TST Group - Annual Report 2020 | FinancialReports.eu

Stock Code: 4439

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TST Group Holding Ltd. `冠星集團控股有限公司`

ANNUAL REPORT 2020

Published on April 18, 2021 Company Website: http://www.tstco.com.hk MOPS Website: http://mops.twse.com.tw

I. Name, Title, Telephone and Email of Company Spokesperson, Deputy Spokesperson and Domestic Agent:

Name of Spokesperson: LIN, CHING-WEI Title: General Manager Telephone: +886-2-2507-9938 Email address: [email protected] Name of Deputy Spokesperson: HUNG, Title: Chief Operating Officer (COO) HSIANG-MING Telephone: +886-2-2507-9938 Email address: [email protected] Name of Domestic Agent: HUNG, HSIANGTitle: Chief Operating Officer (COO) MING Telephone: +886-2-2507-9938 Email address: [email protected] II. Address and Telephone of Head Office, Branch, Factory (I) This Company Name: TST Group Holding Ltd. Address: P.O. Box 472 Harbour Place, 2nd Floor 103 South Church Street George Town, Grand Cayman Cayman Islands KY1-1106 Website: http://www.tstco.com.hk Telephone: +852-2947-0218 (II) Subsidiary in British Virgin Islands Name: TST International Group Limited Address: Jayla Place,2nd Floor, P.O Box 216,Road Town Tortola, British Virgin Islands Website: http://www.tstco.com.hk Telephone: +852-2947-0218 Name: Bumper World Group Holdings Limited Address: Jayla Place, 2nd Floor, P.O Box 216,Road Town Tortola, British Virgin Islands Website: http://www.tstco.com.hk Telephone: +852-2947-0218 Name: Thrive Nation Group Limited Address: Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands Website: http://www.tstco.com.hk Telephone: +852-2947-0218 (III) Subsidiary in Hong Kong Name: Top Star Textile Limited Address: Room 1301, 13F, New East Ocean Centre, 9 Science Museum Road, Kowloon, Hong Kong Website: http://www.tstco.com.hk Telephone: +852-2947-0218 (IV) Subsidiary in Mainland China Name: Taiju Textile (Shanghai) Co., Ltd. Address: Room 3076, Building B, No. 555, Dongchuang Rd., Minxing District, Shanghai City Website: http://www.tstco.com.hk Telephone: +8621-3251-3055 Name: Guangzhou Liangwei Knitted Fabric and Textile Co., Ltd. Address: Room 712 (self-organized), Level 7, No. 140-148, Tiyu E. Rd., Tianhe District, Guangzhou City Website: http://www.tstco.com.hk Telephone: +8620-3887-8266 Name: Taiju Management & Consulting (Guangzhou) Co., Ltd. Address: Room 1911, No.140-148, Tiyu E. Road, Tianhe District, Guangzhou City Website: http://www.tstco.com.hk Telephone: +8620-3887-8258 (V) Subsidiary in Cambodia Name: Top Sports Textile Ltd. Address: Manhattan (Svay Rieng) Special Economic Zone, National Road# 1, Sangkat Bavet, Krong Bavet, Svay Rieng Province, Cambodia Website: http://www.tstco.com.hk Telephone: +855-44-715-188

(VI) Office in Taiwan

Name: TST Group Holding Ltd. Address: 7F, No. 178, Sec. 2, Nanking E. Rd., Zhongshan District, Taipei City 104 Website: http://www.tstco.com.hk Telephone: +886-2-2507-9938

(VII) Subsidiary in Vietnam

Name: TOP STAR TEXTILE VIETNAM COMPANY LIMITED Address: Road No. 3, Xuyen A Industrial Park, My Hanh Bac Commune, Duc Hoa District, Long An province, Vietnam Website: http://www.tstco.com.hk Telephone: +84-90-892-6858 Name: Top Sports Textile Vietnam Co., Ltd Address: Lot No. B17.1, Street N11, Thanh Thanh Cong Industrial Zone, An Hoi Quarter Website: http://www.tstco.com.hk Telephone: +84-28-3962-6698

III. Names, titles, telephone numbers and emails of the representatives for litigations and for non-litigation matters in the Republic of China:

Name: HUNG, HSIANG-MING Title: Chief Operating Officer (COO) Telephone: +886-2-2507-9938 Email: [email protected]

IV. Name, Address, Website and Telephone of Share Transfer Agent: Name: Yuanta Securities Co., Ltd. Registrar & Transfer Agency Department Website: http://www.yuanta.com.tw

Address: Base 1F, No.210, Sec. 3, Chengde Rd., Taipei City Telephone: +886-2-2586-5859

V. Name, Address, Website and Telephone of CPA of financial statements in the most recent year: Name of CPA: CPA Juanlu, Man-Yu, CPA Lin, Ya-Hui
Name of CPA Firm: PricewaterhouseCoopers Taiwan (PwC Taiwan) Website: http://www.pwc.tw Address: 27F, No.333, Sec. 1, Keelung Rd., Xinyi District, Taipei City Telephone: +886-2-2729-6666
VI. Name of the stock exchange where overseas marketable securities are listed, and the method to inquire the information in relation to such securities: None
VII. Company Website: http://www.tstco.com.hk
VIII. List of Board of Directors

Title	Name	Representative
Chairman	Xingmao Group Holdings Limited	LIN, CHIN-MAO
Director	ChiaMei Investment Co.,Ltd.	TUNG, CHIUNG-SHIUNG
Director	LIN, CHING-WEI	-
Director	HUNG,HSIANG-MING	-

Title	Name	Nationality	Academic Qualifications/Experience
Independent Director	LIEN, KING-BIAU	Republic of China	Executive President, Tuntex Incorporation Independent Director, Tainan Enterprises Co., Ltd.
Independent Director	LEE, KUN- MING	Republic of China	Independent Director, The Leofoo Development Co., Ltd. Supervisor, Castles Technology Co., Ltd. CPA Partner, K & B CPAs Firm
Independent Director	LIU, HENG- YIH	Republic of China	Independent Director, The Leofoo Development Co., Ltd. Independent Director, Dynamic Electronics Co., Ltd. Independent Director, WHA YU Industrial Co., Ltd. Supervisor, Sinfu Asset Management Company Full time Associate Professor, College of Management, Yuan Ze University and Director, Institute for Knowledge Services and Innovation

One. Letter to Our Shareholders ........................................................................................................ 1	One. Letter to Our Shareholders ........................................................................................................ 1
Two. Company Profile ....................................................................................................................... 3
I.	Establishment ................................................................................................................... 3
II.	Company background ....................................................................................................... 3
Three.	Report on Corporate Governance ..................................................................................... 4
I.	Organization ..................................................................................................................... 4
II.	Information on the Directors, Supervisors, General Manager, Vice General Managers,
	Senior Managers and the Managers of Each Department and Branch ............................. 6
III.	Remuneration Paid to Directors, Supervisors, General Manager and Vice General
	Managers in the most recent year ................................................................................... 12
IV.	Corporate Governance .................................................................................................... 16
V.	Information on Certified Public Accountant’s audit fees ............................................... 44
VI.	Information of a change (replacement) in the Certified Public Accountants (CPAs) .... 45
VII.	The Company’s Chairman, General Manager, managers in charge of financial affairs
	and accounting who have served with the office of a Certified Public Accountant or its
	affiliates .......................................................................................................................... 45
VIII.	The fact that during the most recent year and as of the print date of this annual report,
	transfer of shares, pledge or change in equity held by the directors, supervisors,
	managers and major shareholders holding over 10% of the aggregate total .................. 45
IX.	Top 10 shareholders who are related parties, spouses or relatives with two degrees ..... 47
X.	Holdings by directors, managers or the entities directly or indirectly controlled by the
	Company in the same investee ....................................................................................... 48
Four. Facts	of Capital Raising .......................................................................................................... 49
I.	Capital and Shares .......................................................................................................... 49
II.	Issuance of corporate bonds ........................................................................................... 53
III.	Issuance of preferred shares ........................................................................................... 53
IV.	Issuance of overseas deposit receipt certificates (DRC) ................................................ 53
V.	Issuance of employee stock option certificates .............................................................. 53
VI.	New shares to employees with restricted rights ............................................................. 53
VII.	Merger/acquisition (M&A) or inward transfer of other firms’ new shares: None ......... 53
VIII.	Implementation of capital utilization plans .................................................................... 53
Five. Business Performance in Brief ................................................................................................ 54
I.	Business Lines ............................................................................................................... 54
II.	Markets, Sales & Distributions ..................................................................................... 61

III.	Number of employees, average number of years of service, average age and academic
	degree credential distribution ratio during the most recent year and as of the print date
	of this annual report ........................................................................................................ 69
IV.	Information of expenditures for environmental protection ............................................ 70
V.	Employment Relationships ............................................................................................. 71
VI.	Key agreements .............................................................................................................. 71
Six. Financial Highlights ................................................................................................................ 73
I.	The condensed balance sheet and Statement of Comprehensive Income for the last five
	years ................................................................................................................................ 73
II.	Financial Analyses for the last five years ....................................................................... 75
III.	Audit Report of the Audit Committee for the Financial Statements in the most recent
	year. ................................................................................................................................ 76
IV.	Financial statements, auditors’ reports, balance sheets, income statements, statement of
	change in equity, and cash flows statements during the most recent two years, footnotes,
	and tables. ....................................................................................................................... 76
V.	The Parent Company Only financial report of the Company that had been verified by
	the Certified Public Accountant in the most recent year: The Company is a foreign issuer
	and hence, this is not applicable. .................................................................................... 76
VI.	The financial problems of the Company and its affiliates found during the most recent
	year and as of the print date of this annual report issuance and the impact of such
	problems upon the Company’s financial position .......................................................... 76
Seven.	Review of Financial Position, Financial Performance, and Risks Related Issues.......... 77
I.	Financial Position ........................................................................................................... 77
II.	Individual financial statement ........................................................................................ 78
III.	Cash flow: ....................................................................................................................... 79
IV.	Impact of major capital expenditures on financials during the most recent year ........... 79
V.	Equity investment policy, investment gains/losses during the most recent year,
	improvement measures and investment plans for the next year ..................................... 80
VI.	Risk Assessments ........................................................................................................... 81
VII.	Other significant events .................................................................................................. 84
Eight.	Special Disclosure .......................................................................................................... 85

One. Letter to Our Shareholders

Dear Shareholders:

The year 2020 was turbulent due to the pandemic and the global economic recession. Countries around the world implemented control measures such as lockdowns, suspension of operations and closing the borders, in order to curb COVID-19. The orders from brand customers suddenly plummeted as their shops were temporarily shut. Indeed, all these uncertainties made the year extremely difficult. The Company’s increase of internal capacities during the year helped to control the attribution. Higher utilization reduces the fixed costs per unit, and this was reflected in the gross margin. As the pandemic gradually eased, the outlook turned positive in the second half of the year.

(1) Overview of 2020 Business Plan Implementations and Explanation of Operating Results and Achievements
Implementation of 2020 Business Plan
- (1) Acceleration of capacity increase in Southeast Asia: The factory expansion, phaseout of old equipment and installation of new machinery in Cambodia boosted the Company’s internal capacity from 35% to 45%.
- (2) Deepening of customer relations and development of new clientele: The Company became a supplier to NIKE and continued to develop branded customers in China during the year. In terms of customer satisfaction, the Company received Adidas’ 2020 Sustainability award as a fabric supplier in North Asia.
Achievements of Implementation of 2020 Business Plan and Execution of Budget The Company posted net sales of NT$5,389 million in 2020, down by 26.76% or NT$1,969 million from 2019. The operating profit was NT$555 million in 2020, up by 0.56% or NT$3 million from 2019. The net income reached NT$416 million in 2020, up by 7.19% or NT$28 million from 2019. The earnings per share was NT$13.25 in 2020.

Comparison with guidance:

According to the Regulations Governing the Publication of Financial Forecasts of Public Companies, the Company did not provide financial forecast for 2020. Hence, there is no comparison with guidance.

Income Statement and Profitability Analysis

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Expressed in Thousands of New Taiwan Dollars
Year 2020 2019
Item
Income Revenues 5,389,194 7,358,438
Statement Gross profits 1,169,454 1,276,221
(Summary) Operating profits 555,037 551,958
Current profit/loss after-tax 416,040 388,128
Return on assets (%) 10.48 11.99
Profitability Return on equity (%) 17.50 23.68
Operating profits as a percentage 176.20 175.22
of paid-in capital (%)
Net profits before-tax as a 170.65 165.22
percentage of paid-in capital (%)
Net margin (%) 7.72 5.27
Basic EPS (NT$) 13.25 13.92
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(2) 2021 Business Plan

Deepening of footprint in Southeast Asia

Before the pandemic, branded customers sought to consolidate suppliers with one-stop management and supplies came from all over the world. After the COVID-19 breakout, local sourcing was emphasized to avoid supply chain disruptions. The trade war between China and the US has affected suppliers in the region, altered the dynamics of the global economy, and changed the landscape of the textile industry’s supply chain. The Company decided to set up an integrated facility for weaving and dyeing in Vietnam. This facility is expected to boost our capacity by 20-30%.

Development of new branded customers in China Most of the brands in China have made overseas acquisitions and they need partners in order to become international brands. As a long-standing business in the international brand market, the Company boasts the advantage in leading and connecting with the world and hence has the confidence to become a good partner to Chinese brands by offering the leadership
(3) R&D Initiatives for 2021

To meet with the need of branded customers, we develop fabrics and improve a diversity of new fabrics by optimizing and bettering existing manufacturing processes and materials utilization. The purpose is to provide a portfolio of new products differentiated and with high value added.

In response to customers’ requirements, the Company’s short-term plan is to establish the facility in Vietnam, so that we have internal capacities in Cambodia and Vietnam and suppliers in China. This will be a breakthrough from the status quo with repositioning for the group. It will enhance our leadership further ahead of competitors and boost our profits with a blue ocean strategy for the constantly changing marketplace.

Finally, allow me to wish all our shareholders all the best. Thanks for your support.

LIN, CHIN-MAO Chairman XINGMAO GROUP HOLDINGS LIMITED

Two. Company Profile

I. Establishment: May 21, 2013

II. Company background

TST Group Holding Ltd. (the Company), incorporated on May 21, 2013 in the Cayman Islands, is primarily engaged in the manufacturing, processing, and marketing of knitted fabrics.

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Year Milestone
1995 Jupiter Textile Company Limited was established in Hong Kong in 1991 and
renamed Top Star Textile Limited in 1995.
1995 Offices were set up in Guangdong, China, as the beginning of our supply chain
in the coastal region of Southern China.
1997 We became Adidas’s designated supplier for fabrics.
2002 We collaborated with Wuhan Textile University by hiring its professors as our
advisors in technology, education, and talent pipeline.
2003 Offices were set up in Shanghai, China, as the beginning of our supply chain in
the coastal region of Eastern China.
2006 Taiju Textile (Shanghai) was established in Shanghai.
2009 As Li Ning shifted its supply chain to Central China, we invested in Hubei
LPV Sports Co., Ltd. as the entry point into ready-garment manufacturing. We
also started to build our supply chain in Hubei, Central China.
2011 We established Top Sports Textile Ltd.. (100% owned) in Manhattan Special
Economic Zone (SEZ) in Svay Rieng Province, Cambodia. This vertically
integrated dyeing and finishing facility marked the beginning of our production
in South East Asia.
2015 We worked with Wuhan Textile University for R&D and patent technology.
2019 We completed a cash injection of NT$50 million in February to increase our
paid-in capital to NT$280 million.
The Board of Directors approved the expansion project for Top Sports Textile
Ltd.
As required for business, we set up a subsidiary in Vietnam, Top Star Textile
Vietnam Company Limited, via TST International Group Limited.
T-Young International Industrial Limited completed its liquidation.
We issued 3.5 million new shares before IPO, to bring our paid-in capital to
NT$315 million.
In December, the Company was successfully listed on the Taiwan Stock
Exchange.
2020 Buy back 151,000 treasury shares.
We established a new subsidiary, Thrive Nation Group Limited, through TST
International Group Limited.
The board of directors approved for the building of a weaving & dyeing factory
in Vietnam. The estimated investment amount was US$35,000 thousand.
2021 We reinvested and established a new subsidiary in Vietnam, Top Sports Textile
Vietnam Co., Ltd. through Thrive Nation Group Limited.
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Three. Report on Corporate Governance

I. Organization

(I) Company structure

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Annual Meeting of Shareholders
Board of Directors
Audit Committee
Auditor’s Office
Remuneration
Chairman’s Office
Committee
Finance &
General General
Accounting
Affairs Manager’s
Department
Dept. Office
Sales & Market Quality Production &
Procurement
Marketing Development Assurance Manufacturing R&D Dept.
Dept.
Dept. Dept. Dept. Dept.
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(II) Departments & Functions

) Departments & Functions	) Departments & Functions
Department Functions
Board of Directors Implementation of decisions by shareholder meetings and formation of business plans and investment projects within the scope authorized by shareholder meetings.
Remuneration Committee Design and periodical review of the performance of directors and managers, and the policy, system, standard and structure of wages and compensations. Regular assessment and decision of the remunerations (contents and amounts) to directors and managers and suggestion to the Board of Directors accordingly.
Audit Committee Oversight of the group’s business and financials, the appropriate representation of financial statements and the effectiveness of internal control systems.
Chairman’s Office General Manager’s Office	Establishment and strengthening of the group’s management system and organizational structure; execution of proposals approved by the Board of Directors; management of company affairs; realization of management and developmentgoals for thegroup.

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Department Functions
Supervision and implementation of audits in different departments
Auditor’s Office and internal control mechanisms, development of improvement
measures and follow up with the progress of such measures.
Sales & Marketing Production marketing in the global market and collection of customer
Department data.
Human resources management, administration, legal affairs,
General Affairs
information management, business ethics, environmental protection,
Department
policing, labor health and safety.
Finance &
Bookkeeping, formulation and implementation of accounting policies,
Accounting
capital planning and working capital management.
Department
Product R&D, new product risk assessment, manufacturing process
design and introduction, collection and management of product R&D
R&D Department
information, development and analytics of new recipes, analysis, and
improvement of manufacturing processes.
1. Planning, quality assurance and after-sale services, ISO system
maintenance and advocation, laboratory certification and quality
Quality Assurance management.
Department 2. Product instruction, testing and validation at customer sites,
product feedback and improvement measures and reporting to
management accordingly.
Procurement
Procurement of raw materials and control of inventory levels
Department
1. Control and management of production progress, quality, new
Production &
product manufacturing processes and status.
Manufacturing
2. Rostering of production schedules and management of
Department
contractors.
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II. Information on the Directors, Supervisors, General Manager, Vice General Managers, Senior Managers and the Managers of Each Department and Branch

(I) Information on Directors and Supervisors

1. Names, education, experience, shareholdings, and nature of such shareholders of directors (no supervisors in the Company)

April 18, 2021 Expressed in Shares; %

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Other Managers,
Directors or
Shareholding Supervisors that
of the Spouse, Shareholding Held in Have Spousal
Nationality Date of on Board for Date of on Shareholding When on Board Shareholding for the Time Being Children for Underage the Name of a Third Party Relationship or are within the Second
Title Name Sex registration place or the First Time (yy/mm/dd)Board Term the Time Being Academic Qualifications / Experience Concurrent Positions in this Group and Other Companies Director/ Suwith the Concerned Degree of Kinship pervisor Remark
(yy/mm/dd)
Xingmao Group
Holdings - Hong Kong 10,640,000 46.26 10,640,000 33.78 - - - - - - - - - -
Limited
Daojiang High School of Top Star Textile Ltd, Top Sports Textile
Commerce - Attendance in the Ltd, Bumper World Group Holdings
Department of Commerce Limited, TST International Group
Limited-Chairman
Domus Limited-Chairman
TatCheong International Company
Limited-Chairman
Wise Sky International Limited-Chairman
Chairman Representative: 2019.01.09 2019.01.09 3 yrs Chintex Investment Company Limited-Chairman
LIN, CHIN- M ROC 2,885,000 10.30 2,570,000 8.16 - - 15,010,000 47.65 Sunny Earn International Holdings - - - -
MAO (Note 1) Limited-Chairman
Happy Time International Investment
Limited-Chairman
Big Loyal Group Limited-Chairman
Xingmao Group Holdings Limited-
Chairman
Numerous Stars Limited-Chairman
Peng Fu Investment Advisory (Shanghai)
Co., Ltd.-Chairman
TST Group Holding Ltd.-President
Study in University of Natal- TST Group Holding Ltd.-General
LIN, CHING- Social Science Manager & R&D Director
Director WEI M ROC 2019.05.27 2019.05.27 3 yrs 90,000 0.32 90,000 0.29 - - - - Vice President, Sales of Top Star Top Star Textile Limited-Director & - - - -
(Note 2) Textile Limited General Manager
Top Sports Textile Ltd-General Manager
Da-Da-Yeh University-Dept. of TST Group Holding Ltd.-Chief Operating
HUNG, Information Management Officer (COO)
Director HSIANG-MING M ROC 2019.05.27 2019.05.27 3 yrs 80,000 0.29 80,000 0.25 - - - - Vice General Manager of Taiju Textile (Shanghai) Co., Ltd. Top Star Textile Limited-Chief Operating Officer (COO) - - - -
(Note 3) Director of Top Star Textile
Limited
Shares Number of g Rate (%) Shareholdin Shares Number of g Rate (%) Shareholdin Shares Number of g Rate (%) Shareholdin Shares Number of g Rate (%) Shareholdin Title Name Relation
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Title	Name Sex Nationality or registration place Date of on Board for the First Time (yy/mm/dd) Date of on Board (yy/mm/dd) Term	Name Sex Nationality or registration place Date of on Board for the First Time (yy/mm/dd) Date of on Board (yy/mm/dd) Term	Name Sex Nationality or registration place Date of on Board for the First Time (yy/mm/dd) Date of on Board (yy/mm/dd) Term	Name Sex Nationality or registration place Date of on Board for the First Time (yy/mm/dd) Date of on Board (yy/mm/dd) Term	Name Sex Nationality or registration place Date of on Board for the First Time (yy/mm/dd) Date of on Board (yy/mm/dd) Term	Name Sex Nationality or registration place Date of on Board for the First Time (yy/mm/dd) Date of on Board (yy/mm/dd) Term	Shareholding When on Board Shareholding for the Time Being Shareholding of the Spouse, Underage Children for the Time Being Shareholding Held in the Name of a Third Party Academic Qualifications / Experience Concurrent Positions in this Group and Other Companies Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%)	Shareholding When on Board Shareholding for the Time Being Shareholding of the Spouse, Underage Children for the Time Being Shareholding Held in the Name of a Third Party Academic Qualifications / Experience Concurrent Positions in this Group and Other Companies Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%)	Shareholding When on Board Shareholding for the Time Being Shareholding of the Spouse, Underage Children for the Time Being Shareholding Held in the Name of a Third Party Academic Qualifications / Experience Concurrent Positions in this Group and Other Companies Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%)	Shareholding When on Board Shareholding for the Time Being Shareholding of the Spouse, Underage Children for the Time Being Shareholding Held in the Name of a Third Party Academic Qualifications / Experience Concurrent Positions in this Group and Other Companies Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%)	Shareholding When on Board Shareholding for the Time Being Shareholding of the Spouse, Underage Children for the Time Being Shareholding Held in the Name of a Third Party Academic Qualifications / Experience Concurrent Positions in this Group and Other Companies Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%)	Shareholding When on Board Shareholding for the Time Being Shareholding of the Spouse, Underage Children for the Time Being Shareholding Held in the Name of a Third Party Academic Qualifications / Experience Concurrent Positions in this Group and Other Companies Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%)	Shareholding When on Board Shareholding for the Time Being Shareholding of the Spouse, Underage Children for the Time Being Shareholding Held in the Name of a Third Party Academic Qualifications / Experience Concurrent Positions in this Group and Other Companies Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%)	Shareholding When on Board Shareholding for the Time Being Shareholding of the Spouse, Underage Children for the Time Being Shareholding Held in the Name of a Third Party Academic Qualifications / Experience Concurrent Positions in this Group and Other Companies Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%)	Shareholding When on Board Shareholding for the Time Being Shareholding of the Spouse, Underage Children for the Time Being Shareholding Held in the Name of a Third Party Academic Qualifications / Experience Concurrent Positions in this Group and Other Companies Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%)	Shareholding When on Board Shareholding for the Time Being Shareholding of the Spouse, Underage Children for the Time Being Shareholding Held in the Name of a Third Party Academic Qualifications / Experience Concurrent Positions in this Group and Other Companies Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%) Number of Shares Shareholdin g Rate (%)	Other Managers, Directors or Supervisors that Have Spousal Relationship or are within the Second Degree of Kinship with the Concerned Director/ Supervisor Remark Title Name Relation	Other Managers, Directors or Supervisors that Have Spousal Relationship or are within the Second Degree of Kinship with the Concerned Director/ Supervisor Remark Title Name Relation	Other Managers, Directors or Supervisors that Have Spousal Relationship or are within the Second Degree of Kinship with the Concerned Director/ Supervisor Remark Title Name Relation	Other Managers, Directors or Supervisors that Have Spousal Relationship or are within the Second Degree of Kinship with the Concerned Director/ Supervisor Remark Title Name Relation

Director	Chia Mei Investment Co., Ltd. - ROC 2019.05.27 2019.05.27 3 yrs Representative: TUNG, CHIUNG- SHIUNG M ROC						150,000 0.54 150,000 0.48 - - - - - -										- - - -
							- - - - - - - - Bachelor of Dept. of Business Administration of National Taipei University Chairman of Toshiba Corporation Chairman of Toshiba Corporation and Neng Shuai International Co., Ltd. Director of Ability Investment Co., Ltd. Supervisor of Abico Capital Management Co., Ltd. Director of Chia Wei Construction Co., Ltd. Director of AbilityInternational Co .,Ltd.										- - - -
Independent Director	LIEN, KING- BIAU M ROC 2019.01.09 2019.01.09 3 yrs						- - - - - - - - National Cheng Chi University - Dept. of Statistics General Manager of Garment Department of Tuntex Incorporation Executive President of Tuntex Incorporation Independent Director of Tainan Enterprises Co., Ltd.										- - - -
Independent Director	LEE, KUN- MING M ROC 2019.01.09 2019.01.09 3 yrs						- - - - - - - - TIFFIN UNIVERSITY- BUSINESS ADMINISTRATION Assistant Manager of Deloitte & Touche CPA Partner of K & B CPAs Firm Independent Director of The Leofoo Development Co., Ltd.. Supervisor of Castles Technology Co., Ltd. CPA Partner of K & B CPAs Firm -										- - - -
Independent Director	LIU, HENG- YIH	M	ROC	2019.01.09	2019.01.09	3 years	-	-	-	-	-	-	-	-	PhD student., National Taiwan University - Department of International Business Professor of Full time Assistant College of Management, Yuan Ze University	The Leofoo Development Co., Ltd. - Independent Director Independent Director of Dynamic Electronics Co., Ltd. Supervisor of Sinfu Asset Management Company Full time Associate Professor of College of Management, Yuan Ze University and Director of Institute for Knowledge Services and Innovation	-	-	-	-

Note 1: LIN, CHIN-MAO owns 100% of Xingmao Group Holdings Limited, 100% of Big Loyal Group Limited, 100% of Sunny Earn International Holdings Limited and 100% of Happy Time International Investment Limited.

Major shareholders of juristic person shareholders:

2. Major shareholders of juristic person shareholders:	2. Major shareholders of juristic person shareholders:
April 18, 2021
Name ofjuristicperson shareholder Major shareholders ofjuristicperson shareholders
Xingmao Group Holdings Limited LIN, CHIN-MAO(100%)
Chia Mei Investment Co., Ltd.	TUNG, YI-CHUN(20.00%); TUNG, CHUN-JEN(20.00%); TUNG, CHUN-YI(20.00%); TUNG, CHIUNG- SHIUNG(12.50%); TUNG YANG, SU-CHING(12.50%); CHEN, PEI-YU(5.00%); CHANG, HSIAO-CHI(5.00%); CHOU,HSIN-YI(5.00%)

Where the major shareholder of juristic person shareholders is a representative of juristic person shareholder: None
Expertise and independence of directors and supervisors

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Meet One of the Following Professional
Qualification Requirements, Together with at Least Independence Information (Note)
Five Years Work Experience
An instructor in
or a higher Number of
position in a A judge, public Have work the Other
department of prosecutor, attorney, Public
experience
commerce, law, certified public in the area of Companies
finance, accountant, or other in Which the
Terms accounting, or professional or commerce, Concerned
Name other academic department technical specialists who has passed a law, finance, or 1 2 3 4 5 6 7 8 9 10 11 12 Director Acts
related to the national examination or otherwise accounting, Concurrently
business needs and been awarded a as an
of the company certificate in a necessary for the Independent
in a public or a profession necessary business of Director
private junior for the business of the
the company
college, company
college, or
university
Xingmao Group Holdings
Limited
Representative: LIN, - -  - - -  -  -  - -
CHIN-MAO
LIN, CHING-WEI - -  - -  -
HUNG, HSIANG-MING - -  -  -
Chia Mei Investment Co.,
Ltd.
Representative: TUNG, - -   -  - -
CHIUNG-SHIUNG
LIEN, KING-BIAU - -   1
LEE, KUN-MING -    1
LIU, HENG-YIH  -   3
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(1) Not an employee of the company or any of its affiliates.

(2) Not a director or supervisor of the company or any of its affiliates. (This, nevertheless, does not apply to cases where the person is an independent director of the Company, its parent company or any subsidiary or a subsidiary with same parent company where the independent directors perform multiple duties concurrently among themselves in accordance with the Act or the laws and regulations of the local country).

(3) Not a natural person shareholder who holds shares, together with those held by the person’s spouse, minority or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding share of the company or rank as top-10 shareholders.

(4) Not a manager specified under (1) or not a spouse, relative within the second-degree relatives, or lineal relative within the third degree by blood of any of the personnel specified under (2) and (3).

(5) Not as a director, supervisor or an employee who directly holds more than 5% of the Company's total issued shares, the top five shareholders or representative designated to serve as a director or a supervisor of a corporate shareholder in accordance with Paragraphs 1 or 2 under Article 27 of the Company Act (This, nevertheless, does not apply to cases where the person is an independent director of the Company, its parent company or any subsidiary or a subsidiary with same parent company where the independent directors perform multiple duties concurrently among themselves in accordance with the Act or the laws and regulations of the local country).

(6) Not as a director, supervisors or an employee of another company controls another company and the Company's directors or voting shares with one half majority (This, nevertheless, does not apply to cases where the person is an independent director of the Company, its parent company or any subsidiary or a subsidiary with same parent company where the independent directors perform multiple duties concurrently among themselves in accordance with the Act or the laws and regulations of the local country).
(7) Not as a director (trustee), supervisor (supervising officer) or employee of another company or institution as the same person or the spouse thereof of the Company's chairman, general manager (Chief Executive Officer (CEO)) or person of equivalent position (This, nevertheless, does not apply to cases where the person is an independent director of the Company, its parent company or any subsidiary or a subsidiary with same parent company where the independent directors perform multiple duties concurrently among themselves in accordance with the Act or the laws and regulations of the local country).
(8) Not as a director (trustee), supervisor (supervising officer), manager or a shareholder holding more than 5% of the shares of a specific company or institution in financial or business transaction with the Company(This, nevertheless, does not apply to a specific company or institution which holds more than 20%, less than 50% of the aggregate total outstanding shares of the Company, and where the company and its parent company, subsidiary or a subsidiary with the same parent company where the independent directors perform multiple duties concurrently among themselves according to the Act or the laws prevalent locally.)
(9) Not as the professionals, the enterprise proprietor, partner, director (trustee), supervisor (supervisory officer), manager and the spouse thereof of sole proprietors, partners, companies or institutions rendering auditing, commercial, legal, financial, accounting and such relevant services to the Company or affiliated enterprises thereof with remuneration obtained over the past two years not beyond NT$500,000. This, nevertheless, does not apply to a member of the Open Acquisition Committee, Remuneration Committee or Special Merger/Acquisition (M&A) Committee in accordance with Securities and Exchange Act, Business Mergers and Acquisitions Act and relevant laws.
(10) Not in a relationship as spouse or a relative within the second degree of kinship with any other directors.
(11) Not been a person or any conditions defined in Article 30 of the Company Act.
(12) Not under Article 27 of the Company Act with government, juristic person or the representative thereof successfully elected.

(II) Information on General Manager, Vice General Managers, Senior Managers and the Managers of Each Department and Branch

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April 18, 2021; expressed in shares; %
Other Managers that
Shareholding of the Have Spousal
Shareholding Held
Shareholding When on Spouse, Underage in the Name of a Relationship or are
Board Children for the Time within the Second
Third Party
Date of on Being Degree of Kinship with
Title Name Sex Board Academic Qualifications/Experience Concurrent Positions in this Group and Other the Concerned Person Remark
Companies
(yy/mm/dd) Share- Share- Share-
Number of holding Number of holding Number of holding
Shares Rate Shares Rate Shares Rate
(%) (%) (%)
Daojiang High School of Commerce - TST Group Holding Limited – Representative
Attendance in the Department of of the juristic person director
Commerce Top Star Textile Ltd, Top Sports Textile Ltd,
Bumper World Group Holdings Limited, TST
International Group Limited - Chairman
Domus Limited - Chairman
TatCheong International Company Limited -
Chairman
Wise Sky International Limited - Chairman
LIN,
President CHIN- M ROC 1992.01 2,570,000 8.16 - - 15,010,000 47.65 Chintex Investment Company Limited - Chairman - - - -
MAO
Sunny Earn International Holdings Limited -
Chairman
Happy Time International Investment Limited -
Chairman
Big Loyal Group Limited - Chairman
Xingmao Group Holdings Limited - Chairman
Numerous Stars Limited - Chairman
Peng Fu Investment Advisory (Shanghai) Co.,
Ltd. - Chairman
Study in University of Natal-Social TST Group Holding Ltd. –Director
General LIN, CHING- Science TST Group Holding Ltd. –R&D Director
Manager WEI M ROC 2000.04.01 90,000 0.29 - - - - Vice President, Sales of Top Star Textile Limited Top Star Textile Limited - Director & General Manager - - - -
(Note 1) -
Top Sports Textile Ltd General Manager
Da-Yeh University-Dept. of Information TST Group Holding Ltd. –Director
HUNG, Management Top Star Textile Limited - Chief Operating
Chief Operating HSIANG- M ROC 2000.11.01 80,000 0.25 - - - - Taiju Textile (Shanghai) Co., Ltd. –Vice Officer (COO) - - - -
Officer (COO) MING General Manager
Top Star Textile Limited-Director
China Textile University - Department of Taiju Textile (Shanghai) Co., Ltd. - R&D
Textile Engineering Director
Manager, Quality Inspection of Top Star
R&D Director ZHANG, XINBIN M PRC 1994.12.01 - - - - - - Textile Limited - - - -
Vice President, Manufacturing of Taiju
(Note 1)
Textile (Shanghai) Co., Ltd.
Taiju Textile (Shanghai) Co., Ltd. -
General Manager
ISCTE (Instituto Superior de Ciencias do Taiju Management & Consulting (Guangzhou)
Trabalho e da Empresa), Master of Co., Ltd. - Vice President, Procurement
Vice President, Procurement FENG, XIAOQIN F PRC 2019.07.01 - - - - - - Business Administration (MBA) - - - -
Procurement Manager of Top Star Textile
Limited
Nationality
Title Name
Relation
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Other Managers that
Shareholding of the Have Spousal
Shareholding Held
Shareholding When on Spouse, Underage in the Name of a Relationship or are
Board Children for the Time within the Second
Third Party
Date of on Being Degree of Kinship with
Title Name Sex Board Academic Qualifications/Experience Concurrent Positions in this Group and Other the Concerned Person Remark
Companies
(yy/mm/dd) Share- Share- Share-
Number of holding Number of holding Number of holding
Shares Rate Shares Rate Shares Rate
(%) (%) (%)
GuangDong Social Science University - Taiju Management & Consulting (Guangzhou)
Director, WEN, M PRC 1994.12.01 - - - - - - Markets and Public Relations Co., Ltd. - Director, Manufacturing - - - -
Manufacturing GUANMEI Manager, Manufacturing Dept. of Top
Star Textile Limited
IMMACULATE HEART OF MARY Top Star Textile Ltd - Chief Financial Officer
COLLEGE (CFO)
Chief Financial Tang Tat M HK 2017.03.01 30,000 0.10 - - - - Audit Manager of James K.K. Chan & Co. - - - -
Officer (CFO) Shing
CPA, ERIC T. S. TANG & CO.
Certified Public Accountant of Bright
Brilliance CPA Limited
-
College of Business – Accounting, Chung
Supervisor Audit Wang Jing-Yi F ROC 2017.03.01 30,000 0.10 - - - - Yuan Christian University PricewaterhouseCoopers Taiwan(PwC - - - -
Taiwan) - Audit Manager
Nationality
Title Name
Relation
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Note 1: Due to operational needs, the group adjusted the position on December 31, 2020, and the R&D director was changed from Zhang Xinbin to general manager LIN, CHING- WEI.

III. Remuneration Paid to Directors, Supervisors, General Manager and Vice General Managers in the most recent year

(I) Remuneration Paid to general Directors, Independent Directors, Supervisors, General Manager and Vice General Managers in the most recent year (2020)

1. Remuneration of general Directors & Independent Directors

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Expressed in Thousands of New Taiwan Dollars; Thousand Shares
Remuneration to Directors Remuneration Received by Concurrent Employees Ratio (%) of the
Ratio (%) of the Aggregate
Compensation (A) Pension (B) Remuneration to Directors (C) Performance of Fees for the Net Income After of A, B, C and D to Aggregate Amount Disbursement, etc. Wages, Bonus and Special Pension (F) Compensation to employee (G) to the Net Income C, D, E, F and G Amount of A, B, Receiving Whether
Business (D) Tax (Note 1) (E) After Tax (Note Remuneration
1) from any
Title Name All Companies Investees or
This Company Specified in the parent
Financial Statements company other
Than the
Subsidiaries of
the Company
Xingmao Group Holdings - 480 - - - - - 60 - 0.13 - - - - - - - - - 0.13 -
Limited
Chairman
Representative: LIN, CHIN-MAO - - - - - - - - - - - 23,503 - - - - - - - 5.65 -
Director LIN, CHING-WE I - 480 - - - - - 50 - 0.13 - 18,985 - - - - 2,101 - - 5.20 -
Director HUNG, HSIANG-MING - 480 - - - - - 60 - 0.13 - 16,919 - - - - 2,101 - - 4.70 -
Director Chia Mei Investment Co., - 480 - - - - - 60 - 0.13 - - - - - - - - - 0.13 -
Ltd.
Representative: TUNG, - - - - - - - - - - - - - - - - - - - - -
CHIUNG-SHIUNG
Independent Director LIEN, KING-BIAU - 720 - - - - - 60 - 0.19 - - - - - - - - - 0.19 -
Independent Director LEE, KUN-MING - 720 - - - - - 60 - 0.19 - - - - - - - - - 0.19 -
Independent Director LIU, HENG-YIH - 720 - - - - - 60 - 0.19 - - - - - - - - - 0.19 -
This Company Specified in the All Companies This Company Specified in the All Companies This Company Specified in the All Companies This Company Specified in the All Companies This Company Specified in the All Companies This Company Specified in the All Companies This Company Specified in the All Companies This Company Specified in the All Companies
Financial Statements Financial Statements Financial Statements Financial Statements Financial Statements Financial Statements Financial Statements Cash Bonus Share Bonus Cash Bonus Share Bonus Financial Statements
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The remuneration of independent directors of the company refers to the company’s overall operating performance, future business risks and development trends of the industry, and also refers to the individual’s performance achievement rate and contribution to the company’s performance. Reasonable remuneration is provided. The relevant performance appraisal and remuneration are reasonable. The compensation will be paid after being reviewed by the Remuneration Committee and submitted to the board of directors for resolution.

Remuneration to Supervisor: This Company has established the Audit Committee so that there is no supervisor.
Remuneration to General Manager and Vice General Manager

Expressed in Thousands of New Taiwan Dollars

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Bonus and Ratio (%) of
the Aggregate
Pension Special Compensation for Employees Amount of A, Whether
Wages (A) Disbursement,
(B) (Note) etc. (D) B, C and D to Receiving
the Net Income Remunerati
(C) After Tax on from
any
Investees
Title Name or parent
company
other Than
the
Subsidiarie
s of the
Company
President LIN, CHIN- - 8,861 - - - 14,642 - - - - - 5.65 -
MAO
General Manager LIN, CHING-WEI - 6,927 - - - 12,058 - - 2,101 - - 5.07 -
Chief Operating HUNG, - 5,275 - - - 11,644 - - 2,101 - - 4.57 -
Officer (COO) HSIANG-MING
4. The remuneration of the top five executives of listed companies
Expressed in Thousands of New Taiwan Dollars
Bonus and Ratio (%) of
the Aggregate
Pension Special Compensation for Employees Amount of A, Whether
Wages (A) Disbursement,
(B) (Note) etc. (D) B, C and D to Receiving
the Net Income Remunerati
(C) After Tax on from
any
Investees
Title Name or parent
company
other Than
the
Subsidiarie
s of the
Company
President LIN, CHIN- - 8,861 - - - 14,642 - - - - - 5.65 -
MAO
General Manager LIN, CHING-WEI - 6,927 - - - 12,058 - - 2,101 - - 5.07 -
Chief Operating Officer (COO) HUNG, HSIANG-MING - 5,275 - - - 11,644 - - 2,101 - - 4.57 -
Chief Financial Officer (CFO) Tang Tat Shing - 3,794 - - - 5,422 - - - - - 2.22 -
Statements Financial
This Company Specified in the All Companies
This Company This Company This Company This Company
the Financial Statements the Financial Statements the Financial Statements the Financial Statements
All Companies Specified in All Companies Specified in All Companies Specified in Cash Bonus Share Bonus Cash Bonus Share Bonus All Companies Specified in
Statements Financial
This Company Specified in the All Companies
This Company This Company This Company This Company
the Financial Statements the Financial Statements the Financial Statements the Financial Statements
All Companies Specified in All Companies Specified in All Companies Specified in Cash Bonus Share Bonus Cash Bonus Share Bonus All Companies Specified in
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Names of the managers allocated with bonus to employees and the facts in allocation:

	5. Names of the managers allocated with bonus to employees and the facts in allocation:	5. Names of the managers allocated with bonus to employees and the facts in allocation:
	April 18,2021;Expressed in Thousands of New Taiwan Dollars
	Title Name Share Bonus Cash Bonus Total Ratio of the Aggregate Amount to the Net Income After Tax(%)
Manger	General Manager LIN, CHING-WEI - 4,202 4,202 1% Chief Operating Officer (COO) HUNG, HSIANG-MING
	Chief Operating Officer (COO)	HUNG, HSIANG-MING

(II) The analyses of the percentages of the aggregate total compensations paid to the Company’s directors and supervisors, General Managers and Vice Presidents of this Company to the net profit after taxes over the past two years in the Company and all companies covered in the consolidated financial statements and explain the policies, criteria, portfolio of remuneration payment, procedures to fix remuneration, business performance and interrelationship to the future risks (The Company does not have any supervisor)
Analyses of the percentages of the aggregate total compensations paid to the directors and supervisors, General Managers and Vice Presidents of this Company and all companies covered in the consolidated financial statements to the net earnings after taxes:

	Expressed in Thousands of New Taiwan Dollars Year 2019 Year 2020 Amount % Amount % 3,240 0.83% 4,490 1.08% 70,881 18.26% 63,609 15.29% 388,128 100% 416,040 100%	Expressed in Thousands of New Taiwan Dollars Year 2019 Year 2020 Amount % Amount % 3,240 0.83% 4,490 1.08% 70,881 18.26% 63,609 15.29% 388,128 100% 416,040 100%	Expressed in Thousands of New Taiwan Dollars Year 2019 Year 2020 Amount % Amount % 3,240 0.83% 4,490 1.08% 70,881 18.26% 63,609 15.29% 388,128 100% 416,040 100%	Expressed in Thousands of New Taiwan Dollars Year 2019 Year 2020 Amount % Amount % 3,240 0.83% 4,490 1.08% 70,881 18.26% 63,609 15.29% 388,128 100% 416,040 100%

Item	Amount % Amount %
Director	3,240 0.83% 4,490 1.08%
General Manager and Vice General Manager	70,881 18.26% 63,609 15.29%
Net income (consolidated)	388,128	100%	416,040	100%

The policies, criteria, portfolio of compensation payment, procedures to fix compensation, business performance and interrelationship to the future risks.

The policies, criteria, portfolio of compensation payment, procedures to fix compensation

A. Directors

The Company has set up Remuneration Committee, responsible for performance reviews of directors and managers, as well as the policy, system, standard and structure of wages and compensations. The wages and compensations are set according to periodical reviews and references to other companies in the same industry.

B. General Manager and Vice Presidents

The remunerations to managers consist of wages, bonuses, employee benefits and

pension contributions, and are determined according to positions held, responsibilities assumed, contributions to the Company and remuneration levels in the industry.

IV. Corporate Governance

(I) Functioning of the Board of Directors

Meetings of board of directors in most recent year have been held for 6 times. The status of attendance of directors was as follows:

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Times of Actual
Times of
Actual Attendance
Title Name Attendance Remarks
Attendance in Ratio (%)
Person 【 B 】 by Proxy 【 B/A 】
Xingmao Group Holdings
Limited
Chairman 6 0 100.00 -
Representative: LIN, CHIN-
MAO
Director LIN, CHING-WEI 5 1 83.33 -
Director HUNG, HSIANG-MING 6 0 100.00 -
Chia Mei Investment Co.,
Director Ltd. Representative: TUNG, 6 0 100.00 -
CHIUNG-SHIUNG
Independent
LIEN, KING-BIAU 6 0 100.00 -
Director
Independent
LEE, KUN-MING 6 0 100.00 -
Director
Independent
LIU, HENG-YIH 6 0 100.00 -
Director
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Other entries as required:

I. Where the operations by the Board of Directors meet any one among those circumstances enumerated below, the date, term, contents of the agenda, opinions of all independent directors and the handling of the independent directors' opinions shall be expressly remarked:

(I) Issues to be enumerated under Article 14-3 of the Securities and Exchange Act:

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Opinions from all
independent directors and
Meeting date/session Discussions
the Company’s response to
these opinions
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March 25, 2020/the 10th meeting for the 1st Board	● Review the proposal for 2019 statement of internal control system ● Review the proposal for 2019 consolidated financial statements and business report ● Review the proposal for 2019 earnings distribution ● Amend partial provisions of “Articles of Incorporation” of the Company ● Amend partial provisions of “Procedures of Endorsement and Guarantee” ● Formulate “Internal Control System” of Top Star Textile Vietnam Company Limited ● Cancel the limit amount of lending of funds to group subsidiaries by TST International Group Limited ● Approve the improvement plan for lending of funds exceeding the limit of TST International Group Limited ● Approve the lending amounts of the Company and its subsidiaries	Approved by all independent directors

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● Approve the additional capital injection to Top
Star Textile Limited through TST International
Group Limited.
● The Company proposes to act as the co-
guarantor for the bank financing and derivatives
trading limit provided by Bank SinoPac
Hongkong, Taishin International Bank, and
Standard Chartered Bank Hong Kong to its
subsidiary.
●The Company proposed to buy back and transfer
its treasury shares to employee
Resolution result : Approved with consent of all attending directors
●Review the consolidated financial statement for
Q1 of 2020
May 12, 2020/the ●Approve the limit amount of lending of funds to Approved by all independent
11 [th] meeting for the the Company’s subsidiary, TOP STAR TEXTILE directors
1 [st] Board
VIETNAM COMPANY LIMITED through its
subsidiary, Top Star Textile Limited.
Resolution result : Approved with consent of all attending directors
●The assessment of independence of the CPA of
financial report of the Company
●Review the consolidated financial statements for
August 13, 2020/the Q2 of 2020 Approved by all independent
13 [th] meeting for the ●Approve the limit amount of lending of funds directors
1 [st] Board
made by the Group
●Approve the limit amount of endorsements and
guarantees provided by the Group
Resolution result : Approved with consent of all attending directors
November 11, ●Review the consolidated financial statement for
Approved by all independent
2020/the 14 [th] Q3 of 2020 directors
meeting for the 1 [st] ●Approve the proposal of audit plan for 2021
Board
Resolution result : Approved with consent of all attending directors
●Amend “Internal Control System” and
“Implementation Rules for Internal Audit” of the
Company by adding the items of procedure of
transfer of treasury shares
●Approve the proposal of employees’ subscription
December 15, to treasury shares transferred by the Company
Approved by all independent
2020/the 15 [th] ●Approve the limit amount of lending of funds directors
meeting for the 1 [st]
made by the Group
Board
●Approve the proposal of the Company’s
investment in factory in Vietnam
●Approve the additional capital injection to the
newly established BIV subsidiary through the
subsidiary, TST International Group Limited
Resolution result : Approved with consent of all attending directors
January 21, 2021/the ●Approve the limit amount of lending of funds
Approved by all independent
16th meeting for the made by the Group directors
1st Board ●Approved the limit amount of
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endorsements/guarantees provided by the
Group
●Approve the additional capital injection to
THRIVE NATION GROUP LIMITED
through the subsidiary, TST International
Group Limited
●The proposal for the establishment of new
subsidiary in Vietnam through the Company’s
subsidiary, THRIVE NATION GROUP
LIMITED
Resolution result : Approved with consent of all attending directors
●Review the proposal for 2020 statement of
internal control system
●Review the 2020 consolidated financial
statements and business report
●Review the 2020 proposal for earnings
distribution
●Approve the proposal for the Group’s acquisition
of right-of-use assets from related parties.
March 24, 2021/the Approved by all independent
17 [th] meeting for the ●Approve the role of the Company acting as directors
1 [st] Board financing co-guarantor for the common bank
financing limit and derivatives trading limit
provided by Taishin International Bank, Hong
Kong Branch to Top Star Textile Limited, and Top
Sports Textile Limited.
●The evaluation of independence of CPA of
financial report of the Company
●Issue new shares of restricted stock unit(RSU)
Resolution result : Approved with consent of all attending directors
●Review the consolidated financial statements for
Q1 of 2021
●Approve the proposal of the role of the Company
acting as the financing co-guarantor for the
May 12, 2021/the financing limit and derivatives trading limit Approved by all independent
18 [th] meeting for the provided by Bank SinoPac and Citibank to directors
1 [st] Board
subsidiaries
●The proposal for additional capital inject to
THRIVE NATION GROUP LIMITED through the
subsidiary, TST International Group Limited
Resolution result : Approved with consent of all attending directors
(II) Issues other than the aforementioned ones where the independent directors voice objection or reserved
opinions as backed up with records or written declarations in the minutes of the Board of Directors
meeting.
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None of the above applicable to the functioning of the Company’s Board of Directors

II. Abstaining from voting by directors who are stakeholders, with details of the directors’ names, proposals, reasons for abstaining and results of votes by other directors:

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Meeting Abstaining director(s) Proposal Reason for Results of votes by
date/session abstaining other directors
March 25, LIN, CHIN-MAO Proposal for 2019 Stakeholders Absent when voting.
2020/the 10th LIN, CHING-WEI performance evaluation of Other attending
meeting for HUNG, HSIANG-MING management and 2020 directors approved
the 1st Board remunerations to management unanimously
LIN, CHIN-MAO Proposal for 2020 Stakeholders
TUNG,CHIUNG-SHIUNG remunerations to directors
LIN, CHING-WEI
HUNG, HSIANG-MING
LIEN, KING-BIAU Proposal for 2020 Stakeholders
LEE, KUN-MING remunerations to independent
LIU, HENG-YIH directors
November 11, LIN, CHIN-MAO Proposal for 2021 Personal gains Absent when voting.
2020/the 14th TUNG,CHIUNG-SHIUNG remunerations to directors Other attending
meeting for LIN, CHING-WEI directors approved
the 1st Board HUNG, HSIANG-MING unanimously
L LIEN, KING-BIAU Proposal for 2021 Stakeholders
LEE, KUN-MING remunerations to independent
LIU, HENG-YIH directors
December 15, LIN, CHIN-MAO Proposal for travel allowances Stakeholders Absent when voting.
2020/the 15th TUNG,CHIUNG-SHIUNG to directors and independent Other attending
meeting for LIN, CHING-WEI directors directors approved
the 1st Board HUNG, HSIANG-MING unanimously
L LIEN, KING-BIAU
LEE, KUN-MING
LIU, HENG-YIH
March 24, LIN, CHIN-MAO Proposal for 2020 Personal gains Absent when voting.
2021/the 17th LIN, CHING-WEI performance evaluation of Other attending
meeting for HUNG, HSIANG-MING management and 2021 directors approved
the 1st Board remunerations to management unanimously
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III. Assessment cycles, periods, scopes, methods, and details of self-assessments (or peer reviews) for the evaluation of the Board of Directors:

The board of directors adopted “Regulations on Performance Assessment of Board of Directors" on August 13, 2020. The board of directors of the Company shall periodically conduct the performance evaluation on the entire board, each functional committee and individual directors at the end of each year. The result of 2020 self-evaluation of performance of board of director: the performance of entire board and each functional committee were “medium”; and the self-evaluation result of performance of individual was “medium”.

Status of implementation of assessment of board of directors

	Evaluation circle Evaluationperiod Evaluation scope Evaluation method
	Once a year From January 1, 2020 to December 31, 2020 Board of directors, individual directors and each functional committee Internal self- evaluation of the board of directors, self-evaluation of individual directors
	Evaluation contents
	1.Evaluation of performance of board of directors: Items and contents of “Questionnaire of Self-
	Evaluation of Performance of the Board” includes five aspects: participation in the company’s operation,
	improvement on the quality of the board's decision making, makeup and structure of the board of
	directors, election of directors and continued knowledge development, and internal control.
	2.Evaluation of performance of individual directors: Items and contents of “Questionnaire of Self-
	Evaluation of Performance of Board Members” includes six aspects: understanding of company goals
	and missions, director's understanding of their duties and responsibilities, participation in the company's
	operation, internal relation maintenance and communications, directors' professionalism and continued
	knowledge development, and internal control.
	3.Evaluation of performance of functional committee: Items and contents of “Questionnaire of Self-
	Evaluation of Performance of the Functional Committee” includes five aspects:participation in the

company's operation, understanding of duties and responsibilities of functional committee, improvement on quality of decision-making at functional committee, makeup of functional committee and election/appointment of members, and internal control. IV. Measures to enhance the functionality of the Board of Directors during the current year and the prior years: (1) The supervisors have been replaced with Audit Committee, to strengthen corporate governance. All the members of Audit Committee are independent directors, and they convene meetings according to the Company’s Charter of Audit Committee. All the proposals from Audit Committee are forwarded to the Board of Directors. (2) Core curricula or professional training programs are planned regularly for directors, to enhance their expertise and competences. (3) To increase information transparency, the Company has set up Investor Relations section on its official website, and assigned personnel to disclose our operating results via TSE Market Observation Post System both periodically and on an ad-hoc basis in order to protect shareholders.

(II) Functioning of Audit Committee

The Company set up Audit Committee on January 9, 2019. Sitting on Audit Committee are the three independent directors. Audit Committee convened five meetings (A) in 2020. The attendance record of the three independent directors was as follows:

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Times of Actual Times of Actual
Title Name Attendance in Attendance by Attendance Ratio Remarks
Person 【 B 】 Proxy (%) 【 B/A 】
Independent LIEN,
5 0 100.00
Director KING-BIAU
Independent LEE, KUN-
5 0 100.00
Director MING
Independent LIU, HENG-
5 0 100.00
Director YIH
Other entries as required:
I. Where the operations by the Audit Committee meet any one among those circumstances enumerated below, the
date, term, contents of the agenda, result of decision resolved in Audit Committee and the handling of the Audit
Committee' opinions shall be expressly remarked:
(I) Matters as set forth under Article 14-5 of Securities and Exchange Act:
Audit Committee Resolution
Meeting date/session Proposal
Results
March 25, 2020/the ●Review 2019 Statement of Internal Control Approved by all independent
10 [th] meeting for the directors
1 [st] Board System
●Review 2019 consolidated financial
statements and business report
●Amend partial provisions of “Procedures of
Endorsement and Guarantees”
●Formulate “Internal Control System” of Top
Star Textile Vietnam Company Limited
The company's handling of independent directors' opinions: all present directors
agreed
●The Proposal for evaluation of independence Approved by all independent
August 13, 2020/the of CPA of the Company’s financial directors
12 [th] meeting for the statements.
1 [st] Board The company's handling of independent directors' opinions: all present directors
agreed
● The Proposal for evaluation of Approved by all independent
November 11,
independence of CPA of the Company’s directors
2020/the 13th
financial statements.
meeting for the 1st
The company's handling of independent directors' opinions: all present directors
Board
agreed
● Amend the Company’s “Internal Control Approved by all independent
December 15, System” and “Implementation Rules of directors
2020/the 14th Internal Audit” by adding the item of
meeting for the 1st procedure of transfer of treasury shares.
Board The company's handling of independent directors' opinions: all present directors
agreed
● Approve the additional capital injection to Approved by all independent
directors
THRIVE NATION GROUP LIMITED
January 21, 2021/the
through the subsidiary, TST International
15th meeting for the
1st Board Group Limited.
The company's handling of independent directors' opinions: all present directors
agreed
March 24, 2021/the ●Review the proposal for 2020 statement of Approved by all independent
directors
16th meeting for the internal control system
1st Board
●Review the 2020 consolidated financial
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	statements and business report ●The evaluation of independence of CPA of financial report of the Company ●Issue new shares of restricted stock unit(RSU)
	The company's handling of independent directors' opinions: all present directors agreed
	May 12, 2021/the 17th meeting for the 1st Board ●The proposal for additional capital inject to THRIVE NATION GROUP LIMITED through the subsidiary, TST International Group Limited Approved by all independent directors The company's handling of independent directors' opinions: all present directors agreed
	(II) Any matters other than the abovementioned not passed by Audit committee but determined by at least two
	thirds of directors: None
II.	Abstaining from voting by independent directors who are stakeholders, with details of the directors’ names,
	proposals, reasons for abstaining and results of votes by other directors: None
III.	Communication among independent directors, internal auditors, and external auditors (including the material
	issues discussed, methods and results of dialogues concerning company financials, operations):
	(`一`)Status of communication among the company’s independent directors and internal auditor:
	1.The company’s internal auditor submitted on monthly basis the audit work report (including audit
	findings and suggestions) to independent directors.
	2.Attended the board meeting on quarterly basis and report the recent audit findings, audit suggestions
	and improvement effect at the meeting, and formulated the essential points for future audit work.
	3.Conducted the opinion exchange at the quarterly board meeting in regards to the affection of change
	of laws and regulations, and the issue of material operation improvement.
	(`二`)The company’s independent directors conducted the governance unit communication meeting before the
	audit with the CPA before the audit of annual report for each year, to understand the key points and
	directions of the audit conducted by CPA, and reviewed and discussed the audit findings of CPA at the
	meeting after the audit, and supervised the implementation of the following matters:
	1.The fair presentation of the Company’s financial statements
	2.The effective implementation of the Company’s internal control.
	3.The Company’s compliance with relevant laws, regulations and rules.
	4.The control of the Company’s existingorpotential risks.

(III) The performance of corporate governance and the status on discrepancy and reasons in relation to the Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies

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Facts of performance Status on discrepancy
and reasons in
relation to Corporate
Evaluation Items Governance Best
Yes No Descriptions in summary
Practice Principles for
TWSE/GTSM Listed
Companies
1. Does the company specify and disclose  The Company has set up the Corporate
the corporate governance best practice Governance Best Practice Principles for all the
principles in accordance with the governance matters. No significant
“Corporate Governance Best Practice differences.
Principles for TWSE/GTSM Listed
Companies”?
2. Corporate Equity Structure and
Shareholders’ Equity
(1) Does the company specify internal  (1) In addition to the protection of
operation procedures to dispose shareholders specified in the Company’s
recommendations, doubts, disputes Articles of Incorporation and internal
and lawsuit matters of shareholders, regulations, we have set up a dedicated
and implement in accordance with team responsible for investor relations to
such procedures? collect suggestions/questions from
shareholders and issues/disputes raised by
shareholders.
(2) Does the company master the major  (2) The Company stays on top of the
shareholders in actual control of the holdings of our directors, managers, and
company and the name list of the final top ten shareholders.
controllers of such major
shareholders? No significant
(3) Does the company establish and  (3) The Company has set up an internal differences.
execute the risk control and firewall control system and the Regulations
mechanism with the affiliates? Governing Management of Affiliated
Companies as a control and management
mechanism by following relevant laws
and regulations.
(4) Does the company establish internal  (4) The Company has set up the Preventive
specifications to prohibit the internal Measures Against Insider Trading and the
parties of the company from trading Operating Procedures on the Processing
securities by taking advantage of the of Internal and Material Information. The
non-opened information in market? purpose is to control the confidentiality of
internal and material information and
prohibit the insider trading of the
Company’s shares by advocating relevant
laws and regulations to insiders.
3. Organization and Functions of Board
of Directors
(1) Does the Board of Directors prepare  (1) The Company has set up the Regulations
diversified guidelines in response to Governing Election of Board Directors by
the organization of members and emphasizing the diversity of board
actualize the execution? members and requiring knowledge, skills,
and expertise to exercise duties. The
diversity of the board composition and
the tasks carried out by board directors No significant
are detailed in Note 1. differences.
(2) Does the company, besides  (2) The Company has set up Remuneration
establishing Compensation Committee and replaced supervisors with
Committee and Audit Committee in Audit Committee. Other functional
accordance with laws, also voluntarily committees will be established as
establish other committees with required.
similar functions?
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Facts of performance Status on discrepancy
and reasons in
relation to Corporate
Evaluation Items Governance Best
Yes No Descriptions in summary
Practice Principles for
TWSE/GTSM Listed
Companies
(3) Does the Company establish  (3) The Company’s Procedures for Election
performance rules and evaluation of Board Directors require the Board to
methods of the Board of Directors, adjust its composition according to
and periodically engages in performance review results.
performance evaluation every year?
Besides, does the Company submit
the outcome of performance
evaluation to the board of directors to
be used as the handy reference in
salary remuneration of respective
directors and their salaries?
(4) Does the company periodically  (4) The Company periodically assesses the
evaluate the independence of the professional qualification and
certified public accountant? independence of external auditors.
4. Have Exchange-listed and/or OTC- Chairman’s Office is responsible for corporate
listed companies been equipped with governance matters.
eligible and appropriate corporate
governance personnel, and designated
corporate governance executives
responsible for corporate governance-
related affairs (including but not
limited to providing directors,
supervisors with the information  No significant
differences.
needed to perform business, assisting
directors, supervisors in complying
with laws to handle matters related to
meetings of the board of directors and
shareholders 'meetings in accordance
with the law, with production of
minutes of board of directors meetings
and shareholders' meetings)?
5. Does the company establish (1) The Company has designated
communication channel of the Spokesperson and Deputy Spokesperson
stakeholders (including but not as the formal channel for external
limited, shareholders, employees, communication, and we have set up an
customers and suppliers, etc.), and internal control system for
establish an exclusive zone of the communication with stakeholders.
(2) The Company has set up webpages to
stakeholders in the company’s  disclose information regarding financials, No significant
website, and properly respond the differences.
operations, and corporate governance for
important issues of corporate social
the reference of shareholders and other
responsibility concerned by the
stakeholders. We have dedicated
stakeholders?
personnel responsible for maintaining the
accuracy and updating of such
information, to ensure fair and honest
presentation.
6. Does the company appoint a The Company has assigned CTBC to provide
professional stock affair handling  registrar services and logistics at shareholder No significant
agency to process the affairs of meetings. differences.
shareholders’ meeting?
7. Information Opening
(1) Does the company set up a website  (1) The Company has set up webpages to
No significant
to disclose the financial business disclose information regarding financials,
differences.
and the corporate governance operations, and corporate governance for
information? the reference of shareholders and other
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Evaluation Items	Facts of performance Status on discrepancy and reasons in relation to Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies Yes No Descriptions in summary	Facts of performance Status on discrepancy and reasons in relation to Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies Yes No Descriptions in summary	Facts of performance Status on discrepancy and reasons in relation to Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies Yes No Descriptions in summary	Facts of performance Status on discrepancy and reasons in relation to Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies Yes No Descriptions in summary
(2) Does the company adopt other information disclosure methods (such as setting up an English website, designating exclusive personnel to be in charge of the corporate information collection and disclosure, actualizing the speaker system, institutional investor conference process placement in the company’s website, etc.)? (3) Did the Company announce and declare its annual financial statements within two months after the end of the fiscal year, and announce and declare the financial statements of the first, second and third quarters and operating performance of each month ahead of schedule as required?   stakeholders. We also disclose such information via Market Observation Post System. (2) Our Spokesperson or Deputy Spokesperson answer these questions. Relevant departments, Spokesperson or Deputy Spokesperson oversea the collection and disclosure of company information. We have set up a website for disclosure purposes. (3) The Company publishes financial reports and monthly revenues before statutory deadlines.
8. Does the company have other available important information helpful to understand the corporate governance and performance status (including but not limited to employee interests, employee care, investor relation, supplier relationship, rights of stakeholders, advanced study status of directors and supervisors, execution status of risk management policy and risk measurement standard, execution status of client policy, the status of purchasing liability insurance of the company for its directors and supervisors, etc.)?			1. Employee interests: The Company maintains a good employment relationship and seeks to protect the legal rights of employees according to the labor laws of different jurisdictions. We have never experienced major labor disputes, nor attracted any penalties from competent authorities for material breach of labor laws. 2. Employee care: The Company offers reasonable salaries, bonuses, and employee travels, and Administration Department oversees the employee benefit program. We endeavor to maintain a trusting relationship with employees. 3. Investor relations: The Company has set up webpages and the spokesperson system to disclose financial and other material information in a timely manner. We also disclose such information via Market Observation Post System to protect our shareholders. 4. Supplier relations: The Company deals with suppliers in a fair manner and maintains long-term cooperation with suppliers byadheringto theprinciple of	No significant differences.

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Evaluation Items	Yes	No	Descriptions in summary	Governance Best Practice Principles for TWSE/GTSM Listed Companies

			trust and honesty. 5. Stakeholders’ rights: To protect the right of stakeholders, the Company has established a variety of communication channels. We act with honest and integrity to fulfill our corporate social responsibility. 6. Directors’ training & education: The Company’s directors take up classes in securities laws/regulations and corporate governance according to the minimum hour requirements by the Regulations Governing Training & Education of Directors and Supervisors of Companies Listed on Taiwan Stock Exchange and Taipei Exchange. 7. Risk management policy and risk assessment standards and implementations: The Company has established various internal regulations, in compliance with relevant laws and regulations, and conducts risk management and assessments accordingly. 8. Implementation of customer policies: The Company spares no efforts in the delivery of best services/products to customers. We have a dedicated team that handle customers’ issues. 9. Purchase of liability insurance for directors: The Company has set out rules in the Corporate Governance Best Practice Principles regarding the purchase of liability insurance for directors and has purchased such insurance for directors accordingly.

9.	Please explain the performance in improvement of the Company's corporate governance in response to	the evaluation
	results released by the Corporate Governance Center of the Taiwan Stock Exchange Co., Ltd. in the most recent year, and
	the proposed preferential measures of improvement for those which call for further improvement:
	For the status of deficiencies in the 7th corporate governance assessment, the Company has started to make improvements
	in 2021, as explained below:
	(`一`) Improved status:
	Improved items Improvement measures

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Uploading of the English versions of handbook The English versions of 2021 handbook of
of meeting agenda and supplemental materials of meeting agenda and supplemental materials
meeting 30 days by the Company before the of meeting were uploaded to Market
annual meeting of shareholders Observation Post System on May 14, 2021.
Detailed disclosure in the annual report of the Have been fairly disclosed in 2020 annual
Company the discussion matters and resolution report.
results of the compensation committee and the
Company’s response to the opinions of its
members.
( 二 ) Items to be implemented: Preferential items and measures for improvement to be conducted in 2021 are as follows:
Items which have not been improved Improvement measures
The convenor of audit committee should It is expected that the convenor of audit
personally attend the annual meeting of committee will personally attend the 2021
shareholders and the names of attendants should annual meeting of shareholders
be disclosed in the minutes of the meeting
The Company should disclose the status of It is expected that the communication status
communications among independent directors, will be disclosed at the Company’s website.
internal auditor, and CPA (such as the manners,
matters and results of the communications
regarding the company’s financial report and
financial business status) at the website of the
Company
The Company’s financial report should be It is expected that the financial report of
approved by the board of directors or submitted each quarter will be approved by the board
to the board of director 7 days before the time of directors before the time limit of
limit of publication, and financial report should publication, and will be publicized within 1
be publicized within 1 days after the date of day after the date of approval. The financial
approval or submission. report of Q1 of 2020 and 2021 will be
publicized within 1 day after the approval
date of the board of directors.
Note 1: The diversity of the board composition and the tasks carried out by board directors to date.
Accounting
Operational Management Crisis Industry Global Decision-
Director Sex & financial Leadership
judgement analysis capability management knowledge perspectives making
Xingmao Group Holdings
Limited
Representative: LIN, CHIN- -  -      
MAO
Chia Mei Investment Co., Ltd.
Representative: TUNG, -     -   
CHIUNG-SHIUNG
LIN, CHING-WEI M  -      
HUNG, HSIANG-MING M        
LIEN, KING-BIAU M  -      
LEE, KUN-MING M     -   
LIU, HENG-YIH M  -   -   
Note 2: Communication channels and dealings with stakeholders
Stakeholder Key issues Communication channels Interactions
Investors Company operations, Annual reports Periodical publication of financial statements
financials, and corporate Investor Relations section on and preparation of annual reports
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governance company website Regular updates of financial and other material
Shareholder meetings information via Market Observation Post
Investor Relations email box: System
[email protected] Regular capital market day events and
Market Observation Post System shareholder meetings to report to investors
company operations and financial status
Employees Employee benefits Administration Department Employee recruitment/dismissal,
Company website compensations, incentives, and benefits in a
reasonable manner and according to relevant
labor laws and regulations
Training & education on an ad-hoc basis
Customers Customer relations Customer visits Regular participation of supplier conferences
Collaboration in supplier conferences organized by customers to understand their
needs
Suppliers Supply chain Procurement contracts Full communication with suppliers and signing
management Supplier visits of procurement contracts
Product innovations Regular visits to suppliers to understand their
needs
Media Company operations and Company website/E-mail Monthly release of operating information,
financials quarterly announcement of operating results
and ad-hoc initiatives in business development
Communities Environmental issues Company website/E-mail Involvement in a variety of community or
Giving back to social welfare campaigns
communities
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(1) Training & education for directors in 2020

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Total
Name Date Organizer Title of programs number
of hours
LIN, CHIN-MAO August 13 Taiwan Corporate Merger & acquisition strategies and 3
LIN, CHING-WEI Governance Association planning
HUNG, HSIANG-MING
TUNG, CHIUNG-SHIUNG
LIEN, KING-BIAU
October 23 TWSE 2020 propaganda seminar on 3
HUNG, HSIANG-MING corporate governance and corporate
ethics for directors and supervisors.
November 6 Taiwan Investor Keys to corporate sustainability: 3
LIN, CHIN-MAO
Relations Institute corporate professionalization and
LIN, CHING-WEI
family professionalization
November 20 Taiwan Corporate Laws and regulations of corporate 3
TUNG, CHIUNG-SHIUNG
Governance Association governance and securities
November 27 TWSE 2020 propaganda seminar on 3
LIEN, KING-BIAU corporate governance and corporate
ethics for directors and supervisors
June 29 Taiwan Corporate Exploration to operational risks and 3
Governance Association legal liabilities under corporate
governance
LIU, HENG-YIH June 29 Taiwan Corporate New version of corporate 3
Governance Association governance blueprint, corporate
governance assessment and
corporate social responsibilities
August 10 Taiwan Corporate Analysis of high efficient operation 3
Governance Association practice of board of directors and
functional committees
LEE, KUN-MING November 11 Taiwan Corporate Disclosure of material information 3
Governance Association of the company and the
responsibilities of directors and
supervisors
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(2) Training & education of executive managers and audit supervisors in 2020

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Total
Title Name Date Organizer Title of programs number
of hours
Taiwan Corporate Merger & acquisition strategies
August 13 3
Governance Association and planning
President LIN, CHIN-MAO Taiwan Investor Keys to corporate sustainability:
November 6 Relations Institute corporate professionalization 3
and family professionalization
Taiwan Corporate Merger & acquisition strategies
August 13 3
Governance Association and planning
General
LIN, CHING-WEI Taiwan Investor Keys to corporate sustainability:
Manager
November 6 Relations Institute corporate professionalization 3
and family professionalization
Taiwan Corporate Merger & acquisition strategies
August 13 3
Chief Governance Association and planning
Operating 2020 propaganda seminar on
HUNG, HSIANG-MING
Officer corporate governance and
October 23 TWSE 3
(COO) corporate ethics for directors
and supervisors.
Coronavirus Impact on Financial
May 12 ACCA 1
Reporting
Live webinar: HKFRS 15:
June 29 HKICPA Sharing application experience 2.5
of the revenue standard
Essential points for amendment
Accounting Research to relevant regulations and the
July 14 and Development frequently seen deficiencies in 3
Foundation preparation of IFRS financial
reports
Accounting Research Case exploration to the search of 3
July 17 and Development fraud “fund flow” and relevant
Foundation legal liabilities
New version of corporate 3
governance blueprint
July 23 Shih Chien University
(2018~2020) – Enhancing
investor relationship
Chief Shih Chien University Strategy, accounting and 3
Financial July 23 practice of group’s
Tang Tat Shing
Officer organizational restructuring
(CFO) Shih Chien University Topic of taxation: Strategy and 3
practice of return of offshore
July 24 funds to Taiwan, and the
mindset of anti-tax avoidance
management practice
Shih Chien University Legal liabilities and obligations 3
July 24 of financial and accounting
officers
Enhancement of the ability of 3
Accounting Research self-preparation of financial
July 28 and Development report: internal control, internal
Foundation audit and information
technology
August 4 IAS 36 Impairment of Assets
ACCA 1.5
(Cantonese)
August 20 Accounting Research Frequently seen corporate 3
and Development governance deficiencies of
Foundation companies and analysis of
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	relevant laws and regulations.	relevant laws and regulations.	relevant laws and regulations.	relevant laws and regulations.
	September 9 Accounting Research and Development Foundation Analysis of practice of “valuation report” of business readinganalysis 3
	September 14 Accounting Research and Development Foundation Analysis of case of misrepresentation of financial report and how to take insight into key information of financial report 3
Audit Supervisor Wang Jing-Yi	August 6 The Institute of Internal Auditors,R.O.C. Essential points of internal audit of regulatory compliance 6
	October 19	The Institute of Internal Auditors, R.O.C.	Analysis of the policy of enhancing companies’ abilities of self-preparation of financial report and discussion of essential points of practice of internal control and internal audit	6

(IV) Disclosure of composition, responsibility and functioning of Remuneration Committee if applicable
Information on Compensation Committee members

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Term Meet One of the Following Professional
Qualification Requirements, Together with at Least Five Independence Information (Note 2)
Years Work Experience
An instructor in or A judge, public Have work
a higher position in prosecutor, experience in the
a department of attorney, certified area of Number of Other
commerce, law, public accountant, commerce, law,
finance, or other finance, or Public Companies
Position accounting, or professional or accounting, or Concurrently
(Note 1) department related other academic specialists who has technical necessary for the otherwise 1 2 3 4 5 6 7 8 9 10 Serving as a Member of Remarks
to the business passed a national business of the Compensation
needs of the examination and company Committee
company in a been awarded a
public or a private certificate in a
junior college, profession
college, or necessary for the
Name university business of the
company
Independent LIEN, KING-BIAU - -            1
Director
Independent LEE, KUN-MING -             1
Director
Independent LIU, HENG-YIH  -            3
Director
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Note 1: For the position, it will be filled up as director, independent director or others.

Note 2: Please tick with  mark in the boxes below where the Compensation Committee members prove to have met with the conditions enumerated below in two years before being appointed and during their tenure of office
(1) Not an employee of the company or any of its affiliates.
(2) Not a director or supervisor of the company or any of its affiliates. (This, nevertheless, does not apply to cases where the person is an independent director of the Company, its parent company or any subsidiary or a subsidiary with same parent company where the independent directors perform multiple duties concurrently among themselves in accordance with the Act or the laws and regulations of the local country).
(3) Not a natural person shareholder who holds shares, together with those held by the person’s spouse, minority or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding share of the company or rank as top-10 shareholders.
(4) Not a manager specified under (1) or not a spouse, relative within the second-degree relatives, or lineal relative within the third degree by blood of any of the personnel specified under (2) and (3).
(5) Not as a director, supervisor or an employee who directly holds more than 5% of the Company's total issued shares, the top five shareholders or representative designated to serve as a director or a supervisor of a corporate shareholder in accordance with Paragraphs 1 or 2 under Article 27 of the Company Act (This, nevertheless, does not apply to cases where the person is an independent director of the Company, its parent company or any subsidiary or a subsidiary with same parent company where the independent directors perform multiple duties concurrently among themselves in accordance with the Act or the laws and regulations of the local country).
(6) Not as a director, supervisors or an employee of another company controls another company and the Company's directors or voting shares with one half majority (This, nevertheless, does not apply to cases where the person is an independent director of the Company, its parent company or any subsidiary or a subsidiary with same parent company where the independent directors perform multiple duties concurrently among themselves in accordance with the Act or the laws and regulations of the local

country).

(7) Not as a director (trustee), supervisor (supervising officer) or employee of another company or institution as the same person or the spouse thereof of the Company's chairman, general manager (Chief Executive Officer (CEO)) or person of equivalent position (This, nevertheless, does not apply to cases where the person is an independent director of the Company, its parent company or any subsidiary or a subsidiary with same parent company where the independent directors perform multiple duties concurrently among themselves in accordance with the Act or the laws and regulations of the local country).
(8) Not as a director (trustee), supervisor (supervising officer), manager or a shareholder holding more than 5% of the shares of a specific company or institution in financial or business transaction with the Company(This, nevertheless, does not apply to a specific company or institution which holds more than 20%, less than 50% of the aggregate total outstanding shares of the Company, and where the company and its parent company, subsidiary or a subsidiary with the same parent company where the independent directors perform multiple duties concurrently among themselves according to the Act or the laws prevalent locally.)
(9) Not as the professionals, the enterprise proprietor, partner, director (trustee), supervisor (supervisory officer), manager and the spouse thereof of sole proprietors, partners, companies or institutions rendering auditing, commercial, legal, financial, accounting and such relevant services to the Company or affiliated enterprises thereof with remuneration obtained over the past two years not beyond NT$500,000. This, nevertheless, does not apply to a member of the Open Acquisition Committee, Remuneration Committee or Special Merger/Acquisition (M&A) Committee in accordance with Securities and Exchange Act, Business Mergers and Acquisitions Act and relevant laws.
(10) Not been a person or any conditions defined in Article 30 of the Company Act.
Responsibility of Remuneration Committee

Remuneration Committee shall exercise duty of care in fulfilling the following functions, report to the Board of Directors by forwarding its recommendations:

(1) Regular review of the charter of Remuneration Committee and develop improvement measures;
(2) Formulation and periodical review of the annual and long-term performance of directors and managers, and the remuneration policy, system, standard and structure;
(3) Regular assessment of target achievements by directors and managers and determine the contents and amounts of their individual remunerations accordingly.
Functioning of Remuneration Committee
(1) Remuneration Committee consists of three members.
(2) Tenure: from January 9, 2019 to January 8, 2022.

The Company’s first Remuneration Committee convened a total of three meetings (A) in 2020. The attendance record is as follows:

(A) in 2020. The attendance record is as follows:
Title Name Times of Actual Attendance in Person`【`B`】` Times of Attendance by Proxy Actual Attendance Ratio (%) (%) `【`B/A`】`(Note)	Remarks
Convener LIEN, KING-BIAU 3 0 100.00	-
Commission member LEE, KUN-MING 3 0 100.00	-
Commission member LIU, HENG-YIH 3 0 100.00	-
Other matters to be noted in the meeting minutes:
1. If the Board of Directors refuses to accept of modify suggestions of the Compensation
Committee, the meeting date, session, agenda content, results resolved by the Board of Directors,
and the Company’s treatment of opinion of the Compensation Committee should be	clearly stated
(for example, if the Board of Directors approved a compensation structure that is better than that
suggested by the Compensation Committee, the circumstance of discrepancy and reason should
be clearly stated): None
2. If the members have opposite opinion or reservations against the resolution of the Compensation
committee and the opinion or reservations have been recorded or documented, the meeting date,

Title Name Times of Actual Attendance in Person`【`B`】`	Times of Attendance by Proxy	Actual Attendance Ratio (%) (%) `【`B/A`】`(Note)	Remarks
session, agenda content, the opinion of all members of the Compensation committee, and the
treatmentof themembers’opinionshould be clearly stated: None

(3) Discussion matters and resolution results of the compensation committee and the Reponses of the Company to opinions of its members:

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Resolution result of the
Meeting date/session Contents of proposal
compensation committee
March 25, 2020/the 6 [th] 1.Review the proposal for 2019 remunerations to Approved by all attending
meeting for the 1 [st] employees and remunerations to directors committee members
Board 2. Proposal for 2019 performance evaluation of
management and 2020 remunerations to
management
3. Proposal for 2020 remunerations to directors
4. Proposal for 2020 remunerations to independent
directors
Response of the Company to opinions of the compensation committees: Approved
with consents of all attending directors
November 11, 2020/the 1. Proposal for 2021 remunerations to directors Approved by all attending
7th meeting for the 1st 2. Proposal for 2021 remunerations to independent committee members
Board directors
Response of the Company to opinions of the compensation committees: Approved
with consents of all attending directors
December 15, 2020/the 1.Proposal for travel allowances to directors and Approved by all attending
8th meeting for the 1st independent directors committee members
Board 2.Proposal for employees’ subscriptions to treasury
shares transferred by the Company
Response of the Company to opinions of the compensation committees: Approved
with consents of all attending directors
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(V) Performance of social responsibility, and the discrepancy of such implementation from the Corporate Social Responsibility Best Practice Principles for TSEC/GTSM Listed Companies, and the reason for any such discrepancy:

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Facts of performance The discrepancy of
such implementation
from the Corporate
Social Responsibility
Best Practice
Evaluation Items
Yes No Description in Summary Principles for
TSEC/GTSM Listed
Companies, and the
reason for any such
discrepancy
efficiency and environmental
protection. We have reduced
the liquor ratio from 1:8 to
1:4 to save on water and
energy in the dyeing process.
C. Wastewater
We use the most advanced
reverse osmosis technology
to process wastewater from
the dyeing process. We have
constructed a robust system
for wastewater treatment. In
Taiwan, our capacity is to
handle 4,000 tons per day, at
25% reuse rate for reclaimed
water. In Cambodia, our
capacity is 7,000 tons per
day.
We seek to meet inspection
requirements set by competent
authorities and the public’s expectation
for giving back to the society.
(2) Does the Company endeavor to  (2) To cut down paper consumption, we
upgrade the utilization efficiency of promote paperless offices and reuse
various resources, and use the one-side printout. We recycle garbage
regenerated material with a low impact where possible, to reduce our
on environmental load? environmental impacts.
(3) Does the Company assess existing and  (3) Climate change is the problem for all of
potential risks and opportunities us. The Company improves our
associated with climate change and manufacturing processes to lower
adopt the corresponding responses and carbon emissions, save energy and
measures? protect the environment.
(4) Does the Company calculate the GHG  (4) We regularly advocate the importance
emissions, water consumption and total of conservation in energy, electricity,
wastes during the past two years, and and water. We use high-performance
formulate policies to achieve energy bulbs, switch off computers where
efficiency, reduction of carbon possible and keep our air-conditioners
emissions, GHS emissions, water at 26℃, to achieve energy efficiency
consumption or manage wastes? and carbon reduction.
4. Maintenance of Community Public
Welfare
(1) Does the company establish related  (1) We formulate HR management charters
management policies and procedures in and work rules according to local labor
accordance with related laws and laws for our operations in different
No significant
international covenants on human jurisdictions, to protect the legal rights
differences.
right? of our employees. We also set up a
union and regularly convene labor
meetings to ensure a harmonious
employment relationship.
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Facts of performance The discrepancy of
such implementation
from the Corporate
Social Responsibility
Best Practice
Evaluation Items
Yes No Description in Summary Principles for
TSEC/GTSM Listed
Companies, and the
reason for any such
discrepancy
(2) Does the Company formulates and  (2) The Company has set up a reasonable
implemented an employee welfare remuneration system, in conjuncture
scheme (including wages, holidays and with performance reviews and aligned
other benefits) and reflected with company targets. We seek to
appropriately the business performance achieve fairness and appropriateness for
onto employee remunerations? both rewards and punitive measures.
(3) Does the company provide employees  (3) The Company provides employees a
with a safe and healthy working safe and healthy work environment and
environment, and implement safety and offers a variety of training &
health education to employees on a educational programs to factory
periodical basis? operators and office employees in a
timely manner.
(4) Does the Company establish effective  (4) The Company organizes internal and
career competency development and external training schemes each year, to
training plans for employees? facilitate effective development of
professional expertise and career
prospects for employees.
(5) Does the Company observe the  (5) The Company maintains good
relevant laws, regulations and communication with customers. There
international standards regarding the is also a transparent and effective
health, safety, customer privacy, channel for customers to complain
marketing and labeling of about products and services. Those who
products/services, and has formulated have any question about the Company’s
relevant policies and complaint products or services can reach out to our
procedures to protect the right of personnel.
consumers?
(6) Does the Company set up supplier  (6) The Company conducts detailed
management policies by requesting assessment of suppliers to understand
suppliers to adhere to relevant their environmental and social impacts.
standards in environmental protection, Going forward, we will strengthen our
occupational health & safety or labor & collaboration with suppliers in
human rights and reporting their corporate social responsibility. We will
implementations accordingly? suspend, in a timely manner,
cooperative ties if any of our suppliers
reports material hazards to the
environment or the society.
5. Does the Company refer to  The Company does not yet compile corporate Planned
internationally acceptable standards or social responsibility reports. organizational
guidelines for the compilation of CSR structure based on
reports to disclose non-financial the current status,
information? Are these reports relevant laws, and
confirmed or endorsed by third-party regulations
evaluation organizations?
6. In case a company establishes its own Corporate Social Responsibility Code in accordance with “Corporate Social
Responsibility Best Practice Principles for TSEC/GTSM Listed Companies”, please describe its operation and the
deviation from the established Best Practice Principles: The Company has set up a set of guidelines for corporate social
responsibility. There is no significant discrepancy between the internal functioning and the structured guidelines.
7. Other important information facilitating to understand the operation status of corporate social responsibility: None
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(VI) Performance of ethical corporate management, and the discrepancy of such implementation from Ethical Corporate Management Best Practice Principles for TSEC/GTSM Listed Companies, and the reason for any such discrepancy

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Facts of performance (Note 1) The discrepancy of
such implementation
from Ethical
Corporate
Management Best
Evaluation Items
Yes No Description in Summary Practice Principles
for TSEC/GTSM
Listed Companies,
and the reason for
any such discrepancy
1. Establishment of policy and measures of
ethical management.
(1) Does the Company establish business  (1) The Company has set up the Ethical
ethics code and have it approved by the Corporate Management Best
Board of Directors? Does the Company Practice Principles by emphasizing
specify in external documents its policy, the importance of integrity and
practice of operation in good faith in its honesty. These principles are
corporate statutes and bylaws and the incorporated into the internal control
commitment from the Board of Directors system so that our directors,
and senior management to its operation managers, and employees are aware
policy? and adhering to.
(2) Has the Company put in place an  (2) The Company has set up the
assessment mechanism for the risks Operational Procedures and
associated with dishonest behavior, and Behavioral Guidelines in Ethical
regularly analyzed and assessed the Corporate Management. These
operating activities exposed to higher procedures and guidelines are for our No significant
risks of dishonest behavior, and day-to-day operations. To ensure our differences.
formulated preventive measures business integrity, we have
accordingly and covering at least the established an effective accounting
preventive measures specified in the system and an internal control
second paragraph of Article 7, the Ethical system. Internal auditors regularly
Corporate Management Best Practice inspect the compliance with the
Principles TWSE/GTSM Listed abovementioned rules and
Companies? regulations in place.
(3) Does the Company specify a scheme to  (3) The Company adheres to business
prevent dishonest behaviors, and integrity and ethics. We strictly
expressly describe in operation prohibit bribery giving and taking
procedures, conduct guidelines, punitive and we specifically disallow illegal
measures and compliant channels donations.
accordingly, in order to properly
implement the abovementioned scheme?
2. Thorough implementation of ethical
corporate management
(1) Does the Company evaluate the record of  (1) Before engaging in any transactions,
ethics of the transaction parties, and we collect as much information as
expressly specify clauses dealing with possible about the creditworthiness
behaviors of ethics in the signed contracts and reputation of counterparties, to
of the transaction parties? prevent any frauds or deceits. No significant
differences.
(2) Has the Company established a unit under  (2) The Chairman’s Office oversees our
the Board of Directors to promote business code of conduct, and
corporate operation in good faith, and reports to the Board of Directors
regularly report to the Board of Directors after periodical inspections.
(at least once per year) its execution and
oversight of the business ethics policy and
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Facts of performance (Note 1) The discrepancy of
such implementation
from Ethical
Corporate
Management Best
Evaluation Items
Yes No Description in Summary Practice Principles
for TSEC/GTSM
Listed Companies,
and the reason for
any such discrepancy
prevention of dishonest behavior?
(3) Does the Company stipulate a policy of  (3) Directors may not discuss or vote in
preventing interest conflict, provide due the issues where themselves or their
statement channels, and actualize the representatives are an interested
execution? party and the conflict of interest
may be detrimental to the best
interest of the Company. They
may, however, express opinions and
answer questions.
(4) Has the Company established an effective  (4) The Company has put in place an
accounting system and an internal control effective accounting and internal
system to implement operation in good control system. Internal auditors
faith, designated internal auditors or periodically inspect the compliance
commissioned external auditors to the abovementioned system.
accordingly to formulate audit plans based
on the assessment of risks associated with
dishonest behavior as the basis for the
audit of dishonest behaviors?
(5) Does the company hold internal, external  (5) The Company organizes internal
educational training for ethical corporate and external training & education
management on a periodical basis? programs, on an ad-hoc basis and as
required, to advocate the importance
of ethics.
3. Operation Status of Corporate Reporting
System of an Offense (1) The Company has set up a letterbox
(1) Does the Company establish substantial  for whistleblowing. If any behavior
offense reporting and incentive systems, breaching laws or code of conduct
and establish convenient offense reporting is identified, our dedicated
channels, and assign proper exclusively personnel will report and respond
responsible personnel to accept the accordingly. Responsible business
reported subject of an offense? units will be involved if the breach
is material. Relevant details,
responses and follow-up
No significant
improvements shall be reported to
differences.
the Board of Directors.
(2) Has the Company established the standard  (2) The Company has set up an internal
investigational procedures of receiving communication channel, managed
whistle-blowing reports, subsequent by the Chairman’s Office.
measures after investigations and the Confidentiality of relevant
confidentiality mechanism? information is ensured.
(3) Does the company take measures to  (3) The Chairman’s Office will protect
protect an offense reporting party from the whistleblower from improper
suffering improper disposition due to an treatment.
offense report?
4. Strengthen Information Disclosure
Does the company disclose the content of The Company has set up a corporate
Ethical Corporate Management Best  social responsibility system and discloses No significant
Practice Principles and promotion relevant information on our official differences.
performance in its website and Market website.
Observation Post Site?
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(VII) If the Company has established corporate governance principles and relevant regulations, they should disclose how to inquire relevant information:

The Company has set up corporate governance principles and relevant regulations such as Code of Conduct, Ethical Corporate Management Best Practice Principles, and Operational Procedures and Behavioral Guidelines in Ethical Corporate Management. All these corporate governance charters and regulations are posted at Corporate Governance section of our official website, so that investors can inquire and download.

(VIII) Other important information that can help to understand how the Company’s corporate governance functions: None
(IX) The following information concerning the implementation of the internal control system should be disclosed:

1. Internal Control Statement:

TST Group Holding Ltd. Statement on Internal Control System

Date: March 24, 2021

The Company's internal control system for 2020 is announced according to the results of self-evaluation, and the following is a summary thereof:

The Company acknowledges that the establishment, implementation and maintenance of the internal control System are the responsibilities of the Board of Directors and the managers of the Company, and the Company has established such a system. Our internal control process is designed to provide reasonable assurance over the effectiveness and efficiency of our operations (including profitability, performance and safeguarding of assets), reliability, timeliness, transparen our reporting, and compliance with applicablerulings, laws and regulations, to ensur reasonable assurance thereof.
The internal control system has inherent limitations. No matter how complete their design, effective iternal control systems are limited to providing reasonable assurance of the aforementioned three objectives. Moreover, in light of the environment and changes in circumstances, internal control system effectiveness may als be affected. However, the Company's internal control system contains self-monitoring mechanisms, and when any fault is noted, the Company immediately deploys corrective action.
The Company has made its judgments as to components of, and the effectiveness of the design and implementation of the internal control systems according to the "Regulations Governing the Establishment of Internal Control Systems by Public Companies" (hereinafter referred to as the "Compliance Guidelines"). The internal control system adopted in the "Compliance Guidelines" involves the process of management control, and is divided into five elements:
The control environment, 2. Risk assessment, 3. Control processes, 4. Information communication, and 5. Supervision operations. Each constituent element includes a number of items. For the aforementioned items, please refer to the “Compliance Guidelines
The Company has adopted the abovementioned internal control system assessment items to evaluate the effectiveness of the internal control system design and implementation.
In accordance with the Company's aforementioned evaluation, the Company found that its internal control system(including the assessment and management of subsidiaries)including efficacy of understanding operations ,efficiency of achievement of objectives ,reliability in reporting, timeliness, and compliance with the relevant Guidelines and law, indicate that the internal control system design and implementation are effective, and can reasonably provide assurance of the aforesaid goals as of December 31, 2020.
The Company has commissioned a CPA project to audit the external financial report reliability and assets security protection (prevent the assets from been acquired, used, or disposed of without authorization) related internal control system for the aforesaid period pursuant Article 28 of the Governing Regulations. and Article 4 of Taiwan Stock Exchange Corporation Rules for Regulating Primary Listed Foreign Issuers As stated in the preceding paragraph, the system's design and execution are effective and do not have significant defect that can affect the recording, processing, aggregation, and reporting of financial information or impact the assets security protection used to prevent assets from being acquired, used, or disposed of without authorization.
This Declaration will become an integral part of the main contents of the Company's annual report and prospect us, and shall be made public. For any falsehood, concealment, or other illegality in the

contentstobe made publicthere will be legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Law.

The Statement has been agreed to by the Company’s Board of Directors on March 24, 2021, where none of the 7 directors present voted against the resolution, and the remaining directors thus all agreed with the content of the Statement, and such is now attested to.

TST Group Holding Ltd.

Chairman:XINGMAO GROUP HOLDINGS LIMITED LIN, CHIN-MAO

General Manager:LIN,CHING-WEI

The report by external auditors should be disclosed if external auditors were commissioned to review the internal control system:

Internal Control Systems’ Compliance Report

Attached is the March 24, 2021 assessment of the internal control system of TST Group Holding Ltd. and subsidiaries and its external financial reports and assurance of its protection of assets, with the Attestation of December 31, 2020 as to effective design and implementation thereof, duly approved upon conclusion of audit by the CPA. The internal control system and evaluation of its effectiveness are responsibilities of the Company’s management, and this CPA is responsible in accordance with the results of the audit to express an opinion of the effectiveness of the Company's internal control system and the aforementioned Attestation regarding the Company's internal control system.

The CPA has conducted the audit review in accordance with the "Regulations Governing Establishment of Internal Control Systems by Public Companies" and the audit standards generally accepted in the Republic of China to ensure that the Company maintains a reasonable assurance on all material aspects of the internal control system. The audit review work includes understanding the Company’s internal control system, evaluation of management levels’ processes of evaluation of the effectiveness overall internal control system, and testing and evaluation of the effectiveness of the design and implementation of the internal control system, as well as any other audit review procedures that the CPAs deem necessary. The CPAs believe that this audit review work provides a reasonable grounds for our opinion.

Any internal control system has its inherent limitations, therefore, the above internal control systems of TST Group Holding Ltd. and subsidiaries, may not be able to prevent or detect errors or fraud that have taken place. Furthermore, future environmental changes may result in reduced efficacy of the internal control system. Hence, while the internal control system is deemed effective for this period, this does not mean that it will be effective in the future.

In accordance with the opinion of the CPAs, and in light of the provisions of the Regulations Governing Establishment of Internal Control Systems by Public Companies as to the items reviewed for internal control efficacy determinations, TST Group Holding Ltd. and subsidiaries and its design and implementation of internal control systems governing external financial reports and assuring protection of assets are deemed to continue to be effective in all material respects as of December 31, 2020. Also as of March 24, 2021, the Attestation of TST Group Holding Ltd. and subsidiaries regarding effective design and implementation of internal control systems for external financial reports and assuring protection of assets is found reasonable in all material respects.

Juanlu, Man-Yu, CPA Lin, Ya-Hui, CPA

For and on behalf of PricewaterhouseCoopers, Taiwan March 24, 2021

(X) During the most recent year and as of the print date of this annual report, any legal publishment on the Company and internal personnel, or punitive measures imposed by the Company to its internal personnel due to violation of internal control rules, major breaches and improvements: None
(XI) During the most recent year and as of the print date of this annual report, any important decisions from shareholder meetings and Board of Director meetings:

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1. Important decisions from shareholder meetings:
Meeting date Key decisions Implementation
(yy/mm/dd)
2020.06.16 The 2019 consolidated financial statements and
business report were compiled by the Company.
The consolidated financial have been audited by
1. Rectification of 2019 Consolidated CPAs Juanlu,Man-Yu and Lin,Ya-Hui of PwC
Financial Statements and Report of Taiwan. Such financial statements and business
Operating Results report have been submitted to and then have been
audited by the Audit Committee for the issue of the
audit report, for the ratification by the General
Meeting of Shareholders.
The Company’s reported a post-tax earnings of
NT$388,127,560 for the year 2019. After the
allocation of NT$79,435,312 to the statutory
surplus reserve and adding to the unappropriated
2. Rectification of 2019 distribution of
retained earnings at the beginning of the term of
earnings
NT$103,566,869, the distributable earnings in
accumulation at NT$412,259,117. The Company
intends to distribute a cash dividend of NT$8 per
share, for a total of NT$252,000,000.
3. Amendment of some articles in the Effective after the shareholders meeting
Company’s Articles of Incorporation
4. Formulation of the Company’s Rules for Effective after the shareholders meeting
Shareholder Meetings
5. Amendment of some articles in the Effective after the shareholders meeting
Procedures of Endorsements and
Guarantees
2. Important decisions from board meetings:
Meeting date Key decisions Implementation
2020.03.25 1. Review of 2019 remunerations to employees and Approved by all independent
directors directors
2. Review of 2019 Internal Control Statement
3. Review of 2019 Consolidated Financial Statements and
Report of Operating Results
4. Review of 2019 distribution of earnings
5. Amendment of some articles in the Company’s Articles
of Incorporation
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Meeting date Key decisions Implementation
2020.03.25 1. Review of 2019 remunerations to employees and Approved by all independent
directors directors
2. Review of 2019 Internal Control Statement
3. Review of 2019 Consolidated Financial Statements and
Report of Operating Results
4. Review of 2019 distribution of earnings
5. Amendment of some articles in the Company’s Articles
of Incorporation
6. Amendment of some articles in the Company’s Articles
of Association for Remuneration Committee
7. Amendment of some articles in the Company’s Articles
of Association for Audit Committee
8. Amendment of some articles in the Company’s Board of
Directors Meeting Procedure Rules.
9. Amendment of some articles in the Rules of Procedure
for Shareholders Meetings
10. The Company is amending some articles in its
Operational Management of Endorsements and
Guarantees.
11. Amendment of some articles in the Procedures for the
Company's Ethical Corporate Management Best
Practice Principles
12. Amendment of some articles in the Corporate
Governance Best Practice Principles
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Meeting date Key decisions Implementation
13. Amendment of some articles in the Practical Principles
of Corporate Social Responsibility
14. Amendment of some articles in the Ethical Corporate
Management Best Practice Principles
15. Implementation of the stock repurchase program and
the transfer of treasury stocks to employees
16. Convening of 2020 Shareholder Meeting
2020.05.12 1. Review the consolidated financial statements for Q1 of Approved by all independent
2020 directors
2. Approve the 2020 renewal of liability insurances for
directors and management
3. Approve the proposal for 2020 revised budget
2020.08.13 1. Proposal for independence of CPA of financial report of Approved by all independent
the Company directors
2. Review the consolidated financial statements for Q2 of
2020
3. Amend partial provisions of “Regulations on Meeting
of Board of Directors” of the Company
4. Amend partial provisions of “Charter for Compensation
Committee” of the Company
5. Amend partial provisions of “Charter for Audit
Committee” of the Company
6. Amend partial provisions of “Code of Ethical Conduct”
of the Company
7. Amend partial provisions of “Rules Governing the
Scope of Powers of Independent Directors” of the
Company
8. Amend partial provisions of “Rules Governing
Financial and Business Matter between Affiliated
Enterprises” of the Company
9. Formulate “Rules for Performance Evaluation of Board
of Directors” of the Company
2020.11.11 1. Review the consolidated financial statements for Q3 of Approved by all independent
2020 directors
2. Approve 2021 operation plan and budget
3. Approve 2021 audit plan
2020.12.15 1. Amend “Internal Control System” and “Rules of Approved by all independent
Implementation of Internal Audit” of the Company by directors
adding the item of procedure of transfer of treasury
shares
2. Approve the employees’ subscription to treasury shares
transferred by the Company
3. Approve the Company’s investment in establishing a
factory in Vietnam
4. Capital injection for investment in the establishment of
a new BVI subsidiary through the subsidiary, TST
International Group Limited
5. Approve the change the share transfer agent for the
Company
2021.1.21 1. Approve the additional capital injection to THRIVE Approved by all independent
NATION GROUP LIMITED through the subsidiary, directors
TST International Group Limited.
2. The proposal for the establishment of new subsidiary in
Vietnam through the Company’s subsidiary, THRIVE
NATION GROUP LIMITED
2021.3.24 1. Review of 2020 remunerations to employees and Approved by all independent
directors directors
2. Review of 2020 Internal Control Statement
3. Review of 2020 Consolidated Financial Statements and
Report of Operating Results
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Meeting date Key decisions Implementation
4. Review of 2020 distribution of earnings
5.
6. Amendment of some articles in the Rules of Procedure
for Shareholders Meetings
7. Proposal for independence of CPA of financial report of
the Company
8. Issue new shares of restricted stock unit(RSU)
9. Convening of 2021 Shareholder Meeting
2021.5.12 1. Review the consolidated financial statements for Q1 of Approved by all independent
2021 directors
2. Approve the 2021 renewal of liability insurances for
directors and management
3. The proposal for additional capital inject to THRIVE
NATION GROUP LIMITED through the subsidiary,
TST International Group Limited
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(XII) During the most recent year and as of the print date of this annual report, any different opinions from directors or supervisors on important decisions by the Board of Directors and such differences are recorded or stated in writing: None

(XIII) During the most recent year and as of the print date of this annual report, any resignation by or dismissal of Chairman, General Manager, accounting supervisors, financial supervisors, internal audit supervisors or R&D supervisors:

Title	Name	Date of on Board (yy/mm/dd)	Date of on dismissal	Reasons for resignation or dismissal
R&D supervisors	Zhang Xinbin	1994.12.01	2020.12.31	Internal job adjustment

V. Information on Certified Public Accountant’s audit fees

(I) Audit fee scale

Information on Certified Public Accountant’s audit fees (I) Audit fee scale	Information on Certified Public Accountant’s audit fees (I) Audit fee scale	Information on Certified Public Accountant’s audit fees (I) Audit fee scale	Information on Certified Public Accountant’s audit fees (I) Audit fee scale	Information on Certified Public Accountant’s audit fees (I) Audit fee scale
Name of CPA firm Name of CPA Duration covered inthe audit Remarks
PricewaterhouseCoopers Taiwan(PwC Taiwan)	Juanlu, Man-Yu	Lin, Ya-Hui	Year 2020	-

Expressed in Thousands of New Taiwan Dollars

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Contents of fees
Audit fees Non-audit fees Total
Amount scale
1 Below $2,000 thousand V
$2,000 thousand (inclusive) ~
2 V
$4,000 thousand
$4,000 thousand (inclusive) ~
3 V
$6,000 thousand
$6,000 thousand (inclusive) ~
4
$8,000 thousand
$8,000 thousand (inclusive) ~
5
$10,000 thousand
Above $10,000 thousand
6
(inclusive)
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(II) Where the fees paid to the Certified Public Accountant, the office of the Certified Public

Accountant and its affiliates as non-audit fee that accounts for over one quarter of the aggregate total of audit fee, the amounts of the audit and non-audit services and the contents of the onaudit services should be disclosed, respectively:

			Expressed in Thousands of New Taiwan Dollars	Expressed in Thousands of New Taiwan Dollars	Expressed in Thousands of New Taiwan Dollars	Expressed in Thousands of New Taiwan Dollars	Expressed in Thousands of New Taiwan Dollars	Expressed in Thousands of New Taiwan Dollars	Expressed in Thousands of New Taiwan Dollars
Name of CPA firm Name of CPA Audit fees			Non-audit fees Duration covered in the audit by CPA Remarks System design Commercial registration Human resources Others Subtotal
Pricewaterho useCoopers Taiwan (PwC Taiwan)	Juanlu, Man-Yu Lin, Ya-Hui	3,886	-	-	-	1,330	1,330	Year 2020	Internal control audit

(III) Reasons for change of external auditors and audit fees before and after, particularly when the audit fee for the first year of the new auditors is lower than the fee paid to the replaced auditors during the previous year: None
(IV) Reduced amount, percentage and reason if audit fee is cut down by 10% or more than the previous year: The audit fee is reduced by NT$1,345 thousand, representing 25.71%, because the audit fee for 2019 included the audit fee for the comparable periods for the previous year not reviewed.

VI. Information of a change (replacement) in the Certified Public Accountants (CPAs):

(1) About the former CPAs: N/A
(2) About the succeeding CPAs: N/A
(3) Response from previous external auditors: N/A
VII. The Company’s Chairman, General Manager, managers in charge of financial affairs and accounting who have served with the office of a Certified Public Accountant or its affiliates: None
VIII. The fact that during the most recent year and as of the print date of this annual report, transfer of shares, pledge or change in equity held by the directors, supervisors, managers and major shareholders holding over 10% of the aggregate total
- (I) Change of holdings by directors, supervisors, managers, and major shareholders with 10% stakes or higher

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Expressed in Thousand Shares
Year 2020 As of April 18, 2021
Title Name Increase Increase Increase Increase
(decrease) in (decrease) in (decrease) in (decrease) in
shares held shares pledged shares held shares pledged
Chairman cum over
10% major LIN, CHIN-MAO - - - -
shareholder
Chairman cum major
Xingmao Group Holdings Limited
shareholders with - - - -
10% stakes Representative: LIN, CHIN-MAO
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Year 2020 As of April 18, 2021
Title Name Increase Increase Increase Increase
(decrease) in (decrease) in (decrease) in (decrease) in
shares held shares pledged shares held shares pledged
Director cum
LIN, CHING-WEI - - - -
General Manager
Director cum
Chief Operating HUNG, HSIANG-MING - - - -
Officer (COO)
Chia Mei Investment Co., Ltd.
Director - - - -
Representative: TUNG, CHIUNG-SHIUNG
Independent Director LIEN, KING-BIAU - - - -
Independent Director LEE, KUN-MING - - - -
Independent Director LIU, HENG-YIH - - - -
Chief Financial
Tang Tat Shing - - - -
Officer (CFO)
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(II) Affiliated counterparties for transfer of shares by directors, supervisors, managers, and major shareholders with 10% stakes or higher: None
(III) Affiliated counterparties for collateralization of shares by directors, supervisors, managers, and major shareholders with 10% stakes or higher: None

IX. Top 10 shareholders who are related parties, spouses or relatives with two degrees

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April 18, 2021; Expressed in Thousands Shares; %
Total shares held by Names and Relations of Top 10 Major Shareholders who
Shares held by Shares held by
Nominee are Related Party or Spousal Relationship or are within the
principal Spouse & Minor
Arrangement Second Degree of Kinship
Name Remarks
Title
Relation
(or Name)
Xingmao Group Holdings LIN, CHIN-MAO 100% Shareholder -
Limited Big Loyal Group Limited, Sunny
10,640 33.78 - - - - Earn International Holdings
Representative: LIN, Same Shareholder -
Limited and Happy Time
CHIN-MAO
International Investment Limited
Xingmao Group Holdings
Limited,
Big Loyal Group Limited 、
LIN, CHIN-MAO 2,570 8.16 - - 15,010 47.65 Sunny Earn International 100% Shareholder -
Holdings Limited and Happy
Time International Investment
Limited
LIN, CHIN-MAO 100% Shareholder -
Xingmao Group Holdings
Big Loyal Group Limited
Representative: LIN, 2,070 6.57 - - - - Limited, Sunny Earn
CHIN-MAO International Holdings Limited Same Shareholder -
and Happy Time International
Investment Limited
Excellent Treat Limited
Representative: FANG, 2,000 6.35 - - - - - - -
CHANG
Business Department of
Standard Chartered in
Custody for Credit Suisse
- investment specialized 1,381 4.38 - - - - - - -
account of Credit Suisse,
Singapore
LIN, CHIN-MAO 100% Shareholder -
Sunny Earn International Xingmao Group Holdings
Holdings Limited 1,380 4.38 - - - - Limited, Sunny Earn
Representative: LIN, International Holdings Limited Same Shareholder -
CHIN-MAO and Happy Time International
Investment Limited
AVY Precision
Technology Inc. Representative: TUNG, 1,379 4.38 - - - - [ABICO ASIA CAPITAL ] CORPORATION Affiliated Company -
CHUN-JEN
Nova Genesis Limited
Representative: PENG, 1,035 3.29 - - - - - - -
HAN
Abico Asia Capital
Corporation
Representative: HSIEH, 1,030 3.27 - - - - AVY Precision Technology Inc. Affiliated Company -
FA-TA
Happy Time International Investment Limited LINBig Loyal Group Limited, CHIN-MAO 、 100% Shareholder -
Representative: LIN, 920 2.92 - - - - Xingmao Group Holdings Same Shareholder -
CHIN-MAO Limited and Happy Time
International Investment Limited
ratio ratio ratio
Shares Shares Shares
Number of Number of Number of
Shareholding Shareholding Shareholding
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X. Holdings by directors, managers or the entities directly or indirectly controlled by the Company in the same investee

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December 31, 2020; Expressed in Thousand Shares; %
Investment by directors,
Investment by this supervisor, manager and
Syndicated investment
Reinvested Company directly or indirectly controlled
companies company
Number of Shareholding Number of Shareholding Number of Shareholding
Shares ratio (%) Shares ratio (%) Shares ratio (%)
Bumper(BVI) 23,000 100% - - 23,000 100%
TST(BVI) 7,000 100% - - 7,000 100%
THRIVE 8,000 100% - - 8,000 100%
TSP 22,000 100% - - 22,000 100%
Top Star 30,000 100% - - 30,000 100%
Taiju Textile
Note 1 100% - - Note 1 100%
(Shanghai)
Guangzhou
Liangwei Knitted
Note 1 100% - - Note 1 100%
Fabric and
Textile
Guangzhou Taiju
Management Note 1 100% - - Note 1 100%
Consulting
Hubei
Zhongsheng Note 1 35% - - Note 1 35%
Textile
TST(Vietnam) Note 1 100% - - Note 1 100%
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Note 1: A limited company, without shares issued

Four. Facts of Capital Raising

I. Capital and Shares

(I) Source of Share Capital:

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Base day: April 18, 2021/Expressed in Thousand Shares; Thousands of New Taiwan Dollars
Authorized capital Paid-in capital Remarks
Paid by
Issue price Number of Number of
Month/Year Par value Amount Amount Source of property
(Dollar) shares shares Other
(Dollar) (Dollar) Capital other than
(Share) (Share)
cash
05/2013 US$1 US$1 50 50 1 share $1 Initial paid- - -
in capital
Long-term
06/2018 US$1 US$1 7,050 7,050 7,000 7,000 - -
investment
Par value converted to NT$10
08/2018 NT$10 NT$10 60,000 600,000 23,000 230,000 - - -
Cash
02/2019 NT$10 NT$95 60,000 600,000 28,000 280,000 injection 5 - -
million
shares
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Month/Year Par value Issue price (Dollar) Authorized capital Paid-in capital Remarks Number of shares (Share) Amount (Dollar) Number of shares (Share) Amount (Dollar) Source of Capital Paid by property other than cash Other	Month/Year Par value Issue price (Dollar) Authorized capital Paid-in capital Remarks Number of shares (Share) Amount (Dollar) Number of shares (Share) Amount (Dollar) Source of Capital Paid by property other than cash Other	Month/Year Par value Issue price (Dollar) Authorized capital Paid-in capital Remarks Number of shares (Share) Amount (Dollar) Number of shares (Share) Amount (Dollar) Source of Capital Paid by property other than cash Other	Authorized capital Paid-in capital Remarks	Authorized capital Paid-in capital Remarks	Authorized capital Paid-in capital Remarks	Authorized capital Paid-in capital Remarks	Authorized capital Paid-in capital Remarks	Authorized capital Paid-in capital Remarks	Authorized capital Paid-in capital Remarks
05/2013 US$1 US$1 50 50 1 share $1 Initial paid- in capital - -
06/2018 US$1 US$1 7,050 7,050 7,000 7,000 - Long-term investment -
Par value converted to NT$10
08/2018 NT$10 NT$10 60,000 600,000 23,000 230,000 - - -
02/2019 NT$10 NT$95 60,000 600,000 28,000 280,000 Cash injection 5 million shares - -
12/2019	NT$10	NT$158	60,000	600,000	31,500	315,000	capital increase by cash 3,500 thousand shares	-	Note

Note: Official Letter No. Tai-Zheng-Shang-Er-10817030851

	Expressed in Shares	Expressed in Shares	Expressed in Shares	Expressed in Shares
Kind of Share	Authorized capital Remarks Outstanding shares Unissued shares Total
Registered ordinaryshares	31,500,000	28,500,000	60,000,000	listed company

Note: 31,500,000 shares outstanding (including 151,000 treasury shares)

(II) Structure of shareholders

Registered ordinaryshares 31,500,000 28,500,000 60,000,000 listed company Note: 31,500,000 shares outstanding (including 151,000 treasury shares) (II) Structure of shareholders	Registered ordinaryshares 31,500,000 28,500,000 60,000,000 listed company Note: 31,500,000 shares outstanding (including 151,000 treasury shares) (II) Structure of shareholders	Registered ordinaryshares 31,500,000 28,500,000 60,000,000 listed company Note: 31,500,000 shares outstanding (including 151,000 treasury shares) (II) Structure of shareholders	Registered ordinaryshares 31,500,000 28,500,000 60,000,000 listed company Note: 31,500,000 shares outstanding (including 151,000 treasury shares) (II) Structure of shareholders	Registered ordinaryshares 31,500,000 28,500,000 60,000,000 listed company Note: 31,500,000 shares outstanding (including 151,000 treasury shares) (II) Structure of shareholders	Registered ordinaryshares 31,500,000 28,500,000 60,000,000 listed company Note: 31,500,000 shares outstanding (including 151,000 treasury shares) (II) Structure of shareholders	Registered ordinaryshares 31,500,000 28,500,000 60,000,000 listed company Note: 31,500,000 shares outstanding (including 151,000 treasury shares) (II) Structure of shareholders	Registered ordinaryshares 31,500,000 28,500,000 60,000,000 listed company Note: 31,500,000 shares outstanding (including 151,000 treasury shares) (II) Structure of shareholders
April 18,2021;Expressed in Shares;%
Structure of Shareholder Quantity Government agencies Financial institutions Other juristic persons Individuals Foreign institutions and foreigners Treasury shares Total
Number of shareholders - - 28 865 38 1 932
Shares held (Share) - - 3,945,000 7,258,991 20,145,009 151,000 31,500,000
Shareholdingratio(%)	-	-	12.52	23.04	63.96	0.48	100.00

In compliance with Article 3 of the Measures Governing Investment Permit to the People of the Mainland Area, the aggregate holding of natural persons, legal persons, group, other institutions from Mainland China or companies investing in third regions was 9.63%.

(III) Facts of disperse of shareholding

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April 18, 2021; Expressed in Shares; %
Number of Number of shares Shareholding ratio
Shareholding grading (shares)
shareholders held (%)
1 to 999 59 4,327 0.01
1,000 to 5,000 677 1,226,434 3.89
5,001 to 10,000 77 604,000 1.92
10,001 to 15,000 26 343,000 1.09
15,001 to 20,000 22 413,000 1.31
20,001 to 30,000 17 421,000 1.34
30,001 to 40,000 8 284,000 0.90
40,001 to 50,000 8 383,000 1.22
50,001 to 100,000 18 1,256,239 3.99
100,001 to 200,000 9 1,298,000 4.12
- - -
200,001 to 400,000
400,001 to 600,000 - - -
600,001 to 800,000 - - -
800,001 to 1,000,000 2 1,782,000 5.66
Above 1,000,001 9 23,485,000 74.55
Total 932 31,500,000 100.00
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(IV) List of Major shareholders

Names, number of shares and percentages of holdings by shareholders with 5% stakes or higher or top ten major shareholders

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April 18, 2021; Expressed in Shares
Shares Shareholding
Number of shares held
Name of Major shareholders ratio (%)
Xingmao Group Holdings Limited
10,640,000 33.78
Representative: LIN, CHIN-MAO
LIN, CHIN-MAO 2,570,000 8.16
Big Loyal Group Limited
Representative: LIN, CHIN-MAO 2,070,000 6.57
Excellent Treat Limited
2,000,000 6.35
Representative: FANG, CHANG
Business Department of Standard Chartered in
Custody for Credit Suisse - investment specialized 1,381,000 4.38
account of Credit Suisse, Singapore
Sunny Earn International Holdings Limited
1,380,000 4.38
Representative: LIN, CHIN-MAO
AVY Precision Technology Inc.
Representative: TUNG, CHUN-JEN 1,379,000 4.38
Nova Genesis Limited
1,035,000 3.29
Representative: PENG, HAN
Abico Asia Capital Corporation
Representative: HSIEH, FA-TA 1,030,000 3.27
Happy Time International Investment Limited
920,000 2.92
Representative: LIN, CHIN-MAO
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(V) Market value per share, net value per share, and earnings per share during the most recent two years and other relevant information

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Expressed in New Taiwan Dollars/Thousand Shares
The year as
Year
Year 2019 Year 2020 of April 18,
Item
2021
Highest 217.00 184.00 164.50
Market price
Lowest 182.00 94.10 138.50
per share ($)
Average 191.92 140.52 152.52
Net Value per Before distribution 74.33 76.64 80.77
share ($) After distribution 66.33 Note 2 -
Weighted average shares (thousand
Earnings per 27,875 31,407 31,349
shares)
share
Earnings per share (Note 1) 13.92 13.25 4.03
Cash dividends 8 Note 2 -
Dividends Issuance of - - - -
per share bonus shares - - - -
Retained Dividends - - -
Analysis of PE ratio (Note 3) 13.79 10.61 -
Return on Dividend-Price ratio (Note 4) 23.99 Note 2 -
Investment Cash dividends yield (Note 5) 4.17 Note 2 -
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Note 1: Basic earnings per share

Note 2: To be determined by the shareholder meeting

Note 3: P/E ratio ＝ Average closing price per share in the current year ／ earnings per share (EPS) before retrospective adjustment

＝ Note 4: Dividend-Price (P/D) ratio Average closing price per share in the current year ／ Cash dividend per share.

＝ Note 5: Cash dividend yield Cash dividend per share ／ Average closing price per share in the current year.

Note 6: Net value per share and earnings per share as of the financial data reviewed by external auditors during the most recent quarter before the print date of this annual report. Other data based on the annual numbers as of the print date of this annual report.

(VI) Dividend policy and implementations

Company policy stated in the Articles of Incorporation

According to the Company’s Articles of Incorporation, we are in the growth stage. To meet the funding requirements, business expansion and robust financial planning for sustainable development, the Company’s dividend policy shall be based on future capex projects and capital requirements. Dividends shall be issued in cash or stocks to shareholders.

Unless otherwise specified by the Cayman Island laws, regulations governing companies listed on the Taiwan Stock Exchange or the Taipei Exchange, or by the Articles of Incorporation, or otherwise defined regarding the rights attached to shares, if the Company reports earnings at the end of a fiscal year, the Board of Directors shall distribute earnings after the completion of the steps below:

(1) tax payments to be allocated as required by laws;
(2) Making up cumulative losses in prior years (if any);
(3) Appropriation or reversal of special surpluses as stipulated by the laws governing publicly issued companies or required by competent authorities.

Unless otherwise specified by laws or regulations governing publicly issued companies, the earnings during the year less than the amounts from (1) to (3) above and plus the unappropriated earnings in prior years are distributable earnings. The

Board of Directors may propose an earnings distribution plan and forward it to the shareholder meeting for approval. Earnings may be distributed in cash or dividends (with additional paid-in capital converted with earnings to allocate to shareholders on a pro rata basis). If the Board of Directors would like to distribute earnings, stock dividends should be at least 40% of the earnings during the year less the amounts from (1) to (3). Cash dividends shall be at least 20% equivalent of the stock dividends.

Proposed distribution of earnings at the shareholder meeting:

The Board of Directors decided on March 24, 2021 to issue a cash dividend of NT$6.5 per share, for a total of NT$203,769 thousand. Once the proposal is passed by the shareholder meeting, the Board of Directors shall authorize Chairman to determine the ex-dividend date and the distribution date.

(VII) Impact of the proposed bonus shares this year to the Company’s operating performance and earnings per share:

No bonus shares proposed this year and hence not applicable

(VIII) Remunerations to employees, directors, and supervisors
Percentage or scope of remunerations to employees, directors, and supervisors as stated in the Articles of Incorporation:

If the Company reports profits for the year, 1% to 10% of the annual profits should be allocated as remunerations to employees and 5% or less to directors. In case of any losses carried forward, earnings should be prioritized for making up such losses. Remunerations to employees may be in cash or stocks, according to Employee Incentive Plan agreed on the basis of Article 11.1. The employees mentioned in this context may include the employees of the affiliated companies that meet certain criteria. The allocation of remunerations to employees requires the approval of a board meeting with at least two thirds of the directors present and at least half of the attending directors agreeing. The proposal shall be reported to the shareholder meeting. The directors who are also executives in other companies or affiliated companies may be entitled to remunerations both as directors and as employees.

Accounting treatment for any difference between the estimation of remunerations to employees, directors, and supervisors and the remunerations in stocks to employees and the actual distributed amount during the current period

The remunerations to employees, directors, and supervisors are estimated for the possible allocations pursuant to the Articles of Incorporation. If the estimated amount is different from the amount approved by the shareholder meeting, adjustments shall be recognized during the year the approval is made.

Remuneration allocations proposed by the Board of Directors
(1) Remunerations to employees, directors, and supervisors in cash or stocks. Any difference between the recognized expenses and the estimated amount, the reason and accounting treatments:

The Company distributed in 2020 a total of NT$4,202,427 to employees, all in cash, and nothing to directors. There was no difference between the estimated amount and the recognized amount for bonuses to employees and remunerations to directors in 2020 financial statement.

(2) Remunerations to employees in stocks as a percentage of post-tax earnings and total remunerations to employees during the period:

No distribution of remunerations to employees in stocks and hence not

applicable

Allocation of remunerations (including the number of shares, the amount, and the share price) to employees, directors, and supervisors during the previous year (2019)

Any difference between the recognized expenses for remunerations to employees, directors, and supervisors, the reason and accounting treatments:

The Company distributed in 2019 a total of NT$3,834,355 to employees, all in cash, and nothing to directors.There was no difference between the estimated amount and the recognized amount for bonuses to employees and remunerations to directors in 2019 financial statement.

(IX) Share repurchases:

Completed share repurchase program(s):

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No. of the repurchase program First
Purpose Transfer to employees
April 29, 2020
Buy back period
To May 25, 2020
Repurchase price range NT$80 to NT$210
Type and quantity of shares bought back 151,000 ordinary shares
Value of repurchased shares NT$20,801,671
Repurchased shares as a percentage of
50.33%
the planned repurchase program
Number of shares cancelled and
0
transferred
Cumulative number of shares held by the
151,000 ordinary shares
company
The ratio of the cumulative number of
shares held by the company to the total 0.48%
number of issued shares
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Ongoing share repurchase program(s) : None
II. Issuance of corporate bonds: None
III. Issuance of preferred shares: None
IV. Issuance of overseas deposit receipt certificates (DRC): None
V. Issuance of employee stock option certificates: None
VI. New shares to employees with restricted rights: None
VII. Merger/acquisition (M&A) or inward transfer of other firms’ new shares: None
VIII. Implementation of capital utilization plans: None

Five. Business Performance in Brief

I. Business Lines

Scope
(1) Main businesses
- A. Weaving, dyeing & printing, processing, manufacturing, and distribution of fabrics for ready-made garments.
- B. Trading, processing and import/export of the abovementioned products and relevant yarn materials.
(2) Revenue breakdown

Expressed in Thousands of New Taiwan Dollars; %

	2020	2020
Product	Sales Percentage of total sales
Cotton blend knitted fabrics	5,389,194 100.00
Others	- -
Total	5,389,194	100.00

(3) Current products (services)

The Company is primarily a manufacturer of cotton blend knitted fabrics for the following applications:

French terry: mainly used in athleisure coats and long-sleeve T-shorts. A classical fabric for sportwear. Fine and gentle outside and with loops or soft piles of yarn on the inside. Even softer and fluffier feel if the fabric is broom-finished inside. Great in keeping warm.
Jersey: a versatile fabric for underwear and athleisure and a staple among woven fabrics. A soft feel, breathable and allowing moisture to flow through.
Air layers: An innovative fabric in athleisure by balancing between aesthetics and functionality. Suitable for fashion, sports, and leisure. An air cushion in the middle of the three layers in structure, to trap air and keep warm. Fine and smooth in surface, light in weight but with a solid and comfy feel. Good single-directional thermal conductivity, moisture absorption, air permeability and water-proof due to the threelayer structure.
(4) New products (services) under development

Environmental-friendly technology in dyeing and jacquard looming

  - A.  Dyeing with liquid ammonia finishing for cotton fabrics

  - B.  Cold dyeing

  - C.  Color spraying

  - D.  Spray printing for ready-made garments

Industry Snapshot
(1) Current status and developments
- A. Global market of fabrics and ready-made garments

According to the 2020 World Trade Report issued by the World Trade Organization (WTO), the annual growth rate of the world textile trade amount in 2019

declined by 2.4% to US$305 billion, and the apparel trade amount declined by 0.4% to US$492 billion. One of the reasons for the decline of textile and apparel trades was China-USA trade war.

In respect of textile exports, the top three export districts were China, 28 EU countries and India, representing 66.9% of global textile exports. The annual growth rate of textile exports in Vietnam increased by 8.3%, exceeding that of Taiwan, and became one of the top seven global export countries. According to the report of WTO, the market share of China in the world textile exports created the new record of 39.2%.

In respect of the apparel exports, the top four apparel export countries, China, 28 EU countries, Bangladesh and Vietnam, contributed 71.4 market shares of the global apparel market. However, the report of WTO also indicated that the market share of China declined to 30.8% from 31.3% of 2018.

In respect of textile imports, in 2019, the total of the top two import countries, USA and 28 EU countries, represented 31.2% of global textile imports. Vietnam became the third textile import country.

In respect of apparel exports, in 2019, the top three apparel import countries, 28 EU countries, USA and Japan purchased a total of 58.1% of global apparels.

B. Global sports and fitness apparel market

The sport goods industry has encountered the first shrink in 2020 since the financial crisis in 2008. Although the business activities bounced once between two COVID pandemics, most of brands, retailers and manufacturers closed in negative figures. The pandemic not only impacted temporary sales performances, but also accelerated the revolution, which has a long-term affection on the enterprise growth period in the value chain of sports goods. This pandemic has brought the industries to the next wave of normality, of which the constituent elements include the rise of the demand for digital commerce and sustainable products, and the increase in the participation of various sports.

COVID pandemic in 2020 caused severe impact on the global sport apparel market and the recession of sales of most enterprises. Mainland China was an exception. Its compound annual growth rate expanded by 16.5% from 2015 to 2019 and is the growth engine of the industry continually.

The degrees of impact on specific sports are different depending on the degree of difficulty they conducted under the lockdown circumstances. Outdoor individual sports and home fitness sports become popular, but group sports and indoor sports are struggling and is impacted by the postpone or cancellation of main sport events. Emerging business opportunities reside in female apparel, home fitness, running and

Yoga/Pilates sport wearing as the focus.

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Source: Euromonitor International

A change of consumers has also been observed from this pandemic. Sport and leisure were the big trend before the pandemic, but boundary line between the work and leisure becomes fuzzier. Comfortable dressing in the occasion which requires formal dressing becomes acceptable more and more.

(2) Upper, mid to downstream of the supply chain

Ready-made garment is produced with materials produced with wool, cotton, or petrochemicals in the upper stream. These materials are woven into yarns and made into cloths, which are dyed, finished, or processed before cutting, sewing, weaving, or knitting into ready-made garments and other textile products. Finally, the garments and products are sold to consumers via brand channels and distributors. Below is an illustration of value chain activities from upper, mid to downstream.

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

Upper stream Midstream Downstream
Petrochem
materials
Artificial
fibers
Yarns Woven Dyeing &
fabrics finishing
Natural
fibers
Chemical
additives
Ready-made
garments
Brand channels and distributors
----- End of picture text -----

(3) Product trends

Athleisure is in and functional sports products are popular. This is the driver of steady growth in the athletic apparel industry. As a result, sports brands are increasingly demanding for the quality of cloths. In addition, they also require the manufacturing process to be environmental-friendly and the products to provide high performances. In the past, OEM clients (i.e. sports brands) offered technology and textile suppliers manufactured products. Nowadays suppliers are required to have the capability to develop fabrics to stand out in the competition. The design of new products for sports brands should stay on top of changing preferences of consumers and balance between fashion and function.

Dyeing and finishing are an important process of fabric manufacturing. Cloth is placed into a dye vat to acquire the desired color. In the past, dyeing a kilogram of cloth consumed at least 200 liters of water. However, the improvement of the manufacturing process has gradually reduced this ratio. Meanwhile, OEM clients began to pay attention to energy efficiency of manufacturing processes and incorporated this in their assessment of textile suppliers. Therefore, the improvement of manufacturing technology is an important issue for textile suppliers.

Environment sustainability is becoming the first consideration of consumers, and enterprises respond to this by introducing more sustainable products. COVID pandemic also accelerate this trend, and the present obligations of enterprises are maintaining the sustainable supply chain and input such concept as cyclic economy.

(4) Competitive landscape for products

The Company is primarily engaged in the manufacturing and distribution of knitted staple fabrics, made with filament yarns, spun yarns, and elastic fibers. Spun yarns account for 50% of our materials. Garments are a necessity in life and there are thousands of fabrics combined with different yearns, dyed, and post-treatments with various techniques. Given the maturity of weaving and dyeing technology, it is increasingly difficult to systematically develop new fibers, techniques, specifications, or designs. What can be achieved now is to enhance and optimize existing processes and material applications and provide differentiated and high value-adding combination of new functions and products, to win orders from OEM clients and boost competitive edges. The Company and its subsidiaries continue to improve a variety of new fabrics. For example, we have developed DryNit® with a special weaving technique different from the traditional

approach of making cotton tapes. The new Spacer fabric is produced with innovative processes to address the problem of pilling and provide better feel and fluffiness. The new French ferry fabric is soft, light, and warm, environmental-friendly and no fiber shredding. In the meantime, the Company and its subsidiaries continue to improve manufacturing processes. We introduce high-tech equipment in energy efficiency and environmental protection such as low liquor ratios in dyeing, improvement in spray dyeing, adjustments to additives administering, adoption of new and environmentalfriendly materials, and waterless dyeing. It is hoped that the Company and its subsidiaries can offer products catering to market needs and responding to market changes.

We are proud of our supply chain management, as we are familiar with sourcing of raw materials and able to identify the most suitable and price competitive suppliers according to quality requirements from our customers. We have access to a large variety of knitted fabrics from a long list of suppliers, and all our contractors have passed the quality certifications from international OEMs. Our quality assurance personnel are well-versed in acceptance standards by ready-made garment customers and we are responsible for shipment scheduling and quality inspection before delivery. As our final products are used in ready-made garments for international sports and leisure brands (OEM brands), we sell to the ready-made garment suppliers of these brands. We either speak directly with OEM brands for specifications or recommend to them our new fabrics. Once the desired colors and styles are identified, OEM brands place order to their ready-made garment manufacturers. As consumers exercise more over the recent years, they demand sportswear that is fashionable and serving different purposes such as anti-bacteria, ultraviolet resistance, moisture absorption/wicking, heat generation, cooling, and waterproof. International sports brands set a high standard for fabrics quality and innovative functionality. Suppliers need to go through a robust process of qualification. It is not possible for new suppliers to become qualified suppliers in a short period of time.

R&D and Technology
(1) R&D expenses during the most recent year and as of the print date of this annual report

waterproof. International sports brands set a high standard for fabrics quality and innovative functionality. Suppliers need to go through a robust process of qualification. It is not possible for new suppliers to become qualified suppliers in a short period of time. R&D and Technology (1) R&D expenses during the most recent year and as of the print date of this annual report	waterproof. International sports brands set a high standard for fabrics quality and innovative functionality. Suppliers need to go through a robust process of qualification. It is not possible for new suppliers to become qualified suppliers in a short period of time. R&D and Technology (1) R&D expenses during the most recent year and as of the print date of this annual report	waterproof. International sports brands set a high standard for fabrics quality and innovative functionality. Suppliers need to go through a robust process of qualification. It is not possible for new suppliers to become qualified suppliers in a short period of time. R&D and Technology (1) R&D expenses during the most recent year and as of the print date of this annual report
Expressed in Thousands of New Taiwan Dollars; % Item 2020 1Q/2021 R&D expenses 15,653 2,097 Net sales 5,389,194 1,505,177 As a percentage of net sales 0.29% 0.14%
R&D expenses 15,653 2,097
Net sales 5,389,194 1,505,177
As a percentage of net sales	0.29%	0.14%

(2) Successfully developed technologies/products

Year	R&D results Details	R&D results Details
2020	Unfolding basic research on the R&D project, "Development of Anti-bacterial and Anti-viral Knitted Mask Fabrics” A kind of double rib air layer knitted fabric is developed by using ultra-fine modal fiber and ultra-fine zinc oxide antibacterial polyester as raw materials, and is finished with single-sided water repellent coating and antibacterial and antiviral finishing. It not only has good air permeability, moisture permeability and stiffness, but also owns one-way wet-guided, anti-bacterial, and anti- virus functions, which can be used as anti-bacterial and anti-viral knitted mask fabric.
	Unfolding basic research on the R&D project , “Improvement in Hair Slip Prevention and Elasticity of French terry Fabric”	A kind of French terry fabric with excellent texture/handfeel is obtained by analyzing the causes of hair slipping and poor elasticity of French terry fabric from the perspective of its fabric structure, proposing new fabric structure of French terry fabric, adjusting the parameters of ball wool technique,adding plasma

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Year R&D results Details
pretreatment and the like to improve the problems of
hair slip and elasticity existing in traditional French terry
fabric.
In order to solve the problem that the existing yarn
storage device cannot handle yarn online, we transform
the technical results of our patented technology with
independent intellectual property rights into a R&D
Unfolding a technical project. The patented technology devises a heating
transformation R&D project arising device installed in the special winding yarn storage
from the patent, “A Yarn Storage device to heat the yarn, and a water supply device
Device fit for Yarn Knitted Fabric installed around said yarn storage device to adjust the
with High Rigidity” yarn humidity. A new functional yarn storage device
incorporating yarn temperature and humidity control is
therefore realized to provide more possibilities to enrich
the yarn material and improve the quality of fabric
development.
A kind of knitted fabric with one-way wet-guided effect
is obtained by adopting double jersey with an outer layer
Unfolding the R&D project , of raw cotton and an inner layer of polyester fiber as the
“Preparation of One-way Wet- study object, whose inner and outer layers go through a
guided Knitted Fabric Based on series of treatments in terms of being on-line spray-
On-line Spray Coating” coated with water repellent agent and moisture-
absorbing and quick-drying finishing agent respectively
based on the on-line spray coating technology.
By adding nozzles and a supporting control system on
the sample dyeing machine, the sample dyeing machine
Unfolding the R&D project,
is endowed with the functions of injection and
“Development of
atomization. At the same time, it is equipped with a
Injection/Atomization Sample
drying system and a vision system, which are used in
Dyeing Machine”
several processing steps for fabric dyeing and finishing,
such as fabric pretreatment, dyeing and washing.
Low temperature plasma pretreatment is applied to pure
cotton and polyester cotton knitted fabrics to obtain the
“Application of Plasma
best process conditions. The cotton knitted fabrics
Pretreatment in Cotton Knitted
subject to plasma pretreatment have better whiteness and
Fabric” published in the “Zhenzhi
excellent hydrophilic properties because plasma
Gongye” magazine in PRC.
treatment can replace conventional refined pretreatment
process to a certain extent.
The application of the invention The invention patent is about quickly accomplishing the
patent, “A Textile Shower and textile surface loose color washing process to save
Washing System” has been production time, reduce water consumption, and go
accepted. green.
The invention patent is about cross-linking chitosan to
cotton fabrics by using citric acid as a cross-linking
The application of the invention agent so that the chitosan cross-linked cotton fabrics
patent, “Method for Improving the have better affinity to direct dyes under specific acidic
Dye-uptake of Direct Dyes on conditions, thereby improving the dye-uptake of direct
Cotton Fabrics” has been accepted. dyes on the chitosan cross-linked cotton fabrics,
reducing cost and environmental pollution, and lowering
the harm to human body in the course of dyeing.
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Long-term and short-term development plans
(1) Short-term plans
- A. Expansion acceleration in South East Asia

Step-up in capacity investment in Cambodia and setup of facilities in Vietnam to establish a complete supply chain in Southeast Asia

B. Continuing with enhancement of management transparency, overall operational efficiency, and employee productivity. Control of operating expenses. Further vertical integration in terms of order taking. Seeking strategic alliances in upper stream and downstream to expand operations, reduce costs and boost profits.
(2) Long-term plans
A. Production planning & strategy

Establishment of highly efficient, high quality and fast delivery with enhanced manufacturing capability and competitive edges, in response to order types and customer requirements

B. Innovation of core technologies

Innovative technologies in weaving, dyeing, and finishing to develop high valueadded products. Vertical integration to ensure fast responses across the value chain.

C. Ongoing improvement of the Company’s financial structure to meet the requirement for continued R&D in new products/services in the international market

II. Markets, Sales & Distributions

1. Market analysis

(1) Key markets for products/services

		Expressed in Thousands of New Taiwan Dollars; % 2019 2020 Amount Percentage Amount Percentage 2,289,808 31.12 1,316,411 24.43 4,629,746 62.92 3,577,306 66.38 238,706 3.24 400,209 7.43 200,178 2.72 95,268 1.77 7,358,438 100.00 5,389,194 100.00	Expressed in Thousands of New Taiwan Dollars; % 2019 2020 Amount Percentage Amount Percentage 2,289,808 31.12 1,316,411 24.43 4,629,746 62.92 3,577,306 66.38 238,706 3.24 400,209 7.43 200,178 2.72 95,268 1.77 7,358,438 100.00 5,389,194 100.00	Expressed in Thousands of New Taiwan Dollars; % 2019 2020 Amount Percentage Amount Percentage 2,289,808 31.12 1,316,411 24.43 4,629,746 62.92 3,577,306 66.38 238,706 3.24 400,209 7.43 200,178 2.72 95,268 1.77 7,358,438 100.00 5,389,194 100.00	Expressed in Thousands of New Taiwan Dollars; % 2019 2020 Amount Percentage Amount Percentage 2,289,808 31.12 1,316,411 24.43 4,629,746 62.92 3,577,306 66.38 238,706 3.24 400,209 7.43 200,178 2.72 95,268 1.77 7,358,438 100.00 5,389,194 100.00
Year Region		2019 2020
		Amount Percentage Amount Percentage
Domestic sales		2,289,808 31.12 1,316,411 24.43
Exports	Southeast Asia	4,629,746 62.92 3,577,306 66.38
	South Asia	238,706 3.24 400,209 7.43
	Others	200,178 2.72 95,268 1.77
	Total	7,358,438	100.00	5,389,194	100.00

Note 1: Domestic sales refer to sales in China Note 2: Based on shipments

(2) Market shares

We have a complete range of production equipment, from greige manufacturing, dyeing & finishing, after-treatment processing, to physical property inspections and quality assurance. The vertical integration creates synergies and varieties in product mixes, processing methods and qualities. Our strategy is to pursue small quantities but large varieties and product options. This is the reason why the Company’s high-quality fabrics are well-recognized by our international OEM clients in Europe and the U.S. Our sales and market shares enjoy stable increase year over year. We continue to innovate, develop, produce, and distribute spun yarns to grow in the market at a steady pace. Our cooperation with OEM clients is solid and long-term in nature. Customer requirements are incorporated in the development stage for product designs, patterns, material combinations and functionality mixes. We endeavor to maintain our advantage in the textile industry by catering to the requirement of international brands and the need from consumers for tasteful, fashionable, and trendy designs.

(3) Demand/supply and growth prospect

The term “athleisure” is coined by combining the words “athletics” and “leisure”. This initially refers to the phenomenon of women wearing yoga outfits in the gym. Men later followed suit. It eventually evolved into a style combining sports and fashion. Athleisure has since become a new casual style.

To the millennials, athleisure is a statement that clothes are more about functions. What they wear is an expression of style and attitude. As digital natives, they quickly understand and embrace new technologies and live on social media. Sports brands are marketed via social media and ecommerce platforms, with KOLs and celebrities showcasing trendy and fabulous looks. Athleisure quickly became an aspiration for consumers. People in their hectic life wish to spend more time exercising. Sports are playing an increasing role in the society. All countries around the world organize road running events, big or small, each year. Gyms and sports centers have been mushrooming in cities of both developed countries and developing economies. Sports have become a part of modern life.

According to statistics from Plunkett Research, the global athleisure market totaled US$1.5 trillion in 2016. Since 2005, the global market has been growing at a CAGR of 5.7% and may reach US$2 trillion in 2020 driven by the Tokyo Olympics. Statista forecasts the global sportswear market to reach US$180.6 billion in 2019 and US$219.8 billion in 2024, at a CAGR of 4.01% over the five-year period.

Expressed in US$bn

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Global Sportswear Market Size
250
219.76
211.31
203.18
195.37
200 180.63 187.85
173.68
150
100
50
0
2018 2019 2020 2021 2022 2023 2024
Global Sportswear Market Size運動服裝產值
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Source: Statista; Yuanta Securities

(4) Competitive edge
A. Outstanding order-taking capability and production management

The Company and its subsidiaries have long-term suppliers in China, and we have people on the ground with these suppliers, to monitor quality and arrange shipments. We have the only sizable weaving and dyeing factory in Bavet, Cambodia. The main customers of the Company and its subsidiaries are ready-made garment manufacturers who supply to international sports and leisure brands (i.e. OEMs). We either approach these OEMs and produce samples according to their requirements or recommend to these OEMs our newly developed fabrics. Once the colors and designs are up to the requirements of OEMs, they place orders to their ready-made garment suppliers, and assign the Company and its subsidiaries as the fabric supplier. Then these ready-made garment manufacturers procure fabrics from the Company and its subsidiaries. There are a large variety of orders and a big volume of samples is required. Orders are frequent and lead times are short. In sum, the Company has extensive experience working for international sports and leisure brands. We also have own factories and long-term suppliers, so that we can adjust production and processing lines to meet with the quality and delivery requirement of international sports and leisure brands.

B. Quality Management System and OEM Certifications

The spun knitted fabrics produced and marketed by the Company and its subsidiaries are under strict quality control. We have been approved by OEMs such as Adidas, Puma, Gap, and Li Ning to ship products by self-inspecting the colors, without any sign-up required from a third party. Our testing center has been certified as an independent supplier by Adidas, Puma, Gap, and Decathlon. In other words, the Company and its subsidiaries are authorized to issue fabric test reports, without certification from third parties. The Company and its subsidiaries have also passed the Quality Control approval from Adidas. All these certifications demonstrate the trust of OEM customers in our quality.

C. Presence in Southeast Asia to stay close to downstream supply chain

The Company and its subsidiaries in 2011 established a vertical production line with weaving, dyeing, and finishing capability in Bavet, Cambodia. Bavet is

approximately 160 kilometers from the capital Phnom Penh of Cambodia (about three hours by car), and about 80 kilometers from Ho Chi Minh City in Vietnam (about two hours by car). Both Phnom Penh and Ho Chi Minh are hubs for readymade garment manufacturers. Our outputs in Bavet can ship to the ready-made garments in Cambodia and Vietnam. As international OEMs are instructing their local suppliers to purchase locally (“local to local”), our production lines have become the only fabric supplier in Cambodian for many international OEMs. There are many hurdles for other fabric and dye manufacturers to overcome to set up facilities in Cambodia in the immediate future. The economic and political environment in Cambodia is not fully developed, and the infrastructure is also inadequate. For example, manufacturers need to source water and energy and comply with the environmental protection requirements. Up to date, there is no other competitor with facilities in Cambodia comparable to those owned by the Company and its subsidiaries. In sum, TST Group is an indispensable partner for international brands in the foreseeable able future.

(5) Positive/negative factors for business prospects and responding measures
A. Positive factors
- (A) Demand stable and growing

The products from the Company and its subsidiaries are used in the ready-made garments of international sports and leisure brands. As the sportswear market continues to boom and the sports and outdoor leisure activities remain vibrant around the world, there will always be a slew of new designs that combines fashion and function. This means fabric and ready-made garment producers will continue to grow at a steady pace.

(B) Global famous brands as key customers

The Company and its subsidiaries have successfully won business from international brands by offering a diversity of quality products. In fact, we have attracted many supplier awards from these customers because of the speed of product launches and capability to develop products according to requirements. Among the awards the Company and its subsidiaries have received are Adidas’s Global Fabric Supplier Award “Golden Shoes”; Championship for Adidas’s Global Textile Supplier Review; PUMA’s Best R&D for Fabric Supplier; PUMA’s Best Global Supplier Award and Li Ning’s Best R&D Award. International brands such as Adidas, PUMA, Decathlon, Li Ning, and GAP are among the clients of the Company and its subsidiaries.

The Company and its subsidiaries have been working with international sports and leisure brands for many years. As a qualified supplier, we have obtained the authorization to self-inspect colors of products, without the need to go through validation from external organizations. Our quality test center has also been certified by the third parties recognized by OEM customers, and the results from our test center are deemed to be equivalent to the validation from third parties. In sum, the Company and its subsidiaries have gained significant trust from sports and leisure brands and we are a regular recipient of supplier awards from these brands. As it is difficult for competitors to achieve our quality standards, our orders are ensured in the foreseeable future.

B. Negative factors
(A) Profitability under the influence of raw material prices

The raw materials of spun knitted fabrics are cotton yarns and chemical fiber yarns. Going forward, the price volatility of cotton and crude oil may push up raw materials prices. Whilst it is possible to transfer costs to OEM customers via negotiations and boost profits for the time being, any dramatic increase of international cotton and oil prices will eventually erode our profitability if costs cannot be completely absorbed by OEM customers.

Responding measures

The Company and its subsidiaries keep a close eye on the change of the raw materials market. We maintain good relations with raw materials suppliers and we diversity the sourcing of raw materials by procuring from multiple suppliers. That said, the long development cycles for sports brands mean relatively adequate time to respond to fluctuations of raw materials prices. When proposing new fabrics to OEM customers for the new season, the Company and its subsidiaries may adjust the manufacturing process and technology to reduce costs. We can also raise unit prices in line with the market to enhance profitability in a timely manner.

(B) The trade war between China and the U.S.

The Company and its subsidiaries ship the fabrics produced in China to the ready-made garment manufacturers in Vietnam and Cambodia. This is because our facilities in Cambodia are not able to meet with all the demand yet. Since the trade war between China and the U.S. in 2018, the U.S. government has been levying extra tariffs on the products from China and textile is among the sanctioned list. However, there are no punitive duties on the products exported to the U.S. from countries other than China but with raw materials manufactured in China. The Company’s products exported from China in 2019 and 2020 during accounted for 35.69% and 32.11% of total revenues, respectively. These products were primarily shipped to Southeast Asia and South Asia. A small portion was sold to other countries in Asia, and there was no direct sale to the U.S. The distribution of ready-made garments from factories is up to the decision from OEM customers. The only significant impact was increased demand for local suppliers as international OEMs stepped up their procurement in Cambodia and Vietnam.

Responding measures

The Company and its subsidiaries are engaged in the development, design, manufacturing, and distribution of cotton blend knitted fabrics used in athleisure fashion. We sell our fabrics to ready-made garment factories. The U.S. government assesses the tariffs on ready-made garments based on where the ready-made garments are produced. The fabrics produced and sold by the Company and its subsidiaries are intermediary materials and not directly exported to the U.S. Therefore, the influence of the trade war between China and the U.S. is limited. However, as the trade negotiation continues, uncertainties abound. To ensure operational stability, the Company established a factory in Vietnam in 2020. This caters to the local sourcing requirements by brand owner customers, diversifies the production risks in a certain region and mitigates macroeconomic risks of a single country.

The Company did not have its own production lines in the early days due to limited scale. We started as a trading business of textiles. We developed products but outsourced the manufacturing to external parties. The Company

gradually established its own capacity in dyeing and finishing. As of 2020, the percentages of own production and outsourced production are half to half.

Responding measures

The Company has been enjoying stabilization in profitability and growth in scale over recent years. In 2011, we built out own weaving, dyeing, and finishing facilities in Cambodia. Looking forward, we plan to expand manufacturing capacities and operational scale, or invest in ready-made garment manufacturing to become fully integrated and hence boost competitiveness. Meanwhile, as the Company is limited by the capacities and deliveries of our contracted manufacturers, we conduct daily quality inspections on these manufacturers and add to our list of contractors, to mitigate the quality and delivery risks of outsourcing.

(D) EU-Vietnam Free Trade Agreement (EVFTA)

Vietnam and the European Union in Hanoi on June 30, 2019 drafted the EUVietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement (EVIPA). Both agreements are to be reviewed by the European Parliament and the parliaments of its member states. The EVFTA would take effect at the end of 2019 the earliest; whilst it would be at least two years away for the review of the EVIPA to be completed. According to the EVFTA, Vietnam and the 28 economies in the European Union will gradually dismantle tariff barriers. As soon as the agreement comes into force, benefits, the European Union (EU) will immediately eliminate 85.6% import duties on certain products from Vietnam, and this covers 70.3% of Vietnam’s exports to the EU. To reciprocate, Vietnam will immediately scrap 48.5% duties on some imports from Europe, and this covers 64.5% of Europe’s exports to Vietnam. Both parties will gradually phase out 99% of customs tariffs within ten years. As Vietnam is keen to become an important economic partner to the EU and integrate into the international economy and cooperation, the signing of the EVFTA is a milestone to its economy and corporate structure. It is beneficial to Vietnam’s exports of textile products to the EU.

Responding measures

The production facilities owned by the Company and its subsidiaries are in China and Cambodia, and thus cannot access the preferential treatments under the EVFTA framework. TST Group decided at the end of 2020 to establish a weaving and dying factory in Vietnam to integrate the supply chain resources in weaving, dyeing, and finishing in Vietnam. It is expected that textile exports from Vietnam will continue to grow, once the EVFTA is implemented. This should boost the demand for fabrics used in ready-made garments and benefit the group.

(E) Stringent environmental standards

In response to rising concerns over the environment, all governments around the world (including China and Cambodia) and international organizations have been increasing the threshold for the statutory requirements in environmental protection. To keep up with this trend and comply with relevant laws and regulations, it is necessary to continue investing in the purchase of anti-pollution equipment and the training of personnel. The effective strategy to reduce environmental pollutions should focus on the control of pollution sources, so that employees can work in a safe environment.

Our subsidiary in Cambodia is engaged in weaving, dyeing, and finishing and thus wastewater and other emissions are inevitable. The subsidiary has its own wastewater treatment facilities and has acquired four permits, pollution discharges, wastewater emission, waste gases from boilers, and sludge emissions. The Ministry of Environment in Cambodia samples wastewater for testing each year. Whilst our Cambodian subsidiary treats wastewater according to legal requirements, there are occasions of breaching the threshold due to equipment failure and production facilities issues, or value deviations caused by different inspection methods. However, we make immediate amends as soon as any problem has been identified.

Responding measures

The Company procures and renews pollution control equipment, advocates waste reductions and develops new manufacturing processes to comply with environmental regulations. We assign personnel to patrol the pollution control equipment onsite each day and there are units responsible for the operation and maintenance of the equipment. The wastes are processed off-plant by the companies recognized by the Ministry of Environment. The Company and its subsidiaries keep informed of relevant environmental laws and regulations. Whilst we seek to enhance our competitiveness, we also strive to mitigate our environmental impact in raw materials and products. We hope to produce with accuracy and timeliness and establish all-rounded competitiveness by manufacturing products in compliance with environmental regulations and catering to customers’ requirements so that we can achieve sustainable developments.

(F) Concentration of OEM customers

Our end customers are global sports brands. As we sell a great variety of products to one customer in large quantities, we do not see much difference between high seasons and low seasons. This customer has been expanding its global market shares over recent years. As a result, our revenues from this OEM customer have been growing in value and percentage.

Responding measures

The Company is actively expanding clientele, and we have achieved results after years of efforts in communicating with customers and attracting new orders. Going forward, we will continue to deepen relations with existing customers, develop new products and new customers to boost revenues and mitigate the risks associated with a single customer.

Key applications and manufacturing processes of staple products
(1) Key applications of stable products

orders. Going forward, we will continue to deepen relations with existing customers, develop new products and new customers to boost revenues and mitigate the risks associated with a single customer. cations and manufacturing processes of staple products applications of stable products	orders. Going forward, we will continue to deepen relations with existing customers, develop new products and new customers to boost revenues and mitigate the risks associated with a single customer. cations and manufacturing processes of staple products applications of stable products
Product Applications
Terryfabrics Main fabricsforathleisure coats andlong-sleeveT-shirts
Jersey fabrics A versatile choice for underwear and athleisure garments
Air-layer fabrics	Innovative fabrics for athleisure garments, ideal for the combination of fashion and function, suitable for trendy, sportyand leisure outfits

(2) Manufacturing processes of staple products

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Supply of major materials

The Company’s raw materials are primarily yarns and greiges.

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Raw materials Key suppliers Supply status
----- End of picture text -----

Yarns and greiges	Tainan Spinning; Far Eastern Textile; Huafu Group; BROS Eastern Group; Hung Yueh Group; Texhong Textile Group; Yicheng Tianshu Textile; Thien Nam Spinning; Lan Fa Textile; Mei Sheng Textile (Vietnam)	Good

List of major customers for purchase and sales:
(1) The names of the suppliers who have accounted for more than 10% of the total purchase amount in the previous year, and the amount and proportion of the purchase amount, and explanation of the reasons in change of increase or decrease:

Expressed in Thousands of New Taiwan Dollars

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Year 2019 Year 2020
Ratio to the net Relationship Ratio to the net Relationship
Title Amount annual input with the Title Amount annual input with the
amount (%) issuer amount (%) issuer
Texhong
1 [Texhong ] 1,046,271 18.66 Nil 743,556 19.64 Nil
Textile Textile
2 A Company 1,015,337 18.11 Nil A Company 734,541 19.40 Nil
BROS
3 HUAFU 627,121 11.18 Nil 446,812 11.80 Nil
MACAO
Others 2,918,307 52.05 - Others 1,861,962 49.16 -
Net input Net input
5,607,036 100.00 - 3,786,871 100.00 -
amount amount
Items
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Explanations for any change: Our main customers enjoy stable businesses. We have at least two longterm suppliers for key materials. There has been no significant change to our list of major suppliers during the past two years.

(2) The names of the customers who have accounted for more than 10% of the total sales in any year in the most recent two years: or the amount and proportion of the sales, and the reasons for the increase or decrease:

(2) The names of the customers who have accounted for more than 10% of the total sales in any year in the most recent two years: or the amount and proportion of the sales, and the reasons for the increase or decrease:	(2) The names of the customers who have accounted for more than 10% of the total sales in any year in the most recent two years: or the amount and proportion of the sales, and the reasons for the increase or decrease:	(2) The names of the customers who have accounted for more than 10% of the total sales in any year in the most recent two years: or the amount and proportion of the sales, and the reasons for the increase or decrease:	(2) The names of the customers who have accounted for more than 10% of the total sales in any year in the most recent two years: or the amount and proportion of the sales, and the reasons for the increase or decrease:	(2) The names of the customers who have accounted for more than 10% of the total sales in any year in the most recent two years: or the amount and proportion of the sales, and the reasons for the increase or decrease:	(2) The names of the customers who have accounted for more than 10% of the total sales in any year in the most recent two years: or the amount and proportion of the sales, and the reasons for the increase or decrease:	(2) The names of the customers who have accounted for more than 10% of the total sales in any year in the most recent two years: or the amount and proportion of the sales, and the reasons for the increase or decrease:
Expressed in Thousands of New Taiwan Dollars Year 2019 Year 2020 Items Title Amount Ratio to the net annual sales amount(%) Relationship with the issuer Title Amount Ratio to the net annual sales amount(%) Relationship with the issuer 1 Win Hanverky Holdings Limited 819,175 11.13 Nil CRYSTAL 634,439 11.77 Nil 2 Suzhou Tianyuan 692,332 9.41 Nil DIN TSUN 559,099 10.37 Nil Others 5,846,931 79.46 Nil Others 4,195,656 77.86 Nil Net input amount 7,358,438 100.00 Net input amount 5,389,194 100.00
Items Title Amount Ratio to the net annual sales amount(%) Relationship with the issuer Title Amount Ratio to the net annual sales amount(%) Relationship with the issuer
1 Win Hanverky Holdings Limited 819,175 11.13 Nil CRYSTAL 634,439 11.77 Nil
2 Suzhou Tianyuan 692,332 9.41 Nil DIN TSUN 559,099 10.37 Nil
Others 5,846,931 79.46 Nil Others 4,195,656 77.86 Nil
	Net input amount	7,358,438	100.00	Net input amount	5,389,194	100.00

Explanations for any change: The company cooperates with the sales of garment factories designated by brand customers.

The output volume and value in the most recent two years:

Expressed in Thousands of New Taiwan Dollars

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Year
Year 2019 Year 2020
Sales
volume/value
Capacity Volume Value Capacity Volume Value
Major
commodities
Cotton blend knitted 30 million 28.36 million 35 million 27.96 million
2,279,305 1,982,863
fabrics pounds pounds pounds pounds
Others －－－－－－
30 million 28.36 million 2,279,305 35 million 27.96 million 1,982,863
Total
pounds pounds pounds pounds
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Explanations for any change: Affected by COVID-19, the demand for orders has fallen, and the output and output value have fallen.

The sales volume and value in the most recent two years:

Expressed in Thousands of New Taiwan Dollars

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Year
Year 2019 Year 2020
Sales volume/
Domestic sales Export Domestic sales Export
value
Volume Value Volume Value Volume Value Volume Value
Major commodities
Cotton blended
24.35 24.64
knitted fabrics －－－－
million 2,442,055 million 2,342,540
(internally
pounds pounds
manufactured)
Cotton blended
21.34 23.71 12.86 15.35
knitted fabrics
million 2,279,676 million 2,626,575 million 1,306,520 million 1,730,243
(externally
pounds pounds pounds pounds
manufactured)
Others － 10,132 －－－ 9,891 －－
21.34 48.06 12.86 39.99
Total million 2,289,808 million 5,068,630 million 1,316,411 million 4,072,783
pounds pounds pounds pounds
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Note: Domestic sales refer to sales in China.

Explanations for any change: Affected by COVID-19, sales fell.

III. Number of employees, average number of years of service, average age and academic degree credential distribution ratio during the most recent year and as of the print date of this annual report

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Expressed in Person
The year as of
Year 2019 2020
March 31, 2021
Managers and
48 52 53
above
Number of
Employees 288 286 290
employees
Operators 736 724 757
Total 1,072 1,062 1,100
Average ages 31.7 32.0 34.0
Average service seniority 4.7 4.9 5.5
Master
0.56% 0.75% 0.73%
(included above)
Academic
University/college 19.40% 30.30% 24.27%
degree levels
Below senior high
80.03% 68.95% 75.00%
school (inclusive)
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IV. Information of expenditures for environmental protection

According to relevant laws and regulations, the procedures of applications for the permits regarding deployment of pollution control facilities, pollution emissions, or payments for pollution control fees or establishment of dedicated personnel in environmental protection are described below:

Our subsidiary in Cambodia, Top Sports Textile Ltd. (TSP), has its own wastewater treatment facilities, and has acquired four permits: pollution discharges, wastewater emission, waste gases from boilers, and sludge emissions. The Ministry of Environment, Cambodia, visits TSP once or twice per annum to sample wastewater for testing. The Cambodian government sets two standards for wastewater emissions: (1) Standard Ⅱ COD <100 for discharge to regular waters; (2) Standard I COD <50 for discharge to protected waters (vs. the standard COD 140 in Taiwan and COD 80 in China). TSP continues to enhance its wastewater treatment facilities. The current capacity is 7,000 cubic meters per day and operating at the standards for discharge to regular waters. Meanwhile, we also introduce sludge drying equipment to reduce the water contents (thus weight and capacity) of sludge.

The environmental regulations in Cambodia do not specify that there should be factory personnel dedicated to environmental protection. However, TSP has established a taskforce focusing on pollution prevention and controlling all the pollution sources onsite. They also serve as the contact window with environment service providers and oversee matters in relation to wastes processing.

Investments in pollution control equipment, purposes of such equipment and potential benefits

List of Pollution Control Equipment

focusing on pollution prevention and controlling all the pollution sources onsite. They also serve as the contact window with environment service providers and oversee matters in relation to wastes processing. Investments in pollution control equipment, purposes of such equipment and potential benefits List of Pollution Control Equipment	focusing on pollution prevention and controlling all the pollution sources onsite. They also serve as the contact window with environment service providers and oversee matters in relation to wastes processing. Investments in pollution control equipment, purposes of such equipment and potential benefits List of Pollution Control Equipment	focusing on pollution prevention and controlling all the pollution sources onsite. They also serve as the contact window with environment service providers and oversee matters in relation to wastes processing. Investments in pollution control equipment, purposes of such equipment and potential benefits List of Pollution Control Equipment	focusing on pollution prevention and controlling all the pollution sources onsite. They also serve as the contact window with environment service providers and oversee matters in relation to wastes processing. Investments in pollution control equipment, purposes of such equipment and potential benefits List of Pollution Control Equipment	focusing on pollution prevention and controlling all the pollution sources onsite. They also serve as the contact window with environment service providers and oversee matters in relation to wastes processing. Investments in pollution control equipment, purposes of such equipment and potential benefits List of Pollution Control Equipment	focusing on pollution prevention and controlling all the pollution sources onsite. They also serve as the contact window with environment service providers and oversee matters in relation to wastes processing. Investments in pollution control equipment, purposes of such equipment and potential benefits List of Pollution Control Equipment
March 31,2021;expressed in USD Equipment name Quantity Acquisition date (yy/mm/dd) Investment cost Valuation (net of depreciation) Purposes and benefits Upgrade of wastewater treatment system 1 2018.10.01 1,250,000 759,446.29 Reaching the European standard of ≤COD 50 Current daily capacity of 7,000M3 Reengineering of wastewater treatment system 1 2016.01.01 300,000 21,289.77 Daily capacity of 5,000M3 Wastewater treatment system 1 2012.06.01 1,100,000 368,254 Daily capacity of 3,000M3
Upgrade of wastewater treatment system 1 2018.10.01 1,250,000 759,446.29 Reaching the European standard of ≤COD 50 Current daily capacity of 7,000M3
Reengineering of wastewater treatment system 1 2016.01.01 300,000 21,289.77 Daily capacity of 5,000M3
Wastewater treatment system	1	2012.06.01	1,100,000	368,254	Daily capacity of 3,000M3

During the most recent year and as of the print date of this annual report, please provide the details of environmental pollution treatments in response to any disputes regarding pollutions, if any: None
During the most recent year and as of the print date of this annual report, in case of any damages (including compensations) incurred by the Company for environmental pollutions, the amount of fines imposed on the Company, responding measures (including improvement measures) going forward, potential expenses (including possible and estimated losses, penalties and damages if no actions have been taken). If a reasonable estimate cannot be provided, please explain the factual reasons why: None
Influence of current pollutions and improvement measures on the Company’s earnings, competitiveness and capital expenditures, and the major capital investments on environmental protection over the next two years: None

V. Employment Relationships

(I) Employee benefits, training & education, retirement system and its implementation, agreement with employees and protection of employee interests
Employee benefits

The Company and its subsidiaries offer subsidies for weddings, funerals, celebrations, etc. of employees, employee travels, performance and year-end bonuses, social insurance, and annual health checkups. We also provide a variety of workshops and training programs to expand the horizon and enhance work efficiency of employees.

Training & education of employees

The Company and its subsidiaries emphasize the importance of talent development because human resources are an important asset. To empower our colleagues at different levels with professionalism and knowledge of their tasks, we organize training & education sessions from time to time. We hope our employees can constantly absorb new information, enhance their competences and work quality so that we can improve operating performances and boost competitiveness.

Retirement system

The Company’s subsidiaries in China, i.e. Taiju Textile (Shanghai) Co., Ltd., Guangzhou Liangwei Knitted Fabric and Textile Co., Ltd. and Guangzhou Taiju Management Consulting Co., Ltd., comply with the regulations stipulated in Social Insurance Law of the People’s Republic of China by paying contributions for employees. Such contributions include medicare, childbirth & raising, retirement, occupational injury and redundancy purposes and pension reserves.

TSP, our subsidiary in Cambodia, adheres to the Cambodian Law on Social Security Schemes for Persons Governed by the Labor Law by making contributing for employees’ health insurance and coverage of occupational risks (accidents and diseases). The subsidies outside China or Cambodia follow the relevant labor laws and regulations in the jurisdictions where they operate.

Agreements with employees and protection of employee interests

The rights of our employees are our top priority. We proactively communicate with supervisors of different functions and practice human-based management. Our labor policy is based on honest communication and the following activities, to create a winwin for the Company and the employees.

A. Compliance with relevant labor laws and regulations to create a harmonious relation with employees and maximize the protection of employees
B. Smooth communication with employees so that they can fully express opinions and receive responses
C. Full advocacy of operational status and material measures in the Company and its subsidiaries so that employees can fully understand, support and collaborate.
(II) During the most recent year and as of the print date of this annual report, the impairment having been undergone by the Company as a result of labor disputes with disclosure of the amount of impairment so far and anticipated in the future as well as the countermeasures. If such amounts could not be reasonably estimated, the fact that it cannot be reasonably estimated should be explained in full: None.

VI. Key agreements

Material and valid contracts signed by the Company in its key operating sites up to date:

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Nature of the Restrictive
Counterparty Term of the contract Highlights
contract clause
Outsourced manufacturing of
Outsourcing From July 1, 2020 to
Company A greiges and colored/finished None
manufacturing December 31, 2021
fabrics
Land renting for
From January 1, 2019 to manufacturing facilities from
Land leasing LIN, CHIN-MAO None
December 31, 2028 Chintex in Manhattan Special
Economic Zone, Svay Rieng
Long-term loan Standard Chartered [From June 22, 2018 to ] Working capital None
June 21, 2021
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Six. Financial Highlights

I. The condensed balance sheet and Statement of Comprehensive Income for the last five years

(I) Condensed Balance Sheet and Income Statement
Condensed Balance Sheet-International Financial Reporting Standards (IFRS)

Expressed in Thousands of New Taiwan Dollars

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Year Financial
Financial information for the past five years information
the year as of
Item 2016 2017 2018 2019 2020 March 31,
2021
(Note)
Current Assets 1,842,045 1,547,363 2,111,947 2,985,110 2,938,842 3,076,641
Property, plant and equipment 594,926 542,892 628,138 908,610 803,289 788,592
Intangible assets 523 412 329 247 181 163
Other assets 24,921 24,113 29,224 136,039 273,483 316,441
Total assets 2,462,415 2,114,780 2,769,638 4,030,006 4,015,795 4,181,837
Current Before distribution 1,573,408 1,281,816 1,756,449 1,541,423 1,494,402 1,533,166
liabilities After distribution 1,573,408 1,281,816 1,756,449 1,793,423 1,494,402 1,533,166
Non-current liabilities 59,720 28,712 75,723 147,309 107,354 104,538
Total Before distribution 1,633,128 1,310,528 1,832,172 1,688,732 1,601,756 1,637,704
liabilities After distribution 1,633,128 1,310,528 1,832,172 1,940,732 1,601,756 1,637,704
The Equity contributed to the
829,287 804,252 937,466 2,341,274 2,414,039 2,544,133
owners of Parent Company
Capital stock 230,000 230,000 230,000 315,000 315,000 315,000
- -
Capital surplus 603,900 1,614,016 1,614,016 1,614,016
Retained Before distribution 558,372 606,397 147,076 535,204 699,244 825,667
earnings After distribution 558,372 606,397 147,076 283,204 699,244 825,667
Other equity 40,915 (32,145) (43,510) (122,946) (193,419) (189,748)
- - - -
Treasury stock (20,802) (20,802)
Non-controlled Equity - - - - - -
Total equity Before distribution 829,287 804,252 937,466 2,341,274 2,414,039 2,544,133
After distribution 829,287 804,252 937,466 2,089,274 2,414,039 2,544,133
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Note: The reviewed consolidated financial statements for the first quarter of 2021.

Condensed Statements of Comprehensive Income - International Financial Reporting Standards (IFRS)

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Expressed in New Taiwan Dollars for earnings per share and
Thousands of New Taiwan Dollars for other items
Year
Financial information for the past five years Financial
information
the year as of
2016 2017 2018 2019 2020 March 31,
Item 2021 (Note)
Operating revenues 4,047,785 4,405,897 5,769,670 7,358,438 5,389,194 1,505,177
Gross operating profit 675,114 811,573 883,908 1,276,221 1,169,454 311,590
Other incomes and expenses - - - - - -
(net)
Operating gain/loss 246,424 321,585 334,936 551,958 555,037 162,432
Non-Operating revenues and
743 21,625 9,477 (31,522) (17,504) (1,959)
expenditures
Net profit (loss) before tax 247,167 343,210 344,413 520,436 537,533 160,473
Net profit (loss) for the year of
189,847 259,225 263,274 388,128 416,040 126,423
continuing operations
Loss from discontinued
operations - - - - - -
Net profit (loss) for the year 189,847 259,225 263,274 388,128 416,040 126,423
Other comprehensive income
(109,340) (73,060) (11,365) (79,436) (70,473) 3,671
for the year (net after tax)
Total amount of comprehensive
80,507 186,165 251,909 308,692 345,567 130,094
incomes for the year
Net profit contributed to the
189,847 259,225 263,274 388,128 416,040 126,423
owners of Parent Company
Total amount of comprehensive
income contributed to the 80,507 186,165 251,909 308,692 345,567 130,094
owners of Parent Company
Earnings per share 8.25 11.27 11.45 13.92 13.25 4.03
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Note: The reviewed consolidated financial statements for the first quarter of 2021.

3. Names of CPAs and their audit opinions for the last five years

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Year Name of Firm CPA Audit Opinions
PricewaterhouseCoopers Juanlu, Man-Yu,
2016 Taiwan(PwC Taiwan) Lin, Ya-Hui Unqualified opinion
PricewaterhouseCoopers Juanlu, Man-Yu,
2017 Taiwan(PwC Taiwan) Lin, Ya-Hui Unqualified opinion
PricewaterhouseCoopers Juanlu, Man-Yu,
2018 Unqualified opinion
Taiwan(PwC Taiwan) Lin, Ya-Hui
PricewaterhouseCoopers Juanlu, Man-Yu,
2019 Unqualified opinion
Taiwan(PwC Taiwan) Lin, Ya-Hui
PricewaterhouseCoopers Juanlu, Man-Yu,
2020 Unqualified opinion
Taiwan(PwC Taiwan) Lin, Ya-Hui
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II. Financial Analyses for the last five years

Financial Analyses for the last five years - adopting International Financial Reporting Standards (IFRS) (Consolidated)

II. Financial Analyses for the last five years Financial Analyses for the last five years - adopting International Financial Reporting Standard (IFRS) (Consolidated)	II. Financial Analyses for the last five years Financial Analyses for the last five years - adopting International Financial Reporting Standard (IFRS) (Consolidated)	II. Financial Analyses for the last five years Financial Analyses for the last five years - adopting International Financial Reporting Standard (IFRS) (Consolidated)
Year Analyzed Item Financial information for the past five years Financial information the year as of March 31, 2021 (Note) 2016 2017 2018 2019 2020
Capital Structure (%)	Liabilities to assets ratio (%)	66.32 61.97 66.15 41.90 39.89 39.16
	Long-term funds to property, plant and equipment ratio (%) 149.43 153.43 161.30 273.89 313.88 335.87
Liquidity (%)	Current ratio (%) 117.07 120.72 120.24 193.66 196.66 200.67
	Quick Ratio (%) 76.40 71.97 72.26 138.25 143.95 136.50
	Interest coverage ratio (times) 11.98 29.27 23.95 20.93 74.31 105.47
Operating ability	Accounts receivable turnover rate (times) 6.05 6.71 7.95 8.58 6.35 7.03
	Average days of accounts receivable (days) 60 54 46 42 57 52
	Inventory turnover rate (times) 4.65 5.54 6.50 7.00 5.14 5.39
	Accounts payable turnover rate (times) 6.10 6.55 6.66 6.26 3.87 4.13
	Average days of sales (days) 78 66 56 52 71 68
	Property, plant and equipment turnover rate (times) 6.48 7.74 9.85 9.58 6.30 7.56
	Total assets turnover rate (times) 1.57 1.93 2.36 2.16 1.34 1.47
Profitability Return on assets (%) 8.02 11.66 11.25 11.99 10.48 12.46 Return on equity (%) 20.31 31.74 30.23 23.68 17.50 20.40 Net gains before tax to paid- in capital ratio (%) 107.46 149.22 149.74 165.22 170.65 203.78 Net gains ratio (%) 4.69 5.88 4.56 5.27 7.72 8.40 Earnings per share ($) 8.25 11.27 11.45 13.92 13.25 4.03	Return on assets (%) 8.02 11.66 11.25 11.99 10.48 12.46
	Return on equity (%) 20.31 31.74 30.23 23.68 17.50 20.40
	Net gains ratio (%) 4.69 5.88 4.56 5.27 7.72 8.40
	Earnings per share ($) 8.25 11.27 11.45 13.92 13.25 4.03
Cash flow	Cash flow ratio(%) 31.97 28.93 11.86 51.98 53.78 29.19
	Cash flow adequacy ratio (%) Note 3 Note 3 Note 3 Note 3 129.57 105.63
	Cash reinvestment ratio (%) 42.24 33.15 15.41 29.07 19.00 14.64
Leverage	Operating leverage 3.71 3.11 2.80 2.80 3.22 2.95
	Financial leverage 1.10 1.04 1.05 1.05 1.01 1.01
	Please provide the reasons for the change in financial rations during the most recent two years. (Not mandatory if the change is within 20%) (1) Higher interest coverage ratio: primarily due sufficient fund resulting in a decrease in bank borrowings and hence a decrease in interest (2) Lower accounts receivables turnover rate and higher average days of accounts receivable: primarily due extension of receivables by parts of customers who were impacted by pandemic. (3) Lower inventory turnover rate and higher average days of sales: primarily due to supplemental raw materials inventory in response to the operational requirements. (4) Lower accounts payable turnover rate: due to extension of payment days as obtained better payment terms from suppliers (5) Lower return on equity and higher net gains ratio: primarily due to increase in own capacity of the Company, decrease in unit cost and increase in profitability. (6) Lower cash reinvestment ratio: primarily due to payment of cash dividends and expenditure for investment in the establishment of a factoryin Vietnam.

Note: The reviewed consolidated financial statements for the first quarter of 2021.

Note 2: Basic EPS

Note 3: IFRS not applicable before 2016, thus no presentation here Note 4: The calculation in this table is as follows:

Capital Structure
- (1) Liabilities to assets ratio = total liabilities / total assets
- (2) Long-term funds to property, plant and equipment ratio = (total equity + non-current liabilities) / net property, plant and equipment
Liquidity
- (1) Current ratio = current assets / current liabilities
- (2) Quick ratio = (current assets – inventory- prepaid expenses) / current liabilities
- (3) Interest coverage ratio (times) = net gains before income tax and interest / interest expenses of the current term
Operating ability
- (1) Account receivables (including Notes receivables from operating activities and accounts receivable) turnover = net sales/average receivables of each term (including notes receivables from operating activities and accounts receivable) balance
- (2) Average days of accounts receivable = 365 / receivables turnover rate
- (3) Inventory turnover rate = COGS (cost of goods sold)/average inventory amount
- (4) Account payables (including Notes payable from operating activities and accounts payable) turnover= COGS (cost of goods sold)/average payables of each term (including Notes payable from operating activities and accounts payable) balance
- (5) Average days of sales = 365 / inventory turnover rate
- (6) Property, plant and equipment turnover rate = net sales / average net property, factory and equipment
- (7) Total assets turnover rate = net sales / average total assets
Profitability
- (1) Return on assets = [gain/loss after tax + interest expense  (1-tax rate)] / average total asset
- (2) Return on equity = gain/loss after tax / average total equity
- (3) Net gains ratio = gain/loss after tax / net sales
- (4) Earnings per share = (the gain/loss contributed to the parent company – preferred stock dividend) / weighted average shares outstanding
Cash flow
- (1) Cash flow ratio= net cash flow of operating activities/current liabilities
- (2) Cash flow adequacy ratio= net cash flow of operating activities in the past five years / the past five years sum of (capital expenditures + inventory addition +cash dividends)
- (3) Cash reinvestment ratio= (net cash flow of operating activities- cash dividends) / (Property, plant and equipment gross + long term investment + other non-current assets + working capital)
Leverage
- (1) Operating leverage = (operating revenues - variable operating cost and expenses)/operating income
- (2) Financial leverage = operating profit / (operating profit - interest expense)
III. Audit Report of the Audit Committee for the Financial Statements in the most recent year: Please refer to the Appendix 1.
IV. Financial statements, auditors’ reports, balance sheets, income statements, statement of change in equity, and cash flows statements during the most recent two years, footnotes, and tables: Please refer to the Appendix 2.
V. The Parent Company Only financial report of the Company that had been verified by the Certified Public Accountant in the most recent year: The Company is a foreign issuer and hence, this is not applicable.
VI. The financial problems of the Company and its affiliates found during the most recent year and as of the print date of this annual report issuance and the impact of such problems upon the Company’s financial position: None

Seven. Review of Financial Position, Financial Performance, and Risks Related Issues

I. Financial Position

Review of Financial Position, Financial Performance, and Risks Related Issues ancial Position	Review of Financial Position, Financial Performance, and Risks Related Issues ancial Position
Expressed in Thousands of New Taiwan Dollars;% Year AccountingItem 2019 2020 Discrepancy Amount % Current assets 2,985,110 2,938,842 (46,268) (1.55) Property, plant and equipment 908,610 803,289 (105,321) (11.59) Intangible assets 247 181 (66) (26.72) Other assets 136,269 273,483 137,214 100.69 Total assets 4,030,006 4,015,795 (14,211) (0.35) Current liabilities 1,541,423 1,494,402 (47,021) (3.05) Non-current liabilities 147,309 107,354 (39,955) (27.12) Total liabilities 1,688,732 1,601,756 (86,976) (5.15) Capital stock 315,000 315,000 - - Capital surplus 1,614,016 1,614,016 - - Retained earnings 535,204 699,244 164,040 30.65 Other equity (122,946) (193,419) (70,473) 57.32 Treasury stock - (20,802) (20,802) 100.00 Non-controlled Equity - - - - Total equity 2,341,274 2,414,039 72,765 3.11 Major changes: 1. An increase in other assets: primarily due to prepayment of the acquisition of the right of use of land for the factory in Vietnam 2. A decrease in noncurrent liabilities: primarily due to installment payment for the right of use of the lease liabilities. 3. An increase in retained earnings due to business growth 4. An increase in other equity primarily due to translational gains from overseas assets and liabilities denominated in foreign currencies 5. An increase in treasuryshares:primarilydue to buyback the shares for transfer to employees.
Year 2019 2020	Discrepancy
AccountingItem	Amount %
Current assets 2,985,110 2,938,842	(46,268) (1.55)
Property, plant and equipment 908,610 803,289	(105,321) (11.59)
Intangible assets 247 181	(66) (26.72)
Other assets 136,269 273,483	137,214 100.69
Total assets 4,030,006 4,015,795	(14,211) (0.35)
Current liabilities 1,541,423 1,494,402	(47,021) (3.05)
Non-current liabilities 147,309 107,354	(39,955) (27.12)
Total liabilities 1,688,732 1,601,756	(86,976) (5.15)
Capital stock 315,000 315,000	- -
Capital surplus 1,614,016 1,614,016	- -
Retained earnings 535,204 699,244	164,040 30.65
Other equity (122,946) (193,419)	(70,473) 57.32
Treasury stock - (20,802)	(20,802) 100.00
Non-controlled Equity - -	- -
Total equity 2,341,274 2,414,039	72,765 3.11
Major changes: 1. An increase in other assets: primarily due to prepayment of the acquisition of the right of use of land for the factory in Vietnam 2. A decrease in noncurrent liabilities: primarily due to installment payment for the right of use of the lease liabilities. 3. An increase in retained earnings due to business growth 4. An increase in other equity primarily due to translational gains from overseas assets and liabilities denominated in foreign currencies 5. An increase in treasuryshares:primarilydue to buyback the shares for transfer to employees.

Note: Audited consolidated financial statements

II. Individual financial statement

(I) Analysis and comparison of financial performances:

Expressed in Thousands of New Taiwan Dollars;%
Year Item 2019 2020 Amount in increase (decrease) Ratio (%) of change
Operatingrevenues 7,358,438 5,389,194 (1,969,244) (26.76)
Operating cost 6,082,217 4,219,740 (1,862,477) (30.62)
Gross profit 1,276,221 1,169,454 (106,767) (8.37)
Operating expenses 724,263 614,417 (109,846) (15.17)
Other incomes and expenses (net) - - - -
Net operating income 551,958 555,037 3,079 0.56
Non-Operating revenues and expenditures (31,522) (17,504) (14,018) (44.47)
Before tax net profit 520,436 537,533 17,097 3.29
IncomeTax Expense 132,308 121,493 (10,815) (8.17)
Net profit (loss) for the year 388,128 416,040 27,912 7.19
Other comprehensive income (net after tax) (79,436) (70,473) (8,963) (11.28)
Totalamount ofcomprehensiveincome 308,692 345,567 36,875 11.95
Net profit contributed to the owners of Parent Company 388,128 416,040 27,912 7.19
Net profit contributed to the owners of Non-controlledEquity - - - -
Total amount of comprehensive income contributed to the owners of Parent Company 308,692 345,567 36,875 11.95
Total amount of comprehensive income contributed to the owners of Non- controlledEquity - - - -
Major changes:
1. As impacted by COVID pandemic in 2020, the decrease in operating revenues was caused by sudden
freezing of orders from brand customers. However, the increase in the own capacity of the Company
in this year contributes to the control on wastes, increase in utilization rate, decrease in amortization of
fixed costs, resulting in decrease in unit costs, and slight increase profitability.
2. Decrease in nonoperating expenditures: primarily because of sufficient operating funds of the
Company resulting in decrease in bank borrowings and decrease in interest expenditure by $18,607
thousand, and because of the use of partial funds as time deposits, resulting in increase in interest
income by $7,356 thousand; the government grants increased by $6,258 thousand, the gain/loss of
foreign exchange turned from gain to loss, primarily due to payment of NTD cash dividends. Because
NTD was strong and the functional currency of the Company was USD, therefore a loss on exchange
was recorded. In summarizing the above factors of change, the nonoperating expenditure for this year
decreased.

Note: Audited consolidated financial statements

(II) Anticipated sales volumes and the grounds thereof, the potential impact upon the Company's finance and business operation and the countermeasures thereof.

The Company is primarily engaged in the R&D, manufacturing, and production of cotton blend knitted fabrics for athleisure. We work together with international brands such as Adidas, PUMA, Decathlon, GAP, and Li Ning for product development. According to Euromonitor international (a market research firm), the athleisure segment continues to outperform the overall fashion market. It is forecasted that the global athleisure segment to post a CAGR of 5.51% and reach US$254.9 billion in 2021. Meanwhile, the Company continues its investment in the existing portfolio and quality improvement, to further cooperate with customers and enhance procurement competitiveness. We hope to establish a forward-looking product mix and cost advantages to boost revenues and profits. We will continue the financial planning to

ensure the robustness of our financial structure for future growth.

III. Cash flow:

(I) Analysis into changes in c ash flow in the most recent year:

	Expressed in Thousands of New Taiwan Dollars	Expressed in Thousands of New Taiwan Dollars
Item	Year 2019	2020 Ratio (%) of Increase (decrease)
Cash	provided (used)inoperatingactivities 801,288	803,634 0.29
Cash	provided (used)in investment activities (411,706)	(227,654) (44.70)
Cash	provided (used)in financing activities 513,445	(424,556) (182.69)
Analytical descriptions of the increase/decrease ratio:
(1)	The change in decrease in net cash used in investment activities was due to no circumstance in
	this year of expansion of Cambodian factory and replacement of equipment to increase
	production efficiency.
(2)	The change in increase in cash flow used in financing activities was due to sufficient fund for
	repayment of bank borrowings and the payment of cash dividends after cash capital injection in
	lastyear.

(II) Improvement plan for inadequate turnover:

As we expect to remain profitable in 2021, there is no liquidity concern.

(III) Analyses on the cash liquidity in the coming year:

Improvement plan for inadequate turnover: As we expect to remain profitable in 2021, there is no liquidity concern. Analyses on the cash liquidity in the coming year:	Improvement plan for inadequate turnover: As we expect to remain profitable in 2021, there is no liquidity concern. Analyses on the cash liquidity in the coming year:
Expressed in Thousands of New Taiwan Dollars
Net cash flow Cash outflow	Countermeasures against inadequate cash
Beginning cash balance from operating activities in the entire year of the entire year Cash balance (shortfall)	Investment plan Wealth management plan
1,250,551 439,303 (949,637) 740,217	‒ ‒
Analyses into changes in cash flow in 2021: (1) Operating activities: This was primarily due to cash inflows from profits, and net change in receivables, inventory, and payables. (2) Investing and financing activities: Mainly used for investment in the establishment of factories in Vietnam.

IV. Impact of major capital expenditures on financials during the most recent year

At the end of 2020, the company decided to go to Vietnam to build an integrated weaving and dyeing factory. It is estimated that it will cost about US$35,000, which is expected to be supported by the group’s own funds, bank loans or other methods. This plan is expected to increase the Group's annual production capacity by approximately 21.6 million pounds after the release of production capacity in 2023, which can effectively alleviate the current situation of nearly full capacity of its own production capacity. In sum, the expansion will not only boost the Company’s topline and bottom line, it will also provide flexibility in operations.

V. Equity investment policy, investment gains/losses during the most recent year, improvement measures and investment plans for the next year

(1) Equity investment policy

The Company focuses on its core business and does not engage in other activities via equity investments. We have set up the Guideline for Lifecycle of Investments, the Regulations Governing Supervision and Management of Subsidiaries, the Regulations Governing Transactions with Affiliated Parties and the Procedures for Asset Acquisitions/Disposals. Any relevant investment project shall be processed according these regulations.

(II) Reasons for equity investment gains/losses during the most recent year, and improvement measures

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Expressed in Thousands of New Taiwan Dollars
Holdings % Recognized
Improveme
Investee direct gains/losses in Reason for gains/losses
nt measure
(indirect) 2020
Investment gains/losses
Bumper(BVI) 100 36,138 recognized by the holding N/A
company
Investment gains/losses
TST(BVI) 100 396,723 recognized by the holding N/A
company
Investment gains/losses
THRIVE 100 (123) recognized by the holding N/A
company
Top Star 100 212,786 Good operating status N/A
Taiju Textile
100 157,055 Good operating status N/A
(Shanghai) Co., Ltd.
Guangzhou Liangwei
Knitted Fabric and 100 14,954 Good operating status N/A
Textile Co., Ltd.
TSP 100 37,063 Good operating status N/A
Taiju Textile
100 3,675 Good operating status N/A
(Shanghai) Co., Ltd.
The main reason for the
Continuing
loss was the initial stage
to develop
TST(Vietnam) 100 (23,384) of establishment and the
new
lack of economies of
clientele
scale.
Hubei Zhongsheng 35 - Operation suspended N/A
Textile Co., Ltd.
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(III) Investment plan for the next 12 months: Go to Vietnam to build a new integrated weaving and dyeing factory with an estimated investment of USD 35,000 thousand.

VI. Risk Assessments

(I) During the most recent year and as of the print date of this annual report, the impact of interest rates, exchange rates and inflation on the Company’s profitability and the proposed responding measures:
Influence of interest rate changes on the Company’s profitability and the proposed responding measures

The Company and its subsidiaries recognize interest incomes from demand deposits with banks and interest expenses due to borrowing from financial institutions to fund working capital. The Company and its subsidiaries reported interest expenses of NT$20,483 thousand and NT$1,876 thousand (or 0.28% and 0.03% of sales), respectively, in 2019 and 2020. This suggests limited influence of interest rate changes on the Company’s operations. As the Company and its subsidiaries continue to expand scale and boost profitability, the increasing internal funds will gradually reduce our reliance on bank loans.

Responding measures:

If interest rates fluctuate dramatically and the Company still needs to borrow, we will consider fund raising from the capital market. The Company will also select either fixed or floating rates, depending on the trend of interest rates, to mitigate the risks of interest rates volatility. We maintain good relations with banks to access favorable borrowing rates. The Company and its subsidiaries will also strictly control and manage our currency exposures, to respond to exchange rate fluctuations.

Influence of exchange rate changes on the Company’s profitability and the proposed responding measures

The Company and its subsidiaries book revenues mainly in USD and some in CNY. We pay for our procurements primarily in CNY. In sum, our functional currencies for daily operations are USD and CNY. We seek to reduce currency exposure and exchange rate risks via natural hedging and when appropriate forward contracts. Below is the exchange gains recognized by the Company and its subsidiaries during the most recent years.

Expressed in Thousands of New Taiwan Dollars	Expressed in Thousands of New Taiwan Dollars	Expressed in Thousands of New Taiwan Dollars
2019 2020
Exchangegains 16,804 (12,870)
As apercentage of sales(%)	0.23%	0.24%

The amount and magnitude of the currency exposure by the Company and its subsidiaries are due to a high percentage of sales in USD and a portion of payments are in CNY. In sum, the Company’s currency gains/losses is highly related to the exchange rates of USD and CNY.

In 2019, we booked an exchange gain of NT$16,804 thousand due to the weakening of CNY in the doldrum of the trade war between China and the U.S. Exchange loss of NT$12,870 thousand in 2020 was incurred primarily due to payment of NTD cash dividends. NTD was strong in recent period, but the functional currency of the Company is USD, therefore the exchange loss was recorded. For the export from production in China, we receive payment in USD and pay for purchases in RMB. The depreciation of RMB vs. USD starting from the middle of 2020 also caused affection. Responding measures:

To mitigate the risks to profitability due to currency rate fluctuations, the Company

collects market information to interpret the trends and assess the risks. We also maintain close conversations with banks to stay on top of exchange rate movements, to make timely adjustments if necessary. We also adopt the following measures to reduce the impact of currency fluctuations on our topline and bottom line:

A. The financial department of the Company and its subsidiaries keep a good relationship with financial institutions to access their insight to exchange rate movements. We also stay on top of the international currency market and financial updates. We manage and adjust, when appropriate, our foreign currency positions, to mitigate the adverse impact of currency fluctuations on our profitability.
B. Depending on our forecast of the currency movement, the Company and its subsidiaries enter into forward contracts, when appropriate, to hedge the currency risks.
C. When providing quotes to customers, the sales department should take into consideration the currency fluctuations to mitigate currency risks.
D. Depending on the assets and liabilities denominated in foreign currencies, the Company seeks to maintain a certain level of positions as a buffer against the impact of exchange rate fluctuations.
Influence of inflation on the Company’s profitability and the proposed responding measures

As of the print date of this annual report, the Company has not experienced any major impact of inflation or deflation despite rapid changes in the global economy.

Responding measures

Going forward, the Company plans to maintain good interactions with suppliers and keep abreast of market price movements. We adjust procurement strategies and cost structures in a timely manner, to mitigate the impact of inflation on our profitability.

(II) During the most recent year and as of the print date of this annual report, the policy regarding highly risky and highly leveraged investments, lending to others, endorsements/guarantees, and derivative instruments, main reasons for gains/losses and proposed responding measures:
Reasons for gains/profits from highly risky and highly leveraged investments and proposed responding measures

The Company has not engaged in any highly risky and highly leverage investments during recent years and as of the print date of this annual report.

Reasons for gains/profits from lending to others and proposed responding measures

The Company lends primarily to overseas subsidiaries directly or indirectly controlled with 100% voting rights as part of business dealings or funding requirements. This is processed according to the Guidelines for Lending to Other Parties.

Reasons for gains/profits from endorsements/guarantees and proposed responding measures

The Company provides endorsements/guarantees primarily to overseas subsidiaries directly or indirectly controlled with 100% voting rights or engages in mutual guarantees with such subsidiaries for credit facilities offered by banks.

This is processed according to the Guidelines for Endorsements/Guarantees.

Reasons for gains/profits from derivatives transactions and proposed responding

measures

The Company has not engaged in derivatives transactions during most recent years and as of the print date of this annual report. Going forward, we will primarily be engaged in USD/CNY forward contracts for hedging purposes, to mitigate the exchange rate risks associated with our assets and liabilities denominated in foreign currencies. This will be processed according to the Procedures for Asset Acquisitions/Disposals and the Guideline for Lifecycle of Investments – Control Operations for Derivatives Transactions.

(III) R&D plans and budgets:

The Company is committed to environmental protection in its operations. Going forward, our R&D projects will focus on environmental protection and energy efficiency. Below is a summary of our R&D plans and budgets.

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Additional R&D
R&D plans
spending expected
Theoretical 1.Research on the industrialization of high- USD 100,000
Fundamental efficiency and short-process projects
Research 2.Research on the production and application
of the patented yarn storage device
3.Improvement and process research of dyeing
small prototype
Fabric 1.The performance of the fabric is improved USD 200,000
development 2.Quality upgrade of fabric
and 3.Improve the appearance of the fabric
improvement
Product 1.Fabric product packaging USD 150,000
operation 2.Build an Internet marketing platform
promotion 3.Digital intelligent manufacturing technology
----- End of picture text -----

(IV) Influence of changes in government policies and laws/regulations domestic and overseas on the Company’s financials and operations and the proposed responding measures:

The Company is registered in the Cayman Islands and operates in China, Taiwan, Hong Kong, and Cambodia. We adhere to the laws/regulations and relevant government policies in the jurisdiction where the Company is registered, and in the jurisdictions where the Company operate. We keep a close eye on any change and development so that we can respond to market conditions and adopt appropriate measures in a timely manner. As of the print date of this annual report, the Company has not suffered significant and adverse impacts on its financials or operations due to change in government policies or laws/regulations domestic or overseas.

(V) Influence of changes in key policies and laws/regulations domestic and overseas on the Company’s financials and operations and the proposed responding measures:

The Company watches closely the advancement of technologies and stays informed of the most up-to-date market information, to assess how the industry dynamics affect our business and operations. During the most recent year and as of the print date of this annual report, the Company has not seen any significant on its financials or operations due to technological changes or industry evolutions.

(VI) Influence of corporate image change on crisis management and the proposed responding measures:

The Company is committed to its business philosophy of integrity, trust, and sustainability. Since inception, we have been dedicated to our core business and we have a good corporate image as we comply with all the relevant laws and regulations and endeavor to protect our reputation. During the most recent year and as of the print date of this annual

report, the Company has not experienced any crisis management events due to change in the corporate image.

(VII) Expected benefits and potential risks of ongoing M&As, and the proposed responding measures:

As of the print date of this annual report, the Company did not have plans to make acquisitions.

(VIII) Expected benefits and potential risks of capacity expansions, and the proposed responding measures: None.

(IX) Risks of customer or supplier concentration, and the proposed responding measures:

Customer concentration

During the most recent year and as of the print date of this annual report, none of the customers accounted for 30% or higher of the group’s revenues.

2. Supplier concentration

During the most recent year and as of the print date of this annual report, none of the customers accounted for 30% or higher of the group’s procurements.

In sum, the Company is not exposed to the risk of customer or supplier concentration.

(X) Influence of significant ownership transfer or change by directors, supervisors or shareholders with 10% stakes or higher on the Company, associated risks, and the proposed responding measures: None

(XI) Influence of control change on the Company, associated risks, and the proposed responding measures: None

As of the print date of this annual report, there has been no change of control for the Company.

(XII) Litigations or non-litigation events

Any judgements or material litigations ongoing, significant non-litigation or administrative litigations regarding the Company, its directors, supervisors, general manager, beneficial owners, major shareholders with 10% stakes or higher, affiliated companies and the results of such judgements or litigations may have material impact on the rights of the Company’s shareholders or the prices of its securities, the facts in contention, the value of underlying targets, start date of litigations, key parties involved and actions taken as of the print date of the annual report: None

(XIII) Other important risks and responding measures:

The Company is a holding company registered in the Cayman Islands, with operations in the Cayman Islands, Hong Kong, China, and Cambodia. Any change in the macroeconomy and political environments and volatility of exchange rates of the location of registration and operating activities will affect the Company. Meanwhile, there are many differences between the laws in the Cayman Island and the laws in Taiwan, and the Company Act is one of the examples. Whilst the Company has amended its Articles of Incorporation according to the Checklist for Protection of Shareholders of Securities Issued by Foreign Entities published by the Taiwan Stock Exchange, there are still many discrepancies in the regulatory frameworks between the Cayman Islands and Taiwan in relation to how companies operate. Investors should establish a good understanding and consult with experts regarding investment risks.

VII. Other significant events: None

Eight. Special Disclosure

I. Related information of affiliates

(I) Public relations of affiliated enterprises:

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

TST Group Holding Ltd.
TST Group
Holding Ltd.
100% 100% Taiwan Office
Bumper World
Group Holdings TST International Group Limited.
Limited (BVI)
100% 100% 100% 100% 100%
Taiju Textile THRIVE
Top Sports Textile Ltd. Textile Limited Top Star (Shanghai) Co., Ltd. NATION GROUP LIMITED
100% 100%
Top Star
Textile
Vietnam
Company
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(II) Basic Information of Affiliates

As of December 31, 2020: Expressed in Thousands of New Taiwan Dollars except foreign currencies expressed in thousand

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Date of
Paid-in
Company name incorporation Address Main Business Line
Capital
(yy/mm/dd)
Bumper World Group 2010/1/4 Jayla Place,2nd Floor, P.O Box 216,Road 689,540 [General investment ]
Holdings Limited Town Tortola, British Virgin Islands business
TST International Group 2004/7/26 Jayla Place,2nd Floor, P.O Box 216,Road 209,860 [General investment ]
Limited Town Tortola, British Virgin Islands business
Vistra Corporate Services Centre,
Thrive Nation Group Limited 2020/11/25 Wickhams Cay II, Road Town, Tortola, 227,840 [General investment ]
business
VG1110, British Virgin Islands
Manhattan (Svay Rieng) Special
TOP SPORTS TEXTILE Economic Zone, National Road# 1, Manufacture and
2011/4/11 660,660
LTD. Sangkat Bavet, Krong Bavet, Svay Rieng production of textiles
Province, Cambodia
Room 1301, 13/F, New East Ocean
Top Star Textile Limited 1991/12/12 Centre, 9 Science Museum Road, 110,097 Sales of textiles
Kowloon, Hong Kong
Road No. 3, Xuyen A Industrial Park, My
Top Star Textile Vietnam Manufacture and
2019/6/6 Hanh Bac Commune, Duc Hoa District, 30,040
Company Limited production of textiles
Long An province, Vietnam
(Self-organized) Room 712, 7th Floor,
Guangzhou Liangwei Knitted
2010/5/31 No. 140-148, Tiyu East Road, Tianhe 62,896 Sales of textiles
Fabric and Textile Co., Ltd.
District, Guangzhou
Room 3076, Building B, No. 555
Taiju Textile (Shanghai) Co.,
2006/7/31 Dongchuan Road, Minhang District, 164,354 Sales of textiles
Ltd.
Shanghai
Guangzhou Taiju
Room 1911, No. 140-148, Tiyu East Management &
Management Consulting Co., 2018/7/10 4,365
Road, Tianhe District, Guangzhou consultation services
Ltd.
Hanzheng Industrial Park, Economic
Hubei Zhongsheng Textile
2010/5/28 Development Zone, Hanchuan City, 16,586 Sales of textiles
Co., Ltd. (Note 1)
Hubei Province
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Note 1: Being suspended from business operation at the moment

(III) Data of shareholders while presumed to be in control or auxiliary relationship: None.
(IV) Description of business transactions between related companies:
(1) The company indirectly invests in the following companies through Bumper World Group Holdings Limited:

TOP SPORTS TEXTILE LTD. is the company's overseas production base for fabrics.

(2) The company indirectly invests in the following companies through TST International Group Limited:

THRIVE NATION GROUP LIMITED is the holding company of the company's future Vietnam plant.

Top Star Textile Limited is the company's international trading business.

Taiju Textile (Shanghai) Co., Ltd. produces and sells fabrics in China for the company.

Guangzhou Liangwei Knitting Textile Co., Ltd. manages orders for the company's sales outside of China.

Top Star Textile Vietnam Company Limited is the overseas production base of the company's cloth.

Guangzhou Taiju Management Consulting Co., Ltd. provides management consulting services for the group.

(V) Information of directors, supervisors, and General Managers of affiliates:

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As of December 31, 2020: Expressed in Thousands of New Taiwan Dollars
Number of shares held
Name or
Company Name Title Amount of investment/
Representative Shareholding ratio
Number of shares
Bumper World Group Holdings Director and - -
LIN, CHIN-MAO
Limited General Manager
Director and
- -
TST International Group Limited LIN, CHIN-MAO
General Manager
Director and
- -
Thrive Nation Group Limited LIN, CHIN-MAO
General Manager
Director and
TOP SPORTS TEXTILE LTD. LIN, CHIN-MAO - -
General Manager
Director LIN, CHIN-MAO - -
Top Star Textile Limited
Director and
- -
LIN, CHING-WEI
General Manager
Top Star Textile Vietnam Company - -
General Manager LAI, YU-TING
Limited
Guangzhou Liangwei Knitted Fabric Director and - -
KAO, CHIU-YI
and Textile Co., Ltd. General Manager
Director and
- -
Taiju Textile (Shanghai) Co., Ltd. HSIAO, HSIN-YI
General Manager
Guangzhou Taiju Management Director and - -
HSIAO, HSIN-YI
Consulting Co., Ltd. General Manager
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(VI) Affiliates’ Business Operating Highlights

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As of December 31, 2020: Expressed in Thousands of New Taiwan Dollars
Profit and/or Earnings per
Total Operating Operating
Names of enterprises Capital Total assets Net worth loss this term share (EPS)
liabilities revenues interest
(after tax) (NT$)
Bumper World
Group Holdings 689,540 414,226 - 414,226 - (102) 37,125 1.61
Limited
TST International
209,860 1,965,527 40,400 1,925,127 - (210) 396,723 56.67
Group Limited
Thrive Nation
227,840 227,837 115 227,722 - (123) (123) (0.02)
Group Limited
TOP SPORTS
660,660 1,222,955 823,659 399,296 852,726 82,527 37,063 16.85
TEXTILE LTD.
Top Star Textile
110,097 1,492,935 949,042 543,893 4,075,146 303,818 212,786 7.09
Limited
Top Star Textile
Vietnam Company 30,040 45,052 45,378 (326) 23,890 (12,873) (23,384) Note 1
Limited
Guangzhou Liangwei
Knitted Fabric and 164,354 1,379,909 689,384 690,525 2,880,862 187,496 157,055 Note 1
Textile Co., Ltd.
Taiju Textile
62,896 334,931 195,272 139,659 1,613,474 19,302 14,954 Note 1
(Shanghai) Co., Ltd.
Guangzhou Taiju
Management 4,365 69,578 54,963 14,615 84,594 5,247 3,675 Note 1
Consulting Co., Ltd.
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Note 1: As a limited company, without share certificates issued.

(VI) Consolidated financial statements of affiliated enterprises: Exactly same as the consolidated financial statements of parent company and its subsidiaries. Please see Appendix 2 annexed hereto.
II. During the most recent year and as of the print date of this annual report, private placement of negotiable securities: None.
III. During the most recent year and as of the print date of this annual report, the Company's stocks held or disposed of by a subsidiary: None.
IV. Other supplementary facts: None.
V. Significant issues with significant impact upon shareholders’ equity or stock prices as set forth under Subparagraph 2, Paragraph 3, Article 36 of Securities and Exchange Act: None.
VI. Significant differential gap between the Company's Articles of Incorporation and provisions regarding provision for protection of shareholders’ equity required in Taiwan:

Pursuant to the Company's Articles of Incorporation, except these points as enumerated below, within the scope where permitted by laws prevalent on the British Cayman Islands, the Company has appropriately set up relevant specifications in accordance with the Checklist for Protection over Shareholders’ Equity to safeguard exercise of shareholders’ equity. Aiming at the differential gap between the Company's Articles of Incorporation and the contents enumerated in the Checklist, we hereby describe the reasons, requirements prevalent in the venue of registration (if any) and the potential impact upon the shareholders of the Company:

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The checklist items for
Contents set forth under the Reason of the differential gap and
protection over shareholders’
Company's Articles of Incorporation descriptions thereof
equity
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The checklist items for protection over shareholders’ equity	Contents set forth under the Company's Articles of Incorporation	Reason of the differential gap and descriptions thereof

1. The Company shall not cancel its shares except a decrease in capital as resolved in the shareholders’ meeting. Decrease in capital shall be reduced pro rata to the shares held by shareholders. 2. In case of decrease of capital, the Company may return the share capital with property other than cash. The property so returned and the amount of offset shall be duly resolved in the shareholders’ meeting and shall be subject to consent by the recipient shareholders. 3. The value of the property mentioned in the preceding Paragraph and the amount so offset shall be submitted by the board of directors to a certified public accountant of the Republic of China before the shareholders’ meeting.	10.7 Notwithstanding anything to the contrary contained in Article 10.1 to 10.6, and subject to the Statute, the Memorandum and Articles and the Applicable Public Company Rules, the Company may, with the approval of an Ordinary Resolution, compulsorily redeem or repurchase Shares, provided that such Shares shall be cancelled upon redemption or repurchase and such redemption or repurchase will be effected pro rata based on the percentage of shareholdings of the Members. Payments in respect of any such redemption or repurchase, if any, may be made either in cash or by distribution of specific assets of the Company, as specified in the Ordinary Resolution approving the redemption or repurchase, provided that (a) the relevant Shares will be cancelled upon such redemption or repurchase and will not be held by the Company as Treasury Shares, and (b) where assets other than cash are distributed to the Members, the type of assets, the value of the assets and the corresponding amount of such substitutive distribution shall be (i) assessed by an R.O.C. certified public accountant before being submitted to the Members for approval and (ii) agreed to by the Member who will receive such assets. After the Company has acquired public company status, the foregoing matter shall be made in accordance with the Applicable Public Company Rules as applied to the Company. 14.1 Subject to the provisions of the Statute, the Applicable Public Company Rules and the Articles, the Company may by Special Resolution: (a)change its name;	1. Regulations Governing the Offering and Issuance of Securities by Foreign Securities Issuers on The British Cayman Islands (hereinafter referred to as Companies Law of the British Cayman Islands) provide under Article 14 to permit a company to decrease the already issued capital but only after a decision is duly resolved in the shareholders’ meeting as an extraordinary resolution and is acknowledged by the court of the British Cayman Islands. 2. Unless provided in Companies Law of the British Cayman Islands under Article 14, the capital having been issued by the Company shall not be cancelled unless duly repurchased, returned or retrieved under Article 37 or 37B of Companies Law of the British Cayman Islands. 3. As provided in Companies Law of the British Cayman Islands under Article 37, the Company is entitled to repurchase its shares in the method and under the conditions in accordance with Articles of Incorporation or as resolved in the shareholders’ meeting. Except under Article 37 of the Companies Law of the British Cayman Islands, the Companies Law of the British Cayman Islands does not provide: (1) The Company should purchase back pro rata to shareholders’ shareholding ratio; (2) The Company shall be subject to approval before returning share capital with a property other than cash or (3) The Company should evaluate the value of the property returned; provided, that the Company may provide the same with its Articles of Incorporation. 4. The provisions under Article 10.7 of the Company's Articles of Incorporation slightly differ from the key points of protection over shareholders’ equity below. The Companies Law of the British Cayman Islands provides that decreased shares having been issued shall not be written off unless

(b)alter or add to these Articles; (c)alter or add to the Memorandum with respect to any objects, powers or other matters specified therein; (d)reduce its share capital and any capital redemption reserve fund; and (e)increase its authorised share capital or cancel any Shares that at the date of the passing of the resolution have not been taken or agreed to be taken by any person, provided that in the event of any change to its authorised share capital, the Company shall also procure the amendment of its Memorandum by the Members at a general meeting to reflect such change. through the purchase-back procedures. In fact, the Company is not entitled to write off the shares held by shareholders. Aiming at such difference, the Company's Articles of Incorporation provide under Article 14.1 and Article 10.7 that the procedures to decrease the Company's capital shall go through purchase back of shares. Such difference results from the Companies Law of the British Cayman Islands. The Company's Articles of Incorporation, nevertheless, do not at all restrict the procedures to decrease the capital.	(b)alter or add to these Articles; (c)alter or add to the Memorandum with respect to any objects, powers or other matters specified therein; (d)reduce its share capital and any capital redemption reserve fund; and (e)increase its authorised share capital or cancel any Shares that at the date of the passing of the resolution have not been taken or agreed to be taken by any person, provided that in the event of any change to its authorised share capital, the Company shall also procure the amendment of its Memorandum by the Members at a general meeting to reflect such change. through the purchase-back procedures. In fact, the Company is not entitled to write off the shares held by shareholders. Aiming at such difference, the Company's Articles of Incorporation provide under Article 14.1 and Article 10.7 that the procedures to decrease the Company's capital shall go through purchase back of shares. Such difference results from the Companies Law of the British Cayman Islands. The Company's Articles of Incorporation, nevertheless, do not at all restrict the procedures to decrease the capital.	(b)alter or add to these Articles; (c)alter or add to the Memorandum with respect to any objects, powers or other matters specified therein; (d)reduce its share capital and any capital redemption reserve fund; and (e)increase its authorised share capital or cancel any Shares that at the date of the passing of the resolution have not been taken or agreed to be taken by any person, provided that in the event of any change to its authorised share capital, the Company shall also procure the amendment of its Memorandum by the Members at a general meeting to reflect such change. through the purchase-back procedures. In fact, the Company is not entitled to write off the shares held by shareholders. Aiming at such difference, the Company's Articles of Incorporation provide under Article 14.1 and Article 10.7 that the procedures to decrease the Company's capital shall go through purchase back of shares. Such difference results from the Companies Law of the British Cayman Islands. The Company's Articles of Incorporation, nevertheless, do not at all restrict the procedures to decrease the capital.
1. The procedures where the Company signed contracts with employees regarding share subscription warrant or issued share subscription warrant. 2. Employee stock option certificates shall not be transferred except an event of succession.	11.1 Notwithstanding the provision of Article 8.7 Restricted Shares, the Company may, upon approval by a majority of the Directors at a meeting attended by two-thirds or more of the total number of the Directors, adopt incentive programmes and may issue Shares or options, warrants or other similar instruments, to employees of the Company and its Subsidiaries. The rules and procedures governing such incentive programme(s) shall be in accordance with policies established by the board of Directors from time to time in accordance with the Statute, the Memorandum and the Articles. After the Company has acquired public company status, the foregoing matter shall be made in accordance with the Applicable Public Company Rules as applied to the Company. 11.2 Options, warrants or other similar instruments issued in accordance with Article 11.1 above are not transferable save by inheritance. 11.3 The Company may enter into relevant agreements with employees of the Company and the employees of its Subsidiaries in relation to the incentive programme approved pursuant to Article 11.1 above,whereby	Companies Law of the British Cayman Islands does not at all provide special clauses regarding contracts with employees regarding share subscription warrant or issued share subscription warrant. Issues regarding issuance of employee stock option certificates and whether employee stock option certificates could be transferred could be provided under the contracts for employee stock option certificates. Please note that Articles 11.1~11.4 of the Company's Articles of Incorporation have been duly amended for protection over shareholders’ equity below. Pursuant to Companies Law of the British Cayman Islands, nevertheless, in restriction over transfer of employee stock option certificates, the provisions shall still be provided in accordance with the contract for employee stock option certificates or the terms set forth under the employee stock option certificates.

employees may subscribe, within a specific period of time, a specific number of the Shares. The terms and conditions of such agreements shall be no less restrictive on the relevant employee than the terms specified in the applicable incentive programme. 11.4 Directors of the Company and its Subsidiaries shall not be eligible for the employee incentive programmes under Article 8.7 or this Article 11, provided that directors who are also employees of the Company or its Subsidiaries may participate in an employee incentive programme in their capacity as an employee (and not as a director of the Companyor its Subsidiaries).	employees may subscribe, within a specific period of time, a specific number of the Shares. The terms and conditions of such agreements shall be no less restrictive on the relevant employee than the terms specified in the applicable incentive programme. 11.4 Directors of the Company and its Subsidiaries shall not be eligible for the employee incentive programmes under Article 8.7 or this Article 11, provided that directors who are also employees of the Company or its Subsidiaries may participate in an employee incentive programme in their capacity as an employee (and not as a director of the Companyor its Subsidiaries).	employees may subscribe, within a specific period of time, a specific number of the Shares. The terms and conditions of such agreements shall be no less restrictive on the relevant employee than the terms specified in the applicable incentive programme. 11.4 Directors of the Company and its Subsidiaries shall not be eligible for the employee incentive programmes under Article 8.7 or this Article 11, provided that directors who are also employees of the Company or its Subsidiaries may participate in an employee incentive programme in their capacity as an employee (and not as a director of the Companyor its Subsidiaries).
1. The shareholders' regular meeting shall be convened at least once per annum, within six months from closure of every fiscal year. The shareholders’ meeting shall be convened by the board of directors. 2. A shareholders’ meeting shall be convened within territories of the Republic of China. In the event that a shareholders’ meeting should be convened in a venue beyond the territories of the Republic of China, it shall call for a decision resolved in the board of directors or the approval shall be obtained by a shareholder(s) from the competent authority and the declaration shall be submitted to the Taiwan Stock Exchange Corporation (TWSE) for consent within two years. 3. A shareholder(s) holding shares in excess of 1% of total outstanding issued shares may propose to the Company either in writing or in electronic means for convening a shareholders' regular meeting. The board of directors shall accept the	16.2 After the Company has acquired public company status, the Company shall hold a general meeting as its annual general meeting within six months following the end of each fiscal year, and shall specify the meeting as such in the notices calling it. At these meetings, the report of the Directors (if any) shall be presented. 16.3 The Company shall hold an annual general meeting every year. 16.4 The general meetings shall be held at such time and place as the Directors shall decide provided that unless otherwise provided by the Statute or this Article 16.4, the general meetings shall be held in Taiwan in the event the Company has acquired public company status. For general meetings to be held outside Taiwan, after the Company has acquired public company status, the Company shall apply with TWSE or TPEx to obtain its approval within two days after the board of Directors resolves to call a general meeting or within two days after the shareholder(s) obtain(s) the approval from competent authorities to convene the same. In addition, where a general meetingis to be held	1. (a) As expressly provided for in Article 58 of Companies Law of the British Cayman Islands, except an exempted company, each and every company shall convene one shareholders’ meeting at least every year. (b) Companies Law of the British Cayman Islands does not mandatorily require an exempted company to convene a shareholders' regular meeting. The Company may, at its discretion, specify under its Articles of Incorporation the number of shareholders’ meeting 2. Companies Law of the British Cayman Islands does not restrict an exempted company to convene a shareholders' meeting at a certain venue. The Company may, at its discretion, specify under its Articles of Incorporation for such venue. 3. Companies Law of the British Cayman Islands does not provide terms about proposals by shareholders. The relevant procedures may be provided under the Articles of Incorporation. 4. Companies Law of the British Cayman Islands does not provide terms regarding convening of a special shareholders meeting by the board of directors. The relevant procedures maybeprovided under

proposal as a motion unless the proposal is not resolved in the shareholders’ meeting, the proposing shareholder(s) is (are) not up to 1%. The proposal is posed beyond the specified period of acceptance or the proposal exceeds three hundred Chinese characters or is more than one issue. The board of directors shall still accept it as a motion if the proposal is to urge the Company to boost public interests or for best performance in corporate social responsibility (CSR). 4. A shareholder (s) having continually held more than 3% of the total outstanding issued shares for more than one year may propose in writing with the key issues and the reasons to the board of directors for convening a special shareholders meeting/ In the event that the board of directors does not serve a notice to convene the meeting within fifteen days after submittal, the shareholder (s) may apply to the competent authority foe permit to convene the meeting. 5. A shareholder (s) having continually held one half majority of the total outstanding issued shares for more than three months may convene a special shareholders meeting themselves. The duration of shareholding and number of held shares shall be counted based on the shareholding status at the moment of book closure day. 6. The issues as enumerated below shall be enumerated in the reasons to convene the meetingwith	outside Taiwan, the Company shall engage a professional securities agent in Taiwan to handle the administration of such general meeting (including but not limited to the handling of the voting of proxies submitted by Members). 16.5 The board of Directors may call general meetings, and they shall on a Member’s requisition pursuant to Article 16.6 proceed to convene an extraordinary general meeting of the Company. 16.6 Member(s) who are entitled to submit a Member’s requisition as provided in the preceding Article 16.5 are Member(s) of the Company holding at the date of deposit of the requisition not less than 3% of the total number of the outstanding Shares at the time of requisition and whose Shares shall have been held by such Member(s) for at least one year. 16.7 The requisition must state in writing the matters to be discussed at the extraordinary general meeting and the reason therefor and must be signed by the requisitionists and duly delivered to the Company, and may consist of several documents in like form each signed by one or more requisitionists. 16.8 If the board of Directors do not within fifteen days from the date of the delivery of the requisition dispatch the notice of an extraordinary general meeting, the requisitionists may themselves convene an extraordinary general meeting in accordance with the Applicable Public Company Rules. 16.9 Member(s) holding more than 50% of the total number of the outstanding Shares for at least three month may themselves convene an extraordinary general meeting. The period and the number of Shares held shall be determined based on the shareholding on the book closing date. 17.5 Matters pertaining to (a)election or discharge of	the Articles of Incorporation. 5. Companies Law of the British Cayman Islands does not provide terms regarding issues that should be enumerated in a notice for a shareholders’ meeting, nor does it ban a company with its Articles of Incorporation issues which should not be submitted through extemporaneous (unscheduled) motion. The relevant procedures may be provided under the Articles of Incorporation. A foreign issuer is just an exempted company as defined under the Companies Law of the British Cayman Islands. In accordance with Companies Law of the British Cayman Islands, a shareholders’ meeting is not necessarily convened every year. The Company's Articles of Incorporation have, nevertheless, expressly provided under Article 16.2: “Where the Company becomes a listed public company, the Company shall convene a shareholders’ meeting within six months from closure of every fiscal year as a shareholders' regular meeting which shall be expressly stated in the notices of the shareholders’ meeting. During a shareholders’ meeting, the relevant reports shall be provided in a board meeting (if any). Contents of the Articles of Incorporation under Article 16.8 slightly differ from the key issues of protection over shareholders’ equity as described below: Letter Tai-Zheng-Shang-Zi 0991701319 of Taiwan Stock Exchange Corporation (TWEC) dated April 13, 2010: “Descriptions: II. (III) In the very premise of not conflicting the laws prevalent at the venue of registration, a foreign issuer shall provide in its Articles of Incorporation the powers entitled to a minority of shareholders to request to convene a special shareholders meeting. The part regarding competent authority to permit the convening should be deleted”. Accordingly, the Articles of Incorporation provide under Article 16.8: “Where the board of directors does not serve notices for the special

descriptions of the key contents and shall not be posed by means of extemporaneous (unscheduled) motion. The key contents may be put into the website designated by the competent authority in charge of securities or by the Company and such URL shall be expressly stated on the notice: (1) Election or discharge of a director or supervisor; (2) Amendment to Articles of Incorporation (3) Capital decrease. (4) Application for discontinuance from being listed to public. (5) Dissolution, merger, conversion, division of shares. (6) Execution, change or termination from a contract for business in leasehold, commissioned business operation or joint venture. (7) Transfer of business operation or properties in full or for the majority. (8) Inward transfer of business operation, properties from another, with significant impact upon the Company's business operation. (9) Issuance through private placement negotiable securities attributed as equity. (10) Permit to directors into prohibition of business strife. (11) Allocation of dividend or bonus warranty period by means of issuance of new shares.	Directors, (b) alteration of the Articles, (c) reduction of capital, (d) application of ceasing public offering, (e) (i) dissolution, Merger (other than a Short-form Merger), Share Exchange (other than a Short-form Share Exchange) or Spin-off (other than a Short-form Spin-off), (ii) entering into, amending, or terminating any contract for lease of the Company's business in whole, or the delegation of management of the Company’s business to others or the regular joint operation of the Company with others, (iii) transfer of the whole or any material part of the business or assets of the Company, (iv) acceptance of the transfer of the whole business or assets of another person, which has a material effect on the business operation of the Company, and (f) ratification of an action by Director(s) who engage(s) in business for himself/herself/itself or on behalf of another person that is within the scope of the Company's business, (g) distribution of the whole or a part of the dividend and bonus of the Company in the form of new Shares, (h) distribution of the legal reserve and the Capital Reserve derived from the issuance of new shares at a premium or from endowments received by the Company to shareholders in the form of new Shares or cash, and (i) the Private Placement of any equity-type securities issued by the Company, shall be indicated in the notice of general meeting, with a summary of the material content to be discussed, and shall not be brought upas an	shareholders meeting within fifteen days after the aforementioned shareholder (s) request(s), the shareholder (s) submitting the request may convene the special shareholders meeting in accordance with the Company Act Governing Public Companies”.

(12) Allocation of legal reserve and capital reserve obtained with premium of stock issuance or the income as donation to original shareholders by means of issuance of new shares or cash.	ad hoc motion, and the material content may be placed on the website specified by the R.O.C. securities competent authorities or the Company, t and the website address shall be indicated in the notice. 18.9 Subject to the Applicable Public Company Rules, Member(s) holding 1% or more of the total number of issued, allotted, and outstanding Shares immediately prior to the relevant closing of the Register of Members may propose to the Company proposal(s) for discussion at an annual general meeting in writing or by means of electronic transmission to the extent and in accordance with the rules and procedures of general meetings proposed by the Directors and approved by an Ordinary Resolution. Other than the following situation, proposals proposed by Member(s) shall be included in the agenda by the board of Directors where (a) the proposing Member(s) holds less than 1% of the total number of outstanding Shares, (b) where the matter of such proposal may not be resolved by a general meeting, (c) the proposing Member has proposed more than one proposal, (d) such proposal contains more than 300 words, or (e) such proposal is submitted past the deadline announced by the Company for accepting the Member’s proposals; provided that the proposal(s) proposed by Member(s) is intended to improve the public interest or fulfil its social responsibilities of the Company, the board of Director may include such proposal(s) in the agenda. 35 Subject to Article 14.2(d), the Directors may capitalise any sum standing to the credit of any of the Company's reserve accounts (including share premium account and capital redemption reserve fund) or any sum standingto the credit ofprofit

and loss account or otherwise available for distribution and to appropriate such sum to Members in the proportions in which such sum would have been divisible amongst them had the same been a distribution of profits by way of Dividend and to apply such sum on their behalf in paying up in full unissued Shares for allotment and distribution credited as fully paid-up to and amongst them in the proportion aforesaid. In such event the Directors shall do all acts and things required to give effect to such capitalisation, with full power to the Directors to make such provisions as they think fit such that Shares shall not become distributable in fractions (including provisions whereby the benefit of fractional entitlements accrue to the Company rather than to the Members concerned). The Directors may authorise any person to enter on behalf of all of the Members interested into an agreement with the Company providing for such capitalisation and matters incidental thereto and any agreement made under such authority shall be effective and binding on all concerned.	and loss account or otherwise available for distribution and to appropriate such sum to Members in the proportions in which such sum would have been divisible amongst them had the same been a distribution of profits by way of Dividend and to apply such sum on their behalf in paying up in full unissued Shares for allotment and distribution credited as fully paid-up to and amongst them in the proportion aforesaid. In such event the Directors shall do all acts and things required to give effect to such capitalisation, with full power to the Directors to make such provisions as they think fit such that Shares shall not become distributable in fractions (including provisions whereby the benefit of fractional entitlements accrue to the Company rather than to the Members concerned). The Directors may authorise any person to enter on behalf of all of the Members interested into an agreement with the Company providing for such capitalisation and matters incidental thereto and any agreement made under such authority shall be effective and binding on all concerned.	and loss account or otherwise available for distribution and to appropriate such sum to Members in the proportions in which such sum would have been divisible amongst them had the same been a distribution of profits by way of Dividend and to apply such sum on their behalf in paying up in full unissued Shares for allotment and distribution credited as fully paid-up to and amongst them in the proportion aforesaid. In such event the Directors shall do all acts and things required to give effect to such capitalisation, with full power to the Directors to make such provisions as they think fit such that Shares shall not become distributable in fractions (including provisions whereby the benefit of fractional entitlements accrue to the Company rather than to the Members concerned). The Directors may authorise any person to enter on behalf of all of the Members interested into an agreement with the Company providing for such capitalisation and matters incidental thereto and any agreement made under such authority shall be effective and binding on all concerned.
1. Where a shareholders’ meeting is convened by the Company, the voting power may be exercised in writing or in electronic means. Where the Company proves satisfactory to the “Scope of Application to Electronic Balloting Adopted by a Company” promulgated by the competent authority of the Republic of China, or in case of a first listed public company as newly listed, the means of electronic balloting shall be enumerated as one of the balloting channels. 2. Where the Company convenes a shareholders’	19.6 Before the Company has acquired public company status, the Directors may determine in their discretion that the voting power of a Member at such general meeting may be exercised by way of a written ballot or by way of an electronic transmission. If a general meeting is to be held in Taiwan after the Company has acquired public company status, when convening a general meeting, the Company shall permit the Members to vote by way of an electronic transmission as one of the methods of exercising voting power as well as voting by way of a written ballot. If a general meeting is to be held outside of the R.O.C., the methods by which Members arepermitted to	1. A shareholder shall not exercise voting power in writing or by way of electronic transmission in a shareholders’ meeting. Where the Articles of Incorporation permit so, nevertheless, a shareholder may authorize a proxy agent in writing or by way of electronic transmission to exercise voting power in the meeting in such means. 2. A shareholder who exercises voting power through a proxy agent shall not be deemed as having participated in in a shareholders’ meeting in person. 3. The Company may provide in Articles of Incorporation the provisions for delivery of proxy form. 4. The Companies Law of the British Cayman Islands does notprovide

meeting in a venue beyond the territories of the Republic of China, the shareholders shall be provided with the choice to exercise balloting powers in writing or in electronic means. 3. Where the Company exercises voting power in writing or by way of electronic transmission, the methods of exercise shall be expressly provided in notice of the shareholders’ meeting. A shareholder who exercises the voting power in writing or by way of electronic transmission is deemed to participate in the shareholders’ meeting in person but is deemed as in abstention in case of extemporaneous (unscheduled) motion or an amendment to an original motion. 4. A shareholder who exercises the voting power in writing or by way of electronic transmission shall have his or her expression of intent served to the Company two days prior to the date scheduled for the meeting. In the event that two or more declarations of intention on the same matter are served to the Company, the declaration of intention first served shall prevail, unless an explicit statement to revoke the previous declaration is made in the subsequent declaration. 5. In the event that a shareholder who has exercised his/her/its voting rights in writing or by means of electronic transmission intends to attend the shareholders' meeting in person, he/she/it shall, 2 days prior to the scheduled meeting	exercise their voting power shall include voting by way of a written ballot or voting by way of an electronic transmission. Where these methods of exercising voting power are to be available at a general meeting, they shall be described in the general meeting notice given to the Members in respect of the relevant general meeting, and the Member voting by written ballot or electronic transmission shall submit such vote to the Company two days prior to the date of the relevant general meeting. In case that there are duplicate submissions, the first received by the Company shall prevail. A Member exercising voting power by way of a written ballot or by way of an electronic transmission shall be deemed to have appointed the chairman of the general meeting as his proxy to exercise his or her voting right at such general meeting in accordance with the instructions stipulated in the written or electronic document; provided, however, that such appointment shall be deemed not to constitute the appointment of a proxy for the purposes of the Applicable Public Company Rules. The chairman, acting as agent of a Member, shall not exercise the voting right of such Member in any way not stipulated in the written or electronic document, nor exercise any voting right in respect of any resolution revised at the meeting or any impromptu proposal at the meeting. A Member voting in such manner shall be deemed to have waived notice of, and the right to vote in regard to, any ad hoc resolution or amendment to the original agenda items to be resolved at the said general meeting. Should the chairman not observe the instructions of a Member in exercising such Member's voting right in respect of any resolution, the Shares held by such Member shall not be included in the	terms to annul a proxy form. In accordance with the principle of case law, nevertheless, disregarding the provision on the contrary in the Articles of Incorporation, a shareholder who participates in a shareholders’ meeting and votes in person shall be in the preferential validity. The Company is, nevertheless, still entitled to provide provision to annul the authorized proxy where a shareholder does not participate in a shareholders’ meeting in person. 5. In descriptions same as 1 above. Note is, nevertheless, still required toward Article 19.6 of the Articles of Incorporation: “(The fore part is omitted) A shareholder who exercises the voting in the aforementioned means is deemed to have appointed the chairperson of the shareholders’ meeting to act as his or her proxy agent to exercise voting power within his or her shares as instructed in writing or in electronic document. (The aft part is omitted)”. Under the laws prevalent in the British Cayman Islands, a shareholder who exercises voting power in such means is not deemed to have participated in the shareholders’ meeting in person. That shareholder, nevertheless, is substantially entitled to the powers bestowed under the laws prevalent in the Republic of China to exercise voting power in writing or by way of electronic transmission. That would not have substantial impact upon the interests of the Company's shareholders.

date of the shareholders' meeting and in the same manner previously used in exercising his/her/its voting rights, serve a separate declaration of intention to revoke his/her/its previous declaration of intention made in exercising the voting rights under the preceding paragraph. In the absence of a timely revocation of the previous declaration of intention, the voting rights exercised in writing or by means of electronic transmission shall prevail. 6. In the event that a shareholder has exercised his/her/its voting rights in writing or by means of electronic transmission, and has also authorized an agent to attend the shareholders' meeting on his/her/its behalf, then the voting rights exercised by the authorized agent for the shareholder shall prevail.	calculation of votes in respect of such resolution but shall nevertheless be included in the calculation of quorum for the meeting. 19.7 A Member who has submitted a vote by written ballot or electronic transmission pursuant to Article 19.6 may, at least two days prior to the date of the relevant general meeting, revoke such vote by written ballot or electronic transmission and such revocation shall constitute a revocation of the proxy deemed to be given to the chairman of the general meeting pursuant to Article 19.6. If a Member who has submitted a written ballot or electronic transmission pursuant to Article 19.6 does not submit such a revocation before the prescribed time, the proxy deemed to be given to the chairman of the general meeting pursuant to Article 19.6 shall not be revoked and the chairman of the general meeting shall exercise the voting right of such Member in accordance with that proxy. 19.8 If, subsequent to submitting a written ballot or electronic transmission pursuant to Article 19.6, a Member submits a proxy appointing a person of the general meeting as his proxy to attend the relevant general meeting on his behalf, then the subsequent appointment of that person as his proxy shall be deemed to be a revocation of such Member’s deemed appointment of the chairman of the general meeting as his proxy pursuant to Article 19.6. 20.7 In the event that a Member exercises his/her/its voting power by means of a written ballot or by means of electronic transmission and has also authorized a proxy to attend a general meeting, then the voting power exercised by the proxy at the general meeting shall prevail. In the event that any Member who has authorised a proxy to attend a general meeting later intends to attend thegeneral

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meeting in person or to exercise
his/her/its voting power by way
of a written ballot or electronic
transmission, he/she/it shall, at
least two days prior to such
general meeting, serve the
Company with a separate notice
revoking his/her/its previous
appointment of proxy. Votes by
way of proxy shall remain valid
if the relevant Member fails to
revoke his appointment of such
proxy before the prescribed time.
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	appointment of proxy. Votes by way of proxy shall remain valid if the relevant Member fails to revoke his appointment of such proxy before the prescribed time.

In the event that the procedure for convening a shareholders' meeting or the method of adopting resolutions thereat is in contrary to any law, ordinance or the Company's Articles of Incorporation, a shareholder may enter a petition in the court for annulment of such resolution and may take Taiwan Taipei District Court as the jurisdictional court for the first instance. .	18.7 Nothing in the Articles shall prevent any Member from issuing proceedings in a court of competent jurisdiction for an appropriate remedy in connection with the improper convening of any general meeting or the improper passage of any resolution. The Taipei District Court, R.O.C., shall be the court of the first instance for adjudicating any disputes arising out of the foregoing.	Such provisions set forth under the Articles of Incorporation might become unenforceable under the laws prevalent in the British Cayman Islands because a court on the British Cayman Islands could not possibly acknowledge and enforce a non-pecuniary judgment rendered in a foreign country before it could look into the subject dispute anew. The provisions set forth under Article 18.7 of the Articles of Incorporation differ from key issues of protection over shareholders’ equity. The key issues of protection over shareholders’ equity enumerated on the left-hand side are in fact the provisions of statutory power bestowed upon shareholders to annul litigation the statutory effect of which could not be accomplished through the Articles of Incorporation and, instead, calls for the power to be bestowed upon the shareholders for annulment. The provisions set forth under Article 18.7 of the Articles of Incorporation slightly differ from key issues of protection over shareholders’ equity. Nevertheless, where the procedures to convene a shareholders’ meeting or the methods to resolve a decision prove in contravention of laws or Articles of Incorporation, the Articles of Incorporation do not restrict shareholders from lodging litigation with the court for a remedy. As to whether the court would accept the litigation or whether the court accepting the litigation would annul that procedure to convene the meeting or annul a decision resolved in the shareholders’ meeting in contravention of laws or Articles of Incorporation, that court (disregarding a court in the Republic of China or on the British

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Cayman Islands, or a court in any other
country with jurisdictional power)
should view and resolve whether the
applicable laws bestow shareholders
with the powers for annulment and
render judgment ex officio. Such
differential gap results from the very
substance of the shareholders’ power
for annulment. The Company's Articles
of Incorporation, nevertheless, do not
restrict shareholders from the rights to
resort to the court for litigation or
remedy.
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		for annulment. The Company's Articles of Incorporation, nevertheless, do not restrict shareholders from the rights to resort to the court for litigation or remedy.

1. Whenever a decision resolved in the shareholders’ meeting meets any one among those circumstances enumerated below, an objecting shareholder is entitled to petition to the Company for procurement: (1) Division, merger, acquisition or share conversion by the Company. (2) Where the Company enters into, amends, or terminates any contract for lease of the Company’s business in whole, or for entrusted business, or for regular joint operation with others; transfer the whole or any essential part of its business or assets; or accepts the transfer of another’s whole business or assets, which has significant impact upon the business operation of the company. 2. A shareholder who makes a request under the preceding Paragraph shall submit the same in writing within twenty days after the decision is resolved in the shareholders’ meeting and shall expressly enumerate the price of acquisition. Where that shareholder reaches an accord with the Company	22.1 In the event any of the following resolutions is adopted at a general meeting, any Member who has notified the Company in writing of his/her/its objection to such a resolution prior to such meeting and has raised again his/her/its objection at such meeting, may request the Company to repurchase all of his/her/its Shares at the then prevailing fair price: (a) The Company enters into, amends, or terminates any agreement for lease of the Company's business in whole, or for the delegation of management of the Company’s business to other or for the regular joint operation of the Company with others; (b) The Company transfers the whole or a material part of its business or assets, provided that, the foregoing does not apply where such transfer is pursuant to the dissolution of the Company; or (c) The Company accepts the transfer of the whole business or assets of another person, which has a material impact on the Company’s business operations. 22.2 Unless otherwise provided by the Applicable Public Company Rules, in the event any part of the Company’s business is Spun Off (other than a Short-form Spin- off) or involved in any Merger (other than a Short-form Merger) or involved in any Share Exchange(other than a Short-	In an attempt to coordinate with the key issues of protection over shareholders’ equity on the left-hand side, the Company is to resolve an amendment to Articles 22.1~22.5 of the Articles of Incorporation during the shareholders' regular meeting 2020. In the amendment, “division, merger, acquisition or share conversion” shall be expressly enumerated as the facts for the objecting shareholders for acquisition. Further pursuant to the checklist of the key issues of protection over shareholders’ equity, the Articles of Incorporation shall expressly provide the timeframe for shareholders to exercise the powers over the objecting shareholders, the procedures for the Company to pay off the prices in the event that the Company and the shareholders do not come to an accord and that when the accord is not successfully reached, the Company shall petition to the court for all shareholders who do not reach an accord for a ruling on pricing with provisions to take Taiwan Taipei District Court as the jurisdictional court for the first instance. The Company has come to an amendment based on the key issues of protection over shareholders’ equity shown on the left- hand side so as to satisfy the amendment on the key issues of protection over shareholders’ equity shown on the left-hand side.

regarding the price of acquisition, the Company shall grant payment of the price within ninety days after the decision is resolved in the shareholders’ meeting. Where no accord is reached, the Company shall grant payment to the shareholder (s) not reaching an accord based on the identified fair price within ninety days after the decision is resolved in the shareholders’ meeting. Where the Company does not grant the payment, the Company is deemed to agree with the acquisition price requested by that shareholder. 3. Where a shareholder applies to the Company for acquisition of his or her shares under the reason set forth under Subparagraph 1, Paragraph 1 and where that shareholder and the Company do not reach an accord within sixty days from the date when the decision is resolved in the shareholders’ meeting, the Company shall take all shareholders who do not reach an accord as the counterparts and petition to the court for a ruling on the price within thirty days thereafter and shall take Taiwan Taipei District Court as the jurisdictional court for the first instance.	form Share Exchange) with any other company, the Member, who has expressed his/her/its objection therefor, in writing or verbally with a record before or during the general meeting and forfeited his/her/its voting right provided, may request the Company to repurchase all of his/her Shares at the then prevailing fair price. In the event of a Short-form Merger, a Short- form Spin-off or a Short-form Share Exchange where at least 90% of the voting power of the outstanding shares of the Company are held by the other company participating in such Merger, Spin-off or Share Exchange, the Company shall deliver a notice to each Member immediately after the resolution of board of directors approving such Short-form Merger, Short- form Spin-off or Short-form Share Exchange and such notice shall state that any Member who expressed his/her/its objection against the Short-form Merger, Short-form Spin-off or Short- form Share Exchange within the specified period pursuant to the Applicable Public Company Rules may submit a written objection requesting the Company to repurchase all of his/her/its Shares at the then prevailing fair value of such Shares. 22.3 The request prescribed in the preceding two Articles shall be delivered to the Company in writing, stating therein the types and numbers of Shares requested to be repurchased, within the specified period pursuant to the Applicable Public Company Rules after the date of the relevant resolution. In the event the requesting Member and the Company have reached an agreement in regard to the purchase price of the Shares held by such Member (the “appraisal price”), the Company shall pay such price within ninety days after the date on which the

resolution was adopted. In the event the Company and the requesting Member fail to reach the agreement with respect to the appraisal price within sixty days after the resolution date, the Company shall apply to any competent R.O.C. court against all the requesting Members as the opposing party within thirty days after the expiry of the sixty-day period for a ruling on the appraisal price, and such ruling by such R.O.C. court shall be binding and conclusive as between the Company and requested Member solely with respect to the appraisal price. 22.4 The payment of appraisal price and the delivery of Share Certificates shall comply with the Applicable Public Company Rules.	resolution was adopted. In the event the Company and the requesting Member fail to reach the agreement with respect to the appraisal price within sixty days after the resolution date, the Company shall apply to any competent R.O.C. court against all the requesting Members as the opposing party within thirty days after the expiry of the sixty-day period for a ruling on the appraisal price, and such ruling by such R.O.C. court shall be binding and conclusive as between the Company and requested Member solely with respect to the appraisal price. 22.4 The payment of appraisal price and the delivery of Share Certificates shall comply with the Applicable Public Company Rules.	resolution was adopted. In the event the Company and the requesting Member fail to reach the agreement with respect to the appraisal price within sixty days after the resolution date, the Company shall apply to any competent R.O.C. court against all the requesting Members as the opposing party within thirty days after the expiry of the sixty-day period for a ruling on the appraisal price, and such ruling by such R.O.C. court shall be binding and conclusive as between the Company and requested Member solely with respect to the appraisal price. 22.4 The payment of appraisal price and the delivery of Share Certificates shall comply with the Applicable Public Company Rules.
1. A decision regarding the motions below involving key issues of protection over shareholders’ equity shall be duly resolved by one half majority vote of the participating shareholders who represent two-thirds majority of total outstanding issued shares. Where the total outstanding issued shares represented by participating shareholders is not up to the aforementioned number, the decision may be resolved by a two-thirds majority vote of the participating shareholders who representative one half majority of the total outstanding issued shares. 2. Where the Company enters into, amends, or terminates any contract for lease of the Company’s business in whole, or for entrusted business, or for regular joint operation with others; transfer the whole or any essential part of its business or assets; or accepts the transfer of	1.1"Special Resolution" means a resolution passed by a majority of not less than two-thirds of votes cast by such Members as, being entitled so to do, vote in person or, where proxies are allowed, by proxy at a general meeting of which notice specifying the intention to propose the resolution as special resolution has been duly given. 12.1 If at any time the share capital of the Company is divided into different classes of Shares, the rights attached to any class, unless otherwise provided by the terms of issue of the Shares of that class, may, whether or not the Company is being wound up, be varied with the sanction of a Special Resolution passed at a general meeting of the holders of the Shares of that class. Notwithstanding the foregoing, if any modification or alteration in the Articles is prejudicial to the preferential rights of any class of Shares, such modification or alteration shall be adopted by a Special Resolution and shall also be adopted by a Special Resolution passed at a separate meeting of holders of that class of Shares.	1. As expressly provided for in Article 60 of Companies Law of the British Cayman Islands, a special decision refers to an event where a decision in a shareholders’ meeting is resolved by balloting, a decision duly resolved with consent not below two-thirds of the total voting powers (or a higher ratio so provided under the Articles of Incorporation, if any, which shall prevail) cast by shareholders entitled to the voting power either in person or through a proxy agent (if the shareholders’ meeting permit a proxy agent). In general Articles of Incorporation prevalent in a company on the British Cayman Islands, it would normally require that the notice of the shareholders’ meeting shall expressly provide the terms for special resolution. Where the powers are duly authorized under the Articles of Incorporation, the decision resolved by shareholders in full in writing may be deemed as a special decision. Where a decision is resolved by means of ballot tallying to count whether a special decision is resolved by a majority, the Company may specify under its Articles of Incorporation the number of voting power each and

100

another’s whole business or assets, which has significant impact upon the business operation of the company. 3. Change in Articles of Incorporation. 4. Where a change in Articles of Incorporation impairs interests of preferred shareholders, decision resolved in the preferred shareholders’ meeting shall be required. 5. Allocation of dividend and bonus either in whole or in part by means of issuance of new shares. 6. A decision for dissolution, merger or demerger. 7. Issuance of new shares with restriction on employees’ interests. 8. Conversion of shares	14.1(b) alter or add to these Articles; 14.1(d) reduce its share capital and any capital redemption reserve fund; and 14.2(e) distribute its Capital Reserve, in whole or in part, by issuing new shares which shall be distributable as dividend shares to its original shareholders in proportion to the number of shares being held by each of them or by cash in accordance with Article 34.2 hereunder. 14.2(f) effect any Merger (other than a Short-form Merger) or Spin-off (other than a Short-form Spin- off) provided that any Merger which falls within the definition of “merger and/or consolidation” under the Statute shall also be subject to the requirements of the Statute; 14.2(g) enter into, amend, or terminate any agreement for lease of the Company's whole business, or for entrusted business, or for frequent joint operation with others; 14.2(h) transfer its business or assets, in whole or in any essential part, provided that, the foregoing does not apply where such transfer is pursuant to the dissolution of the Company; and 14.3 Subject to the provisions of the Statute, the Articles, and the Applicable Public Company Rules, with regard to the dissolution procedures of the Company, the Company shall pass (a) a Supermajority Resolution, if the Company resolves that it be wound up voluntarily because it is unable to pay its debts as they fall due; or (b) a Special Resolution, if the Company resolves that it be wound up voluntarily for reasons other than the reason stated in Article 14.3(a) above.	every shareholder is entitled to cast. 2. In accordance with Companies Law of the British Cayman Islands, the issues subject to special resolution are including but not limited to: (i) Amendment or addition to Articles of Incorporation (Article 24); (ii) Amendment or addition to outlines of the Articles of Incorporation involving objectives, powers or other key issues to be specifically specified (Article 10); (iii) Dissolution at own discretion in a reason other than insolvency when the liabilities become due (Articles 90 and 116). (iv) An issue of merger or consolidation with another company (Article 233). In accordance with Companies Law of the British Cayman Islands, an issue subject to special resolution shall not be resolved through a lower majority. 3. On issues beyond the aforementioned ones, the Companies Law of the British Cayman Islands does not request the reach of certain majority. Such issues may be, nevertheless, provided through the Company's Articles of Incorporation. The Company's Articles of Incorporation slightly differ from the key issues of protection over shareholders’ equity on the left-hand side, as enumerated below: 1. Article 1.1 of Articles of Incorporation. (1) Articles of Incorporation provide: As expressly provided for in Article 1,1 of the Company's Articles of Incorporation, the term “special resolution” refers to: “A decision resolved by two-thirds majority of shareholders in the shareholders’ meeting entitled to voting powers. Such shareholders may exercise the voting powers in

101

person or through a proxy agent (where a proxy agent is permitted, the notice of the shareholders’ meeting shall expressly state as special resolution) on behalf”. The issues subject to special resolutions are including but not limited to: (i) Amendment or addition to Articles of Incorporation (Article 24); (ii) Amendment or addition to outlines of the Articles of Incorporation involving objectives, powers or other key issues to be specifically specified (Article 10); (iii) Dissolution at own discretion in a reason other than insolvency when the liabilities become due (Articles 90 and 116); (iv) An issue of merger or consolidation with another company (Article 233). Furthermore, as expressly provided for in Article 18.1 of the Articles of Incorporation: “No decision shall be resolved in a shareholders’ meeting unless that shareholders’ meeting is attended by shareholders with the represented shares up to the specified quorum. Unless otherwise specified in laws, Articles of Incorporation or rules & regulations of the public company, shareholders participating in the meeting in person or through a proxy agent represent one half majority of the total outstanding issued shares shall constitute the quorum of participation in that shareholders’ meeting”. To put it in more understandable terms, a special resolution shall be adopted in the meeting which is attended by participating shareholders either in person or through proxy agents who make up one half majority of the total outstanding issued shares and

102

		by two-thirds majority vote
		of the participating
		shareholders (including
		shareholders who participate
		in the meeting through proxy
		agents).
	(2)	Causes leading toe
		differential gap
		A special resolution is the
		provision under Companies
		Law of the British Cayman
		Islands. In accordance with
		Companies Law of the
		British Cayman Islands, an
		issue subject to special
		resolution shall be duly
		resolved by shareholders
		through a special resolution
		in accordance with the
		Articles of Incorporation and
		such a decision shall not be
		resolved through a vote
		lower than the threshold
		specified for a special
		resolution under the
		Companies Law of the
		British Cayman Islands.
		Accordingly, in the
		Company's Articles of
		Incorporation, on the
		supermajority on key issues
		of protection over
		shareholders’ equity under
		the Articles of Incorporation
		where a special resolution
		should be adopted under
		Companies Law of the
		British Cayman Islands, the
		issue for “special resolution”
		is reserved under the Articles
		of Incorporation. The issues
		of key issues of protection
		over shareholders’ equity are
		provided under the addition
		“supermajority resolution”
		under the Company's Articles
		of Incorporation.
2.	Article 14.3 of Articles of
	Incorporation:
	(1)	The Articles of Incorporation
		provide:
		Article 14.3 of Articles of
		Incorporation: “Without
		violation laws, Articles of
		Incorporation and laws of a
		public company, the
		procedures regarding

103

	dissolution of the Company:
	(a) Where the Company
	resolves a decision at its
	discretion for
	dissolution because of
	insolvency upon
	maturity of liabilities,
	the Company shall
	resolve a decision by
	(supermajority); or
	(b) Where the Company
	resolves a decision at its
	discretion for
	dissolution due to a
	reason beyond Article
	14.3 (a), the Company
	shall resolve a decision
	through a special
	resolution in the
	shareholders’ meeting”
	slightly differing from
	the key issues of
	protection over
	shareholders’ equity on
	the left-hand side at
	such points: In the
	Articles of
	Incorporation, a
	decision regarding
	dissolution are in the
	different requirements in
	“supermajority
	decision” and “special
	resolution”. In
	comparison, the key
	issues of protection over
	shareholders’ equity on
	the left-hand side
	require in all cases “a
	decision to be resolved
	by supermajority”.
(2)	Reasons leading to
	difference:
	Pursuant to Companies Law
	of the British Cayman
	Islands, where the Company
	resolves a decision for
	dissolution at its discretion
	due to a reason other than
	insolvency when liabilities
	become due, it calls for a
	special resolution. Where the
	Company resolves a decision
	at its discretion for
	dissolution due to a reason of
	insolvency when liabilities
	become due,it calls for only

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a common resolution.
Accordingly, such
differential gap just results
from the laws prevalent in
the British Cayman Islands.
Under the Company's
Articles of Incorporation,
where the Company resolves
a decision at its discretion for
dissolution due to a reason of
insolvency when liabilities
become due, it calls for a
“supermajority resolution”.
On issues beyond Article
14.3 (a), it still reserves for
“special resolution” in
accordance with the
Companies Law of the
British Cayman Islands.
In coordination with amendment toward
the key issues of protection over
shareholders’ equity on the left-hand
side, the Company is scheduled to
amend Article 14.2 of its Articles of
Incorporation in the shareholders’
meeting 2020 into “Unless otherwise
specified under Article 14.6, where not
in contravention of laws, laws of public
companies and the Articles of
Incorporation, the Company shall
resolute through supermajority vote for
following issues: (j) “stock swap”.
The Company has added “conversion of
shares” into the issues subject to
“supermajority resolutions” and has
defined “supermajority resolution”
under Article 1 of Articles of
Incorporation as referring to “(i) A
decision duly resolved by one half
majority vote in the shareholders’
meeting attended by shareholders who
represent two-thirds majority of the
total outstanding issued shares
(including proxy agents authorized by
shareholders), or (ii) Where the
participating shareholders do not
account for two-thirds of the total
outstanding issued shares but account
for one half majority of total
outstanding issued shares, a decision
duly resolved by two-thirds majority of
the participating shareholders” so as to
satisfy the amendment to the contents
of the key issues of protection over
shareholders’ equity on the left-hand
side.
1. A director of the 30.5 A Director who has a personal The Company's Articles of
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Company, toward a motion interest in the matter under Incorporation already expressly provide
in a board of directors discussion at a meeting of the under Article 30.5 “Where the
meeting which involves his Directors shall disclose the Company proceeds with
or her personal interests, material information of such merger/acquisition (M&A), a director
shall expressly declare the director's interest at the meeting; who involves interested relationship in
key contents involving his provided that a Director’s spouse a motion of that merger/acquisition
or her personal interests; or any second degree blood (M&A) in a board of directors meeting
where the Company is relatives, or company(s) with and that relationship might is likely to
amidst process of controlling and subordinating impair the Company's interests shall
merger/acquisition relationship with a Director, who expressly declare to the board of
(M&A), all directors of the has a personal interest in the directors and shareholders’ meeting the
Company shall expressly matter under discussion at a key contents of their involvement in the
declare to the board of meeting, the said Director shall merger/acquisition (M&A) and the
directors and shareholders’ be deemed having a personal reasons of their agreement or veto with
meeting the key contents interest in such matter. If the the decision”. With such contents
of their involvement in the interest of such director conflicts expressly contained in the Articles of
merger/acquisition (M&A) with or impairs the interest of the Incorporation, the Company proves
and the reasons of their Company, such Director shall not consistent with the key issues of
agreement or veto with the be entitled to vote nor exercise protection over shareholders’ equity on
decision resolved on that voting rights on behalf of another the left-hand side.
merger/acquisition Director; the voting right of such
(M&A). Director who cannot vote or
2. Where a director’s spouse, exercise any voting right as
blood relatives within the prescribed above shall not be
second degree of kinship counted in the number of votes of
or a company in control or Directors present at the board
auxiliary relationship with meeting. Where proposals are
that director involves under consideration concerning a
interested relationship with proposed merger and acquisition
an issue in the meeting by the Company, a Director who
mentioned in the preceding has a personal interest in the
Paragraph, that director is proposed transaction shall
deemed in personal disclose at the meeting of the
involvement in the board of Directors and the
interested relationship. general meeting the nature of
3. A director of the Company such director's personal interest
who involves interested and the reason(s) for the approval
relationship in a motion in or objection to the proposed
a board of directors resolution.
meeting and that
relationship might is likely
to impair the Company's
interests shall not
participate in in the voting
process and shall not act as
a proxy for another
director to exercise the
voting power. A decision
resolved in the board of
directors shall not be
counted into the voting
power of a participating
director toward the
aforementioned director
who is not entitled to the
voting power.
The remuneration payable to 30.1 A Director (except for The Companies Law of the British
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106

directors, if not expressly provided under the Articles of Incorporation, shall be resolved in the shareholders’ meeting and shall not be acknowledged retrospectively later on.	Independent Director) may hold any other office or place of profit under the Company in conjunction with his office of Director for such period and on such terms as to remuneration and otherwise as the compensation committee shall present its recommendations to the board of Directors for discussion and approval. 30.2 The Directors may be paid remuneration only in cash. The amount of such remuneration shall be recommended by the compensation committee and determined by the board of Directors, and take into account the extent and value of the services provided for the management of the Company and the standards of the industry in the R.O.C. and overseas. The Directors shall also be entitled to be paid all travelling, hotel and other expenses properly incurred by them in connection with their attendance at meetings of the board of Directors or committees of Directors, or general meetings of the Company, or separate meetings of the holders of any class of Shares or debentures of the Company, or otherwise in connection with the business of the Company, or to receive salaries in respect of their service as Directors as may be recommended by the compensation committee and determined by the board of Directors, or a combination partly of one such method and partly another, provided that any such determination shall be in accordance with the Applicable Public Company Rules. 32.8 The Directors shall establish a compensation committee in accordance with the Applicable Public Company Rules. The number of members of the compensation committee, professional qualifications, restrictions on shareholdings and position that a member of the compensation committee may	Cayman Islands does not expressly provide how remuneration to directors should be fixed but the Company may fix the remuneration through its Articles of Incorporation. The Company does not expressly provide the remuneration toward directors in its Articles of Incorporation nor does it provide that the remuneration should be fixed through the shareholders’ meeting. In accordance with the gist of Explanation Shang-Zi 09302030870 of Ministry of Economic Affairs dated March 8, 2004, nevertheless and the “Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Taiwan Stock Exchange or the Taipei Exchange”, the Company has duly set up Remuneration Committee under the Board of Directors. The provisions set forth under the left-hand side would not adversely affect the Company's shareholders’ equity at all.

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concurrently hold, and
assessment of independence with
respect to the members of the
compensation committee shall
comply with the Applicable
Public Company Rules. The
compensation committee shall
comprise of no less than three
members, one of which shall be
appointed as convener of the
compensation committee. The
rules and procedures for
convening any meeting of the
compensation committee shall
comply with policies proposed by
the members of the compensation
committee and approved by the
Directors from time to time,
provided that the rules and
procedures approved by the
Directors shall be in accordance
with the Statute, the
Memorandum, the Articles and
the Applicable Public Company
Rules and any directions of the
FSC or TWSE or TPEx (as
applicable). The Directors shall,
by a resolution, adopt a charter
for the compensation committee
in accordance with these Articles
and the Applicable Public
Company Rules.
32.9 The compensation referred in the
preceding Article shall include
the compensation, salary, stock
options and other incentive
payment to the Directors and
managers of the Company.
Unless otherwise specified by the
Applicable Public Company
Rules, the managers of the
Company for the purposes of this
Article 32.9 shall mean executive
officers as defined by the rules
and procedures governing the
compensation committee.
Where the directors in 28.2 (m) subject to the provisions of 1. The Companies Law of the British
performance of duty are found the Statute, and the Articles or the Cayman Islands does not provide
having conducted an act Applicable Public Company that shareholders in minority may
significantly impairing the Rules, in the event that he/she/it petition to a court in the British
Company or having been in a has, in the course of performing Cayman Islands for discharging a
fact in contravention of laws his/her/its duties, committed any director.
and ordinances concerned or act resulting in material damage 2. In general, an issue to discharge a
Articles of Incorporation and to the Company or in serious director is specified under the
where the shareholders fail to violation of applicable laws Articles of Incorporation and
come to decision for and/or regulations or the normally requires an ordinary
discharged, shareholders Memorandum and the Articles, resolution to be resolved in the
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108

holding more than 3% of total outstanding issued shares of the Company may petition to the court for a ruling for discharge within thirty days after the shareholders’ meeting and may take Taipei District Court, Taiwan shall be the jurisdictional court of the first instance.	but has not been removed by the Company pursuant to a Supermajority Resolution vote, then any Member(s) holding 3% or more of the total number of issued, outstanding Shares shall have the right, within thirty days after that general meeting, to petition any competent court for the removal of such Director, at the Company’s expense and such Director shall be removed upon the final judgement by such court. For clarification, if a relevant court has competent jurisdiction to adjudicate all of the foregoing matters in a single or a series of proceedings, then, for the purpose of this paragraph (i), final judgement shall be given by such competent court.	shareholders’ meeting. 3. Pursuant to provisions set forth under the Case Law regarding remedies toward shareholders, in a case of accusation of a director with impairment to the Company, the very eligible Plaintiff should be the Company itself instead of shareholder(s) individually or a minority of shareholders except an exception in very rare minority. For instance, where the act taken by a director represents fraud against minority of shares and such fraudulent people become the very controller to the Company, the shareholders in minority as the victim of the fraud would be entitled to lodge litigation with a court. 4. Such provisions set forth under the Articles of Incorporation are unenforceable under the laws prevalent in the British Cayman Islands because a court on the British Cayman Islands could not possibly acknowledge a judgment rendered in a foreign country on a non-pecuniary case until look into the legal authority on the dispute in contention. That director may be discharged through the procedures set forth under the Articles of Incorporation. Provisions set forth under 28.2(m) of the Articles of Incorporation slightly differ from the provisions below: (1) Provisions set forth under the Articles of Incorporation: The Articles of Incorporation read in Article 28.2(m): “Unless otherwise specified in laws, Articles of Incorporation or Company Act for Public Companies, where a director leads to a significant impairment to the Company or significantly in contravention of relevant and applicable laws/ordinances concerned and/or rules or Articles of Incorporation during the period of his or her performance of duty but is not discharged under a special resolution (supermajority resolution), the shareholders holding more than 3% of the total outstandingissued shares are

109

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entitled to petition to the
jurisdictional court, at the
Company's expense, for discharge
of the director in contention within
thirty days from the date when the
decision is resolved in the
shareholders’ meeting and that
director in contention shall be
discharged when the final and
irrevocable court judgment is
rendered by the jurisdictional court
for discharge of the director in
contention. To prevent ambiguity,
where a relevant jurisdictional court
is entitled to render a judgment
toward the aforementioned issue in
a single case or a series, for the
purpose, the term “final and
binding court verdict” as set forth
herein denotes the final and
irrevocable court judgment
rendered by that jurisdictional
court”, Such contents slight differ
from the key points on the left-hand
side.
(2) Causes leading to the difference:
Where a court on the British
Cayman Islands could not possibly
launch substantial trial on a
judgment rendered in a foreign
country on a case beyond monetary
judgment, the Company's has
provided the key points to protect
shareholders’ equity on the left-
hand side into the Articles of
Incorporation. The ruling rendered
by Taiwan Taipei District Court to
discharge the director might be
unable to be acknowledged and
might be unenforceable in a court
on the British Cayman Islands.
Accordingly, in the Articles of
Incorporation, the Company has
provided that shareholders should
lodge litigation with a jurisdictional
court. Such a differential gap
results from the provisions of laws
prevalent on the British Cayman
Islands in acknowledgement and
execution of a judgment rendered
in a foreign country. Still, the
shareholders are still entitled to
discharge a director in accordance
with Articles of Incorporation.
1. The supervisors to be set 32.6 Notwithstanding anything to the The Companies Law of the British
up by the Company shall contrary contained in this Article Cayman Islands does not contain a
be elected by the 32.1 to 32.9, unless otherwise concept of a “supervisor” whereunder,
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110

shareholders’ meeting. At least one among all supervisors shall have domestic domicile in the country. 2. The tenure of office for supervisors shall not be longer than three years maximum. However, supervisors are entitled to reelection. 3. Where supervisors are discharged in full, the board of directors shall convene a shareholders’ meeting for election within sixty days. 4. The supervisors shall oversee the Company in execution of business operation and investigate into the Company's business and financial status from time to time, to audit, copy and duplicate books and documents and may request the board of directors and managers to offer reports. 5. The supervisors shall audit a variety of books worked out by the board of directors and submitted to the shareholders’ meeting and shall report opinions to the shareholders’ meeting. 6. For auditing need, supervisors may retain certified public accountants, lawyers for verification on behalf of the Company. 7. The supervisors are entitled to sit in on a board of directors meeting to speak up opinion. Where the board of directors or directors are found in contravention of laws, Articles of Incorporation or decisions resolved in the shareholders’ meeting,the supervisors	permitted by the Applicable Public Company Rules, the Directors shall establish an audit committee comprised of all of the Independent Directors, one of whom shall be the convener, and at least one of whom shall have accounting or financial expertise. A resolution of the audit committee shall be passed by one-half or more of all members of such committee. The rules and procedures of the audit committee shall be in accordance with policies proposed by the members of the audit committee and passed by the Directors from time to time, which shall be in accordance with the Statute, the Memorandum, the Articles and the Applicable Public Company Rules and the instruction of the FSC or TWSE or TPEx (as applicable), if any. The Directors shall, by a resolution, adopt a charter for the audit committee in accordance with these Articles and the Applicable Public Company Rules.	the validity of a supervisor set forth under the Articles of Incorporation is ambiguous. Pursuant to Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings, in the fore part of Paragraph 2, Article 28-4: “A foreign issuer shall duly set up an Audit Committee”. The Company has duly set up Audit Committee organized by the independent directors (Cf. Article 32.6 of the Articles of Incorporation). Accordingly, the Company is no longer required to set up supervisors additionally.

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shall notify the board of
directors and directors to
discontinue such acts
forthwith.
8. All supervisors may
exercise supervisory
powers respectively.
9. A supervisor shall not
concurrently hold another
post as a director,
manager or other staff
member.
1. Shareholders having 16.10 The Independent Director of the 1. The Companies Law of the British
continually held more Audit Committee may convene Cayman Islands does not contain a
than 1% of the total a general meeting in the event concept of a “supervisor”
outstanding issued shares that the board of Directors fails whereunder, the validity of a
of the Company for more or cannot convene a general supervisor set forth under the
than six months may meeting, or for the benefit of the Articles of Incorporation is
request the supervisors Company when necessary. ambiguous.
to lodge litigation for the 25.6 Any Member(s) holding 1% or 2. Pursuant to provisions set forth
Company against a more of the Company’s issued under the Case Law regarding
director and may take Shares for at least 6 months may remedies toward shareholders, in a
Taiwan Taipei District in writing request the case of accusation of a director with
Court as the Independent Directors of the impairment to the Company, the
jurisdictional court of the Audit Committee to bring action very eligible Plaintiff should be the
first instance. against the Directors on behalf of Company itself instead of
2. Where the supervisors the Company in a court of shareholder(s) individually or a
do not lodge litigation competent jurisdiction as the minority of shareholders. In an
within thirty days after court of first instance. If the exception beyond the
request by the Independent Directors fail to aforementioned principles
shareholders, the bring such action within thirty including an event where an act of
shareholders may lodge days after the request by the a director constitutes fraud against
litigation on behalf of the Member, such Member may the minority shareholders, the
Company and take the bring the action in a court of offender of such fraud is the very
Taipei District Court, competent jurisdiction as the controller over the Company and
Taiwan as the first court of first instance in the name the minority shareholders as a
instance. of the Company. victim of the fraud are entitled to
3. The supervisors or lodge litigation with a court
independent directors of 3. Such provisions when added into
the Audit Committee the Articles of Incorporation might
may convene the become unenforceable under the
shareholders’ meeting for laws prevalent on the British
the interests to the Cayman Islands because a court on
Company except the the British Cayman Islands could
event where the board of not possibly acknowledge and
directors fails or is enforce a non-pecuniary judgment
unable to convene a rendered in a foreign country
shareholders’ meeting. before it could look into the subject
dispute anew.
Where the shares held by 24.3 If a Director creates or has The Companies Law of the British
directors or supervisors created security over any Shares Cayman Islands does not regulate that
(applicable to the held by such Director, such the shares held by directors (under
aforementioned supervisors) Director shall notify the which circumstances) are not entitled to
have been pledged in excess Company of such security. If at voting power. This, nevertheless,
of one-second of the shares any time the number of the could be regulated through the Articles
held by them upon the pledged Shares held by a Director of Incorporation.
moment of election, the part exceeds half of the Shares held As expressly provided for in the fore
----- End of picture text -----

112

of excess is not counted into voting power and is not counted into the voting power of participating shareholders. by such Director at the time of his appointment, then the voting rights attached to the Shares held by such Director at such time shall be reduced, such that the Shares over which security has been created which are in excess of half of the Shares held by such Director at the date of his appointment shall not carry voting rights and shall not be counted in the number of votes casted by the Member at a general meeting. part of Paragraph 2, Article 28-4 of the Regulations Governing the Public Offering of Securities Investment Trust Funds by Securities Investment Trust Enterprises: “A foreign issuer shall set up the Audit Committee”, the Company has duly set up Audit Committee by all its independent directors and is thus no longer required to set up supervisors. That Article, therefore, does not regulate supervisors.	of excess is not counted into voting power and is not counted into the voting power of participating shareholders. by such Director at the time of his appointment, then the voting rights attached to the Shares held by such Director at such time shall be reduced, such that the Shares over which security has been created which are in excess of half of the Shares held by such Director at the date of his appointment shall not carry voting rights and shall not be counted in the number of votes casted by the Member at a general meeting. part of Paragraph 2, Article 28-4 of the Regulations Governing the Public Offering of Securities Investment Trust Funds by Securities Investment Trust Enterprises: “A foreign issuer shall set up the Audit Committee”, the Company has duly set up Audit Committee by all its independent directors and is thus no longer required to set up supervisors. That Article, therefore, does not regulate supervisors.	of excess is not counted into voting power and is not counted into the voting power of participating shareholders. by such Director at the time of his appointment, then the voting rights attached to the Shares held by such Director at such time shall be reduced, such that the Shares over which security has been created which are in excess of half of the Shares held by such Director at the date of his appointment shall not carry voting rights and shall not be counted in the number of votes casted by the Member at a general meeting. part of Paragraph 2, Article 28-4 of the Regulations Governing the Public Offering of Securities Investment Trust Funds by Securities Investment Trust Enterprises: “A foreign issuer shall set up the Audit Committee”, the Company has duly set up Audit Committee by all its independent directors and is thus no longer required to set up supervisors. That Article, therefore, does not regulate supervisors.
There a juristic person is a shareholder, the representative of such juristic person may be elected director or supervisor. Where there are several representatives, such representatives could be elected respectively but could not be elected into both director and supervisor simultaneously. 27.4 If a Member is corporate member, the authorised representative of such Member may be elected as Director. If such Member has more than one authorised representative, each of the authorised representatives of such Member may be elected as Directors respectively. 1. The Companies Law of the British Cayman Islands does not regulate a representative of a juristic person shareholder to be elected a director which, nevertheless, could be regulated by the Articles of Incorporation. 2. The Companies Law of the British Cayman Islands does not contain a concept of a “supervisor” whereunder, the validity of a supervisor set forth under the Articles of Incorporation is ambiguous. 3. As expressly provided for in the fore part of Paragraph 2, Article 28-4 of the Regulations Governing the Public Offering of Securities Investment Trust Funds by Securities Investment Trust Enterprises: “A foreign issuer shall set up the Audit Committee”, the Company has duly set up Audit Committee by all its independent directors and is thus no longer required to set up supervisors. That Article, therefore, does not regulate supervisors.
1. The Company's directors shall exercises due diligence as a bona fide administrator in performance of duty. In case of violation that leads to an impairment to the Company, such a director shall assume the responsibility for damage indemnity. Where such an act is taken for the director himself or herself or for another, the shareholders’ meeting	26.5 The Directors shall faithfully carry out their duties with care, and may be held liable for the damages suffered by the Company for any violation of such duty. The Company may by Ordinary Resolution of any general meeting, to the maximum extent legally permissible, demand the Directors, who violate such duties, to disgorge any profit realised from such violation and regard the profits realised as the profits of the Companyas if such violation was	1. The Companies Law of the British Cayman Islands does not provide obligations for a director. Pursuant to the applicable case law, a director is supposed to assume the (1) fiduciary duties and (2) obligations as a bona fide administrator (duty of care). On violation of the obligations, the director is subject to indemnity. Besides, where a director gains benefit amidst his or her violation of obligations, the Company may claim that such benefit should go to the Company.

113

may, at its resolution, take the gain so obtained as the Company's gain. 2. Where a director amidst performance of his or her duty proves in contravention of laws and, as a result, leads to an impairment to another, such director shall assume the responsibility for compensation to such impaired another. 3. The Company's managers, supervisors shall assume the responsibility for damage indemnity same as that to be assumed by the directors within the scope of their performance of duty.	made for the benefit of the Company. The Directors shall, to the maximum extent legally permissible, indemnify the Company for any losses or damages incurred by the Company if such loss or damage is incurred as a result of a Director’s breach of laws or regulations in the course of performing his duties. The Directors and the Company shall jointly and severally indemnify the third party for any losses or damages incurred by such third party if such loss or damage is incurred as a result of a Director’s breach of laws or regulations in the course of performing his duties. The aforementioned duties of the Directors shall also apply to the managers of the Company.	2. Pursuant to the principle of case law, amidst the process of business management, an act taken by a director is deemed as the act taken by the Company itself. Where such an act leads to an impairment to a third party, it is the Company, instead of that acting director, which should assume the responsibility toward such third party. That claiming third party is not entitled to claim in accordance with the Articles of Incorporation to impose the obligations onto shareholders. A non-shareholder third party is not entitled to execute the claim in accordance with the Articles of Incorporation. Where a director impairs a third party and becomes subject to damage indemnity, the Company is entitled to claim on such director for damage indemnity for the impairment so incurred. 3. Normally toward the Company, a manager is not obliged as a mandatory. A manager is not a party under the Articles of Incorporation. Even the Articles of Incorporation provide such terms, the manager is not entitled to the power of enforcement. The aforementioned obligations should be regulated with a manager by means of a contract. 4. Pursuant to Article 26.5 of the Articles of Incorporation, amidst implementation of business operation to the Company, where a director violates the faithful obligations, another is not necessarily entitled to claim that director under the Companies Law of the British Cayman Islands into indemnity. Even if the Articles of Incorporation provide that such director should team up with the Company for the responsibility for indemnity, that would not constitute the very grounds to claim. 5. Besides, though Articles of Incorporation provide under Article 26.5 that terms on the obligations are equally applicable to managers, as far as the laws prevalent on the British Cayman Islands are concerned. Accordingly,in an

114

attempt to implement the responsibility of managers amidst protection over shareholders’ equity, the Company should execute a special accord with the managers.	attempt to implement the responsibility of managers amidst protection over shareholders’ equity, the Company should execute a special accord with the managers.	attempt to implement the responsibility of managers amidst protection over shareholders’ equity, the Company should execute a special accord with the managers.
Where a juristic person is a shareholder, its representative may be elected the director or supervisor. In case of several representatives, such representatives may be elected respectively but shall not be elected into both director and supervisor simultaneously. 27.4 If a Member is corporate member, the authorised representative of such Member may be elected as Director. If such Member has more than one authorised representative, each of the authorised representatives of such Member may be elected as Directors respectively. 1. Companies Law of the British Cayman Islands does not regulate a juristic person shareholder to have its representative elected into a director. This, nevertheless, could be regulated through the Articles of Incorporation. 2. The Companies Law of the British Cayman Islands does not contain a concept of a “supervisor” whereunder, the validity of a supervisor set forth under the Articles of Incorporation is ambiguous. 3. As expressly provided for in the fore part of Paragraph 2, Article 28- 4 of the Regulations Governing the Public Offering of Securities Investment Trust Funds by Securities Investment Trust Enterprises: “A foreign issuer shall set up the Audit Committee”, the Company has duly set up Audit Committee by all its independent directors and is thus no longer required to set up supervisors. That Article, therefore, does not regulate supervisors.
1. Before the Company convenes a board of directors meeting to resolve a decision on merger/acquisition (M&A), the Audit Committee or a special committee (applicable to a company which has set up supervisors) shall conduct review over the fairness and rationality of the transaction and submit the result of review to the board of directors` and shareholders’ meeting. Where a decision to be resolved in a shareholders’ meeting in accordance with the regulations of local law and ordinance in the		In coordination with amendment to key issues of protection over shareholders’ equity in the left column, the Company plans to add Article 32.8 of the Articles of Incorporation in the shareholders’ meeting 2020: “Before the board of directors resolves a decision on merger/acquisition (M&A), the Audit Committee shall look into the fairness and rationality of the merger/acquisition (M&A) plan and submit the review result to the shareholders’ meeting. A report shall not be dispensed to the shareholders’ meeting, nevertheless, convening a shareholders’ meeting to resolve a decision for merger/acquisition (M&A) is unnecessary in accordance with law. Amidst the review process, the Audit Committee shall retain independent experts to offer opinions regarding the rationality in cash and other properties. The review results and opinions of

115

registration countries of foreign securities issuers, nevertheless, submittal of such report to the shareholders’ meeting is not required. 2. Where the Audit Committee (or special committee) reviews the issue, independent experts should be invited to offer opinions on the rationality of the cash or other properties to be allocated to shareholders pro rata to their respective shareholding ratios. 3. The opinions of the Audit Committee (or special committee) should be served to all shareholders in the same package of the notices of the shareholders’ meeting. Where regulations of local law and ordinance in the registration countries of foreign securities issuers call for a resolution through the shareholders’ meeting, nevertheless, the report should be submitted on the merger/acquisition (M&A) issues in the most recent shareholders’ meeting. 4. Where the aforementioned documents to be served to shareholders have been promulgated through the website designated by the competent authority in charge of securities in the Republic of China and have been placed at the venue of the shareholders’ meeting, such documents are deemed to have been duly served to all shareholders.		independent experts shall be served to all shareholders in the same package with the notices of the shareholders’ meeting. Where the laws do not call for a decision to be resolved through the shareholders’ meeting, such key issues of merger/acquisition (M&A) shall be reported to the most recent shareholders’ meeting”. Besides, Article 32.9 to be added reads: “For the contents to be served to the shareholders’ meetings under the preceding Article with the contents exactly same as those to be promulgated into the website designated by the competent authority in charge of securities in the Republic of China and shall be placed at the venue of shareholders’ meeting readily accessible to shareholders where such same contents are deemed to have been served to all shareholders” so as to satisfy the amendment to the contents to be amended toward the key issues in protection over shareholders’ equity on the left-hand side box.

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Appendix 1

Audit Committee’s Review Report

The Board of Directors prepares and submits the 2020 Business Report and Consolidated Financial Statements.The CPA firm of PricewaterhouseCoopers Taiwan was retained to audit the Company’s Financial Statements and has issued an audit report relating to the Consolidated Financial Statements.

The aforementioned Business Report and Consolidated Financial Statements proposal have been reviewed by the Audit Committee and are considered to be conformed to requirements. Consequently, it is reported for review according to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act.

Respectfully submitted

To the 2021 Annual General Shareholders’ Meeting of TST Group Holding Ltd.

TST Group Holding Ltd. Audit Committee Convener: LIEN,KING-BIAU March 24, 2021

Appendix 2

TST GROUP HOLDING LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REPORT OF INDEPENDENT ACCOUNTANTS

DECEMBER 31, 2020 AND 2019

For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

~1~

TST GROUP HOLDING LTD.

DECEMBER 31, 2020 AND 2019 CONSOLIDATED FINANCIAL STATEMENTS

AND REPORT OF INDEPENDENT ACCOUNTANTS

Contents Page

1.	Cover Page	1
2.	Table of Contents	2 ~ 3
3.	Report of Independent Accountants	4 ~ 9
4.	Consolidated Balance Sheets	10 ~ 11
5.	Consolidated Statements of Comprehensive Income	12
6.	Consolidated Statements of Changes in Equity	13
7.	Consolidated Statements of Cash Flows	14
8.	Notes to the Consolidated Financial Statements	15 ~ 54
	(1) History and Organization	15
	(2) Date of Authorisation for Issuance of the Financial Statements and	15
	Procedures for Authorisation
	(3) Application of New Standards, Amendments and Interpretations	15 ~ 16
	(4) Summary of Significant Accounting Policies	16 ~ 27
	(5) Critical Accounting Judgements, Estimates and Key Sources of	27
	Assumption Uncertainty
	(6) Details of Significant Accounts	28 ~ 42

~2~

Contents Page

(7)	Related Party Transactions	43 ~ 45
(8)	Pledged Assets	45
(9)	Significant Contingent Liabilities and Unrecognised Contract	45
	Commitments
(10)	Significant Disaster Loss	45
(11)	Significant Events after the Balance Sheet Date	45
(12)	Others	45 ~ 51
(13)	Supplementary Disclosures	51
(14)	Segment Information	51 ~ 54

~3~

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Stockholders of TST Group Holding Ltd.

Opinion

We have audited the accompanying consolidated balance sheets of TST Group Holding Ltd. and subsidiaries (the “Group”) as at December 31, 2020 and 2019, and the related consolidated statements of comprehensive income, of changes in equity and of 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 at December 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audits of the consolidated financial statements as of and for the year ended December 31, 2020 in accordance with “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants”, and generally accepted auditing standards in the Republic of China (ROC GAAS); and in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants”, “Financial Supervisory Commission Order No. Financial-Supervisory-Securities-Auditing-1090360805 of February 25, 2020” and generally accepted auditing standards in the Republic of China (ROC GAAS) for our audits of the consolidated financial statements as of and for the year ended December 31, 2019. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

~4~

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, we do not provide a separate opinion on these matters.

Key audit matters for the Group’s consolidated financial statements of the current period are stated as follows:

Timing of revenue recognition

Description

Refer to Note 4(25) for a description of accounting policy on revenue recognition and Note 6(17) for details of revenue. The Group’s major products are raw materials such as greige and coloured fabrics for the midstream and upstream of textile industry. The Group recognises revenue when the control of promised goods is transferred to the buyers. 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 goods in accordance with the sales contract, or the Group has objective evidence that all criteria for acceptance have been satisfied. As the timing of revenue recognition involves management’s judgement and the transaction amounts before and after the balance sheet date are significant to the financial statements, the timing of sales revenue recognition was identified as a key audit matter.

How our audit addressed the matter

We performed the following procedures in relation to the above key audit matter:

Obtained an understanding and evaluated the operating procedures and internal controls over sales revenue, and tested those controls.
Performed confirmation of accounts receivable and sales revenve in order to confirm that the amounts from counterparties are consistent with the records. If there are differences, tested the reconciling items made by the Company in order to confirm whether the significant differences have been adjusted.

~5~

Inspected sales revenue and verified supporting documents to ensure the timing of sales revenue recognition is appropriate.
Performed cut-off test of sales transactions around the fiscal year-end date and verified corroboration of sales revenue recognition to confirm whether revenue is recognised in the proper period.

Allowance for inventory valuation losses

Description

Refer to Note 4(11) for a description of the accounting policy on inventory valuation, Note 5(2) for accounting estimates and assumption uncertainty in relation to inventory valuation, and Note 6(5) for information on the allowance for inventory valuation losses. As of December 31, 2020, the balances of inventories and allowance for inventory valuation losses were NT$ 822,921 thousand and NT$ 35,289 thousand, respectively.

The Group is primarily engaged in the manufacturing and sales of cotton in the textile industry. As the raw material prices of textile products fluctuate continuously and the market is highly competitive, there is a higher risk of incurring inventory valuation losses or having obsolete inventory. The Group’s inventory is stated at the lower of cost and net realisable value. For inventory that is over a certain age, the loss is recognised based on the realisable value.

The industry’s raw material prices fluctuate continuously, and the net realisable value involves subjective judgement which results in a high degree of uncertainty when assessing obsolete or slow-moving inventories. As the inventory and allowance for inventory valuation losses are material to the financial statements, the assessment of allowance for inventory valuation losses was identified as a key audit matter.

How our audit addressed the matter

We performed the following procedures in relation to the above key audit matters:

Assessed whether the policies on allowance for inventory valuation losses were consistently applied in all the periods and met the applicable accounting principles based on our understanding of the Group’s operations and the characteristics of its industry.

~6~

Reviewed the details of the individually obsolete inventories and verified the related supporting documents.
Tested the basis of market value used in calculating the net realisable value of respective inventories and validated the accuracy of net realisable calculation of selected samples.

Responsibilities of management and those charged with governance for the financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance, including the audit committee, are responsible for overseeing the Group’s financial reporting process.

Auditor’s responsibilities for the audit of the 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 ROC GAAS 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.

~7~

As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

~8~

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.

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 auditor’s 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.

Juanlu, Man-Yu Lin, Ya-Hui For and on behalf of PricewaterhouseCoopers, Taiwan March 24, 2021

The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

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TST GROUP HOLDING LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

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December 31, 2020 December 31, 2019
Assets Notes AMOUNT % AMOUNT %
Current assets
1100 Cash and cash equivalents 6(1) $ 1,250,551 31 $ 1,122,004 28
1150 Notes receivable, net 6(3) 40,914 1 16,767 -
1170 Accounts receivable, net 6(3) 764,994 19 874,240 22
1200 Other receivables 6(4) 47,909 1 54,702 1
130X Inventory 6(5) 787,632 20 854,030 21
1470 Other current assets 6(1) and 8 46,842 1 63,367 2
11XX Total current assets 2,938,842 73 2,985,110 74
Non-current assets
1600 Property, plant and equipment 6(6) 803,289 20 908,610 23
1755 Right-of-use assets 6(7) 80,652 2 99,770 2
1780 Intangible assets 181 - 247 -
1900 Other non-current assets 6(8) 、 8 and 9(1) 192,831 5 36,269 1
15XX Total non-current assets 1,076,953 27 1,044,896 26
1XXX Total assets $ 4,015,795 100 $ 4,030,006 100
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(Continued)

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TST GROUP HOLDING LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

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December 31, 2020 December 31, 2019
Liabilities and Equity Notes AMOUNT % AMOUNT %
Liabilities
Current liabilities
2100 Short-term borrowings 6(9) $ 44,475 1 $ 152,724 4
2150 Notes payable 255,510 6 130,203 3
2170 Accounts payable 877,625 22 916,457 23
2200 Other payables 6(10) 246,649 6 236,852 6
2220 Other payables - related parties 7 908 - 680 -
2230 Current income tax liabilities 43,305 1 56,318 1
2280 Current lease liabilities 17,223 1 18,736 1
2320 Long-term liabilities, current portion 6(11) 7,372 - 15,255 -
2399 Other current liabilities 6(17) 1,335 - 14,198 -
21XX Total current liabilities 1,494,402 37 1,541,423 38
Non-current liabilities
2540 Long-term borrowings 6(11) 315 - 8,092 -
2570 Deferred income tax liabilities 6(24) 40,468 1 58,054 2
2580 Non-current lease liabilities 66,132 2 80,701 2
2600 Net defined benefit liability - non-
current 439 - 462 -
25XX Total non-current liabilities 107,354 3 147,309 4
2XXX Total liabilities 1,601,756 40 1,688,732 42
Equity
Share capital 6(14)
3110 Share capital - common stock 315,000 8 315,000 8
Capital surplus 6(15)
3200 Capital surplus 1,614,016 40 1,614,016 40
Retained earnings 6(16)
3320 Special reserve 122,946 3 43,510 1
3350 Unappropriated retained earnings 576,298 14 491,694 12
Other equity interest
3400 Other equity interest ( 193,419) ( 5) ( 122,946) ( 3)
3500 Treasury stock 6(14) ( 20,802) - - -
3XXX Total equity 2,414,039 60 2,341,274 58
Significant contingent liabilities and 9
unrecognised contract commitments
Significant event after the balance
sheet date $ 4,015,795 100 $ 4,030,006 100
3X2X Total liabilities and equity
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The accompanying notes are an integral part of these consolidated financial statements.

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TST GROUP HOLDING LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

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

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Year ended December 31
2020 2019
Items Notes AMOUNT % AMOUNT %
4000 Sales revenue 6(17) $ 5,389,194 100 $ 7,358,438 100
5000 Operating costs 6(5)(22)(23) ( 4,219,740) ( 78) ( 6,082,217) ( 83)
5900 Net operating margin 1,169,454 22 1,276,221 17
5950 Net operating margin 1,169,454 22 1,276,221 17
Operating expenses 6(12)(22)(23)
6100 Selling expenses ( 140,437 ) ( 3) ( 179,155) ( 3)
6200 General and administrative expenses ( 452,792) ( 9) ( 531,900) ( 7)
6300 Research and development expenses ( 15,653) - ( 18,159) -
6450 Impairment loss (impairment gain 12(2)
and reversal of impairment loss)
determined in accordance with IFRS
9 ( 5,535) - 4,951 -
6000 Total operating expenses ( 614,417) ( 12) ( 724,263) ( 10)
6900 Operating profit 555,037 10 551,958 7
Non-operating income and expenses
7100 Interest income 6(18) 10,226 - 2,870 -
7010 Other income 6(19) 16,124 - 10,408 -
7020 Other gains and losses 6(20) ( 36,522 ) - ( 18,691) -
7050 Finance costs 6(21) ( 7,332 ) - ( 26,109) -
7000 Total non-operating income and
expenses ( 17,504 ) - ( 31,522) -
7900 Profit before income tax 537,533 10 520,436 7
7950 Income tax (expense) benefit 6(24) ( 121,493) ( 2) ( 132,308) ( 2)
8000 Profit for the year from continuing
operations 416,040 8 388,128 5
8200 Profit for the year $ 416,040 8 $ 388,128 5
Other comprehensive income
Components of other comprehensive
income that will be reclassified to
profit or loss
8361 Other comprehensive loss, before
tax, exchange differences on
translation ($ 70,473) ( 2) ( $ 79,436) ( 1)
8360 Other comprehensive loss that
will be reclassified to profit or
loss ( 70,473) ( 2) ( 79,436) ( 1)
8500 Total comprehensive income for the
year $ 345,567 6 $ 308,692 4
Profit (loss) attributable to:
8610 Owners of the parent $ 416,040 8 $ 388,128 5
Comprehensive income attributable
to:
8710 Owners of the parent $ 345,567 6 $ 308,692 4
Basic earnings per share 6(25)
9750 Basic earnings per share $ 13.25 $ 13.92
Diluted earnings per share 6(25)
9850 Diluted earnings per share $ 13.23 $ 13.91
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The accompanying notes are an integral part of these consolidated financial statements.

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TST GROUP HOLDING LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Notes	Share capital - common stock			Equityattributableto owners of the parent	Equityattributableto owners of the parent	Equityattributableto owners of the parent	Equityattributableto owners of the parent	Equityattributableto owners of the parent
		Capital surplus, additional paid-in capital		Retained	Earnings	Other equityinterest
				Special reserve	Unappropriated retained earnings	Financial statements translation differences of foreign operations		Treasury stock
6(16) 6(14) 6(13) 6(16) 6(14)	`$` `230,000` `-` `-` `-` `-` `85,000` `-` `$` `315,000` `$` `315,000` `-` `-` `-` `-` `-` `-` `$` `315,000`		`$` `603,900` `-` `-` `-` `-` `1,008,643` `1,473` `$ 1,614,016` `$ 1,614,016` `-` `-` `-` `-` `-` `-` `$ 1,614,016`	`$` `-` `-` `-` `-` `43,510` `-` `-` `$` `43,510` `$` `43,510` `-` `-` `-` `79,436` `-` `-` `$` `122,946`	`$` `147,076` `388,128` `-` `388,128` `(` `43,510 )` `-` `-` `$` `491,694` `$` `491,694` `416,040` `-` `416,040` `(` `79,436 )` `(` `252,000 )` `-` `$` `576,298`	`($` `43,510)` `-` `(` `79,436 )` `(` `79,436)` `-` `-` `-` `($` `122,946 )` `($` `122,946 )` `-` `(` `70,473 )` `(` `70,473)` `-` `-` `-` `($` `193,419 )`	`$ -` `-` `-` `-` `-` `-` `-` `$ -` `$` `-` `-` `-` `-` `-` `-` `(` `20,802 )` `( $ 20,802 )`		`$` `937,466` `388,128` `(` `79,436 )` `308,692` `-` `1,093,643` `1,473` `$ 2,341,274` `$ 2,341,274` `416,040` `(` `70,473 )` `345,567` `-` `(` `252,000 )` `(` `20,802 )` `$ 2,414,039`

The accompanying notes are an integral part of these consolidated financial statements.

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TST GROUP HOLDING LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Depreciation
Amortization
Expected credit loss (gain)
Rewards associated with a leased asset
Loss on disposal of property, plant and equipment
Impairment loss on property, plant and equipment
Interest income
Interest expense
Share-based payments
Changes in operating assets and liabilities
Changes in operating assets
Notes receivable, net
Accounts receivable, net
Other receivables
Inventories
Other current assets
Changes in operating liabilities
Notes payable
Accounts payable
Other payables to related parties
Other payables
Other current liabilities
Cash inflow generated from operations
Interest received
Interest paid
Income taxes paid
Net cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease (Increase) in other current assets
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Decrease (Increase) in refundable deposits
Increase (Decrease) in other non-current assets
Advance payment for land use rights
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in short-term loans
Repayments of long-term debt
Decrease in guarantee deposits received
Payments of lease liabilities
Cash dividends paid
Proceeds from issuing shares
Buy back treasury stocks
Net cash flows from financing activities
Effect of foreign exchange translations
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year Years ended December 31,
Notes
2020
2019
$ 537,533
$
520,436
6(22)
132,710
103,992
6(22)
69
72
12(2)
5,535
(
4,951 )
6(7)
(
2,372 )
-
6(20)
1,878
20,171
6(20)
19,114
6,953
6(18)
(
10,226 )
(
2,870 )
6(21)
7,332
26,109
6(13)
-
1,473
(
24,147 )
3,991
103,711
(
81,262 )
6,793
71,787
66,398
(
11,310 )
3,565
12,565
125,307
22,047
(
38,832 )
127,738
228
81
25,668
81,813
(
12,863 )
13,865
947,401
912,700
10,226
2,870
(
7,332 )
(
26,109 )
(
146,661 )
(
88,173 )
803,634
801,288
12,960
(
18,703 )
6(26)
(
85,688 )
(
396,314 )
1,235
11,888
312
(
1,102 )
520
(
7,475 )
(
156,993 )
-
(
227,654 )
(
411,706 )
(
108,249 )
(
339,317 )
(
15,660 )
(
33,522 )
(
23 )
(
11 )
(
27,822 )
(
20,197 )
6(16)
(
252,000 )
(
187,151 )
6(14)
-
1,093,643
6(14)
(
20,802 )
-
(
424,556 )
513,445
(
22,877 )
(
57,747 )
128,547
845,280
1,122,004
276,724
$ 1,250,551
$
1,122,004

The accompanying notes are an integral part of these consolidated financial statements.

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TST GROUP HOLDING LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

1. History and Organization

TST Group Holding Ltd. (the “Company”), formerly Bumper World Group (Cayman) Holdings Limited, was incorporated as a company in the Cayman Islands in May 2013. The ad dress of the Company’s registered office is P.O. Box 472, 2nd Floor, Harbour Place, 103 South Church Street, George Town, Grand Cayman KY1-1106, Cayman Islands. The Company has completed the Group restructuring in June 2018. The Company and its subsidiaries (collectively referred herein as the “Group”) are primarily engaged in the manufacture and sales of textile. The Company was listed on the Taiwan Stock Exchange starting from December 5, 2019.

2. Date of Authorisation for Issuance of the Financial Statements and Procedures for Authorisation

These consolidated financial statements were authorised for issuance by the Board of Directors on March 24, 2021.

3. Application of New Standards, Amendments and Interpretations

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments endorsed by the FSC effective from 2020 are as follows:

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Effective date by
International Accounting
New Standards, Interpretations and Amendments Standards Board
----- End of picture text -----

follows: New Standards, Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IAS 1 and IAS 8, ‘Disclosure initiative-definition of	January 1, 2020
material’
Amendments to IFRS 3, ‘Definition of a business’	January 1, 2020
Amendments to IFRS 9, IAS 39 and IFRS 7, ‘Interest rate benchmark	January 1, 2020
reform’
Amendment to IFRS 16, ‘Covid-19-related rent concessions’	June 1, 2020 (Note)
Note`：`Earlier application from January 1, 2020 is allowed by FSC.

Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment. Amendment to IFRS 16, ‘Covid-19-related rent concessions’

This amendment provides a practical expedient for lessees from assessing whether a rent concession related to COVID-19, and that meets all of the following conditions, is a lease modification:

(a) Changes in lease payments result in the revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;
(b) Any reduction in lease payments affects only payments originally due on or before June 30 2021; and
(c) There is no substantive change to other terms and conditions of the lease.

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(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by

the Group

New standards, interpretations and amendments endorsed by the FSC effective from 2021 are as follows:

Effective date by International Accounting New Standards, Interpretations and Amendments Standards Board Amendments to IFRS 4, ‘Extension of the temporary exemption from January 1, 2021 applying IFRS 9’ Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, January 1, 2021 ‘ Interest Rate Benchmark Reform— Phase 2’

The above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

(3) IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC are as follows:

==> picture [456 x 39] intentionally omitted <==

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

Effective date by
International Accounting
New Standards, Interpretations and Amendments Standards Board
----- End of picture text -----

endorsed by the FSC are as follows: New Standards, Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 3, ‘Reference to the conceptual framework’	January 1, 2022
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets	To be determined by
between an investor and its associate or joint venture’	International Accounting
	Standards Board
IFRS 17, ‘Insurance contracts’	January 1, 2023
Amendments to IFRS 17, 'Insurance contracts'	January 1, 2023
Amendments to IAS 1, ‘Classification of liabilities as current or non-	January 1, 2023
current’
Amendments to IAS 1, ‘Disclosure of accounting policies’	January 1, 2023
Amendments to IAS 8, ‘Definition of accounting estimates’	January 1, 2023
Amendments to IAS 16, ‘Property, plant and equipment: proceeds	January 1, 2022
before intended use’
Amendments to IAS 37, ‘Onerous contracts—cost of fulfilling a	January 1, 2022
contract’
Annual improvements to IFRS Standards 2018–2020	January 1, 2022

The above standards and interpretations have no significant impact to the Group’s financial condition

and financial performance based on the Group’s assessment.

4. Summary of Significant Accounting Policies

The principal accounting policies applied in the preparation of these consolidated financial statements

are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, International

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Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”).

(2) Basis of preparation

A. Except for financial assets at fair value through profit or loss, the consolidated financial statements have been prepared under the historical cost convention.
B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

A. Basis for preparation of consolidated financial statements
(a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, 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. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.
(b) Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
(c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the noncontrolling interests having a deficit balance.
(d) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity.
(e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or

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liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognised in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

B. Subsidiaries included in the consolidated financial statements:

Name of investor The Company The Company Bumper BVI TST TST TST TST CHINTEX ENTERPRISES LIMITED TOP STAR TEXTILE LIMITED	Name of subsidiary BUMPER WORLD GROUP HOLDINGS LIMITED (Bumper BVI) TST International Group Limited (TST) TOP SPORTS TEXTILE LTD. (TOP SPORTS) THRIVE NATION GROUP LIMITED (THRIVE) TOP STAR TEXTILE LIMITED CHINTEX ENTERPRISES LIMITED GUANGZHOU RUNWELL KNITS TEXTILE GUANGZHOU CHINTEX MANAGEMENT CONSULTING CO., LTD. TOP STAR TEXTILE VIETNAM COMPANY LIMITED (TST Vietnam)	Main business activities Holding company Holding company Manufacturer Holding company Sales company Sales company Sales company Management consulting company Manufacturer	Ownership (%) December 31, 2020 December 31, 2019 100% 100% 100% 100% 100% 100% 100% - 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%	Ownership (%) December 31, 2020 December 31, 2019 100% 100% 100% 100% 100% 100% 100% - 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%	Description
				2019 100% 100% 100% - 100% 100% 100% 100% 100%
					Note 1

Note 1: The Group obtained 100% control of THRIVE on December 8, 2020.

C. Subsidiaries not included in the consolidated financial statements: None.
D. Adjustments for subsidiaries with different balance sheet dates: None.
E. Significant restrictions: None.
F. Subsidiaries that have non-controlling interests that are material to the Group: None.

(4) Foreign currency translation

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The Company’s functional currency is United States dollars; however, the consolidated financial statements are presented in New Taiwan dollars under the regulations of the regulatory

~18~

authorities.

A. Foreign currency transactions and balances
(a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.
(b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss.
(c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
(d) All foreign exchange gains and losses are presented in the statement of comprehensive income within ‘other gains and losses’
B. Translation of foreign operations
(a) The operating results and financial position of all the group entities, associates and joint arrangements that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
- i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;
- ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and
- iii. All resulting exchange differences are recognised in other comprehensive income.
(b) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, even when the Group retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.
(c) The Group’s financial statements were translated into New Taiwan dollars based on t he average exchange rates of USD1=NTD29.5491 and USD1=NTD30.9117 for the years ended December 31, 2020 and 2019, respectively. The closing exchange rates as of December 31, 2020 and 2019 were USD1=NTD28.480 and USD1=NTD29.980, respectively.

~19~

(5) Classification of current and non-current items

A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
(a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;
(b) Assets held mainly for trading purposes;
(c) Assets that are expected to be realised within twelve months from the balance sheet date;
(d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to

be exchanged or used to settle liabilities more than twelve months after the balance sheet date.

B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
(a) Liabilities that are expected to be settled within the normal operating cycle;
(b) Liabilities arising mainly from trading activities;
(c) Liabilities that are to be settled within twelve months from the balance sheet date;
(d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. 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.

(6) Cash equivalents

Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

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

A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income.
B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.
C. At initial recognition, the Group measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Group subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.
D. Dividends are recognised as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

(8) Accounts and notes receivable

A. Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services.
B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

~20~

(9) Impairment of financial assets

For accounts receivable that has a significant financing component, at each reporting date, the Group recognises the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognises the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable that do not contain a significant financing component, the Group recognises the impairment provision for lifetime ECLs.

(10) Derecognition of financial assets

The Group derecognises a financial asset when one of the following conditions is met:

A. The contractual rights to receive the cash flows from the financial asset expire.
B. The contractual rights to receive cash flows of the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.
C. The contractual rights to receive cash flows of the financial asset have been transferred; however, the Group has not retained control of the financial asset.
(11) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted-average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads. It excludes borrowing costs. The item by item approach is used in applying the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

(12) Investments accounted for using equity method / associates

A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognised at cost.
B. The Group’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
C. When changes in an associate’s equity do not arise from profit or loss or other comprehensive income of the associate and such changes do not affect the Group’s ownership percentage of the associate, the Group recognises change in ownership interests in the associate in ‘capital surplus’ in proportion to its ownership.
D. Unrealised gains on transactions between the Group and its associates are eliminated to the extent

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of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

E. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it retains significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.
(13) Property, plant and equipment
A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.
B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
C. Property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.
D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows: Buildings and structures 5 ~ 50 years Machinery and equipment 5 ~ 10 years Office equipment 2 ~ 5 years Transportation equipment 4 ~ 5 years Other equipment 5 years

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(14) Leasing arrangements (lessee) - right-of-use assets/ lease liabilities

A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of lowvalue assets, lease payments are recognised as an expense on a straight-line basis over the lease term.
B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are fixed payments, less any lease incentives receivable. The Group subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognised as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.
C. At the commencement date, the right-of-use asset is stated at cost comprising the amount of the initial measurement of lease liability. The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognised as an adjustment to the right-of-use asset.
D. For lease modifications that decrease the scope of the lease, the lessee shall decrease the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognise the difference between remeasured lease liability in profit or loss.
(15) Intangible assets
Computer software is stated at cost and amortised on a straight-line basis over its estimated useful life of 10 years.
(16) Impairment of non-financial assets

The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognising impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognised.

(17) Borrowings

Borrowings comprise long-term and short-term bank borrowings. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

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(18) Notes and accounts payable

A. Accounts payable are liabilities for purchases of goods or services and notes payable are those resulting from operating and non-operating activities.
B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(19) Derecognition of financial liabilities

A financial liability is derecognised when the obligation specified in the contract is either discharged or cancelled or expires.

(20) Employee benefits

A. Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognised as expense in that period when the employees render service.

B. Pensions

For defined contribution plan, the contributions are recognised as pension expense when they are due on an accrual basis. Prepaid contributions are recognised as an asset to the extent of a cash refund or a reduction in the future payments.

C. Employees’ compensation and directors’ and supervisors’ remuneration

Employees’ compensation and directors’ and supervisors’ remuneration are recognised as expense and liability, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is paid by shares, the Group calculates the number of shares based on the closing price at the previous day of the board meeting resolution.

(21) Employee share based payment

For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognised as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and nonvesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. Ultimately, the amount of compensation cost recognised is based on the number of equity instruments that eventually vest.

(22) Income tax

A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.

~24~

B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. Different tax regulations are applicable to the Group depending on the countries where the companies are registered:
(a) Companies that are registered in the Cayman Islands and British Virgin Islands are exempted from income tax in accordance with local regulations.
(b) Income taxes of companies that are registered in Mainland China are calculated in accordance with the “Law of the People’s Republic of China on Enterprise Income Tax” and its implementation and related notification letters.
(c) For companies that are registered in the Hong Kong Special Administrative Region of the People’s Republic of China, only income sourced in Hong Kong is taxable under the rules of Hong Kong’s Inland Revenue Ordinance.
(d) Income taxes of companies that are registered in the Kingdom of Cambodia are calculated in accordance with the “Law on Taxation” and its implementation and related notification letters.
(e) Income taxes of companies that are registered in the Socialist Republic of Vietnam are calculated in accordance with the “Corporate Income Tax” (CIT) and its implementation and related notification letters.
C. Deferred tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
D. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred tax assets are reassessed.

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(23) Share capital

A. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.
B. Where the Company repurchases the Company’s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders. Where such shares are subsequently reissued, the difference between their book value and any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

(24) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are resolved by the Company’s stockholders. Cash dividends are recorded as liabilities; stock dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shares on the effective date of new shares issuance.

(25) Revenue recognition

A. Sales of goods
(a) The Group manufactures and sells textile products. Sales are recognised when control of the products has transferred, being when the products are delivered to the wholesaler, the wholesaler 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, or the Group has objective evidence that all criteria for acceptance have been satisfied.
(b) A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
B. Incremental costs of obtaining a contract

Given that the contractual period lasts less than one year, the Group recognises the incremental costs of obtaining a contract as an expense when incurred although the Group expects to recover those costs.

(26) Government grants

Government grants are recognised at their fair value only when there is reasonable assurance that the Group will comply with any conditions attached to the grants and the grants will be received. Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises expenses for the related costs for which the grants are intended to compensate.

(27) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the

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chief operating decision maker. The Group’s chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions.

5. Critical Accounting Judgements, Estimates and Key Sources of Assumption Uncertainty

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is addressed below:

(1) Critical judgements in applying the Group’s accounting policies

None.

(2) Critical accounting estimates and assumptions

Evaluation of inventories

As inventories are stated at the lower of cost and net realisable value, the Group must determine the net realisable value of inventories on balance sheet date using judgements and estimates. As textile products are influenced by the fluctuations in raw material prices and the market is competitive, the Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation. Details of the carrying amount of inventories as of December 31, 2020 are provided in Note 6(5).

6. Details of Significant Accounts

(1) Cash and cash equivalents

Cash on hand and revolving funds Checking accounts and demand deposits Time deposits Restricted and transferred to other current assets	December 31, 2020 $ 699 1,074,869 199,632 1,275,200 ( 24,649) $ 1,250,551	December 31, 2019 $ 648 1,121,356 37,609 1,159,613 ( 37,609) $ 1,122,004

A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.
B. Details of the Group’s cash and cash equivalents pledged to others are provided in Note 8.

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December 31, 2020 December 31, 2019

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

Financial assets at fair value through profit or loss	December 31, 2020	December 31, 2019
Non-current items: Financial assets mandatorily measured at fair value through profit or loss Unlisted stocks Valuation adjustments Notes and accounts receivable Notes receivable Accounts receivable Less: Allowance for bad debts	$ 23,456 ( 23,456) $ - December 31, 2020 $ 40,914 $ 775,181 ( 10,187) $ 764,994	$ 24,691 ( 24,691) $ - December 31, 2019
		$ 16,767
		$ 879,168 ( 4,928) $ 874,240

(3) Notes and accounts receivable

A. The ageing analysis of accounts receivable and notes receivable that were past due but not impaired is as follows:

Not past due Up to 30 days 31 to 60 days 61 to 90 days Over 90 days	December 31, 2020 Accounts receivable Notes receivable $ 650,811 $ 40,914 108,121 - 8,978 - 4,076 - 3,195 - $ 775,181 $ 40,914	December 31, 2019 Accounts receivable Notes receivable $ 685,554 $ 16,767 176,875 - 12,018 - 196 - 4,525 - $ 879,168 $ 16,767
	Accounts receivable $ 650,811 108,121 8,978 4,076 3,195 $ 775,181	Accounts receivable $ 685,554 176,875 12,018 196 4,525 $ 879,168

The above ageing analysis was based on past due date.

B. As at December 31, 2020 and 2019, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Group’s notes and accounts receivable was $40,914 and $16,767, $764,994 and $874,240, respectively.
C. Information relating to credit risk of accounts receivable and notes receivable is provided in Note 12(2).
D. As of December 31, 2020 and 2019, accounts receivable and notes receivable were all from contracts with customers. As of January 1, 2019, the balance of accounts receivable (including notes receivable) from contracts with customers amounted to $818,968.
(4) Other receivables

Other receivables
Tax refund receivable Others	December 31, 2020 $ 45,316 2,593 $ 47,909	December 31, 2019
		$ 51,941 2,761
		$ 54,702

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(5) Inventories

Inventories	Inventories	Inventories
December 31, 2020 Allowance for Cost valuation loss Book value Raw materials $ 260,871 ($ 5,176) $ 255,695 Work in progress 386,967 ( 18,681) 368,286 Finished goods 175,083 ( 11,432) 163,651 $ 822,921 ($ 35,289) $ 787,632 December 31, 2019 Allowance for Cost valuation loss Book value Raw materials $ 220,153 ($ 4,098) $ 216,055 Work in progress 369,511 ( 6,674) 362,837 Finished goods 271,704 ( 10,736) 260,968 Inventory in transit 14,170 - 14,170 $ 875,538 ($ 21,508) $ 854,030 The cost of inventories recognised as expense for the year: Years ended December 31, 2020 2019 Cost of goods sold $ 4,205,777 $ 6,078,314 Loss on decline in market value 13,982 3,509 Others ( 19) 394 $ 4,219,740 $ 6,082,217
	2020 $ 4,205,777 13,982 ( 19) $ 4,219,740	2019
		$ 6,078,314 3,509 394
		$ 6,082,217

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(6) Property, plant and equipment

At January 1, 2020 Cost Accumulated depreciation and impairment 2020 Opening net book amount as at January 1 Additions Disposals Reclassifications Depreciation charge Impairment loss Effect of foreign exchange Closing net book amount as at December 31 At December 31, 2020 Cost Accumulated depreciation and impairment	Buildings and structures $ 269,355 ( 40,935) $ 228,420 $ 228,420 865 ( 246) 3,058 ( 12,637) - ( 11,093) $ 208,367 $ 259,393 ( 51,026) $ 208,367	Machinery $ 873,402 ( 290,191) $ 583,211 $ 583,211 2,717 ( 2,767) 92,785 ( 84,751) ( 19,114) ( 28,774) $ 543,307 $ 910,753 ( 367,446) $ 543,307	Office equipment $ 11,842 ( 7,737) $ 4,105 $ 4,105 4,388 ( 63) 2,361 ( 1,645) - ( 240) $ 8,906 $ 17,399 ( 8,493) $ 8,906	Transportation Equipment $ 38,953 ( 27,079) $ 11,874 $ 11,874 260 - - ( 6,634) - ( 230) $ 5,270 $ 38,329 ( 33,059) $ 5,270	Other equipment $ 5,305 ( 1,811) $ 3,494 $ 3,494 6,202 ( 37) 6,095 ( 2,598) - ( 276) $ 12,880 $ 16,098 ( 3,218) $ 12,880	Unfinished construction $ 77,506 - $ 77,506 $ 77,506 55,385 - ( 106,295) - - ( 2,037) $ 24,559 $ 24,559 - $ 24,559	Total
							$ 1,276,363 ( 367,753) $ 908,610 $ 908,610 69,817 ( 3,113) ( 1,996) ( 108,265) ( 19,114) ( 42,650) $ 803,289 $ 1,266,531 ( 463,242) $ 803,289

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		Buildings								Transportation						Unfinished
		and structures			Machinery			Office equipment		equipment			Other equipment			construction		Total
At January 1, 2019
Cost	$	155,651		$	692,789		$	12,008	$	40,183		$	3,302		$	63,408	$	967,341
Accumulated depreciation
and impairment	(	34,062)	(		276,068)	(		7,021)	(	20,447)	(		1,605)			-	(	339,203)
	$	121,589		$	416,721		$	4,987	$	19,736		$	1,697		$	63,408	$	628,138
2019
Opening net book amount
as at January 1	$	121,589		$	416,721		$	4,987	$	19,736		$	1,697		$	63,408	$	628,138
Additions		8,412			42,968			394		-			2,426			373,976		428,176
Disposals	(	82)	(		31,960)	(		15)		-	(		2)			-	(	32,059)
Reclassifications		112,752			244,412			121		-	(		20)	(		357,876)	(	611)
Depreciation charge	(	7,935)	(		66,653)	(		1,280)	(	7,547)	(		511)			-	(	83,926)
Impairment loss		-	(		6,953)			-		-			-			-	(	6,953)
Effect of foreign exchange	(	6,316)	(		15,324)	(		102)	(	315)	(		96)	(		2,002)	(	24,155)
Closing net book amount
as at December 31 At December 31, 2019	$	228,420		$	583,211		$	4,105	$	11,874		$	3,494		$	77,506	$	908,610
Cost	$	269,355		$	873,402		$	11,842	$	38,953		$	5,305		$	77,506	$	1,276,363
Accumulated depreciation
and impairment	(	40,935)	(		290,191)	(		7,737)	(	27,079)	(		1,811)			-	(	367,753)
	$	228,420		$	583,211		$	4,105	$	11,874		$	3,494		$	77,506	$	908,610

The Group has no property, plant and equipment pledged to others.

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(7) Leasing arrangements - lessee

A. The Group leases various assets including land and buildings. Rental contracts are typically made for periods of 1.5 to 10 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.
B. The carrying amount of right-of-use assets and the depreciation charge are as follows:

assets may not be used as security for borrowing purposes. he carrying amount of right-of-use assets and the depreciation charge are	as follows:	as follows:
December 31, 2020 Carrying amount Land $ 24,335 Buildings 56,317 $ 80,652 Year ended December 31, 2020 Depreciation charge Land $ 3,010 Buildings 21,435 $ 24,445 he information on profit and loss accounts relating to lease contracts is as Year ended December 31, 2020 Items affecting profit or loss Interest expense on lease liabilities $ 5,456 Expense on short-term lease contracts 4,128	December 31, 2019
	Carrying amount
	$	28,670 71,100
	$	99,770
	Year ended December 31, 2019
	Depreciation charge
	$ 3,149 16,917
	$ 20,066
	follows: Year ended December 31, 2019
	$ 5,625 10,925

C. The information on profit and loss accounts relating to lease contracts is as follows:
D. For the year ended December 31, 2020 and 2019, the addition to right-of-use assets were $6,675 and $25,273, respectively.
E. For the year ended December 31, 2020 and 2019, the Group’s total cash outflow for leases were $37,406 and $36,747, respectively.
F. The Group has applied the practical expedient to “Covid-19-related rent concessions”, and recognised the gain from changes in lease payments arising from the rent concessions amounting to $2,372 by increasing other income for the 2020.

(8) Other non-current assets

Other non-current assets
Advance payment for land use rights Others	December 31, 2020 $ 156,993 35,838 $ 192,831	December 31, 2019
		$ - 36,269
		$ 36,269

On December 15, 2020, the board of directors decided to lease the land in Thanh Thanh Cong Industrial Zone for the needs of business growth. The lease period was for both parties The date of signing the land lease contract to December 26, 2058, and commissioned Entrust Vietnam Standard Finance & Deal Service Company Ltd to issue a valuation report. The estimated value ranges from US$6,527,826 to US$7,035,546. The contract transaction amount is US$6,890,490 (excluding 10% value-added tax), which is approximately NT$198,515 thousand (at an exchange rate of 28.81). Conversion). According

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to the contract, the group pays 80% of the deposit after the contract is signed, the amount is US dollars 5,512,392 yuan, approximately NT 156,993 thousand (converted at an exchange rate of 28.48).

(9) Short-term borrowings

Short-term borrowings
Type of Borrowings Bank borrowings Unsecured borrowings Type of Borrowings Bank borrowings Unsecured borrowings Secured borrowings	December 31, 2020 $ 44,475 December 31, 2019 $ 108,380 44,344 $ 152,724	Interest rate range 1.70%~2.00% Interest rate range 2.93%~3.82% 1.60%~4.75%	Collateral
			- Collateral
			- Please refer to Notes 7 and 8

Information about the short-term borrowings that were pledged to others as collateral is provided in Notes 7 and 8.

(10)Other payables
December 31, 2020
Salary and bonus payable
$ 138,226
Machinery and equipment payable
15,991
Others
92,432
$ 246,649
(11)Long-term borrowings
Borrowing period
Interest
Type of Borrowings
and repayment term
rate
Long-term bank borrowings
Standard Chartered
Bank secured borrowings
Borrowing period is from May
14, 2018 to June 21, 2021;
interest is payable monthly
1.60%

Hang Seng Bank
secured borrowings
Borrowing period is from March
15, 2018 to March 14, 2023;
interest is payable monthly
3.74%

Less: Current portion

December 31, 2019
$ 137,940
31,862
67,050
$ 236,852
December 31, 2020
$ 7,120
567
( 7,372)
$ 315

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	Borrowing period	Interest
Type of Borrowings	and repayment term	rate	December 31, 2019
Long-term bank borrowings
Standard Chartered	Borrowing period is from May	1.60%	$ 22,485
Bank secured borrowings	14, 2018 to June 21, 2021;
	interest is payable monthly
Hang Seng Bank	Borrowing period is from March	3.74%	862
secured borrowings	15, 2018 to March 14, 2023;
	interest is payable monthly
Less: Current portion			( 15,255)
			$ 8,092

Information about the long-term borrowings that were pledged to others as collateral is provided in Notes 7 and 8.

(12) Pensions

The Group’s mainland China subsidiaries have a defined contribution plan. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC) are based on certain percentage of employees’ monthly salaries and wages. The contribution percentage for the years ended December 31, 2020 and 2019 was 14%~20% for both years. Other than the monthly contributions, the Group has no further obligations. The Group’s Hong Kong subsidiary offers Mandatory Provident Fund Schemes (MPF Schemes), a defined contribution plan, in accordance with the regulations of the Hong Kong Special Administrative Region of the People’s Republic of China for qualified employees. Contribution amounts are based on certain percentage of employees’ basic salaries and wages and are deducted from statement of comprehensive income when payments are required according to MPF Schemes regulations. The assets of MPF Schemes are deposited in independently managed funds, which are separated from the assets of the Group. In addition, the employers’ contributions to the MPF Schemes of the Group belong exclusively to employees.

The Group’s Vietnam subsidiary offers social insurance, a defined contribution plan, which is calculated based on certain percentage of employees’ total local salaries and wages, and contributes to an independent fund administered by the local government in accordance with the pension regulations of local government agencies.

The pension costs under the defined contribution pension plans of the Group for the years ended December 31, 2020 and 2019 were $2,775 and $11,433, respectively.

(13) Share-based payment

A. For the year ended December 31, 2020 and 2019, the Group’s share-based payment arrangements were as follows:

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Type of arrangement	Grant date	Quantity granted	Contract period	Vesting conditions
Cash capital increase reserved for employee Preemption Cash capital increase reserved for employee Preemption	2019.01.31 2019.12.04	505,000 40,000	- -	Vested immediately Vested immediately

The above share-based payment arrangements are settled by equity.

B. The fair value of stock options granted on grant date is measured using the Black-Scholes optionpricing model. Relevant information is as follows:

Type of arrangement	Grant date	Stock price	Exercise price	Expected price volatility (Note)	Expected option life	Expected dividends	Risk-free interestrate	Fair value per unit
Cash capital increase reserved for employee preemption Cash capital increase reserved for employee preemption	2019.01.31 2019.12.04	93.54 176.51	95 $ 158 $	20.0405% 33.1617%	0.0833 0.2500	9% 7%	0.5007% 0.4600%	1.30 $ 20.40 $

Note: Expected price volatility was estimated by using the historical daily transaction information

  - of stock prices of comparable company with the length of the period equivalent to the length of the stock option’s expected life.

C. The Company’s compensation cost incurred on share-based payment transactions for the year ended December 31, 2019 amounted to $1,473.
D. The Company’s no such situation.
(14) Share capital
A. As of December 31, 2020, the Company’s authorised capital was $600,000, consisting of 60,000 thousand shares of ordinary stock and the paid-in capital was $315,000 with a par value of $10 (in dollars) per share.
B. The Board of Directors during its meeting on January 31, 2019 adopted a resolution to raise additional cash totalling $475 million by issuing 5 million new shares with a par value of $10 (in dollars) per share at a premium issuance price of $95 (in dollars) per share .
C. The Board of Directors during its meeting on September 9, 2019 adopted a resolution to raise additional cash before the initial public by issuing 3,500 thousand new shares with a par value of $10 (in dollars) per share. The issuance has been approved by Tai-Zheng-Shang-Er-Zi No. 10817030851 as endorsed by the Taiwan Stock Exchange Corporation on October 14, 2019. The raising period has been extended as approved by Tai-Zheng-Shang-Er-Zi No. 1080020813 on November 13, 2019. The capital was increased through bargaining, with the minimum underwriting price for competitive auction of NT$138.60 (in dollars) per share. People who offer

~35~

higher bid prices win and should subscribe the bid at the winning prices. The price of each winning bid and its weighted-average number is NT$184.06 (in dollars), 1.14 times higher than the minimum underwriting price, therefore, the public subscription price was issued at NT$158.00 (in dollars) per share. The total amount of shares less underwriting allowance for capital increase amounted to $618,643. All proceeds from shares issued have been collected on the effective date, December 4, 2019, and the registration has been completed.

D. Treasury shares
(a)Reason for share reacquisition and movements in the number of the Company’s treasury shares are as follows:

re as follows:
Name of company holding the shares The Company	Reason for reacquisition To be reissued to employees	December 31, 2020 Number of shares Carrying amount 151,000 $ 20,802	December 31, 2020
				Carrying amount $ 20,802

(b)Pursuant to the R.O.C. Securities and Exchange Act, the number of shares bought back as treasury share should not exceed 10% of the number of the Company’s issued and outstanding shares and the amount bought back should not exceed the sum of retained earnings, paid-in capital in excess of par value and realised capital surplus.
(c)Pursuant to the R.O.C. Securities and Exchange Act, treasury shares should not be pledged as collateral and is not entitled to dividends before it is reissued.
(d) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares should be reissued to the employees within five years from the reacquisition date and shares not reissued within the fiveyear period are to be retired. Treasury shares to enhance the Company’s credit rating and the stockholders’ equity should be retired within six months of acquisition.
(15) Capital surplus

Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that the amount of capital surplus to be capitalised mentioned above should not exceed 10% of the paidin capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

(16) Retained earnings

A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and special reserve shall be appropriated or reversed in accordance with Public Offering under the Companies Act or regulations of the regulatory authority. The remainder, if any, along with the beginning unappropriated earnings shall comprise the Company’s accumulated distributable earnings.The distribution of earnings shall be proposed by the Board of Directors and resolved by the

~36~

stockholders at the stockholders’ meeting.

B. In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.
C. As the Company is in the growth stage, the Company’s dividend policy as to whether the distribution of dividends will be in the form of cash and/or shares is dependent on the Company’s requirements for future capital expenditures, business expansion and financial planning for sustainable development. The Board of Directors shall propose the plan when distributing profits and such plan shall be resolved by the stockholders through ordinary resolution. Of the total cash dividends distributed, cash dividends shall not be less than 20% of total dividends distributed.
D. The distribution of earnings for the year ended December 31, 2019 resolved by the the stockholders on June 16, 2020 is as follows:

on June 16, 2020 is as follows:
Special reserve Cash dividends	Year ended December 31, 2019
	Amount $ 79,436 252,000 $ 331,436	Dividends per share (in dollars)
		8.00

E. The distribution of earnings for the year ended December 31, 2020 proposed by the Board of Directors on March 24, 2021 is as follows:

Special reserve Cash dividends	Year ended December 31, 2020	Year ended December 31, 2020
	Amount $ 70,473 203,769 $ 274,242	Dividends per share (in dollars)
		6.50

F. For the information relating to employees’ compensation and directors’ and supervisors’ remuneration, please refer to Note 6(23).
(17) Operating revenue

remuneration, please refer to Note 6(23). Operating revenue
Revenue from contracts with customers - textile	Years ended December 31, 2020 2019 $ 5,389,194 $ 7,358,438
	2020 $ 5,389,194
		$ 7,358,438

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A. Disaggregation of revenue from contracts with customers

The Group derives revenue from the transfer of goods and services at a point in time in the following major geographical regions:

2020 Total segment revenue Inter-segment revenue Revenue from external customer contracts Timing of revenue recognition At a point in time 2019 ( Total segment revenue Inter-segment revenue ( Revenue from external customer contracts Timing of revenue recognition At a point in time	China (including Hong Kong) Cambodia $ 8,569,483 $ 852,726 ( 3,180,,289) ( 852,726) $ 5,389,194 $ - $ 5,389,194 $ - China includingHongKong) Cambodia 12,310,885 $ 911,693 $ 4,952,447) 911,693) ( ( 7,358,438 $ - $ 7,358,438 $ - $	Cambodia

B. Contract liabilities

The Group has recognised the following revenue-related liabilities:

December 31, 2020 December 31, 2019 January 1,2019 Contract liabilities - advance $ 1,335 $ 14,198 $ 333 sales receipts (shown as other current liabilities)

C. Revenue recognised that was included in the contract liability balance at the beginning of the period

Advance sales receipts

Years ended December 31,	Years ended December 31,
2020 $ 14,191	2019 $ 333

(18) Interest income

Advance sales receipts erest income	Years ended December 31, 2020 2019 $ 14,191 $ 333	Years ended December 31, 2020 2019 $ 14,191 $ 333
Interest income from bank deposits	Years ended December 31,
	2020 $ 10,226	2019 $ 2,870

(19) Other income

Interest income from bank deposits her income	2020 2019 $ 10,226 $ 2,870	2020 2019 $ 10,226 $ 2,870
Subsidy income Other income	Years ended December 31,
	2020 $ 15,593 531 $ 16,124	2019 $ 9,335 1,073
		$ 10,408

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(20) Other gains and losses

ther gains and losses
Impairment loss on property, plant and equipment Losses on disposal of property, plant and equipment Foreign exchange (loss) gains Other losses	Years ended December 31,
	2020 ($ 19,114) ( 1,878) ( 12,870) ( 2,660) ($ 36,522)	2019 ($ 6,953) ( 20,171) 16,804 ( 8,371) ($ 18,691)

(21) Finance costs

nance costs
Interest expense Bank loan Lease transactions	Years ended December 31,
	2020 $ 1,876 5,456 $ 7,332	2019
		$ 20,483 5,626 $ 26,109

(22) Expenses by nature

Bank loan Lease transactions xpenses by nature	$ 1,876 $ 20,483 5,456 5,626 $ 7,332 $ 26,109	$ 1,876 $ 20,483 5,456 5,626 $ 7,332 $ 26,109
Employee benefit expense Depreciation charge Amortisation charge	Years ended December 31,
	2020 $ 452,413 132,710 69 $ 585,192	2019
		$ 493,413 103,992 72 $ 597,477

	Employee benefit expense Depreciation charge Amortisation charge	2020 2019 $ 452,413 $ 493,413 132,710 103,992 69 72 $ 585,192 $ 597,477	2020 2019 $ 452,413 $ 493,413 132,710 103,992 69 72 $ 585,192 $ 597,477
(23)	Employee benefit expense Wages and salaries Labour and health insurance fees Pension costs Other personnel expenses	Years ended December 31,
		2020 $ 429,247 9,079 2,775 11,312 $ 452,413	2019
			$ 455,442 14,632 11,433 11,906 $ 493,413

A. In accordance with the Articles of Incorporation of the Company, a ratio of distributable profit of the current year, after covering accumulated losses, shall be distributed as employees’ compensation and directors’ and supervisors’ remuneration. The ratio shall not be lower than 1% and not be higher than 10% for employees’ compensation and shall not be higher than 5% for directors’ and supervisors’ remuneration. If the Company has accumulated deficit, earnings should

~39~

be reserved to cover losses. The employees’ compensation shall be distributed in the form of shares or cash.

B. For the years ended December 31, 2020 and 2019, employees’ compensation was accrued at $4,202 and $3,834, respectively; while no directors’ and supervisors’ remuneration was accrued for both years.

For the year ended December 31, 2020, and 2019 the employees’ compensation and directors’ and supervisors’ remuneration were estimated and accrued based on 1% and 0% of distributable profit of current year as of the end of reporting period.

Employees’ compensation and directors’ and supervisors’ remuneration of 2019 as resolved by the Board of Directors were in agreement with those amounts recognised in the 2019 financial statements.

Information about employees’ compensation and directors’ and supervisors’ remuneration of the Company as resolved at the meeting of Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(24) Income tax
A. Income tax expense

Components of income tax expense:

come tax Income tax expense Components of income tax expense:
Current tax: Current tax on profits for the year Prior year income tax over estimation Deferred tax: Origination and reversal of temporary differences Income tax expense Reconciliation between income tax expense and Tax calculated based on profit before tax and statutory tax rate (Note) Effects from items that should be adjusted in accordance with tax regulations Income tax Prior year income tax over estimation Income tax expense	Years ended	December 31, 2019 $ 114,900 ( 707) 18,115 $ 132,308 December 31, 2019 $ 109,394 ( 233) 23,854 ( 707) $ 132,308
	2020 $ 136,692 33 ( 15,232) $ 121,493 accounting profit Years ended
	2020 $ 120,754 ( 913) 1,619 33 $ 121,493

B. Reconciliation between income tax expense and accounting profit

Note: The basis for computing the applicable tax rate are the rates applicable in the respective

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countries where the Group entities operate.

C. Amounts of deferred tax assets or liabilities as a result of temporary differences are as follows:

2020

January 1 $ 600 57,454 $ 58,054	Recognised in Exchange profit or loss difference ( 522) ( 12) ( 14,710) ( 2,342) ($ 15,232) ($ 2,354) 2019	December 31	December 31
		$ 66 40,402
		$ 40,468
			December 31 600 $ 57,454 58,054 $
January1 1,147 $ 40,030 41,177 $	Recognised in Exchange profit or loss difference 542) ( 5) ( 18,657 1,233) ( 18,115 $ 1,238) ($

D. Under the regulations of the Implementation of the Law on the Amendment to the Cambodian Investment Law of the Kingdom of Cambodia, on September 27, 2005, the Group’s subsidiary, TOP SPORTS TEXTILE LTD., qualified for investment projects and is entitled to income tax exemption for 7 consecutive years until December 2018.
E. Under the regulations of the 2013 tax incentives based on sector of Vietnam, the Group’s qualified subsidiary, TOP STAR TEXTILE VIETNAM COMPANY LIMITED, is entitled to the tax incentives of: ‘tax exemption for 2 years plus 50% tax reduction for the next 4 years’ and ‘17% preferential CIT rate for 10h years’.

~41~

(25) Earnings per share

Years ended December 31,2020

(26)
(27)

Weighted average
number of ordinary
shares outstanding earnings per share
Amount after tax
(shares in thousands)
(New Taiwan dollars)
Basic earnings per share
Profit for the year
$ 416,040
31,407
$ 13.25
Diluted earnings per share
Assumed conversion of all
dilutive potential ordinary shares
-
28
Employees’ compensation
$ 416,040
31,435
$ 13.23
Years ended December 31,2019
Weighted average
number of ordinary
shares outstanding earnings per share
Amount after tax
(shares in thousands)
(New Taiwan dollars)
Basic earnings per share
Profit for the year
$ 388,128
27,875
$ 13.92
Diluted earnings per share
Assumed conversion of all
dilutive potential ordinary shares
-
21
Employees’ compensation
$ 388,128
27,896
$ 13.91
Supplemental cash flow information
Investing activities with partial cash payments
Years ended December 31,
2020
2019
Purchase of property, plant and
equipment
$ 69,817 $ 428,176
Add: Opening balance of payable
on equipment
31,862
-
Less: Ending balance of payable
on equipment
(
15,991)
(
31,862)
Cash paid during the year
$ 85,688
$ 396,314
Changes in liabilities from financing activities

The Company’s changes in liabilities from financing activities for the years ended December 31, 2020 and 2019 are the changes in financing cash flows. Please refer to consolidated statements of cash flows.

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7. Related Party Transactions

(1) Names of related parties and relationship

lated Party Transactions Names of related parties and relationship
Names of related parties	Relationship with the Company
LIN CHIN MAO	Key management
LIN CHING-WEI	Key management
ZHANG XINBIN	Key management
CHINTEX INVESTMENT COMPANY LTD. (CHINTEX)	Other related party
TAT CHEONG INTERNATIONAL COMPANY LIMITED (TAT CHEONG)	Other related party
PONG FU (SHANGHAI) INVESTMENT CONSULTING CO., LTD. (PONG FU)	Other related party
NEWA INSURANCE (CAMBODIA) PLC. (NEWA INSURANCE)	Other related party
LIN CHIN-HSUAN	Other related party
HUNG CHENG-TSUNG	Other related party
YU YING	Other related party
TAISHABA INTERNATIONAL CO., LTD.	Other related party
ABILITY INTERNATIONAL CO.,LTD.(Note)	Other related party
ABILITY INVESTMENT CO.,LTD.(Note)	Other related party
Note:In September 2020, ABILITY INTERNATIONAL CO.,LTD. merged with ABILITY
INVESTMENT CO.,LTD..After the merger, ABILITY INVESTMENT CO.,LTD was the surviving
company, and ABILITY INTERNATIONAL CO.,LTD. was	eliminated after the merger.

(2) Significant related party transactions

A. Payables to related parties:

gnificant related party transactions Payables to related parties:
Other payables - other: Key management Other related parties	December 31, 2020 $ - 908 $ 908	December 31, 2019
		$ 26 654 $ 680

B. Leasing arrangements - lessee
(a) The Group leases property from key management and other related parties. The lease terms are from 2017 to 2028 and rent expenses are paid in the period based on agreements.
(b) Acquisition of right-of-use assets

from 2017 to 2028 and rent expenses are paid in Acquisition of right-of-use assets	the period based on agreements.
Key management LIN CHIN MAO Other related parties Others	Year ended December 31, 2020 2019 $ - $ 4,785 3,486 381 $ 3,486 $ 5,166
	2020 $ - 3,486 $ 3,486

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On January 1, 2019 (the date of initial application of IFRS 16), the Group increased right-ofuse assets by $93,036.

use assets by $93,036. Rent expense
Key management Other related parties	Year ended December 31, 2020 2019 $ 490 $ 383 30 60 $ 520 $ 443
	2020 $ 490 30 $ 520

(d) Lease liability

i. Outstanding balance:

ey management ther related parties Lease liability i. Outstanding balance:	$ 490 $ 383 30 60 $ 520 $ 443	$ 383 60 $ 443
CHINTEX LIN CHIN MAO LIN CHING-WEI Other related parties ii. Interest expense CHINTEX LIN CHIN MAO LIN CHING-WEI Other related parties vice fees er related parties	December 31, 2020 December 31, 2019 $ 24,647 $ 28,172 21,272 24,535 10,393 11,789 12,386 16,415 $ 68,698 $ 80,911 Year ended December 31, 2020 2019 $ 2,142 $ 2,417 1,118 1,198 541 871 665 644 $ 4,466 $ 5,130 Year ended December 31, 2020 2019 $ 1,782 $ 1,846	December 31, 2019 $ 28,172 24,535 11,789 16,415
	2020 $ 1,782

ii. Interest expense

C. Service fees

Other related parties

The Group entered into a service agreement with other related parties and the fees are paid monthly. D. Endorsements and guarantees provided to related parties:

December 31, 2020 December 31, 2019 Key management LIN CHIN MAO $ - $ 477,235

The Chairman, LIN CHIN MAO, and other related parties mentioned in Note 7(1) pledged real estate as collateral for part of the Group’s bank borrowings.

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(3) Key management compensation

Key management compensation
Salaries and other short-term employee benefits Post-employment benefits Share-based payment
	2020 $ 53,430 658 - $ 54,088

8. Pledged Assets

The Group’s assets pledged as collateral are as follows:

Pledged asset Bank borrowings (shown as other current assets) Other financial assets (shown as other non-current assets)	Book	value December 31, 2019 Purpose $ 37,609 Bank borrowings 23,118 Bank borrowings $ 60,727
	December 31, 2020 $ 24,649 - $ 24,649

9. Significant Contingent Liabilities and Unrecognised Contract Commitments

(1) Contingencies

None.

(2) Commitments

(a) As of December 31, 2020, the Group’s issued but unused letter of credit for importing raw materials amounted to $123,519.
(b) Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:

	December 31, 2020
Right-of-use asset(Note)	$ 39,248
Note:The amount is US$1,378,098 (excluding 10% value-added tax), converted at an exchange
rate of 28.48; please refer to Note 6 (8) for details.

10. Significant Disaster Loss

None.

11. Significant Events after the Balance Sheet Date

(1) Details of the appropriation of 2020 earnings as proposed by the Board of Directors on March 24, 2021 are provided in Note 6(16).
(2) On March 24, 2021, the Board of Directors proposed to issue 600,000 new shares with restricted employee rights, each with a nominal value of NT$10 per share. The issue price is NT$0 per share.

12. Others

(1) Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure

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to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

(2) Financial instruments
A. Financial instruments

In accordance with IFRS 9, the carrying amount of financial assets at amortised cost classified by the Group (including cash and cash equivalents, notes receivable, net, accounts receivable, net, other receivables and guarantee deposits paid) amounted to $2,109,845 and the carrying amount of financial liabilities at amortised cost (including short-term borrowings, notes payable, accounts payable, other payables (including related parties), lease liabilities, long-term borrowings (including current portion) and guarantee deposits received) amounted to $1,516,648. Please refer to Note 6 for the financial assets at fair value through profit or loss.

B. Financial risk management policies
(a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s policies on overall risk management focus on unpredictable events in financial markets and seek to minimise any potential adverse effects on the financial condition and financial performance of the Group.
(b) Risk management is carried out by a central treasury department (Group treasury) under policies approved by the Board of Directors. Group treasury identifies, evaluates and hedges financial risks in close cooperation with the Group’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
C. Significant financial risks and degrees of financial risks
(a) Market risk

Exchange rate risk

i. The Group operates internationally and is exposed to exchange rate risk arising from various currency, primarily with respect to the USD, HKD and RMB. Exchange rate risk arises from future commercial transactions, recognised assets and liabilities and net investment in a foreign operation.
ii. The Group’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: USD; other certain subsidiaries’ functional currency: RMB). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

~46~

(Foreign currency: functional currency) Financial assets Monetary items HKD:USD Financial liabilities Monetary items RMB:USD HKD:USD (Foreign currency: functional currency) Financial assets Monetary items HKD:USD Financial liabilities Monetary items RMB:USD HKD:USD	December 31, 2020	December 31, 2020	Book value (NTD) $ 31,484 $ 283,768 55,536 Book value (NTD) $ 45,577 $ 263,207 48,569
	Foreign currency amount (in thousands)
	Foreign currency amount (in thousands)	Exchange rate 0.13 0.14 0.13
	$ 11,841 $ 61,140 12,619

iii. Total exchange loss and gain, including realised and unrealised arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2020 and 2019 amounted to $12,870 and $16,804, respectively.

iv. Analysis of foreign currency market risk arising from significant foreign exchange variation:

Year ended December 31, 2020 Sensitivity analysis Degree of Effect on Effect on other variation profit or loss Comprehensive income 1% $ 315 $ - 1% $ 2,838 $ - 1% $ 555 $ -	Year ended December 31, 2020 Sensitivity analysis Degree of Effect on Effect on other variation profit or loss Comprehensive income 1% $ 315 $ - 1% $ 2,838 $ - 1% $ 555 $ -	Year ended December 31, 2020 Sensitivity analysis Degree of Effect on Effect on other variation profit or loss Comprehensive income 1% $ 315 $ - 1% $ 2,838 $ - 1% $ 555 $ -

Degree of variation 1% 1% 1%	Effect on profit or loss $ 315 $ 2,838 $ 555
		$ - $ - $ -

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Year ended December 31, 2019 Sensitivity analysis Degree of Effect on Effect on other variation profit or loss Comprehensive income 1% $ 456 $ - 1% $ 2,630 $ - 1% $ 486 $ -	Year ended December 31, 2019 Sensitivity analysis Degree of Effect on Effect on other variation profit or loss Comprehensive income 1% $ 456 $ - 1% $ 2,630 $ - 1% $ 486 $ -	Year ended December 31, 2019 Sensitivity analysis Degree of Effect on Effect on other variation profit or loss Comprehensive income 1% $ 456 $ - 1% $ 2,630 $ - 1% $ 486 $ -

Degree of variation 1% 1% 1%	Effect on profit or loss $ 456 $ 2,630 $ 486
		$ - $ - $ -

Price risk

The Group’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss.To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.

Cash flow and fair value interest rate risk

i. The Group’s main interest rate risk arises from bank borrowings with variable rates, which expose the Group to cash flow interest rate risk.
ii. The Group’s borrowings are measured at amortised cost. The borrowings are periodically contractually repriced and to that extent are also exposed to the risk of future changes in market interest rates.
iii.If the borrowing interest rate had increased/decreased by 1% with all other variables held constant, profit before tax for the years ended December 31, 2020 and 2019 would have increased/decreased by $522 and $1,761, respectively. The main factor is that changes in interest expense result in floating rate borrowings.
(b) Credit risk
i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms.
ii. The Group manages their credit risk taking into consideration the entire group’s concern. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilisation of credit limits is regularly monitored.

~48~

iii.The Group adopts credit risk management procedure to assess whether there has been a significant increase in credit risk on that instrument since initial recognition:
If the contract payments were past due over 60 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.
iv.The Group adopts the assumption under IFRS 9, that is, the default occurs when the contract payments are past due over 90 days.
v.The Group classifies customer’s accounts receivable and notes receivable in accordance with customer types and credit rating of customer. The Group applies the simplified approach using provision matrix and loss rate methodology to estimate expected credit loss under the provision matrix basis. The Group used the forecastability to adjust historical and timely information to assess the default possibility of accounts receivable.
vi.The Group used the forecastability to adjust historical and timely information to assess the default possibility of accounts receivable and notes receivable. On December 31, 2020 and 2019, the provision matrix, loss rate methodology is as follows:

Not past due At December 31, 2020 Expected loss rate 0.03% Total book value $ 625,407 Loss allowance $ 180 At December 31, 2019 Expected loss rate 0.03% Total book value $ 691,526 Loss allowance $ 201	Up to 30 days past due	31~60 days past due	61~90 days past due	More than 90 days past due	Total
	0.03% $ 94,675 $ 28 0.03% $ 175,963 $ 51	0.07% $ 1,523 $ 1 0.03% $ 12,018 $ 4	0.07% $ 4,024 $ 3 0.51% $ 196 $ 1	100.00% $ 3,195 $ 3,195 100.00% $ 4,525 $ 4,525	$ 728,824 $ 3,407 $ 884,228 $ 4,782

Further, as of December 31, 2020and 2019, the Group’s accounts receivable amounted to $87,271 and $11,707 and the impairment loss recognised under individual assessment amounted to $6,780 and $146, respectively.

vii.Movements in relation to the Group applying the simplified approach to provide loss allowance for accounts receivable and notes receivable are as follows:

At January 1 Provision for impairment Reversal of impairment loss Effect of exchange rate changes ( At December 31	2020 $ 4,928 5,535 - 276) $ 10,187	2019 $ 10,183 - ( 4,951) ( 304) $ 4,928

(c) Liquidity risk

i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs so that the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing

~49~

facilities. Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, and compliance with internal balance sheet ratio targets.

ii. Surplus cash held by the operating entities over and above balance required for working capital management are transferred to the Group treasury. Group treasury invests surplus cash in interest bearing current accounts, time deposits, money market deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts.
iii.The Group’s undrawn borrowing facilities on December 31, 2020 and 2019 were $1,306,808 and $1,121,783, respectively.
iv.The table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

December 31, 2020 Short-term borrowings Notes payable Accounts payable Other payables (including related parties) Lease liability Long-term borrowings (including current portion) Guarantee deposits received December 31,2019 Short-term borrowings Notes payable Accounts payable Other payables (including related parties) Lease liability Long-term borrowings (including current portion) Guarantee deposits received	Less than 1 year $ 44,475 255,510 877,625 247,557 21,580 7,397 - Less than 1year 152,724 $ 130,203 916,457 237,532 24,633 15,264 -	Over 1 year $ - - - - 77,901 330 439 Over 1year - $ - - - 99,696 8,670 462

(3) Fair value information

The carrying amount of financial instruments not measured at fair value including cash and cash equivalents, notes receivable, accounts receivable, other receivables, short-term borrowings, notes payable, accounts payable and other payables (including related parties) are approximate to their fair values. Lease liability interest rates are approximate to market interest rates so that the book value is considered approximate to fair value. Long-term borrowing interest rates (including current portion) are floating rates, which are approximate to market interest rates, so that the book value is considered approximate to fair value.

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(4) Due to the spread of the new coronavirus, the global economy is still full of uncertainties. For the Group, these events have no significant impact on the continued operation assumptions, asset impairment and related financing risks. However, the follow-up will continue to pay attention to the new crown pneumonia ( COVID-19) The development and evaluation of the epidemic situation has an impact on the Group. The impact. In addition, due to this epidemic, the Group has applied for and received partial government subsidies.

13. Supplementary Disclosures

(1) Significant transactions information

A. Loans to others: Please refer to table 1.
B. Provision of endorsements and guarantees to others: Please refer to table 2.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 3.
D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: None.
E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: Please refer to table 4.
F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.
G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 5.
H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 6.
I. Trading in derivative instruments undertaken during the reporting periods: None.
J. Significant inter-company transactions during the reporting periods: Please refer to table 7.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 8.

(3) Information on investments in Mainland China

A. Basic information: Please refer to table 9.
B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to table 10.

(4) Major Shareholder Information

Major Shareholder Information: Please refer to table 11.

14. Segment Information

(1) General information

The Group has classified the reportable operating segments based on management strategy. The Company’s operations and segmentation are classified according to the management strategy, and the current management strategy is divided into China and Cambodia. Management has determined the reportable operating segments based on the reports reviewed by the management that are used to make

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strategic decisions.

(2) Measurement of segment information

The Group evaluates the performance of the operating segments based on segment income/(loss) and the accounting policies of each operating segment are the same as Summary of Significant Accounting Policies in Note 4.

(3) Information about segment profit or loss, assets and liabilities

The segment information provided to the chief operating decision-maker for the reportable segments is as follows:

as follows:
Revenue from external customers Internal revenue Total revenue Segment income (loss) Segment income (loss), including: Depreciation and amortisation Interest income Interest expense Income tax expense Total segment assets Total segment liabilities Capital expenditure		Year ended	December 31, 2020
	China (including Hong Kong) $ 5,389,194 3,180,289 $ 8,569,483 $ 1,348,277 $ 25,029 $ 10,223 $ 3,937 $ 109,920 $ 8,079,914 $ 1,882,867 $ 8,765	Cambodia $ - 852,726 $ 852,726 $ 48,636 ( $ 101,179 $ 2 $ 2,616 $ 11,573 $ 1,222,955 $ 823,659 $ 57,657	Vietnam $ - 23,890 $ 23,890 $ 23,384) $ 6,571 $ 1 $ 779 $ - $ 45,052 $ 45,378 $ 3,395	Adjustments and write-offs $ - (4,056,905) ($ 4,056,905) ($ 835,996) ($ 5,332,126) ($ 1,150,148) $ -	Total 5,389,194 -
					$ 5,389,194
					$ 537,533
					$ 132,779
					$ 10,226
					$ 7,332
					$ 121,493
					$ 4,015,795
					$ 1,601,756
					$ 69,817

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Year ended December 31, 2019

China

		China
Revenue from external customers Internal revenue Total revenue Segment income (loss) Segment income (loss), including: Depreciation and amortisation Interest income Interest expense Income tax expense Total segment assets Total segment liabilities Capital expenditure		(including Hong Kong)		Cambodia		Vietnam		Adjustments and write-offs		Total
		7,358,438 $ 4,952,447 12,310,885 $ 1,324,129 $ 23,221 $ 2,868 $ 22,634 $ 132,308 $ 7,607,791 $ 2,155,523 $ 339 $		- $ 911,693 911,693 $ 5,362) ($ 78,376 $ - $ 3,086 $ - $ 1,221,556 $ 1,138,632 $ 398,970 $		- $ 3,050 3,050 $ 6,776) ($ 2,467 $ 2 $ 389 $ - $ 56,480 $ 33,030 $ 28,867 $		- $ 5,867,190) ( 5,867,190) ($ 791,555) ($ 4,855,821) ($ 1,638,453) ($ - $		7,358,438 $ - 7,358,438 $ 520,436 $ 104,064 $ 2,870 $ 26,109 $ 132,308 $ 4,030,006 $ 1,688,732 $ 428,176 $

(4) Reconciliation for segment income (loss)

A. The Group’s chief operating decision-maker assesses segment performance and decides resource allocations based on profit before tax, thus reconciliation is not necessary.
B. The amounts provided to the chief operating decision maker with respect to total assets and total liabilities are measured in a manner consistent with that of the financial statements.

(5) Information on products and services

Please refer to Note 6 (17) for the related information.

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(6) Geographical information

Geographical information for the years ended December 31, 2020 and 2019 is as follows:

Years ended December 31,

Taiwan China Singapore Hong Kong Tailand Indonesia Cambodia Others	2020	2020	2019 Non-current Revenue Assets $ 1,793,361 $ - 2,289,808 56,236 1,000,502 - 784,542 40,846 320,056 - 400,956 - 64,327 905,749 704,886 42,065 $ 7,358,438 $ 1,044,896
	Revenue		Revenue $ 1,793,361 2,289,808 1,000,502 784,542 320,056 400,956 64,327 704,886 $ 7,358,438
	$ 1,542,990 1,316,411 902,344 456,825 383,373 147,432 112,451 527,368
	$ 5,389,194

The Group’s geographical revenue information is determined based on the countries where the customers operate. Non-current assets refer to property, plant and equipment, intangible assets and other non-current assets .

(7) Major customer information

The important customer information of the Group in 2020 is as follows:

p	in 2020 is as follows:
		2020
	Revenue $ 559,099	Segment China(including Hong Kong)

There was no such situation in 2019.

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TST Group Holding Ltd. and Subsidiaries

Loans to others

Year ended December 31, 2020

Table 1

Expressed in thousands of NTD (Except as otherwise indicated)

No. (Note 1)	Creditor	Borrower	General ledger account (Note 2)	Is a related party	Maximum outstanding balance during the year ended December 31, 2020 (Note 3)	Balance at December 31, 2020 (Note 8)	Actual amount drawn down	Interest rate	Nature of loan (Note 4)	Amount of transactions with the borrower (Note 5)	Reason for short-term financing (Note 6)	Allowance for doubtful accounts	Coll	ateral	Limit on loans granted to a single party (Note 7)	Ceiling on total loans granted (Note 7)	Footnote
													Item	Value
0 0 1 1 1 1 2	TST Group Holding Ltd. TST Group Holding Ltd. TST International Group Limited TST International Group Limited TST International Group Limited TST International Group Limited BUMPER WORLD GROUP HOLDINGS LIMITED	TOP STAR TEXTILE LIMITED TOP SPORTS TEXTILE LTD. CHINTEX ENTERPRISES LIMITED BUMPER WORLD GROUP HOLDINGS LIMITED TOP STAR TEXTILE LIMITED TOP SPORTS TEXTILE LTD. TOP SPORTS TEXTILE LTD.	Other receivables - related parties Other receivables - related parties Other receivables - related parties Other receivables - related parties Other receivables - related parties Other receivables - related parties Other receivables - related parties	Y Y Y Y Y Y Y	142,400 $ 227,840 56,960 438,022 370,240 1,107,872 42,720	142,400 $ 85,440 - - 370,240 854,400 42,720	- $ 85,440 - - - 356,000 14,240	LIBOR+2% LIBOR+2% - - LIBOR+2% LIBOR+3% LIBOR+2% LIBOR+3%	Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing	- - - - - - -	Working capital Working capital Working capital Working capital Working capital Working capital Working capital	- - - - - - -	None None None None None None None	- - - - - - -	241,404 $ 241,404 1,540,102 1,540,102 1,540,102 1,540,102 1,931,231	965,616 $ 965,616 1,540,102 1,540,102 1,540,102 1,540,102 1,931,231

Table 1, Page 1

No. (Note 1)	Creditor	Borrower	General ledger account (Note 2)	Is a related party	Maximum outstanding balance during the year ended December 31, 2020 (Note 3)	Balance at December 31, 2020 (Note 8)	Actual amount drawn down	Interest rate	Nature of loan (Note 4)	Amount of transactions with the borrower (Note 5)	Reason for short-term financing (Note 6)	Allowance for doubtful accounts	Coll	ateral	Limit on loans granted to a single party (Note 7)	Ceiling on total loans granted (Note 7)	Footnote
													Item	Value
3 3 3	TOP STAR TEXTILE LIMITED TOP STAR TEXTILE LIMITED TOP STAR TEXTILE LIMITED	CHINTEX ENTERPRISES LIMITED TOP SPORTS TEXTILE LTD. TOP STAR TEXTILE VIETNAM LIMITED	Other receivables - related parties Other receivables - related parties Other receivables - related parties	Y Y Y	85,440 427,200 11,392	85,440 142,400 11,392	- - 5,696	4% LIBOR+2% LIBOR+2%	Short-term financing Short-term financing Short-term financing	- - -	Working capital Working capital Working capital	- - -	None None None	- - -	1,925,127 1,925,127 1,925,127	1,925,127 1,925,127 1,925,127

Note 1: The numbers filled in for the loans provided by the Company or subsidiaries are as follows: (1) The Company is ‘0’.

(2) The subsidiaries are numbered in order starting from ‘1’.

Note 2: Fill in the name of account in which the loans are recognised, such as receivables–related parties, current account with stockholders, prepayments, temporary payments, etc. TST Group Holding Ltd.: The ceiling on total loans granted to the companies, who have business relationship with the Company, is 20% of the Company’s net assets based on the latest financial statements; the limit on loans granted to a single party is the amount of business transactions between both sides.

The ceiling on total loans granted to the companies, who have business relationship with the Company, is 20% of the Company’s net assets based on the latest financial statements; the limit on loans granted to a single party is the amount of business transactions between both sides.

The ceiling on total loans granted to the foreign subsidiaries, whose voting rights are 100% owned directly and indirectly by parent, is 80% of the Company’s net assets; the limit on loans granted to a single party is 80% of the Company’s net assets.

TOP STAR TEXTILE LIMITED:

The ceiling on total loans granted to the foreign subsidiaries, whose voting rights are 100% owned directly and indirectly by parent, is 100% of the parent’s net assets; the limit on loans granted to a single party is 100% of the parent’s net assets.

BUMPER WORLD GROUP HOLDINGS LIMITED:

The amount of business transactions refers to the higher amount of purchases or sales between both sides in the most recent year but the limit is 10% of the Company’s net assets based on the latest financial statements. The ceiling on total loans granted to the companies for short-term financing is 40% of the Company’s net assets; the limit on loans granted to a single party is 10% of the Company’s net assets. The ceiling on total loans granted to the foreign subsidiaries, whose voting rights are 100% owned directly and indirectly by parent, is 80% of the parent’s net assets; the limit on loans granted to a single party is 80% of the parent’s net assets.

Table 1, Page 2

Note 4: The column of ‘Nature of loan’ shall fill in ‘Business transaction or ‘Short-term financing’.
Note 5: Fill in the amount of business transactions when nature of the loan is related to business transactions, which is the amount of business transactions occurred between the creditor and borrower in the current year.
Note 6: Fill in purpose of loan when nature of loan is for short-term financing, for example, repayment of loan, acquisition of equipment, working capital, etc.
Note 7: Fill in limit on loans granted to a single party and ceiling on total loans granted as prescribed in the creditor company’s “Procedures for Provision of Loans”, and state each individual party to which the loans have been provided and the calculation for ceiling on total loans granted in the footnote.
Note 8: The amounts of funds to be loaned to others which have been approved by the board of directors of a public company in accordance with Article 14, Item 1 of the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies” should be included in its published balance of loans to others at the end of the reporting period to reveal the risk of loaning the public company bears, even though they have not yet been appropriated. However, this balance should exclude the loans repaid when repayments are done subsequently to reflect the risk adjustment. In addition, if the board of directors of a public company has authorized the chairman to loan funds in instalments or in revolving within certain lines and within one year in accordance with Article 14, Item 2 of the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies”, the published balance of loans to others at the end of the reporting period should also include these lines of loaning approved by the board of directors, and these lines of loaning should not be excluded from this balance even though the loans are repaid subsequently, for taking into consideration they could be loaned again thereafter.

Table 1, Page 3

Table 2

TST Group Holding Ltd. and Subsidiaries Provision of endorsements and guarantees to others Year ended December 31, 2020

Expressed in thousands of NTD (Except as otherwise indicated)

Number （Note	Endorser/ guarantor	endorsed/guaranteed Party being	endorsed/guaranteed Party being	Limit on endorsements/ guarantees provided for a single party （Note 3）	Maximum outstanding endorsement/ guarantee amount as of December 31, 2020 （Note 4）	Outstanding endorsement/ guarantee amount at December 31, 2020 （Note 5）	Actual amount drawn down （Note 6）	Amount of endorsements /guarantees secured with collateral	Ratio of accumulated endorsement/ guarantee amount to net asset value of the endorser/ guarantor company	Ceiling on total amount of endorsements/ guarantees provided （Note 3）	Provision of endorsements/ guarantees by parent company to subsidiary （Note 7）	Provision of endorsements/ guarantees by subsidiary to parent company （Note 7）	Provision of endorsements/ guarantees to the party in Mainland China （Note 7）	Footnote
		Company name	Relationship with the endorser/ guarantor （Note 2）
0 0 0 1	TST Group Holding Ltd TST Group Holding Ltd TST Group Holding Ltd TST International Group Limited	Top Sports Textile Ltd Top Star Textile Limited CHINTEX ENTERPRISES LIMITED Top Star Textile Limited	2 2 2 4	12,070,195 $ 12,070,195 12,070,195 9,625,635	356,000 $ 944,340 279,360 681,897	356,000 $ 944,340 279,360 227,840	131,891 $ 65,276 91,905 18,597	- - - -	14.75 39.12 11.57 9.44	12,070,195 $ 12,070,195 12,070,195 9,625,635	Y Y Y N	N N N N	N N Y N	- - - -

Note 1: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows:
(1) The Company is ‘0’.
(2) The subsidiaries are numbered in order starting from ‘1’.
Note 2: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following seven categories; fill in the number of category each case belongs to:
(1) Having business relationship.
(2) The endorser/guarantor company owns directly or indirectly more than 50% voting shares of the endorsed/guaranteed company.
(3) The endorsed/guaranteed company owns directly and indirectly more than 50% voting shares of the endorser/guarantor parent company.
(4) The endorser/guarantor parent company owns directly and indirectly more than 90% voting shares of the endorsed/guaranteed company.
(5) Mutual guarantee of the trade in the same industry or between the common builders as required by the construction contract.
(6) Due to joint venture, all shareholders provide endorsements/guarantees to the endorsed/guaranteed company in proportion to its ownership.
(7) The joint performance guarantee of the pre-sale house sales contract among companies in the same industry in accordance with Consumer Protection Law.
Note 3: Ceiling on total amount of endorsements/guarantees provided and limit on endorsements/guarantees provided for a single party: TST Group Holding Ltd.:

The Company’s ceiling on total amount of endorsements/guarantees provided is 80% of the Company’s net assets based on the latest financial statements;

limit on endorsements/guarantees provided for a single party is 20% of the Company’s net assets based on the latest financial statements.
The Company’s limit on endorsements/guarantees provided for a single party, who has business relationship with the Company, except limited by the aforementioned rules,
is the amount of business transactions in the most recent year before endorsements/guarantees (the higher amount of purchases or sales between both sides).

The endorsements/guarantees between the companies, whose 90% voting shares are owned directly and indirectly by the Company, are qualified with the limit of 10% of the Company’s net assets.

Except for endorsements/guarantees between the companies, whose 100% voting shares are owned directly and indirectly by parent, limit on endorsements/guarantees provided is 5 times of the Company’s net assets. TST International Group Limited:

The Company’s ceiling on total amount of endorsements/guarantees provided is 80% of the Company’s net assets based on the latest financial statements;

limit on endorsements/guarantees provided for a single party is 20% of the Company’s net assets based on the latest financial statements.

The Company’s limit on endorsements/guarantees provided for a single party, who has business relationship with the Company, except limited by the aforementioned rules,

Table 2, Page 1

is the amount of business transactions in the most recent year before endorsements/guarantees (the higher amount of purchases or sales between both sides).

The endorsements/guarantees between the companies, whose 90% voting shares are owned directly and indirectly by the Company, are qualified with the limit of 10% of the Company’s net assets. Except for endorsements/guarantees between the companies, whose 100% voting shares are owned directly and indirectly by parent, limit on endorsements/guarantees provided is 5 times of the Company’s net assets. TOP STAR TEXTILE LIMITED:

The Company’s ceiling on total amount of endorsements/guarantees provided is 80% of the Company’s net assets based on the latest financial statements;

limit on endorsements/guarantees provided for a single party is 20% of the Company’s net assets based on the latest financial statements.

The Company’s limit on endorsements/guarantees provided for a single party, who has business relationship with the Company, except limited by the aforementioned rules,

is the amount of business transactions in the most recent year before endorsements/guarantees (the higher amount of purchases or sales between both sides).

The endorsements/guarantees between the companies, whose 90% voting shares are owned directly and indirectly by the Company, are qualified with the limit of 10% of the Company’s net assets.

Except for endorsements/guarantees between the companies, whose 100% voting shares are owned directly and indirectly by parent, limit on endorsements/guarantees provided is 5 times of the Company’s net assets. Note 4: Fill in the year-to-date maximum outstanding balance of endorsements/guarantees provided as of the reporting period.

Note 5: Fill in the amount approved by the Board of Directors or the chariman if the chairman has been authorised by the Board of Directors based on subparagraph 8, Article 12 of the Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies.

Note 6: Fill in the actual amount of endorsements/guarantees used by the endorsed/guaranteed company. Note 7: Fill in ‘Y’ for those cases of provision of endorsements/guarantees by listed parent company to subsidiary and provision by subsidiary to listed parent company, and provision to the party in Mainland China.

Table 2, Page 2

Table 3

Expressed in thousands of NTD (Except as otherwise indicated)

TST Group Holding Ltd. and Subsidiaries

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures) December 31, 2020

Securitiesheld by	Marketable securities （Note 1）	Relationship with the securities issuer（Note 2）	General ledgeraccount		As of December 31, 2020	As of December 31, 2020		Footnote （Note 4）
				Numberofshares	Book value （Note 3）	Ownership (%)	Fairvalue
TST International Group Limited	NINGPO YING XING KNITS TEXTILE CO., LTD.	None	Note 5	6,300,000	- $	9.00	- $	None

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities. Note 2: Leave the column blank if the issuer of marketable securities is non-related party. Note 3: Fill in the amount after adjusted at fair value and deducted by accumulated impairment for the marketable securities measured at fair value; fill in the acquisition cost or amortised cost deducted by accumulated impairment for the marketable securities not measured at fair value.

Note 4: The number of shares of securities and their amounts pledged as security or pledged for loans and their restrictions on use under some agreements should be stated in the footnote if the securities presented herein have such conditions. Note 5: Financial assets at fair value through profit or loss - non-current.

Table 3, Page 1

Table 4

TST Group Holding Ltd. and Subsidiaries

Acquisition of real estate reaching $300 million or 20% of paid-in capital or more Year ended December 31, 2020

Expressed in thousands of NTD (Except as otherwise indicated)

Name of company （Note 1）	Name ofproperty	Transaction date （Note 2）	Transaction amount (Excluding tax) （Note 4）	Status ofpayment	Counter-party	Relationship with the company	disclose the previous transfer imformation If the counter-party is a related party,	disclose the previous transfer imformation If the counter-party is a related party,	disclose the previous transfer imformation If the counter-party is a related party,	disclose the previous transfer imformation If the counter-party is a related party,	References for determining price （Note 3）	Purpose of acquisition and currentsituation	Otheragreed
							Owner	Relationship with the company	Date of transfer	Amount
Top Sports Textile Vietnam Company Limited	Right-of-use land	December 15, 2020	198,515	80% deposit has been paid	Thanh Thanh Cong Industrial Zone	None	NA	NA	NA	NA	Valuation report	Build a factory for business use	None

Note 1: This investment proposal was approved by the company’s board of directors on December 15, 2020. However, at the time of the board’s resolution, the Vietnamese subsidiary (Top Sports Textile Vietnam Company Limited) had not yet been and the subsidiary THRIVE NATION GROUP LIMITED was the first to replace it. Pay the price. Note 2:The date of the fact is based on the date of the board resolution.

Note 3: According to the valuation report of Vietnam Standard Finance & Deal Service Company Ltd, the estimated value is approximately USD6,527,826~USD7,035,546, approximately NT$188,066 thousand~202,694 thousand. This amount does Note 4: USD/NTD28.81

Table 4, Page 1

Table 5

TST Group Holding Ltd. and Subsidiaries

Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more Year ended December 31, 2020

Expressed in thousands of NTD

(Except as otherwise indicated)

Purchaser/seller	Counterparty	Relationship with the counterparty		Tran	saction		`（`Note 1`）` Differences in transaction terms compared to third party transactions	`（`Note 1`）` Differences in transaction terms compared to third party transactions	Notes/accounts re	ceivable (payable)	Footnote (Note 2)
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unit price	Credit term	Balance	Percentage of total notes /accounts receivable (payable)
TOP STAR TEXTILE LIMITED TOP SPORTS TEXTILE LTD. TOP STAR TEXTILE LIMITED GUANGZHOU RUNWELL KNITS TEXTILE GUANGZHOU RUNWELL KNITS TEXTILE CHINTEX ENTERPRISES LIMITED	TOP SPORTS TEXTILE LTD. TOP STAR TEXTILE LIMITED GUANGZHOU RUNWELL KNITS TEXTILE TOP STAR TEXTILE LIMITED CHINTEX ENTERPRISES LIMITED GUANGZHOU RUNWELL KNITS TEXTILE	Associates within the Group Associates within the Group Associates within the Group Associates within the Group Associates within the Group Associates within the Group	Purchases Sales Purchases Sales Purchases Sales	852,726 $ 852,726) ( 1,604,263 1,604,263) ( 1,565,064 1,565,064) (	23.38 100.00 43.87 100.00 100.00 53.97	Mutual agreement Mutual agreement Mutual agreement Mutual agreement Mutual agreement Mutual agreement	- - - - - -	- - - - - -	227,750) ($ 227,750 281,623) ( 281,623 189,658) ( 189,658	26.65 100.00 32.96 100.00 100.00 44.00	- - - - - -

Note 1: If terms of related-party transactions are different from third-party transactions, explain the differences and reasons in the ‘Unit price’ and ‘Credit term’ columns.

Note 2: In case related-party transaction terms involve advance receipts (prepayments) transactions, explain in the footnote the reasons, contractual provisions, related amounts, and differences in types of transactions compared to third-party transactions.

Note 3: Paid-in capital referred to herein is the paid-in capital of parent company. In the case that shares were issued with no par value or a par value other than NT$10 per share, the 20 % of paid-in capital shall be replaced by 10% of equity attributable to owners of the parent in the calculation.

Table 5, Page 1

Table 6

TST Group Holding Ltd. and Subsidiaries

Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more December 31, 2020

Expressed in thousands of NTD

(Except as otherwise indicated)

Creditor	Counterparty	Relationship with the counterparty	Balance as at December 31, 2020 `（`Note 1`）`	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date	Allowance for doubtful accounts
					Amount	Action taken
GUANGZHOU RUNWELL KNITS TEXTILE CHINTEX ENTERPRISES LIMITED TOP SPORTS TEXTILE LTD.	TOP STAR TEXTILE LIMITED GUANGZHOU RUNWELL KNITS TEXTILE TOP STAR TEXTILE LIMITED	Associates within the Group Associates within the Group Associates within the Group	281,623 $ 189,658 227,750	5.95 8.25 4.29	- - -	- - -	281,623 $ 173,720 141,441	- - -

Note 1: Fill in separately the balances of accounts receivable–related parties, notes receivable–related parties, other receivables–related parties….

Note 2: Paid-in capital referred to herein is the paid-in capital of parent company. In the case that shares were issued with no par value or a par value other than NT$10 per share, the 20 % of paid-in capital shall be replaced by 10% of equity attributable to owners of the parent in the calculation.

Table 6, Page 1

Table 7

TST Group Holding Ltd. and Subsidiaries Significant inter-company transactions during the reporting period Year ended December 31, 2020

Expressed in thousands of NTD

(Except as otherwise indicated)

Transaction

Number (Note 1)	Company name	Counterparty	Relationship	General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets (Note 3)
1 1 1 1 2 2	TOP STAR TEXTILE LIMITED TOP STAR TEXTILE LIMITED TOP STAR TEXTILE LIMITED TOP STAR TEXTILE LIMITED GUANGZHOU RUNWELL KNITS TEXTILE GUANGZHOU RUNWELL KNITS TEXTILE	TOP SPORTS TEXTILE LTD. TOP SPORTS TEXTILE LTD. GUANGZHOU RUNWELL KNITS TEXTILE GUANGZHOU RUNWELL KNITS TEXTILE CHINTEX ENTERPRISES LIMITED CHINTEX ENTERPRISES LIMITED	3 3 3 3 3 3	Purchases Accounts payable Purchases Accounts payable Purchases Accounts payable	852,726 $ 227,750 1,604,263 281,623 1,565,064 189,658	- - - - - -	15.82 5.67 29.77 7.01 29.04 4.72

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

(1) Parent company is ‘0’.

(2) The subsidiaries are numbered in order starting from ‘1’.

Note 2: Relationship between transaction company and counterparty is classified into the following three categories; fill in the number of category each case belongs to (If transactions between parent company and subsidiaries or between subsidiaries refer to the same transaction, it is not required to disclose twice. For example, if the parent company has already disclosed its transaction with a subsidiary, then the subsidiary is not required to disclose the transaction; for transactions between two subsidiaries, if one of the subsidiaries has disclosed the transaction, then the other is not required to disclose the transaction.):

(1) Parent company to subsidiary.

(2) Subsidiary to parent company.

(3) Subsidiary to subsidiary.

Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

Note 4: The Company may decide to disclose or not to disclose transaction details in this table based on the Materiality Principle.

Table 7, Page 1

TST Group Holding Ltd. and Subsidiaries Information on investees Year ended December 31, 2020

Table 8 Investor	Investee `（`Notes 1 and 2`）`	Location	Main business activities	Initial invest	ment amount	Shares held	as at Decembe	r 31, 2020	Net profit (loss) of the investee for the year ended December 31, 2020 `（`Note 2(2)`）`	Investment income (loss) recognised by the Company for the year ended December 31, 2020 `（`Note 2(3)`）` Expressed in thousa (Except as otherwis	Footnote nds of NTD e indicated)
				Balance as at December 31, 2020	Balance as at December 31, 2019	Number of shares	Ownership	Book value
TST Group Holding Ltd. TST Group Holding Ltd. TST International Group Limited BUMPER WORLD GROUP HOLDINGS LIMITED TST International Group Limited TOP STAR TEXTILE LIMITED	BUMPER WORLD GROUP HOLDINGS LIMITED TST International Group Limited THRIVE NATION GROUP LIMITED TOP SPORTS TEXTILE LTD. TOP STAR TEXTILE LIMITED TOP STAR TEXTILE VIETNAM COMPANY LIMITED	British Virgin Islands British Virgin Islands British Virgin Islands Cambodia Hong Kong Vietnam	Holding Company Holding Company Holding Company Manufacture of textile Sale of textile Manufacture of textile	689,540 $ 209,860 227,840 660,660 110,097 30,040	689,540 $ 209,860 - 359,760 9,569 30,040	23,000,000 $ 7,000,000 8,000,001 22,000,000 30,000,000 -	100.00 100.00 100.00 100.00 100.00 100.00	368,287 $ 1,925,127 227,722 399,296 543,893 (326)	$ 37,125 396,723 123) ( 37,063 212,786 23,384) (	$ 36,138 396,723 123) ( 37,063 212,786 23,384) (	Subsidiary Subsidiary Second- tier subsidiary Second- tier subsidiary Second- tier subsidiary Second- tier subsidiary

Note 1: If a public company is equipped with an overseas holding company and takes consolidated financial report as the main financial report according to the local law rules, it can only disclose the information of the overseas holding company about the disclosure of related overseas investee information.

Note 2: If situation does not belong to Note 1, fill in the columns according to the following regulations:

(1)The columns of ‘Investee’, ‘Location’, ‘Main business activities’, Initial investment amount’ and ‘Shares held as at December 31, 2019’ should fill orderly in the Company’s (public company’s) information on investees and every directly or indirectly controlled investee’s investment information, and note the relationship between the Company (public company) and its investee each (ex. direct subsidiary or indirect subsidiary) in the ‘footnote’ column..

(2)The ‘Net profit (loss) of the investee for the year ended December 31, 2019’ column should fill in amount of net profit (loss) of the investee for this period.

(3)The ‘Investment income (loss) recognised by the Company for the year ended December 31, 2019’ column should fill in the Company (public company) recognised investment income (loss) of its direct subsidiary and

recognised investment income (loss) of its investee accounted for under the equity method for this period. When filling in recognised investment income (loss) of its direct subsidiary, the Company (public company) should confirm that direct subsidiary’s net profit (loss) for this period has included its investment income (loss) which shall be recognised by regulations.

Table 8, Page 1

TST Group Holding Ltd. and Subsidiaries Information on investments in Mainland China Year ended December 31, 2020

Table 9

Expressed in thousands of NTD

(Except as otherwise indicated)

Investee in Mainland China	Main business activities	Paid-incapital	Investment method `（`Note1`）`	Accumulated amount of remittance from Taiwan to Mainland China as of January1,2020	ended Decem Amount remitte to Mainla Amount re to Taiwan	ber 31, 2020 d from Taiwan nd China/ mitted back for the year	Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2020	Net income of investee for the year ended December31,2020	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the year ended December 31, 2020 `（`Note2`）`	Book value of investments in Mainland China as of December 31, 2019	Accumulated amount of investment income remitted back to Taiwan as of December31,2020	Footnote
					Remitted to China	Remitted back toTaiwan
GUANGZHOU RUNWELL KNITS TEXTILE CHINTEX ENTERPRISES LIMITED GUANGZHOU CHINTEX MANAGEMENT CONSULTING CO., LTD. HUBEI CHUNG SHENG TEXTILE CO., LTD.	Sale of textile Sale of textile Management consulting services Sale of textile	62,896 $ 164,354 4,365 16,586	2 2 2 2	- $ - - -	- $ - - -	- $ - - -	- $ - - -	14,954 $ 157,055 3,675 -	100.00 100.00 100.00 35.00	14,954 $ 157,055 3,675 -	139,659 $ 690,525 14,615 -	- $ - - -	Notes 2(2)B and 4 Notes 2(2)B and 4 Notes 2(2)B and 5 Notes 2(2)C and 5

Copany name	Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2019	Investment amount approved Ceiling on by the nvestments in Investment Mainland China Commission of mposed by the the Ministry of Investment Economic n of Affairs(MOEA) MOEA Note 6 Note 6
	Note 6	Note 6

Note 1: Investment methods are classified into the following three categories; fill in the number of category each case belongs to:

(1)Directly invest in a company in Mainland China..

(2) Through investing in an existing company in the third area, which then invested in the investee in Mainland China. (3) Others

Note 2: In the ‘Investment income (loss) recognised by the Company for the year ended December 31, 2019’ column:

(1)It should be indicated if the investee was still in the incorporation arrangements and had not yet any profit during this period.
(2)Indicate the basis for investment income (loss) recognition in the number of one of the following three categories:

A.The financial statements that are audited and attested by international accounting firm which has cooperative relationship with accounting firm in R.O.C. B.The financial statements that are audited and attested by R.O.C. parent company’s CPA.

C.Others.

Note 3: The numbers in this table are expressed in New Taiwan Dollars.

Note 4: Invest through TST International Group Limited.

Note 5: Invest through CHINTEX ENTERPRISES LIMITED. Note 6: The Company is not the company established in Republic of China, which is not applicable.

Table 9, Page 1

TST Group Holding Ltd. and Subsidiaries

Significant transactions conducted with investees in Mainland China directly or indirectly through other companies in the third areas Year ended December 31, 2020

Table 10

Expressed in thousands of NTD

(Except as otherwise indicated)

Investee in Mainland China	Sale(purchase)	Sale(purchase)	Propertytransaction	Propertytransaction	Accounts receivable (payable)	Accounts receivable (payable)	Provision of endorsements/guarantees or collaterals	Provision of endorsements/guarantees or collaterals		Financing	Financing		Others
	Amount	%	Amount	%	Balance at December 31,2020	%	Balance at December 31,2020	Purpose	Maximum balance during the year ended December 31, 2020	Balance at December 31, 2020	Interest rate	Interest during the year ended December 31, 2020
GUANGZHOU RUNWELL KNITS TEXTILE CHINTEX ENTERPRISES LIMITED	($ 1,604,263) -	29.77 -	$ - -	- -	($ 281,623) -	7.01 -	$ - 279,360	- -	$ - 85,440	- $ 85,440	- 4%	- $ -	- -

Table 10, Page 1

TST Group Holding Ltd. and Subsidiaries Major Shareholder Information December 31, 2020

Table 11

Shareholder's Name	Shares	Percentage
Xingmao Group LIN CHIN MAO Big Loyal Group Excellent Treat Limited	10,640,000 2,570,000 2,070,000 2,000,000	33.77% 8.15% 6.57% 6.34%

Note 1: The information of major shareholders in this table is based on the last business day of the end of each quarter by TDCC, and calculates that shareholders hold more than 5% of the company's ordinary shares and special shares that have completed unregistered delivery (including treasury shares). As for the share capital recorded in the company's financial report and the company's actual number of shares delivered without physical registration, there may be differences or differences due to different calculation bases.

Note 2: In the case of the above information, if the shareholder delivers the shares to the trust, it is disclosed in individual accounts by the trustee who opened the trust account by the trustee.
As for the shareholder’s declaration of insider’s shareholding in accordance with the Securities and Exchange Act, the shareholding includes his own shareholding plus the shares delivered to the trust and the right to use the trust property. For information on insider’s equity declaration, please refer to MOPS.

Table 11, Page 1

AI assistant

TST Group — Annual Report 2020

52395_rns_2021-08-20_ea4dc24f-3651-4867-bb9f-cf6cb7df143e.pdf

TST Group Holding Ltd. 冠星集團控股有限公司

ANNUAL REPORT 2020

Table of Contents

One. Letter to Our Shareholders

Dear Shareholders:

(2) 2021 Business Plan

Two. Company Profile

I. Establishment: May 21, 2013

II. Company background

Three. Report on Corporate Governance

I. Organization

II. Information on the Directors, Supervisors, General Manager, Vice General Managers, Senior Managers and the Managers of Each Department and Branch

1. Names, education, experience, shareholdings, and nature of such shareholders of directors (no supervisors in the Company)

III. Remuneration Paid to Directors, Supervisors, General Manager and Vice General Managers in the most recent year

1. Remuneration of general Directors & Independent Directors

IV. Corporate Governance

(II) Functioning of Audit Committee

(1) Training & education for directors in 2020

1. Internal Control Statement:

TST Group Holding Ltd. Statement on Internal Control System

Internal Control Systems’ Compliance Report

V. Information on Certified Public Accountant’s audit fees

VI. Information of a change (replacement) in the Certified Public Accountants (CPAs):

IX. Top 10 shareholders who are related parties, spouses or relatives with two degrees

X. Holdings by directors, managers or the entities directly or indirectly controlled by the Company in the same investee

Four. Facts of Capital Raising

I. Capital and Shares

(I) Source of Share Capital:

(II) Structure of shareholders

(III) Facts of disperse of shareholding

(IV) List of Major shareholders

(VI) Dividend policy and implementations

Five. Business Performance in Brief

I. Business Lines

(3) Current products (services)

Environmental-friendly technology in dyeing and jacquard looming

Source: Euromonitor International

II. Markets, Sales & Distributions

1. Market analysis

(2) Market shares

Responding measures

Responding measures

Responding measures

(D) EU-Vietnam Free Trade Agreement (EVFTA)

Responding measures

(E) Stringent environmental standards

Responding measures

Responding measures

III. Number of employees, average number of years of service, average age and academic degree credential distribution ratio during the most recent year and as of the print date of this annual report

IV. Information of expenditures for environmental protection

List of Pollution Control Equipment

V. Employment Relationships

VI. Key agreements

Six. Financial Highlights

I. The condensed balance sheet and Statement of Comprehensive Income for the last five years

3. Names of CPAs and their audit opinions for the last five years

II. Financial Analyses for the last five years

Seven. Review of Financial Position, Financial Performance, and Risks Related Issues

I. Financial Position

II. Individual financial statement

III. Cash flow:

IV. Impact of major capital expenditures on financials during the most recent year

V. Equity investment policy, investment gains/losses during the most recent year, improvement measures and investment plans for the next year

VI. Risk Assessments

measures

(III) R&D plans and budgets:

2. Supplier concentration

VII. Other significant events: None

Eight. Special Disclosure

I. Related information of affiliates

(II) Basic Information of Affiliates

(VI) Affiliates’ Business Operating Highlights

Audit Committee’s Review Report

TST GROUP HOLDING LTD. AND SUBSIDIARIES

TST GROUP HOLDING LTD.

DECEMBER 31, 2020 AND 2019 CONSOLIDATED FINANCIAL STATEMENTS

AND REPORT OF INDEPENDENT ACCOUNTANTS

TST Group Annual Report 2020

TST Group Holding Ltd. `冠星集團控股有限公司`