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TEX-RAY Annual Report 2020

Jul 16, 2021

51825_rns_2021-07-16_986a2eff-f359-4a58-9fd7-cfbc5f739969.pdf

Annual Report

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Common Stock Code: 1467

==> picture [265 x 174] intentionally omitted <==

TEX-RAY INDUSTRIAL CO.,LTD. TEX-RAY INDUSTRIAL CO.,LTD.

Annual Report 2020

Published on April 27, 2021

This annual report is available at following websites:

  1. M.O.P.S.: mops.twse.com.tw

  2. Website of the Company: www.texray.com

I. Company spokesman and deputy spokespersons:

Spokesperson Deputy Spokesperson
Name Yao Wan Kuei YeFenghua
Position Vice Chairman Senior Manager
Telephone 02-25215155 02-25215155
Email [email protected] [email protected]

II. Contact Information of Headquarters, Branches and Plants:

  1. Headquarters: F2, No.426 Linsen North Road, Taipei

Tel: (02) 2521-5155

  1. Fabric Business Group: F9, No.426 Linsen North Road, Taipei Tel: (02) 2521-5155

  2. Garment Business Group: F7, No. 426, Linsen North Road, Taipei Tel: (02) 2521-5155

  3. III. Share Transfer Agency:

Name: Division of Agency Services, Jih Sun Securities Co.,Ltd.

Address: F7, No.85, Section 2, Nanjing East Road, Taipei Website: www.jihsun.com.tw Tel: (02)2541-9977

  • IV. Contact Information of the CPAs for the Latest Financial Statements

Name of Accounting Firm: KPMG Taiwan

Names of CPAs: TSENG, Kuo-Yang, CPA, & CHIH, Shih-Chin, CPA Address: F68, No.7, Section 5, Xinyi Road, Xinyi District, Taipei

Website: www.kpmg.com.tw Tel: (02) 8101-6666

  • V. Overseas Securities Exchange Where Securities are Listed and Method of Inquiry: None

  • VI. Website of the Company: www.texray.com

Table of Contents

Table of Contents
Page
Chapter 1. Letter to Shareholders 1
Chapter 2. Company Profile
I. Date of Incorporation 8
II. Company History 8
Chapter 3. Corporate Governance Report
I. Corporate Organization 11
II. Information Regarding Directors, Supervisors, President, Vice 13
Presidents, Assistant Vice Presidents, Department and Branch Heads
III. Remunerations for Directors, Supervisors, President and Vice 20
Presidents
IV. Governance and Operation of the Company 27
V. Information on Audit Fees for CPAs 72
VI. Information on Replacement of CPAs 72
VII. The Auditing Firms or Their Affiliates Where the Company's 72
Directors, President, Financial or Accounting Officers Have Worked
over the Past Year
VIII. Changes in Equity Transfer and Pledge of Directors, Supervisors, 73
Managers, and Shareholders Holding over 10% Shares in the Recent
Year and as of the Publication Date
IX. Information on TOP10 Shareholders Who Are Related Parties, 74
Spouses or Relatives within the Second Degree of Kinship
X. Number of Shares and Total Shareholding Ratio Held and Occupied 75
in an Enterprise by the Company, Its Directors, Supervisors,
Managers and Any Companies under Direct or Indirect Control of the
Company
Chapter 4. Fundraising Overview
I. Capital and Shares 76
II. The Company's Issuance of Bonds 80
III. Issuance of Preferred Shares 81
IV. Issuance of Global Depository Receipts (GDRs) 81
V. Handling of Employee Stock Options 81
VI. M&A or Acceptance of Newly Issued Shares from Other Companies 81
VII. Implementation of Capital Utilization Plan 81
Chapter 5. Overview of Business Operations
I. Business Activities 82
II. Market, Production and Marketing Situation 92
III. Practitioners' Information over the Past 2 Fiscal Years 98
IV. Environmental Protection Expenditures 98
V. Labor Relations 98
VI. Material Agreements 100
Chapter 6. Financial Information
I. Concise Balance Sheets, Comprehensive Profit and Loss Statements 101
of the Past 5 Fiscal Years
II. Financial Analyses for the Past 5 Fiscal Years 106
III. Audit Committee's Audit Report 111
IV. Financial Statements for the Most Recent Fiscal Year 111
V. The Company's Separate Financial Statements for the Most Recent 111
Fiscal Year Audited and Attested by CPAs
VI. The Impacts of Any Financial Difficulties of the Company and Its 111
Affiliates upon Financial Situation of the Company in the Most
Recent Fiscal Year and by the Publication Date of the Annual Report
Chapter 7. Review, Analysis and Risks of Financial Situation and Financial
Performances
I. Financial Situation 113
II. Financial Performances 114
III. Cash Flow 116
IV. Effects of Major Capital Expenditures on Financial Operations during 116
the Most Recent Fiscal Year
V. Company Reinvestment Policy for the Most Recent Fiscal Year, 116
Main Reasons for Profits/Losses Generated Thereby, Plan for
Improving Reinvestment Profitability, and Investment Plan for the
Coming Year
VI. Risks 117
VII. Other Important Matters 119
Chapter 8. Special Disclosure
I. Information on Affiliates 120
II. Handling of Private Negotiable Securities 126
III. Shares of the Company Held or Disposed of by Subsidiaries 126
IV. Other Necessary Supplements 126
V. Any Events in the Most Recent Year and by the Publication Date of 126
the Annual Report with Significant Impacts upon Shareholder Equity
or Securities Price

1

Chapter1. Report to Shareholders

Dear shareholders,

Thank you for your long-term support and encouragement to the Company. In 2020, coronavirus disease (COVID-19) raged. As a result, the year 2020 written in black under white background was crossed out in red on the cover of Time (a magazine of the United States). At the bottom of the cover, "THE WORST YEAR EVER" was indicated. However, the Company has grown up against the adversity despite full of thorns. It has not only hit a record high in revenues, but also turned losses it has suffered over the past years into profits and achieved outstanding performances. Without a doubt, the Company made profits in 2020 because of its big success in selling anti-epidemic products in large quantities. The Company clearly knew this success was attributable to the international situation, and selling anti-epidemic products was not a long-term solution. Hence, while profiting from selling the anti-epidemic products, the Company also devoted certain efforts to product R&D and innovation of production technologies. It adjusted its organizational structure in response to the changes in production and trading patterns and gradually segmented markets and customers with a view to going concern.

Dependent upon its previous superior capabilities of resource integration and OEM processing, flexible application of global supply chains in production and marketing, rapid response to risk control and strategic advantages of the Texray Seamless Value Added Chain (TSVAC) in corporate integration, the Company maintained stable and steady operations, having created innovative value creation models with its own characteristics. These years, highlighting functionality, environment-friendliness and innocuity has become a new trend in the global markets of textile products and apparels. The Company has developed patented environment-friendly wet prints in line with its production processes, and offers modern environment-friendly solutions to the most energy-consuming printing and dyeing industry. In terms of products, it has designed a roadmap for RAYS functional textile products. It aims to develop environment-friendly and energy-saving products with lower carbon emissions and technological functions, including ECO-LOR® series produced with dope dyeing technologies, T-Cool and T-Hot series thermo-regulating textile products. The marketing subsidiaries of the Company in New York and Los Angeles of the United States have vigorously promoted the Company's development of functional, environment-friendly and non-toxic advanced products. They have engaged partners to enhance their ODM businesses, effectively segmented markets, and increased value of their products and services.

Maintaining its competitive advantages in metal fiber technologies and markets, the Company expands application of its technologies in different types of products. In 2020, the Company completed its restructuring, and has been earning considerable revenues. On March 12, 2021, it organized its public offering. In addition, the Company has been actively engaged in new product development. With the emergence of electric vehicles and 5G communications, key MLCC and LTCC related additive manufacturing technologies must develop for high-precision printing and wire width micronization. The Monofilament Department cooperates with domestic terminal manufacturers to produce fine steel wires with advanced new-generation additive manufacturing processes.

In the markets of smart textile products, the demands for healthcare and fitness are increasing; on the other hand, the rapid development of information technologies and global internet of things have contributed to growing demands for smart wear. The Company has embarked on sports, fitness and long-term care since a long time ago. It has been taking the lead in technologies and patents. In combination with its advantages in electronics, textile and other related industries, it conducts cooperation across industries to develop products with new functions and promote application and development of textile products in diverse industries.

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In 2020, the Company not only joined the national anti-epidemic delegations in response to COVID-19 and developed medical PPE products, but also sold its products abroad and made enormous profits.

In addition to developing new businesses according to new market trends, the Company will also restructure its existing businesses, technologically reduce or suspend production of its subsidiaries which make meager profits or suffer losses to alleviate losses. Having completed the restructuring in 2020, the Company will concentrate on regions or businesses where considerable profits have been made.

In the coming year, the Company will implement specific business policies and set particular goals. Apart from maintaining its profitability in existing businesses, it will continue developing and facilitating subsequent promising business, to create more benefits for all of its shareholders in accordance with pragmatic business concepts.

Best wishes for all of you!

Wish you all good health and fortune.

Chairman Lin Zui Yeh

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I. 2020 Annual Business Report

  • (I) Business Results Based on the Business Plan

  • (1) The consolidated operating revenue in 2020 was NT$8,598,587,000, an increase of 23.73%, compared with that in 2019.

  • (2) In 2020, the consolidated net income after tax was NT$164,775,000, and the earnings per share was NT$0.72. Due to an increase in the operating revenue from that in the prior period in 2020, the operating profit increased, leading to an increase in profit for 2020.

  • (II) Budget Execution

The Company hasn't prepared financial forecasts.

  • (III) Analysis of Income/Expenditure and Profitability

  • Consolidated Statement of Income and Expenditure

Unit: NTD thousand Unit: NTD thousand
Items 2019 2020
Sales Revenue 6,949,284
8,598,587
Operatingcosts 5,770,797
6,382,107
Gross Profit 1,178,487
2,216,480
OperatingExpenses 1,239,345
1,783,919
OperatingProfit (60,858) 432,561
Net Non-operatingIncome (Expenditure) 21,632
(166,059)
Net Pre-tax Profit (39,226) 266,502
Net After-tax Profit (172,458) 164,775
Earningsper Share (NT$) (0.74) 0.72
. Profitability Analysis
Items 2019 2020
Return on Assets Ratio (%) (1.30) 3.21
Return on Equity Ratio (%) (6.76) 5.58
Ratio to Paid-in
Capital (%)		 OperatingProfit (2.60) 18.52
Net Pre-tax Profit (1.68) 11.41
Net Profit Margin (%) (2.48) 1.92
Retroactive Adjustment of Earnings per
Share(NT$)		 (0.74) 0.72

  1. Profitability Analysis

  2. (IV) Research and Development Status

Please refer to Page 91.

II. Outline of 2021 Business Plan

  • (I) Guidelines for Management

With the fierce competition in the global textile industry, participation of emerging countries in the textile and garment ODM market, as well as the rise of new types of retail customers, the business environment of the textile industry has become increasingly challenging. In particular, the US-China trade war escalated in the fourth quarter of 2019, and the U. S. imposed punitive tariffs as a result. This has disrupted the production and shipment layout of the textile industry. In addition, the

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outbreak of the COVID-19 in early 2020 brought the global textile industry to a standstill or even paralyzed it in the first half of 2020. Fortunately, with the Company’s flexible business strategy and strong textile capacity, it has quickly responded to the market demand for anti-pandemic products to facilitate performance and profit. In the future, the Company will continue to differentiate itself from competitors in the market for customers based on its production and transaction models in terms of product research and development as well as production technology innovation so as to achieve the goal of sustainable operation.

Dependent upon its previous superior capabilities of resource integration and OEM processing, flexible application of global supply chains in production and marketing, rapid response to risk control and strategic advantages of the Texray Seamless Value Added Chain (TSVAC) in corporate integration, the Company maintained stable and steady operations, having created innovative value creation models with its own characteristics. These years, highlighting functionality, environment-friendliness and innocuity has become a new trend in the global markets of textile products and apparels. In recent years, with a new trend focusing on functionality, environmental protection, and non-toxicity in the world's textile and garment market, the Company's marketing companies in New York and Los Angeles have vigorously promoted its functional high-end products and strengthened the ODM business to effectively differentiate its products in the market and improve the products and the service value. The efforts have paid off in the initial stage. Smart textile products are applied in sports, fitness, long-term care and other fields. Maintaining the leading position in technologies, they are being commercialized, which lays a foundation for the Company to become a leader in the field of high-tech textiles. In 2019, the Company cooperated with international famous brands and world-renowned surfers with its professional technologies for dynamic real-time monitoring of the whole body. These technologies are being tested and promoted for use. In terms of specialized motion analysis and recreational applications, the Company will bring different experiences to brands and consumers in the future. It has started to conduct cooperation in the field of extreme sports to develop new products.

Apart from developing new businesses according to new market trends, the Company also restructures its existing businesses, technologically reduces or suspends production of its subsidiaries which make meager profits or suffer losses to alleviate losses. It will concentrate on regions or businesses where considerable profits have been made. In 2020, due to the production of anti-pandemic products, the subsidiary Long An Plant in Vietnam turned to a profit from losses for the first time. As for China, as the fabric business fails to meet the economies of scale required for the production as a fabric factory, the Company has sufferered continuous losses. In 2020, the Company suspended the operation of the fabric factory and renovated it to sub-lease it to a local company in China for business. The Company also signed a lease and collaboration agreement with the company to reserve the production capacity required by the Company’s fabric operations to the lessee. This will not only revitalize the idle capacity and generates rental income but also retain the production required for the fabric business due to the priority ODM agreement while significantly alleviating the impact of insufficient operating momentum in the fabric business on the Company.

Most of the adjustments to the Company’s investment layout have been completed. In 2020, the global COVID-19 pandemic affected the operating performance of the first and second quarters. However, due to a significant shortage of anti-pandemic products on the market in the second half of the year, many countries made purchases as a strategic inventory. With this wave of shortages, the Company has not

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only made up for the operating deficit in the first half of the year but also made profits throughout the year due to a large quantity of shipments to customers. Benefiting from the profits created by the pandemic, the Company has sufficient resources to improve its foundation significantly, make adjustment, and improve its overall operating organization. The Company will continue to review the operating performance of manufacturing units in various regions. For units with poor efficiency and inability to create profits, it will adopt a stop-loss strategy and review the global layout in an overall manner to strive for business opportunities when appropriate.

  • (II) Expected Sales Volume, Its Basis, Important Production and Marketing Policies

  • (1) Expected sales volume and its basis: In accordance with the Regulations Governing the Publication of Financial Forecasts of Public Companies, the Company didn't prepare the financial forecasts for 2021, so no data on expected sales in 2021 is available.

  • (2) Important production and marketing policies:

    1. Fabric business group: The Company will continuously develop functional fabrics, seek excellent fabric factories around the world to strengthen collaboration, develop its core technology, complete a global fabric supply network, enhance the sales ability of the fabric business and ODM design ability, and move towards niche textiles, such as high-end laminated and coated garment fabrics and industrial-grade fabrics.

    2. Apparel business group: The Company will tap into its group’s global layout to reduce tariffs and costs, establish a Taiwan-based operating headquarters and a global network of suppliers in various production and sales sites, and develop localized business entities with independent domestic demand in various regions. As for marketing business, it will strengthen the ODM business to effectively differentiate its products in the market and enhance the value of its products and services in addition to the existing OEM business.

Looking into the future, the Company exhibits competitive advantages in its constant innovation and R&D, so it has built R&D and business centers in the Taiwan headquarters. It is devoted to development and design of smart clothing, ODM, and dope-dyed environment-friendly colored fibers, R&D of special functional fabric and environment-friendly laminated fabric as well as application of new technologies. It improves its independent design capability and creates higher profits by commercializing its outcomes. In the future, the Company will produce its products in an energy-saving manner with larger economies of scale, high added value and fewer wastes, to create the highest benefits.

  • (III) Future Development Strategy, and the Effect of External Competition, the Legal Environment, and the Overall Business Environment

The textile industry in Taiwan has significant impacts upon global economic climate. On one hand, it is subject to the impacts of worldwide price fluctuations of raw materials, rapid salary increase in countries of production bases and factors affecting exchange rate. As Trump took presidency in the United States, he has highlighted protectionism that the United States shall be the first. The successive enactment of laws and regulations unfavorable for regional economy, protectionist "fences" built by countries, laws and regulations restricting free trade have caused constant increase in manufacturing costs. On the other hand, development of the textile industry in Taiwan has slowed down by the economic growth momentum in developed countries. In addition, the main competitors of Taiwan, including Korea, Hong Kong and China,

6

occupy market shares in saturated markets. As a result, the textile industry in Taiwan bears pressure from competitions for price reduction. In face of intensified global trade competitions, the significant factors impacting the textile industry in Taiwan are introduced as follows:

  • (1) Impacts of External Competitions:

In terms of the textile industry, the main rivals of Taiwan include Mainland China, Korea and Southeast Asian countries which have gradually developed over the past years. At present, the textile industry in Taiwan relies upon the strengths of "functional textile products", segments the market using products with high technical thresholds and occupies the leading position in the world with these products. The Company has been attaching great importance to creative R&D. Never falling behind in "functional textile products", it has primarily been profiting from its own functional products. Looking into the future global textile world, with the development of sciences and technologies, we have entered an era of "smart clothing". With years of experience in "smart finished textile clothes", it has been a leading manufacturer in this field. It has maintained its leading position in R&D, design, production and marketing of related products. Once market demands are stimulated, its products will become popular in the market.

  • (2) Impacts of Regulatory Environment

As to global trade environment of finished garments, since the quota limits were relieved, all areas and countries have successively sped up signing of free trade agreements (FTA) or given preferences. In that period, regional economy (e.g. TPP and RCEP) has developed well. However, since Trump took presidency in the United States, he firstly had the United States exited from the Trans-Pacific Strategic Economic Partnership Agreement. Afterwards, he released policies giving priority to the United States and further promulgated trade protection policies. Lately, it has formulated Special 301 to crack down upon China's export. All these factors have significantly impacted international trade practices. Lately, rapid increase in wages, growing environmental awareness and successive release of laws and regulations unfavorable for processing trade in Mainland China have caused finished garment manufacturers to successively take actions and look for new production bases. In addition, with continuous heated discussions of issues on environmental protection and green energies, practitioners of the textile industry are striving to explore new-generation environment-friendly and innoxious modes of production and textile products. In spite of increase in operation costs, it is the social responsibility of enterprises to do that. In face of such competitive pressure and changes in laws and regulations, the Company, which runs businesses all over the world, flexibly adjusts its business strategies from time to time, and figures out business strengths of each production zone. It maintains its existing competitive advantages with market fluctuations.

  1. In Taiwan, the textile industry hardly benefits from competitive strengths of transnational cooperation due to political marginalization , so Taiwan, as operations center, strengthens creative R&D of "functional textile products" and "smart clothing", rapidly respond to competitive advantages, launch its own brands, pay continuous attention to market demands, enhance understanding of markets, offer feedback on businesses in different areas of the world, and better understand brand demands.

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  1. In Chinese production regions, RCEP and future development of the Belt and Road have created infinite space of imagination for growth.

  2. In production regions of eSwatini, domestic markets have been successfully transformed and annually created substantial benefits for the parent company. In addition, the return of AGOA in 2018 may develop other financial resources for the parent company.

  3. In North American production zones, the Company strengthens the connections between American marketing companies and Mexican production centers. In response to the American market which highlights rapid duty-free supply, it collaborates with brands to seize market opportunities more rapidly, and achieve balanced growth for profits through production and marketing. Besides, Mexico strengthens domestic market development and expands business operations.

  4. (3) Impacts of Overall Business Environment:

Owing to trade wars of the United States, enterprises of the textile industry have successively gone out of Mainland China for production near Southeast Asian nations. As a consequence, wages have increased. Like other enterprises of finished garments and the textile industry, the Company has also suffered pressure. Compared with the profitability from reduced export of finished garments, the gross profits of the Company might decline. In face of the challenges under global economic circumstances, the external environmental changes are not controllable by the Company, so the Company is supposed to reinforce its internal business system. This year, the Company will be dedicated to improving production efficiency, bettering plant management, reducing operating costs, actively developing new customers, and diversifying operating risks of new markets.

In 2020, in response to the outbreak of the pandemic, the Company joined the national anti-pandemic team to develop medical-grade PPE products and sell them overseas, which has created huge profits for the Company. However, the Company is not complacent with this, and will continue to develop a variety of different textile products by means of a flexible business strategy to meet customers' needs as the Company's priority.

The Company will still endeavor to: 1. Strengthen the management of the global supply network to meet customers' demand for lower tariffs and rapid supply to reduce their costs. 2. Further develop the regional market and provide more diverse products in local domestic markets to achieve the regional economy in the operational goals. 3. Strengthen R&D and design capabilities and optimize market value and product quality to increase profits. 4. Strengthen the development of eco-friendly and functional textiles with the aim of achieving technological innovation and developing potential brands. 5. Continue to streamline the organizational structure and operating procedures, and counsel poorly managed units to effectively improve efficiency and reduce costs. 6. Expand investment and counsel companies with which the Company has positive relationship to expand their operating scale and create investment benefits

In the coming year, the Company will implement specific business policies and set particular goals. Apart from maintaining its profitability in existing businesses, it will continue developing and facilitating subsequent promising business, to create more benefits for all of its shareholders in accordance with pragmatic business concepts.

8

Chapter2. Company Profile

  • I. Establishment Date: August 18, 1978;Unified Company Code: 69559487

  • II. Company History

  • (I) Company History

  • In August 1978, the Company was established and founded the Yarn Dyeing Division. In December 1989, the Company merged with Youyi Industry Co., Ltd., and founded the Fancy Yarn Spinning Business Unit.

In December 1995, the Company publicly issued its shares.

  • In January 1996, the Company set up the Woven Fabric Business Unit. In November 1998, the Company set up the Finished Garments Business Unit.

  • In December 1998, the Company's stocks were formally listed.

  • In December 1998, the Company invested in AMRAY S.A. DE C.V. In October 1999, the Company invested in the Mexican weaving plant, the dyeing and finishing plant.

  • In May 2000, the Company invested in establishing the second finished garments plant in Mexico.

  • In June 2000, the Company invested in the American marketing company TRLA GROUP INC.

  • In January 2001, the Company invested in the American marketing company Z-PLY CORPORATION.

  • In April 2001, the Company invested in King's Metal Fiber Technologies Co., Ltd. In June 2001, the Development Plan for Coordinated Digital Information System for Textile Production and Marketing, drafted by the Company for developing exemplary applications, was approved by the Ministry of Economic Affairs.

  • In October 2001, the Company won the First Prize for industrial science and technology development awarded by the Ministry of Economic Affairs.

  • In November 2002, King's Metal Fiber Technologies Co., Ltd., an affiliate of the Company, won the Merit Award for national innovations granted by the Ministry of Economic Affairs.

  • In January 2003, the Company's products were evaluated by the 11th Taiwan Excellence Awards as Ultra Mercerized Cotton Color Yarn by the International Trade Administration, the Ministry of Economic Affairs.

  • In May 2003, the Company cooperated with the Metal Industrial Research & Development Center and successfully developed supercritical carbon dioxide cleaning prototypes. It obtained technologically transferred pressure vessel design, cleaning system design and Raytheon's workpiece oil removal technology.

  • In November 2003, the Company achieved outstanding performance among exemplary teams of environmental management system by the Industrial Development Bureau, Ministry of Economic Affairs.

  • In January 2004, the Tainan dyeing and finishing plant passed environmental

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  • certification by ISO 14001.

  • In November 2004, the Company won the 2001 Industrial Sustainability Award granted by the Industrial Development Bureau, Ministry of Economic Affairs.

  • In March 2005, the Industrial Development Bureau, Ministry of Economic Affairs granted special subsidy for the Environment-friendly and Streamlined Low-energy Cotton Yarn Development Technology in the traditional development plans for industrial technologies.

  • In April 2006, the Company invested in Liming (Vietnam) Co., Ltd. In September 2006, the Company won the Award for the Best Industry-University-Research Collaboration in the Technical Plan for Industrial Development Industry from the Ministry of Economic Affairs.

  • In December 2007, the Company invested in T.Q.M. In December 2007, the Company invested in Mingfang International Co., Ltd. (a eSwatini finished garments plant).

  • In January 2008, the Company invested in Tex-ray (Shanghai) Industrial Co ., Ltd. In January 2009, the Company invested in founding Tryd Textile Technology (Jiangsu) Co., Ltd.

  • In December 2009, the Company invested in founding Jiangsu Tex-ray Yueda Apparel Co., Ltd.

  • In November 2010, KASUMI APPARELS SWAZLIAND (PTY),LTD. integrated with KARTAT and merged with TRS.

  • In November 2010, the Company divided Gaoxiong 302 Plant and founded Gaoxiong No.302 Plant.

  • In July 2011, Tryd Textile Technology (Jiangsu) Co., Ltd. was renamed Tryd Yueda Fiber Technology (Jiangsu) Co., Ltd.

  • In November 2011, the Institute for Information Technology approved the Company's special subsidies for encouraging domestic enterprises to set up R&D centers in Taiwan.

  • In March 2012, the Industrial Development Bureau, Ministry of Economic Affairs approved the Company's special subsidies for development of hollow lightweight textile products.

  • In February 2012, the Company invested in the South African marketing company TEX-RAY SA.

  • In October 2012, the eSwatini plant was integrated with the UK textile plant and merged with TQM.

  • In April 2013, the Industrial Development Bureau, Ministry of Economic Affairs approved the Company's special subsidies for development of high-elasticity doped elastic products.

  • In June 2013, TEXRAY (SA), a South African subsidiary of the Company, acquired 51% equity from KASUMI, planning the SA company as an order receiving center for domestic sales in South Africa, and positioning KS as a special finished garments plant for domestic sales.

  • In June 2013, Taiwan Supercritical Technology Co., Ltd. merged with Minxin

10

Machinery Industry Co., Ltd.

In June 2013, the eSwatini plant was integrated with WEH and merged with TQM. In July 2013, the Company founded a Vietnam plant of finished garments.

  • In November 2013, the Company founded T.R.C.A GARMENT CO., LTD. In November 2014, the Mexican production plant was integrated with MRM (a finished garments plant) and TRM (a knitting and dyeing plant)

  • In November 2014, TEXRAY (SA), as a South African subsidiary, acquired 49% equity from KASUMI, and KS, a special finished garments plant for domestic sales.

  • In December 2015, the Company increased its capital investment in Long An finished garments plants in Vietnam.

  • In January 2017, the Company held 100% shares of the Yancheng fiber and garment plants.

  • In May 2018, the dyeing and finishing plant TQM was fully held by the South African subsidiary TEXRAY (SA).

  • In August 2018, the weaving plant was fully held by the South African subsidiary TEXRAY (SA).

  • In May 2020, the production of the yarn dyeing plant in Tainan was suspended. In March 2012, the shares of King's Metal Fiber Technologies Co., Ltd were officially publicly listed.

  • (II) Company Establishment, Merger, Acquisition, Reinvestment and Restructuring in the Most Recent Year and as of the Date of Annual Report: None

  • (III) Significant Transfer or Replacement and Changes in Management Rights of Directors, Supervisors or Majority Shareholders Holding over 10% Shares, Major Changes in Business Models or Businesses, and Effects of Other Important Maters with Significant Effects on Important Matters Affecting Shareholder Equity and the Company: None.

11

Chapter 3 Corporate Governance Report

  • I. Corporate Organization

  • (I) Organization Chart

==> picture [652 x 381] intentionally omitted <==

12

(II) Business of Each Major Department

Department Duties
Auditing Office 1. Implement the form audit work that promotes institutionalized
management.
2. Establish, maintain and implement eight circular audit systems for
internal control.
3. Audit eight internal control cycles, various management methods
and internal relevant operations.
4. Undertake the inspection cases instructed and assigned by the
superiors.
5. Tracking assessment and reporting of the Company’s business
objectives, plans, and budget implementation performance.
6. Check and evaluate the completeness and correctness of relevant
financialprocessing procedures.
Apparel Business
Group		 1. Orders for ready-made garments.
2. Coordination of manufacturer’s production operations.
3. Control of finishedproductqualityand delivery.
Fabric Business
Group		 1. Weaving orders.
2. Coordination of manufacturer’s production operations.
3. Control of finishedproductqualityand delivery.
Finance and
Accounting
Department		 4. Fund coordination and financial planning.
5. Consolidated financial report preparation and accounting
management.
6. Global transfer pricing reports and tax planning.
7. Investment management and strategy planning.
8. Stock affairs services and management.
9. Maintenance of investor relations.
Administration
Department		 1. Human resource management and organizational development
2. Planning, execution and control of general affairs and physical
security control
3. Plan,establish,execute and maintain computer information system
Purchase &
Logistics
Department		 1. Review letter of credit.
2. Integrate, compare and treat in a unified manner all export
expenses, and the price is based on quantity to reduce export costs.
3. Cooperate with the overseas factory establishment plan and plan
the export of machinery and equipment.
4. Raw materials, product export, triangular trade opening and
shipping arrangements.
5. Check and request for export expenses.
6. Inquiry/comparativeprice/negotiation with supplier.
R&D Department 1. Fabric technology development and production.
2. Plan and implement science and technology projects.
3. Implement Tex-Ray’s R&D management system.
4. Plan and implement textile marketing plan.
5. Exhibition planning, DM design.
6. Integrate popular information and provide it to the demanders.
7. Plan and establish the Company’s various copywriting.

13

  • II. Information on Directors, Supervisors, President, Deputy Presidents, Assistant Manager, Supervisors of Various Departments and Branches

  • (I) Information on directors and supervisors

2021.04.26

Position Nationality/Place
of Registration		 Name Gender Date
Elected
(Assumed)		 Tenure Date First
Elected		 Shareholding When Elected Shareholding When Elected Current Shareholding Current Shareholding Spouse & Minor
Shareholding		 Spouse & Minor
Shareholding		 Shareholding by Nominees Shareholding by Nominees Major Experience
(Education)		 Other Position
Concurrently Held
at the Company and
Other Companies		 Executives, Directors or
Supervisors who Are Spouses
or within the Second Degree of
Kinship		 Executives, Directors or
Supervisors who Are Spouses
or within the Second Degree of
Kinship		 Executives, Directors or
Supervisors who Are Spouses
or within the Second Degree of
Kinship		 Note
Number of
Shares		 Shareholding
Ratio		 Number of
Shares		 Shareholding
Ratio		 Number of
Shares		 Shareholding
Ratio		 Number
of
Shares		 Shareholding
Ratio		 Position Name Relationship
Chairman R.O.C. Lin Zui Yeh Male 2018.6.26 3 1997.11.03 6,000,000
2.67%
6,120,000
2.62%
14,280,000
6.11%
-		 - Master of Science in
Management (MSM),
Baker University,
USA		 Legal
Representative of
Reinvestment
Business of Tex-Ray
Industrial Co.,Ltd.		 - - -
Director R.O.C. Sen-Yao Lin Male 2018.6.26 3 1979.05.05 1,462,016
1.03%
1,491,256
0.64%
283,592
0.12%
-		 - Graduate from
Tainan Normal
University
Manager of Dexing
Enterprise		 Legal
Representative of
Reinvestment
Business of Tex-Ray
Industrial Co.,Ltd.		 - - -
Director R.O.C. Yao Wan
Kuei		 Male 2018.6.26 3 1996.05.14 3,755,137
1.58%
3,830,239
1.64%
93,945
0.04%
-		 - Business Economics
Class of National
Chengchi University
Special Assistant to
the President of
China Man-made
Fiber Corporation		 Legal
Representative of
Reinvestment
Business of Tex-Ray
Industrial Co., Ltd.		 - - -
Director BVI B.V.I Yue
Da Textile
Holdings
Limited		 2018.06.26 3 2014.06.27 42,052,440
20.00%
42,052,440
18.00%
-		 - - - - - - - -
Representative China Wang
Lianchun		 Male 2018.06.26 2 2016.05.27 - - - - - - - - Postgraduate of Party
School of C.P.C
Jiangsu Committee
Director of Yueda
Group,Jiangsu
-		 - - -
Representative China Wang
Shengjie
(Note)		 Male 2018.06.26 2 2016.03.22 - - - - - - - - Master of Business
Administration,
Shanxi University of
Finance and
Economics
Director of Yueda
Textile Group		 - - - -
Representative China Dai Jun
(Note)		 Male 2020.09.08 1 2020.09.08 - - - - - - - - Chairman of Yueda
Textile Group Co.,
Ltd.,Jiangsu		 - - - -
Director R.O.C. Wu Ching
Feng		 Male 2018.6.26 3 2000.06.02 1,970,000
1.22%
2,009,400
0.86%
1,000,000
0.43%
-		 - High school graduate
Business Manager of
Tex-Ray Industrial
Co.,Ltd.		 - - - -
Director R.O.C. Ho Yu Male 2018.06.26 3 2000.06.02 51,912
0.00%
80,912
0.03%
-		 - - - Graduated in
International
Business
Administration from
John F. Kennedy
University,
California
Chairman of Chi
Chiang Enterprise
Co., Ltd.
Chairman ofQijia		 - - - -

14

Position Nationality/Place
of Registration		 Name Gender Date
Elected
(Assumed)		 Tenure Date First
Elected		 Shareholding When Elected Shareholding When Elected Current Shareholding Current Shareholding Spouse & Minor
Shareholding		 Spouse & Minor
Shareholding		 Shareholding by Nominees Shareholding by Nominees Major Experience
(Education)		 Other Position
Concurrently Held
at the Company and
Other Companies		 Executives, Directors or
Supervisors who Are Spouses
or within the Second Degree of
Kinship		 Executives, Directors or
Supervisors who Are Spouses
or within the Second Degree of
Kinship		 Executives, Directors or
Supervisors who Are Spouses
or within the Second Degree of
Kinship		 Note
Number of
Shares		 Shareholding
Ratio		 Number of
Shares		 Shareholding
Ratio		 Number of
Shares		 Shareholding
Ratio		 Number
of
Shares		 Shareholding
Ratio		 Position Name Relationship
Optics
Director R.O.C. Serendipity
Co.,Ltd.		 2019.06.12 2 2019.06.12 23,362,466
9.99%
23,362,466
9.99%
-		 - - - - - - - -
Representative
(Note)		 R.O.C. Yang Chia
Yin		 Female 2019.06.12 2 2019.06.12 - - - - - - - - Chairman,
Serendipity Co., Ltd.
Director of Suzhou
Degao Company		 - - - -
Independent
Director		 R.O.C. Lee Mu
Jung		 Male 2018.06.26 3 2015.06.26 409
0.00%
409
0.00%
24
0.00%
-		 - Chinese CPA
Vice President
Shiquan Real Estate
Development Co.,
Ltd.,Putian		 - - - -
Independent
Director		 R.O.C. Chao-Yuan
Chang		 Male 2018.06.26 3 2016.06.21 0
0.00%
0
0.00%
-		 - - - Graduated from
Department of
Economics, Chinese
Culture University
President of Roo
Hsing Garment
Factory		 - - - -
Independent
Director		 R.O.C. Tsai Chao
Lun		 Male 2018.12.04 3 2018.12.04 0
0.00%
0
0.00%
-		 - - - Chairman of
Formostar Garment
Co., Ltd.
Director of BES
Engineering
Corporation		 - - - -

Note: B.V.I Yue Da Textile Holdings Limited re-appointed Mr. Dai Jun to replace Mr. Wang Shengjie as the B-level director on September 8, 2020.

15

Table 1: Major Shareholders of Institutional Shareholders

April 26, 2021
Name of Institutional Shareholders Major Shareholders among Institutional Shareholders
B.V.I Yue Da Textile Holdings Limited Yueda Group (Hong Kong) Limited 100%
Serendipity Co., Ltd. Suzhou Degao Trading Co., Ltd. 100%

Table 2: Major Shareholders of Institutional Shareholders with Corporations as Their Major Shareholders

April 26, 2021
Name of Legal Persons Major Shareholders among Legal Persons
Yueda Group (Hong Kong) Limited Yueda Group Co., Ltd., Jiangsu 100%
Suzhou Degao Trading Co., Ltd. 60% Yang Chia Yin

16

  • (II) Information on qualifications and independence of directors (including independent directors)

Information on directors and supervisors (II)

April 26, 2021

Qualifications
Name		 Meeting One of the Following
Professional Qualification Requirements,
Together with At Least Five Years of
Work Experience		 Meeting One of the Following
Professional Qualification Requirements,
Together with At Least Five Years of
Work Experience		 Meeting One of the Following
Professional Qualification Requirements,
Together with At Least Five Years of
Work Experience
Independence Criteria
(Note)
Independence Criteria
(Note)
Independence Criteria
(Note)
Independence Criteria
(Note)
Independence Criteria
(Note)
Independence Criteria
(Note)
Independence Criteria
(Note)
Independence Criteria
(Note)
Independence Criteria
(Note)
Independence Criteria
(Note)
Independence Criteria
(Note)
Independence Criteria
(Note)		 Number of
Other Public
Companies
where the
Individual
Concurrently
Serves as an
Independent
Director

An
Instructor
or Higher
Position in
a
Department
of
Commerce,
Law,
Finance,
Accounting,
or Other
Academic
Department
Related to
the
Business
Needs in a
Public or
Private
Junior
College,
College or
University
A Judge,
Public
Prosecutor,
Attorney,
Certified
Public
Accountant, or
Other
Professional or
Technical
Specialist who
Has Passed a
National
Examination
and Has Been
Awarded a
Certificate in a
Profession
Necessary for
the Business		 Having
Work
Experience
in the Areas
of
Commerce,
Law,
Finance, or
Accounting,
or
Otherwise
Necessary
for the
Business

1		 2 3 4 5 6 7 8 9 10 11 12
Lin Zui Yeh
Sen-Yao Lin
Yao Wan
Kuei
Wang
Lianchun
Dai Jun
Wu Ching
Feng
YangJiali
Ho Yu
Lee Mu Jung
Chao-Yuan
Chang
Tsai Chao
Lun

Note 1. Please check “ ✓ ” the corresponding boxes if the directors meet the following conditions during the two years prior to the nomination and during the term of office. 

  • (1) Not an employee of the Company or any of its affiliates.

17

  • (2) Not a director or supervisor of the Company or any of its affiliates (except for independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent).

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

  • (4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the officer in the preceding 1 subparagraph, or of any of the persons in the preceding three subparagraphs.

  • (5) Not a director, supervisor, or employee of an institutional shareholder that directly holds 5% or more of the total number of issued shares of the Company, or that ranks among the top 5 in shareholdings, or that designates its representative to serve as a director or supervisor of the Company under Paragraph 1 or 2, Article 27 of the Company Act (except for an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent).

  • (6) Not a director, supervisor or employee of a company controlled by the same person who has shares over half of the Company's director seats or voting rights (except for an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent).

  • (7) Not a director, supervisor, or employee of another company or institution who, or whose spouse, is a chairman, president, or person holding an equivalent position of the Company (except for an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent).

  • (8) Not a director, supervisor, managerial officer, or shareholder holding 5% or more of the shares of a specified company or institution that has a financial or business relationship with the Company (except for a specific company or institution holding more than 20% but less than 50% of the total issued shares of the Company and concurrently serving as an independent director, as appointed in accordance with the Act or the laws and regulations of the local country, at the Company and its parent or subsidiary or a subsidiary of the same parent).

  • (9) Not a professional individual, sole proprietorship, partnership, owner of a company or institution, partner, director, supervisor, managerial officer or spouse thereof that provides auditing service for the Company or any of its affiliates, or provides commercial, legal, financial, or accounting service with cumulative remuneration less than NT$500,000 in the past two years. However, this does not apply in cases where members of the Remuneration Committee, the Review Committee for Public Tender Offer or the Special Committee for Mergers and Acquisitions perform their functions in accordance with the Securities and Exchange Act or the Business Mergers and Acquisitions Act.

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

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

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

  • Note 2. B.V.I Yue Da Textile Holdings Limited re-appointed Dai Jun to replace Wang Shengjie as the B-level director on September 8, 2020.

18

(III) Information on the President, deputy presidents, assistant managers, supervisors of various departments and branches

Position Nationality
Name		 Gender
Date
Elected
(Assumed)		 Shareholding Shareholding Spouse & Minor
Shareholding		 Spouse & Minor
Shareholding		 Shareholding by
Nominees		 Shareholding by
Nominees		 Major Experience
(Education)
 Other Position
Concurrently Held at
Other Companies		 Managerial Officer who Are
Spouses or within the Second
Degree of Kinship		 Managerial Officer who Are
Spouses or within the Second
Degree of Kinship		 Managerial Officer who Are
Spouses or within the Second
Degree of Kinship		 Note
(Note
1)

Number of
Shares		 Shareholding
Ratio
Number of
Shares
Shareholding
Ratio
Number
of
Shares
Shareholding
Ratio		 Position Name Relationship
Chairman
& CEO		 ROC Lin Zui Yeh Male 1997.11.03 6,120,000 2.62 14,280,000
6.11		 - - Master of Science in
Management
(MSM), Baker
University, USA
Legal representative of
reinvestment business		 Vice
President		 Feng-Ying
Yeh
Spouse		 Note

Vice
President		 Tsung-Han
Lin
Father and
son
Vice
President		 Tsung-I
Lin		 Father and
son
Director &
Deputy
CEO		 ROC Sen-Yao Lin Male 1979.05.05 1,491,256 0.64 283,592 0.12 - - Graduate from
Tainan Normal
University
Manager of Dexing
Enterprise		 Legal representative of
reinvestment business
-		 - -
Vice
Chairman
& Deputy
CEO		 ROC Yao Wan
Kuei		 Male 1996.05.14 3,830,239 1.64 93,945 0.04 - - Business Economics
Class of National
Chengchi
University
Special Assistant to
the President of
China Man-made
Fiber Corporation
Legal representative of
reinvestment business
-		 - -
President ROC Wei-Han
Yang		 Male 2015.07.08
234,000
0.10%
0
0.00%
-		 - Master of Industrial
Economy, Stirling
University, UK
Master of Business
Administration,
University of South
Australia
Director of Clothing
Industry Training
Authority
Supervisor of
reinvestment business		 - - -
Vice
President		 ROC Feng-Ying
Yeh		 Female 2001.01.01 14,280,000
6.11%		 6,120,000
2.62%
-		 - Graduated from
National Keelung
Commercial &
Industrial
Vocational Senior
High School		 - Chairman
Lin Zui
Yeh		 Spouse
Vice
President
of Clothing
Division
ROC		 Chin-Hui
Chang		 Male 2019.08.12
981
0.00%
-		 - - - Private Guangwu
Technical College		 - - - -
Vice
President
of Fabric
Division		 ROC Tsung-Han
Lin		 Male 2012.06.05
4,459,000
1.91%
-		 - - - U.S.A.
University of New
Hampshire		 - Chairman
Lin Zui
Yeh		 Father and
son

19

1
Position Nationality
Name		 Gender
Date
Elected
(Assumed)		 Shareholding Spouse & Minor
Shareholding		 Shareholding by
Nominees		 Major Experience
(Education)
 Other Position
Concurrently Held at
Other Companies		 Managerial Officer who Are
Spouses or within the Second
Degree of Kinship		 Note
(Note
1)

Number of
Shares		 Shareholding
Ratio
Number of
Shares
Shareholding
Ratio
Number
of
Shares
Shareholding
Ratio		 Position Name Relationship
Deputy
GM of
Operations		 ROC Tsung-I Lin Male 2018.05.11
4,451,000
1.91%
-		 - - - University of New
Haven, Connecticut,
USA
-		 Chairman
Lin Zui
Yeh		 Father and
son
Yancheng
District
President		 ROC Hung-Hsu
Lin		 Male 2005.07.14
315,884
0.14%
75,480
0.03%
-		 - Department of
Accounting,
Providence
University
Audit Associate,
KPMG		 Representative - - -
Chief
Financial
Officer
Chief
Accountant
Officer
ROC		 Chien-Chung
Wu
Male		 2018.05.11
0
0.00%
-		 - - - Accounting
Department, Chung
Yuan University
Audit Associate,
KPMG
Senior Manager of
Radium Life Tech.
Co.,Ltd.		 Supervisor of
reinvestment business		 - - -

Note: Where the Chairman of the Board of Directors and the President or the highest level manager are the same person, spouses, or relatives within the first degree of kinship, an explanation shall be given of the reason for, reasonableness, necessity thereof, and the measures adopted in response thereto. Four members of the Company’s Chairman’s family have held key positions in the Company. The Chairman passes on practical experience to his sons to take over the management. Four of them are the Company’s top ten shareholders. The two managers started at the Company’s grassroots level. They have been stationed overseas and have considerable understanding on the Company’s overall business operations, and it is reasonable and necessary for them to hold important positions. Currently, there are only three concurrent directors or managers, namely the Chairman, director Sen-Yao Lin and Deputy Chairman Yao. There are no more than half of the concurrent positions. The remaining directors and independent directors all participate in the Company’s operations in the professional field.

20

III. Remuneration Paid During the Most Recent Fiscal Year to Directors (Including Independent Directors), President and Vice Presidents

(I) Compensation to directors (including independent directors)

Unit: NT$ Thousands; December 31, 2020

Position Name Name Remuneration Paid to Directors Remuneration Paid to Directors Remuneration Paid to Directors Remuneration Paid to Directors Remuneration Paid to Directors Remuneration Paid to Directors Remuneration Paid to Directors Remuneration Paid to Directors The sum of A, B, C
and D in proportion
to Earnings After
Tax (%) (Note 10)		 The sum of A, B, C
and D in proportion
to Earnings After
Tax (%) (Note 10)		 Relevant Remuneration Received byDirectors who Are Also Employees Relevant Remuneration Received byDirectors who Are Also Employees Relevant Remuneration Received byDirectors who Are Also Employees Relevant Remuneration Received byDirectors who Are Also Employees Relevant Remuneration Received byDirectors who Are Also Employees Relevant Remuneration Received byDirectors who Are Also Employees Relevant Remuneration Received byDirectors who Are Also Employees Relevant Remuneration Received byDirectors who Are Also Employees Ratio of Total
Remuneration
(A+B+C+D+E+F+G)
to Net Income after
Tax(Note 10)		 Ratio of Total
Remuneration
(A+B+C+D+E+F+G)
to Net Income after
Tax(Note 10)
Whether or
not to receive
remuneration
from a
non-subsidiary
investment
business (Note
11)
Base Compensation
(A)
(Note 2)		 Severance Pay and
Pension (B)		 Remuneration of
Directors (C) (Note
3)		 For Services (D)
(Note 4)		 Salaries, bonus and
special subsidies (E)
(Note 5)
Severance Pay and
Pension (F)		 Remuneration of Employee (G)
(Note 6)
The
Company
All
companies
included
into the
financial
statement
(Note 7)
The
Company		 All
companies
included
into the
financial
statement
(Note 7)
The
Company		 All
Companies
in
Financial
Statements
(Note 7)

The
Company		 All
Companies
in
Financial
Statements
(Note 7)

The
Company		 All
Companies
in
Financial
Statements
(Note 7)

The
Company
All
Companies
in
Financial
Statements
(Note 7)

The
Company
All
companies
included
into the
financial
statement
(Note 7)
The Company		 All Companies
in Financial
Statements
(Note 7)		 The
Company
All
companies
included
into the
financial
statement
(Note 7)
Cash
Amount
Stock
Amount
Cash
Amount
Stock
Amount
Chairman Lin Zui Yeh 1,000 1,000 0 0 647 748 42 42 1.02 1.08 2,442 3,406 0 0 0 0 0 0 2.50 3.15 0
Director Sen-Yao Lin 700 700 0 0 430 430 42 42 0.71 0.97 1,932 1,932 0 0 0 0 0 0 1.88 1.88 0
Director Yao Wan Kuei 700 700 0 0 430 430 42 42 0.71 0.97 2,802 2,802 152 152 0 0 0 0 2.50 2.50 0
Director Wang
Lianchun
Representative
of B.V.I Yue
Da Textile
Holdings
Limited		 0 0 0 0 216 216 37 37 0.15 0.15 0 0 0 0 0 0 0 0 0.15 0.15 0
Director Dai Jun
(Note)		 0 0 0 0 216 216 37 37 0.15 0.15 0 0 0 0 0 0 0 0 0.15 0.15 0
Director Wu ChingFeng 0 0 0 0 216 216 42 42 0.15 0.15 0 0 0 0 0 0 0 0 0.15 0.15 0
Director Ho Yu 0 0 0 0 216 216 42 42 0.15 0.15 0 0 0 0 0 0 0 0 0.15 0.15 0
Director Yang Chia Yin,
Representative of
SerendipityCo.,Ltd.		 0 0 0 0 216 216 42 42 0.15 0.15 0 0 0 0 0 0 0 0 0.15 0.15 0
Independent
Director
Lee Mu Jung		 360 360 0 0 216 216 30 30 0.36 0.36 0 0 0 0 0 0 0 0 0.36 0.36 0
Independent
Director
Chao-Yuan Chang		 360 360 0 0 216 216 42 42 0.37 0.37 0 0 0 0 0 0 0 0 0.37 0.37 0
Independent
Director
Tsai Chao Lun		 360 360 0 0 216 216 42 42 0.37 0.37 0 0 0 0 0 0 0 0 0.37 0.37 0
Subtotal 3,480 3,480 0 0 3,235 3,336 441 441 4.29 4.18 7,176 8,140 62 62 0 0 0 0 8.73 9.38 0
* Other than disclosures in the above table,remunerationpaid to directors forprovidingservices(e.g., providingconsultingservices as a non-employee)for all companies in consolidated fi nancial statements in the most recentyear: None.

Note: B.V.I Yue Da Textile Holdings Limited re-appointed Dai Jun to replace Wang Shengjie as the B-level director on September 8, 2020.

21

Range of Remuneration

21
Range of Remuneration		 21
Range of Remuneration		 21
Range of Remuneration		 21
Range of Remuneration
Range of Remuneration Paid to Directors Name of Director
Total Amount of Remuneration (A+B+C+D) Total Amount of Remuneration
(A+B+C+D+E+F+G)
The Company (Note 8) All companies included
into the financial
statement(Note9)H		 The Company (Note 8) All companies included
into the financial
statement(Note9)I
Less than NT$1,000,000 Wu Ching Feng, Ho Yu,
Wang Lianchun, Dai Jun,
Yang Chia Yin, Lee Mu
Jung, Chao-Yuan Chang,
Tsai Chao Lun
Wu Ching Feng, Ho Yu,
Wang Lianchun, Dai Jun,
Yang Chia Yin, Lee Mu
Jung, Chao-Yuan Chang,
Tsai Chao Lun
Wu Ching Feng, Ho Yu,
Wang Lianchun, Dai Jun,
Yang Chia Yin, Lee Mu
Jung, Chao-Yuan Chang,
Tsai Chao Lun
Wu Ching Feng, Ho Yu,
Wang Lianchun, Dai Jun,
Yang Chia Yin, Lee Mu
Jung, Chao-Yuan Chang,
Tsai Chao Lun
NT$1,000,000 (inclusive)~NT$2,000,000 (exclusive) Lin Zui Yeh, Sen-Yao
Lin,Yao Wan Kuei		 Lin Zui Yeh, Sen-Yao
Lin,Yao Wan Kuei
NT$2,000,000 (inclusive)~NT$3,500,000 (exclusive) Sen-Yao Lin Sen-Yao Lin
NT$3,500,000 (inclusive)~NT$5,000,000 (exclusive) Lin Zui Yeh, Yao Wan
Kuei		 Lin Zui Yeh, Yao Wan
Kuei
NT$5,000,000(inclusive)~NT$10,000,000(exclusive)
NT$10,000,000 (inclusive)~NT$15,000,000 (exclusive)
NT$15,000,000 (inclusive)~NT$30,000,000 (exclusive)
NT$30,000,000(inclusive)~NT$50,000,000(exclusive)
NT$50,000,000 (inclusive)~NT$100,000,000 (exclusive)
Over NT$100,000,000
Total 11 11 11 11

Note 1. Directors Wang Lianchun and Wang Shengjie are representatives of the B.V.I Yue Da Textile Holdings Limited.

Note 2. Remunerations to the directors in the current year include director's salary, directors' allowances, severance pay, various bonuses, incentive payments, etc.

Note 3. The remuneration to directors approved by the Board of Directors prior to the motion for allocation of earnings submitted to the shareholders' meeting in the most recent year.

  • Note 4. Professional service fees paid to the director (including traveling expense, special allowances, subsidies, dormitory, company cars, in kind payments, etc.). If housing, vehicle or other means of transportation, or personal expenses are provided, the nature and cost of the asset provided, the rental calculated based on the actual cost or the fair market value, fuel, and other payments shall be disclosed. If a driver is provided, disclose compensation paid to the driver in a note; however, do not calculate such as part of executive compensation.

  • Note 5. It means the salary, duty allowance, severance pay, bonus, reward, transportation allowance, special allowance, various allowances, and provision of such tangible objects as dormitory and car received by the directors who acted as employees concurrently (including president, vice president, managerial officer and employee) in the most recent year. If housing, vehicle or other means of transportation, or personal expenses are provided, the nature and cost of the asset provided, the rental calculated based on the actual cost or the fair market value, fuel, and other payments shall be disclosed. If a driver is provided, disclose compensation paid to the driver in a note; however, do not calculate such as part of executive compensation. Any salary listed under IFRS 2 Share-Based Payment, including employee stock options, new restricted employee shares, and cash capital increase by stock subscription, shall also be included in remuneration.

  • Note 6. If the directors who acted as employees concurrently (including president, vice president, managerial officer and employee) received employee bonus (including stock dividend and cash dividend) in the most recent year, please disclose the employee bonus approved by the Board of Directors prior to the motion for allocation of earnings submitted to the shareholders' meeting in the most recent year. If it is impossible to impute the same, the amount to be allocated this year shall be based on that allocated physically last year, and please also specify the table 1-3.

22

Note 7. The aggregate of the remuneration to directors in the Company from the companies included into the consolidated financial reports (including the Company) should be disclosed.

Note 8. The aggregate of the remuneration to each director by the Company shall include the director's name disclosed in the relevant space of the following table.

  • Note 9. The aggregate of the remuneration paid to each of the Company's directors by the companies included into the consolidated financial reports (including the Company) shall include the director's name disclosed in the relevant space of the following table.

  • Note 10.The earnings after tax refers to the earnings after tax in the most recent year. If IFRSs is adopted, the earnings after tax shall refer to the earnings after tax identified in the entity or individual financial statement for the most recent year.

  • Note 11.a. This column shall clearly state the amount of remunerations received by the Company’s directors from non-subsidiary reinvestment business.

  • b. If the directors of the Company receive relevant remuneration from the non-subsidiary reinvestment business, the remuneration received by the Company directors from the non-subsidiary reinvestment business shall be incorporated into I column of the remuneration scale table, and the column shall be renamed “All reinvestment businesses”.

  • c. Remuneration refers to the remuneration, compensation (including the compensation to employees, directors and supervisors) and business execution expenses and other relevant remunerations received by the directors of the Company as directors, supervisors or managerial officers of investees other than subsidiaries.

  • The remuneration contents disclosed in this table are different from the concept of income specified in the Income Tax Act, thus the purpose of this table is for information disclosure only, rather than taxation purpose.

(II) Remunerations for President and Vice Presidents:

Unit: NT$1,000

Position Name Salary (A)
(Note 2)		 Salary (A)
(Note 2)		 Severance Pay and Pension
(B)		 Severance Pay and Pension
(B)		 Bonuses and Special
Disbursement
(C)(Note 3)		 Bonuses and Special
Disbursement
(C)(Note 3)		 Employee Compensation (D)
(Note 4)		 Employee Compensation (D)
(Note 4)		 Employee Compensation (D)
(Note 4)		 Employee Compensation (D)
(Note 4)		 The sum of A, B, C and D in
proportion to net profit after
tax(%) (Note 8)		 The sum of A, B, C and D in
proportion to net profit after
tax(%) (Note 8)		 Remuneration
from Invested
Companies
Other than
Subsidiaries
or the Parent
Company
(Note 9)
The
Company		 All companies
included into
the financial
statement
(Note 5)		 The
Company		 All companies
included into
the financial
statement
(Note 5)		 The
Company		 All companies
included into
the financial
statement
(Note 5)		 The Company All companies included
into the financial
statement(Note 5)		 The
Company		 All Companies
in Financial
Statements
Cash
Amount		 Stock
Amount		 Cash
Amount		 Stock
Amount
Chairman &
CEO		 Lin Zui Yeh 12,737 12,737 615 615 7,580 9,534 0 0 0 0 12.70 13.89 0
Director &
DeputyCEO		 Sen-Yao Lin
Vice Chairman
& DeputyCEO		 Yao Wan Kuei
President Wei-Han Yang
Vice President Feng-YingYeh
Vice President Chin-Hui Chang
Vice President Tsung-Han Lin
Vice President Tsung-I Lin
Yancheng
District
President		 Hung-Hsu Lin

23

23 23
Range of Remuneration Paid to the President and Vice Presidents Name of President and Vice Presidents
The Company (Note 6) All companies included into the financial
statement(Note 7)E
Less than NT$1,000,000
NT$1,000,000 (inclusive)~NT$2,000,000 (exclusive) Sen-Yao Lin, Feng-Ying Yeh, Chin-Hui
Chang,Tsung-Han Lin,Hung-Hsu Lin
Sen-Yao Lin, Feng-Ying Yeh, Chin-Hui
Chang,Tsung-Han Lin,Hung-Hsu Lin
NT$2,000,000(inclusive)~NT$3,500,000(exclusive) Lin Zui Yeh,Yao Wan Kuei,Tsung-I Lin Lin Zui Yeh,Yao Wan Kuei,Tsung-I Lin
NT$3,500,000(inclusive)~NT$5,000,000(exclusive) Wei-Han Yang Wei-Han Yang
NT$5,000,000(inclusive)~NT$10,000,000(exclusive)
NT$10,000,000(inclusive)~NT$15,000,000(exclusive)
NT$15,000,000(inclusive)~NT$30,000,000(exclusive)
NT$30,000,000(inclusive)~NT$50,000,000(exclusive)
NT$50,000,000(inclusive)~NT$100,000,000(exclusive)
Over NT$100,000,000
Total 9 9

  • Note 1. Remunerations to the managers in the current year include manager's salary, managers' allowances, and severance pay.

  • Note 2. The figures show payments that include bonuses, incentive payment, traveling expense, special allowances, subsidies, dormitory, company cars, in kind payments, etc.. If housing, vehicle or other means of transportation, or personal expenses are provided, the nature and cost of the asset provided, the rental calculated based on the actual cost or the fair market value, fuel, and other payments shall be disclosed. If a driver is provided, disclose compensation paid to the driver in a note; however, do not calculate such as part of executive compensation. Any salary listed under IFRS 2 Share-Based Payment, including employee stock options, new restricted employee shares, and cash capital increase by stock subscription, shall also be included in remuneration.

  • Note 3. The amount of employee compensation (including stocks and cash) approved by the Board of Directors for the distribution of the President and deputy presidents in the most recent year. If it cannot be estimated, the proposed distribution amount for this year will be calculated based on the actual distribution amount last year. Please also specify the attached Table 1-3. Net income refers to that for the most recent fiscal year; if the IFRS are adopted, net income refers to that in the latest parent-only or individual financial statements.

  • Note 4. Total remuneration paid to the Company's president and vice presidents by all companies (including the Company) listed in the consolidated financial statements shall be disclosed.

  • Note 5. The name of the president or vice presidents to whom the total remuneration is paid by the Company shall be disclosed in the corresponding remuneration range.

  • Note 6. The name of the president or vice presidents to whom the total remuneration is paid by all companies (including the Company) listed in the consolidated financial statements shall be disclosed in the corresponding remuneration range.

  • Note 7. Net income refers to that for the most recent fiscal year; where the IFRS Standards are adopted, net income refers to that in the latest parent-only or individual financial statements.

24

  • Note 8. a. This column shall clearly indicate the amount of remuneration received by the President and deputy presidents of the Company from the invested companies other than subsidiaries.

  • b. If the President and deputy presidents of the Company receive relevant remuneration from the investees beyond subsidiaries, the remuneration received by the Company’s President and deputy presidents from the non-subsidiary reinvestment business shall be shall be incorporated into Column E of the remuneration scale table, and the column shall be renamed “All reinvestment businesses”.

  • c. The remuneration shall refer to the remuneration, compensation, employee bonus and professional practicing fees received by the Company's presidents and vice presidents who acted as the directors, supervisors or managerial officers of investees other than subsidiaries.

  • The remuneration contents disclosed in this table are different from the concept of income specified in the Income Tax Act, thus the purpose of this table is for information disclosure only, rather than taxation purpose.

  • (III) The remuneration of the top 5 remuneration executives of TWSE/TPEx listed companies (individual disclosure of names and remuneration methods) (Note 1)

Unit: NT$ Thousand

Position Name Salary (A)
(Note 2)		 Salary (A)
(Note 2)		 Severance Pay and
Pension (B)		 Severance Pay and
Pension (B)		 Bonuses and Special
Disbursement
(C)(Note 3)		 Bonuses and Special
Disbursement
(C)(Note 3)		 Employee Compensation (D)
(Note 4)		 Employee Compensation (D)
(Note 4)		 Employee Compensation (D)
(Note 4)		 Employee Compensation (D)
(Note 4)		 The sum of A, B, C and
D in proportion to net
profit after tax (%)
(Note 6)		 The sum of A, B, C and
D in proportion to net
profit after tax (%)
(Note 6)		 Remuneration
from Invested
Companies
Other than
Subsidiaries or
the Parent
Company
(Note 7)
The
Company		 All
companies
included into
the financial
statement
(Note 5)
The
Company		 All
companies
included into
the financial
statement
(Note 5)
The
Company		 All companies
included into
the financial
statement
(Note 5)		 The Company All companies
included into the
financial statement
(Note 5)		 The
Company		 All
Companies
in Financial
Statements
Cash
Amount		 Stock
Amount		 Cash
Amount		 Stock
Amount
President Wei-Han Yang 2,460 2460 108 108 1,000 1,991 - - - - 2.17 -
DeputyCEO Yao Wan Kuei 1,802 1,802 152 152 1,000 1,000 - - - - 1.79 -
Vice President Tsung-I Lin 1466 1466 85 85 1,000 1,000 1.55
CEO & Chairman Lin Zui Yeh 1,442 1,442 - - 1,000 1,964 - - - - 1.48 -
DeputyCEO Sen-Yao Lin 932 932 - - 1,000 1,000 - - - - 1.17 -
  • Note 1. The "top five managerial officers with the highest remuneration" refer to the Company's managerial officers; the definition of managerial officers is based on the Ministry of Finance Official Letter No. Zheng-San 0920001301 regarding the scope of managerial officers issued by the former Securities and Futures Commission, Ministry of Finance on March 27, 2003. As for the principle of determining the “top five highest remuneration amounts, it is based on the aggregate amount of the salary, pension, bonus and special fee received by managerial officers of the Company from all companies in the consolidated financial statements, as well as the total amount of employee bonus (that is, A + B + C + D); after sorted by amount, and the top five remuneration amounts are determined. If the director also serves as the above supervisor, this table and the above table (1-1) shall be filled in.

Note 2. Please specify the salary, duty allowance, and severance paid to the top 5 highest remuneration executives in the most recent year.

  • Note 3. Please specify the amount of various bonuses, rewards, transportation allowances, special allowances, various allowances, and provision of such tangible objects as dormitory and car, as well as other remunerations, received by the top 5 highest remuneration executives in the most recent year. If housing, vehicle or other means of transportation, or personal expenses are provided, the nature and cost of the asset provided, the rental calculated based on the actual cost or the fair market value, fuel, and other payments shall be disclosed. If a driver is provided, disclose compensation paid to the driver in a note; however, do not calculate such as part of executive compensation. Any salary listed under IFRS 2 Share-Based Payment, including employee stock

25

options, new restricted employee shares, and cash capital increase by stock subscription, shall also be included in remuneration.

  • Note 4. Please specify the employee bonus (including stocks and cash) to be allocated to the top 5 highest remuneration executives as approved by the Board of Directors prior to the motion for allocation of earnings submitted to the board meeting in the most recent year. If it is impossible to impute the same, the amount to be allocated this year shall be based on that allocated physically last year, and please also specify the Table 1-3.

  • Note 5. Please disclose the aggregate of the remuneration paid to the Company’s top 5 highest remuneration executives by all companies included into the consolidated financial reports (including the Company).

Note 6. The earnings after tax shall refer to the earnings after tax identified in the entity or individual financial statement for the most recent year.

Note 7. a. To specify whether the Company's presidents and vice presidents have received remuneration from investees beyond subsidiaries (If there is none, please fill in "none").

26

  • (IV) The name of the managerial officers who are distributed with employee bonuses and the distribution situation
distribution situation
December 31, 2020
Position
(Note 1)		 Name
(Note 1)		 Stock
Amount
Cash
Amount		 Total Ratio of Total
Amount to Net
Income(%)
Managerial Officer Chairman & CEO Lin Zui Yeh 0 0 0 0
Director & DeputyCEO Sen-Yao Lin
Vice Chairman & DeputyCEO Yao Wan Kuei
President Wei-Han Yang
Vice President Feng-YingYeh
Vice President
 Chin-Hui Chang
Vice President Tsung-Han Lin
Vice President Tsung-I Lin
YanchengDistrict President Hung-Hsu Lin
  • (V) Separate Comparisons and Descriptions of Total Remuneration, as a Percentage of Net Income Stated in the Parent Company-only Financial Reports or Individual Financial Reports, as Paid by the Company and All Other Companies Included in the Consolidated Financial Statements During the Past Two Fiscal Years to Directors, Supervisors, the President, and Vice Presidents, with Analysis and Description of Remuneration Policies, Standards, and Packages, Procedure for Determining Remuneration, and Link
Position 2019 2019 2020 2020
The Company
Companies in the
consolidated
financial
statements
The Company
 Companies in
the consolidated
financial
statements
Director (4.81) (5.02) 4.29 4.18
President and deputy
presidents		 (11.12) (11.79) 12.70 13.89

In summary, the salary structure of directors and business group managerial officers includes basic salary, meal allowance, post allowance and bonus. Their salaries vary according to their experience, performance, working years and liability of guaranty. The difference in the ratio between the two years was due to losses, and the amount did not differ much.

27

  • IV. Implementation of Corporate Governance:

  • (I) Operations of the Board of Directors

A total of 5 (A) Board meetings were held in the most recent year. The attendance of the directors was as follows:

Position Name Attendance
in Person
(B)		 Attendance
by Proxy
Attendance Rate
(%) [B)/A]
Note
Chairman Lin Zui Yeh 5 0 100
Director Sen-Yao Lin 5 0 100
Director Yao Wan Kuei 5 0 100
Director WangLianchun 5 0 100 Representative of
B.V.I Yue Da Textile
Holdings Limited
Director WangShengjie 4 0 100
Director Dai Jun 1 0 100
Director Ho Yu 5 0 100
Director Yang Chia Yin 3 0 100 Representative of
SerendipityCo.,Ltd.
Director Wu ChingFeng 5 0 100
Independent
Director		 Lee Mu Jung 5 0 100
Independent
Director		 Chao-Yuan Chang 5 0 100
Independent
Director		 Tsai Chao Lun 5 0 100

28

Other matters to be recorded:

  1. With regard to the implementation of the Board of Directors, if any of the following circumstances occurs, the dates, terms of the meetings, contents of motions, all independent directors’ opinions and the Company’s handling of such opinions shall be specified:

  2. (1) Matters referred to in Article 14-3 of the Securities and Exchange Act: The independent directors have dissenting opinions or qualified opinions to the proposals.

Date Term Major Resolutions All
Independent
Directors'
Opinions
The Company's
handling of
independent
directors' opinions
2020.03.26 15th Session
11th		 Deliberated and approved the proposal for
changingfinancial reportCPAs		 No
objection		 None
Deliberated and approved the proposal for
assessingthe independence ofCPAs		 No
objection		 None
Deliberated and approved the proposal for bank
credit loan		 No
objection		 None
Deliberated and approved the provision of
guarantees through bank credit loans from
affiliated enterprises		 No
objection		 None
Deliberated and approved the proposal for
providingfund loans for affiliated enterprises		 No
objection		 None
Deliberated and approved the 2018 Statement
of Internal Control System		 No
objection		 None
Deliberated and approved 2019 Business
Report and financial statements		 No
objection		 None
Deliberated and approved the proposal for the
appropriation of capital to cover loss for 2019		 No
objection		 None
Deliberated and approved the operations
associated with the drafting of the regular
shareholders’ meeting proposals		 No
objection		 None
Deliberated and approved the amendments to
the “Rules of Procedure for Shareholders’
Meeting” and“Rulesfor Electionof Directors”		 No
objection		 None
Deliberated and approved the amendments to
the“AuditCommittee Charter”		 No
objection		 None
Deliberated and approved the amendments to
the “Rules of Procedure for Board of Directors
Meetings”, “Corporate Social Responsibility
Best Practice Principles” and “Procedures for
Ethical Management and Guidelines for
Conduct”		 No
objection		 None
Deliberated and approved the date of holding
the 2020 regular shareholders’ meeting and
proposals		 No
objection		 None
Deliberated and approved the proposal for the
compensation to directors and managerial
officers in 2019,and the annual awardquota.		 No
objection		 None
2020.05.12 15th Session
12th Meeting		 1. The Company’s consolidated financial
statements for the firstquarter of 2020		 No
objection		 None
2. Deliberated and approved the proposal for
bank credit loans		 No
objection		 None
3. Deliberated and approved the provision of
guarantees through bank credit loans from
affiliated enterprises		 No
objection		 None

29

29
Date Term Major Resolutions All
Independent
Directors'
Opinions
The Company's
handling of
independent
directors' opinions
4. Deliberated and approved the amendments to
the Company’sArticles of Incorporation
No
objection		 None
5. Deliberated and approved the planning of
Taiwan Yarn DyeingDivision		 No
objection		 None
6. Deliberated and approved the amendments to
the Company’s “Corporate Governance Best
Practice Principles” and “Remuneration
Committee Charter”
No
objection		 None
2020.06.16 15th Session
13th Meeting		 1. Deliberated and approved the proposal for
bank credit loans		 No
objection		 None
2. Deliberated and approved the provision of
fund loans for affiliated enterprises		 No
objection		 None
3. Deliberated and approved the proposal for
integrating the organization structure of
eSwatiniproduction area		 No
objection		 None

4. Deliberated and approved the proposal of
reappointingthe RemunerationCommittee		 No
objection		 None
5. Deliberated and approved the proposal for
listing Tainan factory as an investment real
estate		 No
objection		 None
6. Deliberated and approved the proposal for
changingthe Company’s business address		 No
objection		 None
2020.08.12 15th Session
14th Meeting		 1. Deliberated and approved the proposal for
bank credit loans		 No
objection		 None
2. Deliberated and approved the provision of
fund loans for affiliated enterprises		 No
objection		 None
3. Deliberated and approved the provision of
guarantees through bank credit loans from
affiliated enterprises		 No
objection		 None
4. Deliberated and approved the proposal for
changingspokesperson		 No
objection		 None
5. Deliberated and approved the amendments to
No
objection		 None

the “Rules of Procedure for Board of Directors
Meetings”, “Measures for the Performance
Evaluation of the Board of Directors and
(Functional Committees)” and “Audit
Committee Charter”
6. Deliberated and approved the amendments to
No
objection		 None
the “Code of Ethical Conduct”
7. Deliberated and approved the amendments
to/formulation of the “Remuneration
Committee Charter” and “Management
Guidelines for the Operation of Remuneration
Committee”		 No
objection		 None
2020.11.12 15th Session
15th Meeting		 1. Deliberated and approved the proposal for
bank credit loans		 No
objection		 None
2. Deliberated and approved the provision of
fund loans for affiliated enterprises		 No
objection		 None

3. Deliberated and approved the provision of
guarantees through bank credit loans from
affiliated enterprises		 No
objection		 None
4. Deliberated and approved the audit plan for No None

30

30
Date Term Major Resolutions All
Independent
Directors'
Opinions
The Company's
handling of
independent
directors' opinions
2021 objection
5. Deliberated and approved the amendments to
the Company’s management operation of
financial statementpreparationprocess
No
objection		 None
6. Deliberated and approved the proposal for
formulating the “Rules Governing Financial
and Business Matters between the Company
and its Affiliated Enterprises”		 No
objection		 None
2021.03.26 15th Session
16th Meeting		 Deliberated and approved the proposal for bank
credit loan
No
objection		 None
Deliberated and approved the provision of
guarantees through bank credit loans from
affiliated enterprises		 No
objection		 None
Deliberated and approved the proposal for
providingfund loans for affiliated enterprises		 No
objection		 None

Deliberated and approved the proposal for
assessingthe independence ofCPAs
No
objection		 None
Deliberated and approved the 2019 Statement
of InternalControlSystem		 No
objection		 None
Deliberated and approved the proposal for
distributing remuneration for employees and
directors for 2020

No
objection		 None
2021.03.26 15th Session
16th Meeting		 Deliberated and approved the 2020 Business
Report and financial statements		 No
objection		 None
Deliberated and approved the distribution of
earnings for 2020		 No
objection		 None
Deliberated and approved the amendment to
the “Procedures for Making of
Endorsements/Guarantees”		 No
objection		 None
Deliberated and approved the re-election of
directorsat the shareholders’ meeting		 No
objection		 None
Deliberated and approved the proposal of the
regular shareholders’ meeting and the
nomination of director candidates		 No
objection		 None

Deliberated and approved the proposal for the
list of director candidates nominated by the
Board of Directors		 No
objection		 None
Deliberated and approved the proposal for
liftingthe sixteenth director’s non-competition		 No
objection		 None
Deliberated and approved the date of the 2021
regular shareholders’ meetingand theproposals
No
objection		 None
Deliberated and approved the remuneration to
directors and managerial officers and annual
awardsquota		 No
objection		 None
Deliberated and approved the proposal for
appointingcorporategovernance director		 No
objection		 None
2021.05.11 15th Session
17th meeting		 Approved the proposal for bank credit loans No
objection		 None

Approved the proposal for provision of funds
as loans to affiliates		 No
objection		 None
Approved the proposal for provision of guarantees No None
31
Date Term Major Resolutions All
Independent
Directors'
Opinions
The Company's
handling of
independent
directors' opinions
for credit loans granted by banks to affiliates objection
Approved the proposal for change of the chief
auditor be submitted for discussion		 No
objection		 None
Approved the proposal for 2020 earnings
allocation		 No
objection		 None
Approved the proposal for overseas indirect
investment		 No
objection		 None

  • (2) Any recorded or written Board resolutions to which independent directors have objections or reservations to be noted in addition to the above: None.

  • Regarding recusals of directors from voting due to conflicts of interests, the names of the directors, contents of motions, reasons for recusal, and results of voting shall be specified. All directors have attended each board meeting in accordance with the Rules of Procedure for Board of Directors Meetings, and the discussions and proposals were relevant to the Company or affiliated enterprises. All directors have no personal conflicts of interests, and have no need to evade various discussions.

  • TWSE/TPEx listed companies shall disclose the evaluation cycles, evaluation periods, scope and method of evaluation, and contents of evaluation for evaluating the performance of the board members (on themselves or peers), and fill in the implementation of evaluation for the Board of Directors. The Company has established and implemented the performance evaluation of the Board of Directors in 2020.

The Company has formulated the Board of Directors Performance Evaluation Regulations on August 12, 2020, and distributed the Board Performance Self-evaluation Questionnaire, "Board Member Performance Evaluation Self-evaluation Questionnaire" and "Functional Committee Performance Evaluation" at the end of the year, which were completed in the first quarter of 2021. The Company’s 2020 board performance evaluation results were submitted to the Board of Directors on May 11, 2020, and the overall board (functional committee) performance evaluation results showed that operation was up to standard. Refer to page 37 for details.

  1. Measures undertaken during the current year and past year in order to strengthen the functions of the board of directors (such as the establishment of an audit committee and improvement of information transparency, etc.) and assessment of their implementation. The descriptions are as follows:

  2. (1) The Company has formulated and implemented the “Rules of Procedure for Board of Directors Meetings” in accordance with the “Regulations Governing Procedure for Board of Directors Meetings of Public Companies”.

  3. (2) The Company has formulated the “Rules for Performance Evaluation of Board of Directors” in accordance with the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies”, and conducts the performance evaluation for the Board of Directors and functional committees on a regular basis.

Frequency Period Scope Method Content Rating
Once a year 2020 Board of Directors
Internal
self-evaluation		 A total of 45 items, including participation in the
operation of the Company, the quality of the
Board of Directors’ decision making, the
composition and structure of the Board of
Directors, the election and continuing education
of the directors,and internal control		 Good

32

32
Individual board
members		 Self-evaluation
by the directors		 A total of 23 items, including the alignment of the
goals and missions of the Company, the
awareness of the duties of a director, the
participation in the operation of the Company, the
management of internal relationship and
communication, the director’s professionalism
and continuingeducation,and internal control		 Good
Functional
Committees		 Internal
self-evaluation		 A total of 26 items, including the participation in
the operation of the Company, the awareness of
the duties of the functional committee, the quality
of decisions made by the functional committee,
the composition of the functional committee and
election of its members,and internal control		 Good

  • (3) In order to assist the directors in performing their duties and improve the effectiveness of the Board of Directors, the Company has formulated and implemented the “Standard Operating Procedures for Handling Directors’ Requirements” in accordance with the “Operation Directions for Compliance with the Establishment of Board of Directors by TWSE Listed Companies and the Board’s Exercise of Powers”.

  • (4) During the term of office, the current directors continued to participate in the continuing education courses on corporate governance organized by the institutions designated in the “Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies”.

  • (5) The Company set up its Remuneration Committee and Audit Committee on October 29, 2011 and June 26, 2015, and established relevant organizational procedures to assist the Board of Directors in performing its supervisory duties.

  • (6) The Company has formulated and implemented the “Ethical Corporate Management Best Practice Principles” and “Corporate Governance Best Practice Principles”, in order to strengthen the Company’s ethical corporate management and corporate governance effectiveness.

Supervisors’ participation in the operation of the Board of Directors: Not applicable, the Company has established an Audit Committee

33

  • (II) Operation of the Audit Committee:

Information on the operational status of the Remuneration Committee

The Audit Committee held 5 meetings (A) in the most recent year, and the attendance of independent directors is as follows:

Position Name Actual
Attendance in
Person(B)		 Attendance
by Proxy
Actual Attendance
Rate (%)
(B/A) (Note)		 Note
Independent Director Lee Mu Jung 5 - 100.00%
Independent Director Chao-Yuan
Chang		 5 - 100.00%
Independent Director Tsai Chao Lun 5 - 100.00%

Other matters to be recorded:

  1. With regard to the implementation of the Audit Committee, if any of the following circumstances occurs, the dates, terms of the meetings, contents of motions, all Audit Committee resolutions, and the Company’s handling of such resolutions shall be specified:

(1) Matters referred to in Article 14-5 of the Securities and Exchange Act: None.

Date Term Major Resolutions Resolution result
of the Audit
Committee		 The Company's
handling of the
Audit
Committee's
opinions
2020.03.26 The 2nd
Audit
Committee
The 9th
Meeting		 Deliberated and approved the proposal for changing
financial report CPAs		 No objection None
Deliberated and approved the proposal for assessing the
independence of CPAs		 No objection None
Deliberated and approved the provision of guarantees
through bank credit loans from affiliated enterprises		 No objection None
Deliberated and approved the proposal for providing
fund loans for affiliated enterprises		 No objection None
Deliberated and approved the 2020 Statement of
Internal Control System		 No objection None
Deliberated and approved the financial statements No objection None
Deliberated and approved the proposal for the
appropriation of capital to cover loss for 2019		 No objection None
Deliberated and approved the amendments to the
“Procedures for Ethical Management and Guidelines
for Conduct”		 No objection None
2020.05.12 The 2nd
Audit
Committee
10th
Meeting		 Deliberated and approved the consolidated financial
statements for the firstquarter of 2020		 No objection None
Deliberated and approved the provision of guarantees
through bank credit loans from affiliated enterprises		 No objection None
Deliberated and approved the amendments to the
Company’s Articles of Incorporation		 No objection None
Deliberated and approved the planning of Taiwan Yarn
DyeingDivision		 No objection None
2020.06.16 The 2nd
Audit
Committee
11th		 Deliberated and approved the proposal for providing
fund loans for affiliated enterprises		 No objection None
Deliberated and approved the proposal for integrating
the organization structure of eSwatiniproduction area		 No objection None
2020.08.12 The 2nd
Audit
Committee
12th
Meeting		 Deliberated and approved the consolidated financial
statements for the secondquarter of 2020		 No objection None
Deliberated and approved the proposal for providing
fund loans for affiliated enterprises		 No objection None
Deliberated and approved the provision of guarantees
through bank credit loans from affiliated enterprises		 No objection None
34
Date Term Major Resolutions Resolution result
of the Audit
Committee		 The Company's
handling of the
Audit
Committee's
opinions
2020.11.12 The 2nd
Audit
Committee
13th
Meeting		 Deliberated and approved the consolidated financial
statements for the thirdquarter of 2020		 No objection None
Deliberated and approved the proposal for providing
fund loans for affiliated enterprises		 No objection None
Deliberated and approved the provision of guarantees
through bank credit loans from affiliated enterprises		 No objection None
Deliberated and approved the proposal for providing
fund loans for affiliated enterprises		 No objection None
Deliberated and approved the audit plan for 2021 No objection None
2021.03.26 The 2nd
Audit
Committee
14th
Meeting		 Deliberated and approved the proposal for providing
fund loans for affiliated enterprises		 No objection None
Deliberated and approved the provision of guarantees
through bank credit loans from affiliated enterprises		 No objection None
Deliberated and approved the proposal for assessing the
independence of CPAs		 No objection None
Deliberated and approved the 2019 Statement of
Internal Control System		 No objection None
Deliberated and approved the proposal for distributing
remunerations to employees and directors for 2020		 No objection None
Deliberated and approved the financial statements No objection None
Deliberated and approved the distribution of earnings
for 2020		 No objection None
Deliberated and approved the amendments to the
“Procedures for Makingof Endorsements/Guarantees”		 No objection None
2021.05.11 The 2nd
Audit
Committee
15th
Meeting		 Approved the proposal for loans provided to affiliates No objection None
Approved the proposal for provision of guarantees for
credit loansgranted bybanks to affiliates		 No objection None
Approved the proposal for change of the chief auditor
be submitted for discussion		 No objection None
Approved the proposal for 2020 earnings allocation. No objection None
Approved the proposal for overseas indirect investment.
No objection		 None

  • (2) Except as otherwise disclosed above, any other proposals which failed to obtain the approval of the Audit Committee, but were approved by two-thirds of the directors: None.

  • Regarding recusals of independent directors from voting due to conflicts of interest, the names of the independent directors, contents of motions, reasons for recusals, and results of voting shall be specified: The most recent annual audit committee meeting issues did not involve the recusals of directors from voting due to conflicts of interest.

  • Communication between the independent directors, chief internal auditor, and CPAs (including the key items, methods, and results of audit of finances and operations)

  • (1) The chief internal auditor communicates with the Audit Committee in regards to the audit report on a regular basis, submits the internal audit report to the audit committee meeting convened in each quarter, and informs the President and senior executives of important discussions and resolutions. The chief internal auditor attended the meetings and reported on the implementation of the audit business and major internal control and internal audit matters, and completes the implementation, reporting and tracking of the instructions of the independent directors. For special cases, the CPAs report to the Audit Committee immediately.

35

Summary of previous communications between independent directors and chief internal auditor:

auditor:
Date Communication
Methods		 Communication Items Communication
Results
2020.03.26 The 9th Meeting
of the 2nd Audit
Committee		 1. The implementation of the audit
business in the fourth quarter of 2019
2. Judge the effectiveness of 2019
internal control system
3. Statement of Internal Control
System in 2019		 All independent
directors present
agreed to discuss
2020.05.12 The 10th Meeting
of the 2nd Audit
Committee		 The implementation of audit business
in the first quarter of 2020		 All independent
directors present
agreed to discuss
2020.06.16 The 11th Meeting
of the 2nd Audit
Committee		 Deliberated the proposal for integrating
the organization structure of eSwatini
production area
All independent
directors present
agreed to discuss
2020.08.12 The 12th Meeting
of the 2nd Audit
Committee		 The implementation of audit business
in the second quarter of 2020		 All independent
directors present
agreed to discuss
2020.11.12 The 13th Meeting
of the 2nd Audit
Committee		 The implementation of the audit
business in the third quarter of 2020		 All independent
directors present
agreed to discuss
2021.03.26 The 14th Meeting
of the 2nd Audit
Committee		 The implementation of the audit
business in the fourth quarter of 2020
2. Judgment on the effectiveness of the
internal control system in 2020
3. Statement of Internal Control
System in 2020		 All independent
directors present
agreed to discuss
2021.05.11 The 15th Meeting
of the 2nd Audit
Committee		 The implementation of the audit
business in the first quarter of 2021		 All independent
directors present
agreed to discuss
  • (2) The Company’s CPAs reported the results of the quarterly audit or review of the financial statements and other communications required by relevant laws and regulations at the quarterly audit committee meetings. If there are special circumstances, they will report to the Audit Committee. There were no above special circumstances in 2020, and the Company’s Audit Committee has maintained good communication with the CPAs.
Date Communication
Methods		 Communication Items Communication
Results
2021.03.26 The 14th
Meeting of the
2nd Audit
Committee		 1. Explain and discuss the audit results of
the Company’s 2020 financial report and
consolidated financial report.
2. 2020 key audit items- Revenue
recognition, assessment of accounts
receivable.
3. Group inventory management
5. Important decree update - Corporate
Governance 3.0 Sustainable Development
Roadmap		 All attending
independent
directors fully
understood the
communication
matters

36

(III) Implementation Status of Corporate Governance and Deviations from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof

Evaluation Item Operation Status(Note) Operation Status(Note) Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and Reasons
Thereof
Yes
No		 Summary Description
I.
Does the company establish and disclose its
corporate governance best-practice principles
based on the Corporate Governance Best-Practice
Principles for TWSE/TPEx Listed Companies?
II. Shareholding structure & shareholders' rights
(I) Does the Company establish internal operating
procedures or policies to handle shareholder
suggestions, doubts disputes and lawsuits and
implemented such procedures or policies?
(II) Does the Company possess a list of major
shareholders and list of ultimate owners of these
major shareholders?

With reference to the framework of the Corporate
Governance Best Practice Principles for TWSE/TPEx
Listed Companies, the Board of Directors has formulated
the Company’s “Corporate Governance Best Practice
Principles” in 2020, and also formulated the “Rules of
Procedure for Board of Directors Meetings” and “Rules
for the Election of the Board of Directors”, so as to
ensure that its operation has a comprehensive and
independent supervision function. The results of the
Board of Directors’ discussions are also fully and
transparently fed back to the business decision-making
level to ensure that the Company’s sustainable operation
is based on mutual trust and smooth communication. In
addition, the Company has strengthened the corporate
governance system and structure, and disclosed them on
the Company’s website and MOPS for compliance.
(I) The Corporate Governance Best Practice Principles
has stipulated that the spokesperson or deputy
spokesperson shall coordinate the handling of
shareholders’ doubts and other matters.
(II) Through stock affairs agencies and insiders,
regularly report the changes in the shares of
directors, supervisors and managerial officers,
understand and grasp the structure of major
shareholders,and report the changes in accordance
Same as the description on
the left.
Same as the description on
the left.
Same as the description on
the left.

37

37
Evaluation Item Operation Status(Note) Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and Reasons
Thereof
Yes
No		 Summary Description
(III) Has the company established and enforced risk
control and firewall systems with its affiliate
companies?
(IV) Has the Company adopted internal rules
prohibiting company insiders from trading
securities using information not disclosed to the
market?
with the regulations of listed company information
reporting operations.
(III) The management rights and responsibilities between
the Company and the affiliated enterprises are
clearly divided. The Company has formulated the
“Regulations Governing Transactions with
Affiliates” and “Subsidiary Supervision and
Management Measures”, and affiliated enterprises
all operate independently their financial, business,
and accounting. The mutual risk control mechanism
and firewall have been properly established, and are
subject to the Company’s control and audit.
(IV) The Company has formulated the “Code of Ethical
Conduct”, “Ethical Corporate Management Best
Practice Principles” and “Procedures for Handling
Material Inside Information”, whose applicable
targets include the Company’s directors, managerial
officers, and employees and more. The Company’s
insiders are prohibited from using non-disclosed
public information on the trading of securities in the
market, and relevant information is updated and
publicized from time to time.		 Same as the description on
the left.
Same as the description on
the left.
III. Composition and responsibilities of the Board of
Directors
(I) Is the composition of the Board of Directors
determined by taking appropriate policy based on
diversity and ensure the actual implementation?		 (I) The Company has 11 directors (three are
independent directors), of which one is female. In
accordance with the Company’s “Rules for Election
of Directors”, directors with professional

38

38
Evaluation Item Operation Status(Note) Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and Reasons
Thereof
Yes
No		 Summary Description
(II) In addition to the Remuneration Committee and
Audit Committee, has the Company voluntarily
established other functional committees?		 knowledge, skills and experience in finance,
business, and legal affairs necessary for the
Company's operation are recommended and elected.
Refer to #page 46#
Succession plan for board members and senior
management:
The succession plan shall be based on the
management team and development, and agrees with
the Company’s business philosophy and cultural
management talents and managerial officers. The
succession candidates are composed of managerial
officers from various professional fields. They are
discussed and decided through the Operating
Decision Committee, and the development status of
the candidates shall be discussed regularly. Also, the
succession ability shall be improved by taking the
following methods:
A. Senior coach: The senior coach conducts
face-to-face interviews with candidates on a regular
basis, and uses case and deep structure guidance to
cultivate their comprehensive thinking mode
B. Management course: Focus on flexibility and
responsibility development course planning
(II) In addition to the Remuneration Committee, the
Company has established an Operating Decision
Committee to enhance the Group’s core
competitiveness, formulated and implemented the
Company’s development strategies and plans, and
Same as the description on
the left.

39

39
Evaluation Item Operation Status(Note) Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and Reasons
Thereof
Yes
No		 Summary Description
(III)Does the Companyestablish standards to measure improved the quality and efficiency of
decision-making.
In terms of the preventive mechanism, the Audit Office
operates as an independent unit under the Board of
Directors. The main purpose of the Audit Office is to
implement the internal control system through audit
operations and to promote internal audit-relevant
businesses with an objective and fair standpoint. The
Audit Office draws up the next annual audit plan at
the end of each year, and implements it after
submitting it to the Board of Directors for approval.
In addition to routine audit operations, it also
performs irregular audits for specific audit items. In
addition, each department is required to perform
internal control self-evaluation every year, and use
questionnaires to learn about compliance with
various management regulations, self-evaluation of
managerial officers’ ethics, and violations of human
deficiencies. Since the audit is designed to measure
the effectiveness and compliance of current policies
and procedures, all audit and self-evaluation results
will be reported to the Board of Directors and the
President as the main basis for evaluating the
effectiveness of the internal control system,
operating results and efficiency. If it is a major
improvement issue, relevant personnel will be
convened to form an inter-departmental task force.
(III) The Companyhas formulated the Rules for

Same as the description on

40

40 40
Evaluation Item Operation Status(Note) Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and Reasons
Thereof
Yes
No		 Summary Description
the performance of the Board and implement
such annually? Does the Company submit the
results of performance assessments to the Board
of Directors and use them as reference in
determining remuneration for individual
Directors, their nomination and additional office
term.		 Performance Evaluation of Board of Directors and
its evaluation methods. Each year, the Board of
Directors and the board secretary perform an annual
performance appraisal through internal self
assessment in five aspects (including the
participation in the operation of the Company, the
improvement of the quality of the Board of
Directors’ decision making, the composition and
structure of the Board of Directors, the election and
continuing education of the directors; and internal
control, etc.), so as to improve corporate governance
gradually. The self-evaluations of the Company’s
Board of Directors, functional committees and
directors for 2020 will be completed in January 2021
and reported to the Board of Directors on May 11,
2021. The evaluation results will be used as a
reference for future remuneration and nomination of
individual directors. Refer to #Page48#
the left.
(IV) Does the company regularly evaluate the
independence of the CPAs?
✓		 (IV) The Board of Directors regularly reviews the
independence of CPAs in accordance with the “CPA
Code of Professional Ethics”. The independence and
competence of the CPAs in 2020 have been assessed
by the Board of Directors on March 26, 2021. CPAs
have no conflict of interest or kinship relation with
the Company, and maintain an impartial and
objective attitude when providing professional
services. The independence statement issued by the
CPAs has been obtained. Independence and		 Same as the description on
the left.

41

41 41
Evaluation Item Operation Status(Note) Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and Reasons
Thereof
Yes
No		 Summary Description
IV. Does the company appoint adequate persons and
a chief governance officer to be in charge of
corporate governance matters (including but not
limited to providing directors and supervisors
required information for business execution,
assisting directors and supervisors in following
laws and regulations, handling matters in relation
to the Board meetings and shareholders' meetings
and keeping minutes at the Board meetings and
shareholders' meetings according to law)?		 qualification requirements have been met. Refer to
#Page 46#
The Company has appointed Chien-Chung Wu as the
corporate governance supervisor on March 26, 2021,
taking charge of corporate governance-related
businesses, including providing directors with necessary
information for performing their business, handling
matters associated with meetings of the Board of
Directors, Audit Committee, Remuneration Committee,
and shareholders’ meeting in accordance with the law,
handling the Company’s registration and change
registration, preparing Board of Directors and
shareholders’ meeting minutes and other materials,
releasing regular and non-scheduled financial business
information announcements, formulating or amending
internal control and internal audit systems associated
with changes in regulations, etc. In order to effectively
achieve the CSR goals, the committee has set up three
work implementation groups, namely the “Business
Governance Group”, “Social Participation Group” and
“Environmental Sustainability Group”. Each group is led
by a member of the relevant responsible unit, responsible
for reporting and implementation CSR issues. The
Company expects to vigorously promote corporate
governance-related matters in the secondquarter of 2021.
Same as the description on
the left.
V. Does the company establish communication
channels and a dedicated section on the company
website for stakeholders (including but not		 The Company has a special area for stakeholders on the
Company’s website, as well as contact information for
spokespersons and various business windows to establish
Same as the description on
the left.

42

42
Evaluation Item Operation Status(Note) Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and Reasons
Thereof
Yes
No		 Summary Description
limited to shareholders, employees, customers,
and suppliers) to respond to material corporate
social responsibility issues in a proper manner?
VI. Does the Company appoint a professional
shareholder service agency to deal with
shareholder affairs?
VII. Information disclosure
(I) Has the Company established a corporate website
to disclose information regarding the company's
financial, business, and corporate governance
status?
(II) Has the Company established any other
information disclosure channels (e.g. maintaining
a website in English, designating people to handle
information collection and disclosure, appointing
spokespersons, webcasting investors' conference,
etc.)?


communication channels between shareholders and
stakeholders and relevant units of the Company. All
stakeholders can contact relevant departments and units
of the Company at any time if they have needs. In the
special area for stakeholders, an e-mail box is set up and
handled by a dedicated person to properly respond to
related issues including corporate social responsibility
that the stakeholders are concerned about. At the same
time, it will be announced on the MOPS and the
Company’s website to establish a good communication
channel with investors.
The Company has designated Jih Sun Securities Co., Ltd.
to act as a professional stock affairs agency to assist in
handling relevant affairs of the shareholders meeting.
(I) The Company has set up a website
(http://www.texray.com.tw) to disclose financial
business and corporate governance relevant
information, and designated a specially-assigned
person to maintain the website and update data.
(II) Each department of the Company has designated
personnel to collect the Company's information and
submit it to the information department for
immediate disclosure on the Company's official
website, and the Company adopts a spokesperson
system for timely announcement while placing the
information regarding the investors' conferences on
the Company's website for investors' reference.
Same as the description on
the left.
Same as the description on
the left.
Same as the description on
the left.

43

43
Evaluation Item Operation Status(Note) Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and Reasons
Thereof
Yes
No		 Summary Description
(III) Does the Company announce and declare the
annual financial report within two months after
the end of the fiscal year? Does it announce and
declare the first, second and third quarter
financial reports and operating conditions of each
month as soon as possible before the prescribed
period?		 (III) The Group’s affiliated enterprises span four
continents (Europe, Asia, America, Africa) and its
subsidiaries are not able to announce relevant
information in advance due to compliance with local
laws and regulations. Relevant matters shall be
completed as soon as possible after the Group’s
system is unified in the future.		 Same as the description on
the left.
(VIII)Is there any other important information to
facilitate a better understanding of the
Company's corporate governance practices
(including but not limited to employee rights,
employee wellness, investor relations, supplier
relations, stakeholder rights, Directors' and
Supervisors' training records, implementation of
risk management policies and risk evaluation
measures, implementation of customer policies,
and participation in liability insurance by
Directors and Supervisors)?		 (VIII)Employee rights and employee care: The Company
has set up special processing windows for all types of
stakeholders. For example, the Human Resource
Department specifically handles the rights and interests
of employees, and an Employee Welfare Committee has
been established to care for the needs of employees. The
operation is currently smooth.
Investor relations: The Company has established a
communication channel for the spokesperson and deputy
spokesperson system to respond to relevant questions
from shareholders.
Supplier relations: The Company maintains a good
relationship with its suppliers.
Stakeholders’ rights: The Company respects and
safeguards the legitimate rights and interests of
stakeholders, maintains good communication channels
with customers, employees, and suppliers, handles and
provides relevant company information and
announcements in a timely manner in accordance with
the regulations of the competent authority.
The continuingeducation of directors and supervisors:
Same as the description on the
left.

44

44
Evaluation Item Operation Status(Note) Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and Reasons
Thereof
Yes
No		 Summary Description
Each director and supervisor has relevant practical
experience and professionalism, and the Company has
not established continuing education system.
Implementation of risk management policies and risk
measurement standards: The Company’s major
operational policies, investment proposals,
endorsements, capital loans, bank financing and other
major proposals have been evaluated and analyzed by the
appropriate authorities and implemented in accordance
with the resolutions of the Board of Directors. The Audit
Office also draws up its annual audit plan based on the
results of the risk assessment, and implements it
accurately, so as to implement the supervision
mechanism and control the implementation of various
risks.
Implementation of customer policies: The Company has
a dedicated customer service department to handle the
implementation of customer policies, and the
implementation is smooth.
The Company’s purchase of liability insurance for
directors and supervisors and social responsibility: The
Company has purchased liability insurance for directors
and managerial officers, and has completed the renewal
this year. Relevant information has also been published
on the Market Observatory Post System (MOPS) and the
Company's official website.
Refer to #page47# for relevant negotiationperformance

45

  • IX. Please explain the improvements made in accordance with the Corporate Governance Evaluation results released by the Taiwan Stock Exchange’s Corporate Governance Center, and provide the priorities and plans for improvement with items yet to be improved.

The Company has established a cross-departmental task force to re-examine the corporate governance appraisal project. On March 26, 2021, the Board of Directors appointed Chien-Chung Wu, the chief accountant, as the corporate governance supervisor, responsible for supervising corporate governance-related matters, and providing investors with real-time and transparent information. The Company plans to vigorously promote corporate governance-related operations in the second quarter of this year.

  • X. Environmental, Social and Corporate Governance Risk Assessment and Management Strategies

The Company has formulated the “Corporate Social Responsibility Best Practice Principles”, which is disclosed on the Company’s website, and conducts risk assessment based on the principle of materiality, and formulates relevant risk management strategies in accordance with various aspects.

with various aspects. with various aspects.
Risk assessment items Risk management strategy
Environment Environmental pollution
management
Energy resource use and
management
Occupational safety and
health		  An “Environmental Sustainability Team” has been
established under the CSR Committee to
implement management measures such as
environmental risk assessment, regulatory trend
updates, various environmental management goals
and program implementation, and assist factories at
home and abroad to implement environmental
management.
 The factory has set up a full-time unit for
environmental safety and health to regularly
review the effectiveness of the implementation,
and implement the promise of a sustainable
environment through cyclic management.
Society Talent development and
education
Salary and Welfare		  Formulate the “Education and Training
Management Measures” based on the Company’s
overall development strategy, and integrate the
internal and external resources of the Company to
build the capabilities that employees need for
future development and promotion.
 Establish and improve multi-faceted
labor-management communication channels and
management policies.
 Providegood employee benefits.
Corporate
Governance		 Legal Compliance
Supply chain
management		  Ensure all the personnel and their operations in line
with the relevant laws and regulations by
establishing and implementing the internal control
and audit systems.
 Sign contracts with suppliers in accordance with
the “Supplier Management Policy”, ensure that
suppliers comply with various laws and regulations
and relevant specifications, and conduct
management mechanisms for suppliers before
cooperation, pre-contract evaluation, and daily
evaluation.

46

XI. Evaluation of Professional Knowledge, Skills and Experience of Members of the Board of Directors

Gender 1 2 3 4 5 6 6 7 7 8
Operational
judgment		 Business
Administration
Finance and
Accounting		 Business
economics		 Crisis
treatment		 Industrial
Knowledge		 Global market
viewpoint		 Decision-
Making
Lin Zui Yeh Male ∨ ∨ ∨ ∨ ∨ ∨ ∨ ∨
Sen-Yao Lin Male ∨ ∨ ∨ ∨ ∨ ∨ ∨ ∨
Yao Wan Kuei Male ∨ ∨ ∨ ∨ ∨ ∨ ∨ ∨
WangLianchun Male ∨ ∨ ∨ ∨ ∨ ∨ ∨ ∨
Dai Jun Male ∨ ∨ ∨ ∨ ∨ ∨ ∨ ∨
Wu ChingFeng Male ∨ ∨ ∨ ∨ ∨ ∨ ∨ ∨
Ho Yu Male ∨ ∨ ∨ ∨ ∨ ∨ ∨ ∨
YangChia Yin Female ∨ ∨ ∨ ∨ ∨ ∨ ∨ ∨
Lee Mu Jung Male ∨ ∨ ∨ ∨ ∨ ∨ ∨ ∨
Chao-Yuan Chang Male ∨ ∨ ∨ ∨ ∨ ∨ ∨ ∨
Tsai Chao Lun Male ∨ ∨ ∨ ∨ ∨ ∨ ∨ ∨
XII. Evaluation Standards for the Independence of CPAs
Evaluation Item Rating Independence of the
CPAs
1. Whether the CPAs have direct or significant indirect financial interest with the Company No Yes
2. Whether the CPAs have financingorguarantees with the Companyor the Company’s directors No Yes
3. Whether the CPAs have close business relationships orpotential employment with the Company No Yes
4. Whether the CPAs and their audit team members currently serve or in the last two years have served as
directors, managerial officers or hold or held positions that have a significant impact on audit work in the
Company		 No Yes
5. Whether the CPAsprovide non-audit services for the Companythat maydirectlyaffect the audit work No Yes
6. Whether the CPAs have intermediaryof the stocks or other securities issued bythe Company No Yes
7. Whether the CPAs act as the defender of the Company or coordinate conflicts with other third parties on
behalf of the Company		 No Yes
8. Whether the CPAs have a kinship relation with the Company’s directors or managerial officers or a person
who has a significant influence on the audit case		 No Yes

47

XIII. Stakeholder Engagement Performance

Stakeholder Routine
Communication
Importance1 Meaning for the Company Communication Channel / Frequency2 Concerned about issues
Channels
Responsible Unit
Customers Regular meetings/2-3 times a year
Downstream business partners, a key Product quality and service, business
Key Business units
Customer visits/multiple times a year
driving force for the growth of Tex-Ray performance, workplace safety and health
Customer’s evaluationof factories/multiple times a year
Employee EIP anonymous appeal platform/irregular
The core personnel for stable daily
Performance interview/2 times a year		 Talent cultivation and development, salary
Key operations, the main driver of Administrative unit Year-end employee symposium/once a year and benefits, workplace safety and health,
sustainable operations Various working meetings/irregular economic performance
Educationand training/multiple times a year
Supplier /
Contractor		 Supplier visits/multiple times a year Business performance, business strategy
A key partner for supplying operations Purchase unit
Key Supplier business communication/multiple times a year and sustainable development, supply chain
and product integrity Quality assurance unit
Supplierevaluation/Once a year management
Shareholders/
Investors		 Operational performance, co-creating Shareholders’ meeting /once a year Business performance, business strategy
Importance the key core objects of profit Financial unit Board of Directors meeting/at least once a quarter and sustainable development, compliance
maximization Corporate website & spokesperson/irregular with laws and regulations
Government/
competent
authority		 Relevant regulatory units of the
government and public departments, Administrative unit
Importance Government seminars, public hearings/irregular Legal Compliance
decision-making impacts the industry Financial unit
and thefuture development of Tex-Ray
Industry/trade
association		 Annual exhibition/multiple times a year
Textile-relevant industry associations or Industry, economics and trade, technology, trend
Importance
organizations, technology and various		 R&D unit
seminars/more than 1 to 2 sessions per season		 R&D and Innovation
resource sharing platforms Industrial inspections at home and abroad/more than 2
times a year
Consumers Product end consumers, the demand
Business units
Necessity impacts the growth direction of the Customer or market analysis/monthly Product safety, product quality and service
R&D unit
Company
Public welfare
organization		 External non-profit/non-governmental
Environmental pollution management,

organizations that pay attention to		 Administrative unit Lectures and exchange meetings/irregular
Necessity toxic substance management, workplace
social performance and evaluate the key
Quality assurance unit		 Seminar: occasionally
safety and health
role ofcorporatereputation

  1. The degree of importance is based on the “Dependency”, “Responsibility”, “Influence” and “Diverse Perspectives” and “Tension” in the AA1000 Stakeholder Engagement Standard, and decided after discussion by senior executives and approval by the Chairman.

  2. In 2020, in response to COVID-19 epidemic, customer and supplier meetings, visits and evaluations were mainly conducted through online video conferences.

48

Tex-ray Industrial Co., Ltd. 2020

Performance evaluation of the Board of Directors and functional committees

To implement corporate governance and enhance the functions of the Company's Board of Directors, the Company has formulated the Board of Directors Performance Evaluation Regulations as approved by the Board of Directors as per the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies, and the Board of Directors performance evaluation shall be conducted annually.

  • I. Evaluation cycle and period

  • The Company shall conduct the performance evaluation of the Board of Directors in accordance with the evaluation procedures and evaluation indicators as in said regulations every year, and complete it by the end of the first quarter of the following year.

  • II. Evaluation items and aspects

  • The Board of Directors: Degree of participation in the Company's operations, improvement of the board's decision-making quality, composition and structure of the board, election of directors and continuing education, and internal control.

  • Directors: Keeping abreast of Company's goals and missions, understanding of directors' responsibilities, participation in the Company's operations, internal relationship management and communication, directors' professional and continuing education, and internal control.

    1. Functional committees: Charter, composition of members, committee powers and responsibilities and convening of meetings, and degree of participation in the committees.

  • III. Evaluation results

Partyevaluated Overall evaluation results
Board of Directors 4.3
Individual directors 4.3
Audit Committee 3.8
Remuneration Committee 3.8

Evaluation options: Very agree (5 points); agree (4 points); neutral (3 points); disagree (2 points); strongly disagree (1 point)

49

(IV) Information on Remuneration Committee:

(1) Information on the Members of the Remuneration Committee

Title
(Note 1)		 Qualificatio
ns
Name
Meeting One of the Following
Professional Qualification
Requirements, Together with At
Least Five Years of Work
Experience
Meeting One of the Following
Professional Qualification
Requirements, Together with At
Least Five Years of Work
Experience
Meeting One of the Following
Professional Qualification
Requirements, Together with At
Least Five Years of Work
Experience		 Independence Criteria (Note 2) Independence Criteria (Note 2) Independence Criteria (Note 2) Independence Criteria (Note 2) Independence Criteria (Note 2) Independence Criteria (Note 2) Independence Criteria (Note 2) Independence Criteria (Note 2) Independence Criteria (Note 2) Independence Criteria (Note 2) Number of
Other Public
Companies
in Which the
Individual is
Concurrentl
y Serving as
a
Remunerati
on
Committee
Member



Not
e
An
instructor
or higher
position
in a
departme
nt of
commerce
, law,
finance,
accountin
g, or other
academic
departme
nt related
to the
business
needs of
the
Company
in a
public or
private
junior
college,
college or
university
A Judge,
Public
Prosecutor,
Attorney,
Certified
Public
Accountant
, or Other
Profession
al or
Technical
Specialist
who Has
Passed a
National
Examinatio
n and Has
Been
Awarded a
Certificate
in a
Profession
Necessary
for the
Business
Has work
experienc
e in the
areas of
commerce
, law,
finance,
or
accountin
g, or
otherwise
necessary
for the
business
of the
Company		 1 2 3 4 5 6 7 8 9 10
Independe
nt Director		 Lee Mu
Jung		 ∨ ∨ ∨ ∨ ∨ ∨ ∨ ∨ ∨ ∨ ∨
Independe
nt Director		 Chao-Yuan
Chang		 ∨ ∨ ∨ ∨ ∨ ∨ ∨ ∨ ∨ ∨
Independe
nt Director		 Tsai Chao
Lun		 ∨ ∨ ∨ ∨ ∨ ∨ ∨ ∨ ∨ ∨

Note 1. For the title, please fill in director, independent director, or others.

  • Note 2. Please check “ ✓ ” the corresponding boxes if the members meet the following conditions during the two years prior to the nomination and during the term of office.

  • (1) Not an employee of the Company or any of its affiliates.

  • (2) Not a director or supervisor of the Company's affiliates. Not applicable in cases where the person is an independent director of the Company's parent company or any subsidiary appointed in accordance with the Regulations Governing the Appointment of Independent Directors and Compliance Matters for Public Companies or other local laws and regulations.

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

  • (4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the officer in the preceding 1 subparagraph, or of any of the persons in the preceding three subparagraphs.

  • (5) Not a director, supervisor, or employee of an institutional shareholder that directly holds 5% or

50

more of the total number of issued shares of the Company, or that ranks among the top 5 in shareholdings, or that designates its representative to serve as a director or supervisor of the Company under Paragraph 1 or 2, Article 27 of the Company Act (except for an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent).

  • (6) Not a director, supervisor or employee of a company controlled by the same person who has shares over half of the Company's director seats or voting rights (except for an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent).

  • (7) Not a director, supervisor, or employee of another company or institution who, or whose spouse, is a chairman, president, or person holding an equivalent position of the Company (except for an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent).

  • (8) Not a director, supervisor, managerial officer, or shareholder holding 5% or more of the shares of a specified company or institution that has a financial or business relationship with the Company (except for a specific company or institution holding more than 20% but less than 50% of the total issued shares of the Company and concurrently serving as an independent director, as appointed in accordance with the Act or the laws and regulations of the local country, at the Company and its parent or subsidiary or a subsidiary of the same parent).

  • (9) Not a professional individual, sole proprietorship, partnership, owner of a company or institution, partner, director, supervisor, managerial officer or spouse thereof that provides auditing service for the Company or any of its affiliates, or provides commercial, legal, financial, or accounting service with cumulative remuneration less than NT$500,000 in the past two years. However, this does not apply in cases where members of the Remuneration Committee, the Review Committee for Public Tender Offer or the Special Committee for Mergers and Acquisitions perform their functions in accordance with the Securities and Exchange Act or the Business Mergers and Acquisitions Act.

  • (10) Not under any of the categories stated in Article 30 of the Company Act.

51

  • (2) Operations of the Remuneration Committee

  • I. There are three members in the Remuneration Committee of the Company.

  • II. The term of office of the current members: From August 13, 2018 to June 25, 2021. A total of 2 (A) Remuneration Committee meetings were held in the most recent year, and the qualifications and attendance of the members are as follows:

Position Name Actual
Attendance in
Person(B)		 Attendance
by Proxy		 Attendance rate (%)
(B/A)
(Note)		 Note
Convener Lee Mu Jung 2 - 100
Committee
Member		 Tsai Chao Lun 2 - 100 Newly-appointed on January
16,2020
Committee
Member		 Chao-Yuan Chang 2 - 100 Elected (independent director)
on March 25,2019
Other matters to be recorded:
I.
If the Board of Directors refuses to adopt or amends a recommendation of the Remuneration Committee, the date
of the meeting, session, content of the motion, resolution by the Board of Directors, and the company’s response
to the Remuneration Committee’s opinion (e.g., if the remuneration passed by the Board of Directors exceeds the
recommendation of the Remuneration Committee, the circumstances and cause for the difference shall be
specified). None
II.
If there are resolutions of the Remuneration Committee to which members object or express reservations, and for
which there is a record or declaration in writing, the date of the meeting, session, content of the motion, all
members’ opinions and the response to members’ opinion. None

  • Note: (1) If a member of Remuneration Committee resigns before the end of the accounting year, the resignation date shall be noted in the "Remarks" column. His or her attendance rate (%) will be calculated on the basis of number of Remuneration Committee meetings held during his or her tenure and number of such meetings attended.

  • (2) Where an election may be held for filling the vacancies of committee member before the end of the fiscal year, please list out both the new and the discharged committee members, and specify if they are former members or newly elected, re-elected, and the date of the reelection. His or her attendance rate (%) will be calculated on the basis of number of Remuneration Committee meetings held during his or her tenure and number of such meetings attended.

  • III. During 2020, the agenda and resolutions of the Company's Remuneration Committee are as follows:

III. During 2020, the agenda and
follows:		 resolutions of the Company's Remuneration Committee are as
Date/Time Major Resolutions
The 1st Meeting in 2020
September 11, 2020 (Friday)		 1. The resolution on remuneration to managerial officers in
2019.
2. The method of distributing the notice of the remuneration
meeting and the minutes of proceedings has been changed to
electronic form.
The Chairman consulted all the members present, and they
voted in favor of the resolution without objection.
The 2nd time in 2020
December 30, 2020 (Wednesday)		 1. The remuneration to managerial officers in 2020
2. If major adjustments are made to the positions and
remuneration of the Company’s managerial officers, and a
temporarysalarycommittee meetingcan be convened
The Chairman consulted all the members present, and they
voted in favor of the resolution without objection.

52

(V) Corporate Social Responsibility:

Evaluation Item Status(Note 1) Deviations from the Corporate
Social Responsibility Best
Practice Principles for
TWSE/TPEx Listed Companies
and Reasons Thereof
Yes No Summary Description (Note 2)
I.
Does the company assess ESG risks associated
with its operations based on the principle of
materiality, and establish related risk management
policies or strategies? (Note 3)
∨		 The Company has performed risk assessments on
environmental, social and corporate governance
issues associated with its operations on the
principle of materiality, and formulated relevant
risk management strategies in accordance with
various aspects.
For risk assessment and management strategies,
please refer to #page 45# (Attached Table) of this
Annual Report and the CSR section of Tex-Ray’s
official website.		 Same as the description on the left.
II. Does the Company establish exclusively (or
concurrently) dedicated first-line managers
authorized by the board to be in charge of
proposing the corporate social responsibility
policies and reporting to the board?		 ∨ In accordance with the “Corporate Social
Responsibility Best Practice Principles for
TWSE/TPEx Listed Companies”, the Company
has established a “Tex-Ray CSR Committee” to
promote and implement corporate social
responsibility. The chairman of the CSR
Committee represents the CSR Committee and
reports to CSR relevant policies, planning and
implementation results to the Board of Directors.
The Group’s President serves as the chairman of
the CSR Committee, the director general is elected
from among the members, the heads of various
business divisions/units serve as members, and the
chairman of the Welfare Committee serves as an
ex officio member.
Please refer to the CSR Zone of Tex-Ray’s official
website for “Tex-RayCSR Committee”.		 Same as the description on the left.

53

53
Evaluation Item Status(Note 1) Deviations from the Corporate
Social Responsibility Best
Practice Principles for
TWSE/TPEx Listed Companies
and Reasons Thereof
Yes No Summary Description (Note 2)
III.
Environmental issues
(I)
Does the company establish proper
environmental management systems based on
the characteristics of their industries?
(II)
Does the company endeavor to utilize all
resources more efficiently and use renewable
materials which have low impact on the
environment?		 ∨
∨		 (I)
The Company has established an
“Environmental Sustainability Team” under
the CSR Committee, responsible for
implementing environmental risk assessment,
regulatory trend updates, various
environmental management goals and
program implementation, and other
management practices, and assisting factories
at home and abroad to implement
environmental management. In addition, the
factory holds a management review meeting
every year to regularly review the
effectiveness of the implementation, and
implement the promise of a sustainable
environment through cyclic management.
(II) The Company is committed to promoting
environmental sustainability:
1. With the Long An Garment Factory in Vietnam
as a demonstration base, the Company has
introduced Higg Index to continuously improve
and enhance the efficiency of energy resource
utilization by implementing the recycling
management system of planning, execution,
inspection and improvement.
2. The Company stays committed to creating
high-value products and services with
innovative thinking. At present, we have
developed a number of functional textiles with		 Same as the description on the left.
Same as the description on the left.
Same as the description on the left.
Same as the description on the left.

54

54
Evaluation Item Status(Note 1) Deviations from the Corporate
Social Responsibility Best
Practice Principles for
TWSE/TPEx Listed Companies
and Reasons Thereof
Yes No Summary Description (Note 2)
(III)
Does the company evaluate the potential risks
and opportunities in climate change with
regard to the present and future of its business,
and take appropriate action to counter climate
change issues?
(IV)
Does the company take inventory of its
greenhouse gas emissions, water consumption,
and total weight of waste in the last two years,
and implement policies on energy efficiency
and carbon dioxide reduction, greenhouse gas
reduction, water reduction, or waste
management ?		 ∨
∨		 environmentally friendly connotations and high
added value, such as ECO-lor eco-friendly
colored yarn and ECO-RECYCLE bottle
recycled yarn.
3. The factory implements the recycling and
utilization in the production process, and the
relevant units are responsible for recycling and
sorting to reduce resource consumption and
waste generation.
4. Promote energy-saving programs in an all-round
manner. The main improvement methods are to
purchase and replace energy-consuming
equipment or install power-saving devices to
reduce the power consumption generated by
production activities.
(III) There are currently no relevant assessments
and countermeasures.
(IV) The Company’s factories have formulated the
“Environmental and Energy Management
Communication Procedures”. Environmental
relevant policies, recent three-year data, and
energy-saving reduction results are disclosed
in the annual corporate social responsibility
report.
IV.
Social issues
(I)
Does the companyformulate appropriate		 ∨ (I)
The Companyhas established management		 Same as the description on the left.

55

55
Evaluation Item Status(Note 1) Deviations from the Corporate
Social Responsibility Best
Practice Principles for
TWSE/TPEx Listed Companies
and Reasons Thereof
Yes No Summary Description (Note 2)
management policies and procedures according
to relevant regulations and the International
Bill of Human Rights?
(II)
Has the Company established and offered
proper employee benefits (including
compensation, leave, and other benefits) and
reflected the business performance or results in
employee compensation appropriately?
(III)
Does the company provide a healthy and safe
working environment and organize training on
health and safety for its employees on a regular
basis?


∨
∨		 measures in accordance with the “Labor
Standards Law”, the “Gender Equality in
Employment Act” and the corresponding
law production areas, complies with the
International Labor Conventions, relevant
local laws and headquarters management
systems, and has set up a labor union to sign
agreements in an effort to safeguard the
rights and interests of local employees.
(II)
The Company has established relevant
personnel management measures, covering
working hours, vacations, etc., which are in
compliance with the relevant provisions of
the “Labor Standards Law”. Establish an
Employee Welfare Committee to handle
various welfare matters; the Company’s
remuneration policy reflects position
contribution, personal ability, business
performance, which is positively correlated
with operating performance.
(III)
In order to maintain the health and safety of
employees’ working environment, the
Company has established an Occupational
Safety and Health Management Committee,
which is composed of both employer and
employees, with supervisors above the
managerial level serving as the chairperson,
and the managerial level or above is a
normal setting, so as to ensure the efficiency

Same as the description on the left.
Same as the description on the left.

56

56
Evaluation Item Status(Note 1) Deviations from the Corporate
Social Responsibility Best
Practice Principles for
TWSE/TPEx Listed Companies
and Reasons Thereof
Yes No Summary Description (Note 2)
of decision-making and handling of safety
and health issues, environmental safety
independent management mechanism. The
Company also takes the following
measures:
(1) Headquarters:
1.1
Discuss and review issues concerning the
maintenance of employees’ working
environment from time to time.
1.2
Inspect regularly the buildings in accordance
with fire protection regulations.
1.3
Maintain the building elevators and car
elevators monthly.
1.4
The buildings are cleaned daily by
specially-assigned person.
1.5
Regularly disinfect the buildings.
1.6
Implement access control, hourly disinfection
of floors, elevators, and door handles in
response to statutory infectious diseases.
(2) The factory has an environmental safety and
health management unit that regularly inspects
the implementation level of various health and
safety protections on the production line every
week. If any missing items occur,
environmental safety and health management
unit will immediately notify the responsible
unit to make immediate improvements, and
tracks these improvements, in an effort to
ensure that employees’ workingenvironment
Same as the description on the left.
Same as the description on the left.

57

57
Evaluation Item Status(Note 1) Deviations from the Corporate
Social Responsibility Best
Practice Principles for
TWSE/TPEx Listed Companies
and Reasons Thereof
Yes No Summary Description (Note 2)
(IV)
Does the company provide its employees with
career development and training sessions?		 ∨ complies with regulations.
(3) Taipei Headquarters regularly organizes
employee health check-ups every year to let
employees know their personal health status.
(4) Health check-ups and lectures: Employee
health is the Company’s greatest asset.
Tex-Ray cooperates with regional hospitals to
provide health check-ups and physician
consulting services for employees once a year,
continues to hold relevant health promotion
activities and lectures, and invites professional
nurses or coaches to deliver speeches in the
Company.
(IV)
Through the job rotation mechanism, the
Company cultivates employees’
professional abilities, encourages employees
to continue to study, and strengthens
professional English skills, projects, general
education, management and other fields, so
as to effectively enhance their
competitiveness in the workplace. In order
to enhance the knowledge, attitudes and
skills required by employees to cope with
the transformation of the enterprise and
industry, and to drive the Company’s
innovation and growth, we have formulated
the “Education and Training Management
Measures”, which is based on the
Company’s overall development strategy

58

58
Evaluation Item Status(Note 1) Deviations from the Corporate
Social Responsibility Best
Practice Principles for
TWSE/TPEx Listed Companies
and Reasons Thereof
Yes No Summary Description (Note 2)
(V)
Does the Company's product and service
comply with related regulations and
international rules for customers' health and
safety, privacy, sales, labelling and set polices
to protect consumers' rights and consumer
appeal procedures?		 V and refers to the employee career
development in the job descriptions and
special task needs, etc. We plan the
employee’s learning blueprint curriculum,
integrate the Company’s internal and
external resources, and construct the
abilities that employees need for future
development and promotion. The on-the-job
staff training courses are divided into
management, common knowledge and
professional courses. Various courses are
mainly offered through on-the-job training,
corporate internal training, and the use of
external training agency resources (such as
the Taiwan Textile Research Institute and
other cooperative units).
(V)
In order to maintain a high level of
production quality, the Company has
established “Quality Management
Procedures”, which specifies the sampling
inspection of raw materials, the operation of
production machines, the calibration of
quality inspection equipment, and the
verification of finished and semi-finished
products, etc. Also, the Company
establishes standard operating procedures,
performs internal audits to ensure the
effectiveness of the quality inspection
mechanism,and responds to customer

59

59
Evaluation Item Status(Note 1) Deviations from the Corporate
Social Responsibility Best
Practice Principles for
TWSE/TPEx Listed Companies
and Reasons Thereof
Yes No Summary Description (Note 2)
(VI)
Has the Company established the supplier
management policies requesting suppliers to
comply with relevant laws and regulations
related to environmental protection,
occupational safety and health or labor rights
and supervised its implementation?		 V expectations for Tex-Ray with the best
quality. At the same time, in view of the
environment and product safety, the
Company strictly abides by various laws
and regulations, international standards and
customer requirements, so as to ensure
satisfactory manufacturing process and
product connection.
(VI) The Company has established supplier
management policies. The contracts are
signed based on whether the suppliers meet
local regulations, quality and delivery time.
Also, the Company has formulated supplier
specifications, requiring suppliers to commit
themselves to complying with relevant
regulations concerning environmental
protection, occupational safety and health,
and labor rights. We practice the
management mechanism of pre-cooperation
visits, pre-contract evaluation and daily
evaluation of suppliers. In case any
non-compliance incident is found, the
supplier fails to make improvements within
the time limit, and the communication
between the two parties is invalid, the
supplier will be removed from the list of
qualified manufacturers. Although the
supplier contract does not clearly stipulate
the clauses,such as environmental

60

60
Evaluation Item Status(Note 1) Deviations from the Corporate
Social Responsibility Best
Practice Principles for
TWSE/TPEx Listed Companies
and Reasons Thereof
Yes No Summary Description (Note 2)
protection, occupational safety and health,
and labor rights, the Company will
communicate before collaboration in such a
spirit to comply with its commitment to
relevant social responsibility policies.
V.
Does the Company refer to
internationally-used standards or guidelines for
the preparation of reports such as CSR reports
to disclose non-financial information? Are the
reports certified or assured by a third-party
accreditation body?
∨		 The Company’s CSR reports are drafted based on
the “Core Options” of the “GRI Sustainability
Reporting Standards” (GRI Standards) published
by the Global Reporting Initiative (GRI) in 2016.
At this stage, no third-party verification unit is
convinced that all the contents are released after
approval by the Tex-Ray’s CSR Committee and
Chairman to ensure accuracy and satisfaction of
stakeholders’ expectations before release.		 Same as the description on the left.
VI.
If the company has established corporate social
responsibility best-practice principles based on
the "Corporate Social Responsibility Best
Practice Principles for TWSE/TPEx Listed
Companies," describe the implementation and
any deviations from such principles:
VII.
Other important information to facilitate a
better understanding of corporate social
responsibility practices:
∨
∨		 The Company has formulated the “Corporate
Social Responsibility Best Practice Principles”
with reference to the “Corporate Social
Responsibility Best Practice Principles for
TWSE/TPEx Listed Companies”, and operates in
accordance with these Principles.
The Company voluntarily published the first CSR
report starting from 2018, and published CSR
reports regularly in each year. CSR reports can be
downloaded from Tex-Ray’s official website -
CSR Zone.		 Same as the description on the left.
Same as the description on the left.

61

(6) The Company’s implementation of ethical corporate management and the measures adopted:

Implementation of ethical corporate management

Evaluation Item Operation Status(Note) Operation Status(Note) Operation Status(Note) Deviations from the
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies and Reasons
Thereof
Yes No
Summary Description
I.
Establishment of ethical corporate management
policies and programs
(I)
Has the Company established the ethical
corporate management policies approved by the
Board of Directors and specified in its rules and
external documents the ethical corporate
management policies and practices and the
commitment of the Board of Directors and senior
management to rigorous and thorough
implementation of such policies?
(II)
Does the company establish a risk assessment
mechanism against unethical conduct, analyze
and assess on a regular basis business activities
within its business scope which are at a higher
∨
∨		 (I)
The Company has formulated the “Ethical Corporate
Management Best Practice Principles”, which has
been approved by the Board of Directors and
disclosed on the Company’s website and MOPS.
Also, the Company actively implements the ethical
corporate management policies, which are also in
line with the basic principles of the Company’s
operation. Both the Board of Directors and senior
management emphasize the importance of ethical
corporate management and set themselves an
example to others. The Company’s vision is to
become a sustainable and innovative happy
enterprise. Integrity is the cornerstone of
sustainability. In terms of education and trainings, we
deepen the vision and oath taking for new recruits
and employees, hold annual consensus camp and the
cultural activities of Tex-Ray people, arrange the
vision and sustainable management value in these
activities, and continue to update and swear.
(II)
A plan to prevent dishonest behavior and its behavior
guidelines has been formulated, and the punishment
system has been clearly defined in the rewards and
punishment measures,and thepunishment of

Same as the
description on the left.
Same as the
description on the left.

62

62
Evaluation Item Operation Status(Note) Deviations from the
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies and Reasons
Thereof
Yes No
Summary Description
risk of being involved in unethical conduct, and
establish prevention programs accordingly,
which shall at least include those specified in
Paragraph 2, Article 7 of the "Ethical Corporate
Management Best Practice Principles for
TWSE/GTSM Listed Companies"?
(III)
Has the Company provided any solutions to
prevent the unethical conducts, stipulate the
definite procedures, conduct guidelines,
punishment for violation as well as appeals
system and put into practice, and review and
revise on a regular basis the aforesaid solutions?		 ∨ violators has been clearly stated.
(III)
The Company strictly prohibits bribery and receipt of
bribes on the principle of good faith management,
and explicitly prohibits illegal political contributions.

Same as the
description on the left.
II.
Fulfillment of ethical corporate management
(I)
Does the company evaluate business partners'
ethical records and include ethics-related clauses
in business contracts?
(II)
Has the Company set up a dedicated unit under
the Board of Directors to promote ethical
corporate management and regularly (at least
once every year) report to the Board of Directors
the implementation of the ethical corporate
managementpolicies andpreventionprograms		 ∨
∨		 (I)
The Company has formulated the “Ethical Corporate
Management Best Practice Principles”, which has
been approved by the Board of Directors and
disclosed on the Company’s website and MOPS.
Also, the Company actively implements the ethical
corporate management policies, which are also in
line with the basic principles of the Company’s
operation.
(II)
The Company has designated the management
department as the dedicated unit (hereinafter referred
to as the dedicated unit) under the Board of
Directors, and the dedicated unit is allocated with
sufficient resources and staffed with qualified
personnel to be responsible for the amendment to,		 Same as the description
on the left.
Same as the description
on the left.

63

63
Evaluation Item Operation Status(Note) Deviations from the
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies and Reasons
Thereof
Yes No
Summary Description
against unethical conduct?
(III)
Has the Company established policies to prevent
conflicts of interest, provide appropriate
communication channels, and implement them
accordingly?
(IV)
Has the Company established effective
accounting systems and internal control systems
to implement ethical corporate management and
had its internal audit unit, based on the results of
assessment of the risk of involvement in
unethical conduct, devise relevant audit plans
and audit the compliance with the prevention
programs accordingly or entrusted a CPA to
conduct the audit?
(V)
Does the company regularly hold internal and
external educational trainings on operational
integrity?		 ∨
∨
∨		 implementation, interpretation, consulting services,
filing, registration, and archiving in respect of the
operating procedures and the codes of conduct, and
supervision of the implementation. Meanwhile, the
unit has included "ethical corporate management and
code of conduct" in the training and consensus camp
for new employees, and the implementation status is
reported to the Board of Directors before the end of
each year.
(III)
The Company adheres to the principle of good faith
management, prohibits bribery and acceptance of
bribes, and explicitly prohibits illegal political
contributions.
(IV) The Company has established a sound accounting
system and internal control system, and formulated
an audit plan to perform the audit according to the
level of risk through the internal control
self-assessment process.
(V)
The Company’s employees continue to participate in
relevant education and trainings.		 Same as the description
on the left.
Same as the description
on the left.
Same as the description
on the left.
III.
Operation of the whistle-blowing system
(I)
Does the Companyestablish both a		 ∨ (I)
The Companyhas established a smooth risk control		 Same as the description

64

64
Evaluation Item Operation Status(Note) Deviations from the
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies and Reasons
Thereof
Yes No
Summary Description
reward/punishment system and an integrity
hotline? Can the accused be reached by an
appropriate person for follow-up?		 notification mechanism. In case of any potential or
actual violation of the Code of Ethical Conduct, the
internal reporting mechanism can be adopted, and the
managerial officers of each department can notify the
audit room for inspection. Also, the Audit Office can
perform external inspections through the dedicated
line for investors or interested parties, and the
cross-departmental information integration system. If
it is found that there is a violation, it will be dealt
with in accordance with the law or the relevant
internal regulations of the Company, and the relevant
information of the person who violates the Code of
Ethical Conduct will be disclosed at the MOPS to
ensure the transparency and openness of the
information. Internal whistleblowing channel
http://trcom.texray.com/UOF/Discussion/Suggestions
& feedback to the Group External
whistleblowing channels
E-mail: [email protected]
Whistleblowing telephone number: +8862-25215155
ext.6590
In addition to work rules stipulating rewards and
punishments, the Company has formulated rules
concerning the implementation of the rewards and
punishments, so as to prevent, and deal with
violations of laws and regulations, infringement of
the Company’s interests or frauds.


on the left.

65

65
Evaluation Item Operation Status(Note) Deviations from the
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies and Reasons
Thereof
Yes No
Summary Description
(II)
Has the Company established the standard
operating procedures for investigating reported
misconduct, follow-up measures to be adopted
after the investigation, and related
confidentiality mechanisms?
(III)
Does the Company provide proper
whistleblowerprotection?		 ∨
∨		 (II)
In terms of the preventive mechanism, the Audit
Office operates as an independent unit under the
Board of Directors. The main purpose of the Audit
Office is to implement the internal control system
through audit operations and to promote internal
audit-relevant businesses with an objective and fair
standpoint. The Audit Office draws up the next
annual audit plan at the end of each year, and
implements it after submitting it to the Board of
Directors for approval. In addition to routine audit
operations, it also performs irregular audits for
specific audit items. In addition, each department is
required to perform internal control self-evaluation
every year, and use questionnaires to learn about
compliance with various management regulations,
self-evaluation of managerial officers’ ethics, and
violations of human deficiencies. Since the audit is
designed to measure the effectiveness and
compliance of current policies and procedures, all
audit and self-evaluation results will be reported to
the Board of Directors and the President as the main
basis for evaluating the effectiveness of the internal
control system, operating results and efficiency. If it
is a major improvement issue, relevant personnel will
be convened to form an inter-departmental task force.
(III)
In 2020, the Company did not have any instances of
corruption or fraud that violated ethical corporate

Same as the description
on the left.
Same as the description
on the left.

66

66
Evaluation Item Operation Status(Note) Deviations from the
Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies and Reasons
Thereof
Yes No
Summary Description
management. In order to completely eliminate any
incidents that will damage the sustainable operation
of the Company, Tex-Ray implements education and
training for all new and management personnel,
explaining the Code of Ethical Conduct and
anti-corruption procedures. In the future, the
Company will also carefully evaluate and increase
the number of legal personnel, which not only
strengthens the existing reporting channels, but also
can be used as an effective resource for preventing
illegalities such as legal consultation, advocacy of
laws and regulations,andprevention of corruption.
IV.
Enhanced disclosure of ethical corporate
management information
Does the company disclose the ethical corporate
management policies and the results of its
implementation on the company website and
MOPS?		 ∨ Relevant information has also been published on the Market
Observatory Post System (MOPS) and the Company's
official website.		 Same as the description
on the left.
V.
If the Company has established the ethical corporate management policies based on the Ethical Corporate Management Best-Practice Principles
for TWSE/TPEx Listed Companies, please describe any discrepancy between the policies and their implementation.
The Company has established the “Ethical Corporate Management Best Practice Principles”, and its daily operations are in compliance with
these Principles.
VI.
Other important information that helps to understand the Company’s ethical corporate management operations: The Company has amended the
“Ethical Corporate Management Best Practice Principles” at the board meeting dated of August 12, 2019 and the “Procedures for Ethical
Management and Guidelines for Conduct” at the board meeting dated of March 26, 2020, and implemented them in accordance with the
relevant operating procedures.

(7) Please disclose access to the Company's Corporate Governance Best Practice Principles and related rules and regulations, if

67

any:

Under the “Corporate Governance Best Practice Principles for TWSE/TPEx TWSE/TPEx Listed Companies”, the Company successively set up the “Rules of Procedure for Meetings of the Board of Directors”, “Rules and Procedures of Shareholders’ Meetings”, “Remuneration Committee Charter”, “Procedure for Prevention of Insider Trading”, “Procedure for Online Information Disclosure”, “Corporate Governance Best Practice Principles”, “Ethical Corporate Management Best Practice Principles”, “Code of Ethical Conduct and Corporate Social Responsibility Best Practice Principles”. For details, please visit the Company’s website http://www.texray.com/

  • (8) Other information enabling better understanding of the Company’s corporate governance:

Succession plan for board members and senior management:

The succession plan shall be based on the management team and development, and agrees with the Company’s business philosophy and cultural management talents and managerial officers. The succession candidates are composed of managerial officers from various professional fields. They are discussed and decided through the Operating Decision Committee, and the development status of the candidates shall be discussed regularly. Also, the succession ability shall be improved by taking the following methods:

  • A. Senior coach: The senior coach conducts face-to-face interviews with candidates on a regular basis, and uses case and deep structure guidance to cultivate their comprehensive thinking mode

  • B. Management course: Focus on flexibility and responsibility development course planning

68

  • (9) Implementation of internal control system

  • Statement on Internal Control System

Statement on Internal Control System

Date: March 26, 2021

Based on the self-assessment findings, the Company states the following with regard to its internal control system during the year 2019.

  • I. I. The Company acknowledges that it is the responsibility of the Board of Directors and managerial officers to establish, implement, and maintain the established internal control system. Its purpose is to reasonably ensure that operational effectiveness and efficiency (including income, performance, and asset safety) and reporting are reliable, timely, and transparent, as well as to ensure compliance with relevant regulations and laws.

  • II. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing its 3 stated objectives above. Moreover, the effectiveness of an internal control system may be subject to changes due to extenuating circumstances beyond control. Nevertheless, the internal control system contains self-monitoring mechanisms, and the Company takes immediate remedial actions in response to any identified deficiencies.

  • III. The Company evaluates the design and operating effectiveness of the internal control system based on the criteria provided in the "Regulations Governing the Establishment of Internal Control Systems by Public Companies" (herein below, the "Regulations"). The criteria adopted by the Regulations identify five key components of managerial internal control: (1)control environment, (2)risk assessment, (3)control activities, (4)information and communication, and (5)monitoring activities. Each key component includes several items. Please refer to the Regulations for the aforementioned items.

  • IV. The Company has adopted the aforesaid assessment items for the internal control system to determine whether the design and implementation of the internal control system are effective.

  • V. Based on the results of the determination in the preceding paragraph, the Company is of the opinion that, as of December 31, 2020, the internal control system (including the supervision and management of subsidiaries), including the design and implementation of the internal control system relating to the effectiveness and efficiency of the operations, reliability, timeliness, and transparency of reporting, and compliance with applicable laws and regulations, is effective and can reasonably assure the achievement of the foregoing goals.

  • VI. This statement is an integral part of the Company's annual report and prospectus and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Act.

  • VII. This statement was approved by the Board of Directors on March 26, 2021, and none of the nine Directors in attendance objected to it and all consented to the content expressed in this statement.

Tex-Ray Industrial Co., Ltd.

Chairman of the Board: Lin Zui Yeh (Signature& Seal) President: Wei-Han Yang (Signature & Seal)

69

  1. If a CPA has been hired to carry out a special audit of the internal control system, the CPA audit report shall be disclosed: None.

  2. (10) Penalties imposed upon the Company and its employees in accordance with the law, penalties imposed by the Company upon its employees for the violation of the internal control system policy, principal deficiencies, and improvement status during the most recent fiscal year up to the date of publication of the Annual Report:NONE

  3. (11) Major Resolutions of Shareholders’ Meeting and Board Meetings During the Most Recent Fiscal Year Up to the Date of Publication of the Annual Report:

(I) Major Resolutions of Shareholders' Meeting and Implementation Status:

Date Major resolutions Implementation Status
June 16, 2020
Regular
shareholders’
meeting		 1. Ratified the 2019final statement Resolutionpassed
2. Ratified the allocation of 2019loss allowances Resolutionpassed
3. Deliberated and approved the Company’s Articles of
Incorporation		 Resolution passed
4. Deliberated and approved the amendments to the
“Rules of Procedure for Shareholders’ Meeting”		 Resolution passed
5. Deliberated and approved the amendments to the
“Rules for Election of Directors”		 Resolution passed

(II) Major Resolutions of the Board of Directors:

sareoer
meeting
(II)
. eerate an approve te amenments to te
“Rules of Procedure for Shareholders’ Meeting”
Resolution passed
5. Deliberated and approved the amendments to the
“Rules for Election of Directors”
Resolution passed
Major Resolutions of the Board of Directors:
Date Important resolutions and implementation
2020.03.26 Deliberated and approved the proposal for changing financial report CPAs
Deliberated and approved the proposal for assessing the independence of CPAs
Deliberated and approved the proposal for bank credit loan
Deliberated and approved the provision of guarantees through bank credit loans from
affiliated enterprises
Deliberated and approved the proposal for providing fund loans for affiliated
enterprises
Deliberated and approved the 2018 Statement of Internal Control System
Deliberated and approved 2019 Business Report and financial statements
Deliberated and approved the proposal for the appropriation of capital to cover loss
for 2019
Deliberated and approved the operations associated with the drafting of the regular
shareholders’ meeting proposals
Deliberated and approved the amendments to the “Rules of Procedure for
Shareholders’ Meeting” and “Rules for Election of Directors”
Deliberated and approved the amendments to the “Audit Committee Charter”
Deliberated and approved the amendments to the “Rules of Procedure for Board of
Directors Meetings”, “Corporate Social Responsibility Best Practice Principles” and
“Procedures for Ethical Management and Guidelines for Conduct”
Deliberated and approved the date of holding the 2020 regular shareholders’ meeting
and proposals
Deliberated and approved theproposal for the compensation to directors and

70

70
Date Important resolutions and implementation
managerial officers in 2019,and the annual awardquota.
2020.05.12 Ratified the Company’s consolidated financial statements for the first quarter of 2020
Deliberated and approved the proposal for bank credit loan
Deliberated and approved the provision of guarantees through bank credit loans from
affiliated enterprises
Deliberated and approved the amendment to the Company’s Articles of Incorporation
Deliberated and approved the planning of Taiwan Yarn Dyeing Division
Deliberated and approved the amendments to the Company’s “Corporate Governance
Best PracticePrinciples” and“RemunerationCommittee Charter”
2020.06.16 Deliberated and approved the proposal for bank credit loan
Deliberated and approved the proposal for providing fund loans for affiliated
enterprises
Deliberated and approved the proposal for integrating the organization structure of
eSwatini production area
Deliberated and approved the proposal of reappointing the Remuneration Committee
Deliberated and approved the proposal for listing Tainan factory as an investment real
estate
Deliberatedandapprovedthe proposal forchangingthe Company’s businessaddress
2020.08.12 Deliberated and approved the proposal for bank credit loan
Deliberated and approved the proposal for providing fund loans for affiliated
enterprises
Deliberated and approved the provision of guarantees through bank credit loans from
affiliated enterprises
Deliberated and approved the proposal for changing spokesperson
Deliberated and approved the amendments to the “Rules of Procedure for Board of
Directors Meetings”, “Measures for the Performance Evaluation of the Board of
Directors and (Functional Committees)” and “Audit Committee Charter”
Deliberated and approved the amendments to the “Code of Ethical Conduct”
Deliberated and approved the amendments to/formulation of the “Remuneration
Committee Charter” and “Management Guidelines for the Operation of Remuneration
Committee”

71

71
Date Important resolutions and implementation
2020.11.12 Deliberated and approved the proposal for bank credit loan
Deliberated and approved the proposal for providing fund loans for affiliated
enterprises
Deliberated and approved the provision of guarantees through bank credit loans from
affiliated enterprises
Deliberated and approved the audit plan for 2021
Deliberated and approved the amendments to the Company’s management operation
of financial statement preparation process
Deliberated and approved the proposal for formulating the “Rules Governing
Financial andBusinessMatters between the CompanyanditsAffiliatedEnterprises”
2020.03.26 Deliberated and approved the proposal for providing fund loans for affiliated
enterprises
Deliberated and approved the provision of guarantees through bank credit loans from
affiliated enterprises
Deliberated and approved the proposal for assessing the independence of CPAs
Deliberated and approved the 2019 Statement of Internal Control System
Deliberated and approved the proposal for distributing remunerations to employees
and directors for 2020
Deliberated and approved the financial statements
Deliberated and approved the distribution of earnings for 2020
Deliberated and approved the amendments to the “Procedures for Making of
Endorsements/Guarantees”
2021.05.11 Approved the proposal for bank credit loans
Approved the proposal for provision of funds as loans to affiliates.
Approved the proposal for provision of guarantees for credit loans granted by banks
to affiliates
Approved the proposal for change of the chief auditor be submitted for discussion
Approved the proposal for 2020 earnings allocation.
Approved theproposal for overseas indirect investment.

(12) In the most recent year and as of the publication date of the annual report, directors or supervisors have different opinions on major resolutions passed by the Board of Directors and have records or written statements: None

72

  • (13) A summary of resignations and dismissals of the Company’s relevant persons (including the Chairman, President, Chief Accountant Officer, Chief Financial Officer, Chief Internal Auditor, or R&D Officer during the most recent fiscal year and up to the date of publication of the Annual Report:
Title Name Date of
Appointment		 Date of
Termination		 Reasons for Resignation or
Termination
Chief
Auditor		 Chang,
Chia-Huan		 100.02.16 110.05.11 Transferred to be the Vice
President of a subsidiary

Note: The relevant persons of the Company refer to the Chairman, President, Chief Accountant Officer, Chief Financial Officer, Chief Internal Auditor, or R&D Officer.

V. Information on CPA Professional Fees

(I) Information on accountants

Name of CPA Firm Name of CPA Name of CPA Audit Period Note
KPMG TSENG, Kuo
Yang		 Ti-Nuan Chien 2020/01/01~2020/12/31

(II) Breakdown of CPA Professional Fee

Unit: NTD Thousands


Yang
-uan en

(II) Breakdown of CPA Professional Fee
Yang
-uan en

(II) Breakdown of CPA Professional Fee		 ~
Unit: NTD		 Thousands
Category of Fees
Range
Audit
Fees		 Non-audit
Fees		 Total
1 Under NT$2,000 thousand ✓ 0
2 NT$2,000 thousand(inclusive)- NT$4,000 thousand ✓ 4,156
3 NT$4,000(inclusive)- NT$6,000 thousand
4 NT$6,000(inclusive)- NT$8,000 thousand
5 NT$8,000(inclusive)- NT$10,000 thousand
6 NT$10,000(inclusive)and above
  • (III) When Non-audit Fees Paid to the CPAs, to the CPA Firm, and/or to Any Affiliate of the CPA Firm Are One Quarter or More of the Audit Fees Paid Thereto: None.

Unit: NTD Thousands

Name of
CPA
Firm
Name of
CPA
Audit
Fees		 Non-audit Fees Non-audit Fees Non-audit Fees Non-audit Fees Non-audit Fees Audit Period
 Note
System
Design

Company
Registration
Human
Resources		 Others Total
KPMG TSENG,
Kuo
Yang
4,156

 0 30 0 0 0 20200101
~
20201231
Ti-Nuan
Chien

  • (IV) The Company changes its accounting firm and the audit fees paid for the fiscal year in which such change took place are lower than those for the previous fiscal year: None.

  • (V) Audit fees were reduced by more than 15% compared with the previous year: None.

VI. Information on Replacement of CPAs: None.

  • VII. Chairman, President, or Any Managerial Officer in Charge of Finance or Accounting Matters Holding a Position at the CPA Firm in the Most Recent Fiscal Year: None.

73

  • VIII. Shareholding transfer and pledge changes of directors, supervisors, managerial officers and shareholders holding more than 10% of the shares in the most recent year and as of the publication date of the Annual Report

  • Share changes by directors, supervisors, managerial officers, and major shareholders:

Position Name 2020 2020 As of April 26,2021 As of April 26,2021
Holding
Increase
(Decrease)		 Pledged Holding
Increase
(Decrease)
Holding
Increase
(Decrease)		 Pledged Holding
Increase
(Decrease)
Chairman Lin Zui Yeh - - - -
Director Sen-Yao Lin - - - -
Director Yao Wan Kuei - - - -
Director B.V.I Yue Da
Textile Holdings
Limited		 - - - -
Representative Wang Lianchun
(Note 1)		 - - - -
Representative Dai Jun(Note 1) - - - -
Director Wu ChingFeng - - - -
Director Serendipity Co.,
Ltd.		 - - - -
Representative Yang Chia Yin
(Note 1)		 - - - -
Director Ho Yu -10,000 - - -
Independent
Director		 Lee Mu Jung - - - -
Independent
Director		 Chao-Yuan Chang
-		 - - -
Independent
Director		 Tsai Chao Lun - - - -
Managerial
Officer		 Wei-Han Yang 10,000 - - -
Managerial
Officer		 Feng-Ying Yeh - - - -
Managerial
Officer		 Chin-Hui Chang - - - -
Managerial
Officer		 Tsung-I Lin 315,000 - - -
Managerial
Officer		 Tsung-Han Lin 323,000 - - -
Managerial
Officer		 Hung-Hsu Lin - - - -
Managerial
Officer		 Chien-Chung Wu - - - -
10% Major
Shareholder		 B.V.I Yue Da
Textile Holdings
Limited		 - - - -
10% Major
Shareholder		 Hsien-Yu Kuo - - - 5,220,000

Note 1: Legal representative serves as director

Mr. Hsien-Yu Kuo has been a 10% Major Shareholder of the Company since 2020.12.11

74

IX. Top ten shareholders are a related party, spouse or a relative within the second degree of kinship of another as defined in the Statement of Financial Accounting Standards (SFAS) No. 6.

Relationship among the 10 Largest Shareholders

Name
(Note 1)		 Current shareholding Current shareholding Spouse & minor
shareholding		 Spouse & minor
shareholding		 Shareholding by
nominees		 Shareholding by
nominees		 Among 10 largest
shareholders, name and
relationship with anyone
who is a related party
under no. 6 of the
financial and accounting
standards or a relative
within the second degree
of kinship		 Among 10 largest
shareholders, name and
relationship with anyone
who is a related party
under no. 6 of the
financial and accounting
standards or a relative
within the second degree
of kinship		 Note
Number of Shares Shareholding
Ratio
Number of
Shares
Shareholding
Ratio
Number
of
Shares
Shareholding
Ratio
Designation
(or Name)
Relationship
B.V.I Yue Da
Textile
Holdings
Limited		 42,052,440 18.00 - - - - - - Corporate
Director
Hsien-Yu Kuo 23,680,000 10.14 - - - -
Serendipity
Co.,Ltd.		 23,362,466 9.99 -
-
-		 - Corporate
Director
Feng-Ying Yeh
14,280,000		 6.11 6,120,000
2.62
-		 - Lin Zui
Yeh		 Spouse -
Hsiang-Jung
Tung		 8,199,000 3.51 -
-
-		 -
Lin Zui Yeh 6,120,000 2.62 14,280,000
6.11
-		 - Feng-Ying
Yeh		 Spouse Chairman
Tsung-Han Lin 4,459,000 1.91 - - - - Lin Zui
Yeh		 Children -
Tsung-I Lin 4,451,000 1.91 - - - - Lin Zui
Yeh		 Children -
Yao Wan Kuei 3,830,239 1.64 93,945 0.04 - - - - Director
范玉香 3,111,000 1.33 - - - -

Note: Represetative of the B.V.I Yue Da Textile Holdings Limited is Li Biao

Represetative of Serendipity Co., Ltd. is Ms. Yang Chia Yin

75

  • X. Total Number of Shares and Total Equity Stake Held in any Single Enterprise by the Company, Its Directors and Supervisors, Managers, and Any Companies Controlled Either Directly or Indirectly by the Company
March 31,2021 Unit: Share;% March 31,2021 Unit: Share;% March 31,2021 Unit: Share;% March 31,2021 Unit: Share;% March 31,2021 Unit: Share;% March 31,2021 Unit: Share;%
Investee business Ownership by the Company Investment by
Directors/Managerial Officers
and Companies Directly or
Indirectly Controlled by the
Company		 Total Ownership
Shareholding Shareholdin
gRatio(%)		 Shareholding Shareholdin
gRatio(%)		 Shareholding Shareholdin
gRatio(%)
TEX-RAY
INDUSTRIAL
CO., LTD.
(BELIZE)		 32,348,213
100.00
－		 － 32,348,213
100.00
TEX-RAY
INDUSTRIAL
CO., LTD.
(CAYMAN)		 34,542,722
100.00
－		 － 34,542,722
100.00
FLYNN
INTERNATION
AL LTD.		 9,100,000
100.00
－		 － 9,100,000
100.00
TEX-RAY (BN)
INDUSTRIAL
CO.,LTD.		 60,579,330
100.00
－		 － 60,579,330
100.00
TEXRAY (SA)
PTY LTD.		 39,651,722
100.00
－		 － 39,651,722
100.00
Mingtex
International Co.,
Ltd.		 4,500,000
100.00
－		 － 4,500,000
100.00
Zhengwei
Industrial Co.,
Ltd.		 500,000
100.00
－		 － 500,000
100.00
King's Metal
Fiber
Technologies		 13,217,428
60.56
3,055,773
14.48
16,273,201
74.55
Taiwan
Supercritical
Technologies Co.,
Ltd.		 7,487,381
75.63
779,508
8.22
8,266,889
83.85
Wei Li Textile
Co.,Ltd.		 2,744,000
68.60
－		 － 2,100,000
70.00
AiQ Smart
ClothingInc.		 4,015,112
63.43
988,601
15.62		 5,003,713
79.05

76

Chapter 4 Capital Overview

I. Capital and Shares

(I)Sources of Capital

The share capital formation process in the most recent year and as of the publication date of the Annual Report

Chapter 4 Capital Overview
I.
Capital and Shares
(I)Sources of Capital
The share capital formation process in the most recent year and as of the publication date of the
Annual Report		 Chapter 4 Capital Overview
I.
Capital and Shares
(I)Sources of Capital
The share capital formation process in the most recent year and as of the publication date of the
Annual Report		 Chapter 4 Capital Overview
I.
Capital and Shares
(I)Sources of Capital
The share capital formation process in the most recent year and as of the publication date of the
Annual Report		 Chapter 4 Capital Overview
I.
Capital and Shares
(I)Sources of Capital
The share capital formation process in the most recent year and as of the publication date of the
Annual Report		 Chapter 4 Capital Overview
I.
Capital and Shares
(I)Sources of Capital
The share capital formation process in the most recent year and as of the publication date of the
Annual Report		 Chapter 4 Capital Overview
I.
Capital and Shares
(I)Sources of Capital
The share capital formation process in the most recent year and as of the publication date of the
Annual Report		 Chapter 4 Capital Overview
I.
Capital and Shares
(I)Sources of Capital
The share capital formation process in the most recent year and as of the publication date of the
Annual Report		 Chapter 4 Capital Overview
I.
Capital and Shares
(I)Sources of Capital
The share capital formation process in the most recent year and as of the publication date of the
Annual Report		 Chapter 4 Capital Overview
I.
Capital and Shares
(I)Sources of Capital
The share capital formation process in the most recent year and as of the publication date of the
Annual Report
Unit: Shares;NT$
Year/Month Par
Value		 Authorized Capital Paid-in Capital Note

Number of
Shares		 AMOUNT Number of
Shares		 AMOUNT Source of Capital Capital
Increase by
Assets Other
than Cash		 Others
2006/03 10.62 194,900,000 1,949,000,000 138,723,092 1,387,230,920 7,532,940 convertible
bonds

None
2006/06 10.62 194,900,000 1,949,000,000 140,229,679 1,402,296,790
15,065,870
convertible bonds

None
2006/09 10.06 194,900,000 1,949,000,000 142,416,554 1,424,165,540
21,868,750
convertible bonds

None
2006/12 10.06 194,900,000 1,949,000,000 156,024,860 1,560,248,600
136,083,060
convertible bonds

None
2007/03 10.06 194,900,000 1,949,000,000 164,911,530 1,649,115,300
88,866,700
convertible bonds

None
2012/8 10 194,900,000 1,949,000,000 168,209,761 1,682,097,610 32,981,310 earnings
allotment

None
2014/4 12.8 300,000,000 3,000,000,000 210,262,201 2,102,622,010
42,052,440 private
placement
subscription


None
2018/12 10.16 300,000,000 3,000,000,000 233,624,667 2,336,246,670
23,362,466 private
placement
subscription


None

Note: MOEA’s official letter No. 10701160130 on January 3, 2019.

Unit: Share

Unit: Share
Share Type Authorized Capital Note
Issued Shares
(Listed)		 Unissued Shares Total
Common
stock		 233,624,667
Including 65,414,906
privateplacements


66,375,333
300,000,000
-

(II)Shareholder Structure:

(II)Shareholder Structure: (II)Shareholder Structure: (II)Shareholder Structure:
April 26,2021 Unit: shares
Shareholder
Structure
Item		 Governmen
t Agencies		 Financial
Institutions		 Other
Institutional
Shareholders		 Designated
trust fund		 Individual
Shareholders		 Foreign
Institutions
and Natural
Persons		 Total
Number of
shareholder
s		 0
0
24
1
17,014
43
17,082
Shares Held 0
0
24,764,082
23,580		 164,279,499 44,557,506 233,624,667
Shareholdin
gratio%		 0.00
0.00
10.60
0.01
70.32
19.07
100.00

Note: The Company’s mainland capital which holds 18% of the shares is the B.V.I Yue Da Textile Holdings Limited.

77

(III)Shareholding Distribution Status

77
(III)Shareholding Distribution Status		 77
(III)Shareholding Distribution Status		 77
(III)Shareholding Distribution Status		 77
(III)Shareholding Distribution Status
April 26,2021
Range of Shares Number of
Shareholders		 Shares Held Shareholding
ratio%
1 ~
999
7,634
395,796
0.17
1,000 ~
5,000
7,165
14,776,562
6.32
5,001 ~
10,000
1,073
8,826,749
3.78
10,001 ~
15,000
315
3,952,192
1.69
15,001 ~
20,000
245
4,669,068
2.00
20,001 ~
30,000
220
5,738,139
2.46
30,001 ~
40,000
104
3,750,722		 1.61
40,001 ~
50,000
64
3,004,435
1.29
50,001 ~
100,000
124
8,818,330
3.77
100,001 ~
200,000
71
9,704,555
4.15
200,001 ~
400,000
30
8,075,380
3.46
400,001 ~
600,000
7
3,585,201
1.53
600,001 ~
800,000
3
2,224,000
0.95
800,001 ~
1,000,000
6
5,667,574
2.43
Over 1,000,001 21
150,435,964
64.39
Total 17,082
233,624,667
100

(IV)List of Major Shareholders

April 26, 2021

April 26,20
Shareholding
Name of Major Shareholders		 Shares Held Shareholding
Ratio
B.V.I Yue Da Textile Holdings Limited 42,052,440 18.00
Hsien-Yu Kuo 23,680,000 10.14
Serendipity Co., Ltd. 23,362,466 9.99
Feng-Ying Yeh 14,280,000 6.11
Hsiang-Jung Tung 8,199,000 3.51
Lin Zui Yeh 6,120,000 2.62
Tsung-Han Lin 4,459,000 1.91
Tsung-I Lin 4,451,000 1.91
Yao Wan Kuei 3,830,239 1.64
范玉香 3,111,000 1.33

78

(V)Information on the market price, net worth, earnings and dividends per share in the last two years:

Item Year Year
2020		 2019 The current year
ends on March 31,
2021 (Note 8)
Market
Price Per
Share
(Note 1)		 Highest 10.95 37.45 20.8
Lowest 8.00 6.03 16.65
Average 9.06 16.17 19.03
Net Worth
per Share
(Note 2)
Before distribution		 10.47 13.65 13.59
After distribution 10.47 12.95 13.59
Earnings
per Share		 Weighted Average Shares
(thousand shares)		 233,625 233,625 233,625
Earningsper Share(Note 3) (0.74) 0.72 (0.1)
Dividends
Per Share		 Cash dividends － 0.70 －

Free
allocation
Share		 Stock dividends
appropriated from
earnings		 － － －
Stock dividends
appropriated from
capital surplus		 － － －
Accrued Unpaid Dividends
(Note 4)		 － － －
Return on
Investment		 P/E Ratio(Note 5) (12) 22 (190)
Price/Dividend Ratio(Note 6) － 23 －
Cash Dividend Yield(Note 7) － 0.04 －

  • Note 1. Please identify the highest market value and the lowest market value of the common stock in various years, and calculate the average market price for each year based on the trading value and turnover for each year.

  • Note 2. Please apply the quantity of shares already issued at the end of the year and identify the status of distribution according to the resolution made by the shareholders' meeting held in the following year.

  • Note 3. If it is necessary to make adjustment retroactively due to Free-Gratis dividends, please identify the EPS before and after adjustment.

  • Note 4. If the terms and conditions under which the equity securities are issued provide that the stock dividend retained in the year may be accumulated until the year in which there are allocable earnings available, please disclose the retained stock dividend accumulated until the then year.

  • Note 5. Price-Earnings Ratio=Average Closing Price Per Share in current year/Earnings Per Share

  • Note 6. Dividend Yield=Average Closing Price Per Share in current year/Cash Dividend Per Share

  • Note 7. Cash Dividend Yields=Cash Dividend Per Share/Average Closing Price Per Share in current year

  • Note 8. Please identify the net value per share and EPS available in the latest quarterly financial information audited (reviewed) by the independent auditor before the date of publication of the annual report, and the information available until the date of publication of the annual report in the other sections.

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  • (VII) Dividend Policy and Its Implementation

  • The Company’s dividend policy

If the Company has a net profit for the current year, it shall first use the profit to pay income taxes and make up for any accumulated losses, and then set aside 10% as a legal capital reserve. Any excessive balance may be reserved or transferred to be a special reserve pursuant to relevant laws. Any remaining balance in retained earnings may be appropriated for dividends in accordance with a proposal for appropriation of earnings as approved by the Board of Directors and submit it to the shareholders’ meeting for distribution of shareholder dividends.

The Company is still in the growth stage and adopts a residual dividend policy. Measure future annual funding demands based on the Company’s future budget planning, firstly reserve the funds needed for surplus financing. In order to avoid excessive dilution, stock dividends shall not be higher than 50% of the current year’s dividends, and the rest can be distributed by cash dividends.

  1. Distribution of dividends proposed at the current shareholders’ meeting

The Company’s loss pending to be offsetted at the beginning of 2020 was NT$61,263,411 (the same below). The net profit for the period was NT$168,119,512 and other comprehensive losses NT$1,621,417. The total undistributed earnings for the period was NT$105,234,684. After the Company set aside 10% of the balance for the legal reserve of NT$10,523,468 and reversed the special reserve of NT$201,749,194 as per the Company's Articles of Incorporation. Thus, the earnings available for distribution for this year was NT$296,460,410.

  • (VIII) It is proposed to distribute a cash dividend of NT$0.7 per share for this year's annual shareholders’ meeting, which has yet to be approved by the shareholders’ meeting on June 24, 2021. After the aforesaid cash dividend is approved by the shareholders' meeting, the Chairman is authorized to set the ex-dividend record date for allocation.

  • (VIII) Effect of the proposed free allotment of shares this year on the Company’s operating performance and earnings per share: Not applicable.

  • (IX) Employee dividends and remuneration to directors and supervisors:

  • Percentage or range of employee dividends and remuneration to directors and supervisors as set forth in the Articles of Incorporation:

In accordance with the Company’s Articles of Incorporation: If the Company makes a profit for the year, 2% shall be allocated as employee compensation, which shall be distributed in stock or cash by the resolution of the Board of Directors, and the distribution objects may include employees of subsidiaries who meet certain conditions; The Company can increase the amount of profit, and the Board of Directors resolution will allocate no more than 2% as directors’ remuneration; employee remuneration and directors’ remuneration distribution shall be reported to the shareholders’ meeting, but if the Company still has accumulated losses, it shall reserve the amount of compensation in advance, and then allocate employee remuneration and directors’ remuneration in proportion to the preceding paragraph.

  1. The estimated basis for employee dividends and the remuneration of directors and supervisors in the current period, the calculation basis for the number of shares of the allotted stock dividend, and the accounting treatment if the actual allotted amount differs from the estimated amount:

  2. (A) The estimated amounts as proposed by the board and amounts recognized are as follows:

80
Allocation (Unit: NTD) The amount actually
distributed as
resolved by the
shareholders'
meeting		 Proposed amount as
resolved by the Board
of Directors		 Difference
Employee cash dividend 3,235,188 3,235,188 None
Director remuneration 3,235,188 3,235,188 None

  • (B) Reason for the difference: Not applicable.

  • (C) Treatment of the difference: Where there is a difference between the amount approved by the shareholders' meeting and the amount of proposed by the Board of Directors, the difference will be recognized as changes in accounting estimates after the shareholders' meeting is approved

  • Remuneration distribution approved by the board of directors:

In accordance with Article 31 of the Articles of Incorporation, the Company’s net income before tax before deducting the remuneration to employees and directors shall be used to make up for aggregated losses. No less than 2% of any remainder shall be allocated as the employees’ remuneration and no more than 2% shall be allocated as the directors’ remuneration.

  • (A) The annual estimated amounts are as follows:
Allocation (Unit: NTD) The amount actually
distributed as
resolved by the
shareholders'
meeting		 Proposed amount as
resolved by the Board
of Directors		 Difference
Employee cash dividend 3,235,188 3,235,188 None
Director remuneration 3,235,188 3,235,188 None

  • (B) Reason for the difference: Not applicable.

  • (C) Treatment of the difference: Where there is a difference between the amount approved by the shareholders' meeting and the amount of proposed by the Board of Directors, the difference will be recognized as changes in accounting estimates after the shareholders' meeting is approved.

The net loss after tax for this year, employee dividends and directors’ remuneration will not be distributed. 

  4. Actual distribution of remunerations to employees, directors and supervisors in the previous year: No distribution

  • (X) Share Repurchases: None.

  • II. Handling of corporate bonds (including overseas corporate bonds)

  • (I) Corporate bonds outstanding and in process: None.

  • (II) Corporate bonds maturing within one year: None.

  • (III) Issued corporate bonds convertible into ordinary shares, overseas depository shares or other negotiable securities: None.

  • (IV) Issued exchangeable corporate bonds: None.

  • (V) Companies that raise and issue ordinary corporate bonds in a shelf registration method:

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None.

  • (VI) Issued corporate bonds with warrants: None.

  • (VII) The handling of private placement corporate bonds in the last three years: None.

  • III. The handling of special shares: None.

  • IV. Circumstances for the issuance of Global Depository Receipts (GDRs): None.

  • V. Employee stock options and restricted stocks for employee: None

  • VI. Mergers and acquisitions, or as assignee of new shares issued by another company: None.

  • VII. Implementation of capital utilization plan: None.

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Chapter5. Operational Highlights

  • I. Business Activities

  • (I) Business Scope

    1. Principal businesses of the Company

      • (1) Weaving, chemical finishing, printing, dyeing and trading of cotton fabrics and different types of fiber.

      • (2) Processing, trading and export of ready-to-wear garments

      • (3) Trading and export of cotton yarn and artificial fiber as agent.

      • (4) Manufacturing, processing and trading of ramie and flax.

      • (5) Manufacturing, processing, dyeing, finishing and trading of various textile products and natural fiber.

    2. Proportion of major products to businesses in 2020

Unit: NT$thousand
Product Name Proportion Percentage(%)
Knittingand Dyeing 677,253 7.88%
Metal Fiber 351,523 4.09%
Ready-to-wear
garments		 7,400,802 86.07%
Others 169,009 1.96%
Total 8,598,587 100%

  1. Current main products of the Company

  2. A. Knitted fabric: PK fabric, double-sided fabric, single-sided fabric, fleece, fancy yarn, elastic fabric, tencel cotton, laminated fabric, functional fabric and environment-friendly fabric.

  3. B. Woven fabric: fabric interwoven with long/short fiber, elastic fabric, tencel cotton fabric and functional fabric.

  4. (1) Metal fiber: metal fiber, yarn blended with metal fiber, and hi-tech anti-electromagnetic cloth

  5. (2) Ready-to-wear garments: T-shirts, Polo shirts, Western-style clothes, skirts, trousers, pyjamas, coats, sportswear and casual wear.

  6. (3) Home textile: sheets, pillow cases and quilts.

  7. New products to be developed

  8. (1) Functional sportswear and fabric

  9. (2) Intelligent garments.

  10. (3) All-weather functional clothing and fabric.

  11. (4) Casual functional sportswear and fabric.

  12. (5) High-temperature resistant and conductive fabric.

  13. (6) High-vision functional ready-to-wear garments and fabric.

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  - (7) Pressure garments and related functional fabric.

  - (8) Lightweight wear-resistant textiles under greenhouse effects.

  • (II) Overview of the Industry

  • Current status and development

The Taiwan textile industry faces fierce competitions from China, Korea and emerging Southeast Asian countries. Due to increased costs of raw materials, depreciation of US dollars, restrictions on environmental and trade rules..., high-value products must be developed. With the deepening of global multilateral trade and expansion of regional economic cooperation, Regional Comprehensive Economic Partnership (RCEP) was formally concluded on November 15, 2020 after the Comprehensive Progressive Trans-Pacific Partnership formally entered into force on December 30, 2019, which tested the ability of the Taiwan textile industry to manage its business operations on a worldwide basis.

Value of Taiwan export to RCEP nations and export commodity structure in 2019:

Ranking Nations Export Value
in 2019		 Export
Proportion		 Export Commodity Structure Export Commodity Structure Export Commodity Structure Export Commodity Structure
(US$ million)
Fiber		 Yarn Fabric Ready-to-wear
garments		 Others
1 Vietnam 2,224.80 24.20% 5% 11% 79% 2% 2%
2 Mainland
China		 1,583.70 17.30% 6% 28% 61% 2% 3%
3 Indonesia 481.20
5.20%		 2% 5% 86% 3% 3%
4 Cambodia 374.80
4.10%		 0% 1% 94% 3% 2%
5 Japan 338.60
3.70%		 8% 39% 37% 8% 8%
6 Thailand 311.10
3.40%		 9% 19% 66% 2% 2%
7 Philippines 203.30
2.20%		 1% 21% 71% 3% 4%
8 Korea 102.10
1.10%		 12% 39% 43% 4% 3%
9 Myanmar 68.80
0.70%		 0% 1% 96% 1% 1%
10 Malaysia 65.50
0.70%		 21% 12% 53% 7% 6%
11 Australia 54.10
0.60%		 22% 9% 37% 14% 18%
12 Singapore 30.80
0.30%		 2% 16% 47% 20% 15%
13 New Zealand 12.80
0.10%		 52% 6% 32% 5% 6%
14 Laos 4.60
0.10%		 0% 0% 99% 0% 1%
15 Brunei 0.10
0.00%		 0% 4% 72% 5% 19%
Total 5,856.30 63.70% 6% 17% 71% 3% 3%

Source: summarized by Taiwan Textile Federation

Global political and economic environment is subject to many uncertainties. TEXRAY will flexibly coordinate global supply chains for production and marketing, rapidly respond to risk control and prudently evaluate development likelihoods of potential production zones according to its customer requirements, in order to enhance overall competitiveness of the industry.

In 2020, COVID-19 significantly impacted the global apparel industry. The global epidemic resulted in economic lockout and downturn, creating substantial uncertainties in markets.

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Total national export value in 2020:

Industry Type Textile Machinery
and Motor
Equipment		 Basic
Metals and
Correspondi
ng Products

 Precision
Instruments,
Clocks,
Watches
and Musical
Instruments


Plastic
Rubber and
Correspondi
ng Products


Mineral
Products		 Chemicals
Export Value
(USD billion)		 75.33 2,181.68 254.9 169.93 212.6 73.48 166.6
Proportion to
Total Export
Value		 2.20%
63.20%
7.40%		 4.90%
6.20%
2.10%
4.70%
PeerComparison
18%		 15% -8% 6% -6% -48% -11%

Source: Market Development Office of Taiwan Textile Federation

From January to December 2020, the export value of textiles in China amounted to USD7.533 billion, accounting for 2.2% of the total export value (USD345.276 billion) and declining by 18% on a year-on-year basis compared with that in 2019.

Main export textiles of Taiwan in 2020:

Items Export Value Proportion Peer
Comparison
Export
Volume		 Peer
Comparison		 Unit Price
Peer
Comparison
(USD billion) (%) (%) (Thousand
Tons)		 (%) (USD/kg) (%)
1. Fiber 4.82
6
-20
40.11		 -8
1.2
-13
2. Yarn 10.24
14
-29
39.83		 -25
2.57
-6
3. Fabric 50.6
67
-19
62.47		 -20
8.1
2
4. Ready-to-wear
garments and
accessories		 4.12
6
-13
2.06		 -16
19.93
4
5. Other textiles 5.55
7
27
7.08		 -15
7.85
50
Total 75.33
100
-54
151.55		 -84
4.97
1

Source: Market Development Office of Taiwan Textile Federation

Of textile export, fabric export is still dominant and its value was up to USD5.060 billion, accounting for 67% of total export value and declining by 19% on a year-on-year basis compared with that in 2019; the export volume was 624.7 thousand tons and declined by 20%; but the unit export price grew by 2%.

Places of delivery in export orders of Taiwan textiles in 2020:

Places Statistics on Places of Deliveryin Export Orders of Taiwan Textiles Statistics on Places of Deliveryin Export Orders of Taiwan Textiles Statistics on Places of Deliveryin Export Orders of Taiwan Textiles Statistics on Places of Deliveryin Export Orders of Taiwan Textiles Statistics on Places of Deliveryin Export Orders of Taiwan Textiles Statistics on Places of Deliveryin Export Orders of Taiwan Textiles Statistics on Places of Deliveryin Export Orders of Taiwan Textiles
Total U.S.A. ASEAN
Nations
Hong
Kong		 Europe Japan Others
ExportOrders(USD Billion) 103.10 38.12 18.03 14.54 11.46 4.59 16.36
Proportion to Textile ExportOrders 100% 37% 18 14 11 5 16
Annual Growth(%) -12 -4 -13 -22 -7 -9 -22

Source: Market Development Office of Taiwan Textile Federation

According to statistics of the Statistics Department, Ministry of Economic Affairs, the orders of textiles amounted to USD1.020 billion in December 2020, which increased by 6% on a year-on-year basis compared with that in 2019. The cumulative amount of orders received from January to December 2020 was

85

USD10.310 billion, which declined by 12%.

The spread of the epidemic to Europe and America also imposed significant impacts upon fashion brands. Many orders were canceled after placement and lots of companies went bankrupt. Lots of cities were even locked down, and enterprises promoted remote office work at home. As a result, local market consumption came to a sudden halt. Attention was shifted from offline channels to online ones. Consumer behaviors tended to be conservative and cautious. As people spent more time at home, their lifestyles changed. The products "worth their prices, with multiple functions and satisfying the needs for health protection" will exhibit advantages. Companies of the textile industry have successively turned to produce anti-epidemic products. Meanwhile, significant growth has been achieved in pajamas, sportswear and casual wear under the adverse situation. Lounge wear ever made a hit.

Forecast of global overall fashion market size from 2019 to 2024:

==> picture [408 x 229] intentionally omitted <==

Source: Euromonitor(2020/09)

The sportswear market hasn't declined a lot compared with the entire fashion market, and it will revive faster than the whole fashion market.

Although practitioners had no choice but to consider the fashion industry and new phenomena because of the epidemic, it still shall take 1 to 2 years to observe before market maturity, which will depend upon consumers' long-term acceptance. In the future, more functional, waterproof and protective clothes will outperform, but in a long term, their development will be dependent upon when the epidemic will be controlled. During the epidemic, the textile industry and its customers have adjusted the supply chain. The practitioners of Taiwan textile industry have been occupying more market shares owing to their advantages of responsiveness and scale.

  1. Relationships among Upstream, Midstream and Downstream of the Industry

The relationships among upstream, midstream and downstream of the textile and ready-to-wear garment industries are as follows. In the upstream of the industry chain, there are petrochemical raw materials. After such raw materials are used for production of artificial fiber such as polyester fiber, rayon fiber and carbon fiber,

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the fiber is further spun into yarn and then woven into fabric. After bleaching, dyeing, printing, coating and finishing, the fabric is cut and tailor-made into ready-to-wear garments or other related textile products. The main products of the Company and its subsidiaries are woven and dyed products as well as ready-to-wear garments, which are in the midstream and upstream of the industry value chain.

In face of competitions from the global textile industry and with the emergence of the technological society, the Company actively integrates internal and external resources, continuously enhances its competitive advantages, enhances its supply chains for production and marketing, and develops environment-friendly functional textiles.

==> picture [482 x 161] intentionally omitted <==

Source: information platforms of industry value chains

  1. Development trends of products

Global population structure tends to be urbanized and aged. Climate changes make environmental sustainability become a great concern. The epidemic has caused global economic recession, and the brands in a majority of channels are on the verge of bankruptcy. Under the global situation, the Company focuses on technology innovations, safety protection, comfortable functions and environmental sustainability in developing products.

  • (1) Increase health awareness and optimize functional lives: In 2020, the Company jointed the national anti-epidemic delegation, developed medical PPE products, and synchronously launched new non-medical and anti-epidemic living textiles in line with fashion concepts. In face of the global health crisis, the consumers have proposed protection requirements, to build a sense of security when health is uncertain. Having seized the new health business opportunities, the Company developed new series T-FRESH® C&C (Cooling & Cleaning) photocatalytic and metal fiber anti-epidemic products as optimal life solutions for the post-epidemic era.

  • (2) Strategies for environmental sustainability and circular economy: As environmental protection and green energy have been arousing great concerns in different parts of the world, global famous brands have successively made green declarations. They are more concerned about whether practitioners of the textile industry have the R&D potential for developing environment-friendly and non-toxic production processes an textiles. Having developed patented environment-friendly wet prints according to its production processes, the Company provides modern environmental solutions to the most energy-consuming printing and dyeing industry. In terms of products, it has drawn up a map of Rays functional textiles and developed

87

environment-friendly energy-saving products with lower carbon emissions and technological functions, including ECO-LOR® series, T-Cool and T-Hot series textiles for climate control produced by dyeing with primary liquid. In the future, the Company will continue investing resources and focus on developing sustainable environment-friendly products.

  • (3) Digitization of high-end intelligent clothing: With the aging of global population and increase of health awareness, the market demands for health care and bodybuilding have increased. On the other hand, the rapid development of information technologies and global internet of things have contributed to growing demands for intelligent clothing. The Company has been engaged in bodybuilding and long-term care since a long time ago. Maintaining its leading positions in technologies and patents, it has conducted cooperation across industries to develop products with new functions and facilitate application and development of diverse industrial textiles in combination with advantages of electronics, textiles and other industries.

  • Competitions

Export of ready-to-wear garments is the principal business of the Company, which faces competitions from manufacturers of China, Korea, HK, India and other areas in addition to fierce competitions from competitors who conduct the same businesses as the Company in Taiwan.

Global competitions

  • (1) In Taiwan: Due to political marginalization , the textile industry rarely enjoys competitive advantages in transnational cooperation, so with Taiwan as its operation center, the Company strengthens innovation and development of high-value products, including functional textiles and smart clothing. Meanwhile, it gives play to its competitive advantages dependent upon its high responsiveness through its global network. Apart from development from OEM to ODM, the Company has made more efforts to launch its own brands over the past years. It keeps itself informative about market demands and deepens its knowledge about markets, in order to get feedback on its businesses in different parts of the world and better understand needs of brands.

  • (2) China: In addition to powerful markets with demographic dividends, RCEP and the Belt and Road have also aroused great concerns of the Company. The Company continuously integrates internal resources, focuses on promoting development of local brands, and creating infinite space for growth of economic trade.

  • (3) Southeast Asia: The labor costs are low in Southeast Asia, where policy support is available from governments of different nations, population dividends and economy grow fast, trade agreements and foreign cooperation are expanded. The Company has identified the niche for development in South Asia, so it has invested in building a flagship plant there, which has become the major place for the Company to export ready-to-wear garments.

  • (4) eSwatini: Having successfully transformed the domestic markets, the Company annually creates substantial profits for the parent company. In 2018, with the re-enactment of AGOA, it crated another financial source for the parent company.

  • (5) North America: The Company strengthens connections between the American marketing company and the Mexican production center. In consideration that

88

the American market highlights rapid duty-free supply, it collaborates with brands to seize market opportunities more rapidly, and makes profits from balanced growth of production and marketing. In Mexico, the Company enhances domestic market development and expands business operations.

  • (III) Overview of Technologies and R&D Work

  • R&D expenditures in the most recent year

Unit: NT$ thousand Unit: NT$ thousand Unit: NT$ thousand
Items/Year 2019 2020 As of March 31,
2021
R&D Expenses 72,392
57,702
13,999
Sales Revenue 6,949,284
8,598,587
1,624,326
Percentage(%) 1.04
0.67
0.86
  1. R&D outcomes

In response to growing trend of environmental protection in global industries, the Company is committed to developing new high-value products and services with creative thinking. At present, it has built multiple brands of environment-friendly and high-value functional textiles. Over the past years, its R&D has focused on application of upstream yarn and raw materials, in hope of effectively realizing the core value of sustainable development.

  • (1) Metal fiber, yarn interwoven with stainless steel metal fiber, anti-electromagnetic products, conductive and high temperature resistant products.

  • (2) The stainless steel metal fiber technologies and products are granted the awards in the Open Championships of the National Innovation and Entrepreneurship Awards.

  • (3) The Company was evaluated as National Excellent Manufacturer in catalytic preparation among enterprise R&D alliances by the Technology Office, Ministry of Economic Affairs.

  • (4) The top mercerized cotton dyed yarn was granted the 11th Taiwan Excellence Award.

  • (5) Tainan yarn dyeing mill of the yarn dyeing business office passed the ISO 14001 environmental protection.

  • (6) The Company was evaluated extraordinary for using the Information System for Coordinating Textile Production and Marketing in the demonstrative information application development program of the Ministry of Economic Affairs.

  • (7) The Company successfully developed LCO2 super-critical liquid CO2 based industrial commercial cleaning machines.

  • (8) The Ministry approved the special subsidies for the Company's "development plan for super-critical CO2 disinfection and cleaning equipment".

  • (9) The Company won the award for the best industry-university-research collaboration in the industry technology development program within the industry by the Ministry of Economic Affairs.

  • (10) The Institution for Information Industry approved the special subsidy for encouraging domestic enterprises to build a R&D center.

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  • (11) The Industrial Development Bureau, Ministry of Economic Affairs approved the special subsidy for the development plan for hollow lightweight heat-generating textiles.

  • (12) Developed environment-friendly colored fiber dyed with primary liquid and built the yarn brand Eco-lor.

  • (13) Developed energy-saving cool raw materials with lower carbon emissions and independently built the brand Tcool.

  • (14) Developed energy-saving heat-generating raw materials with lower carbon emissions and built the brand Thot.

  • (15) Developed energy-saving night luminescent fabric with lower carbon emissions and built the brand RayS 21.

  • (16) Developed intelligent wool blended fabric and built the brand Wool miracle.

  • (17) Developed moisture wicking fabric for moisture control and built the brand Dry Switch.

  • (18) Developed energy-saving cool fabric with lower carbon emissions and built the brand Coolitol.

  • (19) Developed tight ready-to-wear garments and built the brand Tmapping.

  • (20) Integrated the product map of functional textiles and developed RAYS functional fabrics, including Cooling, Dry, Mapping, Heating, Shield, Green, Plus and Neo series.

  • (21) Developed moisture-permeable and waterproof foam-based coated fabric lamination technology, and built the brand Breath Light, to which RAYS Shield was added.

  • (22) Developed high-breathability, windproof and warm-keeping sandwich fabric, and built the brand Air Buffer, to which RAYS Heating series was added.

  • (23) Developed environment-friendly and high-resolution digital printing technology and built the brand HD Eco Print, to which RAYS Green series was added.

  • (24) Developed photo-catalytic and metal-ion antibacterial deodorant fiber series and built the brand TFresh, to which RAYS Shield was added.

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According to product attributes and its unique technologies, the Company integrates its products into a map of RAYS functional textiles, including HEATING, SHIELD, MAPPING, GREEN, DRY, COOLING, PLUS and NEO. This map systematically presents the Company's outcomes in developing environment-friendly and energy-saving products with lower carbon emissions and scientific functions.

==> picture [771 x 371] intentionally omitted <==

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  • (IV) Long- and Short-Term Business Development Plans

  • (1) Identify positions of the Company and its products in market economy according to actual situation; put forward objectives of and proposals for technology advancement, upgrading, restructuring and product upgrading as more valuable weapons for business marketing.

  • (2) Use new raw materials, study new technologies, develop new products, constantly make creative products available and supply products to international brands for joint upgrade and growth.

  • (3) Attach importance to utilization of information technologies and enhance the abilities to effectively conduct businesses.

  • (4) Employ diverse marketing channels, including cross-border and active e-commerce.

  • (5) Apart from American markets where the Company has accumulated substantial strengths, the Company also strengthens its efforts for entering the mature European and Japanese markets. It plans southern market operations promoted by the Taiwan government.

  • (6) Gradually increase the ratio of ODM through OEM businesses, to increase the gross interest.

  • (7) Establish good and friendly supply chain partnerships, to jointly develop businesses and create a win-win situation.

  • (8) Promote improvement of human resources and continuing education/training, and introduce excellent project talents to support the improvement, to improve overall operational efficiency of the Company.

  • (9) Constant review and improvement better quality and effectively reduce costs, thus leading to an increase in the overall gross interests.

  • (10) Improve image of the Company, visibility of its products and international marketing capabilities; develop niche markets.

  • (11) Optimize and perfect product development procedures and speed up customers' order placement.

  • (12) Improve services of the new retail era, the abilities to customize services for enterprises, deepen customer relationships, position corporate products/services and integrate marketing.

  • (13) Develop creative environment-friendly, functional and technological high-value products; collaborate with enterprises within the industry and from other industries to drive upgrade and development of Taiwan textile industry.

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  • II. Analysis of Market and Production and Marketing Situation

  • (I) Market analysis:

    1. Distribution and ratio of main products in the past two years

Unit: NT$ thousand

Unit: NT$thousand Unit: NT$thousand
Year 2019 2020
Sales Areas Sales % Sales %
Foreign Sales Africa 1,603,541
23.07		 1,359,986
15.82%
America 3,084,728
44.39		 2,183,491
25.39%
Asia 1,475,651
21.24		 4,198,587
48.83%
Others 273,926
3.94
222,025
2.58%
Subtotal 6,437,846
92.64		 7,964,089
92.62%
Domestic Sales 511,438
7.36
634,498
7.38%
Total 6,948,284
100.00		 8,598,587
100.00%

Note: The sales listed in this form are net operating revenue

  1. Future market supply, demand, growth and competitive niche

  2. (1) Future market supply and demand

From the perspective of global demands for ready-to-wear garments, we can see that per capita income is increasing in different countries, so is global population. Clothing is necessary for people, so the demands for ready-to-wear garments have been growing steadily, and in the future, people will gradually have demands for more exquisite products instead of basic clothing demands.

For global supply of ready-to-wear garments, the Taiwan textile industry has been facing challenges from emerging countries, including China, Korea and Southeast Asia since complete cancellation of the global quota system. In face of these areas' competitive advantages in production costs, it has had no choice but to gradually withdraw from the low price markets. Because of political factors, Taiwan is usually excluded from various reciprocal duties. In particular, since Trump took the presidency in the United States, the withdrawal from the Trans-Pacific Partnership Agreement and unfavorable factors of trade competitions have posed more threats to business environment of the Chinese textile industry. In addition, international brands have progressively made supply chains electronic and digital. They have gradually reduced their suppliers. As a result, the space for development of domestic textile traders, small and medium-sized enterprises has been greatly narrowed.

In face of unfair supply competitions from the global textile industries, the Taiwan textile industry must develop mid to high-end functional textiles. Dependent upon R&D and innovation capabilities and advanced manufacturing technologies of the Taiwan textile industry, China will become the main country for international brands to purchase functional textiles. In addition, to respond to globalization and development trends of regional economy, strengthen "product differentiation" to effectively segment markets, and avoid low price competitions, the Taiwan textile industry promotes "industry digitization" and "industry globalization". It has joined the global supply chain system for industry digitization, in hope of cooperating with big international plants for building "best-selling brands".

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The Company integrates its strategic advantages, maintains steady business operations, creates its own characteristic creative business models and deploys global productions through Texray Seamless Value Added Chain (TSVAC). It has modestly diversified competing risks for market supply and demand. In addition, the Company will continuously deepen designs with market value, study development and market development, and develop more new valuable products and services.

(2) Future market growth

With the constant increase of global GDP and population as mentioned above, the global clothing demands maintain long-term steady growth. However, in face of competitions from emerging countries such as China, Korea and Southeast Asia, Taiwan has had no choice but to gradually withdraw from the low price markets and additionally explore profit models. Over the past 7 years, the Taiwan textile industry has successfully been transformed into an international brand with R&D power, and China has become the foremost choice for purchasing functional textiles. It has occupied more than 50% market shares in the global market. In particular, its global market shares in laminated and coated fabric have exceeded 70% and are still increasing.

The Company specializes in sportswear, especially functional textiles, laminated and coated fabric. As one of the leading manufacturers in the textile industry, it is still constantly developing functional ready-to-wear sportswear and fabric. Intelligent wearables. All-weather functional ready-to-wear garments and fabric. Functional casual ready-to-wear sportswear and fabric. High temperature resistant and conductive cloth High-vision functional ready-to-wear garments and fabric. Pressure garments and related functional fabric. Lightweight wear-resistant textiles under greenhouse effects.

(3) Future competitive market niches

In China, a complete range of objective and accountable quality verification and labeling mechanisms have been established for functional textiles. The Company has been certified by China National Laboratory Attestation (CNLA) system. Now, it is actively striving to pass certification of China National Accreditation Board (CNAB). The establishment of this attestation system has enabled Taiwan to sign letters of intent with more than 60 international famous brands/big ready-to-wear garment traders, including Jansport and SaraMax. Through this verification system, information on suppliers of functional textiles and products can be collected. Set up special zones for image promotion of Taiwan functional textiles in international textile exhibitions and impel domestic practitioners to build strategic alliances with international famous sportswear brands (including Nike and NEXT). Plan integration/application of international business information on textiles, take measures to facilitate trade and create favorable trade environment, in hope that Taiwan will become "the world's best purchase center of functional textiles". This is the competition and growth niche shared by the Taiwan textile industry over the past years. As mentioned above, in terms of its main products, the Company will share this opportunity with the Taiwan textile industry in Taiwan, an area with niches and competitions.

In the future, the global textile industry will enter the era of "intelligent clothing", which is not only a common view of practitioners in the Taiwan textile industry, but also the future development trend of the industry.

94

Engaging in the field of "intelligent clothing", the Company is a leading manufacturer recognized in the world. It takes the lead in R&D, design, production and marketing. Once the era of "intelligent ready-to-wear garments" comes, the Company will inevitably bring its capabilities into full play and make all competitors of the textile industry regard it with special respect.

  1. Positive/negative factors of development visions and responses

  2. (1) Positive factors

    • A. In the Taiwan textile industry, the value chain tends to focus on midstream and upstream R&D and innovations. Successively developing textiles with creative complex functions or functional textiles has become the focus for development of the textile industry. Having become an international brand with independent R&D capacity, the Company is recognized for its high-quality and competitive products. It has occupied over 50% market shares in the global textile market. In this field, China still technologically falls behind the Taiwan textile industry 3 to 5 years. The Company's products can be niche products for practitioners of the Taiwan textile industry.

    • B. The Taiwan textile industry is complete. The upstream, midstream and downstream practitioners can be integrated through strategic alliances or regional clusters. With extraordinary responsive mechanisms, the industry promotes development of textiles with added value in combination with interdisciplinary technologies. With advantages in quality and price of functional textiles, the Taiwan textile industry has been internationally certified and promoted, which is helpful for significantly increasing added value of textiles and favorable for promoting cultivation of the industry's value advantages.

    • C. Over the past years, it has been quite prevalent that enterprises have successively built their own brands in the domestic textile and ready-to-wear garment industries. Several clothing plants have engaged in the retail industry. Dependent upon super quality for which international brands have stringent requirements, they have gradually expanded domestic markets. Efforts will be first made to enhance Taiwan's own brands and cooperate with international brands as their agents. In the future, Taiwan will plan to build its own brands in Mainland China. By coordinating retail and design terminals, Taiwan will cut manufacturing costs of ready-to-wear garments and improve its product quality to increase added value of its own brands and product profitability.

  3. (2) Negative factors

    • A. Chinese textiles and ready-to-wear garments are mainly exported at US dollars. These years, the exchange rate between the US dollars and new Taiwan dollars has fluctuated significantly. As a result, the practitioners of the textile and clothing industries face enormous exchange rate risks.

    • B. In the past years, the Taiwan industries have paid more attention to the electronics industry, so domestic talents and academic institutions have competitively and successively turned to study the electronics industry. As textile and trade resources have always been excluded, it is hard to introduce talents into the textile industry.

    • C. In exporting textiles and ready-to-wear garments, Taiwan faces

95

competitions from low production costs of emerging textile industries of other countries. As a consequence, there are fierce market competitions for low prices, which pose great threats to trade performances of the Taiwan textile industry.

(3) Countermeasures

In face of fierce competitions from emerging textile producing countries, the marketing strategies shall first exclude international brands and channels making purchases at low prices. The product development strategies are required to focus on "functional textiles" and future star products, the "intelligent clothing". Internally, active efforts shall be made to reduce costs, improve efficiency and enhance competencies. Externally, it is necessary to continuously develop products with competitive advantages for Taiwan, create diverse business opportunities, develop emerging markets, supply more diversified products, and increase added value of products. In addition, the Company is supposed to speed up its global integration and deployment. It will produce its products in competitive production zones, coordinate order distribution and customer services, include China and emerging South Asian countries in its supply chain resources and fully integrate its resources. Dependent upon abundant human resources of China and Southeast Asian countries, it will develop global textile markets in combination with advanced technologies and trade experience of Taiwan. It can definitely create favorable business conditions.

(II) Usage and Manufacturing Processes for Main Products

Divisions
Major
Products		 Product Descriptions Main Purposes
Weaving
Division		 Fabric Woven
Fabric
Knitted
Fabric		 1. Trade.
2. Purchase greige and sell them
after processing.
3. Purchase greige yarn for selling
after knitting,dyeingand finishing.


Various
materials
of
ready-to-wear garments
Ready-to-
wear
Garment
Division		 Ready-to-w
ear
garments		 Various
knitted and
woven
garments
Purchase finished fabric and sell
them after processing and stitching.

T-shirts,
POLO
shirts,
casual pants and Western
style clothes.

(III) Supply of Major Raw Materials

Divisions Product Name Major Raw Materials Main Sources Status
Weaving
Division		 Weaving/knitting Greige and greige yarn Dong Da Sheng, Nan
Guang, Guan Jie		 Good
Ready-to-wear
Garment
Division
Ready-to-wear
garments		 Different types of knitted
and woven fabric		 Weaving Division Good

96

  • (IV) Customers with 10% or More of Total Procurement/Distribution, Amount and Percentage in Any Given Year within the Most Recent Two Years

1. Information on major suppliers in the past two years

2019 2019 2019 2019 2020 2020 2020 As ofQ1 of 2021 As ofQ1 of 2021
Items
Name		 Amount Percentage
in Total
Net
Supply
(%)		 Relationship
with the
Issuer		 Name Amount Percentage in
Total Net
Supply (%)		 Relationship
with the
Issuer
Name		 Amount Percentage in
Total Net
Supply (%)		 Relationship
with the
Issuer
1 Manufacturer A 248,897 8.53 - Manufacturer A 1,099,743 25.34 - Formosa 72,500 10.53 -
Others 2,669,210
91.47		 - Others 3,240,757 74.66 - Others 616,240 89.47 -
Net Purchase 2,918,107 100.00 Net Purchase 4,340,500 100.00 Net Purchase 688,740 100.00

2. Major customers in the past two years

2019 2019 2019 2019 2020 2020 2020 2020 As ofQ1 of 2021

Name
Amount
Percentage in Total
Net Supply (%)
Relationship
with the
Issuer		 As ofQ1 of 2021

Name
Amount
Percentage in Total
Net Supply (%)
Relationship
with the
Issuer		 As ofQ1 of 2021

Name
Amount
Percentage in Total
Net Supply (%)
Relationship
with the
Issuer		 As ofQ1 of 2021

Name
Amount
Percentage in Total
Net Supply (%)
Relationship
with the
Issuer
Items
Name		 Amount Percentage
in Total Net
Supply (%)
Relationship
with the
Issuer
Name		 Amount Percentage
in Total Net
Supply (%)		 Relationship
with the
Issuer
Name		 Amount Percentage in Total
Net Supply (%)
1 Alfred Dunner Inc 648,470 9.33 - Manufacturer B 3,130,492 36.41 - Manufacturer C 152,243 9.38 -
Others
 6,300,814 90.67 - Others 5,468,095 63.59 - Others 1,472,083 90.62 -
Net sales
 6,949,284 100 Net sales 8,598,587 100 Net sales 1,624,326 100

In 2020, the Company's major portion of orders was for anti-pandemic products, and suppliers and customers were all related to the anti-pandemic products.

Note: Changes in market environment have caused variations in purchase and sales amount and proportion of the customers.

97

(V) Yield in the Past Two Years

Unit: kg; thousand dozens; NTD thousand

Unit: kg; thousand dozens; NTD thousand Unit: kg; thousand dozens; NTD thousand Unit: kg; thousand dozens; NTD thousand
Year
Yield and
Output
Main
Products		 2019 2020
Production
Capacity		 Yield Output Production
Capacity		 Yield Output
Fabric (kg) Note 2 11,214,
478		 2,466,924
Note 2		 10,176,918
1,184,726
Ready-to-wea
r garments
(thousand
dozens)		 Note 2 3,433 4,267,520
Note 2		 3,930
6,107,696
Total - 6,734,444
-		 7,292,423

  • Note: 1. The Company produces and sells fancy yarn, woven fabric and ready-to-wear garments by OEM/ODM. Its woven fabric and knitted products are outsourced for production by orders. They are measured in multiple units, including yard, kilogram and piece, so the production volume cannot be statistically measured. Besides, the products vary in unit and type, so their total yield cannot be measured.

  • The finished products for the Company's own use or OEM/ODM are excluded from the yield and output. The information on production capacity cannot be disclosed because the woven fabric and ready-to-wear garments are outsourced for production.

(VI) Sales Quantity and Value in the Past 2 Years

Unit: NT$ thousand

Unit: NT$thousand Unit: NT$thousand Unit: NT$thousand Unit: NT$thousand
Year
Sales
Quantity
Products		 2019 2020
Domestic Sales Foreign Sales Domestic Sales Foreign Sales
Quantit
y		 Value Quantity Value Quantity Value Quantity Value
Fabric (kg) 2,939,3
27
335,67
7
10,941,1
93
1,265,6
93
3,934,559
449,334
13,693,596
1,584,095
Ready-to-w
ear garments
(thousand
dozens)
4.62		 15,331
3,331		 4,852,7
79
6.18
20,522
4,169
6,073,560
Others
(Note 2)		 160,43
0
319,374 164,642 306,434
Total 511,43
8
Note 1		 6,437,8
46		 634,498
Note 1
7,964,089

Note: 1. The Company has a great variety of products, so the total sales cannot be measured. The Company has its woven fabric and knitted products outsourced for production. It uses multiple units including yard, kilogram and piece, so the sales cannot be measured.

  1. Other revenues are from selling greige yarn, dyeing additive and greige, etc.

98

III. Information on Employees in the Past 2 Years

Year 2019 2020 2021 as of
(March 31, 2021)
Number of Employees Managerial Officer 55 51 48
Production Line Staff
129		 0 0
General Employees 214 194 193
Total 398 245 241
Average Age 40.5 44 44.7
Average Years of Employment 8.9 10.9 11
Educational Attainment Ph.D. Degree - 1 1
Master's Degree 22 21 22
Bachelor's Degree 209 173 169
High School Diploma
82		 39 38
Below 85 11 11

  • IV. Environmental Protection Expenditure

  • The Company has suffered no loss from environmental pollution in the most recent year and as of the date of the annual report: None.

  • Countermeasures: The Company operates all of its existing equipment for pollution prevention and control in accordance with inspection standards of environmental agencies. The HQ implements measures for saving energy and reducing carbon emissions. In 2019, it replaced all of its lighting equipment with LED lights, and turns lights off at noon. Internally, it gives priority to purchase products labeled green, and carries out activities for reducing water consumption.

For equipment in production zones, more importance is attached to their electric power and balance between process water and daily water usage, in order to effectively save energy and use water resources.

  • V. Labor Relations

  • The Company's Employee Benefits, Continuing Education, Training, Retirement Plan and Its Implementation, Labor Contracts and Measures for Safeguarding Employee Rights and Interests

(1) Personnel system

Recruit talents who recognize core value of the Company and grant employees referral rewards; improve the new employee care system: The personnel of the HR Department introduce core value, general information, rules, department heads, products, customers and internal procedures, etc of the Company to the new employees, in order that all new employees of the Company can better integrate themselves into the Company. The Company has appropriate performance, reward and punishment systems. It clarifies its development visions for its employees in combination with organizational and individual objectives.

  • (2) Employee benefits

  • I. Set up an employee welfare committee and set aside 1% employee welfare fund, 0.1% turnover, 40% sales from scraps and 0.5% employee contributions to effectively implement employee benefit programs.

  • II. Send gifts and cash gifts on May Day, Dragon Boat Festival, Mid-Autumn Festival and other festivals; carry out activities such as lottery drawing for

99

Traditional Chinese Spring Festival, monthly birthday celebration and birthday book;

  • III. Annually pay employees year-end bonus.

  • IV. Buy and maintain labor insurance, national health insurance, foreign business travel insurance and group insurance for employees.

  • V. Annually organize two-day travel for employees and encourage employees to travel with their family members, who are given travel discounts.

  • VI. Implement bonus system for long employment. Offer employees with over 10 years of seniority extra bonuses every 5 years.

  • VII. Annually select employees who have made contributions to the Company, pay and issue bonuses and medals to them. Encourage other employees through public praise and reward mechanisms to create positive atmosphere for joint growth inside the Company.

  • VIII. Annually organize physical examinations for employees according to related rules and regularly care about employees' health.

  • IX. Organize sample garment auctions and irregularly offer employees discounts to buy the Company's products.

(3) Continuing education and training

The Company implements complete and effective education and training programs. In combination with its management system, it conveys its management concepts to constantly improves its employees work skills and human resources, to better their work performances and enhance core competencies of the Company.

To improve employees' knowledge, attitudes and skills necessary for transformation of the Company and the industry to drive its innovative growth, the Company has drafted Education and Training Management Procedures. Based on its overall development strategies and provisions of its job specifications on employees' career development and requirements for special missions, it has prepared learning blueprint and timetable for its employees. By integrating its internal and external resources, the Company fosters employees' capabilities necessary for their future development and promotion. Its on-the-job training programs for employees are divided into three major categories, which about management, general knowledge and fields of expertise. The programs are mainly delivered together through on-the-job training and internal training by introducing resources from external training organization, including comprehensive textile institutes and other partners.

(4) Implementation of retirement system

The Company has formulated retirement regulations for its regular employees. For hose employees to which the pension provisions of the Labor Standards Act, the Company monthly sets aside 6% of their monthly salary as their retirement fund, which is paid to the Employee Retirement Fund Supervisory Committee, and the committee will transfer the fund to the special accounts created in the Bank of China in its own name. Each employee with a seniority shorter than 15 years (inclusive) may be granted two base salaries every year of employment, and those with a seniority of more than 15 years will be given a base salary whenever they further work for the Company for another year, but they will be granted no more than 45 base salaries at maximum. The payment of an employee's pension is based on the seniority and the average salary (base salary) of 6 months before the approved retirement date. For employees to which the Labor Pension Act applies,

100

6% of their monthly salary will be set aside and paid to their individual pension accounts created at the Bureau of Labor Insurance.

  • (5) Labor disputes and measures for safeguarding employees' rights and interests

    • A. Quarterly hold a labor meeting, where the employees and the employer's representatives will jointly discuss issues on labor.

    • B. Set an anonymous discussion zone in the portal of the Company, where all employees can convey their opinions at liberty.

    • C. The Employee Welfare Committee handles matters about employee benefits.

    • D. The employer accepts employees' opinions or complaints.

    • E. The employees irregularly report their opinions to their immediate supervisors in any form.

    • F. Hold a symposium at the end of each year to enhance interactions between senior managers and employees. Apart from presenting management strategies of the Company, employees' advices on enterprise management will also be taken. Besides, positive two-way communication mechanism is established to shape friendly workplace cultures.

  • Losses from Labor Disputes in the Most Recent Year and as of the Date of the Annual Report, Estimated Amount of Current and Future Losses, and Responses: None.

VI. Important Contracts

VI. Important Contracts VI. Important Contracts
Major Agreements
Type of
Contract		 Party Contract Duration Contract Content Restrictions
Syndicated loan
contract
11 banks
including Chang
Hwa Bank		 5 years calculated from
January 8, 2020		 Loan amount: NT$2
billion		 None

101

Chapter 6. Financial Information

  • I. Balance Sheet and Statement of Comprehensive Income

  • (I) Consolidated condensed balance sheet - IFRSs

Unit: NT$ thousand

Year
Items		 Year
Items
Financial information of thepast 5years(Note 1)
Financial information of thepast 5years(Note 1)
Financial information of thepast 5years(Note 1)
Financial information of thepast 5years(Note 1)
Financial information of thepast 5years(Note 1)		 Financial
information from
current year to
March 31,2021
2016 2017
(After
restatement)		 2018 2019 2020
Current assets 3,825,039
3,824,938
4,223,367		 3,766,623 4,274,305 4,066,808
Property, plant and
equipment,net		 2,351,559
2,364,498
2,248,269		 2,268,622 2,074,710 2,092,371
Intangible assets,net 273,923
253,957
262,892
254,665
262,983		 265,663
Other assets 305,822
629,518
372,106
695,209		 1,500,922 1,488,018
Total assets 6,756,343
7,072,911
7,106,634		 6,985,119 8,112,920 7,912,860
Current
liabilities		 Before
distribution		 2,971,581
2,798,664
3,047,731		 2,726,369 3,020,975
2,934,814
After
distribution		 2,971,581
2,798,664
3,047,731		 2,726,369
Note 3
Note 4
Non-current
liabilities		 1,393,370
1,797,948
1,523,799		 1,689,587 1,759,945
1,638,907
Total
liabilities		 Before
distribution		 4,364,951
4,596,612
4,571,530		 4,415,956 4,780,920 4,573,721
After
distribution		 4,364,951
4,596,612
4,571,530		 4,415,956
Note 3
Note 4
Equity attributable to
owners ofparent		 2,289,221
2,365,281
2,412,607		 2,445,524 3,188,038 3,175,050
Share capital 2,102,622
2,102,622
2,336,247		 2,336,247 2,336,247 2,336,247
Capital surplus 231,746
231,746
235,155
235,155
234,052		 234,272
Retained
earnings		 Before
distribution		 368,404
288,860
228,457
307,142
473,640		 449,157
After
distribution		 368,404
288,860
228,457
307,142
Note 3
Note 4
Other equity (413,551) (257,947) (387,252) (433,020) 144,099
155,374
Treasurystock - - - - -
Non-controlling
interest		 102,171
111,018
122,497
123,639
143,962
164,089
Total
equity		 Before
distribution		 2,391,392
2,476,299
2,535,104		 2,569,163 3,332,000
3,339,139
After
distribution		 2,391,392
2,476,299
2,535,104		 2,569,163
Note 3
Note 4

Note 1. The financial information listed above has been audited, reviewed and attested by accountants.

Note 2. The figures listed above after distribution are based on the resolution of the general shareholders' meeting of the following year.

Note 3. The plan for earings appropriation for 2020 is to be resolved by the shareholders' meeting. Note 4. Inapplicable to Q1 of 2021.

102

(II) Consolidated condensed balance sheet - IFRSs

Unit: NT$ thousand

Year
Items		 Year
Items
Financial information of thepast 5years(Note 1)
Financial information of thepast 5years(Note 1)
Financial information of thepast 5years(Note 1)
Financial information of thepast 5years(Note 1)
Financial information of thepast 5years(Note 1)		 Financial
information from
current year to
March 31,2021
2016 2017
(After
restatement)		 2018 2019 2020
Current assets 823,714
897,797		 1,591,971 1,149,187 1,870,397 N/A
Property, plant and
equipment(Note 2)		 717,090
643,551
547,726
536,906
436,000		 N/A
Intangible assets,net 3,481
3,817
9,846
5,387
17,732		 N/A
Other assets(Note 2) 3,525,055
3,783,176		 2,946,760 3,089,191 3,656,406 N/A
Total assets 5,069,340
5,328,341		 5,096,303 4,780,671 5,980,535 N/A
Current
liabilities		 Before
distribution		 1,526,925
1,480,059		 1,383,941 1,018,455 1,138,028 N/A
After
distribution		 1,526,925
1,480,059		 1,383,941 1,018,455
Note 3		 N/A
Non-current liabilities 1,253,194
1,483,001		 1,299,755 1,316,692 1,654,469 N/A
Total
liabilities		 Before
distribution		 2,780,119
2,963,060		 2,683,696 2,335,147 2,792,497 N/A
After
distribution		 2,780,119
2,963,060		 2,683,696 2,335,147
Note 3		 N/A
Share capital 2,102,622
2,102,622		 2,336,247 2,336,247 2,336,247 N/A
Capital surplus 231,746
231,746
235,155
235,155
234,052		 N/A
Retained
earnings		 Before
distribution
368,404
288,860
228,457
307,142
473,640		 N/A
After
distribution
368,404
288,860
228,457
307,142
Note 3		 N/A
Other equity (413,551) (257,947) (387,252) (433,020) 144,099
N/A
Treasurystock -
-
-
-		 - N/A
Total
equity		 Before
distribution		 2,289,221
2,365,281		 2,412,607 2,545,524 3,188,038 N/A
After
distribution		 2,289,221
2,365,281		 2,412,607 2,545,524
Note 3		 N/A

Note 1. The financial information listed above has been audited, reviewed and attested by accountants. Note 2. The figures listed above after distribution are based on the resolution of the general shareholders' meeting of the following year.

Note 3. The plan for earnings appropriation for 2020 is to be resolved by the shareholders' meeting.

103

(III) Consolidated condensed income statement-IFRSs

Unit: NTD thousand (excluding earnings per share)

Unit: NTD thousand (excluding Unit: NTD thousand (excluding Unit: NTD thousand (excluding Unit: NTD thousand (excluding Unit: NTD thousand (excluding earnings per share)
Year
Items
Financial information of thepast 5years(Note 1)		 Financial
information from
current year to
March 31,2021
2016 2017
(After
restatement)		 2018 2019 2020
Sales Revenue 7,109,396
7,259,347		 7,417,890 6,949,284 8,598,587 1,624,326
Gross Profit 1,270,704
1,425,576		 1,314,695 1,178,487 2,216,480 355,510
OperatingIncome 55,850
76,870
(63,188)		 (60,858) 432,561
38,461
Non-operating
income and
expenses		 (126,775)
(53,068)
113,582
21,632		 (166,059) (14,280)
Profit before income
tax		 (70,925)
23,802
50,394
(39,226)		 266,502
24,181
Income from
Continuing
Operations		 (162,643)
(70,166)
(43,749)		 (172,458) 164,775
(22,627)
Loss from
Discontinued
Operations		 -
-
-
-
-		 -
Net Income(Loss) (162,643) (70,166) (43,749) (172,458) 164,775
(22,627)
Other
comprehensive
income (loss) for the
current period (net
amount after tax)		 (55,783)
152,578
(132,912)
201,547		 575,900
11,206
Total comprehensive
income for theyear
(218,426)
82,412
(176,661)
29,089		 740,675
(11,421)
Net Income
Attributable to
Shareholders of the
Parent		 15,269
(76,597)
(60,527)		 (171,877) 168,120
(24,483)
Net Income
Attributable to
Non-controlling
Interests		 (177,912)
6,431
16,778
(581)
(3,345)		 1,856
Comprehensive
Income Attributable
to Owners of the
Parent		 (13,298)
76,060
(190,157)
32,979		 743,617
(13,208)
Comprehensive
Income Attributable
to Non-controlling
Interests		 (205,128)
6,352
13,496
(3,890)
(2,942)		 1,787
Earningsper Share 0.07
(0.36)		 (0.29) (0.74) 0.72
(0.10)

Note 1: The financial information listed above has been audited, reviewed and attested by accountants.

104

(IV) Consolidated Condensed Income Statement - IFRSs

Unit: NTD thousand (excluding earnings per share)

Year
Items
Financial information of thepast 5years(Note 1)
Financial information of thepast 5years(Note 1)
Financial information of thepast 5years(Note 1)
Financial information of thepast 5years(Note 1)
Financial information of thepast 5years(Note 1)		 Financial
information from
current year to
March 31,2021
2016 2017
(After
restatement)		 2018 2019 2020
Sales Revenue 2,946,715
3,066,133
3,550,765		 2,581,433 5,626,250 N/A
Gross Profit 470,049
412,014
445,852
444,662		 1,318,976 N/A
OperatingIncome 121,200
13,154
29,322
60,555
405,436		 N/A
Non-operating
income and
expenses		 (80,069)
(67,890)
(76,715)		 (196,650) (187,262) N/A
Profit before income
tax		 41,131
(54,736)
(47,393)		 (136,095)
218,174
N/A
Income from
Continuing
Operations		 15,269
(76,597)
(60,527)		 (171,877)
168,120
N/A
Loss from
Discontinued
Operations		 -
-
-
-
-		 N/A
Net Income(Loss) 15,269
(76,597)		 (60,527) (171,877) 168,120
N/A
Other
comprehensive
income (loss) for the
current period (net
amount after tax)		 (28,567)
152,657
(129,630)
204,856
575,497
N/A
Total comprehensive
income for theyear
(13,298)
76,060
(190,157)
32,979
743,617
N/A
Net Income
Attributable to
Shareholders of the
Parent		 15,269
(76,597)
(60,527)		 (171,877)
168,120
N/A
Net Income
Attributable to
Non-controlling
Interests		 -
-
-
-
-		 N/A
Comprehensive
Income Attributable
to Owners of the
Parent		 (13,298)
76,060
(190,157)
32,979
743,617
N/A
Comprehensive
Income Attributable
to Non-controlling
Interests		 -
-
-
-
-		 N/A
Earningsper Share 0.07
(0.36)		 (0.29) (0.74) 0.72
N/A

Note 1: The financial information listed above has been audited, reviewed and attested by accountants.

105

(V) Names and audit opinions of CPAs

Year AccountingFirm CPA AccountingOpinions
2016 KPMG CHIEN,Ti Nuan,CHIH,Shih Chin Unmodified opinions
2017 KPMG CHIEN,Ti Nuan,CHIH,Shih Chin Unmodified opinions
2018 KPMG CHIEN,Ti Nuan,CHIH,Shih Chin Unmodified opinions
2019 KPMG CHIEN,Ti Nuan,CHIH,Shih Chin Unmodified opinions

106

II. Financial Analysis for the Past 5 Years

(I) Analysis on consolidated financial standing – IFRSs

Year
Item (Note 2)		 Year
Item (Note 2)
Financial analysis for the last five years
Financial analysis for the last five years
Financial analysis for the last five years
Financial analysis for the last five years
Financial analysis for the last five years		 As of March 31,
2021
2016 2017
(After
restatement)		 2018 2019 2020
Financial
Structure
(%)
Debt ratio		 64.61 64.99 64.33 63.22 58.93 57.80


Ratio of long-term
capital to property,
plant and equipment		 170.37 181.26 175.99 188.57 234.47 238.92
Solvency
(%)		 Current ratio 128.72 136.67 138.57 138.16 141.49 138.57

Quick ratio		 81.53 88.78 85.66 85.13 92.03 93.27
Interest coverage ratio (0.04) 1.29 1.56 0.61 3.76 2.21
Operating
performa
nce		 Accounts receivable
turnover(times)		 6.48 6.27 6.63 6.42 7.85 5.90
Average collection
days		 56.32 58.21 55.05 56.85 46.49 61.86
Inventory turnover
(times)		 4.26 4.70 4.62 4.22 4.83 3.97
Accounts payable
turnover(times)		 9.80 8.92 8.15 7.73 8.97 7.15
Average turnover days 85.68 77.66 79.00 86.49 75.57 91.94
Property, plant and
equipment turnover
(times)		 3.20 3.08 3.22 3.08 3.96 3.12
Total assets turnover
(times)		 1.05 1.03 1.04 0.99 1.06 0.82
Profitabil
ity		 Return on total assets
(%)		 (1.55) (0.14) 0.40 (1.30) 3.21 (0.08)
Return on equity (%) (6.33) (2.88) (1.75) (6.76) 5.58 (0.68)
Pre-tax profit to
paid-in capital (%)
(Note 6)		 (3.37) 1.13 2.16 (1.68) 11.41 1.04
Netprofit margin(%) (2.29) (0.97) (0.59) (2.48) 1.92 (1.39)
Earnings per share
(NTD)		 (0.07) (0.36) (0.29) (0.74) 0.72 (0.01)
Cash
flows		 Cash flow ratio (%) 16.33 5.24 (3.42) 4.84 23.48 (1.17)
Cash flow adequacy
ratio(%)		 29.24 36.12 27.74 38.52 86.52 38.52
Cash flow
reinvestment ratio(%)		 9.07 2.66 (1.84) 2.40 2.49 (0.66)
Leverage
Operating leverage		 4.88 3.84 (2.40) (3.32) 1.59 2.55

Financial leverage		 (4.53) 18.83 0.41 0.38 1.29 2.07
Description of changes in various financial ratios by at least 20% in the last two years:
1. The increase in operating performance and profitability in the current period was mainly due to the acquisition of the orders for
protective suits and quarantine suits in 2020; thus, the net profit was higher than that in 2019. As a result, the operating
performance and profitability in 2020 increased compared with that in 2019.
2. The increase in cash flow ratio and leverage was due to a 317% increase in cash inflow from operating activities during the
currentperiod compared with that in 2019.

Note 1. The financial information listed above has been audited, reviewed and attested by accountants.

107

Note 2. The formulas of the above table are as follows:

  1. Financial structure

    • (1) Debt ratio = Total liabilities/Total assets.

    • (2) Ratio of long-term capital to property, plant, and equipment = (Total equity + Non-current liabilities)/Net value of property, plant, and equipment.

  2. Solvency

    • (1) Current ratio = Current assets/Current liabilities.

    • (2) Quick ratio = (Current assets - Inventories - Prepaid expenses)/Current liabilities.

    • (3) Interest coverage ratio = Income before tax and interest expenses/Interest expenses.

  3. Operating ability

    • (1) Accounts receivable (including accounts receivable and notes receivable generated from operations) turnover rate = Net sales/Average balance of accounts receivable (including accounts receivable and notes receivable generated from operations) for each period.

    • (2) Average days for cash receipts = 365/Accounts receivable turnover rate.

    • (3) Inventory turnover rate = Cost of goods sold/Average inventories.

    • (4) Accounts payable (including accounts payable and notes payable generated from operations) turnover rate = Cost of goods sold/Average balance of accounts payable (including accounts payable and notes payable generated from operations) for each period.

    • (5) Average days for sale of goods = 365/Inventory turnover rate.

    • (6) Real estate, plants and equipment turnover rate ＝ Net sales ／ Average real estate, plants and equipment, net..

    • (7) Total assets turnover rate = Net sales/Average total assets.

  4. Profitability

    • (1) Return on assets = [Income after tax + Interest expenses x (1 - tax rate)]/Average total assets.

    • (2) Return on equity = Income after tax/Average total equity.

    • (3) Net profit margin = Income after tax/Net sales.

    • (4) Earnings per share = (Income attributable to owners of the parent - preferred stock dividends)/Weighted average number of shares issued. (Note 4)

  5. Cash flows

    • (1) Cash flow ratio = Net cash flows generated from operating activities/Current liabilities.

    • (2) Cash flow adequacy ratio = Five-year sum of net cash flows generated from operating activities/Five-year sum of capital expenditure, inventory additions and cash dividends).

    • (3) Cash reinvestment ratio = (Net cash flows from operating - cash dividends)/(Gross amount of property, plant, and equipment + Long term investment + Other non-current assets + Working capital). (Note 5)

  6. Leverage

    • (1) Operating leverage = (Net operating revenue - Variable operating costs & expenses)/Operating income (Note 6).

    • (2) Financial leverage = Operating income/(Operating income - Interest expenses).

  7. Note 3. Special attention shall be paid to the following matters when using the calculation formula of earning per share above:

  8. Shares outstanding is based on weighted average shares, and not based on year end shares

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outstanding.

  1. Cash offerings or treasury stock transactions are considered in calculating weighted average shares.

  2. Earnings appropriation or reserves to paid in capital shall be calculated and adjusted accordingly.

  3. If preferred shares are cumulative non-convertible preferred shares, dividends shall be subtracted (regardless of whether they are paid out in dividends), from after tax net profit. If preferred shares are non-cumulative, in the event of net profits, preferred shares shall be subtracted after tax, but no adjustments needed if there are losses.

  4. Note 4. Special attention should be paid to the following when measuring cash flow analysis:

  5. Cash flows from operating activities refers to operating cash flows.

  6. Capital expenditures are from the annual cash flow statements on capital expenditure outflows.

  7. Inventory increases are from period end balance greater than period beginning balances, if inventories are less, then zero is applied.

  8. Cash dividends includes common stock and preferred shares dividends.

  9. Gross amount of property, plant, and machinery balance is their total amount determined before subtracting accumulative depreciation.

  10. Note 5. The issuer shall classify the operating costs and operating expenses as fixed or variable as per their nature. If it involves estimation or subjective judgment, they are classified based on rationality and consistency.

  11. Note 6. Where Corporation shares have no par value or where the par value per share is not NTD 10, any -

  12. calculations that involve paid in capital and its ratio shall be replaced with the equity ratio belonging to the owner of the parent Corporation of the asset balance sheet.

109

－ (II) Analyses on individual financial standing International Financial Reporting Standards (IFRSs)

Standards (IFRSs)
Items (Note Year (Note 1)
3)
Financial Analysis for the Past 5 Years		 2021 (As of
March 31,
2020)
2016 2017
(After
restatement)		 2018 2019 2020
Financial
Structure
(%)		 Debt ratio 54.84 55.61 52.66 48.85 46.69 N/A
Ratio of long-term capital
to property, plant, and
equipment
529.08		 565.66 623.26 693.73 995.47 N/A
Solvency
(%)		 Current ratio 53.95 60.66 115.03 112.84 164.35 N/A
Quick ratio 32.00 40.49 85.97 70.32 111.39 N/A
Interest coverage ratio 2.34 (0.46) (0.14) (3.07) 7.40 N/A
Operating
Ability		 Accounts receivable
turnover rate(times)		 8.26 8.67 7.86 6.64 14.38 N/A
Average days for cash
receipts		 44.18 42.09 46.43 54.96 25.38 N/A
Inventory turnover rate
(times)		 10.34 10.67 12.94 10.61 13.14 N/A
Accounts payable
turnover rate(times)		 8.07 8.83 8.12 6.65 13.38 N/A
Average days for sale of
goods		 35.29 34.20 28.20 34.40 27.77 N/A
Property, plant, and
equipment turnover rate
(times)		 4.40 4.51 5.96 5.26 11.57 N/A
Total assets turnover rate
(times)		 0.58 0.58 0.68 0.60 0.94 N/A
Profitability Return on total assets(%) 0.81 (0.87) (0.52) (2.94) 3.63 N/A
Return on equity (%) 0.68 (3.29) (2.53) (7.08) 5.97 N/A

Pre-tax profit to paid-in
capital (%) (Note 6)		 1.96 (2.60) (2.03) (5.83) 9.34 N/A
Netprofit margin(%) 0.52 (2.50) (1.70) (6.03) 2.99 N/A
Earningsper share(NT$) 0.07 (0.36) (0.29) (0.74) 0.72 N/A
Cash Flows Cash flow ratio(%) 17.63 4.24 (15.04) 15.23 21.79 N/A

Cash flow adequacy ratio
(%)		 226.75 139.01 106.83 178.94 174.14 N/A
Cash reinvestment ratio
(%)		 6.84 1.63 1.56 3.86 3.83 N/A
Leverage Operatingleverage 1.21 3.51 2.06 1.58 1.07 N/A
Financial leverage 1.34 (0.54) (2.39) 2.23 1.09 N/A
Reasons for any changes in financial ratios up to 20% in the past two years:
1. The increase in operating performance and profitability in the current period was mainly due to the acquisition of the
orders for protective suits and quarantine suits in 2020; thus, the net profit was higher than that in 2019. As a result,
the operating performance and profitability in 2020 increased compared with that in 2019.
2. The increase in cash flow ratio and leverage was due to a 60% increase in cash inflow from operating activities
duringthe currentperiod compared with that in 2019.

Note 1. The financial information listed above has been audited, reviewed and attested by accountants. Note 2. The formulas of the above table are as follows:

  1. Financial structure

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

  3. (2) Ratio of long-term capital to property, plant, and equipment = (Total equity + Non-current liabilities)/Net value of property, plant, and equipment.

  4. Solvency

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

110 

  - (2) Quick ratio = (Current assets - Inventories - Prepaid expenses)/Current liabilities.

  - (3) Interest coverage ratio = Income before tax and interest expenses/Interest expenses.

  1. Operating ability

    • (1) Accounts receivable (including accounts receivable and notes receivable generated from operations) turnover rate = Net sales/Average balance of accounts receivable (including accounts receivable and notes receivable generated from operations) for each period.

    • (2) Average days for cash receipts = 365/Accounts receivable turnover rate.

    • (3) Inventory turnover rate = Cost of goods sold/Average inventories.

    • (4) Accounts payable (including accounts payable and notes payable generated from operations) turnover rate = Cost of goods sold/Average balance of accounts payable (including accounts payable and notes payable generated from operations) for each period.

    • (5) Average days for sale of goods = 365/Inventory turnover rate.

    • (6) Real estate, plants and equipment turnover rate ＝ Net sales ／ Average real estate, plants and equipment, net..

    • (7) Total assets turnover rate = Net sales/Average total assets.

  2. Profitability

    • (1) Return on assets = [Income after tax + Interest expenses x (1 - tax rate)]/Average total assets.

    • (2) Return on equity = Income after tax/Average total equity.

    • (3) Net profit margin = Income after tax/Net sales.

    • (4) Earnings per share = (Income attributable to owners of the parent - preferred stock dividends)/Weighted average number of shares issued. (Note 4)

  3. Cash flows

    • (1) Cash flow ratio = Net cash flows generated from operating activities/Current liabilities.

    • (2) Cash flow adequacy ratio = Five-year sum of net cash flows generated from operating activities/Five-year sum of capital expenditure, inventory additions and cash dividends).

    • (3) Cash reinvestment ratio = (Net cash flows from operating - cash dividends)/(Gross amount of property, plant, and equipment + Long term investment + Other non-current assets + Working capital). (Note 5)

  4. Leverage

    • (1) Operating leverage = (Net operating revenue - Variable operating costs & expenses)/Operating income (Note 6).

    • (2) Financial leverage = Operating income/(Operating income - Interest expenses).

  5. Note 3. Special attention shall be paid to the following matters when using the calculation formula of earning per share above:

  6. Shares outstanding is based on weighted average shares, and not based on year end shares outstanding.

  7. Cash offerings or treasury stock transactions are considered in calculating weighted average shares.

  8. Earnings appropriation or reserves to paid in capital shall be calculated and adjusted accordingly.

  9. If preferred shares are cumulative non-convertible preferred shares, dividends shall be subtracted (regardless of whether they are paid out in dividends), from after tax net profit. If preferred shares are non-cumulative, in the event of net profits, preferred shares shall be

111

subtracted after tax, but no adjustments needed if there are losses.

Note 4. Special attention should be paid to the following when measuring cash flow analysis:

  1. Cash flows from operating activities refers to operating cash flows.

  2. Capital expenditures are from the annual cash flow statements on capital expenditure outflows.

  3. Inventory increases are from period end balance greater than period beginning balances, if inventories are less, then zero is applied.

  4. Cash dividends includes common stock and preferred shares dividends.

  5. Gross amount of property, plant, and machinery balance is their total amount determined before subtracting accumulative depreciation.

  6. Note 5. The issuer shall classify the operating costs and operating expenses as fixed or variable as per their nature. If it involves estimation or subjective judgment, they are classified based on rationality and consistency.

  7. Note 6. Where Corporation shares have no par value or where the par value per share is not NTD 10, any calculations that involve paid-in capital and its ratio shall be replaced with the equity ratio belonging to the owner of the parent Corporation of the asset balance sheet.

  8. III. Audit Committee's Audit Report for the Most Recent Year's Financial Statements: please refer to Page112.

  9. IV. Financial Statements for the Most Recent Year: Please refer to Page 127~206.

  10. V. Individual Consolidated Financial Statements Duly Audited by The Certified Public Accountants in the Most Recent Year: please refer to Page 207~287.

  11. VI. Effects of Any Financial Difficulty of the Company and Its Affiliates on Financial Position of the Company in the Most Recent Year and as of the Date of the Annual Report : None.

112

Audit Committee's Report

Approved

The Audit Committee has completed the review of the 2020 financial statements (including parent company only financial statements and consolidated financial statements), business report for 2020 and earnings distribution plan audited by CPAs Kuo-yang Tseng and Ti-nuan Chien from KPMG in accordance with the laws, and found no inconsistencies. Please review the Report which has been prepared in accordance with Article 219 of the Company Act.

To the 2021 General Shareholders' Meeting of TEX-RAY INDUSTRIAL CO., LTD.

Audit Committee of TEX-RAY INDUSTRAIL CO., LTD. Convened by: Lee Mu Jung

March 26,2021

113

Chapter 7. Review and Analysis of Financial Position and Financial Performance, and Listing of Risks

I. Financial Position

Comparative Analysis of Financial Position

Unit: NT$thousand Unit: NT$thousand
Year
Items
2019		 2020 Difference
Amount %
Current assets 3,766,623 4,274,305 507,682 13.48%
Property, plant and
equipment,net
2,268,622		 2,074,710 (193,912) (8.55%)
Intangible
assets,
net
254,665		 262,983 8,318 3.27%
Other assets 695,209 1,500,922 805,713 115.90%
Total assets 6,985,119 8,112,920 1,127,801 16.15%
Current liabilities 2,726,369 3,020,975 294,606 10.81%
Non-current
liabilities		 1,689,587 1,759,945 70,358 4.16%
Total liabilities 4,415,956 4,780,920 364,964 8.26%
Share capital 2,336,247 2,336,247 - -
Capital surplus 235,155 234,052 (1,103) (0.005%)
Retained earnings 307,142 473,640 166,498 54.21%
Other equity (433,020) 144,099 577,119 (133.28%)
Non-controlling
interest		 123,639 143,962 20,323 16.44%
Total
shareholder
equity
2,569,163		 3,332,000 762,837 29.69%
Notes:
Increase in other assets: Mainly due to the reclassification of the property, plant and equipment in
Tainan into investment property in 2020.
Increase in retained earnings: In 2020, due to orders for protective suits and quarantine suits
obtained, revenue and retained earnings increased.
Increase in other equity: Due to the reclassification of the property, plant and equipment in Tainan
into investment property in 2020, resulting in an increase in property revaluation of
NT$761,166,000.

114

II. Financial Performance

Comparative Analysis of Business Results

Unit: NT$ thousand

Year
Items
2019		 2020 % of change Net sales
Operatingcosts 6,949,284
8,598,587
1,649,303
23.73%
Operatingcosts 5,770,797
6,382,107
611,310
10.59%
Gross Profit 1,178,487
2,216,480
1,037,993
88.08%
Operatingexpenses 1,239,345
1,783,919		 544,574
43.94%
Net operatingincome (60,858) 432,561
493,419		 (810.77%)
Non-operating income and
expenses		 21,632
(166,059)
(187,691)
(867.65%)
Net income before tax from
continuing operating
department		 (39,226)
266,502
305,728
(779.40%)
Income tax expense 133,232
101,727
(31,505)		 (23.65%)
Profit for theyear (172,458) 164,775
337,233
(195.55%)
Other comprehensive income
(after tax)		 201,547
575,900
374,353
185.74%
Total comprehensive income
for theyear		 29,089
740,675
711,586
2446.24%
Net profit attributable to the
owner of theparent company		 (171,877)
168,120
339,997
(197.81%)
Total comprehensive income
(loss) attributable to the owner
of theparent company		 32,979
743,617
710,638
2154.82%
Notes:
1. Analysis of non-operating income and expenditure: In 2020, due to orders for protective suits
and quarantine suits obtained, operating revenue in the current period increased compared with
that in 2019.
2. Operating expenses: The expected credit impairment loss of NT$ 155,294,000 was recognized,
and the operating expenses related to protective suits and quarantine suits were recognized.
3. Non-operating income and expenses: In 2020, NT$67,859,000 for the Yancheng Plant and
NT$4,000 for Tainan Plant No. 1 were recognized in losses of property, plant and
equipment.Analysis of the net profit attributable to the owners of the parent company: ue to
orders for protective suits and quarantine suits obtained in 2020, the net profit for the current
period increased compared with that in 2019.

Estimated Sales Quantity, Estimation Basis, Potential Effects upon Future Financial Affairs of the Company and Response Plan:

Company and Response Plan:

Impacted by the outbreak of COVID-19 in 2020, the global apparel market exhibited pessimistic growth, and the market demands drastically declined in Europe and America. Brands successively required supply suspension or delay of the supply chain. They even canceled orders. The Taiwan textile industry has been seriously impacted as well. In addition, brands have become to reflect upon risks of centralized production. They speed up their re-planning of orders and production bases. All these factors have caused changes in pattern of the global textile supply chain. For the Taiwan textile industry, this is not only a crisis, but also an opportunity.

In the past 20 years, the Taiwan textile industry has become an important place for R&D and production of functional fabric in the world dependent upon its advantages in R&D innovations and

115

flexible production. However, the creative applications of functional textiles have been subject to bottlenecks these years. The products become more and more homogeneous among manufacturers. This phenomenon has become a major hidden trouble in the textile industry. Only if the Taiwan functional textiles are upgraded and transformed faster can they become more competitive in the markets. The global epidemic of COVID-19 in 2020 impacted the Company's business performances in Q1 and Q2. The orders in June, July and August have been fully recovered and the impacts of the epidemic have been minimized. Besides, the Company reviews its manufacturers from time to time. It will adopt stop loss strategy for inefficient and non-profit organizations. It will thoroughly review its business operations and take initiatives to seize opportunities when they come.Although faced with daunting challenges in 2020, the Company will strive to:

  1. Strengthen the management of the global supply network to meet customers' demand for tariff-free and rapid supply to achieve global supply upon placement of orders.

  2. Further develop the regional market and provide more diverse products in local domestic markets to achieve the regional economy in the operational goals.

  3. Strengthen R&D and design capabilities and optimize market value and product quality to increase profits.

  4. Strengthen the development of eco-friendly and functional textiles with the aim of achieving technological innovation and developing potential brands.

  5. Adjust the business model, streamline the organizational structure and operating procedures, and restructure the organization to eliminate poorly managed units to reduce costs effectively.

  6. Develop positive relationship with affiliates to expand production capacity and increase economic benefits.

116

III. Cash Flow

Cash Flow Analysis

Unit: NT$ thousand

Cash Flow Analysis Unit: NT$thousand Unit: NT$thousand
Cash at
Beginning
of Year		 Net Cash Flows
from Operating
Activities		 Cash
Flows
Used		 Effect of
exchange
rate
changes on
cash and
cash
equivalents
Cash Surplus
(Inadequacy)		 Remedial Measures for Cash
Inadequacy
Investment
Plan		 Financial
Plan
843,457
709,204		 (125,612) (58,731) 1,368,318
-		 -
Note 1. Analysis of variance in cash flow in current year:
(1) Operating activities: 709,204
(2) Investments: (219,987)
(3) Financing: 94,375
2. Remedies for cash inadequacy and liquidity analysis: None
3. Analysis on cash liquidityin the upcoming year: None
Cash at
Beginning
of Year		 Expected net
cash flow
from operating
activities of
the whole year

Expected
cash
outflow of
the whole
year		 Effect of
exchange
rate
changes on
cash and
cash
equivalents		 Cash Surplus
(Inadequacy)		 Remedial Measures for Cash
Inadequacy
Investment
Plan		 Financial
Plan
1,368,318
431,634
(195,569)		 (75,014) 1,529,368
-		 -

  • IV. Effect on Financial Operations of Any Major Capital Expenditures during the Most Recent Fiscal Year

  • (I) The subsidiary Jiangsu Tex-Ray Fiber Technology Co., Ltd. planned to expand its sewage treatment equipment in the Yancheng production area this year using its own funds while with some funds from banks.

  • (II) Estimated potential benefits:

After the expansion is completed, the plant can be leased out to obtain rental income.

V. Reinvestment Policy for the Most Recent Fiscal Year, Main Reasons for Profits/Losses Generated Thereby, Plan for Improving Reinvestment Profitability, and Investment Plans for Upcoming Year: The Company made no major investment in 2020, expected to have no major investment plan for 2021 either.

117

VI. Items of Risk Evaluation:

  • (I) Effects of Interest Rate/Exchange Rate Fluctuations and Inflation in the Most Recent Fiscal Year upon Profits (Losses) of the Company and Future Responses:

  • Recently, interest has begun to rise. While maintaining an appropriate financial structure, the Company has applied for syndicated bank loans amounting to NT$1.4 billion, in order to obtain stable capital sources.

  • Exchange gain or loss in the past 2 years

Recent Fiscal Year upon Profits (Losses) of the Company and Future Responses:
1. Recently, interest has begun to rise. While maintaining an appropriate financial
structure, the Company has applied for syndicated bank loans amounting to
NT$1.4 billion, in order to obtain stable capital sources.
2. Exchange gain or loss in the past 2 years		 Recent Fiscal Year upon Profits (Losses) of the Company and Future Responses:
1. Recently, interest has begun to rise. While maintaining an appropriate financial
structure, the Company has applied for syndicated bank loans amounting to
NT$1.4 billion, in order to obtain stable capital sources.
2. Exchange gain or loss in the past 2 years		 Recent Fiscal Year upon Profits (Losses) of the Company and Future Responses:
1. Recently, interest has begun to rise. While maintaining an appropriate financial
structure, the Company has applied for syndicated bank loans amounting to
NT$1.4 billion, in order to obtain stable capital sources.
2. Exchange gain or loss in the past 2 years
Unit: NT$thousand
Year
Items
2019		 2020
Net exchangegain(loss) (4,844) (51,524)
Ratio of net exchangegain(loss)to net revenue (0.0007) (0.0060)

In order to avoid the potential impact of exchange rate fluctuations on profit, the Company has taken the following response measures:

  • (1) For the fund transfer in foreign currency, international purchases are accounted as local purchases, and the payment of foreign exchange expenses shall be from the Company's own foreign exchange income, in order to effectively reduce exchange risks.

  • (2) Collect information on exchange rate fluctuations anytime to fully understand exchange rate fluctuations, determine the time for converting NTD or depositing them in a foreign exchange account.

  • (3) Improve product quality and added value. Get dedicated to controlling costs, increasing gross profits of products and reducing effects of exchange rate fluctuations upon gross profit.

  • The Company conducts its businesses mainly by receiving orders and outsourcing production. The inflation cost and risk can be properly transferred to suppliers or reflect order prices. In addition, decentralize production by international purchases, to effectively avoid impacts of regional inflation.

  • (II) Policy on high-risk investments, highly leveraged investments, loans to other parties, endorsements/guarantees, and derivatives transactions, main reasons for the profit (loss) generated thereby, and future responses:

  • In 2020, the Company neither made high-risk and highly leveraged investments nor traded derivatives.

  • In 2020, all objects of the Company's loans were its affiliates directly engaging in business management, and the affiliates borrowed the money from the Company for short-term operations. The loans were mainly granted for the affiliates' short-term financial needs and would be easily repaid by profits from future business operations, in order to avoid excess capital investments and reduce troubles of loan repayment. They had no material impacts upon profits (losses) of the Company.

  • The Company provided endorsements/guarantees for its affiliates directly engaging in its business management in 2020, because such affiliates had to applied to banks for issuing loan guarantees for opening and working capital line. In terms of finance, the affiliates were required to independently bear the working capital cots, so the parent company provided guarantees for the affiliates in a short term and enabled the affiliates to gradually establish business relations with banks, in order to keep financially independent in a long term. The Company has

118

directly engaged in business management. The guarantee risks were equivalent to operating risks. On the premise of guaranteeing the Company's overall business operations and financial standing, the Company will gradually reduce the guaranteed amount and ratio.

(III) Future R&D Plans and Expected R&D Spending

Future R&D Plans and Expected R&D Spending
Main R&D plans for 2020~2025 Expected investments
New product R&D and function extension of
functional products

Sport series

Environment-friendly series

Medical protection series

Intelligent textile series		 Revenue achievement rate:
0.5~1.5%
Professional team

Improve ODM team

Build TD team		 Internal training
Evaluation and introduction of automation
equipment

Integrate global patterning and coding
systems

Automatic warehousing

Automatic markingmachines		 NT$35,000 thousand
Information system

Global ERP and production system
optimization

Corporate BI introduction

Upgrade of information securitysystem		 NT$45,000 thousand

  • (IV) Impacts of changers in domestic and foreign important policies and laws on financial operations of the Company in the most recent year and responses: None.

  • (V) Effects of science, technology and industry changes on financial operations of the Company and responses: None.

  • (VI) Effects of changes in company image upon corporate crisis management and responses:

Since its listing in December 1998, the Company has lawfully appointed spokespersons, proxy spokespersons and full-time personnel for information disclosure. It provides its investors with real-time and transparent business information.

  • (VII) Expected benefits and possible risks associated with M&A and responses: None.

  • (VIII) Expected benefits and possible risks associated with plant expansion, and responses: none.

  • (IX) Risks associated with consolidation of sales or purchases, and responses:

The Company mainly sold its products to international brands and big factories, so the risk for receiving payments was low. It also bought and maintained appropriate insurances, so it never suffered loss from major credit losses.

  • (X) Effects of significant equity transfer or exchange by directors, supervisors or

119

shareholders holding over 10% shares upon the Company, risks and responses: None.

  • (XI) Impact and risk associated with changes in management rights, and countermeasures: N/A

  • (XII) Litigation and non-litigation matters:

    1. Settled or pending litigation, non-litigation or administrative proceedings involving the Company, its directors, supervisors, President, substantive owner, shareholders holding over 10% shares and affiliates: Zhengwei Xingye Co., Ltd., as a subsidiary of the Company, is involved in some administrative proceedings. For details, please refer to Page194 of the financial report attached hereunder or the disclosure on contingent liabilities.

    2. Involvement of the Company's directors, supervisors, managerial officers, or shareholders holding more than 10% of the Company's shares in affairs specified in Article 157 of the Securities and Exchange Act and the Company's current handling status in the past two years and as of the date of the Annual Report: None.

    3. Financial difficulties or credit loss of the Company's directors, supervisors, managerial officers and shareholders holding over 10% of the Company's shares in the past two years and as of the date of the Annual Report: None.

    4. Others: None.

  • (XIII) Other important risks: None.

  • VII. Other important matters: None.

120

Chapter 8. Special Disclosure

  • I. Information on Affiliates:

  • (I) The Consolidated business reports of the affiliates

    1. Organizational chart of the affiliates

==> picture [320 x 618] intentionally omitted <==

121

2. Basic information of the affiliates

Names of Affiliates Currenc
y		 Paid in Capital (NT$)
Places		 Principal Business
Activities
Belize USD 32,348,213
Belize		 HoldingCompany
Cayman USD 33,542,722
Cayman		 HoldingCompany
TRM (Mexico) PESOS 427,321,500
Mexico		 Dyeing and
finishingfactory
AMRAY (Mexico) PESOS 80,847,394
Mexico		 Ready-to-wear
garment
processing
TRLA USD 2,518,425
U.S.A.		 Marketing and
trade
Z-PLY USD 50,000
U.S.A.		 Marketing and
trade
King's TWD 208,269,870
Taichung		 Metal Fiber
FLYNN USD 9,100,000
SAMOA		 HoldingCompany
Mingfang
International		 TWD 45,336,000
Taipei		 Holding Company
TRS SZL 12,417,938
eSwatini		 Ready-to-wear
garment
processing
Texray (Shanghai) CNY 60,749,260
Shanghai		 Textile
warehousing and
trading
Yancheng Texray
(Shanghai)		 CNY 9,000,000 Yancheng Textile
warehousing and
trading
TEXRAY(BN) USD 60,579,330
SAMOA		 HoldingCompany
TEXRAY(VN)-LA VND 295,096,268,000
Vietnam		 Ready-to-wear
garmentplant
TRCA USD 2,000,000 Cambodia Ready-to-wear
garmentplant
GOOD TIME VND 146,223,419,336
Vietnam		 Ready-to-wear
garment
processing
KASUMI SZL 1,657,400
eSwatini		 Ready-to-wear
garment
processing
TQM SZL 132,525,183
eSwatini		 Dyeing/finishing
UIW SZL 12,031,000
eSwatini		 Ready-to-wear
garment
processing
J.M SZL 6,242,977
eSwatini		 Print processing
factory for
ready-to-wear
garments
MSWATI USD 37,052,330
Mauritius		 HoldingCompany
Texray Yancheng
Fiber		 CNY 357,560,939 Yancheng Woven fabric
dyeing, finishing
and lamination
Jiangsu Texray CNY 33,385,000 Yancheng Ready-to-wear
122
Names of Affiliates Currenc
y		 Paid in Capital (NT$)
Places		 Principal Business
Activities
YanchengGarments garmentplant
Zhengwei TWD 5,000,000
Taipei		 GJB.302
TST TWD 99,000,000 Changhua Machine
manufacturing
TAICHUANG HKD 100,000 Hong Kong Machine
marketing and
trade
EXC TWD 63,300,000
Taipei		 Intelligent
ready-to-wear
garments
Jingshi Shanghai CNY 10,557,001
Shanghai		 King's marketing
TEXRAY SA ZAR 39,651,772 South Africa Marketing
company
YanchengInspection CNY 6,000,000 Yancheng Inspection center
King's (Netherlands) EUR 200,000 Netherlands Marketing
company
Kunshan Dongyi CNY 35,280,000
Jiangsu
Province		 Ready-to-wear
garmentplant
GOLDEN JUBLEE ZAR 5,000,000
eSwatini		 Ready-to-wear
garmentplant
Zhejiang AKE CNY 2,626,000
Zhejiang
Province		 Intelligent
ready-to-wear
garments
AiQ-S GBP 100,000
United
Kingdom		 Intelligent
ready-to-wear
garments
Weili TWD 30,000,000
Taipei		 Woven fabric
printing and
dyeing plant
Huaiwei TWD 20,000,000
Taipei		 Biotechnology
Service
ESWT SZL 1,000,000
eSwatini		 Sales of
agricultural
products

123

  1. Information on directors, supervisors, and presidents of affiliates
Names of Affiliates Position Name or Representative
TEXRAY Belize Director Lin Zui Yeh(TEXRAY representative)
TEXRAY Cayman Director Lin Zui Yeh(TEXRAY representative)
TRM(Mexico) Director Yung-LangWei(TEXRAY Representative)
AMRAY(Mexico) Director Yung-LangWei(Representative)
TRLA Director Lin Zui Yeh(Representative)
Z-PLY Director Feng-yingYeh(Representative)
King's Chairman Lin Zui Yeh(TEXRAY representative)
FLYNN Director Yao Wan Kuei(TEXRAY Representative)
MingfangInternational Chairman Lin Zui Yeh(TEXRAY representative)
TEXRAY ESWATINI Chairman Lin Zui Yeh(Representative)
Texray (Shanghai) Chairman Lin Zui Yeh(Representative)
Yancheng (TEXRAY) Director Lin Zui Yeh(Representative)
TEXRAY(BN) Director Hsiao-Chin Mu(TEXRAY Representative)
TEXRAY(VN)-LA Director Hung-Hsü Lin(Representative)
TRCA GARMENT Director Li-ChengChen(Representative)
GOOD TIME Director YAO WAN KUEI(Representative)
KASUMI Chairman Lin Zui Yeh(Representative)
TQM Chairman Lin Zui Yeh(Representative)
UIW Chairman Lin Zui Yeh(Representative)
J.M Chairman Lin Zui Yeh(Representative)
MSWATI Chairman Lin Zui Yeh(Representative)
TexrayYanchengFiber Chairman Rang-ChengMa(Representative)
Jiangsu Texray
YanchengGarments		 Chairman Rang-Cheng Ma (Representative)
Zhengwei Chairman Lin Zui Yeh(Representative)
TST Chairman Lin Zui Yeh(Representative)
TAICHUANG Chairman Lin Zui Yeh(Representative)
EXC Chairman Lin Zui Yeh(Representative)
Jingshi Shanghai Chairman Chin-Mu Hsiao(Representative)
TEXRAY SA Chairman Lin Zui Yeh(Representative)
YanchengInspection Chairman Lin Zui Yeh(Representative)
King's(Netherlands) Director Chin-Mu Hsiao(Representative)
Kunshan Dongyi Director Hung-Hsü Lin(Representative)
GOLDEN JUBLEE Chairman Lin Zui Yeh(Representative)
ZhejiangAKE Director Hung-Hsü Huang (Representative)
AiQ-S Chairman Lin Zui Yeh(Representative)
Weili Chairman Lin Zui Yeh(Representative)
Huaiwei Chairman Lin Zui Yeh(Representative)
ESWT Chairman Lin Zui Yeh(Representative)

124

4. Operational highlights of affiliates

Unit: NT$

Names of
Affiliates		 Currenc
y		 Total Assets Total liabilities Net Worth Sales Revenue Net operating
income		 Profit or loss for
the period
(After tax)		 Earning
s per
Share
(After
tax)
Belize USD 14,363,724 712 14,363,012 - (2,887) (2,111,304) -
Cayman USD 8,941,919 - 8,941,919 - 100,787 (1,997,768) -
TRM(Mexico) PESOS 307,622,920 119,015,772 188,607,148 72,988,332 (16,668,051) (22,509,692) -
AMRAY
(Mexico)		 PESOS 148,506,660 193,802,139 (45,295,479) 142,874,100 (26,116,911) (14,831,002) -
TRLA USD 2,046,178 249,711 1,796,467 3,476,507 (602,619) (468,601) -
Z-PLY USD 11,957,530 3,500,549 8,456,981 28,642,128 (5,461,770) (5,018,553) -
King's TWD 841,905,757 530,998,124 310,907,633 312,677,845 78,540,423 65,492,469 -
FLYNN USD 15,507,686 - 15,507,686 - - (5,487,147) -
Mingfang
International		 TWD 30,349,593 1,377,690 28,971,903 878,759 (11,815,413) (15,143,451) -
TRS SZL 2,314,419 610,615 1,703,804 - (386,598) (72,520) -
Texray
(Shanghai)		 CNY 135,417,955 41,874,051 93,543,904 136,190,698 (3,094,606) (746,571) -
Yancheng Texray
(Shanghai)		 CNY 3,107,709 14,412,200 (11,304,491) 7,121,436 96,353 134,531 -
TEXRAY(BN) USD 2,037,208 - 2,037,208 - (166,345) (1,739,678) -
TEXRAY(VN) VND 254,267,191,56
7		 110,094,017,72
0		 144,173,173,84
7		 373,079,569,10
4		 62,531,914,290 63,095,325,187 -
TRCA USD 21,129 790,996 (769,867) 815,079 (622,091) (816,846) -
GOOD TIME VND 57,863,782,979 43,477,219,252 14,386,563,727 90,733,353,989 (14,571,275,81
2)		 (14,531,582,26
0)		 -
KASUMI SZL 218,224,560 14,530,359 203,694,201 83,296,534 1,109,370 471,358 -
TQM SZL 784,476,278 289,186,989 495,289,289 637,169,206 84,772,012 74,542,169 -
UIW SZL 11,044,871 1,360 11,043,511 - (16,714) (1,169,293) -
JM SZL 3,840,275 3,247,073 593,202 2,612,327 (3,938,604) (3,844,302) -
MSWATI USD 1,141,170 5,997,185 (4,856,015) - (227,959) (2,870,639) -
Texray
YanchengFiber		 CNY 190,370,764 199,579,401 (9,208,637) 175,520,242 934,030 (18,864,059) -
Texray
YanchengGarmen
ts		 CNY 114,888,141 118,017,683 (3,129,542) 311,291,200 3,315,454 365,207 -
Zhengwei TWD 6,593,062 821,556 5,771,506 10,238,088 (3,931,254) (3,683,210) -
TST TWD 128,696,976 59,458,516 69,238,460 148,159,815 9,814,453 15,114,946 -
TAICHUANG HK 240,257 12,000 228,257 11,000,000 196,266 196,269 -
EXC TWD 40,850,170 39,608,232 1,241,938 6,595,201 (30,732,787) (33,482,371) -
Jingshi Shanghai CNY 2,215,364 1,528,153 687,211 3,001,513 (1,357,260) (2,099,364) -
TEXRAY SA ZAR 1,041,656,445 488,272,574 553,383,871 650,773,692 15,651,286 87,683,782 -
Yancheng
Inspection		 CNY 1,685,143 87,710 1,597,433 1,173,198 72,578 388,539 -
King's
(Netherlands)		 EUR 1,252,762 910,119 342,643 4,136,030 62,968 44,202 -
Kunshan Dongyi CNY 47,238,721 7,118,996 40,119,725 18,818,132 1,766,165 1,123,816 -
GOLDEN
JUBLEE		 SZL 19,295,237 5,455,863 13,839,374 38,234,276 6,020,661 4,331,154 -
ZhejiangAKE CNY 175,603 181,400 (5,797) 327,964 (772,621) (778,776) -
AiQ-S GBP 394,710 234,318 160,392 189,325 (317,478) (177,483) -
Weili TWD 37,099,128 29,724,926 7,374,202 243,135 (15,033,255) (15,687,405) -
Huaiwei TWD 20,001,062 1,087,995 18,913,067 - (1,087,134) (1,086,933) -
ESWT SZL 307,780 100,000 207,780 81,097 (800,858) (792,220) -

5. Business relationships and labor division among affiliates:

  • (1) Business relations and labor division among the Company, King’s Metal Fiber Technologies Co.,Ltd and Taiwan Supercritical Technology Co., Ltd.: The businesses vary among these three companies, which thereby conduct no purchase or sales transactions with each other. Only rental income/expenditure is incurred in office and factory leases.

125

  • (2) The Company directly invests in TEXRAY (SA) (PTY) LTD., through which, it holds shares of T.Q.M. INDUSTRIAL INVESTMENT (PTY) LIMITED, UNION INDUSTRIAL WASHING(PTY) LIMITED, KASUMI APPARELS SWAZLIAND (PTY),LTD. and GOLDEN JUBILEE APPAREL (PTY) LTD.; through Mingfang International Co., Ltd, it invests in TEXRAY ESWATINI (PTY) LTD.: mainly responsible for selling products to South African customers and producing ready-to-wear garments and fabrics in eSwatini.

  • (3) Through TEXRAY INDUSTRIAL CO., LTD.(BELIZE), the Company indirectly invests in TEXRAY (Shanghai): mainly responsible for business information collection and production bases in eastern production zones of Mainland China.

  • (4) Through TEXRAY INDUSTRIAL CO., LTD.(BELIZE), the Company indirectly invests in TEXRAY INDUSTRIAL CO., LTD.(CAYMAN): mainly responsible for selling products to Mexican customers and producing ready-to-wear garments and fabric.

  • (5) Through TEX-RAY (BN) INTERNATIONAL CO., LTD., the Company indirectly invests in GOOD TIME ENTERPRISE CO., LTD., TEXRAY (VN) CO., LTD. and TRCA: mainly responsible for overseas production bases of ready-to-wear garments in Vietnam and Cambodia.

  • (6) Through TEX-RAY (BN) INTERNATIONAL CO., LTD., the Company indirectly invests in MSWATI HOLDINGS LTD and reinvests in Jiangsu Texray Yancheng Fiber Technology Co., Ltd and Jiangsu Texray Garments Co., Ltd through MSWATI: mainly responsible for overseas production bases of ready-to-wear garments and fabric in China.

  • (7) Through FLYNN INTERNATIONAL LIMITED., the Company indirectly invests in Z-PLY CORP. and TRLA GROUP, INC.: mainly responsible for collecting business information and developing markets in the United States.

126

(II) Consolidated financial statements and relationships of the affiliates

Statement

The entities that are required to be included in the combined financial statements of the Company for 2020 (from January 1, 2020 to December 31, 2020) under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements of the parent and subsidiaries prepared in conformity with International Financial Reporting Standards No. 10 by the Financial Supervisory Commission, "Consolidated Financial Statements". In addition, the information required to be disclosed in the combined financial statements has been included included in the above consolidated financial statements. Consequently, combined financial statements of the affiliates will not be further separately prepared.

Sincerely,

Company Name: TEXRAY

Principal: Lin Zui Yeh

Date: March 26, 2021

  • II. Private Placement of Negotiable Securities in the Most Recent Year and as of the Date of the Annual Report: None.

  • III. Holding or Disposal of the Company's Shares by the Subsidiaries in the Most Recent Fiscal Year and as of the Date of the Annual Report: None.

  • IV. Other Supplementary Information: None.

  • V. Any Events in the Most Recent Fiscal Year and as of the Date of the Annual Report with Significant Impacts on Shareholders' Equity or Securities Prices as Stated in Item 2, Paragraph 3 of Article 36 of Securities and Exchange Act of Taiwan: None. 

127

Independent Auditors ’ Report

To the Board of Directors of TEX-RAY INDUSTRIAL CO., LTD.

Opinion

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

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

Basis for Opinion

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

Key Audit Matters

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

1. Revenue recognition

Please refer to Note 4(p) for the accounting policies on revenue and Note 6(t) “Revenue from contracts with customers” for the details of the related disclosure.

. 

128

Description of the key audit matter:

The Group is in the garment textile industry. In order to enhance the international competency, the management adopts global layout as its business strategy and adds multiple production and sales supply chains overseas. Therefore, the extent of influence of local laws and political and economic changes in various countries to such strategy increases dramatically. Resulting in that the revenue recognition is regarded as highly concerns. Therefore, the Group’ s revenue recognition has been identified as one of the key audit matters.

How the matter was addressed in our audit:

We have performed certain audit procedures including understanding the design of internal controls over the recognition of revenue and the collection of receivables, performing test of details by inspecting the sales orders, shipping records, invoices and documents related to accounts receivable and cash collection, and sending confirmation letters to verify the sales records and assessing the adequacy of revenue recognition. Furthermore, we also performed sample testing for verification from transactions within a period before and after balance sheet date to determine whether the revenue is recognized in appropriate period.

2. Valuation of accounts receivable

For the accounting policies on the valuation of accounts receivable, please refer to Note 4(g). Refer to Note 5(a) for the accounting estimates and assumptions related to the valuation of accounts receivable on reporting date and refer to Note 6(c) for the details of the accounts receivable.

Description of the key audit matter:

As of December 31, 2020, the accounts receivable of the Group was $1,104,272 thousand. We have considered that the Group’s trading partners are scattered in different industries and geographic regions, how the management control credit risk of its customer is thoroughly important. Therefore, the impairment assessment of accounts receivable has been identified as one of the key audit matters.

How the matter was addressed in our audit:

We have performed certain audit procedures including inspecting the controls over customer credit assessment process, analyzing the accounts receivable aging table, viewing past collection experience of customers and checking cash collection records after the reporting date to evaluate whether the impairment of the accounts receivable has been properly assessed.

Other Matter

TEX-RAY INDUSTRIAL CO., LTD. has prepared its parent-company-only financial statements as of and for the years ended December 31, 2020 and 2019, on which we have issued an unmodified opinion.

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

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

~ 128~ 

129

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

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

Auditors ’ Responsibilities for the Audit of the Consolidated Financial Statements

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

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

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

  2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

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

  4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

  5. 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.

  6. 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. 

129

130

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

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

The engagement partners on the audit resulting in this independent auditors’ report are Kuo-Yang Tseng and Ti-Nuan Chien.

KPMG

Taipei, Taiwan (Republic of China) March 26, 2021

Notes to Readers

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

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

131

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

Consolidated Balance Sheets

December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Assets
Current assets:
1100
Cash and cash equivalents(Note 6(a))
1110
Current financial assets at fair value through profit or loss(Note 6(b))
1150
Notes receivable, net(Notes 6(c) and 7)
1170
Accounts receivable, net(Notes 6(c), 7 and 8)
1200
Other receivables, net(Notes 6(d) and 7)
1220
Current tax assets
1310
Inventories, manufacturing business, net(Note 6(e))
1410
Prepayments
1470
Other current assets(Note 7)
1476
Other current financial assets(Note 8)

Non-current assets:
1517
Non-current financial assets at fair value through other comprehensive
income(Note 6(b))
1550
Investments accounted for using equity method, net(Note 6(f))
1600
Property, plant and equipment(Notes 6(g) and 8)
1755
Right-of-use assets(Notes 6(h) and 8)
1760
Investment property, net(Notes 6(i) and 8)
1780
Intangible assets(Note 6(j))
1840
Deferred tax assets(Note 6(q))
1960
Prepayments for investments
1980
Other non-current financial assets(Note 8)
1990
Other non-current assets

Total assets		 December 31, 2020
Amount
%
$ 1,368,318
17
612 -
1,877 -
1,104,272
14
91,709
1
7,586 -
1,328,599
16
165,395
2
4,173 -
201,764
2		 December 31, 2019
Amount
%
843,457
12
1,225 -
25,438 -
1,058,776
15
93,438
1
2,188 -
1,313,042
20
132,622
2
5,206 -
291,231
4
3,766,623
54
1,403 -
2,541 -
2,268,622
33
152,464
2
335,128
5
254,665
4
33,137 -
-
-
160,095
2
10,441
-
3,218,496
46
6,985,119
100
Liabilities and Equity
Current liabilities:
2100
Short-term borrowings(Note 6(k))
2110
Short-term notes and bills payable(Note 6(l))
2130
Current contract liabilities(Note 6(t))
2150
Notes payable
2170
Accounts payable
2200
Other payables
2220
Other payables due to related parties(Note 7)
2230
Current tax liabilities
2310
Advance receipts
2280
Current lease liabilities(Note 6(n))
2320
Long-term liabilities, current portion(Note 6(m))
2300
Other current liabilities

Non-current liabilities:
2540
Long-term borrowings(Note 6(m))
2570
Deferred tax liabilities(Note 6(q))
2580
Non-current lease liabilities(Note 6(n))
2640
Net defined benefit liability, non-current(Note 6(p))
2670
Other non-current liabilities, others(Note 9(b))

Total liabilities
Equity Attributable to Owners of Parent (Note 6(r)):
3110
Ordinary share
3200
Capital surplus(Note 7)
3300
Retained earnings
3400
Other equity interest
Equity attributable to the parent company:
36XX
Non-controlling interests
Total equity
Total liabilities and equity		 December 31, 2020 December 31, 2020 December 31, 2020
Amount % Amount

4,274,305
52

10,682 -
-
-
2,074,710
26
159,488
2
1,225,984
15
262,983
3
45,800
1
9,092 -
44,816
1
5,060
-


3,020,975
36
2,726,369
38


1,464,169
18
1,454,830
22
178,363
2
66,043
1
67,025
1
51,690
1
27,701 -
31,649 -
22,687
-
85,375
1


1,759,945
21
1,689,587
25


4,780,920
57
4,415,956
63


2,336,247
30
2,336,247
33
234,052
3
235,155
3
473,640
6
307,142
4
144,099
2
(433,020)
(5)

3,838,615
48



3,188,038
41
2,445,524
35


143,962
2
123,639
2


3,332,000
43
2,569,163
37
$
8,112,920
100

$
8,112,920
100
6,985,119
100

See accompanying notes to consolidated financial statements.

132

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

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Common Share)

4000
Operating revenues (Notes 6(t) and 7)
5000
Operating costs (Notes 6(e) and (n))
5900
Gross profit from operations
6100
Selling expenses
6200
Administrative expenses
6300
Research and development expenses
6450
Expected credit loss
6000
Operating expenses (Notes 6(n) and (s))
6900
Net operating income (loss)
7000
Non-operating income and expenses:
7010
Other income
7020
Other gains and losses, net (Note 6(v))
7100
Interest income (Note 6(v))
7510
Interest expense (Notes 6(v) and 7)
7055
Reversal of expected credit loss, net (Note 6(d))
7770
Share of loss of associates and joint ventures accounted for using equity method (Note 6(f))
7900
Profit (loss) before tax
7950
Less: Income tax expenses (Note 6(q))
Profit (loss)
8300
Other comprehensive income:
8310
Items that will not be reclassified subsequently to profit or loss
8311
Losses on remeasurements of defined benefit plans
8312
Gains on revaluation surplus
8316
Unrealized losses from investments in equity instruments measured at fair value through other
comprehensive income
8349
Income tax related to components of other comprehensive income that will not be reclassified
subsequently to profit or loss
Items 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 financial statements
8399
Income tax related to components of other comprehensive income that may be reclassified
subsequently to profit or loss
Items that may be reclassified subsequently to profit or loss
8300
Other comprehensive income
8500
Total comprehensive income
8600
Profit (loss), attributable to:
8610
Owners of parent
8620
Non-controlling interests
8700
Comprehensive income attributable to:
8710
Owners of parent
8720
Non-controlling interests
Basic earnings per share (Note 6(s))
9750
Basic earnings per share (dollars)
9850
Diluted earnings per share (dollars)		 2020 %
100
74		 2019 %
100
83
Amount
$ 8,598,587
6,382,107		 Amount

6,949,284

5,770,797

2,216,480		 26

1,178,487		 17

1,002,826
568,097
57,702
155,294		 11
7
1
2

581,413

558,275

72,392

27,265		 8
8
1
-

1,783,919		 21

1,239,345		 17

432,561		 5

(60,858)		 -

4,171
(87,678)
14,675
(96,467)
-
(760)		 -
(1)
-
(1)
-
-
5,570

61,053
15,926

(101,411)
49,431
(8,937)		 -
1
-
(1)
-
-

(166,059)		 (2)

21,632		 -

266,502
101,727
3
1


(39,226)

133,232		 -
2

164,775		 2

(172,458)		 (2)

(1,991)
873,576
(224)
(112,410)		 -
10
-
(1)
(4,029)

262,746
(4,116)

-
-
3
-
-

758,951
9

254,601		 3

(183,051)
-		 (2)
-

(53,054)
-		 (1)
-
(183,051) (2)
(53,054)		 (1)

575,900
7


201,547
2

$
740,675		 9
29,089

$ 168,120
(3,345)		 2
-

(171,877)
(581)		 (2)
-

$
164,775		 2
(172,458)		 (2)

$ 743,617
(2,942)		 9
-

32,979
(3,890)
-
-

$
740,675		 9
29,089		 -

$		 0.72 (0.74)
$ 0.72
(0.74)

See accompanying notes to consolidated financial statements.

133

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

Consolidated Statements of Changes in Equity

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Balance on January 1, 2019
Loss
Other comprehensive income
Total comprehensive income
Difference between consideration and carrying amount of subsidiaries acquired
or disposed of
Cash dividends distributed to non-controlling interest by subsidiaries
Changes in non-controlling interests
Disposal of investments in equity instruments designated at fair value through
other comprehensive income
Equity related to non-current assets held-for-sale
Balance on December 31, 2019
Profit (loss)
Other comprehensive income
Total comprehensive income
Difference between consideration and carrying amount of subsidiaries acquired
or disposed of
Changes in non-controlling interests
Balance on December 31, 2020		 Equityattributable to owners ofparent
Totalotherequityinterest
Exchange
differences on
translation of
Unrealized
gains (losses)
on financial
assets
measured at
fair value
Equity related to
non-current
assets (or
Total equity
foreign
financial
statements
through
other
comprehensive
income
Revaluation
surplus
disposal
groups)
held-for-sale
attributable
to owners of
parent
Non-controll
inginterests
Total equity
Ordinary
shares
Capital
surplus		 Retained earnings
Legal
reserve
Special
reserve
Unappropriated
retained
earnings
Total
retained
earnings
$ 2,336,247
235,155
166,655
201,749
(139,947)
228,457
(611,680)
(34,477)
-
258,905
2,412,607
122,497
2,535,104












-
-
-
-
(171,877)
(171,877)
-
-
-
-
(171,877)
(581)
(172,458)
-
-
-
-
(4,029)
(4,029)
(52,586)
(1,275)
262,746
-
204,856
(3,309)
201,547








-
-
-
-
(175,906)
(175,906)
(52,586)
(1,275)
262,746
-
32,979
(3,890)
29,089








-
-
-
-
(62)
(62)
-
-
-
-
(62)
-
(62)
-
-
-
-
-
-
-
-
-
-
-
(3,313)
(3,313)
-
-
-
-
-
-
-
-
-
-
-
8,345
8,345
-
-
-
-
610
610
-
(610)
-
-
-
-
-
-
-
-
-
254,043
254,043
-
-
4,862
(258,905)
-
-
-




2,336,247
235,155
166,655
201,749
(61,262)
307,142
(664,266)
(36,362)
267,608
-
2,445,524
123,639
2,569,163
-
-
-
-
168,120
168,120
-
-
-
-
168,120
(3,345)
164,775
-
-
-
-
(1,622)
(1,622)
(183,905)
(142)
761,166
-
575,497
403
575,900







-
-
-
-
166,498
166,498
(183,905)
(142)
761,166
-
743,617
(2,942)
740,675








-
(1,103)
-
-
-
-
-
-
-
-
(1,103)
-
(1,103)
-
-
-
-
-
-
-
-
-
-
-
23,265
23,265


$
2,336,247
234,052
166,655
201,749
105,236
473,640
(848,171)
(36,504)
1,028,774
-
3,188,038
143,962
3,332,000

See accompanying notes to consolidated financial statements.

134

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

Consolidated Statements of Cash Flows

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities:
Profit (loss) before tax
Adjustments:
Adjustments to reconcile profit (loss):
Depreciation expense
Amortization expense
Provision (reversal of provision) for expected credit loss
Loss on financial assets at fair value through profit or loss
Interest expense
Interest income
Dividend income
Share of loss of associates and joint ventures accounted for using equity
method
Loss on disposal of property, plan and equipment
Gain on disposal of non-current assets held-for-sale
Impairment loss on non-financial assets
Loss (gain) on fair value adjustment of investment property
Loss on lease modification
Total adjustments to reconcile profit
Changes in operating assets and liabilities:
Changes in operating assets:
Decrease in notes receivable
Increase in accounts receivable
(Increase) decrease in other receivables
(Increase) decrease in inventories
(Increase) decrease in prepayments
Decrease (increase) in other current assets
Increase in other financial assets
Total changes in operating assets
Changes in operating liabilities:
Increase (decrease) in contract liabilities
(Decrease) increase in notes payable
Increase (decrease) in accounts payable
Increase (decrease) in other payables
Increase in other payable due to related parties
Increase in other current liabilities
Decrease in net defined benefit liability
(Decrease) increase in other operating liabilities
Total changes in operating liabilities
Total changes in operating assets and liabilities
Total adjustments
Cash inflow generated from operations
Interest received
Dividends received
Interest paid
Income taxes paid
Net cash flows from operating activities		 2020
$ 266,502
237,061
17,674
155,294
128
96,467
(14,675)
(22)
760
14,009
-
72,259
18,948
707		 2019

(39,226)

250,719

12,261

(22,166)

130

101,411

(15,926)

(97)

8,937

3,627
(42,304)

6,273

(10,420)

-
598,610
292,445

23,536
(227,444)
(1,445)
(41,711)
(42,653)
872
(9,434)


16,956

(42,911)

177,958

111,985

58,589

(1,505)

(5,188)

(298,279)


315,884

7,260
(15,517)
153,947
213,302
9,500
1,765
(5,939)
(61,845)


(34,146)

6,873

(200,168)

(80,654)

5,000

115

(3,872)

35,741

302,473


(271,111)

4,194


44,773

602,804


337,218

869,306
14,675
22
(97,920)
(76,879)


297,992

15,926

97

(101,910)

(80,232)

709,204


131,873

135

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

Consolidated Statements of Cash Flows (CONT ’ D)

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flows (used in) from investing activities:
Acquisition of financial assets at fair value through other comprehensive
income
Proceeds from disposal of financial assets at fair value through other
comprehensive income
Proceeds from disposal of financial assets at fair value through profit or loss
Acquisition of investments accounted for using equity method
Increase in prepayments for investments
Proceeds from liquidation of investments accounted for using equity method
Proceeds from disposal of non-current assets held-for-sale
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
Increase in other non-current assets
Net cash flows (used in) from investing activities
Cash flows from (used in) financing activities:
Increase in short-term loans
Decrease in short-term loans
Increase in short-term notes and bills payable
Proceeds from long-term debt
Repayments of long-term debt
Payment of lease liabilities
Decrease (increase) in other financial assets
Change in non-controlling interests
Net cash flows from (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period		 2020
(9,500)
-
485
-
(9,092)
1,781
-
(177,493)
22,795
(17,636)
(31,327)		 2019

-
3,660

-
(2,700)

-

-
321,000

(204,557)

9,356

(5,969)

(55,098)

(219,987)


65,692

1,278,913
(1,838,672)
249,660
1,560,673
(1,323,377)
(46,437)
205,945
7,670


2,831,077

(2,778,796)

-

435,400

(514,210)

(45,156)

(138,093)

(3,313)

94,375


(213,091)

(58,731)
524,861
843,457


(11,881)

(27,407)

870,864

$
1,368,318

843,457

See accompanying notes to consolidated financial statements. 

136

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

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

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

(1) Company history

TEX-RAY INDUSTRIAL CO., LTD. (the “Company”) was established with the approval of the Ministry of Economic Affairs in August 1978, and was listed in Taiwan Stock Exchange in 1998. The registered address is 2F., No. 426, Linsen N. Rd., Jhongshan Dist., Taipei City. The Company was originally a modern yarn dyeing factory, and then expanded to spinning business, plain weaving business, and garment business, etc.. In order to enhance competency in international business, the Group established multiple production and sales supply chains overseas in Mexico, Eswatini, Vietnam, and Mainland China, and deployed the marketing department in US and Mexico market. The Company further divided its departments or established new subsidiaries for specialization purpose in particular technologies and markets in order to enhance the overall economic efficiency.

The main business of the Company and its subsidiaries (the “Group”) is in weaving, manufacturing and processing, dyeing and spinning, and trading of cotton and any kind of fibers and textiles, and yarn trading business, garment processing and trading business, ultrasonic cleaning and supercritical cleaning business and extraction businesses.

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

The consolidated financial statements were authorized for issue by the Board of Directors on March 26, 2021.

(3) New standards, amendments and interpretations adopted

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

The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2020:

  • Amendments to IFRS 3 “Definition of a Business”

  • Amendments to IFRS 9, IAS39 and IFRS7 “Interest Rate Benchmark Reform”

  • Amendments to IAS 1 and IAS 8 “Definition of Material”

  • Amendments to IFRS 16 “COVID-19-Related Rent Concessions”

  • (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, 2021, would not have a significant impact on its consolidated financial statements:

  • Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”

(Continued)

137

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

  • Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform － ” Phase 2

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

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 Effective date per
Interpretations Content of amendment IASB
Amendments to IAS 1 The amendments aim to promote consistency
January 1, 2023
“Classification of Liabilities as
in applying the requirements by helping
Current or Non-current” companies
determine
whether,
in
the
statement of balance sheet, debt and other
liabilities with an uncertain settlement date
should be classified as current (due or
potentially due to be settled within one year)
or non-current.
The amendments include clarifying the
classification
requirements
for
debt
a
company might settle by converting it into
equity.

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 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”

  • Amendments to IAS 1 “Disclosure of Accounting Policies”

  • Amendments to IAS 8 “Definition of Accounting Estimates”

(Continued)

138

(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 statements.

  • (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 and issued into effect by the Financial Supervisory Commission, R.O.C..

  • (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) Fair value through other comprehensive income are measured at fair value,

  • 3) Investment property is measured at fair value, and

  • 4) The defined benefit liabilities (assets) is recognized as the fair value of the plan assets less the present value of defined benefit obligation and the upper limit impact mentioned in Note 4(q).

  • (ii) Functional and presentation currency

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

  • (c) Basis of consolidation

  • (i) Principles for preparing consolidated financial statements

The consolidated financial statements comprise the Company and subsidiaries. Subsidiaries are entities controlled by the Group. The Group ‘controls’ an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

(Continued)

139

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. Intragroup balances and transactions, and any unrealized income and expenses arising from Intragroup transactions are eliminated in preparing the consolidated financial statements. The Group attributes the profit or loss and each component of other comprehensive income to the owners of the parent and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.

Financial statements of subsidiaries are adequately adjusted to align their accounting policies with those of the Group.

The Group prepares consolidated financial statements using uniform accounting policies for like transactions and other events in similar circumstances. 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. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received will be recognized directly in equity, and the Group will attribute it to the owners of the parent.

  • (ii) List of subsidiaries in the consolidated financial statements:
Name of investor
Name of subsidiary
Principal activity		 Shareholding percentage
December
31, 2020
December
31, 2019
Note
The Company
TEX-RAY INDUSTRIAL CO.,
LTD. (BELIZE)
(TEX-RAY(BELIZE))
Oversea investment
holding (Mexico)
The Company
TEX-RAY (BN)
INTERNATIONAL CO., LTD.
(TEX-RAY(BN))
Oversea investment
holding (Vietnam
and Cambodia)
The Company
FLYNN INTERNATIONAL
LTD. (FLYNN(SAMOA))
Oversea investment
holding (USA)
The Company
KING'S METAL FIBER
TECHNOLOGIES CO., LTD.
(KMT)
Non-woven fabrics,
copper secondary
processing and
fabric retailing, etc.
The Company
TAIWAN SUPERCRITICAL
TECHNOLOGY
CO.,LTD.(TST)
Ultrasonic cleaning
and supercritical
cleaning, extraction,
etc.
The Company
GREAT CPT
INTERNATIONAL CO., LTD.
(GREAT CPT)
Oversea investment
holding (Eswatini)
The Company
TEX-RAY (SA) (PTY)
Ltd.(TEX-RAY (SA))
Marketing and
trading
The Company
TEX-RAY INDUSTRIAL CO.,
LTD. (CAYMAN)
(TEX-RAY(CAYMAN))
Oversea investment
holding		 100.00%
100.00% The subsidiary that the
Company holds more
than 50% shares
100.00%
100.00% The subsidiary that the
Company holds more
than 50% shares.
100.00%
100.00% The subsidiary that the
Company holds more
than 50% shares.
63.46%
63.46% The subsidiary that the
Company holds more
than 50% shares.
75.63%
75.63% The subsidiary that the
Company holds more
than 50% shares.
100.00%
100.00% The subsidiary that the
Company holds more
than 50% shares.
100.00%
100.00% The subsidiary that the
Company holds more
than 50% shares.
100.00%
-
% The subsidiary that the
Company holds more
than 50% shares.
(note 1)

(Continued)

140

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Name of investor
Name of subsidiary
Principal activity		 Shareholding percentage
December
31, 2020
December
31, 2019
Note
The Company
ZHENG-RAY Industrial
CO.,LTD.
(ZHENG-RAY)
Trading and
manufacturing of
weaving and
garments
The Company
WEI LI TEXTILE CO., LTD.
(WLT)
Wholesale of
clothing and fabrics
The Company
AIQ SMART CLOTHING
INC. (AIQ)
Wholesale of textile
TEX-RAY (SA)
KASUMI APPARELS
SWAZILAND PTY LTD.
(KASUMI (SWAZILAND))
Garment processing
TEX-RAY (SA)
TQM TEXTILE SWAZILAND
(PTY) LTD.
(T.Q.M.(SWAZILAND))
Weaving and dyeing
TEX-RAY (SA)
UNION INDUSTRIAL
WASHING PTY LTD.
(U.I.W.(SWAZILAND))
Garment processing
TEX-RAY (SA)
J.M. Rotary Print Industrial Co.,
Ltd. (J.M. (SWAZILAND))
Printing
TEX-RAY (SA)
GOLDEN JUBILEE
APPAREL (PTY)
LTD.(GOLDEN
(SWAZILAND))
Garment processing
TEX-RAY
(BELIZE)
TEX-RAY(CAYMAN)
Oversea investment
holding
TEX-RAY
(BELIZE)
TEX-RAY (SHANGHAI )
INDUSTRIAL CO., LTD.
(TEX-RAY (SHANGHAI ))
Warehousing and
trading business of
textile
FLYNN (SAMOA)
TRLA GROUP, INC.(TRLA
GROUP)
Marketing and
trading
FLYNN (SAMOA)
Z-PLY CORPORATION
(Z-PLY (NY))
Marketing and
trading
GREAT CPT
TEXRAY SWAZILAND PTY
LTD.(TEXRAY
(SWAZILAND))
Garment processing
TST
HUAI WEI
BIOTECHNOLOGY CO., LTD
Biotechnology
Service
TEX-RAY (BN)
GOOD TIME(VIETNAM)
ENTERPRISE CO.,LTD.
(GOOD TIME)
Garment processing		 100.00%
100.00% The subsidiary that the
Company holds more
than 50% shares.
70.00%
70.00% The subsidiary that the
Company holds more
than 50% shares.

63.43%
63.43% The subsidiary that the
Company holds more
than 50% shares.
(note 5)

100.00%
100.00% The subsidiary that
TEX-RAY (SA) holds
more than 50% shares.

100.00%
100.00% The subsidiary that
TEX-RAY (SA) holds
more than 50% shares.

100.00%
100.00% The subsidiary that
TEX-RAY (SA) holds
more than 50% shares.
90.00%
80.00% The subsidiary that
TEX-RAY (SA) holds
more than 50%
shares.(note 2)

100.00%
100.00% The subsidiary that
TEX-RAY (SA) holds
more than 50% shares.
-
%
100.00% (Note 1)
100.00%
100.00% The subsidiary that
TEX-RAY (BELIZE)
holds more than 50%
shares.
100.00%
100.00% The subsidiary that
FLYNN (SAMOA)
holds more than 50%
shares.
100.00%
100.00% The subsidiary that
FLYNN (SAMOA)
holds more than 50%
shares.

100.00%
100.00% The subsidiary that
GREAT CPT holds
more than 50% shares.
60.00%
-
% The subsidiary that
TST holds more than
50% shares.(note 3)

100.00%
100.00% The subsidiary that
TEX-RAY (BN) holds
more than 50% shares.

(Continued)

141

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Name of investor
Name of subsidiary
Principal activity		 Shareholding percentage
December
31, 2020
December
31, 2019
Note
TEX-RAY (BN)
MSWATI HOLDINGS LTD.
(MSWATI)
Garment processing
TEX-RAY (BN)
TEXRAY (VN) CO., LTD.
(TEXRAY(VN))
Garment processing
TEX-RAY (BN)
T.R.C.A GARMENT CO.,
LTD. (TRCA GARMENT)
Garment processing
TEX-RAY
(CAYMAN)
TEXRAY MEXICO S.A. DE
C.V.(TEXRAY (MEXICO))
Dyeing
TEX-RAY
(CAYMAN)
AMRAY S.A. DE C.V.
(AMRAY (MEXICO))
Garment processing
KMT
KING'S METAL FIBER
TECHNOLOGIES B.V.
(KMBV)
Marketing and
tradeing
KMT
ELITETOP TECHNOLOGY
INC. (ELITETOP TECH)
Oversea investment
holding
KMT
AIQ
Wholesale of textile
TEX-RAY
(SHANGHAI)
TEX-RAY INDUSTRIAL CO.,
LTD. (YANCHENG)
(TEX-RAY (YANCHENG))
Manufacturing and
sales of textiles,
clothing, shoes and
hats
TEX-RAY
(SHANGHAI )
TEXRAY(KUNSHAN)
INDUSTRIAL CO., LTD.
(TEXRAY(KUNSHAN))
Development of
composite fabrics
ELITETOP TECH KING’S METAL FIBER
(SHANGHAI) CO., LTD.
(KING’S METAL FIBER
(SHANGHAI))
Wholesale of glass
products and textiles
KING’S METAL
FIBER
(SHANGHAI)
AIQ SMART CLOTHING
(Zhejiang) CO., LTD. (AIQ
(Zhejiang))
System
development,
production and sales
of smart devices
AIQ
AIQ SYNERTIAL LTD.
(AIQ-S (UK))
Development of
smart clothing
technology
AIQ
KING’S METAL FIBER
(SHANGHAI)
Wholesale of glass
products and textiles
AIQ
Taiwan Innovation Technology
Co., Limted (HK) (Taiwan
Innovation (HK))
Marketing and
trading of machine
100.00%
100.00% The subsidiary that
TEX-RAY (BN) holds
more than 50% shares.

100.00%
100.00% The subsidiary that
TEX-RAY (BN) holds
more than 50% shares.

100.00%
100.00% The subsidiary that
TEX-RAY (BN) holds
more than 50% shares.
100.00%
100.00% The subsidiary that
TEX-RAY
(CAYMAN) holds
more than 50% shares.

100.00%
100.00% The subsidiary that
TEX-RAY
(CAYMAN) holds
more than 50% shares.
100.00%
100.00% The subsidiary that
KMT holds more than
50% shares.
-
%
100.00% The subsidiary that
KMT holds more than
50% shares. (note 4)

-
%
1.57% (Note 5)
100.00%
100.00% The subsidiary that
TEX-RAY
(SHANGHAI) holds
more than 50% shares.
100.00%
100.00% The subsidiary that
TEX-RAY
(SHANGHAI) holds
more than 50% shares.

-
%
100.00% (Note 4)

100.00%
100.00% The subsidiary that
KING’S METAL
FIBER (SHANGHAI)
holds more than 50%
shares.
50.00%
100.00% (Note 6)

100.00%
-
% The subsidiary that
AIQ holds more than
50% shares. (note 4)
100.00%
-
% The subsidiary that
AIQ holds more than
50% shares. (note 7)

(Continued)

142

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Name of investor
Name of subsidiary
Principal activity		 Shareholding percentage
December
31, 2020
December
31, 2019
Note
MSWATI
TRYD APPAREL CO.,LTD.
(TRYD APPAREL)
Knitted garment
processing
MSWATI
JIANGSU TRYD TEXTILE
TECHNOLOGY CO.,LTD.
(TRYD TEXTILE)
Spinning, weaving,
high-end fabrics,
bleaching and
dyeing, printing and
garment production
TRYD TEXTILE Yancheng Wei-Da Textile
Testing Service Co.,Ltd.
(Wei-Da Testing)
Testing service and
environmental
evaluation
T.Q.M.
(SWAZILAND)
ESWATRADING
(PROPRILTARY) LIMITED
(ESWT (SWAZILAND))
Sale of Agricultural
Product		 100.00%
100.00% The subsidiary that
MSWATI holds more
than 50% shares.
100.00%
100.00% The subsidiary that
MSWATI holds more
than 50% shares.
100.00%
100.00% The subsidiary that
TRYD TEXTILE
holds more than 50%
shares.
90.00%
-
% The subsidiary that
T.Q.M.
(SWAZILAND) holds
more than 50% shares.
-
%
-
%
-
%
-
%

  • Note 1: The Company approved an adjustment of the structure of Mexico production area on December 31, 2020. The shares of TEX-RAY (CAYMNAN), previously owned by TEX-RAY (BELIZE) were now owned directly by the Company.

  • Note 2: TEX-RAY (SA) acquired additional 10% shares of J.M. (SWAZILAND) from non-controlling interests in October, 2020.

  • Note 3: In order to meet the Group's strategy of developing biotechnology business, TST joint the setup of HUAI WEI BIOTECHNOLOGY CO., LTD. and acquired 60% of it's shares in December , 2020.

  • Note 4: ELITETOP TECH transferred 100% shares of King’s Metal Fiber (SHANHAI) to AIQ in February 2020, and went through liquidation in June 2020. The relevant liquidation procedures have been completed.

  • Note 5: AIQ HOLDING sold 1% owned equity of AIQ during 2019, and transferred the rest 99% to KMT. KMT’s special shareholders' meeting, held on November 14, 2019, had approved the capital reduction with the shares of AIQ, resulting in the Company holding 63.43% of AIQ’s shares. KMT sold the remaining 1.57% equity of AIQ in February 2020.

  • Note 6: SYNERTIAL LTD. had completed the transfer of register of trademark to AIQ-S (UK) in exchange of the 50% ownership of AIQ-S (UK).

  • Note 7: For business development purpose, TST had transferred all owned shares of Taiwan Innovation (HK) to AIQ in December, 2020.

  • Note 8: In order to meet the Group's strategy of developing biotechnology business, T.Q.M.(SWAZILAND) join the setup of ESWT (SWAZILAND) and acquired 90% of it's shares in December, 2020.

  • Note 9: There is no subsidiaries that excluded in the consolidated financial report.

(Continued)

143

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(d) Foreign currencies

(i) currencies transaction

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 currencies 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, except for equity securities designated as at fair value through other comprehensive income; which are recognized in other comprehensive income.

(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 the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the presentation currency at the average exchange rate. Exchange 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 when

  • (i) The Group expects to realize the asset, or intends to sell or consume it, in its normal operating cycle,

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

  • (iii) The Group expects to realize the asset within twelve months after the reporting period,

(Continued)

144

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

  • (iv) The asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

A liability is classified as current when

  • (i) The Group expects to settle the liability in its normal operating cycle,

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

  • (iii) The liability is due to be settled within twelve months after the reporting period,

  • (iv) The Group does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

  • (f) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Time deposits which meet the above definition and are held for the purpose of meeting short term cash commitments rather than for investment or other purposes should be recognized as cash equivalents.

Bank overdrafts that are repayable on demand and form an integral part of the Group’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

Trade receivables and debt securities 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 (unless it is 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 issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(i) Financial assets

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

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

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

(Continued)

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TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

  • 1) Financial assets measured at amortized cost

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

  • ‧ it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

  • ‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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

  • 2) 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.

Debt investments at FVOCI are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss.

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 measured at 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) Business model assessment

The Group makes an assessment of the objective of the business model in which a financial asset is held at portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

(Continued)

146

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

  • ‧ the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management ’ s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets;

  • ’

  • ‧ how the performance of the portfolio is evaluated and reported to the Group s management;

  • ‧ the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

  • ‧ how managers of the business are compensated ─ e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

  • ‧ the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, and are consistent with the Group’s continuing recognition of the assets.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

  • 5) Impairment of financial assets

The Group recognizes loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, amortized costs, notes and trade receivables, other receivables, guarantee deposit and other financial assets) and contract assets.

Loss allowance for trade receivables and contract assets are always measured at an amount equal to lifetime ECL.

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

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.

Since the performance object of the Group’s cash deposits are investment grade financial institutions, the Group’s credit risk are considered low.

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

(Continued)

147

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For corporate customers, the Group individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.

6)

Derecognition of financial assets

The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Group enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

(ii) Financial liabilities and equity instruments

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.

3) Financial liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss.

(Continued)

148

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

  • 4) Derecognition of financial liabilities

The Group derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

  • 5) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(h) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is calculated using 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 case of manufactured inventories and work in process, 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) Non-current assets held-for-sale

Non-current assets comprising assets that are highly probable to be recovered primarily through sale rather than through continuing use, are reclassified as held for sale. Immediately before classification as held for sale, the assets, are remeasured in accordance with the Group’s accounting policies. Thereafter, generally, the assets are measured at the lower of their carrying amount and fair value less costs to sell. Impairment losses on assets initially classified as held for sale and any subsequent gains or losses on remeasurement are recognized in profit or loss. Gains are not recognized in excess of the cumulative impairment loss that has been recognized.

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

  • (j) Investment in associates

Associates are those entities in which the Group has significant influence, but no control, over the financial and operating policies.

(Continued)

149

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition, minus any accumulated impairment losses.

The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of those associates, after adjustments to align the accounting policies with those of the Group, from the date on which significant influence commences until the date on which significant influence ceases. The Group recognizes any changes of its proportionate share in the investee within capital surplus, when an associate’s equity changes due to reasons other than profit and loss or comprehensive income, which did not result in changes in actual proportionate share.

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

When the Group’s share of losses of an associate equals or exceeds its interest in associates, it discontinues recognizing its share of further losses. After the recognized interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

The Group discontinues the use of the equity method and measures the retained interest at fair value from the date when its investment ceases to be an associate. The difference between the fair value of retained interest and proceeds from disposing, and the carrying amount of the investment at the date the equity method was discontinued is recognized in profit or loss. The Group accounts for all the amounts previously recognized in other comprehensive income in relation to that investment on the same basis as would have been required if the associates had directly disposed of the related assets or liabilities. If a gain or loss previously recognized in other comprehensive income would be reclassified to profit or loss ( or retained earnings) on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) (or retained earnings) when the equity method is discontinued. If the Group’s ownership interest in an associate is reduced while it continues to apply the equity method, the Group reclassifies the proportion of the gain or loss that had previously been recognized in other comprehensive income relating to that reduction in ownership interest to profit or loss.

If an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the Group continues to apply the equity method without remeasuring the retained interest.

When the Group subscribes to additional shares in an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment will differ from the amount of the Group’s proportionate interest in the net assets of the associate. The Group records such a difference as an adjustment to investments, with the corresponding amount charged or credited to capital surplus. The aforesaid adjustment should first be adjusted under capital surplus. If the capital surplus resulting from changes in ownership interest is not sufficient, the remaining difference is debited to retained earnings. If the Group’s ownership interest is reduced due to the additional subscription to the shares of the associate by other investors, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate will be reclassified to profit or loss on the same basis as would be required if the associate had directly disposed of the related assets or liabilities.

(Continued)

150

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(k) Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment property is initially measured at cost and subsequently at fair value with any change therein recognized in profit or loss.

Any gain or loss on disposal of investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognized in profit or loss. When investment property that was previously classified as property, plant and equipment is sold, any related amount included in ‘other equity - revaluation surplus’ is transferred to retained earnings.

Rental income from investment property is recognized as other revenue on a straight-line basis over the term of the lease.

  • (l) Property, plant and equipment

  • (i) Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses. The cost includes any expenditure of acquiring assets. Self-built asset cost includes materials, direct labor, any other expenditure to make the asset usable, removement and recovery cost, and the loan cost meeting the criteria of capitalization. Besides, the cost also includes the software purchased to integrate related functions, which is capitalized as a part of the equipment.

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.

  • (ii) Subsequent expenditure

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

  • (iii) Depreciation

Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straightline basis over the estimated useful lives of each component of an item of property, plant and equipment.

Land is not depreciated.

The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:

1) Buildings 3～55 years
2) Machinery equipment 1～15 years
3) Transportation equipment 3～5 years
4) Office and Other equipment 1～20 years

(Continued)

151

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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

  • (iv) Reclassification to investment property

A property is reclassified to investment property at its carrying amount when the use of the property changes from owneroccupied to investment property.

  • (m) Leases

  • (i) Identifying a lease

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

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

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

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

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

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

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

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

(ii) As a leasee

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

(Continued)

152

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

  • 1) fixed payments, including in-substance fixed payment,

  • 2) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date,

  • 3) amounts expected to be payable under a residual value guarantee, and

  • 4) payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

  • 1) there is a change in future lease payments arising from the change in an index or rate, or

  • 2) there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, or

  • 3) there is a change of its assessment on whether it will exercise a purchase, extension or termination option, or

  • 4) there is any lease modifications.

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-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Group accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Group presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

The Group has elected not to recognize right-of-use assets and lease liabilities for short-term leases of machinery and office equipment 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.

(Continued)

153

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

As a practical expedient, the Group elects not to assess whether all rent concessions that meets all the following conditions are lease modifications or not:

  • 1) the rent concessions occurring as a direct consequence of the COVID-19 pandemic,

  • 2) the change in lease payments that resulted in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change,

  • 3) any reduction in lease payments that affects only those payments originally due on, or before, June 30, 2021, and

  • 4) there is no substantive change in other terms and conditions of the lease.

In accordance with the practical expedient, the effect of the change in the lease liability is reflected in profit or loss in the period in which the event or condition that triggers the rent concession occurs.

  • (iii) As a leasor

When the Group acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

If an arrangement contains lease and non-lease components, the Group applies IFRS15 to allocate the consideration in the contract.

  • (n) Intangible assets

  • (i) Recognition and measurement

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

Expenditure on research activities is recognized in profit or loss as incurred.

Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to, and has sufficient resources to, complete development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost, less accumulated amortization and any accumulated impairment losses.

Other intangible assets, including patents and trademarks, that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.

(Continued)

154

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

  • (iii) Amortization

Amortization is calculated over the cost of the asset, less its residual value, and is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use. Additionally intangible assets such as computer software are amortized at estimated useful lives ranging from three to twenty years, and recognized in profit and loss.

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

(o) Impairment of non-financial assets

At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than inventories, contract assets, deferred tax assets and investment properties measured at fair value, less costs) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only 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.

(Continued)

155

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(p) Revenue from contracts with customers

(i) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Group expects to be entitled in exchange for transferring goods or services to a customer. The Group recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Group’s main types of revenue are explained below.

  • 1) Sale of goods

The Group engages in manufacturing, processing and wholesaling of textile and garments, and cleansing and extracting equipment. The Group recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied.

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

2) Financial components

The Group does not expect to have any contracts where the period between the transfer of the goods or services to the customer and payment by the customer exceeds one year. The Group required advanced receipts when selling machines, which follows the practice of the industry. Thus it is not considered to be financial components. As a consequence, the Group does not adjust any of the transaction prices for the time value of money.

(q) Employee benefits

  • (i) Defined contribution plans

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

(ii) Defined benefit plans

The Group’s net obligation in respect of defined benefit plans is calculated separately for each the plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

(Continued)

156

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Group, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings within equity.

The Group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Group recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(iii) Termination benefits

Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of those benefits and when the Group recognizes costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted.

  • (iv) 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.

(r) Income taxes

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

Current taxes comprise the expected tax payables or receivables on the taxable profits (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)

157

TEX-RAY INDUSTRIAL 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 (losses) at the time of the transaction,

  • (ii) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future, and

  • (iii) taxable temporary differences arising on the initial recognition of goodwill.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date, and reflect uncertainty related to income taxes, if any.

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

  • (i) the Group has a legally enforceable right to set off current tax assets against current tax liabilities, and

  • (ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:

  • 1) the same taxable entity, or

  • 2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

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

  • (s)

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

(Continued)

158

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(t) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may incur 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 assess its performance. Each operating segment consists of standalone 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 is no judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the consolidated financial statements.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year is as follows:

  • (a) The loss allowance of trade receivables

The Group has estimated the loss allowance of trade receivables that is based on the risk of a default occurring and the rate of expected credit loss. The Group has considered historical experience, current economic conditions and forward-looking information at the reporting date to determine the assumptions to be used in calculating the impairments and the selected inputs. The relevant assumptions and input values, please refer to Note 6(c).

(b) Valuation of inventories

As inventories are stated at the lower of cost or net realizable value, the Group estimates the net realizable value of inventories for obsolescence and unmarketable items at the end of the reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the inventory is mainly determined based on assumptions as to future demand within a specific time horizon. Due to the rapid industrial transformation, there may be significant changes in the net realizable value of inventories. Please refer to Note 6(e) for further description of the valuation of inventories.

(Continued)

159

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

  • (c) Impairment of property, plant and equipment

In the process of evaluating the potential impairment of tangible assets, the Group is required to make subjective judgments in determining the independent cash flows, useful lives, expected future income and expenses related to the specific asset groups considering of the nature of the industry. Any changes in these estimates based on changed economic conditions or business strategies and could result in significant impairment charges or reversal in future years. Refer to Note 6(g) for further description of the key assumptions used to determine the recoverable amount.

(d) Impairment of goodwill

The assessment of impairment of goodwill requires the Group to make subjective judgments to identify cash-generating units (CGUs), allocate the goodwill to relevant CGUs, and estimate the recoverable amount of relevant CGUs. Refer to Note 6(j) for further description of the impairment of goodwill.

The Group’s accounting policies include measuring financial and non-financial assets and liabilities at fair value through profit or loss. The Group’s financial instrument valuation group conducts independent verification on fair value by using data sources that are independent, reliable, and representative of exercise prices. This financial instrument valuation group also periodically adjusts valuation models, conducts back-testing, renews input data for valuation models, and makes all other necessary fair value adjustments to assure the rationality of fair value. Investment property measured at fair value is periodically remeasured by the Group’s finance Dept. or by appraisers using appraisal method accepted by FSC.

The Group strives to use market observable inputs when measuring assets and liabilities. Different levels of the fair value hierarchy to be used in determining the fair value of financial instruments are as follows:

  • (a) Level 1: quoted prices (unadjusted) in active markets for identifiable assets or liabilities.

  • (b) Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived from prices).

  • (c) Level 3: inputs for the assets or liability that are not based on observable market data.

For any transfer within the fair value hierarchy, the impact of the transfer is recognized on the reporting date.

Please refer to following notes for assumptions used in measuring fair value:

  • (a) Note 6(i), Investment property.

  • (b) Note 6(w), Financial instruments.

(Continued)

160

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(6) Explanation of significant accounts

  • (a) Cash and cash equivalents
Cash
Check deposits
Demand deposits
Foreign currency deposits
Time deposits
Cash and cash equivalents in consolidated statements of cash
flows		 December 31,
2020
$ 3,405
8,225
681,789
183,315
491,584		 December 31,
2019

4,967

14,050

596,577

158,622

69,241

$
1,368,318


843,457

’ Please refer Note 6(w) for the disclosure of interest risk and sensitivity analysis of the Group s financial assets and liabilities.

  • (b) Financial assets at fair value

The portfolio of the Group were as follows:

Financial assets mandatorily measured at fair value through
profit or loss
Non-derivative financial assets
Stocks listed on domestic markets
Equity investments measured at fair value through other
comprehensive income
Unlisted Common Shares		 December 31,
2020
$
612		 December 31,
2019
1,225

1,403
$
10,682

  • (i) Please refer to Note 6(v) for re-measurement at fair value recognized in profit or loss.

  • (ii) 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. The revaluation loss of the investment has been recognized in equity accounts.

  • (iii) On Dec. 5, 2019, the Group disposed part of its financial assets at fair value through other comprehensive income at fair value amounted to $3,660 thousand and recognized realized gain amounted to $610 thousand, which was previously recognized as other comprehensive income, and thereafter, was reclassified to retained earnings.

  • (iv) During 2020, the Group sold part of its financial assets at fair value through profit or loss. The financial asset was disposed at fair value amounted to $485 thousand.

(Continued)

161

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

  • (v) Please refer to Note 6(x) for credit risk and market risk of the financial assets.

  • (vi) The aforesaid financial assets were not pledged as collateral.

  • (c) Notes and trade receivables

Notes receivables from operating activities
Accounts receivable-measured at amortized cost
Less: Loss allowance		 December 31,
2020
$ 1,877
1,271,559
167,287		 December 31,
2019

25,438

1,096,554

37,778

1,084,214

$
1,106,149
  • (i) The Group applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due, as well as the incorporated forward looking information. The expected credit losses of the notes receivables and trade receivables were as follows:
Current
Overdue under 90 days
Overdue 90 to 180 days
Overdue 180 to 360 days
Over 360 days past due
Current
Overdue under 90 days
Overdue 90 to 180 days
Overdue 180 to 360 days
Over 360 days past due		 December 31, 2020 December 31, 2020 Loss allowance
Provision
2,038
350
1,025
97,095
66,779
Gross carrying
amount
$ 886,787
151,509
11,099
157,262
66,779		 Weighted-aver
age loss rate

$
1,273,436
167,287


Loss allowance
Provision
6,848
4,296
7,732
6,304
12,598
Gross carrying
amount
$ 823,920
190,595
70,243
24,636
12,598		 Weighted-aver
age loss rate

0%~10%

10%~12%

10%~48%

10%~51%
100%

$
1,121,992
37,778

(Continued)

162

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ii) The movement in the allowance for notes and accounts receivable was as follow:

Balance on January 1
Impairment losses recognized
Amounts written off
Foreign exchange losses
Balance on December 31		 For the years ended December 31
2020
2019
$ 37,778
12,687
155,139
27,265
(19,094)
(1,614)
(6,536)
(560)
$
167,287
37,778

  • (iii) Please refer to Note 8 for the details of notes and trade receivables pledged as collateral for borrowings.

  • (iv) Due to the Covid-19 epidemic, the Group had negotiated with individual customer to change payment term. For the year ended 2020, the Group had recognized allowance provision amounting to $121,740 thousand designated to the customer. The Group additionally adequately adjusted weighted-average loss rate depending on epidemic severity of each operation region.

(d) Other receivables

Other receivables－tax refundable
Others
Less: Loss allowance		 December 31,
2020
$ 73,434
24,731
(6,456)		 December 31,
2019

81,445

28,706

(16,713)

93,438

$
91,709

Except for the other receivables below, all the other receivables are financial assets with low credit risk, therefore, loss allowance for such receivables were measured at the expected credit loss of 12 months. The movement of the allowance for other receivables were as follow:

Balance on January 1
Impairment losses recognized
Reversal of impairment loss
Amounts written off
Foreign exchange losses
Balance on December 31		 For the years ended December 31
2020
2019
$ 16,713
70,049
155
-
-
(49,431)
(9,353)
(3,659)
(1,059)
(246)
$
6,456
16,713

(Continued)

163

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

－ Part of other receivables tax refundable of overseas subsidiaries had been overdue 360 days as of Dec. 31, 2018. Since most of the Taiwanese investors in the local area encountered such dilemma, the management of the Group recognized the loss allowance of refundable tax overdue 360 days, which amounted to $63,748 thousand. The Group had reported the situation to the local government via Ministry of Economic Affairs. As of Dec. 31, 2019, the Group had recovered part of overpaid tax. Therefore, the management of the Group recognized gain on reversal of impairment loss and wrote-off the amount that cannot be collected.

(e) Inventories

Raw materials
Work in progress
Finished goods
Merchandise		 December 31,
2020
$ 436,292
609,627
278,160
4,520		 December 31,
2019

528,084

415,678

355,721

13,559

$
1,328,599


1,313,042

  • (i) As of December 31, 2020 and 2019, inventories recognized as cost of sales amounted to $6,180,598 thousand and $5,748,995 thousand, respectively. For the years ended 2020 and 2019, the write-down of inventories amounted to $99,534 thousand and $21,802 thousand, respectively. The write-downs are included in cost of sales.

  • (ii) The aforesaid inventories were not pledged as collateral.

  • (f)

  • Investments accounted for using equity method

A summary of the Group's investments accounted for using equity method at the reporting date were as follows:

Associate December 31,
2020
$
-		 December 31,
2019
2,541

  • (i) In 2020 and 2019, the Group’s share of the net income, which equaled to the comprehensive income, generated from associates that are not individually insignificant was $760 thousand and $8,937 thousand, respectively.

  • (ii) The Group’s ability to affect those returns from associates is not highly restricted. Because the Group had no obligation to bear additional losses, the Group had stopped recognizing its share of losses from these associates. The unrecognized losses in 2020 and 2019 are $0 and $2,244 thousand, respectively.

  • (iii) The aforesaid investments accounted for using equity method were not pledged as collateral.

(Continued)

164

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(g) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Group for the years ended December 31, 2020 and 2019, were as follows:

Cost:
Balance on January 1, 2020
Additions
Transfers
Disposals
Reclassification to investment property
Effect of movement in exchange rate
Balance on December 31, 2020
Balance on January 1, 2019
Additions
Transfers
Disposals
Reclassification to investment property
Effect of movement in exchange rate
Balance on December 31, 2019
Depreciation and impairment loss:
Balance on January 1, 2020
Depreciation for the period
Impairment loss
Reclassification to investment property
Transfers
Disposals
Effect of movement in exchange rate
Balance on December 31, 2020
Balance on January 1, 2019
Depreciation for the period
Transfers
Disposals
Reclassification to investment property
Effect of movements in exchange rates
Balance on December 31, 2019
Carrying amounts:
Balance on December 31, 2020
Balance on December 31, 2019
Balance on January 1, 2019		 Land
$ 505,656
-
-
-
(38,490)
(1,108)		 Buildings
1,487,886
16,630
4,567
(3,836)
(86,011)
(25,552)		 Machinery
equipment
1,554,721
25,905
23,942
(262,119)
-
(45,963)		 Transportation
equipment
46,283
2,012
452
(7,234)
-
(1,806)		 Office
equipment
131,201
1,652
-
(2,755)
-
(2,020)		 Lease
assets
444
-
-
-
-
-		 Other
facilities
175,161
3,743
1,348
(41,747)
-
(5,882)		 Construction
inprogress
96,871
127,551
-
-
-
(3)		 Total
3,998,223
177,493
30,309
(317,691)
(124,501)
(82,334)

$
466,058
1,393,684
1,296,486
39,707
128,078		 444
132,623
224,419
3,681,499

$ 513,657
-
-
-
(7,871)
(130)
1,543,382
17,741
13,800
(8,400)
(45,502)
(33,135)
1,461,044
93,862
66,687
(35,781)
-
(31,091)
50,894
3,648
-
(7,470)
-
(789)
124,961
6,136
4,546
(2,169)
-
(2,273)		 444
-
-
-
-
-
174,647
9,190
2,191
(9,591)
-
(1,276)
30,816
73,980
(7,823)
-
-
(102)
3,899,845
204,557
79,401
(63,411)
(53,373)
(68,796)

$
505,656
1,487,886
1,554,721
46,283
131,201		 444
175,161
96,871
3,998,223

$ -
-
-
-
-
-
-
450,715
58,450
-
(58,475)
-
(3,836)
(7,727)
992,812
114,954
70,059
-
(401)
(231,185)
(30,513)
31,250
4,526
100
-
-
(6,482)
(1,254)
101,661
7,071
200
-
-
(2,263)
(1,425)		 444
-
-
-
-
-
-
152,719
6,036
1,500
-
-
(37,121)
(5,026)
-
-
-
-
-
-
-
1,729,601
191,037
71,859
(58,475)
(401)
(280,887)
(45,945)
$
-
439,127
915,726
28,140
105,244		 444
118,108		 -
1,606,789
$ -
-
-
-
-
-
448,036
61,305
12
(5,805)
(44,411)
(8,422)
916,648
122,130
(12)
(28,250)
-
(17,704)
33,840
4,770
-
(6,865)
-
(495)
96,316
8,376
469
(1,734)
-
(1,766)		 444
-
-
-
-
-
156,292
5,813
(469)
(7,774)
-
(1,143)		 -
-
-
-
-
-
1,651,576
202,394
-
(50,428)
(44,411)
(29,530)
$
-
450,715
992,812
31,250
101,661		 444
152,719		 -
1,729,601
$
466,058
954,557
380,760
11,567
22,834		 -
14,515		 224,419
2,074,710

$
505,656
1,037,171
561,909
15,033
29,540		 -
22,442
96,871
2,268,622

$
513,657
1,095,346
544,396
17,054
28,645		 -
18,355
30,816
2,248,269

(i) On November 12, 2019, the Board of Directors approved the adjustment of business model of TEXRAY (MEXICO) identified as major subsidiary. As a result, some property, plant and equipment are expected to be leased or sold. Therefore, the real estate amounting to $8,962 thousand was transferred to investment property. Please refer to Note 6(i) for details.

(Continued)

165

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

  • (ii) On June 16, 2020, the Board of Directors approved that the real estate of the factory site located in Taiwan would be leased or sold subsequently, resulting in the carrying value amounting to $66,026 thousand was transferred into investment property. Please refer to Note 6(i) for details.

  • (iii) In June 2020, due to the cessation of production at the Tainan Dyeing Factory, the Group estimated that the recoverable amount of the relevant property, plant and equipment was lower than the book value, thus impairment loss amounting to $4,000 thousand was recognized.

  • (iv) The property, plant and equipment of the Group had been pledged as collateral for bank borrowings, please refer to Note 8.

  • (h) Right-of-use assets

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

Cost:
Balance on January 1, 2020
Additions
Disposal
Effect of movement in exchange rates
Balance on December 31, 2020
Balance on January 1, 2019
Additions
Disposal / Write-off
Effect of movement in exchange rates
Balance on December 31, 2019
Accumulated depreciation:
Balance on January 1, 2020
Depreciation for the year
Disposal / Write-off
Effect of movement in exchange rates
Balance on December 31, 2020
Balance on January 1, 2019
Depreciation for the year
Disposal / Write-off
Effect of movement in exchange rates
Balance on December 31, 2019
Carrying amounts:
Balance on December 31, 2020
Balance on December 31, 2019
Balance on January 1, 2019		 Land
$ 113,281
-
(3,385)
(2,473)		 Buildings
71,906
67,844
(46,395)
(4,154)		 Machinery
equipment		 Transportatio
n equipment

6,254
508

-
16		 Total
194,005
68,352
(52,344)
(6,611)

2,564

-

(2,564)

-

$
107,423
89,201
-		 6,778
203,402

$ 83,285
32,933
-
(2,937)
72,252
15,419
(14,698)
(1,067)
4,082

-

(1,518)

-

1,640
4,640

-
(26)
161,259
52,992
(16,216)
(4,030)

$
113,281
71,906
2,564

6,254
194,005

$ 6,068
5,883
(3,385)
(506)
32,570
37,295
(36,317)
(1,539)

1,525

390

(1,915)

-


1,378

2,456

-
11
41,541
46,024
(41,617)
(2,034)

$
8,060
32,009
-		 3,845
43,914

$ -
6,616
-
(548)
-
37,724
(4,828)
(326)		 -

2,601

(1,076)

-
-

1,384

-
(6)
-
48,325
(5,904)
(880)

$
6,068
32,570
1,525

1,378
41,541

$
99,363
57,192
-

2,933
159,488

$
107,213
39,336		 1,039

4,876
152,464

$
83,285
72,252
4,082


1,640
161,259

(Continued)

166

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The right-of-use assets of the Group had been pledged as collateral for bank borrowings, please refer to Note 8.

(i) Investment property

The movement of the investment property were as follows:

Book Value:
Balance on January 1, 2020
Transfer from property, plant, and equipment
Change in fair value
Effect of movements in exchange rates
Balance on December 31, 2020
Balance on January 1, 2019
Transfer from property, plant, and equipment
Change in fair value
Balance on December 31, 2019		 Land and
improvement
Buildings
Total
$ 197,456
137,672
335,128
38,490
27,536
66,026
873,576
(18,948)
854,628
(21,655)
(8,143)
(29,798)



$
1,087,867
138,117
1,225,984



$ -
53,000
53,000
7,871
1,091
8,962
189,585
83,581
273,166



$
197,456
137,672
335,128
  • (i) The recurring fair value measurement for the investment properties has been categorized as a Level 3 fair value based on the input to the valuation technique used. The above table shows a reconciliation from the opening balances to the closing balances for Level 3 fair values.

The Group’s investment properties were subsequently measured at fair value using the income approach after initial recognition. The relevant contract information and key assumptions used in the method are as follows:

Contract Terms Building No. 6576, Sec. 3, Zhongshan Dist., Taipei City Building No. 6576, Sec. 3, Zhongshan Dist., Taipei City
December 31, 2020 December 31, 2019
Contract terms 1.Rental:$238 thousand /month
2.Period:60 months
3.Deposits: $460 thousand
4.Tax borne by lessor:$85
thousand/year		 1.Rental:$210~$238 thousand /month
2.Period:57 months
3.Deposits: $460 thousand
4.Tax borne by lessor:$86
thousand/year
Rent at local market rate
(note)		 $3,128 /Py /month $2,860 /Py /month
Current market rent for
comparable properties in
similar locations and
condition		 $2,683～$3,234 /Py /month $2,630~$3,088 /Py /month
Current status In use In use

(Continued)

167

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Contract Terms Building No. 6576, Sec. 3, Zhongshan Dist., Taipei City Building No. 6576, Sec. 3, Zhongshan Dist., Taipei City
December 31, 2020 December 31, 2019
Capitalization rate 3.77% 3.54%
Discount rate 2.02% 2.04%
Appraised by external
independent appraiser or
self-appraisal		 Appraised by external independent
appraiser		 Appraised by external independent
appraiser
Appraiser office(s) Grand Elite Real Estate Appraisers
Firm		 Grand Elite Real Estate Appraisers
Firm
Appraiser name(s) Fu-Sheng Wang Fu-Sheng Wang
Appraisal date December 31, 2020 December 31, 2019
Fair value by external
independent appraiser(s)		 $64,090 thousand $63,420 thousand
Contract terms The Group’s property located at
Parque Industrial la Primavera, Mexico
December 31, 2020 December 31, 2019
Rent at local market rate
(note)		 $16～$432 /square feet/month $16～$432 /square feet/month
Current market rent for
comparable properties in
similar locations and
condition		 As above As above
Current status Available for leasing Available for leasing
Capitalization rate 7.864% 5.99%～7.07%
Discount rate 2.94%～3.83% 5.74%～6.57%
Appraised by external
independent appraiser or
self-appraisal		 Appraised by external independent
appraiser		 Appraised by external independent
appraiser
Appraiser office(s) Grand Elite Real Estate Appraisers
Firm(review opinion)		 Grand Elite Real Estate Appraisers
Firm(review opinion)
Appraiser name(s) Fu-ShengWang Fu-ShengWang
Appraisal date December 31,2020 December 17,2019
Fair value by external
independent appraiser(s)		 $271,076 thousand ($191,820
thousandpeso)		 $299,943 thousand ($188,970
thousandpeso)

(Continued)

168

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Contract terms Land No. 228-240, 240-1, 241, 531, 531-1, 533-535
and buildings located at Shengli Sec., Rende Dist., Tainan City,
total in twenty items.
December 31, 2020
Rent at local market rate (note) $171~$218 /Py /month
Current market rent for
comparable properties in
similar locations and condition		 As above
Current status Available for leasing
Capitalization rate 1.755%
Discount rate 3.29%
Appraised by external
independent appraiser or
self-appraisal		 Appraised by external independent appraiser
Appraiser office(s) CHINA PROPERTY APRAISING CENTER CO., LTD.
Appraiser name(s) Dian-Jing Hsieh、Xiang-Ling Chiu
Appraisal date June 30 and December 31, 2020
Fair value by external
independent appraiser(s)		 $920,654 thousand and $920,913 thousand respectively

Note: If there is no actual lease case in the area where the target premises are, the valuation report’s selection of the rent comparison case for the premises is based on the investigation and evaluation of the target land use, within the range of the neighboring area, select three appropriate comparison cases, after analysis and comparison and adjustment, obtain the reasonable market rent of the target land.

In accordance with Article 34 of the Regulations on Real Estate Appraisal, the procedures of the income approach include estimating the effective gross income and total expenses, computing the net operating income, determining the capitalization rate or discount rate, and computing the income. The attributes used by the Group for the estimations above were the last three years’ data from the subject property and comparable properties which have similar characteristics, and these data were assessed and adjusted based on their persistency, stability, and growth to ensure the availability and reasonableness of these data. The movement of income (cash inflows) and expenditure (cash outflows) for future periods was based on the vacancies or losses, existing or future cash flow plans of the Group, and historical cash flows from the subject property, identical properties, or properties in the same industry. The estimation and computation of the net income were based on the highest and best use of the subject property and have taken into consideration the income generated from comparable properties in the same location based on their highest and best use.

(Continued)

169

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The discount rate is determined by the risk premium method, which takes into consideration of the bank time deposit interest rate, government bond interest rate, the risk of real estate investment, currency changes and the trend of real estate prices, etc., and is selected to represent the general property return. The rate is a benchmark, and it is determined after adjusting the difference between the investment property and the individual characteristics of the target. The discount rate is based on the mobile interest rate of the two-year postal fixed rate of small deposit issued by Chunghwa Post Co., Ltd., plus no less than 75 basis points of percentage. Factors such as the underlying income situation, liquidity, risk, value-added and ease of management are also taking account. As of December 31, 2020 and 2019, the discount rates were determined to be 2.02%~3.83% and 2.04%～6.57%, with risk premium added up. The estimation of capitalization rates refer to the weighted average returns which is calculated by dividing the net income of the comparative targets by the prices.

  • (ii) The Group’s Tainan dyeing factory was expected to be leased or sold, thus it was transferred from plant, plant and equipment to investment property on June 16, 2020. The Group recognized the value-added amounting to $873,576 thousand between the fair value and book value at the time of the transfer, and the impairment loss of building amounted to $18,948 thousand (recorded under other gains and losses). The value-added after deducting the amount of provision of land value increment tax equaled to $761,166 thousand, and was recognized under other equity.

  • (iii) On November 12, 2018, the Group signed a sales contract of real estate accounted for investment property with a non-related party. The transfer of ownership was completed on January 24, 2019. The sale price amounting to $321,000 thousand was wholly collected. The Group thus recognized the gain on sale of investment property amounting to $42,304 thousand.

  • (iv) In 2019, the Group transferred real estate from property, plant and equipment to investment property measured at fair value and recognized the difference between fair value and book value, amounting to $262,746 thousand as revaluation surplus under other equity. Please refer to Note 6(g).

  • (v) Remeasurement gains and losses arising from investment property measured at fair value, please refer to Note 6(v).

  • (vi) As of December 31, 2020 and 2019, the investment property of the Group had been pledged as collateral for long-term borrowings, please refer to Note 8.

(Continued)

170

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(j) Intangible assets

The cost, amortization and impairment of the intangible assets of the Group for the years ended December 31, 2020 and 2019, were as follows:

Costs:
Balance on January 1, 2020
Additions
Disposals
Transfers
Effect of movement in exchange rate
Balance on December 31, 2020
Balance on January 1, 2019
Additions
Disposals
Effect of movement in exchange rate
Balance on December 31, 2019
Amortization and impairment loss:
Balance on January 1, 2020
Amortization for the year
Impairment loss
Disposals
Transfers
Effect of movement in exchange rates
Balance on December 31, 2020
Balance on January 1, 2019
Amortization for the year
Disposals
Effect of movement in exchange rates
Balance on December 31, 2019
Carrying amounts:
Balance on December 31, 2020
Balance on December 31, 2019
Balance on January 1, 2019		 Patent
and
trademark		 Software
cost
64,889
16,473
-
5,578
(223)		 Others
1,083
90
-
251
-		 Total
518,350
32,128
(453)
5,829
(11,705)


$
206,320
249,688
86,717		 1,424
544,149


$ 197,200
265,453
9,425
-
(15,218)
-
-
(4,482)
69,195
4,461
(8,396)
(371)
-
1,083
-
-
531,848
14,969
(23,614)
(4,853)

$
191,407
260,971
64,889		 1,083
518,350


$ 175,412
38,110
3,521
4,039
400
-
(453)
-
-
-
(28)
-
49,689
9,289
-
-
(63)
(112)
474
825
-
-
63
-
263,685
17,674
400
(453)
-
(140)

$
178,852
42,149
58,803		 1,362
281,166


$ 182,678
33,886
1,679
4,224
(8,945)
-
-
-
52,392
5,884
(8,396)
(191)
-
474
-
-
268,956
12,261
(17,341)
(191)
$
175,412
38,110
49,689		 474
263,685


$
27,468
207,539
27,914		 62
262,983


$
15,995
222,861
15,200		 609
254,665


$
14,522
231,567
16,803		 -
262,892

(i) The amortization of intangible assets were recognized in the statement of comprehensive income as follows:

Operating costs
Operating expenses		 For the years ended December 31
2020
2019
$
1,719
711
$
15,955
11,550
2020
$
1,719

$
15,955

(Continued)

171

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Impairment

For impairment testing purposes, goodwill had been allocated to operating units. They were the minimum level used to monitor the goodwill of the Group for internal management purposes and shall not be larger than the operating segment of the Group.

The carrying amount of goodwill had been allocated to each operating unit were as follows:

America region
Eswatini region
Vietnam region		 December 31,
2020
$ 147,521
44,397
15,621		 December 31,
2019
157,603
44,397
20,861

$
207,539
222,861

The recoverable amount of the goodwill was based on its value in use, determined by discounting the future cash flows to be generated from the continuing use of the CGU.

The value in use is determined by the Group’s self-assessment by discounting the future cash flows generated by the continuous use of the unit. The value in use (including property, plant and equipment and goodwill) as of December 31, 2020 and 2019, were performed on the same basis, which was estimated based on factors such as past experience and actual operating results.

The key assumptions of the calculation represent the management's assessment of future trends, or it was determined by appraisal agency based on its own professional judgement. And it takes consideration of both external and internal information (historical information) as well.

(iii) The aforesaid intangible assets were not pledged as collateral.

(k) Short-term borrowings

Letters of credit
Unsecured non-financial institution loans
Unsecured bank loans
Secured bank loans
Total
Unused credit line
Range of interest rates		 December 31,
2020
$ 9,990
3,508
567,394
270,177		 December 31,
2019

61,722

-

1,163,482

185,624

$
851,069

1,410,828

$
480,557
361,336

1.00%~6.00%
1.20%~5.44%

The Group had pledged assets as collateral for short-term borrowing, please refer to Note 8.

(Continued)

172

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

  • (l) Short-term notes and bills payable
Commercial paper payable
Less: Discount on short-term notes and bills payable
Net
Range of interest rates
Guarantee institution		 December 31, 2020
$ 250,000
(340)

$
249,660

1.3%
CHANG HWA Bank and
other ten syndicated banks

The Group had pledged assets as collateral for short-term notes and bills payable, please refer to Note 8.

  • (m) Long-term borrowings

The details were as follows:

Unsecured non-financial institution loans
Secured non-financial institution loans
Unsecured bank loans
Secured bank loans
Less: current portion
borrowing fees
Net
Unused credit line
Range of interest rates
Maturity		 December 31,
2020
$ 73,743
48,830
-
1,738,531
(391,874)
(5,061)		 December 31,
2019
50,710
142,066
34,000
1,397,032
(168,978)
-

$
1,464,169		 1,454,830

$
50,248
136,648

1.40%~7.87%
2021.01~2028.03
1.196%~7.87%
2020.01~2035.06

  • (i) The Group entered into a five-year syndicated loan agreement of $2 billion with 11 banks including Changhua Commercial Bank LTD. on January 8, 2020. The funds obtained in the syndicated loan are used to settle the outstanding balance of the previous syndicated loan agreement and to supplement the operating turnover. According to the agreement, the Group shall calculate and maintain its current ratio, interest protection multiples and debt ratio based on the annual and semi-annual consolidated financial reports audited or reviewed by auditors during the loan period. On December 31, 2020, the Group did not violate the loan agreement.

  • (ii) Please refer to Note 8 for details of the related assets pledged as collateral.

(Continued)

173

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(n) Lease liabilities

The carrying amount of lease liabilities were as follows:

Current
Non-current		 December 31,
2020
$
23,650		 December 31,
2019

27,424

$
67,025


51,690

For the maturity analysis, please refer to Note 6(w).

The amounts recognized in profit or loss were as follows:

Interest on lease liabilities
Expenses relating to leases of low-value assets,
excluding short-term leases of low-value assets		 For the years ended December 31, 2020
2020
2019
$
2,568
2,203


$
16,419
24,535

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

Total cash outflow for leases For the years ended December 31, 2020
2020
2019
$
62,856
71,894

(o) Operating lease

Please refer to Note 6(g) and 6(i) for information about the operating leases of property.

A maturity analysis of lease payments, showing the undiscounted lease payments to be received after the reporting date were as follows:

Less than one year
One to two years
Two to three years
Three to four years
Four to five years
More than five years
Total undiscounted lease payments		 December 31,
2020
$ 12,873
12,771
12,771
12,057
9,914
44,613		 December 31,
2019
3,174
2,857
2,857
2,857
2,143
-

$
104,999		 13,888

For the information of rent revenue from operating lease, please refer to Note 6(v).

(Continued)

174

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

  • (p) Employee benefits

  • (i) Defined benefit plans

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

Present value of defined benefit obligations
Fair value of plan assets
Net defined benefit liabilities		 December 31,
2020
$ (61,223)
33,522
$
(27,701)		 December 31,
2019

(81,736)

50,151



(31,585)

The Group makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provide pension benefits for employees upon retirement. Plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average monthly salary for six months prior to retirement.

  • 1) Composition of plan assets

The Group set aside pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. Under these regulations, the minimum earnings from these pension funds shall not be less than the earnings from two-year time deposits with the interest rates offered by local banks.

The Group’s Bank of Taiwan labor pension reserve account balance amounted to $33,522 thousand as of December 31, 2020. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

  • 2) Movements in present value of the defined benefit obligations

The movements in the present value of the defined benefit obligations for the years ended December 31, 2020 and 2019 were as follows:

Defined benefit obligation, January 1
Current service costs and interest cost
Remeasurements of the net defined benefit
liability
－Experience adjustments
－Actuarial gains (losses) arose from changes
in demographic assumptions
－Actuarial gains (losses) arose from changes
in financial assumption
The effect of plan reduction
Benefits paid by the plan
Defined benefit obligation, December 31		 For the years ended December 31
2020
2019
$ (81,736)
(80,603)
(713)
(987)
398
(3,405)
(5)
(323)
(3,822)
(2,214)
23,544
3,286
1,111
2,510
$
(61,223)
(81,736)
2020
$ (81,736)
(713)
398
(5)
(3,822)
23,544
1,111

$
(61,223)

(Continued)

175

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

  • 3) Movements in the fair value of plan assets

The movements in the fair value of the defined benefit plan assets for the years ended December 31, 2020 and 2019 were as follows:

Fair value of plan assets, January 1
Interests revenue
Remeasurements of the fair value of plan assets
－Return on plan asset excluding interest
income
Contributions made
Benefits paid by the plan
Settlement payment of plan asset
Fair value of plan assets, December 31		 For the years ended December 31
2020
2019
$ 50,151
49,111
383
503
1,613
1,738
3,623
4,178
(1,111)
(2,510)
(21,137)
(2,869)		 For the years ended December 31
2020
2019
$ 50,151
49,111
383
503
1,613
1,738
3,623
4,178
(1,111)
(2,510)
(21,137)
(2,869)
2020
$ 50,151
383
1,613
3,623
(1,111)
(21,137)

$
33,522

50,151

  • 4) Movements of the effect of the asset ceiling: None.

  • 5) Expenses recognized in profit or loss

The Group’s pension expenses that should be recognized in profit or loss for the years ended December 31, 2020 and 2019 were as follows:

Current service costs
Net interest of net liabilities for defined benefit
obligations
Service cost of prior period		 For the years ended December 31
2020
2019
$ 106
187
224
297
(2,407)
(417)		 For the years ended December 31
2020
2019
$ 106
187
224
297
(2,407)
(417)
2020
$ 106
224
(2,407)

$
(2,077)

67

The actual expenses recognized in profit or loss for the years ended December 31, 2020 and 2019 were as follows:

Operating costs
Selling expenses
Administration expenses
Research and development expenses		 For the years ended December 31
2020
2019
$ (43)
321
(1,318)
2
(914)
(62)
(37)
41		 For the years ended December 31
2020
2019
$ (43)
321
(1,318)
2
(914)
(62)
(37)
41
2020
$ (43)
(1,318)
(914)
(37)

$
(2,312)

302

(Continued)

176

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The difference between the above expenses and the amounts should be reported in the actuarial report will be regarded as a change in accounting estimates and recognized as the profit or loss of the following year.

Due to a number of employees agreeing to a curtailment as of December 31, 2020, the Group has reduced the defined benefit retirement obligations by $23,544 thousand and recognized the reduction in benefits in the consolidated income statement.

6)

Actuarial assumptions

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

Discount rate
Future salary increase rate		 December 31,
2020
0.30%~0.35%
2.00%		 December 31,
2019
0.75%
2.00%

The expected allocation payment to be made by the Group to the defined benefit plans for the one-year period after the reporting date is $2,388 thousand.

～ The weighted average lifetime of the defined benefits plans is 10 11 years.

7)

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, 2020
Discount rate (change 0.25％)
Future salary increasing rate (change 0.25％)
December 31, 2019
Discount rate (change 0.25％)
Future salary increasing rate (change 0.25％)		 Influences of defined
benefit obligations
Increase 0.25％
Decrease 0.25％
$ (1,524)
1,584
1,553
(1,503)
(2,142)
2,230
2,196
(2,122)		 Influences of defined
benefit obligations
Increase 0.25％
Decrease 0.25％
$ (1,524)
1,584
1,553
(1,503)
(2,142)
2,230
2,196
(2,122)
Increase 0.25％
$ (1,524)
1,553
(2,142)
2,196
1,584
(1,503)
2,230
(2,122)

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 2020 and 2019.

(Continued)

177

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ii) Defined contribution plans

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

The pension costs incurred from the contributions to the Bureau of the Labor Insurance amounted to $24,541 thousand and $52,801 thousand for the years ended December 31, 2020 and 2019, respectively.

(q) Income taxes

(i) Tax expense

The components of income tax for the years ended December 31, 2020 and 2019 were as follows:

Current income tax expense
Current period
Prior years income tax adjustment
Land value increment tax
Deferred income tax expense
Origination and reversal of temporary differences
Recognition of previously unrecognized tax losses
Tax expense		 For the years ended December 31
2020
2019
$ 141,885
112,287
(19,674)
(13,474)
-
39,136		 For the years ended December 31
2020
2019
$ 141,885
112,287
(19,674)
(13,474)
-
39,136
122,211

137,949

(17,294)
(3,190)


(4,420)

(297)

(20,484)


(4,717)

$
101,727


133,232

The reconciliation of tax expense and income before tax for the years ended December 31, 2020 and 2019 were as followed:

Profit (loss) before tax
Income tax expense at domestic statutory tax rate
Effect of tax rates in foreign jurisdiction
Tax-exempt income
Origination and reversal of temporary differences
Change in unrecognized temporary differences
Current-year losses for which no deferred tax asset was
recognized
Land value increment tax
Adjustment to the prior year
Loss on disposal of investment
Others		 For the years ended December 31
2020
2019
$ 266,502
(39,226)
$ 53,300
(7,845)
91,658
131,079
(4)
(8,461)
(19,730)
(7,120)
-
7,165
(3,190)
-
-
39,136
(19,674)
(13,474)
(9,660)
(6,894)
9,027
(354)
$
101,727
133,232
2020
$ 266,502

$ 53,300
91,658
(4)
(19,730)
-
(3,190)
-
(19,674)
(9,660)
9,027

$
101,727

(Continued)

178

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The applicable statutory tax rates for subsidiaries in foreign regions were as follows: America: 22.1%~43.84%, Netherlands: 19%~21%, Mexico: 30%, Mainland: 25%, South Africa: 28% and Eswatini: 27.5%.

(ii) Deferred tax asset and liability recognized

Changes in the amount of deferred tax assets and liabilities for 2020 and 2019 were as follows:

1) Deferred tax asset:

Balance on January 1, 2020

Recognized in profit or loss
Balance on December 31, 2020

Balance on January 1, 2019

Recognized in profit or loss
Balance on December 31, 2019
 Unrealized
loss of
inventory
**valuation **		 Unrealized
sales margin		 Carryforward
of unused tax
loss		 Others Total

33,137

12,663

45,800

29,502

3,635

33,137
$ 4,389
15,334
2,066

(599)
10,446

(3,226)
16,236

1,154

$
19,723


1,467


7,220


17,390

$ 1,465
2,924


2,178

(112)


14,100

(3,654)


11,759

4,477

$
4,389


2,066


10,446


16,236
  • 2) Deferred tax liabilities:
Balance on January 1, 2020
Recognized in profit or loss
Recognized in other
comprehensive income
Balance on December 31, 2020
Balance on January 1, 2019
Recognized in profit or loss
Balance on December 31, 2019		 Defined
benefit plan
Provision for
land value
increment tax
$ 654
64,635
-
-
-
112,410
$
654
177,045
$ 654
67,939
-
(3,304)
$
654
64,635		 Others **Total **

754
(90)

-
66,043

(90)
112,410


664

178,363


1,348

(594)

69,941

(3,898)



754


66,043

  • (iii) The Company’s income tax returns through 2018 have been assessed and approved by the Tax Authority.

  • (r) Capital and other equity

(i) Ordinary shares

A resolution was passed by the general meeting of shareholders held on 27 June, 2013, for the issuance of 42,052 thousand ordinary shares for cash under private placement, with par value of $10 per share, amounting to $420,524 thousand. The date of capital increase was on 28 April, 2014, which was approved on 23 April, 2014 by the Board. The relevant statutory registration procedures have been completed.

(Continued)

179

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

A resolution was passed by the temporary meeting held on December 4, 2018 for the issuance of 23,362 thousand ordinary shares for cash under private placement, with par value of $10 and issuance price of $10.16 per share, amounting to $237,363 thousand. The date of capital increase was on December 12, 2018. The relevant statutory registration procedures have been completed.

As of December 31, 2020 and 2019, the number of authorized shares were each $3,000,000 thousand, respectively, with par value of $10 per share and divided into 300,000 thousand shares. All of the aforementioned shares are ordinary shares, and the number of issued shares was 233,625 thousand shares. All proceeds from the shares have been collected.

The aforementioned private placement of ordinary shares and the transfer of any subsequently obtained bonus shares would be subject to article 43-8 under the Securities and Exchange Act. The Company can only apply for these shares to be traded on the Taiwan Stock Exchange after a three-year period has elapsed from the delivery date of the private-placed securities, and after applying for a public offering with the Financial Supervisory Commission.

(ii) Capital surplus

The components of the capital surplus were as follows:

Share capital
Conversion of bonds
Treasury stock transactions
Difference between consideration and carrying amount of
subsidiaries acquired or disposed
Changes in equity of subsidiaries under equity method
Donated surplus		 December 31,
2020
$ 121,485
14,648
3,949
90,683
3,033
254		 December
31, 2019

121,485

14,648

3,949

91,786

3,033

254
$
234,052
235,155

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

(iii) Retained earnings

The Company’s article of incorporation stipulate that Company’s net earnings should first be used to offset the prior years' deficits, if any, before paying any income taxes or salary. Of the remaining balance, 10% is to be appropriated as legal reserve, and then any remaining profit, together with any undistributed retained earnings, shall be distributed according to the distribution plan proposed by the Board of Directors to be submitted to the stockholders’ meeting for approval.

(Continued)

180

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The Company adopts a residual dividend policy. According to the Company's future budget plan and the future annual funding needs measured, the Group reserved the funds needed for the retained earnings financing. In order to avoid excessive dilution, the stock dividend is not higher than 50% of the current year's distribution, and the rest can be distributed by cash dividend.

  • 1) Legal reserve

When a company incurs no loss, it may, pursuant to a resolution by a shareholders’ meeting, distribute its legal reserve by issuing new shares or by distributing cash, and only the portion of legal reserve which exceeds 25% of capital may be distributed.

  • 2) Special reserve

When the Group first adopted the International Financial Reporting Standards endorsed by the FSC, it chose to apply the exemption item of IFRS 1 "First-time Adoption of International Financial Reporting Standards". The unrealized revaluation increase and accumulation accounted under shareholders’ equity amounted to $216,408 thousand result in the reduction of retained earnings. In accordance with Rule No. 1010012865 issued by the FSC on April 6, 2012, for the net reduction of retained earnings on the conversion date due to the first adoption of IFRSs, the Group was exempted from reclassifying special surplus reserve for the amount transferred to the retained earnings on January 1, 2013.

In accordance with Rule No. 1010012865 issued by the FSC on April 6, 2012, a portion of current-period earnings and undistributed prior-period earnings shall be reclassified as special earnings reserve during earnings distribution. The amount to be reclassified should equal the current-period total net reduction of other shareholders’ equity. Similarly, a portion of unappropriated earnings prior-period earnings shall be reclassified as special earnings reserve (and does not qualify for earnings distribution) to account for cumulative changes to other shareholders’ equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders’ equity shall qualify for additional distributions.

The Group chose the fair value model for subsequent measurement of its investment property. According to the Rule No. 1030006415 issued by the FSC on March 18, 2014, the Group took the special surplus reserve amounting to the net increase in fair value of investment property measured by the fair value model at first adoption, and the special surplus reserve shall be taken in the following order when the Group distribute the earnings every year:

  • a) Take the special reserve, which amounts to the net increase in the fair value model for subsequent measurement of investment property, from undistributed earnings of current period and prior year. If it is the cumulative net increase in fair value in the previous period, the amount of the special reserve equals to the same amount from the undistributed earnings from the previous period. When the accumulated net increase in fair value of the investment real estate is subsequently reduced or the investment real estate is disposed of, the surplus may be reverted to distribute the surplus based on the reduction or the disposal situation.

(Continued)

181

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

  • b) According to the Rule No. 1010047490 issued by the FSC November 21, 2012, the special surplus reserve calculated based on the difference between the market value and the book value of the parent company’s stock held by the subsidiaries at the end of the period, shall not be distributed. If there is any rebound in the market price thereafter, the reversal amount based on the shareholding percentage shall be reclassified into retained earnings.

  • c) In accordance with Rule No. 1010012865 issued by the FSC on April 6, 2012, the amount of net deduction of other shareholders’ equity recognized in current year should be retained from undistributed earnings from current period and prior year. The amount of net deduction of other shareholders’ equity generated from previous period should be made up from undistributed earnings from the prior year. When the accumulated net deduction of other shareholders ’ equity is subsequently reduced, the special reserve may be reversed to distributable earnings.

  • 3) Earnings distribution

Earnings distributions for 2020 and 2019 were decided by the resolution adopted, with no distributable earnings, at the general meeting of shareholders held on June 16, 2020 and June 12, 2019, respectively. For more information please check the website of Market Observation Post system.

  • (s) Earnings per share

The basic earnings per share and diluted earnings per shares were calculated as follow:

Basic earnings per share
Profit/(loss) attributable to ordinary shareholders
Weighted-average number of ordinary shares (thousand shares)
Profit/(loss) attributable to shareholders per share
Diluted earnings per share
Profit/(loss) attributable to ordinary shareholders
Weighted-average number of ordinary shares (basic)
Effect of dilutive potential ordinary shares
Effect of employee share bonus
Weighted average number of ordinary shares (diluted)
Profit/(loss) attributable to ordinary shareholders (diluted)		 For the years ended December 31
2020
2019
$
168,120
(171,877)

233,625
233,625
$
0.72
(0.74)
$
168,120
(171,877)
233,625
233,625
163
-
233,788
233,625
$
0.72
(0.74)
2020
$
168,120


233,625


$
0.72
$
168,120

233,625
163
233,788

$
0.72

(Continued)

182

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

  • (t) Revenue from contracts with customers

  • (i) Disaggregation of revenue

Primary geographical markets:
Taiwan
America
Asia
Mexico
Africa
Other countries		 For the years ended December 31
2020
2019
$ 634,498
511,438
2,017,581
2,922,439
4,198,587
1,475,651
165,910
162,289
1,359,986
1,603,541
222,025
273,926
$
8,598,587
6,949,284
2020
$ 634,498
2,017,581
4,198,587
165,910
1,359,986
222,025

$
8,598,587
  • (ii) Contract balances
Contract liabilities December 31,
2020
$
69,478		 December 31,
2019

81,910		 January 1,
2019
115,996

The major change in the balance of contract liabilities is the difference between the time frame in the performance obligation to be satisfied and the payment to be received.

  • (u) Employee compensation and directors' remuneration

According the amended Company’s Articles of Incorporation, remuneration of employees is appropriated at 2% of profit settled by cash or shares decided by the board of directors. The recipients of cash and shares may include the employees of the Company’s affiliated companies who meet certain conditions. Remuneration of directors is appropriated at no more than 2% of the profit. Remuneration of employees and directors is submitted to general meeting of the shareholders. However, accumulated deficit from prior years is first offset before any appropriation of profit.

For the year ended December 31, 2020, remuneration of employees and directors each amounting to $3,235 thousand, respectively, were estimated on the basis of the Company’s net profit before tax, excluding the remuneration of employees and directors of each period, and multiplied by the percentage of remuneration of employees and directors as specified in the Company’s Articles of Incorporation. For the year ended December 31, 2019, the Company suffered operating loss, hence, no remuneration of employees and directors were estimated.

There was no difference between the amounts approved by Board of Directors and recognized for the years ended December 31, 2020 and 2019. For further information, please refer to Market Observation Post System website.

(Continued)

183

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(v) Non-operating income and expenses

(i) Other income

The details of other income were as follows:

Rent income
Dividend income		 For the years ended December 31
2020
2019
$ 4,149
5,473
22
97
$
4,171
5,570
2020
$ 4,149
22
$
4,171
  • (ii) Other gains and losses

The details of other gain and losses were as follows:

Gain on disposal of held-for-sale non-current asset
Losses on disposal of property, plant and equipment
(Losses) gain on fair value adjustment of investment
property
Foreign exchange losses
Loss on financial asset at fair value through profit or loss
Impairment loss of non-financial asset
Other income
Other expenses		 For the years ended December 31
2020
2019
$ -
42,304
(14,009)
(3,627)
(18,948)
10,420
(51,524)
(4,844)

(128)
(130)
(72,259)
(6,273)
70,451
29,854
(1,261)
(6,651)
$
(87,678)
61,053
2020
$ -
(14,009)
(18,948)
(51,524)

(128)
(72,259)
70,451
(1,261)

$
(87,678)
  • (iii) Interest income

The details of interest income were as follows:

Interest income
Bank deposits
Overdue accounts
Interest subsidy		 For the years ended December 31
2020
2019
$ 14,324
14,840
323
1,086
28
-
$
14,675
15,926
2020
$ 14,324
323
28
$
14,675

(Continued)

184

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

  • (iv) Interest expenses

The details of interest expenses were as follows:

Loans and borrowings
Lease liabilities
Capitalized interest		 For the years ended December 31
2020
2019
$ 96,148
100,027
2,568
2,203
(2,249)
(819)
$
96,467
101,411
2020
$ 96,148
2,568
(2,249)

$
96,467

  • (w) Financial instruments

  • (i) Categories of financial instruments

    • 1) Financial asset
Mandatory measured at fair value through profit or loss
Measured at fair value through other comprehensive
income
Subtotal
Measured at amortized cost (deposits and receivables)
Cash and cash equivalents
Notes, accounts receivable, and other receivables
Other current financial assets
Other non-current financial assets
Subtotal
Total		 December 31,
2020
$ 612
10,682		 December 31,
2019

1,225

1,403

11,294


2,628

1,368,318
1,197,858
201,764
44,816


843,457

1,177,652

291,231

160,095

2,812,756


2,472,435

$
2,824,050


2,475,063
  • 2) Financial liabilities
Financial liabilities carried at amortized cost
Short-term borrowings
Short-term notes and bills payable
Accrued payables
Long-term borrowings (including current portion)
Total		 December 31,
2020
$ 851,069
249,660
1,312,605
1,856,043		 December 31,
2019

1,410,828

-

950,217

1,623,808

$
4,269,377


3,984,853

(Continued)

185

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ii) Credit risk

  • 1) Credit risk exposure

The carrying amount of financial assets and contract assets represents the maximum amount exposed to the credit risk. The amounts of maximum credit risk exposure of the Group on December 31, 2020 and 2019, were $2,824,050 thousand and $2,475,063 thousand, respectively.

  • 2) The customers of the Group are concentrated in the retail and wholesale of textile or garments. In order to reduce credit risk, the Group continuously evaluates the financial status of customers, conducts individual assessment based on the signs of impairment of accounts receivable and credit risk characteristics, handles accounts receivable insurance policy for some customers. On December 31, 2020 and 2019, the Group has a vast client base that is not connected, thus, the extent of concentration of credit risk is limited.

  • 3) For credit risk exposure of trade receivables and other receivables, please refer to Notes 6(c) and 6(d).

  • (iii) Liquidity risk

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

December 31, 2020
Non-derivative financial liabilities
Secured loans
Unsecured loans
Letters of credit
Short-term notes and bills
payable
Accrued payables
Lease liabilities
December 31, 2019
Non-derivative financial liabilities
Secured loans
Unsecured loans
Letters of credit
Accrued payables
Lease liabilities		 Carrying
amount

$ 2,057,538
644,645
9,990
249,660
1,312,605
90,675		 Contractual
cash flows		 Within 6
months		 6-12
months		 1-2years 2-5years Over 5
years

-

-
-
-
-

28,532
2,141,365
700,589
10,023
250,000
1,312,605
97,300
521,256

576,181

10,023

250,000

1,312,605

16,696
102,877

86,522

-

-

-

8,493
191,128

35,499
-
-
-

13,232
1,326,104

2,387
-
-
-

30,347

$
4,365,113
4,511,882


2,686,761


197,892


239,859


1,358,838


28,532


$ 1,724,722
1,248,192
61,722
950,217
79,114
1,796,333
1,258,169
61,920
950,217
83,043


309,842

1,125,007

61,920

950,217

17,278


273,880

107,557

-

-

11,932


515,642

25,605
-
-

18,565


513,573

-
-
-

21,750


183,396
-
-
-

13,518

$
4,063,967
4,149,682


2,464,264


393,369


559,812


535,323


196,914

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

(Continued)

186

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iv) Currency risk

  • 1) Exposure to foreign currency risk

The Group’s significant exposures to foreign currency risk were as follow:

Financial assets
Monetary items
NTD:USD
SZL:USD
CNY:USD
VND:USD
EUR:NTD
Financial liabilities
Monetary items
NTD:USD
SZL:USD
CNY:USD
VND:USD
MXN:USD		 December 31, 2020 December 31, 2020 December 31, 2020 December 31, 2019
Foreign
Currency
Exchange
Rate
NTD

19,700
30.0150
591,302

646
14.0483
19,348

7,819
6.9680
234,210

278
23,168
8,357

1,435
33.6500
48,274

6,587
30.0150
197,716

3,086
14.0483
92,463

7,892
6.9680
236,404

3,166
23,168
95,025

4,110
18.9100
123,143		 December 31, 2019
Foreign
Currency
Exchange
Rate
NTD

19,700
30.0150
591,302

646
14.0483
19,348

7,819
6.9680
234,210

278
23,168
8,357

1,435
33.6500
48,274

6,587
30.0150
197,716

3,086
14.0483
92,463

7,892
6.9680
236,404

3,166
23,168
95,025

4,110
18.9100
123,143
Foreign
Currency		 Exchange
Rate		 NTD Foreign
Currency		 Exchange
Rate
$ 29,090
941
2,709
2,029
1,425
16,648
3,382
8,406
4,421
8,765
28.0950

14.6628

6.5326

23,080

34.5800

28.0950

14.6628

6.5326

23,080

19.8807
817,296

26,422

76,404

56,987

49,285

467,713

95,005

237,121

124,170

246,075
19,700

646

7,819

278

1,435

6,587

3,086

7,892

3,166

4,110
30.0150

14.0483

6.9680

23,168

33.6500

30.0150

14.0483

6.9680

23,168

18.9100





  • 2) Sensitivity analysis

The Group’s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts receivable and other receivables, other financial assets, loans, trade and other payables that are denominated in foreign currency. A 1% of appreciation or depreciation of each major foreign currency against the Group’s functional currency as of December 31, 2020 and 2019 would have increased (decreased) the net income for the years ended December 31, 2020 and 2019 by $1,437 thousand and $1,567 thousand, respectively.

  • 3) Foreign exchange gains or losses on monetary item

Since the Group has many kinds of functional currency, the information on foreign exchange gain (loss) on monetary items is disclosed by total amount. For the years ended December 31, 2020 and 2019, foreign exchange losses (including realized and unrealized portions) amounted to $51,524 thousand and $4,844 thousand, respectively.

(Continued)

187

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(v) Interest rate analysis

The book values of the financial assets and financial liabilities exposed to the interest rate risk on the reporting date were as below:

Financial assets
Financial liabilities		 Fixed-rate instrument
December 31,
2020
December 31,
2019
$ 673,259
459,952
(298,490)
(142,066)		 Fixed-rate instrument
December 31,
2020
December 31,
2019
$ 673,259
459,952
(298,490)
(142,066)		 Variable rate instrument
December 31,
2020
December 31,
2019
911,421
799,064
(2,658,282)
(2,892,570)		 Variable rate instrument
December 31,
2020
December 31,
2019
911,421
799,064
(2,658,282)
(2,892,570)
December 31,
2020
$ 673,259
(298,490)		 December 31,
2020
911,421
(2,658,282)

$
374,769


317,886
(1,746,861)


(2,093,506)

The following sensitivity analysis is based on the exposure to the interest rate risk of derivative and non derivative financial instruments on the reporting date. Regarding assets with variable interest rates, the analysis is based on the assumption that the amount of assets outstanding at the reporting date was outstanding throughout the year. The Group’s internal management reported the change of interest rate and the exposure to changes in interest rate of 1% is considered by management to be a reasonable change of interest rate.

If the interest rate had increased / decreased by 1% basis points, the Group’s interest expenses would have increased / decreased by $17,469 thousand and $20,935 thousand for the years ended December 31, 2020 and 2019 respectively, with all other variable factors remaining constant. The is mainly due to variable-rate loans.

(vi) Other market price risk

If the security price of domestic stocks measured at fair value through profit or loss held by the Group changes, the impact to other comprehensive income will be as follows, assuming the analysis is based on the same basis for both years and assuming that all other variables considered in the analysis remain the same:

**For the years ended December 31 ** **For the years ended December 31 **
2020 2019
Price of securities at reporting date Net income (loss) Net income (loss)
Increasing 7% $
43		 86
Decreasing 7% (43) (86)

(vii) Information of fair value

  • 1) Classification of financial instruments and fair value hierarchy

The book value of the financial assets and liabilities was close to the fair value. The fair value of the financial assets measured at fair value through profit and loss and those measured at fair value through other comprehensive income was estimated on a recurring basis of level 1 and 3, respectively.

(Continued)

188

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

  • 2) Valuation techniques for financial instruments not measured at fair value

The Group’s valuation techniques and assumptions used for financial instruments not measured at fair value are as follows:

  • a) Financial assets and liabilities measured at amortized cost (including debt investment that has no active markets).

    • If there is quoted price generated by transactions, the recent transaction price and quoted price data is used as the basis for fair value measurement. However, if no quoted prices are available, the discounted cash flows are used to estimate fair values.

  • 3) Valuation techniques for financial instruments measured at fair value

The Group’s valuation techniques and assumptions used for financial instruments measured at fair value are as follows:

  • a) Financial instruments that have standard terms and are traded in an active market, such as listed stocks, the fair value are determined by quoted prices.

  • b) Measurements of fair value of financial instruments without an active market

    • i) Using discounted cash flow analysis to measure its fair value. The main assumption is investors’ expected standard profit which is manipulated by capitalization rate that reflects investment risk.

    • ii) Using observable market data at the reporting date to measure its fair value. The main assumption is based on comparable price-book ratio, which is adjusted by offsetting the impact of discount for lack of marketability and minority interest.

  • c) The fair values of financial assets and financial liabilities other than those aforesaid are determined in accordance with discounted cash flow analysis which is generally accepted.

  • 4) Transfers between Level 1 and Level 2

There are no transfers from each level for the years ended December 31, 2020 and 2019.

(Continued)

189

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(x) Financial risk management

  • (i) Overview

The Group have 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 exposure information, objectives, policies and processes for measuring and managing the above mentioned risks. For further information, please refer to the relevant notes to the consolidated financial statement.

(ii) Structure of risk management

The financial management department of the Group provides intercompany services for various businesses, coordinates the operation of entering the domestic and international financial markets, and supervises and manages the financial risks related to the operation of the Group by analyzing the internal risk report according to the degree and breadth of the risk. Internal auditors continue to review compliance with policies and the risk limit. The Group did not trade financial instruments (including derivative financial instruments) for speculative purposes.

  • (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 and investments in equity investment.

  • 1) Trade and other receivables

The policy adopted by the Group is to only trade with reputable customers and obtain collateral when necessary to reduce the risk of financial losses from default. The Group only trades with companies rated equivalent to the investment grade. Such information is provided by independent rating agencies; if such information is not available, the Group will use other publicly available financial information and transaction experience to rate major customers. The Group continues to monitor the credit risk insurance level and the credit rating of the counterparty, and distributes the total transaction amount to those with qualified credit ratings, and controls the credit risk through the credit limit that is reviewed and approved annually.

The accounts receivable is comprised from vast customers base, which is scattered in different industries and geographic regions. The Group continues to evaluate the financial status of customers.

(Continued)

190

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

2) Investments

The exposure to credit risk for the bank deposits, fixed income investments, and other financial instruments is measured and monitored by the Group’s finance department. The Group only deals with banks, other external parties, corporate organizations, government agencies and financial institutions with good credit rating. The Group does not expect any counterparty above fails to meet its obligations hence there is no significant credit risk arising from these counterparties.

  • 3) Guarantees

The Group’s policy is to provide financial guarantees only to wholly owned subsidiaries. On December 31, 2020 and 2019, no other guarantees were outstanding.

  • (iv) Liquidity risk

The Group manages and maintains sufficient cash and cash equivalents to support the operation and ease the impact of cash flow fluctuation. The management supervises the unused credit lines and ensures the compliance of loan contracts.

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group ’ s reputation.

Bank loans were important resource of liquidity risk for the Group. For the unused credit line of the Group on December 31, 2020 and 2019, please refer to the Notes 6(k) and 6(m).

(v) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity 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 arising from sales, purchases and borrowings that are not denominated in functional currencies of the Group’s main operating entities. The functional currency of the Group is primarily the New Taiwan Dollars (NTD), as well as US Dollars (USD), Euro (EUR) Chinese Yuan (CNY) and South African Rand (ZAR). The currencies used in these transactions are denominated in NTD, EUR, USD, CNY and ZAR.

The loan interest is denominated in the same currency as principal. Generally, borrowings are denominated in the same currencies that generates operating cash flows of the Group, mainly in NTD, as well as in USD and CNY. This provides an economic hedge without derivatives being entered into, and therefore, hedge accounting is not applied in these circumstances.

(Continued)

191

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

In respect of other monetary assets and liabilities denominated in foreign currencies, the Group ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.

  • 2) Interest rate risk

The Group borrowed funds in the fixed and variable rate simultaneously, resulting in fair value change risk and cash flow risk. The Group manage the interest rate risk through maintaining a proper combination of fixed and variable rate.

  • 3) Other market price risk

The Group is exposed to equity price risk due to the investments in domestic listed stocks. The Group does not actively trade these investments, and the management continuously monitor the price risk and assess the portfolio.

  • (y) 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 payment to the shareholders, reduce the capital for redistribution to shareholders, issue new shares, or sell assets to settle any liabilities.

The Group and other entities in the same industry use the debt-to-equity ratio to manage capital. This ratio is the total net debt divided by the total capital. The net debt from the balance sheet is derived from the total liabilities less cash and cash equivalents. The total capital and equity include share capital, capital surplus, retained earnings, other equity and non-controlling interests plus net debt.

As of December 31, 2020, the Group’s capital management strategy is consistent with the prior year. The Group’s debt-to-equity ratio at the end of the reporting period as of December 31, 2020 and 2019, were as follows:

Total liabilities
Less: cash and cash equivalents
Net debt
Total Equity
Adjusted equity
Debt-to-equity ratio		 December 31,
2020
$ 4,780,920
(1,368,318)		 December 31,
2020
$ 4,780,920
(1,368,318)		 December 31,
2019
4,415,956
(843,457)

3,412,602
3,332,000
3,572,499
2,569,163

$
6,744,602
6,141,662

50.60%
58.17%

(Continued)

192

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(7) Related-party transactions

  • (a) Names and relationship with related parties

The following are entities that have had transactions with related parties during the periods covered in the consolidated financial statements.

Name of related party
SEN JEWEL TECHNOLOGY CO., LTD.
MASTERAY INTERNATIONAL CO., LTD.
TAI CHAM TECHNOLOGY CO., LTD.
Feng-Ying Yeh		 Relationship with the Group
Same president with the Company
An associate
The entity’s chairman is the vice
chairman of the Company
Key management personnel

  • (b) Significant transactions with related parties

  • (i) For the years ended December 31, 2020 and 2019, the sales revenue due from related parties amounted to $1,604 thousand and $105 thousand, respectively. The payment terms of cash collection of the receivables ranged from one to three months, which were similar to the normal transactions.

  • (ii) The amount of purchase by the Group from related parties was $15 thousand in 2020. The payment terms of the payables were one month, which were similar to the normal transactions.

  • (iii) Receivables from Related Parties

The receivables from related parties were as follows:

Account Relationship December 31,
2020
$ -
1,684		 December 31,
2019
110

-
Account receivables

Other receivables


Other current assets
 Other related party
Associates
Other related party
Associates
Associates

$
1,684

110

$ 295
-
500
127
$
295
627
$
-		 15

(Continued)

193

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

  • (iv) Leases

The Group leased its factory buildings and offices to associates and other related party in lease terms of a year. The rental income was paid on a monthly basis. For years ended December 31, 2020 and 2019, there were $260 thousand and $180 thousand, respectively.

  • (v) Loans from key management
Key management personnel-Feng-Ying, Yeh December 31,
2020
$
14,500		 December 31,
2019

5,000

The Group’s borrowing from the main management is calculated at an interest rate of 4%. The interest expenses recognized for the years ended December 31, 2020 and 2019 were $360 thousand and $12 thousand, respectively. The above-mentioned loans did not provide collateral.

  • (vi) Disposals of property, plant and equipment

    • 1) The Group sold 99,424 shares of AIQ to key management. The total disposal price was $815 thousand. The gains of the disposal were $163 thousand which is recorded under additional paid-in capital.

    • 2) In 2020, the Group sold machinery and transportation equipment to other related party. The total disposal price were $1,519 thousand. The gains of the disposal was $576 thousand.

  • (c) Key management personnel compensation

Key management personnel compensation comprised:

Short-term employee benefits
Post-employment benefits		 For the years ended December 31
2020
2019
$ 27,456
26,572
702
811		 For the years ended December 31
2020
2019
$ 27,456
26,572
702
811
2020
$ 27,456
702
$
28,158		 27,383

(Continued)

194

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(8) Pledged assets

The carrying values of pledged assets were as follows:

Pledged assets Pledged to secure
Collateral for short-term
borrowings
Collateral for long-term and
short-term borrowings,
guarantee of litigation and
performance
Collateral for long-term and
short-term borrowings
Collateral for long-term
borrowings
Collateral for short-term
borrowings		 December 31,
2020
$ 2,063
227,995
1,068,216
984,074
107,809		 December 31,
2019

30,162

434,576

1,208,640

63,420

113,008
Account receivables
Other financial assets－current and
non-current
Property, plant and equipment
Investment property
Right-of-use assets

$
2,390,157


1,849,806

(9) Commitments and contingencies

  • (a) Significant commitments and contingencies were as follows:

  • (i) Unrecognized contractual commitments

Unrecognized contractual commitments
Acquisition of property, plant and equipment
Outstanding standby letter of credit
USD
EUR
NTD		 December 31,
2020
$
17,668		 December 31,
2019
138,368

December 31,
2020
$
12,558
December 31,
2019
8,407
3,519
18,373

$
-
$
22,827

(ii) Outstanding standby letter of credit

  • (b) Significant contingent liability

  • (i) The subsidiary ZHENG-RAY has dispute with the procurement center of the Armament Bureau of the Ministry of National Defense regarding part of the military product inspection of the order No. 98011, which the business was previously transferred from the Company’s Dept. 302. Thus, ZHENG-RAY filed a lawsuit for payment of the price to District Court in 2012. On November 14, 2019, the Supreme Court’s Civil Judgment was made that the Armament Bureau of the Ministry of National Defense should pay a price of $10,888 thousand. The case was settled. After an agreement with the Ministry of National Defense to reduce the price, the products were fully inspected and accepted in April 2020.

(Continued)

195

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

  • (ii) The subsidiary TRYD TEXTILE joint venture with its portion of the real estate, plant and equipment and guarantee deposits from non-related counterparty. As of December 31, 2019, the deposits from counterparty amounting to $81,499 thousand (CNY 18,920 thousand) was accounted under other non-current liabilities. Due to the mutually agreed termination of the investment plan, the deposits after settlement were paid in April 2020.

(10) Losses Due to Major Disasters: None

(11) Subsequent Events: None

(12) Other:

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

By funtion
By item		 For the years ended December 31 For the years ended December 31 For the years ended December 31 For the years ended December 31 For the years ended December 31 For the years ended December 31
2020 2019

Cost of
Sale		 Operating
Expense		 Total Cost of
Sale		 Operating
Expense		 Total
Employee benefits
Salary 797,810
508,397		 1,306,207
908,140
497,356		 1,405,496
Labor and health insurance 56,545
33,687
90,232
71,310
35,272
106,582
Pension 8,975
13,254
22,229
27,410
25,693
53,103
Others 46,427
59,061
105,488
48,301
31,943
80,244
Depreciation 162,354
74,707
237,061
154,746
95,973
250,719
Depletion - - - - - -
Amortization 1,719
15,955
17,674
711
11,550
12,261

(Continued)

196

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(13) Other disclosures

  • (a) Information on significant transactions

The following is the information on significant transactions required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Group:

(i) Loans to other parties

Number Name of
lender		 Name of
borrower		 Account
name		 Related
party		 Highest
balance
of
financing
to other
parties
during the
period		 Ending
balance		 Actual
usage
amount
during the
period		 Range of
interest
rates
during the
period		 Purposes
of fund
financing
for the
borrower
(Note 1)		 Transaction
amount for
business
between two
parties		 Reasons
for
short-term
financing
Allowance
Loss		 Collateral Collateral Individual
funding loan
limits

Maximum
limit of fund
financing
Item Value
0 The
Company
AMRAY
(MEXICO)

Other
accounts
receivable-
related
party


Yes		 $ 30,250
28,095
28,095		 2.5-4% 2 - Operating
turnover		 - - - 1,275,215
1,275,215
0 The
Company
TEX-RAY
(MEXICO)

Other
accounts
receivable-
related
party


Yes		 60,500
56,190
56,190		 2.5-4% 2 - Operating
turnover		 - - - 1,275,215
1,275,215
0 The
Company
AIQ		 Other
accounts
receivable-
related
party


Yes		 75,000
75,000
34,000		 4% 2 - Operating
turnover		 - - - 1,275,215
1,275,215
1 Z-PLY(NY) AMRAY
(MEXICO)

Other
accounts
receivable-
related
party


Yes		 29,480
28,095
28,095		 2.5% 2 - Operating
turnover		 - - - 237,599
356,398
1 Z-PLY(NY) TEX-RAY
(MEXICO)

Other
accounts
receivable-
related
party


Yes		 61,800
56,190
54,785		 2.5% 2 - Operating
turnover		 - - - 237,599
356,398
1 Z-PLY(NY)
TRYD
TEXTILE
Other
accounts
receivable-
related
party


Yes		 91,815
84,285
84,285		 2.5% 2 - Operating
turnover		 - - - 237,599
356,398
2 TEX-RAY
(SHANHAI)
TRYD
APPAREL
Other
accounts
receivable-
related
party


Yes		 86,640
86,027
-		 6% 2 - Operating
turnover		 - - - 402,365
603,547
2 TEX-RAY
(SHANHAI)
TRYD
TEXTILE
Other
accounts
receivable-
related
party


Yes		 259,920
258,081
245,177		 6% 2 - Operating
turnover		 - - 402,365
603,547
3 TEX-RAY
(MEXICO)
AMRAY
(MEXICO)

Other
accounts
receivable-
related
party


Yes		 56,772
56,527
52,782		 2.5% 2 - Operating
turnover		 - - - 266,536
399,803
4 KMT
 AIQ Other
accounts
receivable-
related
party


Yes		 15,450
-		 - 2% 2 - Operating
turnover		 - - - 124,363
124,363
5 KING'S
METEL
(SHANHAI)

AIQ
(Zhejiang)
Other
accounts
receivable-
related
party


Yes		 1,735
1,727
-		 6% 2 - Operating
turnover		 - - - 2,967
4,451
6 ZHENG-RA
Y		 GREAT
CPT		 Other
accounts
receivable-
related
party


Yes		 10,000
10,000
-		 3% 2 - Operating
turnover		 - - - 2,308
2,308

Note 1: Nature of the loan:

  • 1) The borrower calls for loan arrangement.

  • 2) The borrower has short-term financing necessities.

Note 2: The maximum financing amount is limited to not more than 40% of the company's net value, therefore, the calculation is based on the net value of the latest financial report. The ceiling on loan limit is $3,188,038 thousand NTD × 40% = $1,275,215 thousand NTD.

(Continued)

197

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

  • Note 3: The maximum financing amount to individual company is limited to no more than 40% of the company's net value, therefore the calculation is based on the net value of the latest financial report. The ceiling on loan is $3,188,038 thousand NTD × 40% = $1,275,215 thousand NTD.

  • Note 4: The maximum limit of financing is limited to 40% of the net value of the financial report of the lender company. However, the maximum limit of loans between 100% held foreign subsidiaries is limited to 150% of the lender company’s net value.

  • Note 5: The maximum financing amount to individual company shall not exceed 40% of the subsidiary’s net value. However, the loans between 100% held foreign subsidiaries shall not exceed 100% of the net value of the lender subsidiary.

Note 6: The above-mentioned transactions have been reconciliated in the preparation of consolidated report.

(ii) Guarantees and endorsements for other parties

No. Name of
guarantor		 Counter-party of
guarantee and
endorsement		 Counter-party of
guarantee and
endorsement		 Limitation on
amount of
guarantees and
endorsements
for a specific
enterprise		 Highest

balance for
guarantees
and
endorsements
during
theperiod		 Balance of
guarantees
and
endorsements
as of
reporting date		 Actual usage
amount
during the
period		 Property

pledged for
guarantees
and
endorsements
(Amount)		 Ratio of
accumulated
amounts of
guarantees and

endorsements to
net worth of the
latest
financial
statements

Maximum
amount for
guarantees and
endorsements		 Parent
company

endorsements/
guarantees to
third parties
on behalf of
subsidiary		 Subsidiary
endorsements/

guarantees
to third parties
on behalf of
parent
company
Endorsements/
guarantees to

third parties
on behalf of
companies in
Mainland
China
Name Relationshi
p with the
Company

0		 The
Company
T.Q.M.
(SWAZILAND)
2		 1,594,019
100,000
-		 - 51,348
-
%
3,188,038
Y		 N N

0		 The
Company
GOOD TIME		 2 1,594,019
55,620
33,714
22,476
-		 1.06%
3,188,038
Y		 N N

0		 The
Company
TEX RAY (VN)		 2 1,594,019
155,275
84,285
-		 14,072
2.64%
3,188,038
Y		 N N

0		 The
Company
TEX-RAY
(SHANHAI)
2		 1,594,019
103,968
103,232
60,219
-		 3.24%
3,188,038
Y		 N Y

0		 The
Company
TRYD APPAREL
2		 1,594,019
166,323
154,523
60,342
14,072
4.85%
3,188,038
Y		 N Y

0		 The
Company
TRYD TEXTILE
2		 1,594,019
877,686
866,697
383,096
198,892
27.19%
3,188,038
Y		 N Y

0		 The
Company
TST		 2 1,594,019
102,000
48,095
16,663
-		 1.51%
3,188,038
Y		 N N

0		 The
Company
WLT		 2 1,594,019
10,000
10,000
7,849
-		 0.31%
3,188,038
Y		 N N

1		 TEX-RAY
(SHANHAI)
TEX RAY
(KUNSHAN)
2		 402,365
43,320
43,013
15,055
-		 10.69%
603,547
N		 N Y

  • Note 1: The relationships between the guarantee and the guarantor are as follows:

  • The company with which it does business.

  • The company directly or indirectly holds more than 50% of voting right.

  • A companies directly or indirectly hold more than 50% of voting rights of the public company.

  • Companies in which the public company directly or indirectly holds more than 90% of voting right may make endorsement / guarantees for each other.

  • Where a public company fulfills its obligations by providing mutual endorsements / guarantees for other company in the same industry or for joint builders for purposes of undertaking a construction project.

  • Where all capital contributing shareholders make endorsement / guarantees for the jointly invested company in proporation to their shareholding percentages.

  • Note 2: The maximum limit of endorsement / guarantee is limited to not more than 100% of the net value of the company, therefore the calculation is based on the net value of the latest financial report. The ceiling on endorsement / guarantee is $3,188,038 thousand NTD × 100% = $3,188,038 thousand NTD.

  • Note 3: The maximum limit for a single enterprise endorsement / guarantee is no more than 50% of the net value of the company. Therefore, the calculation is based on the net value of the latest financial report. The ceiling on endorsement / guarantee is $3,188,038 thousand NTD × 50% = $1,594,019 thousand NTD.

  • Note 4: The amount of the endorsement / guarantee provided to a single enterprise with which the company does business shall not exceed the total amount of transactions in twelve months before the endorsement.

  • Note 5: The maximum limit of overseas subsidiary endorsement / guarantee is not more than 150% of the net value of the subsidiary's net value calculated based on the latest financial statement, and the limit of endorsement / guarantee for individual is not more than 100% of the net value of each subsidiary' calculated based on the latest financial statement.

(Continued)

198

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

  • (iii) Securities held as of December 31, 2020 (excluding investment in subsidiaries, associates and joint ventures)
Name of holder Category and
name of
security		 Relationship
with company		 Account
title		 Endingbalance Endingbalance Endingbalance Endingbalance Highest
Percentage of
ownership (%)		 Note
Shares/Units
(thousands)		 Carrying value Percentage of
ownership (%)		 Fair value
The Company SHIN ERA
TECHNOLOGY
CO., LTD.		 - Non-current
financial assets at
value through other
comprehensive
income
68
-		 1.88%
-		 1.88%
The Company
 Cayman iMaker
Technlogy Inc.		 - Non-current
financial assets at
value through other
comprehensive
income
800
-		 8.80%
-		 8.80%
The Company TAIWAN
UNITED
OUTDOOR
GROUP, INC.		 - Non-current
financial assets at
value through other
comprehensive
income
500
-		 15.67%
-		 15.67%
The Company
 PHYSICLO, Inc.
-		 Non-current
financial assets at
value through other
comprehensive
income
51
-		 5.00%
-		 5.00%
The Company NIEN HSING
TEXTILES		 -
 Financial assets at
fair value through
profit or loss		 35
612
- %
612
- %
AIQ
 Joiiup Technology
Co., Ltd.		 - Non-current
financial assets at
value through other
comprehensive
income
333
-		 5.71%
-		 7.18%
TST SEN JEWEL
TECHNOLOGY
CO., LTD.		 - Non-current
financial assets at
value through other
comprehensive
income
950
9,500
19.00%
9,500
19.00%
KING'S METEL
FIBER
(SHANHAI)		 Shenzhen Titanium
Investment
Development
Partnership.
-		 Non-current
financial assets at
value through other
comprehensive
income
274
1,182
7.648%
1,182
7.648%

  • Note: The stocks of private companies have no active market price, so they are evaluated at the net equity value multiplied by the percentage of ownership or equity evaluation report for reference.

  • (iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock: None

  • (v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None

  • (vi) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None

  • (vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

Name of
company		 Relatedparty Nature of
relationship		 Transaction details Transaction details Transaction
different f		 s with terms
rom others		 Notes/Accounts receivable
(payable)		 Notes/Accounts receivable
(payable)		 Note
Purchase/Sale Amount Percentage of
total
purchases/sales
Payment terms		 Unitprice Payment terms Endingbalance
Percentage of total
notes/accounts
receivable
(payable)
The Company Z-PLY(NY) Sub-subsidiary Sales
 $ (477,276)
(8.24)%		 45 days - - 23,234
5.17%
The Company T.Q.M.(SWAZI
LAND)		 Sub-subsidiary Sales (184,333)
(3.18)%		 60 days - - 73,898
16.44%
TRYD
APPAREL		 TEX-RAY
(SHANGHAI)
Affiliated
company
Sales		 (269,430)
(19.76)%		 60 days - - 74,160
42.95%
TRYD
APPAREL		 The Company Ultimate parent
company
Sales		 (512,046)
(37.55)%		 30 days - - 646
0.37%
TEX-RAY
(SHANGHAI)		 The Company Ultimate parent
company
Sales		 (233,647)
(35.92)%		 60 days - - 21,827
12.35%
TEX-RAY
(SHANGHAI)		 Z-PLY(NY) Affiliated
company
Sales		 (140,712)
(21.63)%		 60 days - - 20,583
11.64%
T.Q.M.(SWAZI
LAND)		 TEX-RAY(SA) Parent company Sales (1,240,588)
(96.18)%		 75 days - - 924,611
99.33%

(Continued)

199

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Name of
company		 Relatedparty Nature of
relationship		 Transacti on details Transaction
different f		 s with terms
rom others		 Notes/Accounts receivable
(payable)		 Notes/Accounts receivable
(payable)		 Note
Purchase/Sale Amount Percentage of
total
purchases/sales
Payment terms		 Unitprice Payment terms Endingbalance
Percentage of total
notes/accounts
receivable
(payable)
KASUMI(SWA
ILAND)		 T.Q.M.(SWAZI
LAND)		 Affiliated
company
Sales		 (168,034)
(99.65)%		 60 days - - 370,569
99.76%
KMT KMBV Subsidiary Sales (118,137)
(37.83)%		 90 days Fixed profit
margin
-		 27,561
44.43%
TEX-RAY(VN) The Company Ultimate parent
company
Sales		 (446,064)
(95.16)%		 60 days - - - -%
TRYD
TEXTILE		 TRYD
APPAREL
Affiliated
company
Sales		 (497,752)
(66.54)%		 30 days - - 32,613
23.40%
Z-PLY(NY) The Company Ultimate parent
company
Purchase		 477,276
58.87%		 45 days - - (23,234)
(42.00)%
T.Q.M.(SWAZI
LAND)		 The Company Ultimate parent
company
Purchase		 184,333
17.26%		 60 days - - (73,898)
(13.67)%
TEX-RAY
(SHANGHAI)		 TRYD
APPAREL
Affiliated
company
Purchase		 269,430
45.93%		 60 days - - (74,160)
(51.32)%
The Company TRYD
APPAREL
Sub-subsidiary		 Purchase 512,046
- %		 30 days - - (646)
(0.22)%
The Company TEX-RAY
(SHANGHAI)
Sub-subsidiary		 Purchase 233,647
- %		 60 days - - (21,827)
(7.52)%
Z-PLY(NY) TEX-RAY
(SHANGHAI)
Affiliated
company
Purchase		 140,712
17.36%		 60 days - - (20,583)
(37.20)%
TEX-RAY(SA) T.Q.M.(SWAZI
LAND)		 Subsidiary Purchase 1,240,588
100.00%		 75 days - - (924,611)
(100.00)%
T.Q.M.(SWAZI
LAND)		 KASUMI(SWA
ILAND)		 Affiliated
company
Purchase		 168,034
15.73%		 60 days - - (370,569)
(68.56)%
KMBV KMT Parent company Purchase 118,137
97.13%		 90 days Fixed profit
margin
-		 (27,561)
(97.76)%
The Company TEX-RAY(VN) Sub-subsidiary Purchase 446,064
- %		 60 days - - - -%
TRYD
APPAREL		 TRYD
TEXTILE
Affiliated
company
Purchase		 497,752
39.58%		 30 days - - (32,613)
(37.33)%

Note: The above-mentioned transactions have been reconciliated in the preparation of consolidated report.

  • (viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock:
Name of
company		 Counter-party Nature of
relationship		 Ending
balance		 Turnover
rate		 Overdue Overdue Amounts received in
subsequentperiod		 Loss
Allowance
Amount Action taken
TEX-RAY(SHANGHAI) TRYD TEXTILE Affiliated company 245,177
(Note 1)		 - - - -
T.Q.M.(SWAZILAND) TEX-RAY(SA) Parent company 924,611
1.37
-		 - 263,002
-
KASUMI(SWAILAND) T.Q.M.(SWAZILAND) Affiliated company 370,569
0.47
-		 - 36,866
-

Note 1: Loan provided by the related party.

Note 2: The above-mentioned transactions have been reconciliated in the preparation of consolidated report.

  • (ix) Trading in derivative instruments: None

  • (x) Business relationships and significant intercompany transactions:

No. Name of company Name of counter-party Nature of
relationship		 Intercompanytransactions Intercompanytransactions Intercompanytransactions
Account name Amount Trading terms Percentage of the consolidated
net revenue or total assets
0
 The Company Z-PLY(NY) 1 Sales revenue
 $ 477,276
Similar to
non-relatedparties
5.55%
0
 The Company Z-PLY(NY) 1 Accounts
Receivable
23,234
Similar to
non-relatedparties
0.29%
0
 The Company TEX-RAY(VN) 1 Other prepaid
expenses
110,947
Similar to
non-relatedparties
1.37%
0
 The Company TRCA GARMENT 1 Other prepaid
expenses
23,837
Similar to
non-relatedparties
0.29%
0
 The Company T.Q.M.(SWAZILAND) 1 Sales revenue 184,333
Similar to
non-relatedparties
2.14%
0
 The Company T.Q.M.(SWAZILAND) 1 Accounts
Receivable
73,898
Similar to
non-relatedparties
0.91%
0
 The Company GOOD TIME 1 Other prepaid
expenses
21,901
Similar to
non-relatedparties
0.27%
0
 The Company AMRAY(MEXICO) 1 Sales revenue 46,028
Similar to
non-relatedparties
0.54%

(Continued)

200

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

No. Name of company Name of counter-party Nature of
relationship		 Intercompanytransactions Intercompanytransactions
Account name Amount Trading terms Percentage of the consolidated
net revenue or total assets
0
 The Company AMRAY(MEXICO) 1 Accounts
Receivable
10,214
Similar to
non-relatedparties		 0.13%
0
 The Company AMRAY(MEXICO) 1 Other receivables
28,095		 Bycontract 0.35%
0
 The Company AIQ 1 Other receivables
34,000		 Bycontract 0.42%
0
 The Company TEX-RAY(MEXICO) 1 Other receivables
56,190		 Bycontract 0.65%
1
 TEX-RAY(CAYMAN) TEX-RAY(MEXICO) 3 Accounts
Receivable
39,243
Similar to
non-relatedparties		 0.48%
2
 TRYD APPAREL TRLA GROUP 3 Sales revenue 30,322
Similar to
non-relatedparties		 0.35%
2
 TRYD APPAREL TEX-RAY (SHANGHAI)
3		 Sales revenue 269,430
Similar to
non-relatedparties		 3.13%
2
 TRYD APPAREL TEX-RAY (SHANGHAI)
3		 Accounts
Receivable
74,160
Similar to
non-relatedparties		 0.91%
2
 TRYD APPAREL The Company 2 Sales revenue 512,046
Similar to
non-relatedparties		 5.96%
2
 TRYD APPAREL Z-PLY(NY) 3 Sales revenue 79,568
Similar to
non-relatedparties		 0.93%
3
 TEX-RAY (SHANGHAI) The Company 2 Sales revenue 233,647
Similar to
non-relatedparties		 2.72%
3
 TEX-RAY (SHANGHAI) The Company 2 Accounts
Receivable
21,827
Similar to
non-relatedparties		 0.27%
3
 TEX-RAY (SHANGHAI) Z-PLY(NY) 3 Sales revenue 140,712
Similar to
non-relatedparties		 1.64%
3
 TEX-RAY (SHANGHAI) Z-PLY(NY) 3 Accounts
Receivable
20,583
Similar to
non-relatedparties		 0.25%
3
 TEX-RAY (SHANGHAI) TEX-RAY
(YANCHENG)
3		 Accounts
Receivable
52,892
Similar to
non-relatedparties		 0.65%
3
 TEX-RAY(SHANGHAI) TRYD TEXTILE 3 Other receivables
245,177		 Bycontract 3.02%
3
 TEX-RAY (SHANGHAI) TRYD TEXTILE 3 Sales revenue 58,329
Similar to
non-relatedparties		 0.68%
4
 T.Q.M.(SWAZILAND) TEX-RAY(SA) 3 Accounts
Receivable
924,611
Similar to
non-relatedparties		 11.40%
4
 T.Q.M.(SWAZILAND) TEX-RAY(SA) 3 Sales revenue 1,240,588
Similar to
non-relatedparties		 14.43%
5
 KASUMI(SWAILAND) T.Q.M.(SWAZILAND) 3 Accounts
Receivable
370,569
Similar to
non-relatedparties		 4.57%
5
 KASUMI(SWAILAND) T.Q.M.(SWAZILAND) 3 Sales revenue 168,034
Similar to
non-relatedparties		 1.95%
6
 U.I.W(SWAZILAND) KASUMI(SWAILAND)
3		 Accounts
Receivable
15,830
Similar to
non-relatedparties		 0.20%
7
 GOLDEN JUBILEE T.Q.M.(SWAZILAND) 3 Sales revenue 61,537
Similar to
non-relatedparties		 0.76%
7
 GOLDEN JUBILEE The Company 2 Sales revenue 15,776
Similar to
non-relatedparties		 0.18%
8
 GOOD TIME The Company 2 Processing revenue
98,932
Similar to
non-relatedparties		 1.15%
9
 MSWATI TRYD APPAREL 3 Other receivables
19,654
Similar to
non-relatedparties		 0.24%
10 AMRAY(MEXICO) TRLA GROUP 3 Sales revenue 39,328
Similar to
non-relatedparties		 0.46%
10 AMRAY(MEXICO) TEX-RAY(MEXICO) 3 Sales revenue 80,478
Similar to
non-relatedparties		 0.94%
11 TEX-RAY(MEXICO) AMRAY(MEXICO) 3 Other receivables
52,782		 Bycontract 0.65%
11 TEX-RAY(MEXICO) AMRAY(MEXICO) 3 Prepayment for
purchases
44,754
Similar to
non-relatedparties		 0.52%
12 Z-PLY(NY) TRYD TEXTILE 3 Other receivables
84,285		 Bycontract 1.04%
12 Z-PLY(NY) TEX-RAY(MEXICO) 3 Other receivables
54,785		 Bycontract 0.68%
12 Z-PLY(NY) AMRAY(MEXICO) 3 Other receivables
28,095		 Bycontract 0.33%
13 KMT KMBV 3 Sales revenue 118,137 Fixedprofit margin 1.37%
13 KMT KMBV 3 Accounts
Receivable
27,561
Similar to
non-relatedparties		 0.34%
14 TRCA GARMENT The Company 2 Processing revenue
23,185
Similar to
non-relatedparties		 0.27%
15 TEX-RAY(VN) The Company 2 Processing revenue
446,064
Similar to
non-relatedparties		 5.19%
16 TRYD TEXTILE TRYD APPAREL 3 Sales revenue 497,752
Similar to
non-relatedparties		 5.79%
16 TRYD TEXTILE TRYD APPAREL 3 Accounts
Receivable
32,613
Similar to
non-relatedparties		 0.38%
17 TEX-RAY (YANCHENG) TRYD APPAREL 3 Sales revenue 23,278
Similar to
non-relatedparties		 0.27%
18 TEXRAY(KUNSHAN) TRYD APPAREL 3 Accounts
Receivable
52,047
Similar to
non-relatedparties		 0.61%
19 Taiwan Innovation (HK) TST 3 Sales revenue 39,497
Similar to
non-relatedparties		 0.46%

(Continued)

201

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Note 1: The numbering is as follows:

  1. “0” represents the parent company.

  2. Subsidiaries are sequentially numbered from 1 by company.

Note 2: Relation between related parties are as follows:

  1. Parent company and its subsidiaries.

  2. Subsidiaries and its parent company.

  3. Subsidiaries and subsidiaries.

(b) Information on investees

The following is the information on investees for the years ended December 31, 2020 (excluding information on investees in Mainland China)

Name of
investor		 Name of investee Location Main
businesses and
products		 Original inves tment amount Balance as of December 31, 2020 Highest
Percentage of
wnership		 Net income
(losses)
of investee		 Share of
profits/losses of
investee		 Note
December 31,2020 December 31,2019 Shares
(thousands)		 Percentage of
wnership		 Carrying
value
The Company TST
 TAIWAN Printing and dyeing
finishing,
machinery and
equipment
manufacturing and
wholesale,etc.




$ 68,067
68,067
7,487,381
75.63%
43,039
75.63%
15,115
10,691		 Subsidiary
The Company Great CPT
 TAIWAN Overseas
investment holding
104,370
79,370
4,500,000
100.00%
64,786
100.00%
(15,143)
(15,235)		 Subsidiary
The Company KMT
 TAIWAN Non-woven fabrics,
copper secondary
processing and
fabric retailing,etc


84,881
84,881
13,217,428
63.46%
191,331
63.46%
65,511
41,575		 Subsidiary
The Company ZHENG-RAY
 TAIWAN Trading and
manufacturing of
spinning and
weaving


5,000
25,000
500,000
100.00%
5,771
100.00%
(3,683)
(3,683)		 Subsidiary
The Company WLT
 TAIWAN Wholesale trade 21,000
21,000
2,100,000
70.00%
5,162
70.00%
(15,687)
(10,981)		 Subsidiary
The Company FLYNN (SAMOA)
 SAMOA Overseas
investment holding
310,613
310,613
9,100,000
100.00%
435,689
100.00%
(159,428)
(159,428)		 Subsidiary
The Company TEX-RAY (CAYMAN) CAYMAN Overseas
investment holding
1,057,841
-		 33,542,722
100.00%
251,223
100.00%
(58,045)
-		 Subsidiary
(Note 2)
The Company TEX-RAY (BELIZE)
 BELIZE Overseas
investment holding
1,063,287
1,314,510
-		 100.00%
403,529
100.00%
(61,344)
(61,344)		 Subsidiary
The Company TEX-RAY (BN)
 SAMOA Overseas
investment holding
1,756,813
1,756,813
60,579,330
100.00%
57,235
100.00%
(50,546)
(50,546)		 Subsidiary
The Company TEX-RAY (SA)
 SOUTH AFRICA Overseas
investment holding
102,704
102,704
39,651,772
100.00%
1,059,497
100.00%
177,435
177,435		 Subsidiary
The Company AIQ
 TAIWAN Wholesale trade 90,000
90,000
4,015,112
63.43%
788
63.43%
(33,482)
(21,238)		 Subsidiary
The Company Unigym Global
 CAYMAN Electronic
Information Supply
Service Industry

9,092
-		 - -
%
-		 -
%
-		 - Prepayment
s for
investments
TEX-RAY
(BELIZE)		 TEX-RAY (CAYMAN) CAYMAN Overseas
investment holding
-		 1,057,841
-		 -
%
-		 100.00%
(58,045)
Exempt from
disclosure
Note 2
TEX-RAY
(BN)		 GOOD TIME
 VIETNAM Garment
processing
227,750
227,750
-		 100.00%
33,133
100.00%
(18,259)
Exempt from
disclosure
Sub-subsidi
ary
TEX-RAY
(BN)		 MSWATI
 MAURITIUS Overseas
investment holding
1,160,125
1,160,125
-		 100.00%
(136,430)
100.00%
(83,406)
Exempt from
disclosure
Sub-subsidi
ary
TEX-RAY
(BN)		 TEX-RAY(VN)
 VIETNAM Garment
processing
423,990
423,990
-		 100.00%
175,497
100.00%
79,278
Exempt from
disclosure
Sub-subsidi
ary
TEX-RAY
(BN)		 TRCA GARMENT
 CAMBODIA Garment
processing
63,564
63,564
-		 100.00%
(21,629)
100.00%
(23,733)
Exempt from
disclosure
Sub-subsidi
ary
FLYNN
(SAMOA)
TRLA GROUP
 USA Marketing and
trading
18,384
18,384
2,936,000
100.00%
50,472
100.00%
(13,615)
Exempt from
disclosure
Sub-subsidi
ary
FLYNN
(SAMOA)
Z-PLY (NY)
 USA Marketing and
trading
260,443
260,443
200
100.00%
385,120
100.00%
(145,814)
Exempt from
disclosure
Sub-subsidi
ary
Great CPT TEXRAY
(SWAZILAND)		 ESWATINI Garment
processing
158,524
158,524
12,417,938
100.00%
3,264
100.00%
(147)
Exempt from
disclosure
Sub-subsidi
ary
Great CPT
 YIHONG CO.,LTD
 TAIWAN Dyeing and
finishing industry
6,000
6,000
600
20.00%
-		 20.00%
-		 Exempt from
disclosure
Investment
accounted
for using
equity
method
Great CPT MASTERAY
INTERNATIONAL CO.,
LTD.

TAIWAN		 Wholesale trade - 2,700
-		 -
%
-		 45.00%
(689)
Exempt from
disclosure
Investment
accounted
for using
equity
method
TST
 Taiwan Innovation (HK) HONGKONG Machine marketing
and trading
-		 390
-		 -
%
-		 100.00%
738
Exempt from
disclosure
Note 2
TST HUAI WEI
BIOTECHNOLOGY CO.,
LTD

TAIWAN		 Biotechnology
Service
12,000
-		 1,200,000
60.00%
11,348
60.00%
(1,087)
Exempt from
disclosure
Sub-subsidi
ary
KMT
 KMBV
 NETHERLANDS Marketing and
trading
7,950
7,950
200,000
100.00%
8,589
100.00%
1,508
Exempt from
disclosure
Sub-subsidi
ary
KMT
 ELITETOP TECH
 SAMOA Overseas
investment holding
-		 48,091
-		 -
%
-		 100.00%
(3,224)
Exempt from
disclosure
Sub-subsidi
ary

(Continued)

202

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of
investor		 Name of investee Location Main
businesses and
products		 Original inve stment amount Balance as of December 31, 2020 Highest
Percentage of
wnership		 Net income
(losses)
of investee		 Share of
profits/losses of
investee		 Note
December 31,2020 December 31,2019 Shares
(thousands)		 Percentage of
wnership		 Carrying
value
KMT
 HND WIRE INC.
 TAIWAN Metal wire
products
manufacturing

-		 10,004
-		 -
%
-		 -
%
(2)
Exempt from
disclosure
Investment
accounted
for using
equity
method
AIQ
 AIQ-S(UK)
 UK Development of
smart clothing
technology

15,419
15,419
396,266
50.00%
3,076
50.00%
4,934
Exempt from
disclosure
Sub-subsidi
ary
AIQ
 Taiwan Innovation (HK) HONGKONG Machine marketing
and trading
390
-		 100,000
100.00%
827
100.00%
738
Exempt from
disclosure
Sub-subsidi
ary
TEX-RAY
(CAYMAN)
 TEX-RAY(MEXICO)
 MEXICO Dyeing 1,168,882
1,168,882
-		 100.00%
266,536
100.00%
(33,747)
Exempt from
disclosure
Sub-subsidi
ary
TEX-RAY
(CAYMAN)
 AMRAY(MEXICO)
 MEXICO Garment
processing
178,119
178,119
-		 100.00%
(64,011)
100.00%
(22,235)
Exempt from
disclosure
Sub-subsidi
ary
TEX-RAY (SA) KASUMI(SWAZILAND) ESWATINI Trading and
manufacturing of
dyeing, finishing,
woven fabrics and
garments



43,461
43,461
1,657,400
100.00%
390,258
100.00%
954
Exempt from
disclosure
Sub-subsidi
ary
TEX-RAY (SA) T.Q.M.(SWAZILAND) ESWATINI Dyeing 569,316
569,316
132,525,183
100.00%
948,925
100.00%
150,903
Exempt from
disclosure
Sub-subsidi
ary
TEX-RAY (SA) U.I.W.(SWAZILAND) ESWATINI Garment
processing
47,508
47,508
12,031,000
100.00%
21,158
100.00%
(2,367)
Exempt from
disclosure
Sub-subsidi
ary
TEX-RAY (SA)
I		 J.M. Rotary Print
ndustrial Co.,Ltd.
ESWATINI		 Dyeing and
finishing of fabrics,
clothingsales

12,908
11,712
5,618,679
90.00%
1,023
90.00%
(7,782)
Exempt from
disclosure
Sub-subsidi
ary
TEX-RAY (SA) GOLDEN JUBILEE
 ESWATINI Garment
processing
10,800
10,800
5,000,000
100.00%
26,515
100.00%
8,768
Exempt from
disclosure
Sub-subsidi
ary
T.Q.M.(SWAZI
LAND)
 ESWT (SWAZILAND) ESWATINI Sale of agricultural
products
1,822
-		 900,000
90.00%
358
90.00%
(1,604)
Exempt from
disclosure
Third-tier
company

Note 1: The carrying value of subsidiaries are reconciliated in the preparation of consolidated report.

Note 2: Please refer to Note 4(c) for consolidated components.

(c) Information on investment in mainland China

  • (i) The names of investees in Mainland China, the main businesses and products, and other information
Name of
investee		 Main
businesses
and
products		 Total
amount
of paid-in
capital		 Method
of
investment		 Accumulated
outflow of

investment from
Taiwan as of
January1,2019		 Investment flows Investment flows Accumulated
outflow of
investment from
Taiwan as of
December 31,2020		 Net
income

(losses)
of the
investee		 Percentage
of
ownership		 Highest
percentage
of
ownership		 Investment
income
(losses)		 Book
value		 Highest
Percentage
of ownership		 Accumu-lated
remittance of
earnings in
currentperiod
Outflow Inflow
TEX-RA
(SHANGHAI)		 Y

Operating
textile storage,
trading,
distribution,
display and
technology
development





282,574
(2)		 282,574
-		 - 282,574
(3,217)
100.00%		 100.00%
(3,217)		 402,365
-		 -
TEX-RA
(YANCHENG
)		 Y

Manufacturing
and sales of
textiles,
clothing, shoes
and hats



45,527
(3)		 - - - - 580
100.00%		 100.00%
580		 (48,625)
-		 -
TEXRAY(KU
NSHAN)
Development
of composite
fabrics

168,268
(3)		 - - - - 4,842
100.00%		 100.00%
4,842		 172,569
-		 -
TRY
TEXTILE		 D
Garment
processing and
engaged in
spinning,
weaving,
high-end
fabrics,
bleaching and
dyeing,
printing and
garment
production








1,749,139
(2)		 1,235,108
-		 - 1,235,108 (81,283)
100.00%		 100.00%
(81,283)		 (39,610)
-		 -
TRY
ARRAREL		 D
Knitted
garment
processing
164,220
(2)		 86,711
-		 - 86,711
1,574
100.00%		 100.00%
1,574		 (13,461)
-		 -
KING’
META
FIBE
(SHANGHAI)		 S
L
R

Wholesale of
glass products,
high-efficienc
y insulation
materials,
textiles,
clothing,
apparel and
accessories






51,221
(2)		 47,247
3,974
-		 51,221
(9,045)
63.43%		 63.43% (5,737)
1,882
-		 -

(Continued)

203

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of
investee		 Main
businesses
and
products		 Total
amount
of paid-in
capital		 Method
of
investment		 Accumulated
outflow of

investment from
Taiwan as of
January1,2019		 Investme nt flows Accumulated
outflow of
investment from
Taiwan as of
December 31,2020		 Net
income

(losses)
of the
investee		 Percentage
of
ownership		 Highest
percentage
of
ownership		 Investment
income
(losses)		 Book
value		 Highest
Percentage
of ownership		 Accumu-lated
remittance of
earnings in
currentperiod
Outflow Inflow
AIQ
(Zhejiang)
System
development,
production and
sales of smart
devices



10,318
(3)		 - - - - (3,355)
63.43%		 63.43% (2,128)
(16)
-		 -
TRYD
ARRAREL
(HENAN)
(Note 3)


Garment
processing		 - (2) 46,494
-		 - 46,494
-		 -% -% - - - -
TRYD
TEXTILE
RESEARCH
INSTITUTE
(Note 4)



Technology
research and
development
of polymer
composite
materials and
new textile
materials






49,149
(2)		 - - - - - -% -% - - - -
Wei-Da
Testing
Testing service
and
environmental
assessment


31,065
(3)		 - - - - 1,674
100.00%		 100.00%
1,674
6,871
-		 -
SHANGHAI
JIN PEILI
(Note 5)

Weaving,
dyeing and
finishing of
high-end
fabrics, sales
of products of
the company





111,088
(2)		 14,321
-		 - 14,321
-		 -% -% - - - -
JIANAN
TEXTILE
(Note 6)

Weaving,
dyeing and
finishing of
high-grade
fabrics



29,613
(2)		 29,613
-		 - 29,613
-		 -% -% - - - -

Note 1: Three types of investment method are as follows:

  1. Directly investing in the mainland area.

  2. Investing in the mainland through companies in another country (Please refer to Noter 4(c)).

  3. Other methods.

  4. Note 2: The investment gains and losses recognized at the equity method are based on the financial information of the mainland investee companies, which was audited by the auditors of parent company during the same fiscal period.

  5. Note 3: The business was deregistered in November 2015, and the share capital was remitted back to the upper parent company MSWATI in March 2016.

Note 4: The business was liquidated in October 2019.

  • Note 5: The business was liquidated in December 2012.

  • Note 6: The business was sold in June 2012, and the returns of original investment was remitted back to the upper parent company MSWATI.

  • Note 7: The numbers listed above are presented in NTD rounded to nearest thousand, according to the currency rate on December 31, 2020. (USD: 28.0950, CNY: 4.318)

(ii) Limitation on investment in Mainland China

The Company had obtained the certification letter of the operating headquarters from the Ministry of Economic Affairs on August 6, 2018. The validity period is from August 2, 2018 to August 1, 2021, and there is no such restriction of ceiling on investment in Mainland China.

(iii) Significant transactions:

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

(Continued)

204

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

  • (d) Major shareholders:
Major shareholders:
Shareholding
Shareholder’s Name		 Shares Percentage
YUE-DA TEXTILE HOLDINGS, LTD B.V 42,052,440
17.99%
Xian-Yu, Guo 23,680,000
10.13%
SUXHOU WEIDE CO., LTD. 23,362,466
9.99%
Feng-Ying, Yeh 14,280,000
6.11%

(14) Segment information

  • (a) General information

  • (i) The Group’s reportable segments are as below: the dyeing and spinning segment, the weaving segment, the garment processing segment, the functional subsidiaries, the military affairs segment, and other segments. They are respectively engaged in the weaving, manufacturing and processing, dyeing and finishing and trading of cotton, cloth, various fibers and textiles, and cotton yarn purchasing, export business, garment processing and export business, etc..

  • ’

  • (ii) The operating results of all operating departments are regularly reported to the Company s operating decision-makers for resource allocation and for evaluation of their performance. It was prepared on a basis consistent with the consolidated financial statements.

  • (b) Information about reportable segments and their measurement and reconciliations

The Group uses the internal management report that the chief operating decision maker reviews as the basis to determine resource allocation and make a performance evaluation. The internal management report includes profit before taxation, but not including any extraordinary activity and foreign exchange gain or losses because taxation, extraordinary activity, and foreign exchange gain or losses are managed on a group basis, and hence they are not able to be allocated to each reportable segment. In addition, not all reportable segments include depreciation and amortization of significant non-cash items. The reportable amount is similar to that in the report used by the chief operating decision maker.

The operating segment accounting policies are similar to those described in Note (4) “Summery of significant accounting policies” except for the recognition and measurement of pension cost, which is on a cash basis.

The Group treated intersegment sales and transfers as third-party transactions. They are measured at market price.

(Continued)

205

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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

For the year ended
December 31, 2020		 Dyeing and
weaving segment
$ 677,253
1,845,189		 Garment
processing
segment		 Machine
manufacturing
segment

149,787
39,497		 Military
Affairs
segment
10,238
-		 Metal Fiber
segment
351,523
131,066		 Other
8,984
189,052		 Adjustment
and
eliminations
-
(5,486,215)		 Total
8,598,587
-
Revenue from external
customers
Intersegment revenues
Total revenue
Interest revenue
Interest expenses
Depreciation and
amortization
Share of profit (loss) of
associates and joint
ventures accounted for
using equity method
Reportable segment
profit or loss
For the year ended
December 31, 2019
7,400,802
3,281,411

$
2,522,442
10,682,213
189,284		 10,238
482,589
198,036
(5,486,215)		 8,598,587

$
2,547
24,967
15
138
66
4,729
(17,787)
14,675

$
55,463
18,729		 34 - 5,290
34,738
(17,787)
96,467

$
113,219
81,289		 2,336 15
27,857
30,019
-
254,735

$
-
-
-		 -
-
(760)		 -
(760)
$
10,337		 518,468 16,162 (3,683) 26,527
(301,309)		 -
266,502

$ 1,211,678
1,668,561

5,257,074
3,153,385

107,579
5,771
10
-
361,187
145,137
11,756
238,046		 -
(5,210,900)
6,949,284
-
Revenue from external
customers
Intersegment revenues
Total revenue
Interest revenue
Interest expenses
Depreciation and
amortization
Share of profit (loss) of
associates and joint
ventures accounted for
using equity method
Reportable segment
profit or loss

$
2,880,239
8,410,459
113,350		 10
506,324
249,802
(5,210,900)		 6,949,284

$
2,914
19,587
15		 90
214
5,007
(11,901)
15,926

$
51,804
20,554		 191 - 5,368
35,395
(11,901)
101,411

$
98,850
91,876		 2,606 17
26,113
43,518
-
262,980

$
-
-
-		 -
(8,301)
(636)		 -
(8,937)
$
(98,351)		 95,525 6,048 (4,132)
3,562
(41,878)		 -
(39,226)

Note:The departmental assets and liabilities information of the Group is not provided to the management for reference or for decision-making purposes, and there is no need to disclose departmental assets and liabilities.

(Continued)

206

TEX-RAY INDUSTRIAL 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, please refer to Note 6(t). The segment assets are based on the geographical location of the assets.

Region
Non-current assets
Taiwan
USA
China
Mexico
Africa
Vietnam
Others		 For the years ended December 31
2020
2019
$ 2,079,075
1,148,251
215,136
185,198
698,822
835,737
256,276
291,012
186,618
212,978
270,794
315,796
21,504
32,348
$
3,728,225
3,021,320
2020
$ 2,079,075
215,136
698,822
256,276
186,618
270,794
21,504

$
3,728,225

Non-current assets include property, plant and equipment use-of-right assets, investment property, intangible assets and other non-current assets, excluding financial instruments, deferred tax assets, pension fund assets, and rights arising from an insurance contract (non-current).

(d) Major customers

Customer A from garment processing segment
Customer B from garment processing segment		 For the years ended December 31
2020
2019
$ 3,130,492
-
583,442
890,833
$
3,713,934
890,833		 For the years ended December 31
2020
2019
$ 3,130,492
-
583,442
890,833
$
3,713,934
890,833
2020
$ 3,130,492
583,442
$
3,713,934



890,833

207

Independent Auditors ’ Report

To the Board of Directors of TEX-RAY INDUSTRIAL CO., LTD.

Opinion

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

In our opinion, the accompanying financial statements present fairly, in all material respects, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

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

Key Audit Matters

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

1. Revenue recognition

Please refer to Note 4(p) for the accounting policies on revenue and Note 6(r) “Revenue from contracts with customers” for the details of the related disclosure.

.

208

Description of the key audit matter:

The Company is in the garment textile industry. In order to enhance the international competency, the management adopts global layout as its business strategy and adds multiple production and sales supply chains overseas. Therefore, the extent of influence of local laws and political and economic changes in various countries to such strategy increases dramatically. Resulting in that the revenue recognition is regarded as highly concerns. Therefore, the Company’ s revenue recognition has been identified as one of the key audit matters.

How the matter was addressed in our audit:

We have performed certain audit procedures including understanding the design of internal controls over the recognition of revenue and the collection of receivables, performing test of details by inspecting the sales orders, shipping records, invoices and documents related to accounts receivable and cash collection and assessing the adequacy of revenue recognition. Furthermore, we also performed sample testing for verification from transactions within a period before and after balance sheet date to determine whether the revenue is recognized in appropriate period.

2. Valuation of accounts receivable

For the accounting policies on the valuation of accounts receivable, please refer to Note 4(f). Refer to Note 5(a) for the accounting estimates and assumptions related to the valuation of accounts receivable on reporting date and refer to Note 6(c) for the details of the accounts receivable.

Description of the key audit matter:

As of December 31, 2020, the accounts receivable of the Company was $338,837 thousand. We have considered that the Company’s trading partners are scattered in different industries and geographic regions, how the management control credit risk of its customer is thoroughly important. Therefore, the impairment assessment of accounts receivable has been identified as one of the key audit matters.

How the matter was addressed in our audit:

We have performed certain audit procedures including inspecting the controls over customer credit assessment process, analyzing the accounts receivable aging table, viewing past collection experience of customers and checking cash collection records after the reporting date to evaluate whether the impairment of the accounts receivable has been properly assessed.

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

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

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

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

209

Auditors ’ Responsibilities for the Audit of the Financial Statements

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

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

  1. Identify and assess the risks of material misstatement of the 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.

  2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

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

  4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

  5. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

  6. Obtain sufficient and appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on this financial statements. We are responsible for the direction, supervision and performance of the 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.

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.

210

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

The engagement partners on the audit resulting in this independent auditors’ report are Kuo-Yang Tseng and Ti-Nuan Chien.

KPMG

Taipei, Taiwan (Republic of China) March 26, 2021

Notes to Readers

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

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

211

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TEX-RAY INDUSTRIAL CO., LTD.

Balance Sheets

December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Assets
Current assets:
1100
Cash and cash equivalents(Note 6(a))
1110
Current financial assets at fair value through profit or loss(Note 6(b))
1150
Notes receivable, net(Notes 6(c))
1170
Accounts receivable, net(Notes 6(c))
1181
Accounts receivable due from related parties(Notes 7)
1200
Other receivables, net
1210
Other receivables due from related parties, net(Notes 7)
1310
Inventories, manufacturing business, net(Notes 6(d))
1410
Prepayments(Note 7)
1470
Other current assets
1476
Other current financial assets(Note 8)

Non-current assets:
1550
Investments accounted for using equity method, net(Note 6(e))
1600
Property, plant and equipment(Note 6(f) and 8)
1755
Right-of-use assets(Notes 6(g))
1760
Investment property, net(Notes 6(h) and 8)
1780
Intangible assets
1840
Deferred tax assets(Note 6(o))
1960
Prepayments for investments
1980
Other non-current financial assets(Note 8)
1990
Other non-current assets

Total assets		 December 31, 2020
Amount
%
$ 512,083
9
612 -
500 -
338,837
6
110,539
2
5,932 -
132,032
2
420,761
7
181,993
3
330 -
166,778
3		 December 31, 2019
Amount
%
75,302
2
1,225 -
21,793 -
211,612
5
99,000
2
3,514 -
42,319
1
235,120
5
197,872
4
240 -
261,190
5
1,149,187
24
2,799,770
59
536,906
11
39,595
1
128,719
3
5,387 -
5,884 -
-
-
115,223
2
-
-
3,631,484
76
4780671
100
Liabilities and Equity
Current liabilities:
2100
Short-term borrowings(Note 6(i))
2110
Short-term notes and bills payable(Note 6(j))
2130
Current contract liabilities(Note 6(r))
2150
Notes payable
2160
Notes payable due to related parties(Note 7)
2170
Accounts payable
2180
Accounts payable due to related parties(Note 7)
2200
Other payables
2220
Other payables due to related parties(Note 7)
2230
Current tax liabilities
2280
Current lease liabilities(Note 6(l))
2320
Long-term liabilities, current portion(Note 6(k))
2300
Other current liabilities(Note 7)
2315
Other advance receipts(Note 7)

Non-current liabilities:
2540
Long-term borrowings(Note 6(k))
2570
Deferred tax liabilities(Note 6(o))
2580
Non-current lease liabilities(Note 6(l))
2640
Net defined benefit liability, non-current(Note 6(n))
2670
Other non-current liabilities, others

Total liabilities
Equity(Note 6(p)):
3110
Ordinary share
3200
Capital surplus
3300
Retained earnings
3400
Other equity interest
Total equity
Total liabilities and equity		 December 31, 2020 December 31, 2020 December 31, 2020
Amount % Amount

1,870,397
32

2,518,050
42
436,000
7
32,845
1
1,058,441
18
17,732 -
25,966 -
9,092 -
9,879 -
2,133
-

1,138,028
18
1,018,455
21


1,424,189
24
1,188,200
25
177,699
3
65,289
1
26,810
1
32,407
1
25,012
1
29,496
1
759
-
1,300
-

1,654,469
29
1,316,692
28

4,110,138
68

2,792,497
47
2,335,147
49


2,336,247
39
2,336,247
49
234,052
4
235,155
5
473,640
8
307,142
6
144,099
2
(433,020)
(9)



3,188,038
53
2,445,524
51
$
5980535
100		 $
5,980,535
100
4,780,671
100

See accompanying notes to parent company only financial statements.

212

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TEX-RAY INDUSTRIAL CO., LTD.

Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Common Share)

4000
Operating revenues (Notes 6(r) and 7)
5000
Operating costs (Notes 6(d), (n) and 7)
5900
Gross profit from operations
5910
Less:Unrealized profit from sales
5920
Add:Realized profit on from sales
5950
Gross profit (loss) from operations
6000
Operating expenses (Note 6(n)):
6100
Selling expenses
6200
Administrative expenses
6300
Research and development expenses
6900
Net operating income
7000
Non-operating income and expenses:
7010
Other income (Notes 6(t) and 7)
7020
Other gains and losses, net (Note 6(t))
7100
Interest income(Notes 6(t) and 7)
7070
Share of loss of subsidiaries, associates and joint ventures accounted for using equity method, net
7510
Interest expense (Note 6(t))
Profit (loss) before tax
7950
Less: Income tax expenses (Note 6(o))
Profit (loss)
8300
Other comprehensive income:
8310
Items that will not be reclassified subsequently to profit or loss
8311
Losses on remeasurements of defined benefit plans
8312
Gains on revaluation surplus
8316
Unrealized losses from investments in equity instruments measured at fair value through other
comprehensive income
8330
Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for
using equity method, components of other comprehensive income that will not be reclassified
to profit or loss
8349
Income tax related to components of other comprehensive income that will not be reclassified
subsequently to profit or loss
Items 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 financial statements
8399
Income tax related to components of other comprehensive income that may be reclassified
subsequently to profit or loss
Items that may be reclassified subsequently to profit or loss
8300
Other comprehensive income
8500
Total comprehensive income
Basic earnings per share (Note 6(q))
9750
Basic earnings per share (dollars)
9850
Diluted earnings per share (dollars)		 2020 %
100
77		 2019 %
100
84
Amount
$ 5,626,250
4,310,188		 Amount

2,851,433

2,406,771

1,316,062		 23

444,662		 16

(7,336)
10,250		 -
-
(10,250)
10,891		 -
-

1,318,976		 23

445,303		 16

718,559
181,733
13,248		 13
3
-

249,611

124,105
11,032		 9
4
1

913,540		 16

384,748		 14

405,436		 7

60,555		 2

17,470
(82,566)
4,694

(92,754)
(34,106)		 -
(1)
-
(2)
(1)
18,339

50,613
4,854

(237,034)

(33,422)		 1
2
-
(8)
(2)

(187,262)
(4)


(196,650)
(7)

218,174
50,054
3
1


(136,095)

35,782
(5)
1

168,120		 2

(171,877)		 (6)

(1,622)
873,576
(142)

-
112,410		 -
16
-
-
2
(4,029)

262,746
3,660
(4,935)

-
-
9
-
-
-

759,402		 14
257,442		 9

(183,905)
-		 (3)
-

(52,586)
-		 (2)
-
(183,905) (3)
(52,586)		 (2)

575,497
11


204,856
7

$
743,617		 13
32,979		 1

$		 0.72 (0.74)
$ 0.72
(0.74)

See accompanying notes to parent company only financial statements.

213

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TEX-RAY INDUSTRIAL CO., LTD.

Statements of Changes in Equity

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Balance on January 1, 2019
Loss
Other comprehensive income
Total comprehensive income
Difference between consideration and carrying amount of
subsidiaries acquired or disposed of
Disposal of investments in equity instruments designated at fair
value through other comprehensive income
Equity related to non-current assets held-for-sale
Balance on December 31, 2019
Profit
Other comprehensive income
Total comprehensive income
Difference between consideration and carrying amount of
subsidiaries acquired or disposed of
Balance on December 31, 2020		 Ordinary
shares
Capital surplus		 Retained earnings Total other equityinterest
Exchange
differences on
translation of
Unrealized gains
(losses)
on financial
assets measured
at fair value
Equity related to
non-current
assets (or
foreign
financial
statements
through other
comprehensive
income
Revaluation
surplus
disposal
groups)
held-for-sale
Total other
equityinterest
Total equity
Legal reserve
Special reserve
Unappropriated
retained earnings
Total retained
earnings
$ 2,336,247
235,155
166,655
201,749
(139,947)
228,457
(611,680)
(34,477)
-
258,905
(387,252)
2,412,607











-
-
-
-
(171,877)
(171,877)
-
-
-
-
-
(171,877)
-
-
-
-
(4,029)
(4,029)
(52,586)
(1,275)
262,746
-
208,885
204,856







-
-
-
-
(175,906)
(175,906)
(52,586)
(1,275)
262,746
-
208,885
32,979







-
-
-
-
(62)
(62)
-
-
-
-
-
(62)
-
-
-
-
610
610
-
(610)
-
-
(610)
-
-
-
-
-
254,043
254,043
-
-
4,862
(258,905)
(254,043)
-





2,336,247
235,155
166,655
201,749
(61,262)
307,142
(664,266)
(36,362)
267,608
-
(433,020)
2,445,524
-
-
-
-
168,120
168,120
-
-
-
-
-
168,120
-
-
-
-
(1,622)
(1,622)
(183,905)
(142)
761,166
-
577,119
575,497







-
-
-
-
166,498
166,498
(183,905)
(142)
761,166
-
577,119
743,617







-
(1,103)
-
-
-
-
-
-
-
-
-
(1,103)


$
2,336,247
234,052
166,655
201,749
105,236
473,640
(848,171)
(36,504)
1,028,774
-
144,099
3,188,038

See accompanying notes to parent company only financial statements.

214

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TEX-RAY INDUSTRIAL CO., LTD.

Statements of Cash Flows

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities:
Profit (loss) before tax
Adjustments:
Adjustments to reconcile profit (loss):
Depreciation expense
Amortization expense
Reversal of provision for expected credit loss
Loss on financial assets at fair value through profit or loss
Interest expense
Interest income
Dividend income
Share of loss of subsidiaries, associates and joint ventures accounted for
using equity method
Loss on disposal of property, plan and equipment
Gain on disposal of non-current assets held-for-sale
Impairment loss on non-financial assets
Realized profit from sales
Loss (gain) on fair value adjustment of investment property
Other income
Other losses
Total adjustments to reconcile profit
Changes in operating assets and liabilities:
Decrease in financial assets at fair value through profit or loss
Decrease in notes receivable
(Increase) decrease in accounts receivable
(Increase) decrease in accounts receivable due from related parties
(Increase) decrease in other receivables
(Increase) decrease in other receivables due from related parties
(Increase) decrease in inventories
Decrease (increase) in prepayments
Increase in other current assets
Increase in other financial assets
Total changes in operating assets
Changes in operating liabilities:
Increase (decrease) in contract liabilities
(Decrease) increase in notes payable
Increase in notes payable due to related parties
Increase (decrease) in accounts payable
(Decrease) increase in accounts payable due to related parties
Increase (decrease) in other payables
Decrease in other payable due to related parties
Increase in advance receipts
Increase in other current liabilities
Decrease in net defined benefit liability
Decrease in other operating liabilities
Total changes in operating liabilities
Total changes in operating assets and liabilities
Total adjustments
Cash inflow generated from operations
Interest received
Dividends received
Interest paid
Income taxes paid
Net cash flows from operating activities		 2020
$ 218,174
26,175
6,264
(1,010)
128
34,106
(4,694)
(22)
92,754
2,780
-
4,000
(2,914)
18,948
(1,649)
605		 2019

(136,095)

32,081

3,666

(1,283)

130

33,422

(4,854)

(97)

237,034

(203)
(42,304)

-

(641)

(10,420)

(788)

-
175,471
245,743

485
21,293
(126,215)
(11,539)
(2,418)
(89,713)
(185,641)
15,879
(90)
(4,799)


-

16,964

60,889

117,942

3,414

124,597

(16,565)

(13,472)

(39)

(1,370)

(382,758)


292,360

17,895
(12,325)
13
52,430
(9,348)
220,478
(397)
4,679
713
(5,462)
(541)


(36,610)

3,863

-

(129,446)

15,583

(23,718)

(27)

-

589

(3,878)

(1,660)

268,135


(175,304)

(114,623)


117,056

60,848


362,799

279,022
4,694
22
(34,173)
(1,614)


226,704

4,854

97

(33,116)

(43,390)

247,951


155,149

215

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TEX-RAY INDUSTRIAL CO., LTD.

Statements of Cash Flows (CONT ’ D)

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from investing activities:
Proceeds from disposal of financial assets at fair value through other
comprehensive income
Acquisition of investments accounted for using equity method
Increase in prepayments for investments
Proceeds from liquidation of investments accounted for using equity method
Proceeds from disposal of non-current assets held-for-sale
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
Increase in other financial assets
Decrease in other financial assets
Increase in other non-current assets
Dividends received
Net cash flows from investing activities
Cash flows from (used in) financing activities:
Increase in short-term loans
Decrease in short-term loans
Increase in short-term notes and bills payable
Proceeds from long-term debt
Repayments of long-term debt
Payment of lease liabilities
Increase in other financial assets
Decrease in other financial assets
Net cash flows from (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period		 2020
-
(25,000)
(9,092)
20,000
-
(5,954)
18,221
(18,609)
-
94,412
(2,133)
-		 2019
3,660

(127,447)

-

-
321,000

(13,931)

215

-
(137,950)

-

-
5,754
71,845

51,301

309,293
(761,025)
249,660
1,400,000
(1,183,811)
(7,275)
-
110,143


1,427,631

(1,476,398)

-

110,000

(267,400)

(7,054)
(143)

-

116,985

(213,364)

436,781
75,302


(6,914)

82,216

$
512,083

75,302

See accompanying notes to parent company only financial statements.

216

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TEX-RAY INDUSTRIAL CO., LTD.

Notes to the Financial Statements

For the years ended December 31, 2020 and 2019

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

(1) Company history

TEX-RAY INDUSTRIAL CO., LTD. (the “Company”) was established with the approval of the Ministry of Economic Affairs in August 1978, and was listed in Taiwan Stock Exchange in 1998. The registered address is 2F., No. 426, Linsen N. Rd., Jhongshan Dist., Taipei City. The Company was originally a modern yarn dyeing factory, and then expanded to spinning business, plain weaving business, and garment business, etc.. In order to enhance competency in international business, the Company established multiple production and sales supply chains overseas in Mexico, Eswatini, Vietnam, and Mainland China, and deployed the marketing department in US and Mexico market. The Company further divided its departments or established new subsidiaries for specialization purpose in particular technologies and markets in order to enhance the overall economic efficiency.

The main business of the Company is in weaving, manufacturing and processing, dyeing and spinning, and trading of cotton and any kind of fibers and textiles, and yarn trading business, garment processing and trading business, ultrasonic cleaning and supercritical cleaning business and extraction businesses.

(2) Approval date and procedures of the financial statements

The financial statements were authorized for issue by the Board of Directors on March 26, 2021.

(3) New standards, amendments and interpretations adopted

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

The Company has initially adopted the following new amendments, which do not have a significant impact on its financial statements, from January 1, 2020:

  • Amendments to IFRS 3 “Definition of a Business”

  • Amendments to IFRS 9, IAS39 and IFRS7 “Interest Rate Benchmark Reform”

  • Amendments to IAS 1 and IAS 8 “Definition of Material”

  • Amendments to IFRS 16 “COVID-19-Related Rent Concessions”

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

The Company assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2021, would not have a significant impact on its financial statements:

  • 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

(Continued)

217

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

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

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

FSC:
Standards or Effective date per
Interpretations Contentof amendment **IASB **
Amendments to IAS 1 The amendments aim to promote consistency
January 1, 2023
“Classification of Liabilities as
in applying the requirements by helping
Current or Non-current” companies
determine
whether,
in
the
statement of balance sheet, debt and other
liabilities with an uncertain settlement date
should be classified as current (due or
potentially due to be settled within one year)
or non-current.
The amendments include clarifying the
classification
requirements
for
debt
a
company might settle by converting it into
equity.

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

The Company 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 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 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”

  • Amendments to IAS 1 “Disclosure of Accounting Policies”

  • Amendments to IAS 8 “Definition of Accounting Estimates”

(4) Summary of significant accounting policies

The significant accounting policies presented in the financial statements are summarized below. The following accounting policies were applied consistently throughout the periods presented in the financial statements.

(Continued)

218

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

  • (a) Statement of compliance

The financial statements are prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

  • (b) Basis of preparation

  • (i) Basis of measurement

Except for the following significant accounts, the 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) Fair value through other comprehensive income are measured at fair value,

  • 3) Investment property is measured at fair value, and

  • 4) The defined benefit liabilities is recognized as the fair value of the plan assets less the present value of defined benefit obligation and the upper limit impact mentioned in Note 4(r).

  • (ii) Functional and presentation currency

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

(c) Foreign currencies

  • (i) currencies transaction

Transactions in foreign currencies are translated into the respective functional currencies of the Company at the exchange rates at the dates of the transactions. At the end of each subsequent reporting period, monetary items denominated in foreign currencies are translated into the functional currencies using the exchange rate at that date. Non-monetary items denominated in foreign currencies that are measured at fair value are translated into the functional currencies using the exchange rate at the date 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, except for equity securities designated as at fair value through other comprehensive income; which are recognized in other comprehensive income.

(Continued)

219

TEX-RAY INDUSTRIAL CO., LTD. Notes to the 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 the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the presentation currency at the average exchange rate. Exchange 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 Company 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 Company 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.

  • (d) Classification of current and non-current assets and liabilities

An asset is classified as current when

  • (i) The Company expects to realize the asset, or intends to sell or consume it, in its normal operating cycle,

  • (ii) The Company holds the asset primarily for the purpose of trading,

  • (iii) The Company expects to realize the asset within twelve months after the reporting period,

  • (iv) The asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

A liability is classified as current when

  • (i) The Company expects to settle the liability in its normal operating cycle,

  • (ii) The Company holds the liability primarily for the purpose of trading,

  • (iii) The liability is due to be settled within twelve months after the reporting period,

  • (iv) The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

(Continued)

220

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(e) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Time deposits which meet the above definition and are held for the purpose of meeting short term cash commitments rather than for investment or other purposes should be recognized as cash equivalents.

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 statement of cash flows.

(f) Financial instruments

Trade receivables and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument. A financial asset (unless it is 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 issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(i) Financial assets

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

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

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

  • 1) Financial assets measured at amortized cost

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

  • ‧ it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

  • ‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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

(Continued)

221

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

  • 2) Fair value through other comprehensive income (FVOCI )

On initial recognition of an equity investment that is not held for trading, the Company 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.

Debt investments at FVOCI are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss.

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 Company 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 measured at 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) Business model assessment

The Company makes an assessment of the objective of the business model in which a financial asset is held at portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

  • ‧ the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management ’ s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets;

  • ’

  • ‧ how the performance of the portfolio is evaluated and reported to the Company s management;

  • ‧ the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

  • ‧ how managers of the business are compensated ─ e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

(Continued)

222

TEX-RAY INDUSTRIAL CO., LTD.

Notes to the Financial Statements

  • ‧ the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, and are consistent with the Company’s continuing recognition of the assets.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

  • 5) Impairment of financial assets

The Company recognizes loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, amortized costs, notes and trade receivables, other receivables, guarantee deposit and other financial assets) and contract assets.

Loss allowance for trade receivables and contract assets are always measured at an amount equal to lifetime ECL.

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

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

Since the performance object of the Company’s cash deposits are investment grade financial institutions, the Company’s credit risk are considered low.

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

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

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

(Continued)

223

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For corporate customers, the Company individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Company expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

6) Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Company enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

  • (ii) Financial liabilities and equity instruments

  • 1) Classification of debt or equity

Debt and equity instruments issued by the Company 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.

3) Financial liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

(Continued)

224

TEX-RAY INDUSTRIAL CO., LTD.

Notes to the Financial Statements

  • 4) Derecognition of financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

  • 5) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(g) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is calculated using 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 case of manufactured inventories and work in process, 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.

  • (h) Non-current assets held-for-sale

Non-current assets comprising assets that are highly probable to be recovered primarily through sale rather than through continuing use, are reclassified as held for sale. Immediately before classification as held for sale, the assets, are remeasured in accordance with the Company’s accounting policies. Thereafter, generally, the assets are measured at the lower of their carrying amount and fair value less costs to sell. Impairment losses on assets initially classified as held for sale and any subsequent gains or losses on remeasurement are recognized in profit or loss. Gains are not recognized in excess of the cumulative impairment loss that has been recognized.

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

  • (i) Investment in associates

Associates are those entities in which the Company has significant influence, but no control, over the financial and operating policies.

Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition, minus any accumulated impairment losses.

(Continued)

225

TEX-RAY INDUSTRIAL CO., LTD.

Notes to the Financial Statements

The financial statements include the Company ’ s share of the profit or loss and other comprehensive income of those associates, after adjustments to align the accounting policies with those of the Company, from the date on which significant influence commences until the date on which significant influence ceases. The Company recognizes any changes of its proportionate share in the investee within capital surplus, when an associate’s equity changes due to reasons other than profit and loss or comprehensive income, which did not result in changes in actual proportionate share.

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

When the Company’s share of losses of an associate equals or exceeds its interest in associates, it discontinues recognizing its share of further losses. After the recognized interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate.

The Company discontinues the use of the equity method and measures the retained interest at fair value from the date when its investment ceases to be an associate. The difference between the fair value of retained interest and proceeds from disposing, and the carrying amount of the investment at the date the equity method was discontinued is recognized in profit or loss. The Company accounts for all the amounts previously recognized in other comprehensive income in relation to that investment on the same basis as would have been required if the associates had directly disposed of the related assets or liabilities. If a gain or loss previously recognized in other comprehensive income would be reclassified to profit or loss ( or retained earnings) on the disposal of the related assets or liabilities, the Company reclassifies the gain or loss from equity to profit or loss (as a reclassification ’ adjustment) (or retained earnings) when the equity method is discontinued. If the Company s ownership interest in an associate is reduced while it continues to apply the equity method, the Company reclassifies the proportion of the gain or loss that had previously been recognized in other comprehensive income relating to that reduction in ownership interest to profit or loss.

If an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the Company continues to apply the equity method without remeasuring the retained interest.

When the Company subscribes to additional shares in an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment will differ from the amount of the Company’s proportionate interest in the net assets of the associate. The Company records such a difference as an adjustment to investments, with the corresponding amount charged or credited to capital surplus. The aforesaid adjustment should first be adjusted under capital surplus. If the capital surplus resulting from changes in ownership interest is not sufficient, the remaining difference is debited to retained earnings. If the Company’s ownership interest is reduced due to the additional subscription to the shares of the associate by other investors, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate will be reclassified to profit or loss on the same basis as would be required if the associate had directly disposed of the related assets or liabilities.

(Continued)

226

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(j) Subsidiaries

The subsidiaries in which the Company holds controlling interest are accounted for under equity method in the non-consolidated financial statements. Under equity method, the net income, other comprehensive income and equity in the non-consolidated financial statement are the same as those attributable to the owners of parent in the consolidated financial statements.

The changes in ownership of the subsidiaries are recognized as equity transaction.

(k) Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment property is initially measured at cost and subsequently at fair value with any change therein recognized in profit or loss.

Any gain or loss on disposal of investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognized in profit or loss. When investment property that was previously classified as property, plant and equipment is sold, any related amount included in ‘other equity - revaluation surplus’ is transferred to retained earnings.

Rental income from investment property is recognized as other revenue on a straight-line basis over the term of the lease.

(l) Property, plant and equipment

  • (i) Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses. The cost includes any expenditure of acquiring assets. Self-built asset cost includes materials, direct labor, any other expenditure to make the asset usable, removement and recovery cost, and the loan cost meeting the criteria of capitalization. Besides, the cost also includes the software purchased to integrate related functions, which is capitalized as a part of the equipment.

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.

(ii) Subsequent expenditure

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

  • (iii) Depreciation

Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straightline basis over the estimated useful lives of each component of an item of property, plant and equipment.

Land is not depreciated.

(Continued)

227

TEX-RAY INDUSTRIAL CO., LTD.

Notes to the Financial Statements

The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:

1) Buildings 5～55 years
2) Machinery equipment 1～23 years
3) Transportation equipment 1～6 years
4) Office and Other equipment 1～20 years

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

  • (iv) Reclassification to investment property

A property is reclassified to investment property at its carrying amount when the use of the property changes from owneroccupied to investment property.

  • (m) Leases

  • (i) Identifying a lease

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

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

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

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

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

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

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

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

(Continued)

228

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

  • (ii) As a leasee

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

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

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

  • 1) fixed payments, including in-substance fixed payment,

  • 2) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date,

  • 3) amounts expected to be payable under a residual value guarantee, and

  • 4) payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

  • 1) there is a change in future lease payments arising from the change in an index or rate, or

  • 2) there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, or

  • 3) there is a change of its assessment on whether it will exercise a purchase, extension or termination option, or

  • 4) there is any lease modifications.

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-of-use asset has been reduced to zero.

(Continued)

229

TEX-RAY INDUSTRIAL CO., LTD.

Notes to the Financial Statements

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Company accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Company presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

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

As a practical expedient, the Company elects not to assess whether all rent concessions that meets all the following conditions are lease modifications or not:

  • 1) the rent concessions occurring as a direct consequence of the COVID-19 pandemic,

  • 2) the change in lease payments that resulted in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change,

  • 3) any reduction in lease payments that affects only those payments originally due on, or before, June 30, 2021, and

  • 4) there is no substantive change in other terms and conditions of the lease.

In accordance with the practical expedient, the effect of the change in the lease liability is reflected in profit or loss in the period in which the event or condition that triggers the rent concession occurs.

  • (iii) As a leasor

When the Company acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Company makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

If an arrangement contains lease and non-lease components, the Company applies IFRS15 to allocate the consideration in the contract.

  • (n) Intangible assets

  • (i) Recognition and measurement

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

(Continued)

230

TEX-RAY INDUSTRIAL CO., LTD.

Notes to the Financial Statements

Expenditure on research activities is recognized in profit or loss as incurred.

Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Company intends to, and has sufficient resources to, complete development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost, less accumulated amortization and any accumulated impairment losses.

Other intangible assets, including patents and trademarks, that are acquired by the Company and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

(iii) Amortization

Amortization is calculated over the cost of the asset, less its residual value, and is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use. Additionally intangible assets such as computer software are amortized at estimated useful lives ranging from three to twenty years, and recognized in profit and loss.

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

(o) Impairment of non-financial assets

At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories, contract assets, deferred tax assets and investment properties measured at fair value, less costs) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

(Continued)

231

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only 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.

  • (p) Revenue from contracts with customers

  • (i) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Company’s main types of revenue are explained below.

1) Sale of goods

The Company engages in manufacturing, processing and wholesaling of textile and garments. The Company recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied.

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

  • 2) Financial components

The Company does not expect to have any contracts where the period between the transfer of the goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.

(q) Government grants

The Company recognizes an unconditional government grant related to a biological asset in profit or loss as other income when the grant becomes receivable. Grants that compensate the Company for expenses or losses incurred are recognized in profit or loss on a systematic basis in the periods in which the expenses or losses are recognized.

(Continued)

232

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(r) Employee benefits

(i) Defined contribution plans

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

(ii) Defined benefit plans

The Company’s net obligation in respect of defined benefit plans is calculated separately for each the plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings within equity.

The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(iii) Termination benefits

Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer of those benefits and when the Company recognizes costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted.

(iv) Short-term employee benefits

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

(Continued)

233

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(s) Income taxes

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

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

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

  • (i) temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction,

  • (ii) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future, and

  • (iii) taxable temporary differences arising on the initial recognition of goodwill.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date, and reflect uncertainty related to income taxes, if any.

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

  • (i) the Company has a legally enforceable right to set off current tax assets against current tax liabilities; and

  • (ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:

  • 1) the same taxable entity, or

  • 2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

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.

(Continued)

234

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(t) Earnings per share

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

(u) Operating segments

Please refer to the consolidated financial report of TEX-RAY INDUSTRIAL CO., LTD. for the years ended December 31, 2020 and 2019 for operating segments information.

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

The preparation of the financial statements in conformity with the Regulations 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 is no judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the financial statements.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year is as follows:

  • (a) The loss allowance of trade receivables

The Company has estimated the loss allowance of trade receivables that is based on the risk of a default occurring and the rate of expected credit loss. The Company has considered historical experience, current economic conditions and forward-looking information at the reporting date to determine the assumptions to be used in calculating the impairments and the selected inputs. The relevant assumptions and input values, please refer to Note 6(c).

(b) Valuation of inventories

As inventories are stated at the lower of cost or net realizable value, the Company estimates the net realizable value of inventories for obsolescence and unmarketable items at the end of the reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the inventory is mainly determined based on assumptions as to future demand within a specific time horizon. Due to the rapid industrial transformation, there may be significant changes in the net realizable value of inventories. Please refer to Note 6(d) for further description of the valuation of inventories.

(Continued)

235

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

The Company’s accounting policies include measuring financial and non-financial assets and liabilities at fair value through profit or loss. The Company’s financial instrument valuation group conducts independent verification on fair value by using data sources that are independent, reliable, and representative of exercise prices. This financial instrument valuation group also periodically adjusts valuation models, conducts back-testing, renews input data for valuation models, and makes all other necessary fair value adjustments to assure the rationality of fair value. Investment property measured at fair value is periodically remeasured by the Company’s finance Dept. or by appraisers using appraisal method accepted by FSC.

The Company strives to use market observable inputs when measuring assets and liabilities. Different levels of the fair value hierarchy to be used in determining the fair value of financial instruments are as follows:

  • (a) Level 1: quoted prices (unadjusted) in active markets for identifiable assets or liabilities.

  • (b) Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived from prices).

  • (c) Level 3: inputs for the assets or liability that are not based on observable market data.

For any transfer within the fair value hierarchy, the impact of the transfer is recognized on the reporting date.

Please refer to following notes for assumptions used in measuring fair value:

  • (a) Note 6(h), Investment property.

  • (b) Note 6(u), Financial instruments.

(6) Explanation of significant accounts

  • (a) Cash and cash equivalents
Cash
Check deposits
Demand deposits
Foreign currency deposits
Time deposits
Cash and cash equivalents in the statements of cash flows		 December 31,
2020
$ 497
6,529
778
53,255
451,024		 December 31,
2019

572

11,740

2,765

60,225

-

$
512,083

75,302

’ Please refer Note 6(u) for the disclosure of interest risk and sensitivity analysis of the Company s financial assets and liabilities.

(Continued)

236

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

  • (b) Financial assets at fair value

The portfolio of the Company were as follows:

Financial assets mandatorily measured at fair value through
profit or loss
Non-derivative financial assets
Stocks listed on domestic markets		 December 31,
2020
$
612		 December 31,
2019
1,225

  • (i) Please refer to Note 6(t) for re-measurement at fair value recognized in profit or loss.

  • (ii) The Company designated the investments shown above as equity securities at fair value through other comprehensive income because these equity securities represent those investments that the Company intends to hold for long-term strategic purposes. The revaluation loss of the investment has been recognized in equity accounts.

  • (iii) On Dec. 5, 2019, the Company disposed part of its financial assets at fair value through other comprehensive income at fair value amounted to $3,660 thousand and recognized realized gain amounted to $610 thousand, which was previously recognized as other comprehensive income, and thereafter, was reclassified to retained earnings.

  • (iv) During 2020, the Company sold part of its financial assets at fair value through profit or loss. The financial asset was disposed at fair value amounted to $485 thousand.

  • (v) Please refer to Note 6(u) for credit risk and market risk of the financial assets.

  • (vi) The aforesaid financial assets were not pledged as collateral.

  • (c) Notes and trade receivables

Notes receivables from operating activities
Accounts receivable-measured at amortized cost
Less: Loss allowance		 December 31,
2020
$ 500
339,049
212		 December 31,
2019

21,793

212,834

1,222
$
339,337
233,405

(Continued)

237

TEX-RAY INDUSTRIAL CO., LTD.

Notes to the Financial Statements

  • (i) The Company applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due, as well as the incorporated forward looking information. The expected credit losses of the notes receivables and trade receivables were as follows:
Overdue under 90 days
Overdue 90 to 180 days
Overdue 180 to 360 days
Over 360 days past due
Overdue under 90 days
Overdue 90 to 180 days
Overdue 180 to 360 days
Over 360 days past due		 December 31, 2020 December 31, 2020 Loss allowance
Provision
-
98
5
109
Gross carrying
amount
$ 338,447
984
9
109
$
339,549		 212

Loss allowance
Provision
-
601
550
71
1,222
Gross carrying
amount
$ 227,472
6,013
1,071
71		 Weighted-aver
age loss rate

0%

10%

51.4%

100%
$
234,627
  • (ii) The movement in the allowance for notes and accounts receivable was as follow:
Balance on January 1
Amounts written off
Reversal of impairment losses
Balance on December 31		 For the years ended December 31
2020
2019
$ 1,222
2,571
-
(66)
(1,010)
(1,283)


$
212
1,222

(iii) The aforesaid receivables were not pledged as collateral.

(Continued)

238

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(d) Inventories

Raw materials
Work in process
Finished goods
Merchandise		 December 31,
2020
$ 13,649
368,857
-
38,255		 December 31,
2019

47,494

183,194
4,321

111

$
420,761

235,120

  • (i) As of December 31, 2020 and 2019, inventories recognized as cost of sales amounted to $4,239,495 thousand and $2,405,720 thousand, respectively. For the years ended 2020 and 2019, the write-down of inventories amounted to $70,693 thousand and $1,051 thousand, respectively. The write-downs are included in cost of sales.

  • (ii) The aforesaid inventories were not pledged as collateral.

  • (e) Investments accounted for using equity method

A summary of the Company's investments accounted for using equity method at the reporting date were as follows:

Subsidiaries December 31,
2020
$
2,518,050		 December 31,
2019

2,799,770
  • (i) Subsidiary

Please refer to the consolidated financial statements for the year ended December 31, 2020 and 2019.

(ii) Associate

The Company’s ability to affect those returns from associates is not highly restricted. Because the Company had no obligation to bear additional losses, the Company had stopped recognizing share of losses from MAINETTI GTA HANGERS SWAZILAND (PTY) LTD ("GTA"). The unrecognized losses in 2019 was $7 thousand. GTA had completed liquidation process in 2019.

  • (iii) The aforesaid investments accounted for using equity method were not pledged as collateral.

(Continued)

239

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(f) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Company for the years ended December 31, 2020 and 2019, were as follows:

Cost:
Balance on January 1, 2020
Additions
Reclassification to investment property
Disposals
Balance on December 31, 2020
Balance on January 1, 2019
Additions
Transfers
Disposals
Balance on December 31, 2019
Depreciation and impairment loss:
Balance on January 1, 2020
Depreciation for the period
Impairment loss
Reclassification to investment property
Disposals
Balance on December 31, 2020
Balance on January 1, 2019
Depreciation for the period
Disposals
Balance on December 31, 2019
Carrying amounts:
Balance on December 31, 2020
Balance on December 31, 2019
Balance on January 1, 2019		 Land
$ 231,506
-
(38,490)
-		 Buildings
372,815
3,313
(86,011)
-		 Machinery
equipment
225,907
1,227
-
(90,076)		 Transportation
equipment
6,858
-
-
(4,952)		 Office
equipment
42,069
1,008
-
(23)		 Other
facilities
87,107
406
-
(12,242)		 Construction
inprogress
-
-
-
-		 Total
966,262
5,954
(124,501)
(107,293)
$
193,016		 290,117
137,058
1,906
43,054
75,271		 -
740,422

$ 231,506
-
-
-
372,038
777
-
-
221,846
2,535
1,526
-
10,571
-
-
(3,713)
36,800
1,669
3,600
-
88,035
3,449
375
(4,752)		 -
5,501
(5,501)
-
960,796
13,931
-
(8,465)
$
231,506		 372,815 225,907
6,858		 42,069
87,107		 -
966,262

$ -
-
-
-
-
114,164
7,070
-
(58,475)
-
195,717
8,024
2,200
-
(75,192)
5,657
637
100
-
(4,527)
33,858
2,202
200
-
(23)
79,960
1,567
1,500
-
(10,217)		 -
-
-
-
-
429,356
19,500
4,000
(58,475)
(89,959)
$
-		 62,759
130,749
1,867
36,237
72,810		 -
304,422
$ -
-
-
105,844
8,320
-
184,006
11,711
-
8,452
918
(3,713)
31,808
2,050
-
82,960
1,740
(4,740)		 -
-
-
413,070
24,739
(8,453)
$
-		 114,164 195,717
5,657		 33,858
79,960		 -
429,356
$
193,016
227,358
6,309
39
6,817
2,461		 -
436,000

$
231,506
258,651
30,190		 1,201
8,211
7,147		 -
536,906

$
231,506
266,194
37,840
2,119
4,992
5,075		 -
547,726

  • (i) On June 16, 2020, the Board of Directors approved that the real estate of the factory site located in Taiwan would be leased or sold subsequently, resulting in the carrying value amounting to $66,026 thousand was transferred into investment property. Please refer to Note 6(h) for details.

  • (ii) In June 2020, due to the cessation of production at the Tainan Dyeing Factory, the Company estimated that the recoverable amount of the relevant property, plant and equipment was lower than the book value, thus impairment loss amounting to $4,000 thousand was recognized.

  • (iii) The property, plant and equipment of the Company had been pledged as collateral for bank borrowings, please refer to Note 8.

(Continued)

240

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(g) Right-of-use assets

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

Cost:
Balance on January 1, 2020
Additions
Disposal
Balance on December 31, 2020
Balance on January 1, 2019
Additions
Balance on December 31, 2019
Accumulated depreciation:
Balance on January 1, 2020
Depreciation for the year
Disposal
Balance on December 31, 2020
Balance on January 1, 2019
Depreciation for the year
Balance on December 31, 2019
Carrying amounts:
Balance on December 31, 2020
Balance on December 31, 2019
Balance on January 1, 2019		 Land
$ 37,365
-
(3,385)		 Buildings
1,326
693
(1,326)		 Machinery
equipment		 Transportatio
n equipment

5,682
508

-		 Total
46,937
1,201
(7,275)
40,863
9,364
37,573
46,937
7,342
6,675
(5,999)
8,018
-
7,342
7,342
32,845
39,595
9,364

2,564

-

(2,564)

$
33,980
693

-
6,190

$ 4,432
32,933		 1,326
-
2,564
-

1,042
4,640

$
37,365		 1,326 2,564

5,682

$ 4,149
3,481
(3,385)
560
620
(700)

1,524

390

(1,914)


1,109

2,184

-

$
4,245
480

-
3,293

$ -
4,149		 -
560		 -

1,524
-

1,109

$
4,149		 560
1,524


1,109

$
29,735		 213
-

2,897

$
33,216		 766 1,040

4,573

$
4,432		 1,326
2,564


1,042

(h) Investment property

The movement of the investment property were as follows:

Book Value:
Balance on January 1, 2020
Transfer from property, plant, and equipment
Change in fair value
Balance on December 31, 2020
Balance on January 1, 2019
Change in fair value
Balance on December 31, 2019		 Land and
improvement
Buildings
Total
$ 42,559
86,160
128,719
38,490
27,536
66,026
882,644
(18,948)
863,696



$
963,693
94,748
1,058,441



$ 37,650
75,746
113,396
4,909
10,414
15,323



$
42,559
86,160
128,719

(Continued)

241

TEX-RAY INDUSTRIAL CO., LTD.

Notes to the Financial Statements

Carrying amounts:
Balance on December 31, 2020
Balance on December 31, 2019
Balance on January 1, 2019		 Land and
improvement
Buildings
Total
$
963,693
94,748
1,058,441



$
42,559
86,160
128,719



$
37,650
75,746
113,396
  • (i) The recurring fair value measurement for the investment properties has been categorized as a Level 3 fair value based on the input to the valuation technique used. The above table shows a reconciliation from the opening balances to the closing balances for Level 3 fair values.

The Company’s investment properties were subsequently measured at fair value using the income approach after initial recognition. The relevant contract information and key assumptions used in the method are as follows:

Contract Terms Building No. 6576, Sec. 3, Zhongshan Dist., Taipei City Building No. 6576, Sec. 3, Zhongshan Dist., Taipei City
December 31, 2020 December 31, 2019
Contract terms 1.Rental:$238 thousand /month
2.Period:60 months
3.Deposits: $460 thousand
4.Tax borne by lessor:$85
thousand/year		 1.Rental:$210~$238 thousand /month
2.Period:57 months
3.Deposits: $460 thousand
4.Tax borne by lessor:$86
thousand/year
Rent at local market rate
(note)		 $3,128 /Py /month $2,860 /Py /month
Current market rent for
comparable properties in
similar locations and
condition		 $2,683～$3,234 /Py /month $2,630~$3,088 /Py /month
Current status In use In use
Capitalization rate 3.77% 3.54%
Discount rate 2.02% 2.04%
Appraised by external
independent appraiser or
self-appraisal		 Appraised by external independent
appraiser		 Appraised by external independent
appraiser
Appraiser office(s) Grand Elite Real Estate Appraisers
Firm		 Grand Elite Real Estate Appraisers
Firm
Appraiser name(s) Fu-Sheng Wang Fu-Sheng Wang
Appraisal date December 31, 2020 December 31, 2019
Fair value by external
independent appraiser(s)		 $64,090 thousand $63,420 thousand

(Continued)

242

TEX-RAY INDUSTRIAL CO., LTD.

Notes to the Financial Statements

Contract Terms Land No. 38, and buildings in Dehui Sec. 4, Zhongshan Dist., Taipei City Land No. 38, and buildings in Dehui Sec. 4, Zhongshan Dist., Taipei City
December 31, 2020 December 31, 2019
Contract terms 1.Rental:$42 thousand /month
2.Period:12 months
3.Deposits: $0 thousand
4.Tax borne by lesson:$16
thousand/year		 1.Rental:$52 thousand /month
2.Period:12 months
3.Deposits: $0 thousand
4.Tax borne by lesson:$16
thousand/year
Rent at local market rate
(note)		 $1,100 /Py /month $900~$1,300 /Py /month
Current market rent for
comparable properties in
similar locations and
condition		 $900～$1,300 /Py /month $1,172~$1,182 /Py /month
Current status In use In use
Capitalization rate 2.14% 2.18%
Discount rate 2.02% 2.04%
Appraised by external
independent appraiser or
self-appraisal		 Appraised by external independent
appraiser		 Appraised by external independent
appraiser
Appraiser office(s) Grand Elite Real Estate Appraisers
Firm		 Grand Elite Real Estate Appraisers
Firm
Appraiser name(s) Fu-Sheng Wang Fu-Sheng Wang
Appraisal date December 31, 2020 December 31, 2019
Fair value by external
independent appraiser(s)		 $12,980 thousand $13,020 thousand
Contract Terms Land No. 868, and buildings in Zhenquian Sec. Changhua County
December 31, 2020 December 31, 2019
Contract terms 1.Rental:$200 thousand /month
2.Period:12 months
3.Deposits: $0 thousand
4.Tax borne by lesson:$181
thousand/year		 1.Rental:$150 thousand /month
2.Period:12 months
3.Deposits: $0 thousand
4.Tax borne by lesson:$181
thousand/year
Rent at local market rate
(note)		 $190 /Py /month $150~$250 /Py /month

(Continued)

243

TEX-RAY INDUSTRIAL CO., LTD.

Notes to the Financial Statements

Contract Terms Land No. 868, and buildings in Zhenquian Sec. Changhua County Land No. 868, and buildings in Zhenquian Sec. Changhua County Land No. 868, and buildings in Zhenquian Sec. Changhua County
December 31, 2020 December 31, 2019
Current market rent for
comparable properties in
similar locations and
condition		 As above As above
Current status In use In use
Capitalization rate 3.25% 1.60%
Discount rate 2.00% 2.10%
Appraised by external
independent appraiser or
self-appraisal		 Appraised by external independent
appraiser		 Appraised by external independent
appraiser
Appraiser office(s) Grand Elite Real Estate Appraisers
Firm		 Grand Elite Real Estate Appraisers
Firm
Appraiser name(s) Fu-Sheng Wang Fu-Sheng Wang
Appraisal date December 31, 2020 December 31, 2019
Fair value by external
independent appraiser(s)		 $61,386 thousand $52,279 thousand
Contract terms Land No. 228-240, 240-1, 241, 531, 531-1, 533-535
and buildings located at Shengli Sec., Rende Dist., Tainan City,
total in twenty items.
December 31, 2020
Rent at local market rate (note) $171~$218 /Py /month
Current market rent for
comparable properties in
similar locations and condition		 As above
Current status Available for leasing
Capitalization rate 1.755%
Discount rate 3.29%
Appraised by external
independent appraiser or
self-appraisal		 Appraised by external independent appraiser
Appraiser office(s) CHINA PROPERTY APRAISING CENTER CO., LTD.
Appraiser name(s) Dian-Jing Hsieh、Xiang-Ling Chiu
Appraisal date June 30 and December 31, 2020
Fair value by external
independent appraiser(s)		 $ 920,654 thousand and $920,913 thousand respectively

(Continued)

244

TEX-RAY INDUSTRIAL CO., LTD.

Notes to the Financial Statements

  • Note: If there is no actual lease case in the area where the target premises are, the valuation report’s selection of the rent comparison case for the premises is based on the investigation and evaluation of the target land use, within the range of the neighboring area, select three appropriate comparison cases, after analysis and comparison and adjustment, obtain the reasonable market rent of the target land.

In accordance with Article 34 of the Regulations on Real Estate Appraisal, the procedures of the income approach include estimating the effective gross income and total expenses, computing the net operating income, determining the capitalization rate or discount rate, and computing the income. The attributes used by the Company for the estimations above were the last three years’ data from the subject property and comparable properties which have similar characteristics, and these data were assessed and adjusted based on their persistency, stability, and growth to ensure the availability and reasonableness of these data. The movement of income (cash inflows) and expenditure (cash outflows) for future periods was based on the vacancies or losses, existing or future cash flow plans of the Company, and historical cash flows from the subject property, identical properties, or properties in the same industry. The estimation and computation of the net income were based on the highest and best use of the subject property and have taken into consideration the income generated from comparable properties in the same location based on their highest and best use.

The discount rate is determined by the risk premium method, which takes into consideration of the bank time deposit interest rate, government bond interest rate, the risk of real estate investment, currency changes and the trend of real estate prices, etc., and is selected to represent the general property return. The rate is a benchmark, and it is determined after adjusting the difference between the investment property and the individual characteristics of the target. The discount rate is based on the mobile interest rate of the two-year postal fixed rate of small deposit issued by Chunghwa Post Co., Ltd., plus no less than 75 basis points of percentage. Factors such as the underlying income situation, liquidity, risk, value-added and ease of management are also taking account. As of December 31, 2020 and 2019, the discount rates were determined to be 2.00%~3.29% and 2.04%～2.10%, with risk premium added up. The estimation of capitalization rates refer to the weighted average returns which is calculated by dividing the net income of the comparative targets by the prices.

  • (ii) The Company’s Tainan dyeing factory was expected to be leased or sold, thus it was transferred from plant, plant and equipment to investment property on June 16, 2020. The Company recognized the value-added amounting to $873,576 thousand between the fair value and book value at the time of the transfer, and the impairment loss of building amounted to $18,948 thousand (recorded under other gains and losses). The value-added after deducting the amount of provision of land value increment tax equaled to $761,166 thousand, and was recognized under other equity.

  • (iii) On November 12, 2018, the Company signed a sales contract of real estate accounted for investment property with a non-related party. The transfer of ownership was completed on January 24, 2019. The sale price amounting to $321,000 thousand was wholly collected. The Company thus recognized the gain on sale of investment property amounting to $42,304 thousand.

  • (iv) As of December 31, 2020 and 2019, the investment property of the Company had been pledged as collateral for long-term borrowings, please refer to Note 8.

(Continued)

245

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(i) Short-term borrowings

Letters of credit
Unsecured bank loans
Total
Unused credit line
Range of interest rates		 December 31,
2020		 December 31,
2019

61,722

510,000
$ 9,990
110,000

$
119,990


571,722

$
187,010


105,278

1.00% ~ 1.35%

1.20%~1.60%

The Company had pledged assets as collateral for short-term borrowing, please refer to Note 8.

  • (j) Short-term notes and bills payable
Commercial paper payable
Less: Discount on short-term notes and bills payable
Net
Range of interest rates
Guarantee institution		 December 31, 2020
$ 250,000
(340)

$
249,660

1.3%
CHANG HWA Bank and
other ten syndicated banks

The Company had pledged assets as collateral for short-term notes and bills payable, please refer to Note 8.

(k) Long-term borrowings

The details were as follows:

Unsecured bank loans
Secured bank loans
Less: current portion
borrowing fees
Net
Unused credit line
Range of interest rates
Maturity		 December 31,
2020
$ -
1,438,250
(9,000)
(5,061)		 December 31,
2019
34,000
1,183,000
(28,800)
-
1,188,200
-
1.1960%~1.8947%
2020.06~2028.03

$
1,424,189

$
-
1.4%~2%

2025.01~2028.03

(Continued)

246

TEX-RAY INDUSTRIAL CO., LTD.

Notes to the Financial Statements

  • (i) The Company entered into a five-year syndicated loan agreement of $2 billion with 11 banks including Changhua Commercial Bank LTD. on January 8, 2020. The funds obtained in the syndicated loan are used to settle the outstanding balance of the previous syndicated loan agreement and to supplement the operating turnover. According to the agreement, the Company shall calculate and maintain its current ratio, interest protection multiples and debt ratio based on the annual and semi-annual consolidated financial reports audited or reviewed by auditors during the loan period. On December 31, 2020, the Company did not violate the loan agreement.

  • (ii) Please refer to Note 8 for details of the related assets pledged as collateral.

  • (l) Lease liabilities

The carrying amount of lease liabilities were as follows:

Current
Non-current		 December 31,
2020
$
6,328		 December 31,
2019

7,476

32,407

$
26,810

For the maturity analysis, please refer to Note 6(u).

The amounts recognized in profit or loss were as follows:

Interest on lease liabilities
Expenses relating to leases of low-value assets,
excluding short-term leases of low-value assets
Covid-19-related rent concessions (Recognized as
deduction of rent expenses)		 For the years ended December 31, 2020
2020
2020
$
674
784
$
448
963
$
916
-

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

Total cash outflow for leases

**For the years ** **ended December 31, ** 2020
2020 2019
$ 7,481 8,801

(Continued)

247

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

  • (m) Operating lease

Please refer to Note 6(h) for information about the operating leases of property.

A maturity analysis of lease payments, showing the undiscounted lease payments to be received after the reporting date were as follows:

Less than one year
One to two years
Two to three years
Three to four years
Four to five years
Total undiscounted lease payments		 December 31,
2020
$ 8,839
2,857
2,857
2,143
-		 December 31,
2019
8,159
2,857
2,857
2,857
2,143
$
16,696
18,873

For the information of rent revenue from operating lease, please refer to Note 6(t).

  • (n) Employee benefits

  • (i) Defined benefit plans

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

Present value of defined benefit obligations
Fair value of plan assets
Net defined benefit liabilities		 December 31,
2020
$ (55,352)
30,340		 December 31,
2019

(76,828)

47,332

$
(25,012)

(29,496)

The Company makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provide pension benefits for employees upon retirement. Plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average monthly salary for six months prior to retirement.

  • 1) Composition of plan assets

The Company set aside pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. Under these regulations, the minimum earnings from these pension funds shall not be less than the earnings from two-year time deposits with the interest rates offered by local banks.

The Company’s Bank of Taiwan labor pension reserve account balance amounted to $30,340 thousand as of December 31, 2020. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

(Continued)

248

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

  • 2) Movements in present value of the defined benefit obligations

The movements in the present value of the defined benefit obligations for the years ended December 31, 2020 and 2019 were as follows:

Defined benefit obligation, January 1
Current service costs and interest cost
Remeasurements of the net defined benefit
liability
－Experience adjustments
－Actuarial gains (losses) arose from changes
in demographic assumptions
－Actuarial gains (losses) arose from changes
in financial assumption
The effect of plan reduction
Benefits paid by the plan
Defined benefit obligation, December 31		 For the years ended December 31
2020
2019
$ (76,828)
(75,998)
(676)
(941)
1,066
(3,316)
(2)
(297)
(3,567)
(2,072)
23,544
3,286
1,111
2,510		 For the years ended December 31
2020
2019
$ (76,828)
(75,998)
(676)
(941)
1,066
(3,316)
(2)
(297)
(3,567)
(2,072)
23,544
3,286
1,111
2,510
2020
$ (76,828)
(676)
1,066
(2)
(3,567)
23,544
1,111

$
(55,352)

(76,828)
  • 3) Movements in the fair value of plan assets

The movements in the fair value of the defined benefit plan assets for the years ended December 31, 2020 and 2019 were as follows:

Fair value of plan assets, January 1
Interests revenue
Remeasurements of the fair value of plan assets
－Return on plan asset excluding interest
income
Contributions made
Benefits paid by the plan
Settlement payment of plan asset
Fair value of plan assets, December 31		 For the years ended December 31
2020
2019
$ 47,332
46,653
361
477
1,525
1,656
3,370
3,925
(1,111)
(2,510)
(21,137)
(2,869)		 For the years ended December 31
2020
2019
$ 47,332
46,653
361
477
1,525
1,656
3,370
3,925
(1,111)
(2,510)
(21,137)
(2,869)
2020
$ 47,332
361
1,525
3,370
(1,111)
(21,137)

$
30,340

47,332
  • 4) Movements of the effect of the asset ceiling: None.

(Continued)

249

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

  • 5) Expenses recognized in profit or loss

The Company’s pension expenses that should be recognized in profit or loss for the years ended December 31, 2020 and 2019 were as follows:

Current service costs
Net interest of net liabilities for defined benefit
obligations
Service cost of prior period		 For the years ended December 31
2020
2019
$ 106
187
209
277
(2,407)
(417)		 For the years ended December 31
2020
2019
$ 106
187
209
277
(2,407)
(417)
2020
$ 106
209
(2,407)

$
(2,092)

47

The actual expenses recognized in profit or loss for the years ended December 31, 2020 and 2019 were as follows:

Operating costs
Selling expenses
Administration expenses
Research and development expenses		 For the years ended December 31
2019
2019
$ 61
200
(1,261)
(63)
(892)
(88)
-
(2)		 For the years ended December 31
2019
2019
$ 61
200
(1,261)
(63)
(892)
(88)
-
(2)
2019
$ 61
(1,261)
(892)
-
$
(2,092)
47

Due to a number of employees agreeing to a curtailment as of December 31, 2020 and 2019, the Company has reduced the defined benefit retirement obligations by $23,544 thousand and $3,286 thousand and recognized the reduction in benefits in the income statement.

6) Actuarial assumptions

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

Discount rate
Future salary increase rate		 December 31,
2020
0.30%
2.00%		 December 31,
2019
0.75%
2.00%

The expected allocation payment to be made by the Company to the defined benefit plans for the one-year period after the reporting date is $2,107 thousand.

The weighted average lifetime of the defined benefits plans is 10 years.

(Continued)

250

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

7) 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, 2020
Discount rate (change 0.25％)
Future salary increasing rate (change 0.25％)
December 31, 2019
Discount rate (change 0.25％)
Future salary increasing rate (change 0.25％)		 Influences of defined
benefit obligations
Increase 0.25％
Decrease 0.25％
$ (1,363)
1,416
1,389
(1,344)
(1,998)
2,079
2,048
(1,979)
Increase 0.25％
$ (1,363)
1,389
(1,998)
2,048

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 2020 and 2019.

(ii) Defined contribution plans

The Company allocates the regulated percentage 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 Company allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligation.

The pension costs incurred from the contributions to the Bureau of the Labor Insurance amounted to $8,997 thousand and $10,096 thousand for the years ended December 31, 2020 and 2019, respectively.

(Continued)

251

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(o) Income taxes

(i) Tax expense

The components of income tax for the years ended December 31, 2020 and 2019 were as follows:

Current income tax expense
Current period
Prior years income tax adjustment
Land value increment tax
Deferred income tax expense
Origination and reversal of temporary differences
Tax expense		 For the years ended December 31
2020
2019
$ 70,627
10,390
(491)
(13,635)
-
39,136
(20,082)
(109)
$
50,054
35,782		 For the years ended December 31
2020
2019
$ 70,627
10,390
(491)
(13,635)
-
39,136
(20,082)
(109)
$
50,054
35,782
$ 70,627
(491)
-
(20,082)
$
50,054



35,782

The amount of income tax recognized in other comprehensive income was as follows:

Items that will not be reclassified subsequently to profit or loss
Real estate revaluation surplus		 For the year
ended
December 31
2020
$
112,410

The reconciliation of tax expense and income before tax for the years ended December 31, 2020 and 2019 were as followed:

Profit (loss) before tax
Income tax expense at domestic statutory tax rate
Tax-exempt income
Recognition of investment loss under the equity method
Prior years income tax adjustment
Land value increment tax
Origination and reversal of temporary differences
Others		 For the years ended December 31
2020
2019
$ 218,174
(136,095)
$ 43,635
(27,219)
(4)
(8,461)
18,551
47,406
(491)
(13,635)
-
39,136
(20,082)
(109)
8,445
(1,336)
$
50,054
35,782
2020
$ 218,174

$ 43,635
(4)
18,551
(491)
-
(20,082)
8,445

$
50,054

(Continued)

252

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

  • (ii) Recognized deferred tax asset and liability recognized

Changes in the amount of deferred tax assets and liabilities for 2020 and 2019 were as follows:

  • 1) Deferred tax asset:
Deferred tax asset:
Balance on January 1, 2020

Recognized in profit or loss
Balance on December 31, 2020

Balance on January 1, 2019

Recognized in profit or loss
Balance on December 31, 2019
 Unrealized
loss of
inventory
**valuation **		 Unrealized
sales margin		 Unrealized
exchange loss		 Others **Total **
$ 2,924
14,138
2,066

(599)
-

6,193		 894

350
5,884

20,082

$
17,062


1,467


6,193

1,244

25,966

$ 2,714
210


2,178

(112)


-

-

1,340
(446)


6,232

(348)
$
2,924

2,066

-
894


5,884
  • 2) Deferred tax liabilities:
Balance on January 1, 2020
Recognized in other
comprehensive income
Balance on December 31, 2020
Balance on January 1, 2019
Recognized in profit or loss
Balance on January 1, 2019		 Defined
benefitplan
Provision for
land value
increment tax
Unrealized
exchange
benefits
$ 654
64,635
-
-
112,410
-
$
654
177,045
-
$ 654
67,939
457
-
(3,304)
(457)
$
654
64,635
-		 Total
65,289
112,410

177,699


69,050

(3,761)


65,289

  • (iii) The Company’s income tax returns through 2018 have been assessed and approved by the Tax Authority.

  • (p) Capital and other equity

  • (i) Ordinary shares

A resolution was passed by the general meeting of shareholders held on 27 June, 2013, for the issuance of 42,052 thousand ordinary shares for cash under private placement, with par value of $10 per share, amounting to $420,524 thousand. The date of capital increase was on 28 April, 2014, which was approved on 23 April, 2014 by the Board. The relevant statutory registration procedures have been completed.

A resolution was passed by the temporary meeting held on December 4, 2018 for the issuance of 23,362 thousand ordinary shares for cash under private placement, with par value of $10 and issuance price of $10.16 per share, amounting to $237,363 thousand. The date of capital increase was on December 12, 2018. The relevant statutory registration procedures have been completed.

(Continued)

253

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

As of December 31, 2020 and 2019, the number of authorized shares were each $3,000,000 thousand, respectively, with par value of $10 per share and divided into 300,000 thousand shares. All of the aforementioned shares are ordinary shares, and the number of issued shares was 233,625 thousand shares. All proceeds from the shares have been collected.

The aforementioned private placement of ordinary shares and the transfer of any subsequently obtained bonus shares would be subject to article 43-8 under the Securities and Exchange Act. The Company can only apply for these shares to be traded on the Taiwan Stock Exchange after a three-year period has elapsed from the delivery date of the private-placed securities, and after applying for a public offering with the Financial Supervisory Commission.

(ii) Capital surplus

The components of the capital surplus were as follows:

Share capital
Conversion of bonds
Treasury stock transactions
Difference between consideration and carrying amount of
subsidiaries acquired or disposed
Changes in equity of subsidiaries under equity method
Donated surplus		 December 31,
2020
$ 121,485
14,648
3,949
90,683
3,033
254		 December
31, 2019

121,485

14,648

3,949

91,786

3,033

254
$
234,052
235,155

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

(iii) Retained earnings

The Company’s article of incorporation stipulate that Company’s net earnings should first be used to offset the prior years' deficits, if any, before paying any income taxes or salary. Of the remaining balance, 10% is to be appropriated as legal reserve, and then any remaining profit, together with any undistributed retained earnings, shall be distributed according to the distribution plan proposed by the Board of Directors to be submitted to the stockholders’ meeting for approval.

The Company adopts a residual dividend policy. According to the Company's future budget plan and the future annual funding needs measured, the Company reserved the funds needed for the retained earnings financing. In order to avoid excessive dilution, the stock dividend is not higher than 50% of the current year's distribution, and the rest can be distributed by cash dividend.

(Continued)

254

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

  • 1) Legal reserve

When a company incurs no loss, it may, pursuant to a resolution by a shareholders’ meeting, distribute its legal reserve by issuing new shares or by distributing cash, and only the portion of legal reserve which exceeds 25% of capital may be distributed.

  • 2) Special reserve

When the Company first adopted the International Financial Reporting Standards endorsed by the FSC, it chose to apply the exemption item of IFRS 1 "First-time Adoption of International Financial Reporting Standards". The unrealized revaluation increase and accumulation accounted under shareholders’ equity amounted to $216,408 thousand result in the reduction of retained earnings. In accordance with Rule No. 1010012865 issued by the FSC on April 6, 2012, for the net reduction of retained earnings on the conversion date due to the first adoption of IFRSs, the Company was exempted from reclassifying special surplus reserve for the amount transferred to the retained earnings on January 1, 2013.

In accordance with Rule No. 1010012865 issued by the FSC on April 6, 2012, a portion of current-period earnings and undistributed prior-period earnings shall be reclassified as special earnings reserve during earnings distribution. The amount to be reclassified should equal the current-period total net reduction of other shareholders’ equity. Similarly, a portion of unappropriated earnings prior-period earnings shall be reclassified as special earnings reserve (and does not qualify for earnings distribution) to account for cumulative changes to other shareholders’ equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders’ equity shall qualify for additional distributions.

The Company chose the fair value model for subsequent measurement of its investment property. According to the Rule No. 1030006415 issued by the FSC on March 18, 2014, the Company took the special surplus reserve amounting to the net increase in fair value of investment property measured by the fair value model at first adoption, and the special surplus reserve shall be taken in the following order when the Company distribute the earnings every year:

  • a) Take the special reserve, which amounts to the net increase in the fair value model for subsequent measurement of investment property, from undistributed earnings of current period and prior year. If it is the cumulative net increase in fair value in the previous period, the amount of the special reserve equals to the same amount from the undistributed earnings from the previous period. When the accumulated net increase in fair value of the investment real estate is subsequently reduced or the investment real estate is disposed of, the surplus may be reverted to distribute the surplus based on the reduction or the disposal situation.

  • b) According to the Rule No. 1010047490 issued by the FSC November 21, 2012, the special surplus reserve calculated based on the difference between the market value and the book value of the parent company’s stock held by the subsidiaries at the end of the period, shall not be distributed. If there is any rebound in the market price thereafter, the reversal amount based on the shareholding percentage shall be reclassified into retained earnings.

(Continued)

255

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

  • c) In accordance with Rule No. 1010012865 issued by the FSC on April 6, 2012, the amount of net deduction of other shareholders’ equity recognized in current year should be retained from undistributed earnings from current period and prior year. The amount of net deduction of other shareholders’ equity generated from previous period should be made up from undistributed earnings from the prior year. When the accumulated net deduction of other shareholders ’ equity is subsequently reduced, the special reserve may be reversed to distributable earnings.

  • 3) Earnings distribution

Earnings distributions for 2020 and 2019 were decided by the resolution adopted, with no distributable earnings, at the general meeting of shareholders held on June 16, 2020 and June 12, 2019, respectively. For more information please check the website of Market Observation Post system.

(q) Earnings per share

The basic earnings per share and diluted earnings per shares were calculated as follow:

  • (i) Basic earnings per share
Basic earnings per share
Profit/(loss) attributable to ordinary shareholders
Weighted-average number of ordinary shares (thousand
shares)
Profit/(loss) attributable to shareholders per share		 For the years ended December 31
2020
2019
$
168,120
(171,877)
233,625
233,625
$
0.72
(0.74)
2020
$
168,120

233,625

$
0.72
  • (ii) Diluted earnings per share
Basic earnings per share
Profit/(loss) attributable to ordinary shareholders
Weighted-average number of ordinary shares (basic)
Effect of dilutive potential ordinary shares
Effect of employee share bonus
Weighted average number of ordinary shares (diluted)
Profit/(loss) attributable to ordinary shareholders (diluted)		 For the years ended December 31
2020
2019
$
168,120
(171,877)
233,625
233,625
163
-
233,788
233,625
$
0.72
(0.74)
2020
$
168,120

233,625
163
233,788

$
0.72

(Continued)

256

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

  • (r) Revenue from contracts with customers

  • (i) Disaggregation of revenue

Primary geographical markets:
Taiwan
America
Asia
Europe
Africa
Other countries
Contract balances
Contract liabilities		 For the years ended December 31
2020
2019
$ 535,882
404,072
1,560,611
1,619,152
3,330,891
562,972
14,384
29,997
184,482
234,912
-
328
$
5,626,250
2,851,433
December 31,
2020
December 31,
2019
January 1,
2019
$
17,908
13
36,623
  • (ii) Contract balances

The major change in the balance of contract liabilities is the difference between the time frame in the performance obligation to be satisfied and the payment to be received.

  • (s) Employee compensation and directors' remuneration

According the amended Company’s Articles of Incorporation, remuneration of employees is appropriated at 2% of profit settled by cash or shares decided by the board of directors. The recipients of cash and shares may include the employees of the Company’s affiliated companies who meet certain conditions. Remuneration of directors is appropriated at no more than 2% of the profit. Remuneration of employees and directors is submitted to general meeting of the shareholders. However, accumulated deficit from prior years is first offset before any appropriation of profit.

For the year ended December 31, 2020, remuneration of employees and directors both amounting to $3,235 thousand, were estimated on the basis of the Company’s net profit before tax, excluding the remuneration of employees and directors of each period, and multiplied by the percentage of remuneration of employees and directors as specified in the Company’s Articles of Incorporation. For the year ended December 31, 2019, the Company suffered operating loss, hence, no remuneration of employees and directors were estimated.

There was no difference between the amounts approved by Board of Directors and recognized for the years ended December 31, 2020 and 2019. For further information, please refer to Market Observation Post System website.

(Continued)

257

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(t) Non-operating income and expenses

(i) Other income

The details of other income were as follows:

Rent income
Management service revenue
Dividend income
Commission revenue
Compensation revenue
Others		 For the years ended December 31
2020
2019
$ 9,338
7,927
2,340
-
22
97
118
56
-
4,995
5,652
5,264
$
17,470
18,339
2020
$ 9,338
2,340
22
118
-
5,652

$
17,470

(ii) Other gains and losses

The details of other gain and losses were as follows:

Gain on disposal of held-for-sale non-current asset
(Losses) gains on disposal of property, plant and
equipment
(Losses) gains on remeasurement of investment property
Foreign exchange losses
Loss on financial asset at fair value through profit or loss
Impairment loss of non-financial asset
Other income
Other expenses		 For the years ended December 31
2020
2019
$ -
42,304
(2,780)
203
(18,948)
10,420
(59,703)
(2,925)

(128)
(130)
(4,000)
-
3,563
826
(570)
(85)
$
(82,566)
50,613
2020
$ -
(2,780)
(18,948)
(59,703)

(128)
(4,000)
3,563
(570)

$
(82,566)

(iii) Interest income

The details of interest income were as follows:

Interest income
Bank deposits
Interest subsidy
Loans		 For the years ended December 31
2020
2019
$ 2,823
3,632
27
4
1,844
1,218
$
4,694
4,854
2020
$ 2,823
27
1,844

$
4,694

(Continued)

258

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(iv) Interest expenses

The details of interest expenses were as follows:

Loans and borrowings
Lease liabilities		 For the years ended December 31
2020
2019
$ 33,432
32,638
674
784
$
34,106
33,422
2020
$ 33,432
674
$
34,106

(u) Financial instruments

(i) Categories of financial instruments

  • 1) Financial asset
Mandatory measured at fair value through profit or loss
Measured at amortized cost (deposits and receivables)
Cash and cash equivalents
Notes, accounts receivable, and other receivables
Other current financial assets
Other non-current financial assets
Subtotal
Total		 December 31,
2020
$ 612		 December 31,
2019

1,225
512,083
587,840
166,778
9,879

75,302

378,238

261,190

115,223

1,276,580


829,953

$
1,277,192


831,178
  • 2) Financial liabilities
Financial liabilities carried at amortized cost
Short-term borrowings
Short-term notes and bills payable
Accrued payables
Long-term borrowing, current portion
Long-term borrowings
Total		 December 31,
2020
$ 119,990
249,660
649,320
9,000
1,424,189		 December 31,
2019

571,722

-

398,536

28,800

1,188,200

$
2,452,159


2,187,258

(Continued)

259

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(ii) Credit risk

  • 1) Credit risk exposure

The carrying amount of financial assets and contract assets represents the maximum amount exposed to the credit risk. The amounts of maximum credit risk exposure of the Company on December 31, 2020 and 2019, were $1,277,192 thousand and $831,178 thousand, respectively.

  • 2) The customers of the Company are concentrated in the retail and wholesale of textile or garments. In order to reduce credit risk, the Company continuously evaluates the financial status of customers, conducts individual assessment based on the signs of impairment of accounts receivable and credit risk characteristics, handles accounts receivable insurance policy for some customers. On December 31, 2020 and 2019, the top five customers comprised 85% and 53% of the balances of accounts receivable, resulting in the concentration of credit risk.

  • 3) For credit risk exposure of notes and trade receivables, please refer to Notes 6(c).

  • (iii) Liquidity risk

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

December 31, 2020
Non-derivative financial liabilities
Secured loans
Unsecured loans
Letters of credit
Short-term notes and bills
payable
Accrued payables
Lease liabilities
December 31, 2019
Non-derivative financial liabilities
Secured loans
Unsecured loans
Letters of credit
Accrued payables
Lease liabilities		 Carrying
amount

$ 1,438,250
110,000
9,990
249,660
649,320
33,138		 Contractual
cash flows		 Within 6
months		 6-12
months		 1-2years 2-5years Over 5
years

-
-
-
-
-

9,146
1,539,088
110,444
10,023
250,000
649,320
35,243
18,760

110,444

10,023

250,000

649,320

3,590
18,728

-

-

-

-

3,292
175,496
-
-
-
-

5,481
1,326,104
-
-
-
-

13,734

$
2,490,358
2,594,118


1,042,137


22,020


180,977


1,339,838


9,146


$ 1,183,000
544,000
61,722
398,536
39,883
1,220,871
545,546
61,920
398,536
42,619


152,518

531,847

61,920

398,536

4,319


153,834

8,482

-

-

3,823


442,472

5,217
-
-

6,639


451,379

-
-
-

14,319


20,668
-
-
-

13,519

$
2,227,141
2,269,492


1,149,140


166,139


454,328


465,698


34,187

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

(Continued)

260

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(iv) Currency risk

  • 1) Exposure to foreign currency risk

The Company’s significant exposures to foreign currency risk were as follow:

Financial assets
Monetary items
NTD:USD
Financial liabilities
Monetary items
NTD:USD		 December 31, 2020 December 31, 2020 December 31, 2020 December 31, 2019
Foreign
Currency
Exchange
Rate
NTD

18,321
30.015
549,905

6,297
30.015
189,004		 December 31, 2019
Foreign
Currency
Exchange
Rate
NTD

18,321
30.015
549,905

6,297
30.015
189,004
Foreign
Currency		 Exchange
Rate		 NTD Foreign
Currency		 Exchange
Rate
$ 27,278
16,421
28.095

28.095
766,377

461,341
18,321

6,297
30.015

30.015

  • 2) Sensitivity analysis

The Company’s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts receivable and other receivables, other financial assets, loans, trade and other payables that are denominated in foreign currency. A 1% of appreciation or depreciation of each major foreign currency against the Company’s functional currency as of December 31, 2020 and 2019 would have increased (decreased) the net income for the years ended December 31, 2020 and 2019 by $3,050 thousand and $3,609 thousand, respectively.

  • 3) Foreign exchange gains or losses on monetary item

Since the Company has many kinds of functional currency, the information on foreign exchange gain (loss) on monetary items is disclosed by total amount. For the years ended December 31, 2020 and 2019, foreign exchange losses (including realized and unrealized portions) amounted to $59,703 thousand and $2,925 thousand, respectively.

  • (v) Interest rate analysis

The book values of the financial assets and financial liabilities exposed to the interest rate risk on the reporting date were as below:

Fixed interest rate instruments：
Financial assets
Financial liabilities
Variable interest rate instruments：
Financial assets
Financial liabilities		 Book value
December 31,
2020
December 31,
2019
$
617,783
371,333		 Book value
December 31,
2020
December 31,
2019
$
617,783
371,333
December 31,
2020
$
617,783

$
(249,660)

-

$
54,053
62,990

$
(1,553,179)
(1,788,722)

(Continued)

261

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

The following sensitivity analysis is based on the exposure to the interest rate risk of derivative and non derivative financial instruments on the reporting date. Regarding assets with variable interest rates, the analysis is based on the assumption that the amount of assets outstanding at the reporting date was outstanding throughout the year. The Company’s internal management reported the change of interest rate and the exposure to changes in interest rate of 1% is considered by management to be a reasonable change of interest rate.

If the interest rate had increased / decreased by 1% basis points, the Company’s interest expenses would have increased / decreased by $14,991 thousand and $17,257 thousand for the years ended December 31, 2020 and 2019 respectively, with all other variable factors remaining constant. The is mainly due to variable-rate loans.

  • (vi) Other market price risk

If the security price of domestic stocks measured at fair value through profit or loss held by the Company changes, the impact to other comprehensive income will be as follows, assuming the analysis is based on the same basis for both years and assuming that all other variables considered in the analysis remain the same:

**For the years ended December 31 ** **For the years ended December 31 **
2020 2019
Price of securities at reporting date Net income (loss) Net income (loss)
Increasing 7% $
43		 86
Decreasing 7% (43) (86)

  • (vii) Information of fair value

  • 1) Classification of financial instruments and fair value hierarchy

The book value of the financial assets and liabilities was close to the fair value. The fair value of the financial assets measured at fair value through profit and loss and those measured at fair value through other comprehensive income was estimated on a recurring basis of level 1 and 3, respectively.

  • 2) Valuation techniques for financial instruments not measured at fair value

The Company’s valuation techniques and assumptions used for financial instruments not measured at fair value are as follows:

  • a) Financial assets and liabilities measured at amortized cost (including debt investment that has no active markets).

If there is quoted price generated by transactions, the recent transaction price and quoted price data is used as the basis for fair value measurement. However, if no quoted prices are available, the discounted cash flows are used to estimate fair values.

(Continued)

262

TEX-RAY INDUSTRIAL CO., LTD.

Notes to the Financial Statements

  • 3) Valuation techniques for financial instruments measured at fair value

The Company’s valuation techniques and assumptions used for financial instruments measured at fair value are as follows:

  • a) The financial instrument that have standard terms and are traded in an active market, such as listed stocks, the fair value is determined by quoted prices.

  • b) Measurements of fair value of financial instruments without an active market

    • i) Using discounted cash flow analysis to measure its fair value. The main assumption is investors’ expected standard profit which is manipulated by capitalization rate that reflects investment risk.

    • ii) Using observable market data at the reporting date to measure its fair value. The main assumption is based on comparable price-book ratio, which is adjusted by offsetting the impact of discount for lack of marketability and minority interest.

  • c) The fair values of financial assets and financial liabilities other than those aforesaid are determined in accordance with discounted cash flow analysis which is generally accepted.

  • 4) Transfers between Level 1 and Level 2

There are no transfers from each level for the years ended December 31, 2020 and 2019.

  • (v) Financial risk management

  • (i) Overview

The Company have exposures to the following risks from its financial instruments:

  • 1) credit risk

  • 2) liquidity risk

  • 3) market risk

The following likewise discusses the Company’s exposure information, objectives, policies and processes for measuring and managing the above mentioned risks. For further information, please refer to the relevant notes to the financial statement.

  • (ii) Structure of risk management

The financial management department of the Company provides intercompany services for various businesses, coordinates the operation of entering the domestic and international financial markets, and supervises and manages the financial risks related to the operation of the Company by analyzing the internal risk report according to the degree and breadth of the risk. Internal auditors continue to review compliance with policies and the risk limit. The Company did not trade financial instruments (including derivative financial instruments) for speculative purposes.

(Continued)

263

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(iii) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and investments in equity investment.

1) Trade and other receivables

The policy adopted by the Company is to only trade with reputable customers and obtain collateral when necessary to reduce the risk of financial losses from default. The Company only trades with companies rated equivalent to the investment grade. Such information is provided by independent rating agencies; if such information is not available, the Company will use other publicly available financial information and transaction experience to rate major customers. The Company continues to monitor the credit risk insurance level and the credit rating of the counterparty, and distributes the total transaction amount to those with qualified credit ratings, and controls the credit risk through the credit limit that is reviewed and approved annually.

The accounts receivable is comprised from vast customers base, which is scattered in different industries and geographic regions. The Company continues to evaluate the financial status of customers.

2) Investments

The exposure to credit risk for the bank deposits, fixed income investments, and other financial instruments is measured and monitored by the Company’s finance department. The Company only deals with banks, other external parties, corporate organizations, government agencies and financial institutions with good credit rating. The Company does not expect any counterparty above fails to meet its obligations hence there is no significant credit risk arising from these counterparties.

3) Guarantees

The Company’s policy is to provide financial guarantees only to wholly owned subsidiaries. On December 31, 2020 and 2019, no other guarantees were outstanding.

(iv) Liquidity risk

The Company manages and maintains sufficient cash and cash equivalents to support the operation and ease the impact of cash flow fluctuation. The management supervises the unused credit lines and ensures the compliance of loan contracts.

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed ’ conditions, without incurring unacceptable losses or risking damage to the Company s reputation.

(Continued)

264

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

Bank loans were important resource of liquidity risk for the Company. The unused credit line of the Company on December 31, 2020 and 2019 were $187,010 thousand and $105,278 thousand, respectively.

  • (v) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices, will affect the Company’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 Company is exposed to currency risk arising from sales, purchases and borrowings that are not denominated in functional currencies of the Group’s main operating entities. The functional currency of the Group is primarily the New Taiwan Dollars (NTD), as well as US Dollars (USD), Euro (EUR) Chinese Yuan (CNY) and South African Rand (ZAR). The currencies used in these transactions are denominated in NTD, EUR, USD, CNY and ZAR.

The loan interest is denominated in the same currency as principal. Generally, borrowings are denominated in the same currencies that generates operating cash flows of the Company, mainly in NTD, as well as in USD and CNY. This provides an economic hedge without derivatives being entered into, and therefore, hedge accounting is not applied in these circumstances.

In respect of other monetary assets and liabilities denominated in foreign currencies, the Company ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.

  • 2) Interest rate risk

The Company borrowed funds in the fixed and variable rate simultaneously, resulting in fair value change risk and cash flow risk. The Company manage the interest rate risk through maintaining a proper combination of fixed and variable rate.

  • 3) Other market price risk

The Company is exposed to equity price risk due to the investments in domestic listed stocks. The Company does not actively trade these investments, and the management continuously monitor the price risk and assess the portfolio.

  • (w) Capital management

The Company’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 Company may adjust the dividend payment to the shareholders, reduce the capital for redistribution to shareholders, issue new shares, or sell assets to settle any liabilities.

(Continued)

265

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

The Company and other entities in the same industry use the debt-to-equity ratio to manage capital. This ratio is the total net debt divided by the total capital. The net debt from the balance sheet is derived from the total liabilities less cash and cash equivalents. The total capital and equity include share capital, capital surplus, retained earnings and other equity plus net debt.

As of December 31, 2020, the Company’s capital management strategy is consistent with the prior year. The Company’s debt-to-equity ratio at the end of the reporting period as of December 31, 2020 and 2019, were as follows:

Total liabilities
Less: cash and cash equivalents
Net debt
Total Equity
Adjusted equity
Debt-to-equity ratio		 December 31,
2020
$ 2,792,497
(512,083)		 December 31,
2020
$ 2,792,497
(512,083)		 December 31,
2019
2,335,147
(75,302)
2,259,845
2,445,524
4,705,369
48.03%

2,280,414
3,188,038

$
5,468,452

41.70%

(7) Related-party transactions

  • (a) Names and relationship with related parties

The following are entities that have had transactions with related parties and the Company's subsidiaries during the periods covered in the financial statements.

Name of related party
TEX-RAY INDUSTRIAL CO., LTD. (BELIZE)
TEX-RAY (BN) INTERNATIONAL CO., LTD.
FLYNN INTERNATIONAL LTD.
KING’S METAL FIBER LTD.
TAIWAN SUPERCRITICAL TECHNOLOGY CO., LTD.
GREAT CPT INTERNATIONAL CO., LTD.
KASUMI APPARELS SWAZILAND (PTY) LTD.
(KASUMI (SWAZILAND))
T.Q.M. TEXTILE SWAZLAND (PTY) LTD.
(T.Q.M. (SWAZILAND))
UNION INDUSTRIAL WASHING (PTY) LTD.
(U.I.W. (SWAZILAND))
TEX-RAY (SA) (PTY) LTD.
(TEX-RAY (SA))
J.M. Rotary Print Industrial Co., Ltd.
GOLDEN JUBILEE APPAREL (PROPRIETARY LIMITED)		 Relationship with the Company
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary

Subsidiary

(Continued)

266

TEX-RAY INDUSTRIAL CO., LTD.

Notes to the Financial Statements

Name of related party
ZHENG-RAY Industrial CO.,LTD.
WEI LI TEXTILE CO., LTD.
TEX-RAY INDUSTRIAL CO., LTD.
(TEX-RAY (CAYMAN))
TEX-RAY INDUSTRIAL CO., LTD. (SHANGHAI)
(TEX-RAY (SHANGHAI))
TRLA GROUP, INC.(TRLA GROUP)
Z-PLY CORPORATION(Z-PLY (NY))
TEXRAY SWAZILAND PTY LTD.
GOOD TIME(VIETNAM) ENTERPRISE CO.,LTD.
(GOOD TIME)
MSWATI HOLDINGS LTD.
TEXRAY (VN) CO., LTD.
(TEXRAY (VN))
T.R.C.A GARMENT CO., LTD.
(TRCA GARMENT)
TEXRAY MEXICO S.A. DE C.V.
(TEXRAY (MEXICO))
AMRAY S.A. DE C.V.(AMRAY (MEXICO))
KING'S METAL FIBER TECHNOLOGIES B.V.
ELITETOP TECHNOLOGY INC.
AIQ HOLDING INC.
TEX-RAY INDUSTRIAL CO., LTD. (YANCHENG)
AIQ SMART CLOTHING INC.(AIQ)
AIQ SMART CLOTHING (Zhejiang) CO.,LTD.
KING'S METAL FIBER (SHANGHAI) CO., LTD.
TRYD APPAREL CO., LTD.(TRYD APPAREL)
JIANGSU TRYD TEXTILE TECHNOLOGY CO., LTD.
TEXRAY (KUNSHAN) CO., LTD.
Taiwan Innovation Technology Co., Limited (HK)
AIQ SYNERTIAL LTD.
Yancheng Wei-Da Textile Testing Service Co., Ltd.
ESWATRADING (PTY) LIMITED
HUAI WEI BIOTECHNOLOGY CO., LTD.
SEN JEWEL TECHNOLOGY CO., LTD.		 Relationship with the Company
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Same president with the Company

(Continued)

267

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

Name of related party Relationship with the Company
The entity's chairman is the vice
chairman of the Company
TAI CHAM TECHNOLOGY CO., LTD.

  • (b) Significant transactions with related parties

  • (i) Sales

The amounts of sales to the related parties were as follows:

Subsidiary－Z-PLY(NY)
Subsidiaries
Other related party
Associates		 For the years ended December 31
2020
2019
$ 477,276
515,435
235,699
239,813
-
105
1,604
-
$
714,579
755,353
2020
$ 477,276
235,699
-
1,604

$
714,579

The payment terms ranged from one to three months, which were no difference from the those given to other customers. The pricing cannot be compared due to the specifications and styles of the orders.

(ii) Purchase

  • 1) The amounts of inventory purchases from related parties were as follows:
Subsidiary－TRYD APPAREL
Subsidiaries		 For the years ended December 31
2020
2019
$ 512,046
4,799
240,625
200,565
$
752,671
205,364
2020
$ 512,046
240,625

$
752,671

The payment terms ranged from one to three months, which were no difference from those given by other vendors. The pricing cannot be compared due to the specifications and styles of the orders.

  • 2) The amount of processing service purchases from related parties were as follows:
Subsidiary－GOOD TIME
Subsidiary－TEXRAY (VN)
Subsidiaries		 For the years ended December 31
2020
2019
$ 98,932
104,598
446,064
172,870
37,535
82,269
$
582,531
359,737
2020
$ 98,932
446,064
37,535

$
582,531

(Continued)

268

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

The Company's outsourcing processing transactions with related parties are based on the content of the customer's order. The prices and payment terms are negotiated, and if necessary, the advance payment may be made based on the operational needs of the related parties.

(iii) Receivables from related parties

The receivables from related parties were as follows:

Account
Relationship		 December 31,
2020
December 31,
2019
$ 23,234
40,049
73,898
52,667
11,723
6,174
-
110
1,684
-
Accounts receivable
due from related
parties
Subsidiary-Z-PLY(NY)
Accounts receivable
due from related
parties
Subsidiary-T.Q.M. (SWAZILAND)
Accounts receivable
due from related
parties
Subsidiaries
Accounts receivable
due from related
parties
Other related parties
Accounts receivable
due from related
parties
Associates
Other receivables due
from related parties
Subsidiary-TEX-RAY (MEXICO)
Other receivables due
from related parties
Subsidiary-AMRAY (MEXICO)
Other receivables due
from related parties
Subsidiaries
Other receivables due
from related parties
Other related parties
Other receivables due
from related parties
Associates

$
110,539
99,000


$ 3,971
2,478
2,529
-
6,952
3,981
295
500
-
142
$
13,747
7,101

(Continued)

269

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(iv) Payables to related parties

Account
Relationship		 December 31,
2020
December 31,
2019
$
13
-
21,827
9,960
-
24,647
5,136
1,704
$
26,963
36,311
$
366
763
Notes payable due to
related parties
Subsidiary
Accounts payable due to
related parties
Subsidiary-TEXRAY
(SHANGHAI)
Accounts payable due to
related parties
Subsidiary-GOOD TIME
Accounts payable due to
related parties
Subsidiaries
Other payable due to
related parties
Subsidiary
  • (v) Prepayments

The prepayments of the Company to related parties were as follows：

Subsidiary-TEXRAY (VN)

Subsidiary-TRCA GARMENT
Subsidiary-GOOD TIME
 December 31,
2020
$ 110,947
23,837
21,901		 December 31,
2019
139,934
17,953
-
157,887

$
156,685
  • (vi) Receipts under custody (accounted as other current liabilities)

The receipts of the Company for related parties were as follows:

Subsidiary

December 31,
2020
$
42		 December 31,
2019
417
  • (vii) Financing provided to related parties (accounted as other receivables due from related parties)

Balances of financing provided by the Company to related parties were as follows：

Subsidiary-AMRAY (MEXICO)
Subsidiary-TEX-RAY (MEXICO)
Subsidiary-AIQ		 December 31,
2020
$ 28,095
56,190
34,000		 December 31,
2019

-

5,253

-

$
118,285

5,253

(Continued)

270

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

The financing provided to related parties was unsecured. The interest charged by the Company to its subsidiaries is ranging from 2.5%～4%. The interest incomes in 2020 and 2019 were $1,844 thousand and $1,218 thousand, respectively.

(viii) Endorsement guarantee

  • 1) The balances of endorsement guarantee provided to the subsidiaries, which was due to bank borrowings and material purchase borrowings, were as follows (expressed in thousands of each currency )：
December 31,
2020
USD
34,200
NTD
30,000
ZAR
-
CNY
72,000		 December 31,
2019
USD
32,800

NTD
80,000

ZAR
40,000

CNY
48,000

  • 2) As of December 31, 2020 and 2019, the assets pledged by the Company as collateral for subsidiaries ’ outstanding loans were $278,384 thousand and $363,858 thousand, respectively.

  • (ix) Leases

The Company leased its factory buildings and offices to subsidiaries, associates and other related parties in lease terms of a year. The rental income was paid on a monthly basis. For the years ended December 31, 2020 and 2019, the rental income was $5,900 thousand and $2,968 thousand, respectively.

  • (x) Property transaction

  • 1) The Company decided the reorganization plan of the Eswatini production area by the Board of Directors on May 11 and August 13, 2018, and took December 31, 2018, as the base date of sale of equity to TEX-RAY (SA). The Company sold the remaining 49% of the equity of T.Q.M. (SWAZILAND) and 100% of the equity of U.I.W. (SWAZILAND) , identified as the subsidiaries, for US$11,160 thousand. As of December 31, 2019, the amount of $29,965 thousand had not been recovered, and accounted for other receivables due from related parties. The amount had been collected in 2020.

  • 2) In 2020, The Company sold machinery and transportation equipment to subsidiaries and other related parties in the amount of $7,419 thousand and $1,519 thousand, respectively. The gains on disposal were $3,670 thousand and $576 thousand, respectively.

(Continued)

271

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(xi) Others

1) Management service income

The amount of management service income from related party received by the Company (accounted as other income under non-operating income and expenses) was as follows:

Subsidiary For the years ended December 31
2020
2019
$
2,340
-		 For the years ended December 31
2020
2019
$
2,340
-
2019

-

As of December 31, 2020, unamortized advance receipts amounting to $4,679 thousand were accounted as other advance receipts.

2) Commission income

The amounts of commission income (accounted as other income under non-operating income and expenses) received by the Company for purchasing raw materials for related parties were as follows:

Subsidiaries For the years ended December 31
2020
2019
$
13
56
2020
$
13

The commission income was charged based on 1% of the purchase price.

  • (c) Key management personnel compensation

Key management personnel compensation comprised:

Short-term employee benefits
Post-employment benefits		 For the years ended December 31
2020
2019
$ 25,401
24,303
702
811
$
26,103
25,114
2020
$ 25,401
702
$
26,103

(Continued)

272

TEX-RAY INDUSTRIAL CO., LTD.

Notes to the Financial Statements

(8) Pledged assets

The carrying values of pledged assets were as follows:

Pledged assets Pledged to secure
Collateral for borrowings
(including guarantee for
subsidiaries)
Collateral for borrowings and
short-term notes and bills
payable
Collateral for long-term
borrowings		 December 31,
2020
$ 166,778
258,411
1,045,461		 December 31,
2019

371,333

328,195

115,699
Other financial assets－current and
non-current
Property, plant and equipment
Investment property

$
1,470,650


815,227

(9) Commitments and contingencies

  • (a) Significant commitments and contingencies were as follows:

Outstanding standby letter of credit

USD
NTD		 December 31,
2020
$
12,558		 December 31,
2019
8,407

$
22,827
18,373

(b) Significant contingent liability: None.

(10) Losses Due to Major Disasters: None

(11) Subsequent Events: None

(Continued)

273

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(12) Other:

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

By funtion
**By item **		 For the years ended December 31 For the years ended December 31 For the years ended December 31 For the years ended December 31 For the years ended December 31 For the years ended December 31
2020 2019

Cost of
Sale		 Operating
Expense		 Total Cost of
Sale		 Operating
Expense		 Total
Employee benefits
Salary 40,357
188,925
229,282
55,602
159,348
214,950
Labor and health insurance 2,743
14,978
17,721
5,829
15,469
21,298
Pension 971
5,934
6,905
1,898
8,245
10,143
Remuneration of directors - 14,333
14,333
-		 5,747
5,747
Others 1,713
15,103
16,816
3,209
9,143
12,352
Depreciation 9,512
16,663
26,175
17,264
14,817
32,081
Depletion - - - - - -
Amortization - 6,264
6,264
-		 3,666
3,666

For the years ended December 31, 2020 and 2019 , the additional information on the number of employees and employee benefits of the Company was as follows:

Number of employees
Number of directors (non-employed)
Average employee benefit expense
Average employee salary expense
Change in percentage of average employee benefit
Supervisor's remuneration		 For the years ended December 31
2020
2019
305
392		 For the years ended December 31
2020
2019
305
392
2020
305
7
8
$
908
674
$
769
560
37.32%
$
-
-

The Company's salary and remuneration policies (including directors, managers and employees) are as follows:

The Company has formulated the "Board of Directors and Functional Committee Performance Evaluation Measures", which is used as the basis for performance evaluation of independent directors and directors. It is considered that Company's overall operating performance, future operating risks and industry development trends, the achievement rate of individual performance and the contribution on the Company as well. Reasonable remuneration will be granted after comprehensive consideration.

The managers of the Company have the responsibility of performing group operations and management, function. To provide reasonable remuneration, their remuneration structure is based on salary and allowance. The bonus is based on the overall operating performance, and takes into account the target achievement rate, profitability, operating efficiency and contribution of each manager, as well as the peer industry standards.

The employee's salary includes monthly salary and bonuses distributed by the Company based on annual profitability. The amount assigned to each employee depends on their position, contribution, and performance.

(Continued)

274

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(13) Other disclosures

  • (a) Information on significant transactions

The following is the information on significant transactions required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Company:

(i) Loans to other parties

Number Name of
lender		 Name of
borrower		 Account
name		 Related
party		 Highest
balance
of
financing
to other
parties
during the
period		 Ending
balance		 Actual
usage
amount
during the
period		 Range of
interest
rates
during the
period		 Purposes
of fund
financing
for the
borrower
(Note 1)		 Transaction
amount for
business
between two
parties		 Reasons
for
short-term
financing
Allowance
Loss		 Collateral Collateral Individual
funding loan
limits

Maximum
limit of fund
financing
Item Value
0 The
Company
AMRAY
(MEXICO)

Other
accounts
receivable-
related
party


Yes		 $ 30,250
28,095
28,095		 2.5-4% 2 - Operating
turnover		 - - - 1,275,215
1,275,215
0 The
Company
TEX-RAY
(MEXICO)

Other
accounts
receivable-
related
party


Yes		 60,500
56,190
56,190		 2.5-4% 2 - Operating
turnover		 - - - 1,275,215
1,275,215
0 The
Company
AIQ		 Other
accounts
receivable-
related
party


Yes		 75,000
75,000
34,000		 4% 2 - Operating
turnover		 - - - 1,275,215
1,275,215
1 Z-PLY(NY) AMRAY
(MEXICO)

Other
accounts
receivable-
related
party


Yes		 29,480
28,095
28,095		 2.5% 2 - Operating
turnover		 - - - 237,599
356,398
1 Z-PLY(NY) TEX-RAY
(MEXICO)

Other
accounts
receivable-
related
party


Yes		 61,800
56,190
54,785		 2.5% 2 - Operating
turnover		 - - - 237,599
356,398
1 Z-PLY(NY)
TRYD
TEXTILE
Other
accounts
receivable-
related
party


Yes		 91,815
84,285
84,285		 2.5% 2 - Operating
turnover		 - - - 237,599
356,398
2 TEX-RAY
(SHANHAI)
TRYD
APPAREL
Other
accounts
receivable-
related
party


Yes		 86,640
86,027
-		 6% 2 - Operating
turnover		 - - - 402,365
603,547
2 TEX-RAY
(SHANHAI)
TRYD
TEXTILE
Other
accounts
receivable-
related
party


Yes		 259,920
258,081
245,177		 6% 2 - Operating
turnover		 - - 402,365
603,547
3 TEX-RAY
(MEXICO)
AMRAY
(MEXICO)

Other
accounts
receivable-
related
party


Yes		 56,772
56,527
52,782		 2.5% 2 - Operating
turnover		 - - - 266,536
399,803
4 KMT
 AIQ Other
accounts
receivable-
related
party


Yes		 15,450
-		 - 2% 2 - Operating
turnover		 - - - 124,363
124,363
5 KING'S
METEL
(SHANHAI)

AIQ
(Zhejiang)
Other
accounts
receivable-
related
party


Yes		 1,735
1,727
-		 6% 2 - Operating
turnover		 - - - 2,967
4,451
6 ZHENG-RA
Y		 GREAT
CPT		 Other
accounts
receivable-
related
party


Yes		 10,000
10,000
-		 3% 2 - Operating
turnover		 - - - 2,308
2,308

Note 1: Nature of the loan:

1) The borrower calls for loan arrangement.

  • 2) The borrower has short-term financing necessities.

Note 2: The maximum financing amount is limited to not more than 40% of the company's net value, therefore, the calculation is based on the net value of the latest financial report. The ceiling on loan limit is $3,188,038 thousand NTD × 40% = $1,275,215 thousand NTD.

(Continued)

275

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

  • Note 3: The maximum financing amount to individual company is limited to no more than 40% of the company's net value, therefore the calculation is based on the net value of the latest financial report. The ceiling on loan is $3,188,038 thousand NTD × 40% = $1,275,215 thousand NTD.

  • Note 4: The maximum limit of financing is limited to 40% of the net value of the financial report of the lender company. However, the maximum limit of loans between 100% held foreign subsidiaries is limited to 150% of the lender company’s net value.

  • Note 5: The maximum financing amount to individual company shall not exceed 40% of the subsidiary’s net value. However, the loans between 100% held foreign subsidiaries shall not exceed 100% of the net value of the lender subsidiary.

(ii) Guarantees and endorsements for other parties

No. Name of
guarantor		 Counter-party of
guarantee and
endorsement		 Counter-party of
guarantee and
endorsement		 Limitation on
amount of
guarantees and
endorsements
for a specific
enterprise		 Highest

balance for
guarantees
and
endorsements
during
theperiod		 Balance of
guarantees
and
endorsements
as of
reporting date		 Actual usage
amount
during the
period		 Property

pledged for
guarantees
and
endorsements
(Amount)		 Ratio of
accumulated
amounts of
guarantees and

endorsements to
net worth of the
latest
financial
statements

Maximum
amount for
guarantees and
endorsements		 Parent
company

endorsements/
guarantees to
third parties
on behalf of
subsidiary		 Subsidiary
endorsements/

guarantees
to third parties
on behalf of
parent
company
Endorsements/
guarantees to

third parties
on behalf of
companies in
Mainland
China
Name Relationshi
p with the
Company

0		 The
Company
T.Q.M.
(SWAZILAND)
2		 1,594,019
100,000
-		 - 51,348
-
%
3,188,038
Y		 N N

0		 The
Company
GOOD TIME		 2 1,594,019
55,620
33,714
22,476
-		 1.06%
3,188,038
Y		 N N

0		 The
Company
TEX RAY (VN)		 2 1,594,019
155,275
84,285
-		 14,072
2.64%
3,188,038
Y		 N N

0		 The
Company
TEX-RAY
(SHANHAI)
2		 1,594,019
103,968
103,232
60,219
-		 3.24%
3,188,038
Y		 N Y

0		 The
Company
TRYD APPAREL
2		 1,594,019
166,323
154,523
60,342
14,072
4.85%
3,188,038
Y		 N Y

0		 The
Company
TRYD TEXTILE
2		 1,594,019
877,686
866,697
383,096
198,892
27.19%
3,188,038
Y		 N Y

0		 The
Company
TST		 2 1,594,019
102,000
48,095
16,663
-		 1.51%
3,188,038
Y		 N N

0		 The
Company
WLT		 2 1,594,019
10,000
10,000
7,849
-		 0.31%
3,188,038
Y		 N N

1		 TEX-RAY
(SHANHAI)
TEX RAY
(KUNSHAN)
2		 402,365
43,320
43,013
15,055
-		 10.69%
603,547
N		 N Y

  • Note 1: The relationships between the guarantee and the guarantor are as follows:

  • The company with which it does business.

  • The company directly or indirectly holds more than 50% of voting right.

  • A companies directly or indirectly hold more than 50% of voting rights of the public company.

  • Companies in which the public company directly or indirectly holds more than 90% of voting right may make endorsement / guarantees for each other.

  • Where a public company fulfills its obligations by providing mutual endorsements / guarantees for other company in the same industry or for joint builders for purposes of undertaking a construction project.

  • Where all capital contributing shareholders make endorsement / guarantees for the jointly invested company in proporation to their shareholding percentages.

  • Note 2: The maximum limit of endorsement / guarantee is limited to not more than 100% of the net value of the company, therefore the calculation is based on the net value of the latest financial report. The ceiling on endorsement / guarantee is $3,188,038 thousand NTD × 100% = $3,188,038 thousand NTD.

  • Note 3: The maximum limit for a single enterprise endorsement / guarantee is not more than 50% of the net value of the company. Therefore, the calculation is based on the net value of the latest financial report. The ceiling on endorsement / guarantee is $3,188,038 thousand NTD × 50% = $1,594,019 thousand NTD.

  • Note 4: The amount of the endorsement / guarantee provided to a single enterprise with which the company does business shall not exceed the total amount of transactions in twelve months before the endorsement.

  • Note 5: The maximum limit of overseas subsidiary endorsement / guarantee is no more than 150% of the net value of the subsidiary's net value calculated based on the latest financial statement, and the limit of endorsement / guarantee for individual is not more than 100% of the net value of each subsidiary' calculated based on the latest financial statement.

(Continued)

276

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

  • (iii) Securities held as of December 31, 2020 (excluding investment in subsidiaries, associates and joint ventures)
Name of holder Category and
name of
security		 Relationship
with company		 Account
title		 Endingbalance Endingbalance Endingbalance Endingbalance Note
Shares/Units
(thousands)		 Carrying value Percentage of
ownership (%)		 Fair value
The Company SHIN ERA
TECHNOLOGY
CO., LTD.		 - Non-current
financial assets at
value through other
comprehensive
income		 68
-		 1.88%
-
The Company Cayman iMaker
Technlogy Inc.		 - Non-current
financial assets at
value through other
comprehensive
income		 800
-		 8.80%
-
The Company
 TAIWAN UNITED
OUTDOOR
GROUP, INC.		 - Non-current
financial assets at
value through other
comprehensive
income		 500
-		 15.67%
-
The Company
 PHYSICLO, Inc. - Non-current
financial assets at
value through other
comprehensive
income		 51
-		 5.00%
-
The Company NIEN HSING
TEXTILES		 -
 Financial assets at
fair value through
profit or loss		 35
612
- %
612
AIQ
 Joiiup Technology
Co., Ltd.		 - Non-current
financial assets at
value through other
comprehensive
income		 333
-		 5.71%
-
TST SEN JEWEL
TECHNOLOGY
CO., LTD.		 - Non-current
financial assets at
value through other
comprehensive
income		 950
9,500
19.00%
9,500
KING'S METEL
FIBER (SHANHAI)		 Shenzhen Titanium
Investment
Development
Partnership.		 - Non-current
financial assets at
value through other
comprehensive
income		 274
1,182
7.648%
1,182

  • Note: The stocks of private companies have no active market price, so they are evaluated at the net equity value multiplied by the percentage of ownership or equity evaluation report for reference.

  • (iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock: None

  • (v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None

  • (vi) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None

  • (vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

capital stock:
Name of company Relatedparty Nature of
relationship		 Transaction details Transaction
different f		 s with terms
rom others		 Notes/Accounts receivable
(payable)		 Note
Purchase
/Sale		 Amount Percentage of
total
purchases/sales
Payment
terms		 Unitprice Payment
terms		 Endingbalance
Percentage of total
notes/accounts
receivable
(payable)
The Company
 Z-PLY(NY) Sub-subsidiary Sales $ (477,276)
(8.24)%		 45 days - - 23,234
5.17%
The Company
 T.Q.M.(SWAZILAND) Sub-subsidiary Sales (184,333)
(3.18)%		 60 days - - 73,898
16.44%
TRYD APPAREL TEX-RAY
(SHANGHAI)		 Affiliated
company
Sales		 (269,430)
(19.76)%		 60 days - - 74,160
42.95%
TRYD APPAREL
 The Company Ultimate parent
company
Sales		 (512,046)
(37.55)%		 30 days - - 646
0.37%
TEX-RAY
(SHANGHAI)
The Company		 Ultimate parent
company
Sales		 (233,647)
(35.92)%		 60 days - - 21,827
12.35%
TEX-RAY
(SHANGHAI)
Z-PLY(NY)		 Affiliated
company
Sales		 (140,712)
(21.63)%		 60 days - - 20,583
11.64%
T.Q.M.(SWAZILAND) TEX-RAY(SA) Parent company Sales (1,240,588)
(96.18)%		 75 days - - 924,611
99.33%

(Continued)

277

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

Name of company Relatedparty Nature of
relationship		 Transact ion details Transaction
different fr		 s with terms
om others		 Notes/Accounts receivable
(payable)		 Notes/Accounts receivable
(payable)		 Note
Purchase
/Sale		 Amount Percentage of
total
purchases/sales
Payment
terms		 Unitprice Payment
terms		 Endingbalance
Percentage of total
notes/accounts
receivable
(payable)
KASUMI(SWAILAND) T.Q.M.(SWAZILAND) Affiliated
company
Sales		 (168,034)
(99.65)%		 60 days - - 370,569
99.76%
KMT
 KMBV Subsidiary
 Sales (118,137)
(37.83)%		 90 days
 Fixed profit
margin
-		 27,561
44.43%
TEX-RAY(VN)
 The Company Ultimate parent
company		 Sales (446,064)
(95.16)%		 60 days - - - -%
TRYD TEXTILE
 TRYD APPAREL Affiliated
company
Sales		 (497,752)
(66.54)%		 30 days - - 32,613
23.40%
Z-PLY(NY)
 The Company Ultimate parent
company
Purchase		 477,276
58.87%		 45 days - - (23,234)
(42.00)%
T.Q.M.(SWAZILAND) The Company Ultimate parent
company
Purchase		 184,333
17.26%		 60 days - - (73,898)
(13.67)%
TEX-RAY
(SHANGHAI)
TRYD APPAREL		 Affiliated
company
Purchase		 269,430
45.93%		 60 days - - (74,160)
(51.32)%
The Company
 TRYD APPAREL Sub-subsidiary Purchase 512,046
- %		 30 days - - (646)
(0.22)%
The Company TEX-RAY
(SHANGHAI)		 Sub-subsidiary Purchase 233,647
- %		 60 days - - (21,827)
(7.52)%
Z-PLY(NY) TEX-RAY
(SHANGHAI)		 Affiliated
company
Purchase		 140,712
17.36%		 60 days - - (20,583)
(37.20)%
TEX-RAY(SA)
 T.Q.M.(SWAZILAND) Subsidiary
 Purchase 1,240,588
100.00%		 75 days - - (924,611)
(100.00)%
T.Q.M.(SWAZILAND) KASUMI(SWAILAND) Affiliated
company
Purchase		 168,034
15.73%		 60 days - - (370,569)
(68.56)%
KMBV
 KMT Parent company Purchase 118,137
97.13%		 90 days
 Fixed profit
margin
-		 (27,561)
(97.76)%
The Company
 TEX-RAY(VN) Sub-subsidiary Purchase 446,064
- %		 60 days - - - -%
TRYD APPAREL
 TRYD TEXTILE Affiliated
company
Purchase		 497,752
39.58%		 30 days - - (32,613)
(37.33)%
  • (viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock:
Name of
company		 Counter-party Nature of
relationship		 Ending
balance		 Turnover
rate		 Overdue

Amount
Action taken		 Overdue

Amount
Action taken		 Amounts received in
subsequentperiod		 Loss
Allowance
Amount
TEX-RAY(SHANGHAI) TRYD TEXTILE Affiliated company 245,177
(Note)		 - - - -
T.Q.M.(SWAZILAND) TEX-RAY(SA) Parent company 924,611
1.37
-		 - 263,002
-
KASUMI(SWAILAND) T.Q.M.(SWAZILAND) Affiliated company 370,569
0.47
-		 - 36,866
-

Note : Loan provided by the related party.

  • (ix) Trading in derivative instruments: None

(b) Information on investees

The following is the information on investees for the years ended December 31, 2020 (excluding information on investees in Mainland China)

Name of investor Name of investee Location Main
businesses and
products		 Original inve stment amount Balance as of December 31, 2020 Net income
(losses)
of investee		 Share of
profits/losses of
investee		 Note
December 31,2020 December 31,2019 Shares
(thousands)		 Percentage of
wnership		 Carrying
value
The Company
 TST TAIWAN Printing and dyeing
finishing, machinery
and equipment
manufacturing and
wholesale,etc.



$ 68,067
68,067
7,487,381
75.63%
43,039
15,115
10,691		 Subsidiary
The Company
 Great CPT TAIWAN Overseas investment
holding
104,370
79,370
4,500,000
100.00%
64,786
(15,143)
(15,235)		 Subsidiary
The Company
 KMT TAIWAN Non-woven fabrics,
copper secondary
processing and fabric
retailing,etc


84,881
84,881
13,217,428
63.46%
191,331
65,511
41,575		 Subsidiary
The Company
 ZHENG-RAY TAIWAN Trading and
manufacturing of
spinningand weaving

5,000
25,000
500,000
100.00%
5,771
(3,683)
(3,683)		 Subsidiary
The Company
 WLT TAIWAN Wholesale trade 21,000
21,000
2,100,000
70.00%
5,162
(15,687)
(10,981)		 Subsidiary
The Company
 FLYNN (SAMOA) SAMOA Overseas investment
holding
310,613
310,613
9,100,000
100.00%
435,689
(159,428)
(159,428)		 Subsidiary
The Company
 TEX-RAY (CAYMAN) CAYMAN Overseas investment
holding
1,057,841
-		 33,542,722
100.00%
251,223
(58,045)
-		 Subsidiary
(Note)
The Company
 TEX-RAY (BELIZE) BELIZE Overseas investment
holding
1,063,287
1,314,510
-		 100.00%
403,529
(61,344)
(61,344)		 Subsidiary

(Continued)

278

TEX-RAY INDUSTRIAL CO., LTD.

Notes to the Financial Statements

Name of investor Name of investee Location Main
businesses and
products		 Original inves tment amount Balance as of December 31, 2020 Net income
(losses)
of investee		 Share of
profits/losses of
investee		 Note
December 31,2020 December 31,2019 Shares
(thousands)		 Percentage of
wnership		 Carrying
value
The Company
 TEX-RAY (BN) SAMOA Overseas investment
holding
1,756,813
1,756,813
60,579,330
100.00%
57,235
(50,546)
(50,546)		 Subsidiary
The Company
 TEX-RAY (SA) SOUTH AFRICA Overseas investment
holding
102,704
102,704
39,651,772
100.00%
1,059,497
177,435
177,435		 Subsidiary
The Company
 AIQ TAIWAN Wholesale trade 90,000
90,000
4,015,112
63.43%
788
(33,482)
(21,238)		 Subsidiary
The Company
 Unigym Global CAYMAN Electronic
Information Supply
Service Industry

9,092
-		 - -
%
-		 - - Prepayment
s for
investments
TEX-RAY (BELIZE) TEX-RAY (CAYMAN) CAYMAN Overseas investment
holding
-		 1,057,841
-		 -
%
-		 (58,045)
Exempt from
disclosure
Note
TEX-RAY (BN)
 GOOD TIME VIETNAM Garment processing
227,750
227,750
-		 100.00%
33,133
(18,259)
Exempt from
disclosure
Sub-subsidi
ary
TEX-RAY (BN)
 MSWATI MAURITIUS Overseas investment
holding
1,160,125
1,160,125
-		 100.00%
(136,430)
(83,406)
Exempt from
disclosure
Sub-subsidi
ary
TEX-RAY (BN)
 TEX-RAY(VN) VIETNAM Garment processing
423,990
423,990
-		 100.00%
175,497
79,278
Exempt from
disclosure
Sub-subsidi
ary
TEX-RAY (BN)
 TRCA GARMENT CAMBODIA Garment processing
63,564
63,564
-		 100.00%
(21,629)
(23,733)
Exempt from
disclosure
Sub-subsidi
ary
FLYNN (SAMOA)
 TRLA GROUP USA Marketing and
trading
18,384
18,384
2,936,000
100.00%
50,472
(13,615)
Exempt from
disclosure
Sub-subsidi
ary
FLYNN (SAMOA)
 Z-PLY (NY) USA Marketing and
trading
260,443
260,443
200
100.00%
385,120
(145,814)
Exempt from
disclosure
Sub-subsidi
ary
Great CPT TEXRAY
(SWAZILAND)		 ESWATINI Garment processing
158,524
158,524
12,417,938
100.00%
3,264
(147)
Exempt from
disclosure
Sub-subsidi
ary
Great CPT
 YIHONG CO.,LTD TAIWAN Dyeing and finishing
industry
6,000
6,000
600
20.00%
-		 - Exempt from
disclosure
Investment
accounted
for using
equity
method
Great CPT MASTERAY
INTERNATIONAL CO.,
LTD.		 TAIWAN Wholesale trade - 2,700
-		 -
%
-		 (689)
Exempt from
disclosure
Investment
accounted
for using
equity
method
TST
 Taiwan Innovation (HK) HONGKONG Machine marketing
and trading
-		 390
-		 -
%
-		 738
Exempt from
disclosure
Note 2
TST HUAI WEI
BIOTECHNOLOGY CO.,
LTD		 TAIWAN Biotechnology
Service
12,000
-		 1,200,000
60.00%
11,348
(1,087)
Exempt from
disclosure
Sub-subsidi
ary
KMT
 KMBV NETHERLANDS Marketing and
trading
7,950
7,950
200,000
100.00%
8,589
1,508
Exempt from
disclosure
Sub-subsidi
ary
KMT
 ELITETOP TECH SAMOA Overseas investment
holding
-		 48,091
-		 -
%
-		 (3,224)
Exempt from
disclosure
Sub-subsidi
ary
KMT
 HND WIRE INC. TAIWAN Metal wire products
manufacturing
-		 10,004
-		 -
%
-		 (2)
Exempt from
disclosure
Investment
accounted
for using
equity
method
AIQ
 AIQ-S(UK) UK Development of
smart clothing
technology

15,419
15,419
396,266
50.00%
3,076
4,934
Exempt from
disclosure
Sub-subsidi
ary
AIQ
 Taiwan Innovation (HK) HONGKONG Machine marketing
and trading
390
-		 100,000
100.00%
827
738
Exempt from
disclosure
Sub-subsidi
ary
TEX-RAY (CAYMAN)
TEX-RAY(MEXICO)		 MEXICO Dyeing 1,168,882
1,168,882
-		 100.00%
266,536
(33,747)
Exempt from
disclosure
Sub-subsidi
ary
TEX-RAY (CAYMAN)
AMRAY(MEXICO)		 MEXICO Garment processing
178,119
178,119
-		 100.00%
(64,011)
(22,235)
Exempt from
disclosure
Sub-subsidi
ary
TEX-RAY (SA)
 KASUMI(SWAZILAND) ESWATINI Trading and
manufacturing of
dyeing, finishing,
woven fabrics and
garments



43,461
43,461
1,657,400
100.00%
390,258
954
Exempt from
disclosure
Sub-subsidi
ary
TEX-RAY (SA)
 T.Q.M.(SWAZILAND) ESWATINI Dyeing 569,316
569,316
132,525,183
100.00%
948,925
150,903
Exempt from
disclosure
Sub-subsidi
ary
TEX-RAY (SA)
 U.I.W.(SWAZILAND) ESWATINI Garment processing
47,508
47,508
12,031,000
100.00%
21,158
(2,367)
Exempt from
disclosure
Sub-subsidi
ary
TEX-RAY (SA) J.M. Rotary Print
Industrial Co.,Ltd.		 ESWATINI Dyeing and finishing
of fabrics, clothing
sales

12,908
11,712
5,618,679
90.00%
1,023
(7,782)
Exempt from
disclosure
Sub-subsidi
ary
TEX-RAY (SA)
 GOLDEN JUBILEE ESWATINI Garment processing
10,800
10,800
5,000,000
100.00%
26,515
8,768
Exempt from
disclosure
Sub-subsidi
ary
T.Q.M.(SWAZILAND)
ESWT (SWAZILAND)		 ESWATINI Sale of agricultural
products
1,822
-		 900,000
90.00%
358
(1,604)
Exempt from
disclosure
Third-tier
company

Note : The Company adjusted of the holding structure of Merico production area on December 31, 2020. The shares of TEX-RAY (CANMAN), previously owned by TEX-RAY (BELIZE) were new owned directly by the Company.

(Continued)

279

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(c) Information on investment in mainland China

  • (i) The names of investees in Mainland China, the main businesses and products, and other information
Name of
investee		 Main
businesses
and
products		 Total
amount
of paid-in
capital		 Method
of
investment		 Accumulated
outflow of
investment from
Taiwan as of
January1,2019		 Investment flows Investment flows Accumulated
outflow of
investment from
Taiwan as of
December 31,2020		 Net
income

(losses)
of the
investee		 Percentage
of
ownership		 Investment
income
(losses)		 Book
value		 Accumu-lated
remittance of
earnings in
currentperiod
Outflow Inflow
TEX-RAY
(SHANGHAI)
Operating textile
storage, trading,
distribution, display
and technology
development



282,574
(2)		 282,574
-		 - 282,574
(3,217)
100.00%
(3,217)		 402,365
-
TEX-RAY
(YANCHENG)
Manufacturing and
sales of textiles,
clothing, shoes and
hats


45,527
(3)		 - - - - 580
100.00%
580		 (48,625)
-
TEXRAY(KUNSHAN) Development of
composite fabrics
168,268
(3)		 - - - - 4,842
100.00%
4,842		 172,569
-
TRYD TEXTILE Garment processing
and engaged in
spinning, weaving,
high-end fabrics,
bleaching and
dyeing, printing and
garmentproduction





1,749,139
(2)		 1,235,108
-		 - 1,235,108 (81,283)
100.00%
(81,283)		 (39,610)
-
TRYD ARRAREL Knitted garment
processing
164,220
(2)		 86,711
-		 - 86,711
1,574
100.00%
1,574		 (13,461)
-
KING’S METAL
FIBER (SHANGHAI)
Wholesale of glass
products,
high-efficiency
insulation
materials, textiles,
clothing, apparel
and accessories





51,221
(2)		 47,247
3,974
-		 51,221
(9,045)
63.43%		 (5,737)
1,882
-
AIQ (Zhejiang) System
development,
production and
sales of smart
devices



10,318
(3)		 - - - - (3,355)
63.43%		 (2,128)
(16)
-
TRYD ARRAREL
(HENAN) (Note 3)
Garment processing
-		 (2) 46,494
-		 - 46,494
-		 -% - - -
TRYD TEXTILE
RESEARCH
INSTITUTE (Note 4)

Technology
research and
development of
polymer composite
materials and new
textile materials




49,149
(2)		 - - - - - -% - - -
Wei-Da Testing Testing service and
environmental
assessment

31,065
(3)		 - - - - 1,674
100.00%
1,674
6,871
-
SHANGHAI JIN PEILI
(Note 5)
Weaving, dyeing
and finishing of
high-end fabrics,
sales of products of
the company



111,088
(2)		 14,321
-		 - 14,321
-		 -% - - -
JIANAN TEXTILE
(Note 6)
Weaving, dyeing
and finishing of
high-grade fabrics

29,613
(2)		 29,613
-		 - 29,613
-		 -% - - -

Note 1: Three types of investment method are as follows:

  1. Directly investing in the mainland area.

  2. Investing in the mainland through companies in another country (Please refer to Noter 4(c) of consolidated financial statement for the year ended December 31, 2020.)

  3. Other methods.

  4. Note 2: The investment gains and losses recognized at the equity method are based on the financial information of the mainland investee companies, which was audited by the auditors of parent company during the same fiscal period.

  5. Note 3: The business was deregistered in November 2015, and the share capital was remitted back to the upper parent company MSWATI in March 2016.

  6. Note 4: The business was liquidated in October 2019.

  7. Note 5: The business was liquidated in December 2012.

  8. Note 6: The business was sold in June 2012, and the returns of original investment was remitted back to the upper parent company MSWATI.

  9. Note 7: The numbers listed above are presented in NTD rounded to nearest thousand, according to the currency rate on December 31, 2020. (USD: 28.0950, CNY: 4.318)

(Continued)

280

  • (ii) Limitation on investment in Mainland China

The Company had obtained the certification letter of the operating headquarters from the Ministry of Economic Affairs on August 6, 2018. The validity period is from August 2, 2018 to August 1, 2021, and there is no such restriction of ceiling on investment in Mainland China.

  • (iii) Significant transactions:

The significant inter-company transactions with the subsidiaries in Mainland China are disclosed in “Business relationships and significant intercompany transactions”.

  • (d) Major shareholders:
Major shareholders:
Shareholding
Shareholder’s Name		 Shares Percentage
YUE-DA TEXTILE HOLDINGS, LTD B.V 42,052,440
17.99%
Xian-Yu, Guo 23,680,000
10.13%
SUXHOU WEIDE CO., LTD. 23,362,466
9.99%
Feng-Ying, Yeh 14,280,000
6.11%

(14) Segment information

Please refer to the consolidated financial statements for the year ended December 31, 2020.

TEX-RAY INDUSTRIAL CO., LTD.

Chairman: Lin Zui Yeh

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