii) Currency risk

1) Currency risk exposure

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

Fi	D	ecember 31, 2021		December 31, 2020
	Foreign currency (in thousands) $ 7,418 2,393	Exchange rate 27.68 27.68	Foreign currency (in thousands) 19,170 2,570	Exchange rate Amount 28.48 545,973 28.48 73,185
Fi

(Continued)

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

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, 2021 and 2020, would have decreased (increased) profit before tax for the years ended December 31, 2021 and 2020, by $1,391 thousand and $4,728 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 gains, including realized and unrealized, were $17,371 thousand and $10,463 thousand for the years ended December 31, 2021 and 2020, 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 profit before tax would have decreased / increased by $443 thousand and $3,701 thousand for the years ended December 31, 2021 and 2020 with all other variable factors remaining constant. This was mainly due to the Group's borrowing at variable rate.

(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:

	December 31, 2021	December 31, 2021	December 31, 2021
Carrying amount $ 294		Fair value
	Level 1 -	Level 2 -	Level 3 294	Total
				294

(Continued)

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

	December 31, 2021	December 31, 2021	December 31, 2021
Carrying amount $ 270,283 535,849 7,766 9,196 823,094 $ 823,388 $ 1,075 44,264 17,524 101,309 1,204 3,593 167,894 $ 168,969		Fair value
	Level 1 Level 2 Level 3 - - - - - - - - - - - - - - - - - 294 - - 1,075 - - - - - - - - - - - - - - - - - - - - 1,075 December 31, 2020			Total
				- - - -
				-
				294
				1,075
				- - - - -
				-
				1,075

		Fair value
	Level 1 -	Level 2 -	Level 3 882	Total
				882

(Continued)

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

	December 31, 2020	December 31, 2020	December 31, 2020
Carrying amount $ 674,257 475,210 22,145 9,698 1,181,310 $ 1,182,192 $ 1,000 370,140 31,235 105,482 2,088 234,781 3,801 747,527 $ 748,527		Fair value
	Level 1 - - - - - - - - - - - - - - -	Level 2 - - - - - - - - - - - - - - -	Level 3 - - - - - 882 1,000 - - - - - - - 1,000	Total
				- - - -
				-
				882
				1,000
				- - - - - -
				-
				1,000

2) 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).

(Continued)

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

‧ Level 3: inputs for the assets or liability that are not based on observable market data (unobservable inputs).
－
3) Valuation techniques for financial instruments measured at fair value non-derivative

The fair value of unlisted equity instruments is estimated and calculated by using the comparable company approach with a liquidity discount rate which reflects the time value of money and the investment risk premium.

4)
Derivative financial instruments evaluation

The put options and call options of the corporate bonds payable are based on Binary Tree Model to estimate the fair value.

5) Reconciliation of Level 3 fair values

Balance at January 1, 2021 Unrealized valuation losses Balance at December 31, 2021 Balance at January 1, 2020 Unrealized valuation losses Issued Balance at December 31, 2020	Current/non- current financial liabilities at fair value through profit or loss	Non-current financial assets at fair value through other comprehensive income 882 (588) 294 12,200 (11,318) - 882	合計 1,882 (513) 1,369 12,200 (11,318) 1,000 1,882
	$ 1,000 75 $ 1,075 $ - - 1,000 $ 1,000

The above total gain or loss is reported in “ other gains and losses” and “ unrealized valuation gains (losses) on financial assets at fair value through other comprehensive gains and losses”.” Among them, the assets still held in 2021 and 2020 are as follows:

Total gains and losses Gain or loss is reported in “other gains and losses” Gain or loss is reported in “unrealized valuation gains (losses) on financial assets at fair value through other comprehensive gains and losses”	2021 2020 $ 75 - (588) (11,318)

(Continued)

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

6) 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 Financial liabilities at fair value through profit or loss	Valuation technique Comparables companty Method Binary tree convertible bond evaluation model	Significant unobservable inputs Ibter-relationship between significant unobservable inputs and fair value measurement ‧ Discount for lack of marketability. ‧ The estimated fair value would decrease if liquidity discount were higher ‧ Volatility ‧ The higher the volatility, the higher the fair value

－
7) 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.

(v) 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.

(Continued)

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

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.

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, 2021 and 2020, the endorsement and guarantees provided by the Group were both $0 thousand.

(Continued)

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

(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, 2021 and 2020, the Group’ s unused credit line were $925,093 thousand and $745,000 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.

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.

(w) 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.

(Continued)

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

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, 2021 $ 537,643 $ 1,014,564 % 52.99	December 31, 2020
		846,563
		1,084,262
		% 78.08

As of December 31, 2021, there were no changes in the Group’s approach to manage capital.

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

Reconciliation of liabilities arising from financing activities was as follows:

	Cash flows (299,909) (914) - (300,823) sh flows Add cance of co (286,317) (1,042) 245,930 (41,429)	Conver bon - -		Non-ca	sh changes	Foreign exchange movement (25,967) 30 - (25,937)	December 31, 2021
			sion of ds (96) (96) No	Di amo	scount rtization - - 5,104 5,104 changes
							44,264 1,204 239,789
							285,257
	sh flows (286,317) (1,042) 245,930 (41,429)			n-cash			December 31, 2020 370,140 2,088 234,781
		ition / llation ntracts - 1,648 - 1,648	Issuance of corporate bonds - - (11,550) (11,550)		Discount amortizati - -	on 401 401
$ $
							607,009

(7) Related-party transactions:

Key management personnel compensation comprised:

Key management personnel compensation comprised:
Short-term employee benefits Post-employment benefits	2021 $ 24,890 30 $ 24,920	2020
		17,449 372
		17,821

(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:

Pledged assets	Object	December 31, 2021 $ 145,829 18,630 3,971 $ 168,430	December 31, 2020
Property, plant and equipment: Land Buildings Other financial assets－non-current: Refundable deposits	Short-term loans Short-term loans Guarantee for electricity supply and fuel cards		166,95 29,07 4,52
			200,55

(9) Commitments and contingencies:

The credit line of guarantee provided by bank was as follows:

Electricity guarantee	December 31, 2021 $ 3,743	December 31, 2020 4,269

(10) Losses due to major disasters: None

(11) Subsequent events:

In order to make effective use of the Group's resources and create maximum profit for shareholders, upon the resolution by Board of Directors on March 11, 2022, the Group will terminate the operation of GVG Hong Kong, GVG Shenzhen and Chaporo and process the liquidation.

(12) Other:

A summary of personnel costs, depreciation, depletion and amortization, by function, is as follows:

Function Account	2021	2021	2021	2020	2020	2020
	Operating cost	Operating expenses	Total	Operating cost	Operating expenses	Total
Personnel costs Salaries Health insurance Pension Other personnel expense Depreciation Depletion Amortization	392,276 - 2,480 15,664 33,413 - 968	165,384 1,106 1,931 22,183 17,977 - 2,798	557,660 1,106 4,411 37,847 51,390 - 3,766	414,429 - 1,504 12,929 32,893 - 1,042	159,190 530 1,704 14,261 18,838 - 2,052	573,619 530 3,208 27,190 51,731 - 3,094

(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, 2021:

(i) Lending to other parties:

Lending to other parties:	Lending to other parties:	Lending to other parties:	Lending to other parties:	Lending to other parties:	Lending to other parties:	Lending to other parties:	Lending to other parties:	Lending to other parties:	Lending to other parties:	Lending to other parties:	Lending to other parties:	Lending to other parties:
													(In Thousands of New Taiwan Dollars)
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	Collateral		Individual funding loan limits (note 3)	Maximum limit of fund financing (note 3)
													Item	Value
0 0 0	The Company The Company The Company	GVG Shen Zhen RJM RGP	Receivable from related party Receivable from related party Receivable from related party	Yes Yes Yes	218,666 111,200 39,949	44,388 110,720 38,752	44,388 83,040 -	1.68 - -	2 2 2	- - -	Repay bank loan Operating Turnover Operating Turnover and Distributio n of Dividends	- - -	-	- - -	359,638 359,638 359,638	359,638 359,638 359,638

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.

(ii) Guarantees and endorsements for other parties: None

(iii) Information regarding securities held at the reporting date (excluding subsidiary, associates and joint ventures):

				(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 holder	Category and name of security	Relationship with company	Account	Ending balance				Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
RGI RGI	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	192 102	15.93 6.25	192 102

(iv) Information regarding purchase or sale of securities for the period exceeding 300 million or 20% of the Company’s paid-in capital: None
(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

(Continued)

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

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

capital:	capital:	capital:
									(In Thousands of New Taiwan Dollars)
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	(284,104)	77.69	45~60 days	Note 1	-	57,074	77.49	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:

					(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
Name of company	Counter-party	Nature of relationship	Ending balance (Note 2)	Turnover rate (%) (Note 3)	Overdue		Amounts received in subsequent period (Note 1)	Allowance for bad debts
					Amount	Action taken
The Company	RJM	Subsidiary	128,051	-	-		-	-

Note 1: For period ended March 11, 2022.

Note 2: Related-party transactions have been eliminated in the preparation of the consolidated financial statements.

Note 3: The Company lends to RJM , therefore it is not applicable.

(ix) Information regarding trading in derivative financial instruments: please refer to note 6(k).
(x) Significant transactions and business relationship between the parent company and its subsidiaries for the year ended December 31, 2021:

December 31, 2021:	December 31, 2021:	December 31, 2021:
				(In Thousands of New Taiwan Dollars)
No. (note 1)	Name of company	Name of counter-party	Nature of relationship (note 2)	Intercompany transactions
				Account	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
1 1 2	RGP RGP The Company	RJM RJM RJM	1 1 2	Sales Trade receivables Other receivables	284,104 57,074 128,051	The price calculation is made by the consent of the both parties. 45~60 days The duration is one year, and the annual interest rates is at 1.68%	13.60% 3.68% 8.25%

Note 1: Company numbering as follow: No.1 represents RGP.

No.2 represents The Company.

Note 2: The numbering of the relationship between transaction parties as follows:

No.1 represents a subsidiary to the parent company.

No.2 represents the parent company to a subsidiary.

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.

(Continued)

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

(b) Related information on investee companies:

The following is the information on investees for the year ended December 31, 2021 (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, 2021			Net income (losses) of investee (note 1)	Share of profits/losses of investee (note 1)	Note
				December 31, 2021	December 31, 2020	Shares (thousands)	Percentage of ownership	Carrying value (note 1)
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 38,971 18,920 154 45,000 11,647 2,774	300,000 38,971 15,230 154 45,000 11,647 2,335	4,549,998 9,400,000 4,796,000 3,500,000 4,500,000 127,500 294,245	% 99.99 % 100.00 % 99.99 % 70.00 % 100.00 % 51.00 % 49.00	1,033,141 1,334 700 22 14,363 119,263 458	180,362 (2,006) (5,873) (47) (5,409) 23,677 (1,715)	180,362 (2,006) (5,873) (47) (5,409) 11,841 (840)	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.

(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)
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	Investme remitted o	nt amount r recovered	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
					Remittance	Recovery
GVG (Shen Zhen	Selling jewelry and gems	CNY 8,100	2	(note 4)	(note 4)	(note 4)	(note 4)	(2,004)	% 100.00	(2,004)	1,398	-

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 reviewed by the auditors of the 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: Not applicable

(iii) Significant inter-company transactions with China investee company: None

(Continued)

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

(d) Major shareholders:

Major shareholders:
Shareholding Shareholder’s Name	Shares	Percentage
Solar Jewelers Group Corp. Bank SinoPac as Custodian for Arianna Investment Co., Ltd. Investment Account	13,760,000 2,549,559	% 35.84 % 6.64

Note (1)The major shareholder information in the table above contains a listing of shareholders with 5% or more ownership of the Company. The ownership information was calculated by Taiwan Depository & Clearing Corporation at the last trading date in each quarter using the number of common shares (including treasury stocks) and preferred shares issued in scripless form. There might be a difference between share capital on the financial report and the actual share that have completed non-physical delivered due to different basis of calculation.
Note: (2)Shareholders who transferred their shares to trustees are disclosed by each settlor of the trustee accounts. The ownership information disclosed by shareholders with ownership above 10% include their own shares and those shares that they transfer to trustees while retains the power to decide the allocation of trust property. Information on insider ownership declaration is available on the Market Observation Post System website.

(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.

(Continued)

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

	2021	2021
Manufacturing and selling gems and jewelry department $ 2,006,792 - 223 $ 2,007,015 $ 8,245 $ 43,865 $ 170,719	Electro- plating department Adjustments and eliminations 81,571 - 284,104 (284,104) 145 - 365,820 (284,104) - - 11,291 - 32,248 - 2020		Total 2,088,363 - 368
			2,088,731
			8,245
			55,156
			202,967

Manufacturing and selling gems and jewelry department $ 1,631,729 - 458 $ 1,632,187 $ 8,678 $ 43,341 $ 97,235	Electro- plating department 133,828 282,829 185 416,842 - 11,484 27,059	Adjustments and eliminations - (282,829) - (282,829) - - -	Total 1,765,557 - 643
			1,766,200
			8,678
			54,825
			124,294

For the years ended December 31, 2021 and 2020, the adjustments and eliminations of operating segments were (284,104) thousand and (282,829) thousand, respectively.

(b) Product and service information

For the details refer to note 6(r).

(Continued)

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

(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(r).

Non-current assets:

Geographical information Thailand Other countries Total	December 31, 2021 $ 309,044 2,151 $ 311,195	December 31, 2020
		336,864 3,832
		340,696

Non-current assets include property, plant and equipment, right-of-use assets and intangible assets excluding non-current 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 Customer E from manufacturing and selling jewelry and gems department	2021 $ 1,068,218 25,517 157,338 $ 1,251,073	2020
		739,010 114,158 188,773
		1,041,941

AI assistant

RH — Audit Report / Information 2021

52432_rns_2021-11-12_f8197332-8ce5-4f87-8749-f81eee6d9544.pdf

REGAL HOLDING CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

Table of contents

KPMG

Independent Auditors' Report

Opinion

Basis for Opinion

Key Audit Matters

Description of key audit matter:

2. Subsequent measurement of inventories

Description of key audit matter:

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

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

KPMG

Notes to Readers

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

Consolidated Balance Sheets

December 31, 2021 and 2020

(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, 2021 and 2020

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

(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, 2021 and 2020

(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, 2021 and 2020

(expressed in thousands of New Taiwan Dollars)

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

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

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

(1) Company history

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

(3) New standards, amendments and interpretations adopted:

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

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

(4) Summary of significant accounting policies:

(a) Statement of compliance

(b) Basis of preparation

(c) Basis of consolidation

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

(ii) List of subsidiaries in the consolidated financial statements

(d) Foreign currencies

(i) Foreign currency transactions

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

(ii) Foreign operation

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

(f) Cash and cash equivalents

(g) Financial instruments

(i) Financial assets

1) Financial assets measured at amortized cost

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

2) Fair value through other comprehensive income (FVOCI)

4) Impairment of financial assets

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

5) Derecognition of financial assets

(ii) Financial liabilities

1) Classification of debt or equity

2) Equity instrument

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

3) Convertible bonds

4) Other financial liabilities

5) Derecognition of financial liabilities

6) Offsetting of financial assets and liabilities

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

(h) Inventories

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

(j) Lease

(k) Intangible assets

(l) Impairment of non-financial assets

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

(m) Revenue

(n) Employee benefits

(i) Defined contribution plans

(ii) Defined benefit plans

RH Audit Report / Information 2021