TEX-RAY — Annual Report 2022

Nov 14, 2022

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Stock Code:1467

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors’ Report For the Years Ended December 31, 2022 and 2021

Address: 2F., No. 426, Linsen N. Rd., Jhongshan Dist., Taipei City Telephone: (02)2521-5155

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

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Table of contents

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

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1 2 3 4 5 6 7 8 9 9 9～11 11～29 30～31 31～63 63～65 65 66 66 66 66 67～71 72 73～74 74 75～77

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Representation Letter

The entities that are required to be included in the combined financial statements of TEX-RAY INDUSTRIAL CO., LTD. as of and for the year ended December 31, 2022 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 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 is included in the consolidated financial statements. Consequently, TEX-RAY INDUSTRIAL CO., LTD. and Subsidiaries do not prepare a separate set of combined financial statements.

Company name: TEX-RAY INDUSTRIAL CO., LTD. Chairman: Ray Lin Date: March 28, 2023

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KPMG

台北市110615信義路5段7號68樓(台北101大樓) 電 話 Tel + 886 2 8101 6666 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, 傳 真 Fax + 886 2 8101 6667 Xinyi Road, Taipei City 110615, Taiwan (R.O.C.) 網 址 Web kpmg.com/tw

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, 2022 and 2021, 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, 2022 and 2021, 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 audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and Standards on Auditing of 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 Norm of Professional Ethics for Certified Public Accountants of Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirement. 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(o) for the accounting policies on revenue and Note 6(t) “Revenue from contracts with customers” for the details of the related disclosure.

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

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Description of 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 key audit matter:

As of December 31, 2022, the accounts receivable of the Group was $720,650 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, 2022 and 2021, 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.

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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 auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Standards on Auditing of 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 the Standards on Auditing of the Republic of China, we exercise professional judgment and 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.

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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 Shu-Ying Chang.

KPMG

Taipei, Taiwan (Republic of China) March 28, 2023

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.

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

Consolidated Balance Sheets

December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents (Note 6(a)) 1150 Notes receivable, net (Note 6(c)) 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 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)) 1600 Property, plant and equipment (Notes 6(f) and 8) 1755 Right-of-use assets (Notes 6(g) and 8) 1760 Investment property, net (Notes 6(h) and 8) 1780 Intangible assets (Note 6(i)) 1840 Deferred tax assets (Note (p)) 1960 Non-current prepayments for investments 1980 Other non-current financial assets (Note 8) 1990 Other non-current assets, others Total assets	December 31, 2022 Amount % $ 2,144,613 25 33,069 - 720,650 8 88,876 1 5,283 - 1,250,817 14 134,589 2 7,553 - 178,190 2 4,563,640 52 24,512 - 1,936,570 22 301,164 3 1,435,942 17 256,893 3 58,059 1 - - 42,811 1 36,898 1 4,092,849 48 $ 8,656,489 100	December 31, 2021 Amount % 1,343,026 16 1,232 - 1,293,485 15 110,610 1 4,827 - 1,495,212 17 129,439 2 3,149 - 172,533 2 4,553,513 53 10,689 - 1,984,873 23 280,832 3 1,422,784 17 248,238 3 61,783 1 9,092 - 38,196 - 8,265 - 4,064,752 47 8,618,265 100 Liabilities and Equity Current liabilities: 2100 Short-term borrowings (Note 6(j)) 2110 Short-term notes and bills payable (Note 6(k)) 2130 Current contract liabilities (Notes 6(t) and 7) 2150 Notes payable 2170 Accounts payable 2200 Other payables 2220 Other payables to related parties (Note 7) 2230 Current tax liabilities 2310 Advance receipts 2313 Unearned revenue 2280 Current lease liabilities (Note 6(m)) 2320 Long-term liabilities, current portion (Note 6(l)) 2300 Other current liabilities Non-Current liabilities: 2540 Long-term borrowings (Note 6(l)) 2570 Deferred tax liabilities (Note 6(p)) 2580 Non-current lease liabilities (Note 6(m)) 2640 Net defined benefit liability, non-current (Note 6(o)) 2670 Other non-current liabilities, others Total liabilities Equity attributable to owners of parent(Note 6(q)): 3110 Ordinary share 3200 Capital surplus (Note 6(q)) 3300 Retained earnings 3400 Other equity interest 36XX Non-controlling interests Total equity Total liabilities and equity	December 31, 2022		December 31, 2021
			Amount %		Amount %
			$ 1,440,752 17 279,473 3 108,992 1 1,653 - 536,277 6 340,232 4 20,816 - 60,881 1 4,733 - 2,836 - 46,253 1 118,053 1 6,981 - 2,967,932 34 2,067,926 24 180,307 2 205,220 2 11,719 - 4,430 - 2,469,602 28 5,437,534 62 2,336,247 27 239,699 3 259,608 3 224,138 3 159,263 2 3,218,955 38 $ 8,656,489 100		1,432,249 17 299,584 4 80,400 1 9,456 - 872,157 10 296,294 4 29,061 - 101,417 1 24,935 - - - 33,277 - 226,251 3 7,960 - 3,413,041 40 1,691,168 20 178,613 2 189,775 2 21,933 - 16,966 - 2,098,455 24 5,511,496 64 2,336,247 27 239,714 3 281,648 3 77,073 1 172,087 2 3,106,769 36 8,618,265 100

See accompanying notes to consolidated financial statements.

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(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, 2022 and 2021

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

4000 Operating revenue (Note 6(t)) 5000 Operating costs (Notes 6(e) and (o)) 5900 Gross profit from operations 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Expected credit loss (gain) Operating expenses (Notes 6(o) and (u)) 6900 Net operating income (loss) 7000 Non-operating income and expenses: 7010 Other income (Notes 6(v) and 7) 7020 Other gains and losses, net (Note 6(v)) 7100 Interest income (Note 6(v)) 7510 Interest expense (Notes 6(v) and 7) 7900 Profit from continuing operations before tax 7950 Less: Income tax expenses (Note 6(p)) (Loss) profit 8300 Other comprehensive income: 8310 Components of other comprehensive income that will not be reclassified to profit or loss 8311 Gains (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 to profit or loss Components of other comprehensive income that will not be reclassified to profit or loss 8360 Components of other comprehensive income (loss) that will be reclassified to profit or loss 8361 Exchange differences on translation of foreign financial statements 8399 Income tax related to components of other comprehensive income that will be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income Total comprehensive income (Loss) profit , attributable to: Owners of parent Non-controlling interests Comprehensive income attributable to: Owners of parent Non-controlling interests Basic earnings per share (Note 6(s)) Basic earnings per share (dollars) Diluted earnings per share (dollars)	2022 Amount % $ 6,129,220 100 4,828,337 79 1,300,883 21 587,327 10 534,329 8 77,898 1 70,706 1 1,270,260 20 30,623 1 8,445 - 73,776 1 32,440 1 (99,981) (2) 14,680 - 45,303 1 86,977 1 (41,674) - 5,825 - 958 - 10,164 - - - 16,947 - 151,156 2 - - 151,156 2 168,103 2 $ 126,429 2 $ (38,383) - (3,291) - $ (41,674) - $ 125,025 2 1,404 - $ 126,429 2 $ (0.16) $ (0.16)	2021 Amount % 6,637,936 100 5,311,863 80 1,326,073 20 667,571 10 484,526 7 56,694 1 23,248 - 1,232,039 18 94,034 2 3,748 - 49,872 1 20,927 - (94,919) (1) (20,372) - 73,662 2 116,417 2 (42,755) - 2,594 - 59,893 - - - - - 62,487 - (127,510) (2) - - (127,510) (2) (65,023) (2) (107,778) (2) (30,882) (11,873) - (42,755) (95,481) (2) (12,297) - (107,778) (2) (0.13) (0.13)

See accompanying notes to consolidated financial statements.

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(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, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

Balance at January 1, 2021 Loss Other comprehensive income Total comprehensive income Appropriation and distribution of retained earnings: Legal reserve appropriated Cash dividends of ordinary share Reversal of special reserve Difference between consideration and carrying amount of subsidiaries acquired or disposed Changes in ownership interests in subsidiaries Changes in non-controlling interests Balance at December 31, 2021 Loss Other comprehensive income Total comprehensive income Changes in non-controlling interests Disposal of investments in equity instruments designated at fair value through other comprehensive income Balance at December 31, 2022								Equity attributab	Equity attributab	Equity attributab	le	to owners of	parent	parent								Non- controlling interests	Total equity
	Ordinary shares			Capital surplus				Retaine	d earnings					Tota	l other equity in		t	erest		Total equity attributable to owners of parent
														Exchange differences on translation of foreign financial statements	Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income			Revaluation surplus
						Legal reserve		Special reserve	Unappropriate d retained earnings			Total retained earnings
	$ 2,336,247 - - - - - - - - - 2,336,247 - - - - - $ 2,336,247			234,052		166,655		201,749		105,236		473,640		(848,171) - (126,919) (126,919) - - - - - - (975,090) - 151,107 151,107 - - (823,983)		(36,504) - - - - - - - - - (36,504) - 5,682 5,682 - (10,682) (41,504)		1,028,774		3,188,038		143,962 (11,873) (424) (12,297) - - - - - 40,422 172,087 (3,291) 4,695 1,404 (14,228) - 159,263	3,332,000
		- -		- -		- -		- -										- 59,893					(42,755) (65,023)
		-		-		-		-										59,893					(107,778)
		- - - - - -		- - - 5,164 498 -		10,523 - - - - -												- - - - - -					- (163,537) - 5,164 498 40,422
		2,336,247 - -				177,178 - -												1,088,667 - 958					3,106,769 (41,674) 168,103
		-				-												958					126,429
		- -				- -												- -					(14,243) -
		$ 2,336,247				177,178												1,089,625					3,218,955

See accompanying notes to consolidated financial statements.

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(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, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Provision for expected credit loss Gain on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Dividend income Share-based payments (Gain) loss on disposal of property, plan and equipment Loss on disposal of intangible assets Impairment loss on non-financial assets Loss (gain) on fair value adjustment of investment property Gain on lease modification Total adjustments to reconcile profit Changes in operating assets and liabilities: Changes in operating assets: (Increase) decrease in notes receivable Decrease (increase) in accounts receivable Decrease (increase) in other receivable Decrease (increase) in inventories (Increase) decrease in prepayments (Increase) decrease in other current assets Total changes in operating assets Changes in operating liabilities: Increase in contract liabilities Decrease in notes payable (Decrease) increase in accounts payable Increase (decrease) in other payable (Decrease) increase in other payable to related parties (Decrease) increase in other current liabilities Decrease in net defined benefit liability Increase in deferred credits (Decrease) increase in other operating liabilities Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow (outflow) generated from operations Interest received Dividends received Interest paid Income taxes paid Net cash flows from (used in) operating activities

For the years ended December 31 2022 2021 $ 45,303 73,662 203,482 206,525 17,405 17,488 70,706 23,248 - (111) 99,981 94,919 (32,440) (20,927) - (21) - 3,028 (415) 808 - 146 225 - 34,250 (27,988) (300) (26) 392,894 297,089 (31,961) 645 500,425 (273,254) 21,434 (25,408) 241,612 (236,582) (5,760) 58,809 (4,420) 828 721,330 (474,962) 28,630 14,762 (7,803) (38,085) (334,846) 194,876 25,190 (192,260) (8,211) 14,612 (965) 2,241 (4,389) (3,174) 2,846 - (32,706) 5,054 (332,254) (1,974) 389,076 (476,936) 781,970 (179,847) 827,273 (106,185) 32,440 20,927 - 21 (100,162) (94,786) (103,066) (153,850) 656,485 (333,873)

2022 $ 45,303 203,482 17,405 70,706 - 99,981 (32,440) - - (415) - 225 34,250 (300) 392,894 (31,961) 500,425 21,434 241,612 (5,760) (4,420) 721,330 28,630 (7,803) (334,846) 25,190 (8,211) (965) (4,389) 2,846 (32,706) (332,254) 389,076 781,970 827,273 32,440 - (100,162) (103,066) 656,485

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(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, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

		For the	years ended	December 31
		2022		2021
Cash flows from (used in) investing activities:
Acquisition of financial assets at fair value through other comprehensive income			(10,920)	-
Proceeds from disposal of financial assets at fair value through other			16,380	-
comprehensive income
Proceeds from disposal of financial assets at fair value through profit or loss		-		723
Acquisition of property, plant and equipment			(70,366)	(195,152)
Proceeds from disposal of property, plant and equipment			13,948	16,723
Acquisition of intangible assets			(8,080)	(5,645)
(Increase) Decrease in other financial assets			(10,419)	32,559
Increase in other non-current assets			(40,005)	(24,335)
Net cash flows from (used in) investing activities			(109,462)	(175,127)
Cash flows from (used in) financing activities:
Increase in short-term loans		2,734,980		1,975,628
Decrease in short-term loans		(2,726,477)		(1,394,448)
Increase in short-term notes and bills payable			779,889	49,924
Decrease in short-term notes and bills payable			(800,000)	-
Proceeds from long-term debt		1,941,111		511,765
Repayments of long-term debt		(1,672,205)		(451,627)
Payment of lease liabilities			(41,393)	(32,093)
Cash dividends paid		-		(163,537)
Change in non-controlling interests			(14,243)	43,057
Net cash flows from financing activities			201,662	538,669
Effect of exchange rate changes on cash and cash equivalents			52,902	(54,961)
Net increase (decrease) in cash and cash equivalents			801,587	(25,292)
Cash and cash equivalents at beginning of period		1,343,026		1,368,318
Cash and cash equivalents at end of period	$	2,144,613		1,343,026

See accompanying notes to consolidated financial statements.

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(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, 2022 and 2021

(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 28, 2023.

(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. 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, 2022:

• －

• ●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”

• (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, 2023, would not have a significant impact on its consolidated financial statements:

• ●Amendments to IAS 1 “Disclosure of Accounting Policies”

• ●Amendments to IAS 8 “Definition of Accounting Estimates”

(Continued)

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TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• ●Amendments to IAS 12 “ Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

• (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 Interpretations Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” Amendments to IAS 1 “Non- current Liabilities with Covenants”

Content of amendment Effective date per IASB Under existing IAS 1 requirements, companies classify a liability as current when they do not have an unconditional right to defer settlement for at least 12 months after the reporting date. The amendments has removed the requirement for a right to be unconditional and instead now requires that a right to defer settlement must exist at the reporting date and have substance. The amendments clarify how a company classifies a liability that can be settled in its own shares – e.g. convertible debt. January 1, 2024 After reconsidering certain aspects of the 2020 amendments1, new IAS 1 amendments clarify that only covenants with which a company must comply on or before the reporting date affect the classification of a liability as current or non-current. Covenants with which the company must comply after the reporting date (i.e. future covenants) do not affect a liability’ s classification at that date. However, when non-current liabilities are subject to future covenants, companies will now need to disclose information to help users understand the risk that those liabilities could become repayable within 12 months after the reporting date. January 1, 2024

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

(Continued)

11

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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 IFRS 17 “Initial Application of IFRS 17 and IFRS 9 – Comparative Information“

• ●Amendments to IFRS16 “Requirements for Sale and Leaseback Transactions”

(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(p).

• (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 thousands.

(Continued)

12

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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.

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, 2022 December 31, 2021 Note	Shareholding percentage December 31, 2022 December 31, 2021 Note
			December 31, 2022
The Company The Company The Company The Company The Company The Company	TEX-RAY INDUSTRIAL CO., LTD. (BELIZE) (TEX- RAY(BELIZE)) TEX-RAY (BN) INTERNATIONAL CO., LTD. (TEX-RAY(BN)) FLYNN INTERNATIONAL LTD. (FLYNN(SAMOA)) KING'S METAL FIBER TECHNOLOGIES CO., LTD. (KMT) GREAT CPT INTERNATIONAL CO., LTD. (GREAT CPT) TEX-RAY (SA) (PTY) Ltd.(TEX-RAY (SA))	Oversea investment holding (China) Oversea investment holding (Vietnam and Cambodia) Oversea investment holding (USA) Non-woven fabrics, copper secondary processing and fabric retailing, etc. Oversea investment holding (Eswatini) Marketing and trading	% 100.00 % 100.00 % 100.00 % 59.22 % 100.00 % 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. % 100.00 The subsidiary that the Company holds more than 50% shares. % 59.22 The subsidiary that the Company holds more than 50% shares. % 100.00 The subsidiary that the Company holds more than 50% shares. % 100.00 The subsidiary that the Company holds more than 50% shares.

(Continued)

13

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, 2022 December 31, 2021 Note	Shareholding percentage December 31, 2022 December 31, 2021 Note
			December 31, 2022
The Company The Company The Company The Company The Company The Company TEX-RAY (SA) TEX-RAY (SA) TEX-RAY (SA) TEX-RAY (SA) TEX-RAY (SA) TEX-RAY (BELIZE) FLYNN (SAMOA) FLYNN (SAMOA) GREAT CPT INTERNATIONAL CO., LTD.	TEX-RAY INDUSTRIAL CO., LTD. (CAYMAN) (TEX-RAY(CAYMAN)) ZHENG-RAY Industrial CO.,LTD. (ZHENG-RAY) WEI LI TEXTILE CO., LTD. (WLT) AIQ SMART CLOTHING INC. (AIQ) TRLA GROUP, INC(TRLA GROUP) Z-PLY CORPORATION (Z-PLY(NY)) KASUMI APPARELS SWAZILAND PTY LTD. (KASUMI (SWAZILAND)) TQM TEXTILE SWAZILAND (PTY) LTD. (T.Q.M.(SWAZILAND)) UNION INDUSTRIAL WASHING PTY LTD. (U.I.W.(SWAZILAND)) J.M. Rotary Print Industrial Co., Ltd. (J.M. (SWAZILAND)) GOLDEN JUBILEE APPAREL (PTY) LTD.(GOLDEN (SWAZILAND)) TEX-RAY (SHANGHAI ) INDUSTRIAL CO., LTD. (TEX-RAY (SHANGHAI )) TRLA GROUP, INC.(TRLA GROUP) Z-PLY CORPORATION (Z- PLY (NY)) TEXRAY SWAZILAND PTY LTD.(TEXRAY (SWAZILAND))	Oversea investment holding Trading and manufacturing of weaving and garments Wholesale of clothing and fabrics Wholesale of textile Marketing and trading Marketing and trading Garment processing Weaving and dyeing Garment processing Printing Garment processing Warehousing and trading business of textile Marketing and trading Marketing and trading Garment processing	% 100.00 % 100.00 % 68.60 % 70.44 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % - % - % 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. % 68.60 The subsidiary that the Company holds more than 50% shares. % 70.44 The subsidiary that the Company holds more than 50% shares. % - The subsidiary that the Company holds more than 50% shares. (Note 2) % - The subsidiary that the Company holds more than 50% shares. (Note 2) % 100.00 The subsidiary that TEX RAY (SA) holds more than 50% shares. % 100.00 The subsidiary that TEX RAY (SA) holds more than 50% shares. % 100.00 The subsidiary that TEX RAY (SA) holds more than 50% shares. % 100.00 The subsidiary that TEX RAY (SA) holds more than 50% shares. % 100.00 The subsidiary that TEX RAY (SA) holds more than 50% shares. % 100.00 The subsidiary that TEX RAY (BELIZE) holds more than 50% shares. % 100.00 The subsidiary that FLYNN (SAMOA) holds more than 50% shares. (Note 2) % 100.00 The subsidiary that FLYNN (SAMOA) holds more than 50% shares. (Note 2) % 100.00 The subsidiary that GREAT holds more than 50% shares. (Continued)

14

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, 2022 December 31, 2021 Note	Shareholding percentage December 31, 2022 December 31, 2021 Note
			December 31, 2022
ZHENG-RAY ZHENG-RAY TEX-RAY (BN) TEX-RAY (BN) TEX-RAY (BN) TEX-RAY (BN) TEX-RAY (CAYMAN) TEX-RAY (CAYMAN) KMT TEX-RAY (SHANGHAI ) TEX RAY (SHANGHAI ) AIQ AIQ AIQ	HUAI WEI BIOTECHNOLOGY CO., LTD Taiwan Supercritical Technology CO.,LTD.(TST) GOOD TIME(VIETNAM) ENTERPRISE CO.,LTD. (GOOD TIME) MSWATI HOLDINGS LTD. (MSWATI) 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. (KMBV) TEX-RAY INDUSTRIAL CO., LTD. (YANCHENG) (TEX- RAY (YANCHENG)) TEXRAY(KUNSHAN) INDUSTRIAL CO., LTD. (TEXRAY(KUNSHAN)) AIQ SYNERTIAL LTD. (AIQ-S ) KING’S METAL FIBER (SHANGHAI) Taiwan Innovation Technology Co., Limted (HK) (Taiwan Innovation (HK))	Biotechnology Service Ultrasonic cleaning and supercritical cleaning, extraction, etc. Garment processing Oversea investment holding Garment processing Garment processing Dyeing Garment processing Marketing and tradeing Manufacturing and sales of textiles, clothing, shoes and hats Development of composite fabrics Development of smart clothing technology Wholesale of glass products and textiles Marketing and trading of machine	% 60.00 % 75.63 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 50.00 % 100.00 % 100.00	% 60.00 The subsidiary that ZHENG-RAY holds more than 50% shares % 75.63 The subsidiary that ZHENG-RAY holds more than 50% share (Note 1) % 100.00 The subsidiary that TEX RAY (BN) holds more than 50% shares. % 100.00 The subsidiary that TEX RAY (BN) holds more than 50% shares. % 100.00 The subsidiary that TEX RAY (BN) holds more than 50% shares. % 100.00 The subsidiary that TEX RAY (BN) holds more than 50% shares. % 100.00 The subsidiary that TEX RAY (CAYMAN) holds more than 50% shares. % 100.00 The subsidiary that TEX RAY (CAYMAN) holds more than 50% shares. % 100.00 The subsidiary that KING'S METAL FIBER TECH holds more than 50% shares. % 100.00 The subsidiary that TEX-RAY (SHANGHAI) holds more than 50% shares. % 100.00 The subsidiary that TEX-RAY (SHANGHAI) holds more than 50% shares. % 50.00 The subsidiary that AIQ holds more than 50% shares. % 100.00 The subsidiary that AIQ holds more than 50% shares. % 100.00 The subsidiary that AIQ holds more than 50% shares.

(Continued)

15

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, 2022 December 31, 2021 Note	Shareholding percentage December 31, 2022 December 31, 2021 Note
			December 31, 2022
KING’S METAL FIBER (SHANGHAI) MSWATI MSWATI TRYD TEXTILE	AIQ SMART CLOTHING (Zhejiang) CO., LTD. (AIQ (Zhejiang)) TRYD APPAREL CO.,LTD.(TRYD APPAREL) JIANGSU TRYD TEXTILE TECHNOLOGY CO.,LTD. (TRYD TEXTILE) Yancheng Wei Da Textile Testing Service Co.,Ltd. (Wei Da Testing)	System development, production and sales of smart devices Knitted garment processing Spinning, weaving, high-end fabrics, bleaching and dyeing, printing and garment production Testing service and environmental evaluation	% 100.00 % 100.00 % 100.00 % 100.00	% 100.00 The subsidiary that KING’S METAL FIBER (SHANGHAI) holds more than 50% shares. % 100.00 The subsidiary that MSWATI holds more than 50% shares. % 100.00 The subsidiary that MSWATI holds more than 50% shares. % 100.00 The subsidiary that TRYD TEXTILE holds more than 50% shares.

Note 1: Due to its organizational restructuring, the Company issues all TST’s shares in exchange for ZHENG RAY’s shares on October 21, 2021.

• Note 2: Due to its organizational restructuring, the Company acquired 100% of equity interests in TRLA GROUP INC and Z-PLY CORPORATION from its subsidiary FLYNN International Ltd by cash on December 27, 2022.

Note 3: There are no subsidiaries that are not included in this consolidated financial report.

(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.

(Continued)

16

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Foreign operation

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the presentation currency at 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;

• (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.

(Continued)

17

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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.

• 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)

18

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 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) 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:

‧ 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.

(Continued)

19

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

4) 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.

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.

5) 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.

(Continued)

20

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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.

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.

(Continued)

21

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(h) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is calculated using 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) Investment in associates

Associates are those entities in which the Group 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.

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.

(Continued)

22

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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.

(j) 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.

(k) 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.

(Continued)

23

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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

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.

(l) Leases

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.

(i) As a lease

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

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

(Continued)

24

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

• －

• fixed payments, including in-substance fixed payment;

• － variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

• －

• －

• amounts expected to be payable under a residual value guarantee; and

• 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:

• － there is a change in future lease payments arising from the change in an index or rate; or

• － there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee; or

• － there is a change of its assessment on whether it will exercise a purchase, extension or termination option; or

• －

• 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 that have a lease term of 12 months or less and leases of low-value assets, office equipment. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(Continued)

25

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:

• －

• the rent concessions occurring as a direct consequence of the COVID-19 pandemic;

• － 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;

• － any reduction in lease payments that affects only those payments originally due on, or before, June 30, 2022; and

• －

• 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.

• (ii) 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.

• (m) 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)

26

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.

(n) 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)

27

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(o) 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.

(i) 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.

(ii) 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.

(p) 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.

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.

(Continued)

28

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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.

(q) 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;

(Continued)

29

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

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

(r) 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.

(s) 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.

(Continued)

30

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

The preparation of the consolidated financial statements in conformity with the Regulations and 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.

(c) Impairment of property, plant and equipment

In the process of evaluating the potential impairment of tangible , 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.The cash-generating units for the Group's assessment of asset impairment include property, plant and equipment and intangible assets - goodwill. Refer to note 6(i) for further description of the key assumptions used to determine the recoverable amount.

(Continued)

31

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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(i) 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. TheGroup’ 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 notes listed as below for assumptions used in measuring fair value.

• (a) Note 6(h), Investment property

• (b) Note 6(w), 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 consolidated statement of cash flows	December 31, 2022 $ 11,373 11,786 900,247 206,750 1,014,457 $ 2,144,613	December 31, 2021
		5,835 16,956 566,097 219,577 534,561
		1,343,026

Please refer Note 6(w) for the disclosure of the Group’s financial assets and liabilities interest risk and sensitivity analysis.

(Continued)

32

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

Equity investments at fair value through other comprehensive income: Unlisted Common Share	December 31, 2022 $ 24,512	December 31, 2021
		10,689

• (i) 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.

• (ii) Please refer to Note 6(x) for credit risk and market risk.

• (iii) 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: Allowance for impairment	December 31, 2022 $ 33,069 987,903 267,253 $ 753,719	December 31, 2021
		1,232 1,478,570 185,085
		1,294,717

• (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 note receivables and trade receivables were as follows:

Current Overdue 90 days Overdue 90 to 180 days Overdue 180 to 360 days 360 days past due	December 31, 2022	December 31, 2022
	Gross carrying amount $ 595,359 108,059 34,378 72,990 210,186 $ 1,020,972	Weighted- average loss rate 0~12% 0~7% 10%~31% 50%~100% 100%	Loss allowance Provision 1,313 1,399 5,868 48,487 210,186 267,253

(Continued)

33

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Current Overdue 90 days Overdue 90 to 180 days Overdue 180 to 360 days 360 days past due	December 31, 2021	December 31, 2021
	Gross carrying amount $ 954,216 274,020 80,215 2,158 169,193 $ 1,479,802	Weighted- average loss rate 0%~5% 0%~12% 10%~66% 50%~100% 100%	Loss allowance Provision
			4,343 1,603 8,407 1,539 169,193
			185,085

• (ii) The movement in the allowance for notes and accounts receivable was as follow:

Balance on January 1 Impairment losses recognized Amounts write-off Foreign exchange losses Balance on December 31	For the years ended December 31 2022 2021 $ 185,085 167,287 70,706 23,248 (5,834) (3,000) 17,296 (2,450) $ 267,253 185,085
	2022 $ 185,085 70,706 (5,834) 17,296 $ 267,253

• (iii) The aforementioned notes and trade receivables of the Group had been pledged as collateral for long-term borrowings; please refer to Note 8.

• (iv) As of December 31, 2022, the accumulated accounts receivable of this individual customer have been recognized as expected credit impairment losses amounting to US$ 4,939 thousand. The Group has also obtained the collateral for US$1,000 thousand portion of the 6,370 firstround ordinary shares of this customer at US$157 per share.

(d) Other receivables

Other receivables—tax-refund Other Less: Allowance for impairment	December 31, 2022 $ 70,437 24,740 (6,301) $ 88,876	December 31, 2021 80,333 36,578 (6,301) 110,610

(Continued)

34

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Except for the other receivables below, all the other receivables are financial asset with low credit risk; therefore, the allowance for loss was measured at the expected credit loss of 12 months. The movement in the allowance for other receivables was as follow:

Balance on January 1 Amounts write-off Balance on December 31	For the years ended December 31 2022 2021 $ 6,301 6,456 - (155) $ 6,301 6,301
	2022 $ 6,301 - $ 6,301

• (e) Inventories

Raw materials Work in prograss Finished goods Merchandise	December 31, 2022 $ 523,310 423,908 289,511 14,088 $ 1,250,817	December 31, 2021
		549,345 615,605 315,159 15,103
		1,495,212

• (i) As of December 31, 2022, raw material, consumables, and changes in the finished goods and work in progress recognized as cost of sales amounted to $4,820,614 thousand (2021: $5,334,032 thousand). In 2022, The write-downs of inventories amounted to $7,723 thousand. In 2021, the reversal of The write-down of inventories amounted to $22,169 thousand due to the income in market. The write-downs and reversals were included in cost of sales.

• (ii) The aforesaid inventories were not pledged as collateral.

• (f) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Group for the years ended December 31, 2022 and 2021, were as follows:

Cost: Balance on January 1, 2022 Additions Transfers Disposals Reclassification to investment property Effect of movement in exchange rate Balance on December 31, 2022		Land $ 465,458 - - - - 972 466,430	Buildings 1,423,705 12,334 135,072 (10,486) (4,753) 38,077 1,593,949	Machinery equipment 1,057,796 21,656 15,687 (111,078) - 32,750 1,016,811	Transportation equipment 37,969 4,665 - (4,105) - 1,367 39,896	Office equipment 126,939 4,187 2,437 (6,414) - 3,409 130,558	Lease assets 444 - - - - - 444	Other facilities 93,647 8,768 - (5,029) - 1,815	Construction in progress 126,436 18,756 (142,111) - - 1,121 4,202	Total 3,332,394 70,366 11,085 (137,112) (4,753) 79,511
	$
								99,201		3,351,491

(Continued)

35

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Balance on January 1, 2021 Additions Transfers Disposals Reclassification to Investment property Effect of movement in exchange rate Balance on December 31, 2021 Depreciation and impairment loss: Balance on January 1, 2022 Depreciation for the period Disposals Reclassification to investment property Effect of movement in exchange rate Balance on December 31, 2022 Balance on January 1, 2021 Depreciation for the period Disposals Reclassification to investment property Effect of movements in exchange rates Balance on December 31, 2021 Carrying amounts: Balance on December 31, 2022 Balance on January 1, 2021 Balance on December 31, 2021		Land $ 466,058 - - - - (600) $ 465,458 $ - - - - - $ - $ - - - - - $ - $ 466,430 $ 466,058 $ 465,458	Buildings 1,393,684 30,454 223,275 (16,483) (207,876) 651 1,423,705 403,985 62,116 (6,746) (1,832) 12,068 469,591 439,127 64,376 (10,375) (89,235) 92 403,985 1,124,358 954,557 1,019,720	Machinery equipment 1,296,486 26,951 17,484 (263,995) - (19,130) 1,057,796 732,124 73,835 (103,236) - 24,012 726,735 915,726 82,665 (253,343) - (12,924) 732,124 290,076 380,760 325,672	Transportation equipment 39,707 3,691 - (4,539) - (890) 37,969 26,902 3,939 (3,452) - 1,031 28,420 28,140 3,561 (4,100) - (699) 26,902 11,476 11,567 11,067	Office equipment 128,078 5,833 322 (7,356) - 62 126,939 104,984 6,570 (5,523) - 2,725 108,756 105,244 6,839 (7,184) - 85 104,984 21,802 22,834 21,955	Lease assets 444 - - - - -	Other facilities 132,623 4,113 1,824 (41,088) - (3,825) 93,647 79,082 4,976 (4,622) - 1,539 80,975 118,108 5,208 (40,928) - (3,306) 79,082 18,226 14,515 14,565	Construction in progress 224,419 124,110 (222,520) - - 427 126,436 - - - - - - - - - - - - 4,202 224,419 126,436	Total 3,681,499 195,152 20,385 (333,461) (207,876) (23,305) 3,332,394 1,347,521 151,436 (123,579) (1,832) 41,375 1,414,921 1,606,789 162,649 (315,930) (89,235) (16,752) 1,347,521 1,936,570 2,074,710 1,984,873
							444
							444 - - - -
							444
							444 - - - -
							444
							-
							-
							-

(i) On November 11, 2021, the Board of Directors approved that the part of the TRYD TEXTILE plant in China that had been leased out, and the real estate of the factory site to be reclassified from property, plant and equipment to investment property. Please refer to Note 6(h) for details.

• (ii) The property, plant and equipment of the Group had been pledged as collateral for bank borrowings, please refer to Note 8.

(g) Right-of-use assets

The Group leases assets including land, buildings and transportation equipment. Information about leases for which the Group as a lessee was presented below:

Cost: Balance on January 1, 2022 Additions Disposal Effect of movement in exchange rates Balance on December 31, 2022	Land $ 107,840 1,578 - 3,688 $ 113,106	Buildings 223,080 57,468 (25,368) 10,863 266,043	Transporation equipment 6,531 1,164 (4,641) 61 3,115	Total 337,451 60,210 (30,009) 14,612 382,264

(Continued)

36

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Balance on January 1, 2021 Additions Disposal Effect of movement in exchange rates Balance on December 31, 2021 Accumulated depreciation: Balance on January 1, 2022 Depreciation for the year Disposal Effect of movement in exchange rates Balance on December 31, 2022 Balance on January 1, 2021 Depreciation for the year Disposal Effect of movement in exchange rates Balance on December 31, 2021 Carrying amounts: Balance on December 31, 2022 Balance on January 1, 2021 Balance on December 31, 2021	Land $ 107,423 - - 417 $ 107,840 $ 14,754 6,948 - 784 $ 22,486 $ 8,060 6,625 - 69 $ 14,754 $ 90,620 $ 99,363 $ 93,086	Buildings 89,201 173,140 (29,719) (9,542) 223,080 37,440 43,604 (25,740) 2,018 57,322 32,009 35,037 (28,274) (1,332) 37,440 208,721 57,192 185,640	Transporation equipment 6,778 1,453 (1,599) (101) 6,531 4,425 1,494 (4,641) 14 1,292 3,845 2,214 (1,599) (35) 4,425 1,823 2,933 2,106	Total 203,402 174,593 (31,318) (9,226) 337,451 56,619 52,046 (30,381) 2,816 81,100 43,914 43,876 (29,873) (1,298) 56,619 301,164 159,488 280,832

The right-of-use assets of the Group had been pledged as collateral for bank borrowings, please refer to Note 8.

(h) Investment property

The movement of the investment property were as follows:

Book Value: Balance on January 1, 2022 Transfer from property, plant, and equipment Chang in fair value Effect of movements in exchange rates Balance on December 31, 2022	Land and improvement $ 1,090,185 - 9,410 27,958 $ 1,127,553	Buildings 332,599 2,921 (42,702) 15,571 308,389	Total 1,422,784 2,921 (33,292) 43,529 1,435,942

(Continued)

37

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Balance on January 1, 2021 Transfer from property, plant, and equipment Chang in fair value Effect of movements in exchange rates Balance on December 31, 2021	Land and improvement $ 1,087,867 - 9,656 (7,338) $ 1,090,185	Buildings 138,117 118,641 78,225 (2,384) 332,599	Total 1,225,984 118,641 87,881 (9,722) 1,422,784

• (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	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.	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, 2022	December 31, 2021
Rent at local market rate (note)	$220~$280 /Py /month	$200~$218 /Py /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	2.345%	1.754%
Discount rate	2.22%	3.29%
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	CHINA PROPERTY APRAISING CENTER CO., LTD.
Appraiser name(s)	Fu-Sheng Wang、Ming-Quan Chen	Dian-Jing Hsieh、Xiang-Ling Chiu
Appraisal date	December 31, 2022	December 31, 2021
Fair value by external independent appraiser(s)	$930,260 thousand	$934,513 thousand

(Continued)

38

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, 2022	December 31, 2021
Contract terms	1.Rental:$238 thousand /month 2.Period:60 months 3.Deposits: $460 thousand 4.Tax borne by lessor:$83 thousand/year	1.Rental:$238 thousand /month 2.Period:60 months 3.Deposits: $460 thousand 4.Tax borne by lessor:$84 thousand/year
Rent at local market rate (note)	$3,220 /Py /month	$3,250 /Py /month
Current market rent for comparable properties in similar locations and condition	$2,794～$3,065 /Py /month	$2,794~$4,125 /Py /month
Current status	In use	In use
Capitalization rate	3.95%	3.77%
Discount rate	2.20%	2.02%
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, 2022	December 31, 2021
Fair value by external independent appraiser(s)	$67,670 thousand	$70,970 thousand

Contract terms	The Group’s property located at Parque Industrial la Primavera, Mexico	The Group’s property located at Parque Industrial la Primavera, Mexico
	December 31, 2022	December 31, 2021
Rent at local market rate (note)	$63～$287 /square feet/month	$41～$240 /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	11.00%	10.00%
Discount rate	10.50%	7.50%

(Continued)

39

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Contract terms	The Group’s property located at Parque Industrial la Primavera, Mexico	The Group’s property located at Parque Industrial la Primavera, Mexico
	December 31, 2022	December 31, 2021
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-Sheng Wang	Fu-Sheng Wang
Appraisal date	Febuary 18, 2023	January 18, 2022
Fair value by external independent appraiser(s)	$285,183 thousand ($181,020 thousand peso)	$238,493 thousand ($176,198 thousand peso)
Contract item	The Group’s property located at Jiangsu Yancheng Economic Development Zone, China
Contract terms	December 31, 2022	December 31, 2021
	1.Rental:$45/ square feet/month 2.Period:120 months 3.Deposits: None 4.Tax borne by lessor:$2,985 thousand/year	1.Rental:$45/ square feet/month 2.Period:120 months 3.Deposits: None 4.Tax borne by lessor:$2,985 thousand/year
Rent at local market rate (note)	$533/square feet/month	$533/square feet/month
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%	4.00%
Discount rate	2.75%	2.75%
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 2022	November 2 2021
Fair value by external independent appraiser(s)	$199,526 thousand ($44,808 thousand Chinese Yuan)	$224,218 thousand ($51,529 thousand Chinese Yuan)

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.

(Continued)

40

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

In accordance with Article34 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.

The discount rate is determined by the risk premium method, which considers 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 selects the investment return of the most general property 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 deposit small deposit issued by Chunghwa Post Co., Ltd. plus no less than three yards, and considers the underlying income situation, liquidity, risk, value-added and management For factors such as the difficulty of the above, the risk premium will be added on December 31, 2022 and 2021 to determine the discount rate of the target to be 2.20%~10.50% and 2.02% 〜 7.50%. The estimation of income capitalization refers to the weighted average calculation after dividing the net income of the comparison target by the price.

• (ii) In 2022 and 2021, the Group reclassified its real estate from property, plant and equipment to investment property measured at fair value and recognized the difference between the fair value and the book value, amounting to $958 thousand and $59,893 thousand respectively, as revaluation surplus under other equity. Please refer to Note 6(f).

• (iii) Remeasurement gains and losses arising from investment property measured at fair value, please refer to Note 6(v).

• (iv) As of December 31, 2022 and 2021, the investment property of the Group had been pledged as collateral for long-term borrowings; please refer to Note 8.

• (i)

• Intangible assets

The cost, amortization and impairment of the intangible assets of the Group for the years ended December 31, 2022 and 2021, were as follows:

Costs: Balance on January 1, 2022 Additions Effect of movement in exchange rate Balance on December 31, 2022	Patent		Goodwill 247,307 - 16,963 264,270	Soft cost 89,861 5,867 516 96,244	Others 1,424 2,213 (2) 3,635	Total 546,723 8,080 18,463
	$ 208,131 - 986 $ 209,117
						573,266

(Continued)

41

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Balance on January 1, 2021 Additions Disposals Effect of movement in exchange rate Balance on December 31, 2021 Amortization and impairment loss: Balance on January 1, 2022 Amortization for the year Effect of movement in exchange rates Balance on December 31, 2022 Balance on January 1, 2021 Amortization for the year Disposals Effect of movement in exchange rates Balance on December 31, 2021 Carrying amounts: Balance on December 31, 2022 Balance on December 31, 2021 Balance on January 1, 2021	Patent		Goodwill 249,688 - - (2,381) 247,307 46,025 4,058 - 50,083 42,149 3,876 - - 46,025 214,187 201,282 207,539	Soft cost 86,717 3,039 - 105 89,861 69,432 9,608 301 79,341 58,803 10,563 - 66 69,432 16,903 20,429 27,914	Others 1,424 - - - 1,424 1,424 720 5 2,149 1,362 62 - - 1,424 1,486 - 62	Total 544,149 5,645 (291) (2,780) 546,723 298,485 17,405 483 316,373 281,166 17,488 (145) (24) 298,485 256,893 248,238 262,983

(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	For the years ended December 31
	2022 $ 1,330 $ 16,075	2021
		1,508
		15,980

• (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 Swaziland region Vietnam region	December 31, 2022 $ 161,252 44,397 8,538 $ 214,187	December 31, 2021 145,342 44,397 11,543 201,282

(Continued)

42

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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, 2022 and 2021, 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.

• (j) Short-term borrowings

Unsecured bank loans Unsecured non-financial institution loans Secured bank loans Total Unused credit line Range of interest rates	December 31, 2022 $ 776,066 25,000 639,686 $ 1,440,752 $ 1,200,957 1.5%~5.50%	December 31, 2021
		826,175 - 606,074
		1,432,249
		415,996
		1.00%~6.00%

The Group had pledged assets as collateral for short-term borrowing, please refer to Note 8.

• (k) 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, 2022 $ 280,000 (527) $ 279,473 1.89~2.07% CHANG HWA Bank and other four syndicated banks, IBFC	December 31, 2021 300,000 (416) 299,584 1.31% 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.

(Continued)

43

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(l) Long-term borrowings

The details were 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, 2022 $ 26,082 133,589 108,041 1,922,434 (118,053) (4,167) $ 2,067,926 $ 175,979 1.79%~4.80% 2023.07~2036.05	December 31, 2021 94,186 8,669 41,000 1,777,385 (226,251) (3,821) 1,691,168 18,000 0.588%~7.87% 2022.01~2036.05

• (i) The Group entered into a five-year syndicated loan agreement of 1.2 billion with 5 banks including Changhua Commercial Bank LTD on april 14, 2022.The funds obtained from the joint 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, debt ratio and net tangible asset based on the Group’s annual parent only financial statements audited by auditors during the loan period.The Group met the aforementioned financial ratio as of December 31, 2022.

• (ii) Please refer to Note 8 for details of the related assets pledged as collateral.

(m) Lease liabilities

The carrying amount of lease liabilities were as follows:

Current Non-current For the maturity analysis, please refer to Note 6(w).	December 31, 2022 $ 46,253 $ 205,220	December 31, 2021
		33,277
		189,775

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 year ended December 31, 2022 2021 $ 7,469 8,515 $ 18,504 19,913	For the year ended December 31, 2022 2021 $ 7,469 8,515 $ 18,504 19,913
		2021
		8,515
		19,913

(Continued)

44

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

Total cash outflow for leases	For the year ended December 31,	For the year ended December 31,
	2022 $ 67,366	2021 60,521

(n) Operating lease

Please refer to Note 6(f) and 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 More than five years Total undiscounted lease payments	December 31, 2022 $ 33,704 30,329 28,186 31,599 32,282 95,367 $ 251,467	December 31, 2021
		30,497 30,332 29,617 27,475 30,801 124,425
		273,147

(o) 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, 2022 $ (35,458) 23,739 $ (11,719)	December 31, 2021 (58,160) 36,227 (21,933)

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.

(Continued)

45

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group’ s Bank of Taiwan labor pension reserve account balance amounted to $23,739 thousands as of December 31, 2022. 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, 2022 and 2021 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 Benefits paid by the plan Loss of control of a subsidiary Defined benefit obligation, December 31	For the years ended December 31 2022 2021 $ (58,160) (61,223) (423) (211) 230 (131) (1) (72) 2,903 2,215 4,607 1,262 15,386 - $ (35,458) (58,160)
	2022 $ (58,160) (423) 230 (1) 2,903 4,607 15,386 $ (35,458)

• 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, 2022 and 2021 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 2022 2021 $ 36,227 33,522 251 103 2,693 582 3,372 3,282 (4,620) (1,262) (14,184) - $ 23,739 36,227
	2022 $ 36,227 251 2,693 3,372 (4,620) (14,184) $ 23,739

• 4) Movements of the effect of the asset ceiling: None.

(Continued)

46

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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, 2022 and 2021 were as follows:

Current service costs Net interest of net liabilities for defined benefit obligations Curtailment or settlement gains	For the years ended December 31	For the years ended December 31
	2022 $ 27 145 (1,189) $ (1,017)	2021
		27 81 -
		108

The actual expenses recognized in profit or loss for the years ended December 31, 2022 and 2021 were as follows:

Operating costs Selling expenses Administration expenses Research and development expenses Prepayment	For the years ended December 31	For the years ended December 31
	2022 $ 13 (672) (293) (65) - $ (1,017)	2021
		4 60 25 2 17
		108

The difference between the above expenses and the amount should to be reported in the actuarial report will be regarded as a change in accounting estimates and recognized as the profit and loss of the following year.

6) Actuarial assumptiions

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

Discount rate Future salary increase rate	December 31, 2022 December 31, 2021 1.3%~1.35% 0.70% % 2.00 % 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 $1,514 thousands.

The weighted average lifetime of the defined benefits plans is 8 〜 10 years.

(Continued)

47

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated 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, 2022 Discount rate (change 0.25％) Future salary increasing rate (change 0.25％) December 31, 2021 Discount rate (change 0.25％) Future salary increasing rate (change 0.25％)	Influences of defined benefit obligations Increase 0.25％ Decrease 0.25％ $ (765) 793 785 (763) (1,350) 1,400 1,378 (1,337)

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 2022 and 2021.

(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 $46,043 thousand and $43,096 thousand for the years ended December 31, 2022 and 2021, respectively.

(Continued)

48

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(p) Income taxes

(i) Tax expense

The components of income tax for the years ended December 31, 2022 and 2021 were as follows:

Current income tax expense Current period Prior years income tax adjustment Additional tax on undistributed earnings Deferred income tax expense Origination and reversal of temporary differences Recognition of previously unrecognized tax losses Tax expense	For the years ended December 31 2022 2021 $ 100,784 110,662 (22,868) 17,327 271 5,101 78,187 133,090 9,374 7,905 (584) (24,578) 8,790 (16,673) $ 86,977 116,417
	2022 $ 100,784 (22,868) 271 78,187 9,374 (584) 8,790 $ 86,977

The reconciliation of tax expense and income before tax for the years ended December 31, 2022 and 2021 are as followed:

Profit before tax Income tax expense at domestic statutory tax rate Effect of tax rates in foreign jurisdiction Tax-exempt income Gains on financial assets at fair value through profit or loss Origination and reversal of temporary differences Current-year losses for which no deferred tax asset was recognized Adjustment to the prior year Realized investment loss Other	For the years ended December 31 2022 2021 $ 45,303 73,662 $ 9,061 14,732 89,589 108,825 - (4) - (22) 9,374 7,905 (584) (24,578) (22,868) 17,327 (1,536) (4,400) 3,941 (3,368) $ 86,977 116,417
	2022 $ 45,303 $ 9,061 89,589 - - 9,374 (584) (22,868) (1,536) 3,941 $ 86,977

The applicable statutory tax rates for subsidiaries in foreign regions were as follows: America: 22.1%~43.84%, Netherlands: 15%, Mexico: 30%, Mainland: 25%, South Africa: 28% and Swaziland: 27.5%.

(Continued)

49

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Deferred tax asset and liability recognized

Changes in the amount of deferred tax assets and liabilities for 2022 and 2021. were as follows:

1) Deferred tax asset:

Unrealized loss of inventory valuation Balance on January 1, 2022 $ 17,252 Recognized in profit or loss (5,581) Effect of movement in exchange rates - Balance on December 31, 2022$ 11,671 Balance on January 1, 2021 $ 19,723 Recognized in profit or loss (2,471) Effect of movement in exchange rates - Balance on December 31, 2021$ 17,252	Unrealized sales margin 2,647 (488) - 2,159 1,467 1,180 - 2,647	Carryforw ard of unused tax loss 30,856 19 3,372 34,247 7,220 24,578 (942) 30,856	Other 11,028 (1,046) - 9,982 17,390 (6,362) - 11,028	Total 61,783 (7,096) 3,372 58,059 45,800 16,925 (942) 61,783

2) Deferred tax liabilities:

Defined benefit plan Balance on January 1, 2022 $ 654 Recognized in profit or loss - Balance on December 31, 2022$ 654 Balance on January 1, 2021 $ 654 Recognized in profit or loss - Balance on December 31, 2021$ 654		Provision for land value increment tax	Unrealized exchange benefits	Unrealized exchange benefits	Other 914 55 969 664 250 914	Total
		177,045 -		- 1,639 1,639 - - -		178,613 1,694
		177,045				180,307
		177,045 -				178,363 250
		177,045				178,613

(iii) The Company’s income tax returns through 2020 have been assessed and approved by the Tax Authority.

(q) 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 since been completed.

(Continued)

50

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

A resolution was passed by the temporary meeting held on 4 December 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 thousands, The date of capital increase was on December 12, 2018. The relevant statutory registration procedures have been completed.

As of December 31, 2022 and 2021, 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:

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, 2022 $ 121,485 14,648 3,949 95,847 3,516 254 $ 239,699	December 31, 2021
		121,485 14,648 3,949 95,847 3,531 254
		239,714

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.

(Continued)

51

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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’s dividend policy considering factors such as current and future development plans, investment environment, capital requirements and domestic and international competition, and the interests of shareholders, is to distribute dividends to shareholders in an amount not less than 10% of the current distributable earnings each year.

The earnings distribution may be distributed by cash or stock. The distribution ratio of cash dividends should not be less than 10% of the total dividends.

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 recognized by the FSC, it chose to apply the exemption item of IFRS 1 "First-time Application of International Financial Reporting Standards". Hence, the unrealized revaluation and accumulation accounted for shareholders’ equity amounted to $216,408 thousand, resulting in a decrease in retained earnings. Since the net reduction of retained surplus on the conversion date was due to the initial adoption of IFRSs based on FSC’s regulations, the Company need not apply for a special surplus reserve for the amount reclassified to retained earnings on January 1, 2013.

The Company chose the fair value model for subsequent measurement of its investment property. According to the regulations of the FSC, the net increase in special surplus reserve amounting to the net increase in fair value of investment property measured by the fair value model adopted for the first time should be applied. Also, the special surplus reserve shall be taken in the following order when the Company distribute its annual earnings:

• a) The fair value model is used in calculating the special reserve amounting to the net for subsequent measurement of investment property from undistributed earnings of current period and prior year. If the cumulative net increase in fair value in the previous period, the amount of the special surplus reserve of the same amount from the undistributed surplus in the previous period cannot be distributed; 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)

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TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• b) The special surplus reserve calculated based on the shareholding ratio, which amounts to the difference between the market value and the book value of the parent company’s stock held by the subsidiary company at the end of the period, shall not be distributed. If there is any rebound in the market price thereafter, the amount of that part must be converted to a special surplus reserve based on the shareholding ratio.

• c) 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 total net reduction of other shareholders’ equity for the current period. Similarly, a portion of undistributed 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. The amounts of subsequent reversals pertaining to the net reduction of other shareholders’ equity shall qualify for additional distributions.

• 3) Earnings distribution

On June 15, 2022, the Company resolved not to distribute dividends at the general meeting of stockholders. On July 12, 2021, the general meeting of stockholders resolved to distribute earnings for 2020. The cash dividends of $0.7 per share, amounting to $163,537 thousand, were distributed to ordinary shareholders for the year 2020.

(r) Share-based payment

On January 20, 2021, the Board of Directors decided to issue 1,000 shares as employee stock options for employees who meet certain conditions, with the subscription price of $15 per share on the grant date.

• (i) The Group used Black-DScholes method in measuring the fair value of the share-based payment at the grant date. For the year ended December 31, 2021, the measurement inputs were as follows:

Grant date Fair value at grant date Exercise price(TWD/per share) Expected volatility (%) Risk-free interest rate (%) Expected dividend Expected life (years) Fair value(TWD/per share)	Equity-settled
	Employee stock options
	2021.01.20 15.00 18.02 57.23% 0.16% 0.00% 0.02 3.0280

(Continued)

53

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Description of share-based payment arrangements

Details of the employee stock options were as follows:

Outstanding at January 1 Granted during the year (number) Exercised during the year (number) Outstanding at December 31, 2022	2021 Weighted average exercise price Number of options $ - - 15.00 1,000 (15.00) (1,000) $ - -
	Weighted average exercise price $ - 15.00 (15.00) $ -

In 2021, the Group incurred the expenses on share-based arrangement amounting to $3,028 thousands.

(s) 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 Loss attributable to ordinary shareholders Weighted-average number of ordinary shares (thousand shares) Loss attributable to shareholders per share	For the years ended December 31	For the years ended December 31
	2022 $ (38,383) 233,625 $ (0.16)	2021 (30,882
		233,625
		(0.13

(ii) The Group’s suffers from operating losses for the years ended December 31, 2022 and 2021 and has no dilution effect. Thus, no diluted earnings per share has been disclosed.

• (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 2022 2021 $ 226,349 212,666 2,351,386 2,810,172 1,529,395 1,594,514 200,555 240,162 1,576,771 1,561,854 244,764 218,568 $ 6,129,220 6,637,936
	2022 $ 226,349 2,351,386 1,529,395 200,555 1,576,771 244,764 $ 6,129,220

(Continued)

54

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Contract balances

Contract liabilities	December 31, 2022 $ 108,992	December 31, 2021 80,400	January 1, 2021
			69,478

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' and supervisors' remuneration

Based on the amended Company’ s Articles of Incorporation, remuneration of employees and directors are appropriated at the rate of at least 2% and no more than 2% of profit before tax, respectively. Prior years’ accumulated deficit is first offset before any appropriation of profit. Employees of subsidiaries may also be entitled to the employee remuneration of the Company, which can be settled in the form of cash or stock.

For the year ended December 31, 2022 and 2021, the Company suffered an operating loss, hence, no remuneration to employees and directors were estimated. The estimated amounts were calculated based on the net profit before tax, excluding the remuneration to employees and directors of each period, and multiplied by the percentage of remuneration to employees and directors as specified in the Company’s Articles of Incorporation.

There was no difference between the amounts approved in Board of Directors meeting and recognized for the years ended December 31, 2022 and 2021. For further information, please refer to Market Observation Post System.

(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	For the years ended December 31
	2022 $ 8,445 - $ 8,445	2021
		3,727 21
		3,748

(Continued)

55

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Other gains and losses

The details of other gain and losses were as follows:

Losses on disposal of intangible assets Gains (losses) on disposal of property, plant and equipment (Losses) gains on fair value adjustment of investment property Foreign exchange gains (losses) Gains of financial asset at fair value through profit or loss Other income Other expenses	For the years ended December 31	For the years ended December 31
	2022 $ - 415 (34,250) 83,741 - 48,774 (24,904) $ 73,776	2021
		(146) (808) 27,988 (23,312) 111 50,086 (4,047)
		49,872

(iii) Interest income

The details of interest income were as follows:

The details of interest income were as follows:
Bank deposits Overdue accounts Interest subsidy	For the years ended December 31
	2022 $ 32,242 181 17 $ 32,440	2021
		20,761 144 22
		20,927

(iv) Interest expenses

The details of interest expenses were as follows:

Loans and borrowings Lase liabilities	For the years ended December 31 2022 2021 $ 92,512 86,404 7,469 8,515 $ 99,981 94,919	For the years ended December 31 2022 2021 $ 92,512 86,404 7,469 8,515 $ 99,981 94,919
		2021
		86,404 8,515
		94,919

(Continued)

56

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(w) Financial instruments

(i) Categories of financial instruments

• 1) Financial asset

Measured at fair value through other comprehensive income Measured at amortized cost (deposits and receivables) Cash and cash equivalents Notes, accounts receivables, and other receivables Other financial assets－current Other non-current financial assets Subtotal Total

2) Financial liabilities

Financial liabilities
Financial liabilities carried at amortized cost Short-term borrowings Short-term notes and bills payable Accrued payable Lease liabilities Long-term borrowings (including current portion) Total	December 31, 2022 $ 1,440,752 279,473 898,978 251,473 2,185,979 $ 5,056,655	December 31, 2021
		1,432,249 299,584 1,206,968 223,052 1,917,419
		5,079,272

(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, 2022 and 2021 was $3,232,721 thousand and $2,969,771 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, 2022 and 2021, The Group has a vast client base that is not connected, thus, the extent of concemtration credit risk is limited.

(Continued)

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TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 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, 2022 Non-derivative financial liabilities Secured bank loans Unsecured bank loans Short-term notes and bills payable Accured payables Lease liabilities December 31, 2021 Non-derivative financial liabilities Secured bank loans Unsecured bank loans Short-term notes and bills payable Accured payables Lease liabilities	Carrying amount $ 2,695,709 935,189 279,473 898,978 251,473 $ 5,060,822 $ 2,392,128 961,361 299,584 1,206,968 223,052 $ 5,083,093	Contractual cash flows 2,961,297 944,877 280,000 898,978 273,113 5,358,265 2,494,538 989,922 300,000 1,206,968 247,960 5,239,388	Within 6 months 358,110 838,546 280,000 898,978 26,550 2,402,184 340,057 794,816 300,000 1,206,968 21,014 2,662,855	6-12 months 421,193 20,240 - - 27,118 468,551 438,171 134,579 - - 19,034 591,784	1-2 years 124,998 42,895 - - 54,661 222,554 186,457 35,106 - - 38,146 259,709	2-5 years 943,938 43,196 - - 152,268 1,139,402 1,244,654 25,421 - - 129,234 1,399,309	Over 5 years
							1,113,058 - - - 12,516
							1,125,574
							285,199 - - - 40,532
							325,731

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

(Continued)

58

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:

The Group’s signifi	cant exposures to foreign currency r	cant exposures to foreign currency r	isk were as follow:	isk were as follow:
Financial assets Monetary items NTD:USD SZL:USD CNY:USD VND:USD EUR:NTD MXN:USD JPY:NTD Financial liabilities Monetary items NTD:USD SZL:USD CNY:USD VND:USD MXN:USD USD:GBP	December 31, 2022 Foreign Currency Exchange Rate NTD $ 28,093 30.7100 862,736 530 17.0068 16,268 1,048 6.8983 31,879 338 23,633 10,366 1,391 32.7200 45,519 520 19.4932 15,958 58,475 0.2324 13,590 15,324 30.7100 470,607 302 17.0068 9,262 9,187 6.8983 279,357 794 23,633 24,386 - 19.4932 - 300 0.8266 9,213		December 31, 2021
	Foreign Currency $ 28,093 530 1,048 338 1,391 520 58,475 15,324 302 9,187 794 - 300	Exchange Rate 30.7100 17.0068 6.8983 23,633 32.7200 19.4932 0.2324 30.7100 17.0068 6.8983 23,633 19.4932 0.8266	Foreign Currency 29,754 673 5,509 618 1,373 293 51,937 8,257 4,086 16,743 1,548 12,973 -	Exchange Rate NTD 27.6800 823,604 15.9236 18,653 6.3614 152,244 22,828 17,139 31.3200 42,989 20.4499 8,125 0.2405 12,491 27.6800 228,566 15.9236 113,185 6.3614 462,679 22,828 42,890 20.4499 359,331 - -

• 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 financail 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, 2022 and 2021 would have increased (decreased) the net income for the years ended December 31, 2022 and 2021 would have increased (decreased) the before-tax net income for the years ended December 31, 2022 and 2021 by $2,035 and $1,314, 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, 2022 and 2021, foreign exchange gains (including realized and unrealized portions) amounted to $83,741 thousand and losses $23,312 thousand, respectively.

(Continued)

59

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 affected by the interest rate risk on the reporting date were as below:

Financial assets Financial liabilities	Fixed-rate instrument December 31, 2022 December 31, 2021 $ 1,172,874 686,526 (325,895) (308,253) $ 846,979 378,273	Variable rate instrument December 31, 2022 December 31, 2021 1,151,573 823,947 (3,601,124) (3,340,999) (2,449,551) (2,517,052)	Variable rate instrument December 31, 2022 December 31, 2021 1,151,573 823,947 (3,601,124) (3,340,999) (2,449,551) (2,517,052)
	December 31, 2022 $ 1,172,874 (325,895) $ 846,979	December 31, 2022 1,151,573 (3,601,124) (2,449,551)
			(2,517,052)

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 $24,496 thousands and $25,171 thousands for the years ended December 31, 2022 and 2021 respectively, with all other variable factors remaining constant. The reason is mainly due to variable-rate loans.

(vi) Other market price risk

If the securty 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:

Price of securities at reporting date Increasing 7% Decreasing 7%	For the years ended December 31 2022 2021 Net income (loss) Net income (loss) $ 1,716 748 (1,716) (748)

• (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)

60

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, 2022 and 2021.

• (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

(Continued)

61

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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 receivable

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.

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, 2022 and 2021, no other guarantees were outstanding.

(Continued)

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TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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 amount of the Group on December 31, 2022 and 2021, please refer to the Notes(k) and (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.

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.

(Continued)

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TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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, 2022, 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, 2022 and 2021, were as follows:

Total liabilities Less: cash and cash equivalents Net debt Total Equity Adjusted equity Debt-to-equity ratio	December 31, 2022 $ 5,437,534 (2,144,613) 3,292,921 3,218,955 $ 6,511,876 % 50.57	December 31, 2021 5,511,496 (1,343,026) 4,168,470 3,106,769 7,275,239 % 57.30

(7) Related-party transactions:

(a) Names and relationship with related parties

Name of related party Relationship with the Group SEN JEWEL TECHNOLOGY CO., LTD. Same president with the Company TAI CHAM TECHNOLOGY CO., LTD. The entity’s chairman is the vice chairman of the Company

Yancheng Nanwei Composite Material R & D Co., Ltd.

Key management personnel of the entity is the subsidiary of the group

Feng-Ying Yeh Key management personnel Yao Wan-Kuei Key management personnel

(Continued)

64

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Significant transactions with related parties

(i) Sales

The amounts of sales to the related parties were as follows:

	For	the years ended December	the years ended December	31
		2022	2021
Other related party	$	-		150
Associates			593	32
	$		593	182

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) Receivables from Related Parties

The receivables from related parties were as follows:

Account	Relationship	December 31, 2022 $ - $ -	December 31, 2021
Account receivables Other receivables	Other related parties Other related parties		158
			200

(iii) Payables from Related Parties

Account	Relationship	December 31, 2022 $ -	December 31, 2021
Other payables due to related parties	Other related parties		4

(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, 2022 and 2021, there were $15 thousand and $60 thousand, respectively.

(v) Loans to related parties (accounted as other payables due to related parties)

Key management personnel-Feng Ying, Yeh Key management personnel-Yao Wan-Kuei Other related parties Range of interest rates	December 31, 2022 $ - 12,000 8,816 $ 20,816 2%~4%	December 31, 2021
		28,250 - -
		28,250
		4%

(Continued)

65

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Account	Relationship	December 31, 2022 December 31, 2021 $ 32 807 For the years ended December 31	December 31, 2022 December 31, 2021 $ 32 807 For the years ended December 31
Interest payable Account	Key management personnel Relationship
		2022 $ 523	2021
Interest expense	Key management personnel		807

No collaterals were pledged for the abovementioned loans.

(vi) Advance receipts

The advance receipts from related parties were as follows:

Other related parties	December 31, 2022 $ 690	December 31, 2021
		633

(c) Key management personnel compensation

Key management personnel compensation comprised:

Short-term employee benefits Post-employment benefits	For the years ended December 31	For the years ended December 31
	2022 $ 29,329 816 $ 30,145	2021
		30,309 723
		31,032

(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, 2022 $ - 191,200 1,090,034 1,236,035 65,524 $ 2,582,793	December 31, 2021
Account receivables Other financial assets－current and non-current Property, plant and equipment Investment property Right-of-use assets			4,666 190,238 1,201,403 1,068,630 76,463
			2,541,400

(Continued)

66

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(9) Commitments and contingencies:

• (a) Significant commitments and contingencies were as follows:

• (i) Unrecognized contractual commitments

Acquisition of property, plant and equipment Outstanding standby letter of oredit USD	December 31, 2022 $ - December 31, 2022 $ 7,314	December 31, 2021
		1,561
		December 31, 2021 12,036

• (ii) Outstanding standby letter of oredit

• (b) Significant contingent liability: None

(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 year ended December 31	For the year ended December 31	For the year ended December 31	For the year ended December 31	For the year ended December 31
	2022				2021
	Cost of Sale	Operating Expense	Total	Cost of Sale	Operating Expense	Total
Employee benefits
Salary	701,434	499,249	1,200,683	694,331	485,018	1,179,349
Labor and health insurance	49,030	37,806	86,836	50,020	37,389	87,409
Pension	20,706	24,320	45,026	19,987	23,200	43,187
Others	39,646	29,419	69,065	38,864	33,680	72,544
Depreciation	114,366	89,116	203,482	136,796	69,729	206,525
Depletion	-	-	-	-	-	-
Amortization	1,330	16,075	17,405	1,508	15,980	17,488

(Continued)

67

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:

(In Thousands of New Taiwan Dollars)

Number	Name of lender	Name of borrower	Account name	Related party	Highest balance of financing to other parties during the period	Ending balance	Actual usage amount during the period	Range of interest rates during the period	Purposes of fund financing for the borrower	Transaction amount for business between two parties	Reasons for short-term financing	Allowance for bad debt	Collateral	Collateral	Individual funding loan limits	Maximum limit of fund financing
													Item	Value
0	The Company	TRYD APPAREL	Other accounts receivable- related party	Yes	64,430	61,420	-	4%	2	-	Operating turnover	-	-	-	1,223,877	1,223,877
0	The Company	TRYD TEXTILE	〞	Yes	84,075	61,420	30,710	4%	2	-	Operating turnover	-	-	-	1,223,877	1,223,877
0	The Company	AIQ	〞	Yes	40,000	-	-	4%	2	-	Operating turnover	-	-	-	1,223,877	1,223,877
0	The Company	AIQ-S	〞	Yes	9,665	9,213	9,213	2.5%-4%	2	-	Operating turnover	-	-	-	1,223,877	1,223,877
1	Z-PLY(NY)	TRYD TEXTILE	〞	Yes	128,860	122,840	61,420	2.5%	2	-	Operating turnover	-	-	-	322,557	483,835
1	Z-PLY(NY)	TEXRAY (MEXICO)	〞	Yes	64,430	61,420	-	2.5%	2	-	Operating turnover	-	-	-	322,557	483,835
1	Z-PLY(NY)	AMRAY (MEXICO)	〞	Yes	32,215	30,710	-	2.5%	2	-	Operating turnover	-	-	-	322,557	483,835
2	TEX-RAY (SHANGHAI)	TRYD TEXTILE	〞	Yes	270,850	267,177	266,509	6%	2	-	Operating turnover	-	-	-	422,882	634,323
2	TEX-RAY (SHANGHAI)	TRYD APPAREL	〞	Yes	90,283	89,059	-	6%	2	-	Operating turnover	-	-	-	422,882	634,323
2	TEX-RAY (SHANGHAI)	AIQ(Zheiji ang)	〞	Yes	49,656	48,982	48,982	6%	2	-	Operating turnover	-	-	-	422,882	634,323
3	TEX-RAY (MEXICO)	AMRAY (MEXICO)	〞	Yes	81,182	78,771	49,626	2.5%	2	-	Operating turnover	-	-	-	293,086	439,629
4	TEX-RAY (CAYMAN)	TEXRAY (MEXICO)	〞	Yes	128,860	122,840	118,848	2.5-4%	2	-	Operating turnover	-	-	-	471,333	707,000
4	TEX-RAY (CAYMAN)	AMRAY (MEXICO)	〞	Yes	289,935	276,390	261,035	2.5-4%	2	-	Operating turnover	-	-	-	471,333	707,000
5	AIQ	AIQS	〞	Yes	4,832	-	-	4%	2	-	Operating turnover	-	-	-	578	578
6	ZHENG-RAY	HUAI WEI BIOTECH NOLOGY CO.,LTD	〞	Yes	10,000	-	-	4%	2	-	Operating turnover	-	-	-	43,326	43,326

Note 1: Financing purposes:

1) Business dealings

2) Short-term financing needs

• Note 2: The maximum limit of Capital Finance is limited to 40% of the company's net value, so the calculation is based on the net value of the most recent financial report. The calculation limit is 3,059,692 thousand NTD × 40% = 1,223,877 thousand NTD.

• Note 3: The loan amount of individual objects is limited to not more than 40% of the company's net value, so the calculation is based on the net value of the most recent financial report. The calculation limit is 3,059,692 thousand NTD × 40% = 1,223,877 thousand NTD.

• Note 4: The maximum limit of capital financing is limited to 40% of the net value of the financial report of the loan and the company. However, the maximum limit of 100% holding of foreign subsidiary financing is limited to 150% of the company’s financial report net value.

• Note 5: The loan amount of individual objects shall not exceed 40% of the subsidiary’s financial report net value. However, the amount of loans to individual objects between 100% held foreign subsidiaries shall not exceed 100% of the net value of the financial report of the subsidiary.

(Continued)

68

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Guarantees and endorsements for other parties:

									(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
No.	Name of guarantor	Counter-party of guarantee and endorsement		Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company
0	The Company	TRYD TEXTILE	2	1,529,846	969,517	783,105	458,531	230,808	% 25.59	3,059,692	Y	N	Y
0	The Company	TRYD APPAREL	2	1,529,846	225,505	214,970	145,565	51,589	% 7.03	3,059,692	Y	N	Y
0	The Company	TEX-RAY (VN)	2	1,529,846	64,430	61,420	-	-	% 2.01	3,059,692	Y	N	N
0	The Company	TEX-RAY (SHANGHAI)	2	1,529,846	108,340	106,871	87,500	-	% 3.49	3,059,692	Y	N	Y
0	The Company	TST	2	1,529,846	48,625	20,000	-	-	% 0.65	3,059,692	Y	N	N
0	The Company	AIQ	2	1,529,846	41,000	41,000	35,021	15,355	% 1.34	3,059,692	Y	N	N
0	The Company	WEI LI TEXTILE	2	1,529,846	100,000	100,000	50,607	-	% 3.27	3,059,692	Y	N	N
1 (	TEX-RAY SHANGHAI)	TEX-RAY (KUNSHAN)	2	422,882	45,142	44,530	30,280	-	% 10.53	634,323	N	N	Y
2	TRYD TEXTILE	TRYD APPAREL	4	1,529,846	180,567	178,118	178,118	190,989	% -	3,059,692	N	N	Y

• Note 1: The relationship between the guarantee and the guarantor are as follows:

• Transactions between the companies.

• The Company directly or indirectly holds more than 50% voting right.

• When other companies directly or indirectly hold more than 50% voting rights of the Company.

• The Company directly or indirectly holds more than 90% voting right.

• A company that is mutually protected under contractual requirements based on the needs of the contractor.

• A company that is endorsed by all the contributing shareholders in accordance with their shareholding ratio due to joint investment relationship.

• Under the Consumer Protection Act, performance guarantees for pre-sale contracts for companies in the same industry.

• Note 2: The maximum limit of endorsement guarantee is limited to not exceeding 100% of the net value of the company's latest financial report, so the calculation is based on the net value of the most recent financial report, and the calculation limit is 3,059,692 thousand NTD × 100% = 3,059,692 thousand NTD.

• Note 3: The limit for a single enterprise endorsement guarantee is limited to 50% of the net value of the company's latest financial report. Therefore, the calculation is based on the net value of the latest financial report. The calculation limit is 3,059,692 thousand NTD × 50% = 1,529,846 thousand NTD.

• Note 4: The amount of the endorsement guarantee provided to a single enterprise in business dealings shall not exceed the total amount of business dealings in the twelve months before the endorsement of the two parties.

Note 5: The maximum limit of overseas subsidiary endorsement guarantee is limited to 150% of the net value of each subsidiary's latest financial statement, and the limit of endorsement guarantee for individual objects is limited to 100% of the net value of each subsidiary's latest financial statement.

(iii) Securities held as of December 31, 2022 (excluding investment in subsidiaries, associates and joint ventures):

(In Thousands of New Taiwan Dollars)

Name of holder The Company The Company The Company	Category and name of security	Relationship with company	Account title	Ending balance	Ending balance	Ending balance	Ending balance	Highest Percentage of ownership (%)	Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
	SHIN ERA TECH	-	Non current financial assets at fair value through other comprehensive income	68	-	% 1.88	-	% 1.88
	Cayman iMaker Technlogy Inc.	-	Non current financial assets at fair value through other comprehensive income	800	-	% 8.80	-	% 8.80
	TAIWAN United Outdoor Group, Inc.	-	Non current financial assets at fair value through other comprehensive income	500	-	% 15.67	-	% 15.67

(Continued)

69

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of holder	Category and name of security	Relationship with company	Account title	Ending balance	Ending balance	Ending balance	Ending balance	Highest Percentage of ownership (%)	Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
The Company	PHYSICLO, Inc.	-	Non current financial assets at fair value through other comprehensive income	51	-	% 5.00	-	% 5.00
The Company	Uniigym Global	-	Non current financial assets at fair value through other comprehensive income	250	9,092	% 2.26	9,092	% 2.26
The Company	eAi Technologies Inc.	-	Non current financial assets at fair value through other comprehensive income	1,092	10,920	% 13.03	10,920	% 13.03
AIQ	Joiiup Technology Co., Ltd.	-	Non current financial assets at fair value through other comprehensive income	333	-	% 5.71	-	% 5.71
ZENG-RAY	SEN JEWEL TECHNOLOGY CO., LTD.	-	Non current financial assets at fair value through other comprehensive income	950	4,500	% 19.00	4,500	% 19.00

• Note: The stocks of unlisted OTC companies have no market price to follow, so they are listed based on the net equity value multiplied by the shareholding ratio 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:

					(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
Name of company	Category and name of security	Account name	Name of counter- party	Relationship with the company	Beginning Balance		Purchases		Sales				Ending Balance
					Shares	Amount	Shares	Amount	Shares	Price	Cost	Gain (loss) on disposal	Shares	Amount
TEX-RAY Industrial	Z-PLY CORPORTION	Investment accounted for asing equity method,net	FLYNN (SAMOA)	Subsidiary	-	-	200	314,491	-	-	-	-	200	314,491

(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:

(In Thousands of New Taiwan Dollars)

Name of company	Related party	Nature of relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transactions with terms different from others	Transactions with terms different from others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
The Company	Z-PLY(NY)	Subsidiary	Sale	$ (645,534)	% (22.43)	45 days	-		43,322	15.32%
The Company	T.Q.M. (SWAZILAND)	Sub-subsidiary	Sale	(243,332)	% (8.45)	30 days	-		63,901	22.59%
TRYD APPAREL	Z-PLY(NY)	Affiliated company	Sale	(161,834)	% (22.62)	90 days	-		30,848	17.73%
T.Q.M(SWAZILAND)	TEX-RAY(SA)	Parent company	Sale	(1,384,113)	% (95.80)	75 days	-		1,096,649	99.24%
KASUMI(SWAILAND)	T.Q.M (SWAZILAND)	Affiliated company	Sale	(180,367)	% (99.36)	75 days	-		379,695	99.99%
GOOD TIME	The Company	Ultimate Parent company	Sale	(124,237)	% (87.92)	60 days	-		-	-%
KMT	KMBV	Subsidiary	Sale	(129,708)	% (33.40)	60 days	-		28,051	40.82%

(Continued)

70

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of company	Related party	Nature of relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transactions with terms different from others	Transactions with terms different from others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
TEX-RAY(VN)	The Company	Ultimate Parent company	Sale	(275,624)	% (97.46)	60 days	-		-	-%
Z-PLY(NY)	The Company	Ultimate Parent company	Purchase	645,534	% 73.45	45 days	-		(43,322)	(56.56)%
T.Q.M(SWAZILAND)	The Company	Ultimate Parent company	Purchase	243,332	% 30.00	30 days	-		(63,901)	(11.70)%
TEX-RAY (SA)	T.Q.M (SWAZILAND)	Subsidiary	Purchase	1,384,113	% 99.52	75 days	-		(1,096,649)	(99.83)%
T.Q.M(SWAZILAND)	KASUMI (SWAZILAND)	Affiliated Company	Purchase	180,367	% 22.24	75 days	-		(379,695)	(69.55)%
The Company	GOOD TIME	Sub-subsidiary	Purchase	124,237	% 8.19	60 days	-		-	-%
KMBV	KMT	Subsidiary	Purchase	129,708	% 96.85	60 days	-		(28,051)	(99.60)%
The Company	TEX-RAY (VN)	Sub-subsidiary	Purchase	275,624	% 18.16	60 days	-		-	-%
Z-PLY(NY)	TRYD APPAREL	Affiliated company	Purchase	161,834	% 18.41	90 days	-		(30,848)	(40.27)%

(viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Counter-party	Nature of relationship	Ending balance	Turnover rate	Overdue	Overdue	Amounts received in subsequent period	Allowance for bad debts
					Amount	Action taken
T.Q.M.(SWAZILAND)	TEX-RAY(SA)	Parent company	1,096,649	1.29%	-		176,947	-
KASUMI(SWAILAND)	T.Q.M.(SWAZILAND)	Affiliated company	379,695	0.48%	-		12,841	-
TEXRAY(KUNSHAN)	TRYD APPAREL	Affiliated company	337,810	-	-		-	-
TEX-RAY (SHANGHAI)	TRYD TEXTILE	Affiliated company	266,509	(note 1)	-		-	-
TEX-RAY(CAYMAN)	TEX-RAY(MEXICO)	Subsidiary	261,035	(note 1)	-		-	-
TEX-RAY(CAYMAN)	AMRAY(MEXICO)	Subsidiary	118,848	(note 1)	-		-	-

Note 1: Loan provided by the related party.

(ix) Trading in derivative instruments: None

• (x) Business relationships and significant intercompany transactions:

(In Thousands of New Taiwan Dollars)

				(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
No.	Name of company	Name of counter-party	Nature of relationship	Intercompany transactions
				Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
0	The Company	Z-PLY(NY)	1	Sales revenue	645,534	Similar to non- related parties	10.53%
0	The Company	Z-PLY(NY)	1	Account receivable	43,322	Similar to non- related parties	0.50%
0	The Company	TEX-RAY(VN)	1	Other prepaid expenses	119,652	Similar to non- related parties	1.38%
0	The Company	TRCA GARMENT	1	Other prepaid expenses	23,797	Similar to non- related parties	0.27%
0	The Company	T.Q.M.(SWAZILAND)	1	Sales revenue	243,332	Similar to non- related parties	3.97%
0	The Company	T.Q.M.(SWAZILAND)	1	Account receivable	63,901	Similar to non- related parties	0.74%
0	The Company	GOOD TIME	1	Other prepaid expenses	32,203	Similar to non- related parties	0.37%
0	The Company	TRYD TEXTILE	1	Other receivable	30,710	By contract	0.35%
1	TEX-RAY(CAYMAN)	AMRAY(MEXICO)	1	Other receivable	261,035	By contract	3.02%
1	TEX-RAY(CAYMAN)	TEX-RAY(MEXICO)	1	Other receivable	118,848	By contract	1.37%
2	TRYD APPAREL	TEX-RAY (SHANGHAI)	1	Sales revenue	67,491	Similar to non- related parties	1.10%
2	TRYD APPAREL	TEX-RAY (SHANGHAI)	1	Account receivable	48,607	Similar to non- related parties	0.56%
2	TRYD APPAREL	The Company	1	Account receivable	16,237	Similar to non- related parties	0.19%
2	TRYD APPAREL	The Company	1	Sales revenue	91,701	Similar to non- related parties	1.50%
2	TRYD APPAREL	Z-PLY (NY)	1	Sales revenue	161,834	Similar to non- related parties	2.64%

(Continued)

71

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

No.	Name of company	Name of counter-party	Nature of relationship	Intercompany transactions	Intercompany transactions	Intercompany transactions	Intercompany transactions
				Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
2	TRYD APPAREL	Z-PLY (NY)	3	Account receivable	30,848	Similar to non- related parties	0.36%
3	TEX-RAY (SHANGHAI)	The Company	2	Sales revenue	58,320	Similar to non- related parties	0.95%
3	TEX-RAY (SHANGHAI)	Z-PLY (NY)	3	Sales revenue	65,376	Similar to non- related parties	1.07%
3	TEX-RAY (SHANGHAI)	TRYD APPAREL	3	Sales revenue	62,224	Similar to non- related parties	1.02%
3	TEX-RAY (SHANGHAI)	TEX-RAY (YANCHENG)	3	Account receivable	59,355	Similar to non- related parties	0.69%
3	TEX-RAY (SHANGHAI)	TRYD TEXTILE	2	Other receivable	266,509	By contract	3.08%
3	TEX-RAY (SHANGHAI)	TRYD TEXTILE	3	Sales revenue	19,990	Similar to non- related parties	0.33%
3	TEX-RAY (SHANGHAI)	AIQ (Zhejieng)	3	Other receivable	48,982	By contract	0.57%
4	T.Q.M(SWAZILAND)	TEX-RAY (SA)	3	Account receivable	1,096,649	Similar to non- related parties	12.67%
4	T.Q.M(SWAZILAND)	TEX-RAY (SA)	3	Sales revenue	1,384,113	Similar to non- related parties	22.58%
5	KASUMI(SWAILAND)	T.Q.M.(SWAZILAND)	3	Account receivable	379,695	Similar to non- related parties	4.39%
5	KASUMI(SWAILAND)	T.Q.M.(SWAZILAND)	3	Sales revenue	180,367	Similar to non- related parties	2.94%
6	GOLDEN JUBILEE	T.Q.M.(SWAZILAND)	3	Sales revenue	62,897	Similar to non- related parties	1.03%
6	GOLDEN JUBILEE	T.Q.M.(SWAZILAND)	3	Account receivable	25,538	Similar to non- related parties	0.30%
7	GOOD TIME	The Company	2	Processing revenue	124,237	Similar to non- related parties	2.03%
8	MSWATI	TRYD APPAREL	3	Other receivable	21,483	Similar to non- related parties	0.25%
9	AMRAY(MEXICO)	TRLA GROUP	3	Sales revenue	80,987	Similar to non- related parties	1.32%
10	TEX-RAY(MEXICO)	AMRAY(MEXICO)	3	Account receivable	44,413	Similar to non- related parties	0.51%
10	TEX-RAY(MEXICO)	AMRAY(MEXICO)	3	Other receivable	49,626	By contract	0.57%
10	TEX-RAY(MEXICO)	AMRAY(MEXICO)	3	Prepayment for purchases	65,935	Similar to non- related parties	0.76%
11	Z-PLY(NY)	TRYD TEXTILE	3	Other receivable	61,420	By contract	0.71%
12	KMT	KMBV	3	Sales revenue	129,708	Fixed profit margin	2.12%
12	KMT	KMBV	3	Account receivable	28,051	Similar to non- related parties	0.32%
13	TEX-RAY(VN)	The Company	2	Processing revenue	275,624	Similar to non- related parties	4.50%
14	TRYD TEXTILE	TRYD APPAREL	3	Sales revenue	72,852	Similar to non- related parties	1.19%
14	TRYD TEXTILE	TRYD APPAREL	3	Account receivable	17,937	Similar to non- related parties	0.21%
14	TRYD TEXTILE	TEX-RAY (SHANG HAI)	3	Sales revenue	17,198	Similar to non- related parties	0.28%
15	TEX-RAY (KUNSHAN)	TRYD APPAREL	3	Account receivable	95,172	Similar to non- related parties	1.10%
15	TEX-RAY (KUNSHAN)	TEX-RAY (SHANG HAI)	3	Sales revenue	40,965	Similar to non- related parties	0.67%
16	TEX-RAY (YANCHENG)	TRYD APPAREL	3	Sales revenue	21,239	Similar to non- related parties	0.35%
17	FLYNN(SAMOA)	The Company	3	Other receivable	337,810	By contract	3.90%

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 its subsidiaries

(Continued)

72

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Information on investees:

The following is the information on investees for the years ended December 31, 2022 (excluding information on investees in Mainland China):

(In Thousands of New Taiwan Dollars)

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2022	Balance as of December 31, 2022	Balance as of December 31, 2022	Highest Percentage of wnership	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2022	December 31, 2021	Shares (thousands)	Percentage of wnership	Carrying value
The Company	Great CPT	TAIWAN	Overseas investment holding	124,370	104,370	5,000,000	% 100.00	66,549	% 100.00	(7,563)	(7,661)	Subsidiary
The Company	KMT	TAIWAN	Non-woven fabrics, copper secondary processing and fabric retailing, etc	83,002	83,002	12,924,963	% 59.22	217,818	% 59.22	68,734	40,702	Subsidiary
The Company	ZHENG-RAY	TAIWAN	Trading and manufacturing of Spinning and weaving	63,000	63,000	11,580,000	% 100.00	77,874	% 100.00	(4,222)	(5,362)	Subsidiary
The Company	WLT	TAIWAN	Wholesale trade	27,440	27,440	2,744,000	% 68.60	(20,145)	% 68.60	(27,548)	(18,898)	Subsidiary
The Company	FLYNN (SAMOA)	SAMOA	Overseas investment holding	310,613	310,613	9,100,000	% 100.00	356,880	% 100.00	11,190	11,190	Subsidiary
The Company	TEX-RAY (BELIZE)	BELIZE	Overseas investment holding	1,063,287	1,063,287	32,348,213	% 100.00	423,900	% 100.00	1,022	1,022	Subsidiary
The Company	TEX-RAY (BN)	SAMOA	Overseas investment holding	1,756,813	1,756,813	60,579,330	% 100.00	(384,978)	% 100.00	(221,040)	(221,040)	Subsidiary
The Company	TEX-RAY (SA)	SOUTH AFRICA	Marketing and trading	102,704	102,704	39,651,771	% 100.00	1,470,477	% 100.00	228,908	228,908	Subsidiary
The Company	TEX-RAY (CAYMAN)	CAYMAN	Overseas investment holding	1,414,580	1,353,739	46,042,722	% 100.00	471,334	% 100.00	(85,597)	(85,597)	Subsidiary
The Company	AIQ	TAIWAN	Wholesale trade	163,512	163,512	11,503,200	% 70.44	1,019	% 70.44	(54,561)	(38,434)	Subsidiary
The Company	Z-PLY (NY)	USA	Marketing and trading	314,491	-	200	% 100.00	483,809	% 100.00	11,801	-	Subsidiary
The Company	TRLA GROUP	USA	Marketing and trading	42,109	-	2,936,000	% 100.00	40,960	% 100.00	(611)	-	Subsidiary
TEX-RAY (BN)	GOOD TIME	VIETNAM	Garment processing	227,750	227,750	-	% 100.00	11,528	% 100.00	15,997	Exempt from disclosure	Sub-subsidiary
TEX-RAY (BN)	MSWATI	MAURITIUS	Overseas investment holding	1,160,125	1,160,125	-	% 100.00	(513,076)	% 100.00	(204,685)	Exempt from disclosure	Sub-subsidiary
TEX-RAY (BN)	TEXRAY (VN)	VIETNAM	Garment processing	423,990	423,990	-	% 100.00	134,325	% 100.00	(27,231)	Exempt from disclosure	Sub-subsidiary
TEX-RAY (BN)	TRCA GARMENT	CAMBODIA	Garment processing	63,564	63,564	-	% 100.00	(23,644)	% 100.00	-	Exempt from disclosure	Sub-subsidiary
FLYNN (SAMOA)	TRLA GROUP	USA	Marketing and trading	-	18,384	-	% -	-	% 100.00	(611)	Exempt from disclosure	Sub-subsidiary
FLYNN (SAMOA)	Z-PLY (NY)	USA	Marketing and trading	-	260,443	-	% -	-	% 100.00	11,801	Exempt from disclosure	Sub-subsidiary
Great CPT	TEXRAY (SWAZILAND)	ESWATINI	Garment processing	158,524	158,524	12,417,938	% 100.00	3,622	% 100.00	169	Exempt from disclosure	Sub-subsidiary
ZHENG-RAY	HUAI WEI BIOTECHNOL OGY CO.,LTD	TAIWAN	Biotechnology Service	9,540	9,540	1,200,000	% 60.00	(2,255)	% 60.00	(12,509)	Exempt from disclosure	Sub-subsidiary
ZHENG-RAY	TST	TAIWAN	Printing and dyeing finishing, machinery and equioment manufacturing and whole sale, etc.	68,067	68,067	5,067,217	% 75.63	56,708	% 75.63	5,173	Exempt from disclosure	Sub-subsidiary
KMT	KMBV	NETHERLANDS	Marketing and trading	7,950	7,950	200,000	% 100.00	10,370	% 100.00	1,179	Exempt from disclosure	Sub-subsidiary
AIQ	AIQ-S	UK	Development of smart clothing technology	15,419	15,419	396,266	% 50.00	(1,774)	% 50.00	(5,608)	Exempt from disclosure	Sub-subsidiary
AIQ	Taiwan Innoration(HK)	HONG KONG	Development of smart clothing technology	390	390	100,000	% 100.00	(2,229)	% 100.00	(1,453)	Exempt from disclosure	Sub-subsidiary
TEX-RAY (CAYMAN)	TEXRAY (MEXICO)	MEXICO	Dyeing	1,168,882	1,168,882	-	% 100.00	293,086	% 100.00	9,099	Exempt from disclosure	Sub-subsidiary
TEX-RAY (CAYMAN)	AMRAY (MEXICO)	MEXICO	Garment processing	178,119	178,119	-	% 100.00	(265,690)	% 100.00	(100,247)	Exempt from disclosure	Sub-subsidiary
TEXRAY (SA)	KASUMI (SWAZILAND)	ESWATINI	Trading and manufacturing of Spinning and weaving	43,461	43,461	1,657,400	% 100.00	375,413	% 100.00	(111)	Exempt from disclosure	Sub-subsidiary
TEXRAY (SA)	T.Q.M.(SWAZI LAND)	ESWATINI	Dyeing	569,316	569,316	132,525,183	% 100.00	1,154,231	% 100.00	110,494	Exempt from disclosure	Sub-subsidiary
TEXRAY (SA)	U.I.W.(SWAZI LAND)	ESWATINI	Garment processing	47,508	47,508	12,031,000	% 100.00	20,157	% 100.00	120	Exempt from disclosure	Sub-subsidiary
TEXRAY (SA)	J.M. Rotary Print Industrial Co.,Ltd.	ESWATINI	Dyeing and finishing of fabrics, clothing sales	12,908	12,908	5,618,729	% 100.00	4,241	% 100.00	5,202	Exempt from disclosure	Sub-subsidiary
TEXRAY (SA)	GOLDEN JUBILEE APPAREL (PTY) LTD.	ESWATINI	Garment processing	10,800	10,800	5,000,000	% 100.00	42,275	% 100.00	5,290	Exempt from disclosure	Sub-subsidiary

Note : Voting interest percentage differed due to secured bonds converted to ordinary shares.

(Continued)

73

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(c) Information on investment in Mainland China:

• (i) The names of investees in Mainland China, the main businesses and products, and other information:

(In Thousands of New Taiwan Dollars)

Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2021	Investment flows	Investment flows	Accumulated outflow of investment from Taiwan as of December 31, 2022	Net income (losses) of the investee	Percentage of ownership	Highest 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	1,163	100.00%	100.00%	1,163	422,882	-
TEX-RAY (YANCHENG)	Manufacturing and sales of textiles, clothing, shoes and hats	45,527	( 3 )	-	-	-	-	(4,932)	100.00%	100.00%	(4,932)	(54,778)	-
TEXRAY(KU NSHAN)	Development of composite fabrics	168,268	( 3 )	-	-	-	-	1,486	100.00%	100.00%	1,486	187,851	-
TRYD TEXTILE	Garment processing and engaged in spinning, weaving, highend fabrics, bleaching and dyeing, printing and garment production	1,749,139	( 2 )	1,235,108	-	-	1,235,108	(146,480)	100.00%	100.00%	(146,480)	(233,485)	-
TRYD ARRAREL	Knitted garment processing	164,220	( 2 )	86,711	-	-	86,711	(60,934)	100.00%	100.00%	(60,934)	(188,262)	-
KING’S METAL FIBER (SHANGHAI)	Wholesale of glass products, high-efficiency insulation materials, textiles, clothing, apparel and accessories	62,008	( 2 )	51,221	10,787	-	62,008	(20,577)	70.44%	70.44%	(14,494)	(11,702)	-
AIQ (Zhejiang)	System development, production and sales of smart devices	20,947	( 3 )	-	-	-	-	(20,643)	70.44%	70.44%	(14,541)	(23,770)	-
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 material	49,149	( 3 )	-	-	-	-	-	-%	-%	-	-	-
Wei-Da Testing	Testing service and environmental assessment	31,065	( 3 )	-	-	-	-	2,134	100.00%	100.00%	2,134	9,366	-
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	-	-%	-%	-	-	-

(Continued)

74

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

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.

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 deregistered in June 2012, and only the investment fund was remitted back to the upper parent company MSWATI.

Note 7: The numbers listed above are presented in NTD, according to the currency rate on December 31, 2022. (USD: 30.710, CNY: 4.4080)

(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 July 12, 2021. The validity period is from June 29, 2021 to June 28, 2024, and there is no such restriction of ceiling on investment in Mainland China.

• (iii) Significant transactions:

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

(d) Major shareholders:

Major shareholders:
Shareholding Shareholder’s Name	Shares	Percentage
Yue-Da Textile holdings, Ltd B.V	42,052,440	% 17.99
Nan-Yu, Guo	23,680,000	% 10.13
Suzhou Wei-De Co., Ltd.	23,362,466	% 9.99
Feng-Ying, Yeh	14,280,000	% 6.11

(Continued)

75

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(14) Segment information:

• (a) General information

• (i) The Group’s reportable segments are as below: the dyeing and wearing segment, the garment pracess segment, the Machine manufacturing segment, the Metal Fiber 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) “Sumrnary 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.

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

For the year ended December 31, 2022 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	Dyeing and weaving segment $ 529,738 595,207 $ 1,124,945 $ 2,667 $ 47,353 $ 65,467 $ - $ (22,653)		Garment processing segment	Machine Manufacturing segment 105,166 520 105,686 190 48 3,492 - 3,098	Metal Fiber segment 491,044 160,677 651,721 415 11,947 34,642 - 29,448	Other 23,694 255,130 278,824 11,825 35,764 34,517 - (159,489)	Adjustment and eliminations - (3,941,046) (3,941,046) (30,495) (30,495) - - -	Total 6,129,220 -
			4,979,578 2,929,512 7,909,090 47,838 35,364 82,769 - 194,899
								6,129,220
								32,440
								99,981
								220,887
								-
								45,303

(Continued)

76

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

For the year ended December 31, 2021 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	Dyeing and weaving segment $ 527,102 497,225 $ 1,024,327 $ 1,896 $ 45,078 $ 79,941 $ - $ (47,030)		Garment processing segment	Machine Manufacturing segment 76,406 158 76,564 13 230 3,242 - 1,017	Metal Fiber segment 401,232 148,028 549,260 42 8,501 29,486 - 9,666	Other 29,154 227,967 257,121 5,811 32,630 28,625 - (127,233)	Adjustment and eliminations - (3,816,305) (3,816,305) (20,466) (20,466) - - -	Total 6,637,936 -
			5,604,042 2,942,927 8,546,969 33,631 28,946 82,719 - 237,242
								6,637,936
								20,927
								94,919
								224,013
								-
								73,662

Note:The departmental assets and liabilities information of the Group is not provided to the main management for reference or for decision-making purposes, and there is no need to disclose departmental assets and liabilities.

(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(z) and 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	For the years ended December 31
	2022 $ 2,376,040 65,734 727,363 297,853 240,874 237,730 21,873 $ 3,967,467	2021
		2,129,849 210,001 784,663 250,631 299,099 245,065 25,684
		3,944,992

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).

(Continued)

77

TEX-RAY INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(d) Major customers

Customer A from garment processing segment Customer B from garment processing segment Customer C from garment processing segment	For the years ended December 31	For the years ended December 31
	2022 $ 604,293 517,812 510,673 $ 1,632,778	2021
		549,194 604,206 647,228
		1,800,628