REGAL HOLDING CO., LTD. AND SUBSIDIARIES

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Stock Code:4807

REGAL HOLDING CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors' ReportFor the Years Ended December 31, 2020 and 2019

Address: The Grand Pavilion Commercial Centre, Oleander Way, 802 West BayRoad, P. O. Box 32052, Grand Cayman KY1-1208, Cayman Islands

Telephone: 66-24-207440-1074

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

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Table of contents

Contents Page

1. Cover Page 1

2. Table of Contents 2

3. Independent Auditors’ Report 3

4. Consolidated Balance Sheets 4

5. Consolidated Statements of Comprehensive Income 5

6. Consolidated Statements of Changes in Equity 6

7. Consolidated Statements of Cash Flows 7

8. Notes to the Consolidated Financial Statements

(1) Company history 8

(2) Approval date and procedures of the consolidated financial statements 8

(3) New standards, amendments and interpretations adopted 8～9

(4) Summary of significant accounting policies 9～22

(5) Significant accounting assumptions and judgments, and major sourcesof estimation uncertainty

22

(6) Explanation of significant accounts 22～54

(7) Related-party transactions 54

(8) Pledged assets 54

(9) Commitments and contingencies 55

(10) Losses due to major disasters 55

(11) Subsequent events 55

(12) Other 55

(13) Other disclosures

(a) Information on significant transactions 56～57

(b) Information on investees 58

(c) Information on investment in China 58

(d) Major shareholders 59

(14) Segment information 59～61

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Independent Auditors' Report

To the Board of Directors of

Regal Holding Co., Ltd.:

Opinion

We have audited the consolidated financial statements of Regal Holding Co., Ltd. ("the Company") and itssubsidiaries ("the Group"), which comprise the consolidated statement of balance sheets as of December 31,2020 and 2019, and the consolidated statement of comprehensive income, changes in equity and cash flows forthe years then ended, and notes to the consolidated financial statements, including a summary of significantaccounting policies.

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

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit ofthe consolidated financial statements of the current period. These matters were addressed in the context of ouraudit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do notprovide a separate opinion on these matters. Based on our judgment, the key audit matters that should bedisclosed in this audit report are as follows:

1. Revenue recognition

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

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Description of key audit matter:

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

How the matter was addressed in our audit:

Our audit procedures included:

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

2. Subsequent measurement of inventories

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

Description of key audit matter:

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

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

How the matter was addressed in our audit:

Our audit procedures included:

Assessing the reasonableness of accounting policies for subsequent measurement of inventories; obtainingaging analysis of inventories and analyzing changes in inventory age categories to verify the appropriatenessof the changes; obtaining details of subsequent measurement of inventories and understanding thereasonableness of selling prices adopted; verifying net realizable value of inventories by vouching the sourcedocuments of samples and determining whether related subsequent measurement of inventories has beenappropriately disclosed .

Responsibilities of Management and Those Charged Governance for the Consolidated FinancialStatements

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

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

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

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

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

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

1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether dueto fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidencethat is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,forgery, intentional omissions, misrepresentations, or the override of internal control.

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

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

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

5. Evaluate the overall presentation, structure and content of the consolidated financial statements, includingthe disclosures, and whether the consolidated financial statements represent the underlying transactions andevents in a manner that achieves fair presentation.

6. Obtain sufficient and appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Group to express an opinion on the consolidated financial statements. We areresponsible for the direction, supervision and performance of the group audit. We remain solely responsiblefor our audit opinion.

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

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

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

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

KPMG

Taipei, Taiwan (Republic of China)March 19, 2021

Notes to Readers

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

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

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

Consolidated Balance SheetsDecember 31, 2020 and 2019

(expressed in thousands of New Taiwan Dollars)

December 31, 2020 December 31, 2019　Assets Amount % Amount %

11xx Current assets:1100 Cash and cash equivalents (note 6(a)) $ 674,257 35 462,759 241170 Trade receivables, net (notes 6(c) and 6(r)) 475,210 25 732,314 371200 Other receivables (note 6(d)) 22,145 1 1,647 -1220 Current tax assets 26,947 1 14,958 1130x Inventories (note 6(f)) 344,661 18 295,233 151470 Other current assets (notes 4(c) and 8) 14,558 1 18,486 1

Total current assets 1,557,778 81 1,525,397 7815xx Non-current assets:1520 Non-current financial assets at fair value through other comprehensive

income (note 6(b)) 882 - 12,200 11600 Property, plant and equipment (notes 6(g), 6(j) and 8) 326,511 17 348,046 181755 Right-of-use assets (notes 6(h) and 6(l)) 2,075 - 1,465 -1780 Intangible assets (note 6(i)) 12,110 1 40,364 21840 Deferred tax assets (note 6(n)) 21,771 1 23,218 11984 Other financial assets－non-current (note 8) 9,698 - 10,308 -

Total non-current assets 373,047 19 435,601 22

1xxx Total assets $ 1,930,825 100 1,960,998 100

December 31, 2020 December 31, 2019　Liabilities and Equity Amount % Amount %

21xx Current liabilities:2100 Short-term loans (notes 6(g), 6(j) and 8) $ 370,140 19 693,065 352150 Notes payables 440 - 245 -2170 Trade payables 30,795 2 57,299 32200 Other payables (note 6(s)) 105,482 5 86,851 52230 Current tax liabilities 29,479 2 - -2280 Current lease liabilities (note 6(l)) 884 - 1,206 -2399 Other current liabilities (note 6(r)) 5,020 - 4,590 -

Total current liabilities 542,240 28 843,256 4325xx Non-current liabilities:2505 Non-current financial liabilities at fair value through profit or loss (note

6(k)) 1,000 - - -2530 Bonds payable (note 6(k)) 234,781 12 - -2570 Deferred tax liabilities (note 6(n)) 35,367 2 38,902 22580 Non-current lease liabilities(note 6(l)) 1,204 - 278 -2640 Net defined benefit liabilities－non-current (note 6(m)) 28,170 2 27,735 22645 Guarantee deposits received 3,801 - 3,814 -

Total non-current liabilities 304,323 16 70,729 42xxx 　　Total liabilities 846,563 44 913,985 4731xx Equity attributable to owners of the Company (notes 6(f), 6(k) and

6(p))3100 Common stock 383,860 20 384,700 193200 Capital surplus 439,036 23 428,182 2233xx Retained earnings:3310 Legal reserve 70,774 4 70,774 43320 Special reserve 28,481 1 28,481 13350 Accumulated deficits (1,123) - (81,257) (4)

98,132 5 17,998 1Other equity:

3410 Exchange differences on translation of foreign financial statements 18,686 1 66,091 33420 Losses from investments in equity instruments measured at fair value

through other comprehensive income (11,318) (1) - -3491 Other equity－unearned compensation (1,750) - (6,795) -

5,618 - 59,296 3Total equity attributable to owners of the Company: 926,646 48 890,176 45

36xx Non-controlling interests (note 6(f)) 157,616 8 156,837 83xxx 　　Total equity 1,084,262 56 1,047,013 532-3xxx Total liabilities and equity $ 1,930,825 100 1,960,998 100

See accompanying notes to consolidated financial statements.

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Consolidated Statements of Comprehensive IncomeFor the years ended December 31, 2020 and 2019

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

2020 2019Amount % Amount %

4000 Operating revenues (note 6(r)) $ 1,765,557 100 1,809,297 1005000 Operating costs (notes 6(e), 6(g), 6(h), 6(i), 6(l), 6(m) and 12) 1,363,969 77 1,583,125 875900 Gross profit 401,588 23 226,172 136000 Operating expenses (notes 6(c), 6(g), 6(h), 6(i), 6(l), 6(m), 6(p), 6(s), 7 and 12):6100 Selling expenses 69,764 4 68,965 46200 Administrative expenses 166,382 9 180,582 106300 Research and development expenses 60,775 3 70,286 46450 Impairment loss (reversal of impairment loss) determined in accordance with IFRS 9 (10,228) - 10,337 -

Total operating expenses 286,693 16 330,170 186900 Operating income (losses) 114,895 7 (103,998) (5)7000 Non-operating income and expenses (notes 6(k), 6(l) and 6(t)):7100 Interest income 643 - 3,399 -7010 Other income 7,238 - 9,179 -7020 Other gains and losses 10,196 - (15,200) (1)7050 Finance costs (8,678) - (4,228) -

　　Total non-operating income and expenses 9,399 - (6,850) (1)7900 Profit (losses) before income tax 124,294 7 (110,848) (6)7950 Less: income tax expenses (note 6(n)) 26,646 2 7,522 -8200 Profit (losses) for the period 97,648 5 (118,370) (6)8300 Other comprehensive income (notes 6(m) and 6(v)): 8310 Components of other comprehensive income that will not be reclassified subsequently to profit

or loss8311 Gains (losses) on remeasurements of defined benefit plans (8,175) - 9,240 -8316 Unrealized losses from investments in equity instruments measured at fair value through other

comprehensive income (11,318) (1) - -8349 Less: income tax related to components of other comprehensive income that will not be

reclassified subsequently to profit or loss - - - -Components of other comprehensive income that will not be reclassified subsequently to profit

or loss (19,493) (1) 9,240 -8360 Items that may be reclassified subsequently to profit or loss8361 Exchange differences on translation of foreign operations (55,965) (3) 68,969 48399 Less: income tax related to items that may be reclassified subsequently to profit or loss - - - -

Components of other comprehensive income that will be reclassified subsequently to profit orloss (55,965) (3) 68,969 4

8300 Other comprehensive income (75,458) (4) 78,209 48500 Total comprehensive income $ 22,190 1 (40,161) (2)8600 Profit (losses) attributable to (note 6(f)):8610 Owners of the Company $ 88,343 5 (146,304) (8)8620 Non-controlling interests 9,305 - 27,934 2

$ 97,648 5 (118,370) (6)Comprehensive income attributable to (note 6(f)):

8710 Owners of the Company $ 21,411 1 (79,151) (4)8720 Non-controlling interests 779 - 38,990 2

$ 22,190 1 (40,161) (2)

Earnings (losses) per share (New Taiwan dollars) (note 6(q))9750 Basic earnings (losses) per share $ 2.31 (3.83)9850 Diluted earnings (losses) per share $ 2.29 (3.83)


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Consolidated Statements of Changes in EquityFor the years ended December 31, 2020 and 2019(expressed in thousands of New Taiwan Dollars)

Equity attributable to owners of the CompanyOther equity

Retained earnings Exchange

Unrealized losseson financial assetsmeasured at fair

Common stock

Capital surplus

Legal reserve

Special reserve

Unappropriatedretained earnings

(accumulateddeficits)

Total retainedearnings

differences ontranslation of

foreign financialstatements

value throughother

comprehensiveincome Others

Total equityattributable toowners of the

CompanyNon-controlling

interests Total equityBalance at January 1, 2019 $ 385,000 433,262 50,135 28,481 230,640 309,256 7,984 - (17,248) 1,118,254 261,378 1,379,632Appropriation and distribution of retained earnings:

Legal reserve appropriated - - 20,639 - (20,639) - - - - - - -Cash dividends - - - - (154,000) (154,000) - - - (154,000) (143,531) (297,531)

Profit (losses) for the period - - - - (146,304) (146,304) - - - (146,304) 27,934 (118,370)Other comprehensive income - - - - 9,046 9,046 58,107 - - 67,153 11,056 78,209Total comprehensive income - - - - (137,258) (137,258) 58,107 - - (79,151) 38,990 (40,161)Adjustments for restricted shares to employees (300) (5,080) - - - - - - 5,380 - - -Share-based payments - - - - - - - - 5,073 5,073 - 5,073Balance at December 31, 2019 384,700 428,182 70,774 28,481 (81,257) 17,998 66,091 - (6,795) 890,176 156,837 1,047,013

Equity component of convertible bonds issued - 10,767 - - - - - - - 10,767 - 10,767Profit for the period - - - - 88,343 88,343 - - - 88,343 9,305 97,648Other comprehensive income - - - - (8,209) (8,209) (47,405) (11,318) - (66,932) (8,526) (75,458)Total comprehensive income - - - - 80,134 80,134 (47,405) (11,318) - 21,411 779 22,190Adjustments for restricted shares to employees (840) 87 - - - - - - 753 - - -Share-based payments - - - - - - - - 4,292 4,292 - 4,292Balance at December 31, 2020 $ 383,860 439,036 70,774 28,481 (1,123) 98,132 18,686 (11,318) (1,750) 926,646 157,616 1,084,262


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Consolidated Statements of Cash FlowsFor the years ended December 31, 2020 and 2019(expressed in thousands of New Taiwan Dollars)

2020 2019Cash flows from (used in) operating activities:

Profit (loss) before tax $ 124,294 (110,848)Adjustments:

Adjustments to reconcile profit (losses):Depreciation expenses 51,731 54,308Amortization expenses 3,094 5,544Expected credit losses (gains) (10,228) 10,337Interest expenses 8,678 4,228Interest income (643) (3,399)Share-based payments 4,292 5,073Losses (gains) on disposal of property, plant and equipment (219) 1,568Losses on disposal of intangible assets 33 -Gains on lease modification (17) -Reversal of impairment loss on financial assets 200 -Unrealized foreign exchange losses (gains) 390 (476)Expense arising from derecognition of intangible assets 11,131 -Transaction cost of issuance of convertible bonds related to derivative instruments 17 -

Total adjustments to reconcile profit 68,459 77,183Changes in operating assets and liabilities:

Financial assets mandatorily measured at fair value through profit or loss - 100,524Trade receivables 226,324 (329,372)Other receivables (3,008) 1,228Inventories (65,424) 38,196Other current assets 3,266 (8,392)

Total changes in operating assets 161,158 (197,816)Notes payables 207 (52)Trade payables (23,249) 4,341Other payables 21,917 (86,106)Other current liabilities 613 3,492Net defined benefit liabilities (9,859) 5,760

Total changes in operating liabilities (10,371) (72,565)Total changes in operating assets and liabilities 150,787 (270,381)

Total adjustments 219,246 (193,198)Cash inflows generated from (used in) operations 343,540 (304,046)Interest received 643 3,399Interest paid (7,340) (3,547)Income taxes paid (8,555) (59,648)

Net cash flows from (used in) operating activities 328,288 (363,842)Cash flows from (used in) investing activities:

Acquisition of financial assets at fair value through other comprehensive income - (12,200)Acquisition of property, plant and equipment (48,060) (35,553)Proceeds from disposal of property, plant and equipment 496 731Acquisition of intangible assets (7,753) (10,303)Increase in other financial assets－non-current 90 (417)

Net cash flows used in investing activities (55,227) (57,742)Cash flows from (used in) financing activities:

Increase (decrease) in short term loans (286,317) 687,305Proceeds from bond issuance 245,930 -Increase in guarantee deposits received 190 33Payments of lease liabilities (1,042) (1,584)Cash dividends paid - (297,531)

Net cash flows from (used in) financing activities (41,239) 388,223Effect of exchange rate changes on cash and cash equivalents (20,324) 14,943Net increase (decrease) in cash and cash equivalents 211,498 (18,418)Cash and cash equivalents at the beginning of period 462,759 481,177Cash and cash equivalents at the end of period $ 674,257 462,759


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Notes to the Consolidated Financial StatementsDecember 31, 2020 and 2019

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

(1) Company history

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

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

The consolidated financial statements were reported to the Board of Directors on March 19, 2021.

(3) New standards, amendments and interpretations adopted:

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

Effective January 1, 2020, the Group has initially adopted the following new amendments, which donot have a significant impact on its consolidated financial statements.

● Amendments to IFRS 3 “Definition of a Business”

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

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

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

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

The Group assesses that the adoption of the following new amendments, effective for annual periodbeginning on January 1, 2021, would not have a significant impact on its consolidated financialstatements:

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

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

(Continued)

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

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

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

● Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor andIts Associate or Joint Venture”

● IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”● Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”● Amendments to IAS 16 “Property, Plant and Equipment－Proceeds before Intended Use”● Amendments to IAS 37 “Onerous Contracts－Cost of Fulfilling a Contract”● Annual Improvements to IFRS Standards 2018-2020● Amendments to IFRS 3 “Reference to the Conceptual Framework”● Amendments to IAS 1 “Disclosure of Accounting Policies”● Amendments to IAS 8 “Definition of Accounting Estimates”

(4) Summary of significant accounting policies:

The significant accounting policies presented in the consolidated financial statements are summarizedbelow. The following accounting policies were applied consistently throughout the periods presented inthe consolidated financial statement.

(a) Statement of compliance

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

(b) Basis of preparation

(i) Basis of measurement

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

1) Financial instruments at fair value through profit or loss are measured at fair value;

2) Financial assets at fair value through other comprehensive income are measured at fairvalue.

3) The defined benefit liabilities are measured at fair value of the plan assets less thepresent value of the defined benefit obligation with the limit explained in note 4(n).

(Continued)

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(ii) Functional and presentation currency

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

(c) Basis of consolidation

(i) Principles of preparation of the consolidated financial statements

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

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

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

(ii) List of subsidiaries in the consolidated financial statements

Percentage of ownership(%)

Name ofinvestor Name of subsidiary

Businessactivities

December31, 2020

December31, 2019

The Company Regal Jewelry Manufacture Co., Ltd.(RJM)

Designing, manufacturing and sellingjewelry and gems

%99.99 %99.99

The Company GIO VAN GOGH (International) JewelryLtd. (GVG Hong Kong) (Note 1)

Investment activities %100.00 %100.00

The Company Regal Management Solution Co., Ltd.(RMS)

Technical services and resourcesconsulting

%99.99(Note 2)

%99.99(Note 2)

The Company Chaporo Co., Ltd. (Chaporo) Investment activities %70.00(Note 3)

%70.00(Note 3)

The Company Regal Innovation Co., Ltd. (RIC) Selling jewelry and gems %100.00(Note 4)

%100.00

RJM Regal Plating Co., Ltd. (RGP) Jewelry and gems planting %51.00 %51.00RJM Linden Integrated Co., Ltd. (Linden) Selling jewelry and gems %49.00

(Note 5)%49.00

(Note 5)GVG Hong

KongGio Van Gogh Shen Zhen Ptd Ltd. (GVG

Shen Zhen) (Note 1)Selling jewelry and gems %100.00 %100.00

(Continued)

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Note 1: A resolution was made by the Board of Directors of the Company on November 13, 2019, for a capital injectionamounting to CNY 3,100 thousand into GVG Shen Zhen for it to settle its outstanding debts and fulfill the workingcapital. The Company thereby made its first investment of capital amounting to CNY 1,400 thousand into GVGShen Zhen through GVG Hong Kong in December 2019. However, as of December 31, 2019, the injected capitalwas on hold by GVG Shen Zhen's bank, since the registration procedures have not yet been completed. The Grouprecorded the injected capital as other current assets. The aforementioned registration procedures were completed onFebruary 19, 2020. In addition, the Company made its investment of capital amounting to CNY 1,700 thousand intoGVG Shen Zhen through GVG Hong Kong separately on June 3, August 20, and September 21, 2020. Theaforementioned registration procedures were completed on September 24, 2020.

Note 2:RMS was registered and established by RJM on April 5, 2018, and thereafter was transferred to the Company onAugust 14, 2018 through group restructuring. The Company made a capital injection amounting to THB 10,000thousand on December 14, 2018. In addition, a resolution was made by the Board of Directors of the Company heldon October 5, 2020 for a capital injection amounting to THB 60,000 thousand.

Note 3: To increase the production capacity of gems and jewelry, a resolution was made by the Board of Directors of theCompany on November 12, 2018, for an investment amounting to USD 3,500 thousand to establish a subsidiary,Chaporo Co., Ltd., by owning 70% of its shares, and for an investment amounting to THB 110,000 thousand toacquire Elex Precise Co., Ltd through Chaporo Co., Ltd. by share subscription and acquisition from its previousshareholders. Chaporo was registered and established by the Company in Seychelles on October 5, 2018, andthereafter, the Company made a capital injection amounting to USD 5 thousand on April 30, 2019. However, afterevaluating the target company, the Company found that the potential benefits of the acquisition did not meet itsexpectation. Therefore, the Board of Directors of the Company made a resolution on August 14, 2019, to terminatethe acquisition of Elex Precise Co., Ltd.

Note 4: To expand business and manage supply chains, a resolution was made by the Board of Directors of the Company onAugust 14, 2019, for an investment amounting to TWD 30,000 thousand to establish a subsidiary, Regal InnovationCo., Ltd., by owning 100% of its shares. The incorporation procedures have been completed on October 18, 2019.The registered capital was TWD 30,000 thousand and paid in capital was TWD 25,000 thousand. In addition,resolutions were made by the Board od Directors of the Company for capital injections amounting to TWD 40,000thousand and TWD 20,000 thousand separately on March 13 and October 5,2020.

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

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

(d) Foreign currencies

(i) Foreign currency transactions

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

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

(Continued)

12


(ii) Foreign operation

The assets and liabilities of foreign operations, including goodwill and fair value adjustmentsarising on acquisition, are translated into the presentation currency at exchange rates at thereporting date. The income and expenses of foreign operations are translated at the averageexchange rate in the reporting period. Translation differences are recognized in othercomprehensive income.

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

When the settlement of a monetary receivable from or payable to a foreign operation is neitherplanned nor likely to occur in the foreseeable future, foreign exchange gains and losses arisingfrom such a monetary item that are considered to form part of the net investment in the foreignoperation are recognized in other comprehensive income.

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

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

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

(ii) It is held primarily for the purpose of trading;

(iii) It is expected to be realized within twelve months after the reporting period;

(iv) The asset is cash or a cash equivalent unless the asset is restricted from being exchanged orused to settle a liability for at least twelve months after the reporting period.

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

An entity shall classify a liability as current when:

(i) It is expected to be settled in the normal operating cycle;

(ii) It is held primarily for the purpose of trading;

(iii) It is due to be settled within twelve months after the reporting period, despite the fact that along-term refinance is completed or a debt agreement is rearranged during the period betweenthe reporting date and the approval date.

(Continued)

13


(iv) It does not have an unconditional right to defer settlement of the liability for at least twelvemonths after the reporting period. Terms of a liability that could, at the option of thecounterparty, result in its settlement by issuing equity instruments do not affect itsclassification.

(f) Cash and cash equivalents

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

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

(g) Financial instruments

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

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

(i) Financial assets

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

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

1) Financial assets measured at amortized cost

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

‧ it is held within a business model whose objective is to hold assets to collectcontractual cash flows; and

‧ its contractual terms give rise on specified dates to cash flows that are solelypayments of principal and interest on the principal amount outstanding.

(Continued)

14


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

2) Fair value through other comprehensive income (FVOCI)

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

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

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

3) Fair value through profit or loss (FVTPL)

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

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

4) Impairment of financial assets

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

At each reporting date, the Group performs impairment assessment on its financial assetsand contract assets with significant financing components. The Group considersreasonable and supportable information that is relevant and available without undue costor effort. This includes both quantitative and qualitative information and analysis basedon the Group’s historical experience and informed credit assessment, as well as forwardlooking information. The Group measures impairment at an amount equal to 12 monthECL when the credit risk of a financial asset has not increased significantly. It measuresimpairment at an amount equal to lifetime ECL when the credit risk of a financial assethas increased significantly. Impairment for accounts receivable and contract assets whichdo not contain a significant financing component are measured at an amount equal tolifetime ECL.

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

(Continued)

15


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

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

When determining whether the credit risk of a financial asset has increased significantlysince initial recognition, and when estimating ECL, the Group considers reasonable andsupportable information that is relevant and available without undue cost or effort. Thisincludes both quantitative and qualitative information and analysis based on the Group’shistorical experience and informed credit assessment, as well as forward lookinginformation.

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

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

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

5) Derecognition of financial assets

Financial assets are derecognized when the contractual rights to the cash flows from thefinancial assets expire, or when the Group transfers substantially all the risks andrewards of ownership of its financial assets or when the Group neither transfers norretains substantially all of the risks and rewards of ownership and it does not retaincontrol of the financial asset.

(ii) Financial liabilities

1) Classification of debt or equity

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

2) Equity instrument

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

(Continued)

16


3) Convertible bonds

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

The liability component of the convertible bonds is initially recognized at the fair valueof a similar liability that does not have an equity conversion option. The equitycomponent is initially recognized at the difference between the fair value of theconvertible bonds as a whole and the fair value of the liability component. Any directlyattributable transaction costs are allocated to the liability and equity components inproportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a convertible bonds ismeasured at amortized cost using the effective interest method. The equity component isnot remeasured.

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

4) Other financial liabilities

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

5) Derecognition of financial liabilities

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

6) Offsetting of financial assets and liabilities

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

(Continued)

17


(h) Inventories

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

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

(i) Property, plant and equipment

(i) Recognition and measurement

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

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

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

(ii) Subsequent cost

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

(iii) Depreciation

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

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

Buildings 10~20 yearsMachinery and equipment 5 yearsTransportation equipment 5 yearsOffice equipment 3~5 yearsLand improvement 5 years

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

(Continued)

18


(j) Lease

(i) As a leasee

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

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

The lease liability is initially measured at the present value of the lease payments that are notpaid at the commencement date discounted using the Group's incremental borrowing rate. Thelease liability is subsequently measured at amortized cost using the effective interest method.When the lease liability is remeasured, other than lease modifications, a correspondingadjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if thecarrying amount of the right-of-use asset has been reduced to zero.

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

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

(k) Intangible assets

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

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

(l) Impairment of non-financial assets

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

(Continued)

19


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

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

(m) Revenue

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

(n) Employee benefits

(i) Defined contribution plans

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

(ii) Defined benefit plans

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

(Continued)

20


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

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

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

(iii) Short-term employee benefits

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

(o) Share-based payment

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

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

(p) Income taxes

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

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

(Continued)

21


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

(i) temporary differences on the initial recognition of assets and liabilities in a transaction that isnot a business combination and that affects neither accounting nor taxable profits or losses atthe time of the transaction;

(ii) temporary differences related to investments in subsidiaries and joint arrangements to theextent that the Group is able to control the timing of the reversal of the temporary differencesand it is probable that they will not reverse in the foreseeable future; and

(iii) taxable temporary differences arising on the initial recognition of goodwill

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

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

(i) the Group has a legally enforceable right to set off current tax assets against current taxliabilities; and

(ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the sametaxation authority on tither:

1) the same taxable entity; or

2) different taxable entities which intend to settle current tax assets and liabilities on a netbasis, or to realize the assets and liabilities simultaneously, in each future period inwhich significant amounts of deferred tax liabilities or assets are expected to be settled orrecovered.

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

(q) Earnings per share

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

(Continued)

22


Diluted earnings per share is calculated as the profit attributable to ordinary shareholders of theCompany divided by the weighted average number of ordinary shares outstanding after adjustmentfor the effects of all potentially dilutive ordinary shares, such as employee compensation. TheGroup’ s dilutive potential ordinary shares include the estimation of employee remuneration andconvertible bonds.

(r) Operating segments

An operating segment is a component of the Group that engages in business activities from which itmay earn revenues and incur expenses (including revenues and expenses relating to transactions withother components of the Group). Operating results of the operating segment are regularly reviewedby the Group's chief operating decision maker to make decisions about resources to be allocated tothe segment and to assess its performance. Each operating segment consists of discrete financialinformation.

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

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

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

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

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

(6) Explanation of significant accounts:

(a) Cash and cash equivalents

　　　December 31,

2020December 31,

2019Cash $ 1,004 6,844Demand deposits 625,336 424,907Checking deposits 48 508Fixed deposits 47,869 30,500Cash and cash equivalents in consolidated statement of cash

flows$ 674,257 462,759

(Continued)

23


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

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

December 31,2020

December 31,2019

Financial assets at fair value through other comprehensiveincome:Unlisted stocks – foreign companies $ 882 12,200

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

(c) Trade receivables

December 31,2020

December 31,2019

Trade receivables $ 481,598 749,940Less: loss allowance (6,388) (17,626)

$ 475,210 732,314

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

The Group's analysis on the expected credit loss of its trade receivables in the region of Thailand asof December 31, 2020 and 2019 was as follows:

December 31, 2020

Book value oftrade receivables

Lifetimeexpected credit

loss rate (%)

Allowance forlifetime

expected creditloss

Not yet due $ 194,209 - -Past due 1~30 days 105,746 - -Past due 31~60 days 85,205 - -Past due 61~90 days 1 - -Over 1 year 5,219 100.00 5,219

$ 390,380 5,219

(Continued)

24


December 31, 2019



loss rate (%)


expected creditloss

Not yet due $ 552,982 - -Past due 1~30 days 94,745 - -Past due 91~180 days 462 8.31 38Past due 181~365 days 293 41.67 122Over 1 year 5,579 100.00 5,579

$ 654,061 5,739

The Group’ s analysis on the expected credit loss of its trade receivables in other regions as ofDecember 31, 2020 and 2019 was as follows:

December 31, 2020



loss rate (%)


expected creditloss

Not yet due $ 72,936 0.54 395Past due 1~30 days 16,509 2.23 368Past due 31~60 days 436 14.37 63Past due 91~180 days 389 44.53 173Past due 181~365 days 316 82.68 261Over 1 year 632 100.00 632

$ 91,218 1,892

December 31, 2019



loss rate (%)


expected creditloss

Not yet due $ 48,022 0.40 190Past due 1~30 days 36,513 1.59 582Past due 31~60 days 274 11.96 33Past due 61~90 days 349 21.16 74Past due 91~180 days 178 33.98 60Past due 181~365 days 218 57.42 125Over 1 year 10,325 100.00 10,325

$ 95,879 11,389

(Continued)

25


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

2020 2019Balance at the beginning $ 17,626 6,793Impairment losses recognized (reversed) (10,228) 10,337Foreign currency translation effects (1,010) 496Balance at the end $ 6,388 17,626

(d) Other receivables

December 31,2020

December 31,2019

Other receivables $ 22,145 1,647Less: loss allowance - -

$ 22,145 1,647

The Group did not have any past due other receivables as of December 31, 2020 and 2019.

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

(e) Inventories

December 31, 2020

Cost

Allowance fordevaluation

andobsolescence

Net realizablevalue

Raw materials $ 262,919 52,958 209,961Work in process 118,750 9,914 108,836Finished goods 25,454 8,063 17,391Supplies and spare parts 13,029 4,556 8,473

$ 420,152 75,491 344,661

December 31, 2019

Cost

Allowance fordevaluation

andobsolescence

Net realizablevalue

Raw materials $ 246,238 51,842 194,396Work in process 85,653 10,442 75,211Finished goods 20,083 5,107 14,976Supplies and spare parts 14,533 3,883 10,650

$ 366,507 71,274 295,233

(Continued)

26


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

2020 2019Beginning balances $ 71,274 69,849Provision (reversal) of the allowance for inventory

devaluation and obsolescence7,879 (2,550)

Foreign currency translation effects (3,662) 3,975Ending balances $ 75,491 71,274

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

2020 2019Loss (reversal gain) on the allowance for inventory

devaluation and obsolescence$ 7,879 (2,550)

Revenue from sales of scrap (24,982) (10,919)$ (17,103) (13,469)

As of December 31, 2020 and 2019, the Group did not pledge the inventories as collateral.

(f) Material non-controlling interests of subsidiaries

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

Main operation Percentage of non-

controlling interests

Subsidiaryplace/ country of

incorporationDecember31, 2020

December31, 2019

Regal Plating Co., Ltd. Thailand %49 %49

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

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

December 31,2020

December 31,2019

Current assets $ 300,936 303,083Non-current assets 41,405 26,743Current liabilities (21,564) (13,706)Non-current liabilities (1,160) (866)Net assets $ 319,617 315,254Non-controlling interests $ 156,612 154,474

(Continued)

27


2020 2019Sales revenue $ 416,658 517,506Net income (losses) $ 21,488 57,427Other comprehensive income (17,125) 22,272

$ 4,363 79,699Profit for current period attributable to non-controlling

interests$ 10,529 28,139

Total comprehensive income attributable to non-controllinginterests

$ 2,138 39,053

Net cash flows from operating activities $ 59,228 201,697Net cash flows used in investing activities (27,462) -Net cash flows used in financing activities - (292,920)Net increase (decrease) in cash and cash equivalents $ 31,766 (91,223)Dividends to non-controlling interests $ - (143,531)

(g) Property, plant and equipment

The cost, depreciation, and impairment losses of the property, plant and equipment of the Group forthe years ended December 31, 2020 and 2019, were as follows:

Land BuildingsMachinery and

equipmentTransportation

equipmentOffice

equipmentLand

improvementEquipment tobe inspected Total

Cost or deemed cost:

Balance at January 1, 2020 $ 176,420 250,613 318,581 31,308 139,353 10,948 548 927,771

Additions - 2,545 27,993 496 11,167 119 5,740 48,060

Disposals - - (22,118) (1,189) (6,554) (208) - (30,069)

Reclassification - - 2,039 - 247 - (2,286) -

Foreign currency translation effect (9,469) (13,435) (17,143) (1,682) (7,283) (588) (8) (49,608)

Balance at December 31, 2020 $ 166,951 239,723 309,352 28,933 136,930 10,271 3,994 896,154

Balance at January 1, 2019 $ 166,532 235,535 306,509 26,438 123,628 9,936 3,900 872,478

Additions - 1,069 14,566 5,255 10,042 419 4,202 35,553

Disposals - - (28,047) (1,986) (1,997) - - (32,030)

Reclassification - 13 7,414 2 324 - (7,753) -

Foreign currency translation effect 9,888 13,996 18,139 1,599 7,356 593 199 51,770

Balance at December 31, 2019 $ 176,420 250,613 318,581 31,308 139,353 10,948 548 927,771

Accumulated depreciation andimpairment losses:

Balance at January 1, 2020 $ - 172,846 263,947 19,645 112,841 10,446 - 579,725

Depreciation - 12,930 22,507 3,124 11,999 119 - 50,679

Disposals - - (22,008) (1,170) (6,406) (208) - (29,792)

Foreign currency translation effect - (9,196) (14,278) (1,047) (5,887) (561) - (30,969)

Balance at December 31, 2020 $ - 176,580 250,168 20,552 112,547 9,796 - 569,643

Balance at January 1, 2019 $ - 149,210 252,349 16,542 97,481 9,803 - 525,385

Depreciation - 14,644 23,163 3,357 11,481 60 - 52,705

Disposals - - (26,513) (1,255) (1,963) - - (29,731)

Foreign currency translation effect - 8,992 14,948 1,001 5,842 583 - 31,366

Balance at December 31, 2019 $ - 172,846 263,947 19,645 112,841 10,446 - 579,725

(Continued)

28


Land BuildingsMachinery and

equipmentTransportation

equipmentOffice

equipmentLand

improvementEquipment tobe inspected Total

Carrying amount:

Balance at December 31, 2020 $ 166,951 63,143 59,184 8,381 24,383 475 3,994 326,511

Balance at December 31, 2019 $ 176,420 77,767 54,634 11,663 26,512 502 548 348,046

Balance at January 1, 2019 $ 166,532 86,325 54,160 9,896 26,147 133 3,900 347,093

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

(h) Right-of-use assets

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

BuildingsCost:

Balance at January 1, 2020 $ 3,038Additions 2,668Disposals (3,032)Foreign currency translation effect (6)Balance at December 31, 2020 $ 2,668Balance at January 1, 2019 $ -Effects of retrospective application 3,083Balance at January 1, 2019 after adjustment 3,083Foreign currency translation effect (45)Balance at December 31, 2019 $ 3,038

Accumulated depreciation:Balance at January 1, 2020 $ 1,573Depreciation 1,052Disposals (2,029)Foreign currency translation effect (3)Balance at December 31, 2020 $ 593Balance at January 1, 2019 $ -Effects of retrospective application -Balance at January 1, 2019 after adjustment -Depreciation 1,603Foreign currency translation effect (30)Balance at December 31, 2019 $ 1,573Carrying amount:Balance at December 31, 2020 $ 2,075Balance at December 31, 2019 $ 1,465

(Continued)

29


(i) Intangible assets

The cost, amortization, and impairment losses of the intangible assets of the Group for the yearsended December 31, 2020 and 2019, were as follows:

Computersoftware Trademark Total

Costs:Balance at January 1, 2020 $ 87,652 857 88,509Additions 7,291 462 7,753Disposals (40) - (40)Reclassification (30,554) - (30,554)Foreign currency translation effect (4,813) (43) (4,856)Balance at December 31, 2020 $ 59,536 1,276 60,812Balance at January 1, 2019 $ 73,786 - 73,786Additions 9,454 849 10,303Foreign currency translation effect 4,412 8 4,420Balance at December 31, 2019 $ 87,652 857 88,509

Amortization and impairment loss:Balance at January 1, 2020 $ 48,145 - 48,145Amortization 3,082 12 3,094Disposals (7) - (7)Foreign currency translation effect (2,530) - (2,530)Balance at December 31, 2020 $ 48,690 12 48,702Balance at January 1, 2019 $ 40,192 - 40,192Amortization 5,544 - 5,544Foreign currency translation effect 2,409 - 2,409Balance at December 31, 2019 $ 48,145 - 48,145

Carrying amount:Balance at December 31, 2020 $ 10,846 1,264 12,110Balance at December 31, 2019 $ 39,507 857 40,364Balance at January 1, 2019 $ 33,594 - 33,594

(Continued)

30


(j) Short-term loans

December 31,2020

December 31,2019

Letters of credit $ 169,464 248,753Secured bank loans 200,676 444,312

$ 370,140 693,065Unused credit lines $ 1,785,427 1,481,013Interest rate (%) 0.96~2.1 1.25~2.8

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

(k) Corporate bonds payable

(i) The details of the Group's convertible bonds were as follows:

December 31,2020

Principal amount of convertible bonds $ 250,000

Less: discount on issuing convertible bonds (10,550)

Less: underwriting expense (5,070)

Add: amortization of discount on bonds payable 401

Ending balance of bonds payable $ 234,781

2020Embedded derivative financial instruments－remeasurment of call and

put options at fair value through profit and loss (recorded as financialliabilities at fair value through profit or loss)

$ 200

Interest expense $ 401

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

(Continued)

31


The Company issued its unsecured convertible bonds amounting to $251,250 thousand onDecember 3, 2020 upon the approval by the Financial Supervisory Commission on November11, 2020. The Company recognize liability and equity components of convertible bondsseparately as follows:

December 31,2020

Discounted present value of convertible bonds on the date of issuance $ 239,450

Embedded derivative financial instruments on the date of issuance (putoption and call option)

800

Equity component on the date of issuance (conversion option) 11,000

$ 251,250

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

Terms of issuing unsecured convertible bonds are as follows:

1) Coupon rate: 0%。

2) Duration period: 3 years (December 2, 2020, to December 2, 2023)

3) Repayment term: the bond are repayable in cash upon maturity of the bonds, except forthose which were repurchased by the Company, sold back to the Company, or convertedto common stock before maturity.

4) Conversion period: beginning from three month after the issuance date (March 3, 2021)until maturity (December 2, 2023), bondholders may convert the bonds into commonstock according to the conversion rate set in the agreement.

5) The Company's call option (right of redemption): beginning from three month after theissuance date (March 3, 2021) until 40 days before maturity (October 23, 2023), if thestock closing price exceeds 30% of the conversion price for 30 consecutive workingdays, or the remaining principal amount of bonds payable, which have not yet beenconverted into shares is lower than 10% of the total principal, the Company is entitled tosend a "bond redemption notification" to the bondholders and publish an announcementthrough the TPEx to exercise its call option.

6) Bondholders' put option: bondholders are entitled to exercise the put option on December2, 2022 with an exercise price at 101.0025% (annual yield rate of the put option is 0.5%)of the par value of the bonds. Upon receipt of a sell back request, the Company shall paythe amount to the bondholders by cheque or electronic transfer within 5 working days ofthe put date.

(Continued)

32


7) Conversion price and adjustment:

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

(ii) Nom-current financial liabilities measured at fair value through profit or loss are as follows:

December 31,2020

Embedded derivative financial instruments (put option and call option)

Balance at the beginning $ -

Addition in this period 800

Valuation loss in this period 200

$ 1,000

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

December 31,2020

Balance at the beginning $ -

Addition in this period 11,000

Less: underwriting expenses (233)

Balance at the ending $ 10,767

(Continued)

33


(l) Lease liabilities

December 31, 2020Future

minimum leasepayments Interests

Present valueof minimum

lease paymentsLess than one year $ 914 30 884Between one and five years 1,219 15 1,204

$ 2,133 45 2,088

Current $ 914 30 884

Non-current $ 1,219 15 1,204

December 31, 2019Future

minimum leasepayments Interests

Present valueof minimum

lease paymentsLess than one year $ 1,227 21 1,206Between one and five years 280 2 278

$ 1,507 23 1,484

Current $ 1,227 21 1,206

Non-current $ 280 2 278

The amounts recognized in profit or loss were as follows:

2020 2019Interests on lease liabilities $ 40 61

Expenses relating to short-term leases $ 1,426 655

Expenses relating to leases of low-value assets, excludingshort-term leases of low-value assets

$ 318 334

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

2020 2019Total cash outflow for leases $ 2,826 2,634

(i) Building leases

As of December 31, 2020, the Group leases buildings for its office space, which typically runfor a period of 1 to 2 years. Some leases include an option to renew the lease for an additionalperiod of the same duration after the end of the contract term.

(Continued)

34


(ii) Other leases

The Group also leases printers and other office equipment with contract terms of one to fiveyears. These leases are short-term leases or leases of low-value items. The Group has electednot to recognize its right-of-use assets and lease liabilities for these leases.

(m) Employee benefits

(i) Defined benefit plans

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

December 31,2020

December 31,2019

Net defined benefit liabilities $ 28,170 27,735

1) Movements in present value of the defined benefit obligations

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

2020 2019Defined benefit obligations at the beginning $ 27,735 29,495Current service costs and interest cost 2,680 6,910Remeasurements of the net defined benefit

liabilities－Actuarial gains and losses arising from

changes in adjustments based on experiences 8,351 (2,237)

－Actuarial gains and losses arising fromchanges in demographic assumptions

166 (9,976)

－Actuarial gains and losses arising fromchanges in financial assumptions

(342) 2,973

Past service costs - 2,357Effect of movements in exchange rates (1,528) 1,802Benefits paid (8,892) (3,589)Defined benefit obligations at December 31 $ 28,170 27,735

(Continued)

35


2) Expenses recognized in profit or loss

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

2020 2019Current service costs $ 2,421 5,838Net interest of net liabilities for defined benefit

obligations259 1,072

Past service costs - 2,357$ 2,680 9,267

Operating costs $ 1,504 5,583Administration expenses 1,176 3,684

$ 2,680 9,2673) Remeasurement of defined benefit liabilities recognized in other comprehensive income

The Group's remeasurements of the defined benefit liabilities recognized in othercomprehensive income for the years ended December 31, 2020 and 2019, were asfollows:

2020 2019Accumulated amounts at the beginning $ (6,741) (15,981)Amounts recognized during the period (8,175) 9,240Accumulated amounts at December 31 $ (14,916) (6,741)

4) Actuarial assumptions

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

December 31,2020

December 31,2019

Discount rate (monthly paid employees) 1.68%~1.97% 1.52%~1.71%Discount rate (daily paid employees) 1.98%~1.99% 1.50%~1.89%Future salary increase rate (monthly paid

employees)3.91% 4.26%

Future wages increase rate (daily paidemployees)

3.00% 2.86%

The expected payments to be made by the Group to the defined benefit plans for the one-year period after the reporting date is $4,242 thousand.

The weighted average lifetimes of the defined benefits plans for daily paid and monthlypaid employees are 17 years and 14 years, respectively.

(Continued)

36


5) Sensitivity analysis

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

Impact on defined benefitobligations

Increased 0.50%

Decreased0.50%

December 31, 2020Discount rate (changes: 0.50%) (760) 964Future salary increasing rate (changes: 0.50%) 503 (468)

December 31, 2019Discount rate (changes: 0.50%) (457) 864Future salary increasing rate (changes: 0.50%) 470 (438)

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

There is no change in the method and assumptions used in the preparation of sensitivityanalysis for 2020 and 2019.

(ii) Defined contribution plans

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

The pension costs incurred from the contributions to the Bureau of Labor Insurance amountedto $528 thousand and $280 thousand for the years ended December 31, 2020 and 2019,respectively.

(n) Income taxes

(i) The Company was incorporated in the Cayman Islands, where corporate income tax is notrequired to be paid. RJM, RGP, RMS, Linden and RGI’ s statutory income tax rate is 20%.GVG Hong Kong 's statutory income tax rate is 16.5%. GVG Shenzhen's statutory income taxrate is 25%.

(Continued)

37


(ii) The components of income tax in the years 2020 and 2019 were as follows:

2020 2019Current tax expense

Current period $ 29,981 24,724Deferred tax expenses (benefits)

Origination and reversal of temporary differences (3,335) (17,202)Income tax expense $ 26,646 7,522

Reconciliation of income tax and profit before tax for 2020 and 2019 was as follows:

2020 2019Profit (losses) excluding income tax $ 124,294 (110,848)Income tax using the statutory tax rate at each

jurisdictions$ 32,283 11,485

Estimated tax arising from subsidiary's earningdistribution

(3,535) (7,357)

Adjustment according to tax act (2,102) 3,394Total $ 26,646 7,522

(iii) Deferred tax assets and liabilities

1) Unrecognized deferred tax assets

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

December 31,2020

December 31,2019

The carryforward of unused tax losses $ - 24,281

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

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

As of December 31, 2020, RJM’ s tax losses that had not been recognized as deferredincome tax assets were fully deducted against the taxable income in 2020.

(Continued)

38


2) Recognized deferred tax assets and liabilities

Changes in the amount of deferred tax assets and liabilities for 2020 and 2019 were asfollow:

Deferred tax liabilities:

Taxableinvestment

incomeBalance at January 1, 2020 $ (38,902)Recognized in profit or loss 3,535Balance at December 31, 2020 $ (35,367)Balance at January 1, 2019 $ (56,609)Recognized in profit or loss 17,707Balance at December 31, 2019 $ (38,902)

Deferred tax assets:

Impairmentlosses on trade

receivables

Impairmentlosses on

inventories

Accruedpension

liabilities Others TotalBalance at January 1, 2020 $ 3,525 13,947 5,469 277 23,218

Recognized in profit or loss (2,046) 1,262 382 202 (200)

Effect of exchange rate changes (202) (741) (295) (9) (1,247)

Balance at December 31, 2020 $ 1,277 14,468 5,556 470 21,771

Balance at January 1, 2019 $ 1,359 13,669 5,821 1,549 22,398

Recognized in profit or loss 2,067 (529) (696) (1,347) (505)

Effect of exchange rate changes 99 807 344 75 1,325

Balance at December 31, 2019 $ 3,525 13,947 5,469 277 23,218

(iv) Examination and approval

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

In Thailand, where RJM, RGP, RMS, and Linden operates, the corporate income tax returnsare examined by the tax authority without issuing official approval certificates. Income taxespaid in prior years have received income tax receipts up to 2019. Corporate income tax returnssubmitted by GVG Hong Kong and GVG Shen Zhen had been approved by the revenuedepartment through 2019. Corporate income tax returns submitted by the Company’s Taiwanbranch RIC had been approved by the revenue department through 2018.

(Continued)

39


(o) Capital and other equity

Reconciliation of share outstanding for the years ended September 30, 2020 and 2019 was as follow:

Unit: thousand sharesCommon Stock

2020 2019Balance of outstanding shares on January 1 38,160 38,160Restricted shares vested in the year 113 -Balance of outstanding shares on December 31 38,273 38,160Restricted shares granted to employees at January 1 310 340Restricted shares vested in the year (113) -Restricted shares canceled (84) (30)Balance of restricted shares granted to employees onDecember 31

113 310

Balances of total shares issued on December 31 38,386 38,470

As of December 31, 2020 and 2019, the total value of authorized ordinary shares each amounted to$600,000 thousand, with a par value of $10 per share. There were $383,860 thousand and $384,700thousand ordinary shares issued at December 31, 2020 and 2019, respectively.

(i) Issuance of common stock

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

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

As of November 19, 2019, the Company recalled 70 thousand restricted shares due to theresignation of the employees, with a par value of $10 per share, and correspondingly adjustedits capital surplus－restricted shares to employees and employee's unearned remuneration for$3,766 thousand, respectively. A resolution was made by the Board of Directors on March 13,2020, to cancel the recalled shares, with the record date of the cancellation on March 17, 2020.The registration for the cancellation has been completed, resulting in adjusting capital surplus－restricted shares to employees for $700 thousand.

(Continued)

40


As of July 3, 2020, the Company recalled 14 thousand restricted shares due to the resignationof the employees, with a par value of $10 per share, and correspondingly adjusted its capitalsurplus－ restricted shares to employees and employee's unearned remuneration for $753thousand, respectively. A resolution was made by the Board of Directors on August 13, 2020,to cancel the recalled shares, with the record date of the cancellation on August 27, 2020. Theregistration for the cancellation has been completed, resulting in adjusting capital surplus－restricted shares to employees for $140 thousand.

(ii) Capital surplus

The balance of capital surplus was as follows:

December 31,2020

December 31,2019

Additional paid-in capital $ 418,370 418,370Restricted shares to employees 9,899 9,812Issuance of convertible bonds－stock options 10,767 -

$ 439,036 428,182

(iii) Retained earnings

According to the Company's Articles, if there are profits for the year, the profits should first beused to pay income tax; thereafter, offset the prior year’ s deficit, if any. Of the remainingbalance, 10% is to be appropriated as legal reserve. Any remainder will be allocated as specialsurplus reserve as required by the applicable securities authority of the ROC under theapplicable public company rules. The remaining profit, if any, after combining all or part of theaccumulated undistributed profits in the previous years and the reversed special surplusreserve, shall be allocated as dividends to the shareholders in proportion to their shareholdingsbased on the resolution approved during the board meeting. Subject to the law of CaymanIslands and the applicable public company rules, and unless otherwise resolved by the Boardand the shareholders, as well as after having considered the financial, business and operationalfactors of the Company, the dividends shall not be less than fifty percent (50%) of the profitafter tax of the relevant year. The distribution may be made by way of cash dividends or stockdividends, or a combination thereof, provided that, the cash dividends shall not be less than30% of the total amount of dividends payable.

1) Special reserve

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

(Continued)

41


2) Earnings distribution

Due to the net loss incurred by the Company in 2019, no earnings were distributed in2020 based on the resolution decided during the shareholders’ meeting held on June 17,2020.

2018TWD per share Total Amount

Dividends distributed to shareholders:Cash $ 4.000 154,000

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

Earnings distribution for 2020 was decided during the board meeting held on March 19,2021 as follow:

2020TWD per share Total Amount

Dividends distributed to shareholders:

Cash $ 0.500 19,193

The earnings distribution for 2020 will be decided at the shareholders’ meeting to be heldin June 2021.

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

(p) Share-based payment

Details on restricted shares are as follows:

Unit: thousand shares2020 2019

Number of shares on January 1 240 340Vested during the year (113) -Forfeited during the year (14) (100)Number of shares on December 31 113 240

The share-based payment costs for 2020 and 2019 were $4,292 thousand and $5,073 thousand,respectively; and the unvested share-based payments amounted to $1,750 thousand and $6,795thousand, respectively, which were recorded as reductions of other equity. Please refer to note 6(o)for the changes in share capital and other equity.

(Continued)

42


(q) Earnings per share

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

Unit: thousand shares2020 2019

Basic earnings (losses) per share:Net income (losses) attributable to common stocks $ 88,343 (146,304)Weighted-average number of common stocks outstanding 38,170 38,160Basic earnings (losses) per share (New Taiwan dollars) $ 2.31 (3.83)

Diluted earnings (losses) per share:Net income (losses) attributable to common stocks $ 88,343 (146,304)Potential dilutive effect on common stock

Interest expenses of convertible bonds 401 -Losses from remeasurement of financial liabilities at fair

value through profit or loss200 -

Net income (losses) attributable to common stocks $ 88,944 (146,304)Weighted-average number of common stocks outstanding 38,170 38,160Potential dilutive effect on common stocks

Conversion of convertible bonds 672 -Unvested restricted employee shares 52 -

Weighted-average number of common shares outstanding－diluted

38,894 38,160

Diluted earnings (losses) per share (New Taiwan dollars) $ 2.29 (3.83)

(r) Revenue from contracts with customers

(i) Disaggregation of revenue

2020 2019Primary geographical markets:

Thailand $ 888,254 1,105,299United States 330,576 240,936France 188,694 190,511United Kingdom 128,759 154,913Canada 97,232 -Other 132,042 117,638

$ 1,765,557 1,809,297

(Continued)

43


2020 2019Main product/service line

Designing, manufacturing and selling jewelry andgems

$ 1,631,729 1,432,918

Electroplating 133,828 376,379$ 1,765,557 1,809,297

(ii) Remaining balances of contracts

December 31,2020

December 31,2019

January 1,2019

Trade receivables $ 481,598 749,940 394,050Less: loss allowance (6,388) (17,626) (6,793)Total $ 475,210 732,314 387,257Contract liabilities (recorded as

other current liabilities)$ 3,663 997 -

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

The amounts of revenue recognized for the years ended December 31,2020 and 2019 that wereincluded in the contract liability balance at the beginning of the period were $866 thousand and$115 thousand, respectively.

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

(s) Employee compensation and directors' remuneration

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

Since the profit for this period shall be used to offset the Company's accumulated deficits, theCompany did not accrue any remunerations to its employees and directors for 2020. Also, theCompany did not accrue any remunerations to its employees and directors for 2019 because itsufferred a net loss before taxation.

(Continued)

44


(t) Non-operating income and expenses

(i) Interest income

The details of interest income were as follows:

2020 2019Interest income from bank deposits $ 643 3,399

(ii) Other income

The details of other income were as follows:

2020 2019Others $ 7,238 9,179

(iii) Other gains and losses

The details of other gains and losses were as follows:

2020 2019Gains (losses) on disposal of property, plant and

equipment$ 219 (1,568)

Losses on disposal of intangible assets (33) -Gains on lease modification 17 -Foreign exchange gains (losses), net 10,463 (13,865)Gains from financial assets at FVTPL - 343Losses from financial liabilities at FVTPL (200) -Others (270) (110)Total $ 10,196 (15,200)

(iv) Finance costs

The details of finance costs were as follows:

2020 2019Interest expenses on loans from banks $ 8,237 4,167Corporate bonds payable 401 -Interest expenses on lease liabilities 40 61

$ 8,678 4,228

(Continued)

45


(u) Financial instruments

(i) Credit risk

1) Risk exposure

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

2) Concentration of credit risk

The Group's exposure to credit risk is influenced mainly by the individual characteristicsof each customer. However, the management also considers the statistical information onthe Group's customer base, including the default risk of the industry and country in whichcustomers operate. These factors may have an influence on credit risk. The Group's tradereceivables were obviously concentrated on three main customers, which accounted for74% and 92% of the total amount of trade receivables as of December 31, 2020 and2019. As of December 31, 2020 and 2019 the Group's trade receivables concentrated onthree main customers were $353,248 thousand and $674,089 thousand, respectively.

3) Credit risk of receivables

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

(ii) Liquidity Risk

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

Carryingamount

Contractualcash flows

Less than 1year 1-2 years

More than 2years

December 31, 2020Non-derivative financial liabilities

Short-term loans $ 370,140 370,140 370,140 - -Payables 136,717 136,717 136,717 - -Lease liabilities 2,088 2,088 884 1,204 -Corporate bonds payable

(including embedded derivativefinancial instruments)

235,781 235,781 - - 235,781

Guarantee deposits received 3,801 3,801 - - 3,801$ 748,527 748,527 507,741 1,204 239,582

(Continued)

46


Carryingamount

Contractualcash flows

Less than 1year 1-2 years

More than 2years

December 31, 2019Non-derivative financial liabilities

Short-term loans $ 693,065 693,065 693,065 - -Payables 116,720 116,720 116,720 - -Lease liabilities 1,484 1,484 1,206 278 -Guarantee deposits received 3,814 3,814 - - 3,814

$ 815,083 815,083 810,991 278 3,814

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

(iii) Currency risk

1) Currency risk exposure

The Group's significant exposure to foreign currency risk was as follows:December 31, 2020 December 31, 2019

Foreign currency

(in thousands) Exchange rate Amount

Foreigncurrency

(in thousands) Exchange rate AmountFinancial assets

Monetary items

USD $ 19,170 28.48 545,973 13,580 29.98 407,138

Financial liabilities

Monetary items

USD 2,570 28.48 73,185 2,127 29.98 63,782

2) Sensitivity analysis

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

A strengthening (weakening) of the TWD against the USD for 1% as of December 31,2020 and 2019, would have decreased (increased) profit (losses) before tax for the yearsended December 31, 2020 and 2019, by $4,728 thousand and $3,434 thousand,respectively. The analysis is performed on the same basis for the prior year.

3) Exchange gains and losses of monetary items

Due to the different types of functional currency of the Group, the Group discloses itsexchange gains and losses of monetary items aggregately. The Company's exchange gain(loss), including realized and unrealized, were $10,463 thousand and $(13,865) thousandfor the years ended December 31, 2020 and 2019, respectively.

(Continued)

47


(iv) Interest rate analysis

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

If the interest rate had increased / decreased by 1%, the Group's profit (losses) before taxwould have decreased / increased by $3,701 thousand and $6,931 thousand for the years endedDecember 31, 2020 and 2019 with all other variable factors remaining constant. This wasmainly due to the Group's borrowing at variable rate.

(v) Fair value information

1) Categories and fair value of financial instruments

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

December 31, 2020Carrying Fair valueamount Level 1 Level 2 Level 3 Total

Financial assets at fairvalue through othercomprehensive incomeUnlisted equity

instruments measuredat fair value

$ 882 - - 882 882

Financial assets measuredat amortized costCash and cash

equivalents674,257 - - - -

Trade receivables 475,210 - - - -Other receivables 22,145 - - - -Other financial assets－non-current

9,698 - - - -

Subtotal 1,181,310 - - - -Total $ 1,182,192 - - 882 882Financial liabilities

measured at fair valuethrough profit or lossConversion and call

options of corporatebonds

$ 1,000 - - 1,000 1,000

(Continued)

48



Financial liabilitiesmeasured at amortizedcostShort-term loans $ 370,140 - - - -Notes and accounts

payables31,235 - - - -

Other payables 105,482 - - - -Lease liabilities 2,088 - - - -Corporate bonds

payable234,781 - - - -

Guarantee depositsreceived

3,801 - - - -

Subtotal 747,527 - - - -Total $ 748,527 - - 1,000 1,000


Financial assets at fairvalue through othercomprehensive incomeUnlisted equity

instuments measuredat fair value throughprofit or loss

$ 12,200 - - 12,200 12,200

Financial assets measuredat amortized costCash and cash

equivalents462,759 - - - -

Trade receivables 732,314 - - - -Other receivables 1,647 - - - -Other financial assets－non-current

10,308 - - - -

Subtotal 1,207,028 - - - -Total $ 1,219,228 - - 12,200 12,200

(Continued)

49



Financial liabilitiesmeasured at amortizedcostShort-term loans $ 693,065 - - - -Notes and accounts

payables57,544 - - - -

Other payables 59,176 - - - -Lease liabilities 1,484 - - - -Guarantee deposits

received3,814 - - - -

Total $ 815,083 - - - -

2) The Group seeks to use market observable inputs when measuring the fair values ofassets and liabilities. Different levels of the fair value hierarchy to be used in determiningthe fair value of financial instruments are as follows:

‧ Level 1: quoted prices (unadjusted) in active markets for identical assets orliabilities.

‧ Level 2: inputs other than quoted prices included within Level 1 that are observablefor the asset or liability, either directly (i.e. such as prices) or indirectly (i.e.derived from calculation of prices).

‧ Level 3: inputs for the assets or liability that are not based on observable marketdata (unobservable inputs).

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

The fair value of unlisted equity instruments is estimated and calculated by using thediscounted cash flow method on an assumption that the fair values are the present valueof the future cash flows that the investee companies expect to produce, using the discountrate which reflects the time value of money and the investment risk premium.

4) Derivative financial instruments evaluation

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

(Continued)

50


5) Reconciliation of Level 3 fair values

Unlisted equityinstruments

Balance at January 1, 2020 $ 12,200　Impairment (11,318)Balance at December 31, 2020 $ 882Balance at January 1, 2019 $ -Purchase 12,200Balance at December 31, 2019 $ 12,200

6) Quantified information on significant unobservable inputs (Level 3) used in fair valuemeasurement

Quantified information of significant unobservable inputs was as follows:

ItemValuationtechnique

Significant unobservable inputs

Inter-relationshipbetween significant unobservable inputs

and fair valuemeasurement

Financial assets atfair value throughothercomprehensiveincome－equityinvestments withoutan active market

ComparablescompantyMethod

‧Discount for lack ofmarketability.

The estimated fair valuewould decrease ifliquidity discountwere higher

7) Fair value measurements in Level 3－ sensitivity analysis of reasonably possiblealternative assumptions

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

(Continued)

51


(v) Financial risk management

(i) Overview

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

1) credit risk

2) liquidity risk

3) market risk

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

(ii) Structure of risk management

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

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

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

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

(iii) Credit risk

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

1) Trade and other receivable

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

(Continued)

52


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

2) Investments

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

3) Guarantees

The Group's policy is to provide endorsements and guarantees only to counter partieswho meet the requirements in the Group's Regulations Governing Making Endorsements/Guarantees. As of December 31, 2020 and 2019, the endorsement and guaranteesprovided by the Group were both $0 thousand.

(iv) Liquidity risk

The finance management committee monitors working capital demand based on forecasts. TheGroup maintains sufficient fund to fulfill operational requirements and retain sufficient creditline to avoid violation of related terms and conditions. The forecast is in consideration offinance project and compliance with the terms of loan agreements. Besides, as of December31, 2020 and 2019, the Group’s unused credit line were $1,533,670 thousand and $1,525,983thousand, respectively.

(v) Market risk

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

1) Currency risk

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

(Continued)

53


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

2) Interest rate risk

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

3) Other price risk

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

(w) Capital management

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

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

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

The Group's collective quantitative data is as follows:

December 31,2020

December 31,2019

Total liabilities $ 846,563 913,985Total equity $ 1,084,262 1,047,013Debt-to-equity ratio %78.08 %87.29

As of December 31, 2020, there were no changes in the Group’s approach to manage capital.

(Continued)

54


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

Reconciliation of liabilities arising from financing activities was as follows:

Non-cash changes

January 1,2020 Cash flows

Addition /cancellationof contracts

Issuance ofcorporate

bondsDiscount

amortization

Foreignexchangemovement

December31, 2020

Short-term loans $ 693,065 (286,317) - - - (36,608) 370,140

Lease liabilities 1,484 (1,042) 1,648 - - (2) 2,088Corporate bonds payable - 245,930 - (11,550) 401 - 234,781Total liabilities from financing

activities$ 694,549 (41,429) 1,648 (11,550) 401 (36,610) 607,009

Non-cash changes

January 1, 2019 Cash flowsForeign exchange

movement December 31, 2019Short-term loans $ - 687,305 5,760 693,065Lease liabilities 3,083 (1,584) (15) 1,484Total liabilities from

financing activities$ 3,083 685,721 5,745 694,549

(7) Related-party transactions:

Key management personnel compensation comprised:

2020 2019Short-term employee benefits $ 17,449 16,354Post-employment benefits 372 384

$ 17,821 16,738

(8) Pledged assets:

The carrying amounts of pledged assets were as follows:

Pledged assets Object December 31,

2020December 31,

2019Other current assets: Restricted bank deposits Please refer to 4(c)

(Note 1)$ - 6,027

Property, plant and equipment:Land Short-term loans 166,951 176,420Buildings Short-term loans 29,073 38,905

Other financial assets－non-current:Refundable deposits Guarantee for

electricity supply andfuel cards

4,527 4,730

$ 200,551 226,082

(Continued)

55


(9) Commitments and contingencies:

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

December 31,2020

December 31,2019

Electricity guarantee $ 4,269 4,460

(10) Losses due to major disasters: None

(11) Subsequent events: None

(12) Other:

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

Function 2020 2019

AccountOperating

costOperatingexpenses Total

Operatingcost

Operatingexpenses Total

Personnel costsSalaries 414,429 159,190 573,619 427,188 169,839 597,027Health insurance - 530 530 - 546 546Pension 1,504 1,704 3,208 5,583 3,964 9,547Remuneration of

director- - - - 3,860 3,860

Other personnelexpense

12,929 14,261 27,190 17,610 25,821 43,431

Depreciation 32,893 18,838 51,731 35,273 19,035 54,308Depletion - - - - - -Amortization 1,042 2,052 3,094 1,127 4,417 5,544

(Continued)

56


(13) Other disclosures:

(a) Information on significant transactions:

The following were the information on significant transactions required by the "Regulations Governing the Preparation ofFinancial Reports by Securities Issuers" for the Group for the year ended December 31, 2020:

(i) Lending to other parties:

(In Thousands of New Taiwan Dollars)

Number Name of Name of Account Related

Maximumbalance offinancingto otherparties

during theperiod

Endingbalance

Actualusage

amountduring the

Range ofinterest

ratesduring the

Purposesof fund

financingfor the

borrower

Transactionamount for

businessbetween two

Reasonsfor

short-term

Allowancefor bad Collateral

Individualfunding

loanlimits

Maximumlimit of

fundfinancing

(note 1) lender borrower name party (note 4) (note 5) period period (note 2) parties financing debt Item Value (note 3) (note 3)0 The

CompanyGVG ShenZhen

Receivablefromrelatedparty

Yes 177,062 177,062 177,062 1.68 2 - Operatingcapital

- - - 185,329 370,658

Note 1: The number representation as follows:

1. No.0 represents the Company.

2. No.1 and thereafter represent the subsidiary companies.

Note 2: The nature of financing is classified as follows:

1. No.1 represents the business-related

2. No.2 represents the short-term financing

Note 3: For business-related, the total amount available for lending shall not exceed 40% of the amount of the net value of the Company. The total amount for lending to a company shall not exceedthe amount of inter-company's sales or purchase, whichever is higher.For short-term financing, the total amount available for lending shall not exceed 40% of the amount of the net value of the Company. The total amount for lending to a company shall notexceed 20% of the amount of the net value of the Company.The net value of the Company is in accordance with its latest financial statements.

Note 4: The maximum balance of financing to other parties beginning from the reporting period to the month the Company issued its financial statements.

(ii) Guarantees and endorsements for other parties: None

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

Category and Ending balance

Name of holdername of security

Relationshipwith company Account

Shares/Units(thousands) Carrying value

Percentage ofownership (%) Fair value Note

RGI SELF PICK INC. - Non-currentfinancial assets atfair value throughother comprehensiveincome

2,400 575 14.57 575

RGI SELF TOKEN INC. - Non-currentfinancial assets atfair value throughother comprehensiveincome

500 307 6.25 307

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

(v) Information on acquisition of real estate with purchase amount exceeding 300 million or 20% of the Company’s paid-incapital: None

(vi) Information regarding receivables from disposal of real estate exceeding 300 million or 20% of the Company’ s paid-incapital: None

(Continued)

57


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

Transaction detailsTransactions in terms other

than the regular termsNote and accounts receivable

(payable)

Name ofcompany Counterparty

Nature ofrelationship Purchase/Sale Amount

Percentage oftotal purchases

(sales)(%)Credit terms

(days) Unit price Payment terms

Ending balanceof notes and

accountsreceivable(payable)

Percentage of totalnotes and accounts

receivable(payable) Note

RGP RJM RJM'ssubsidiary

Sales (282,829) 49.59 45~60 days Note 1 - 57,364 52.45 Note 2

Note 1: The price was determined by mutual agreements.

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

(viii) Information regarding receivables from related-parties exceeding 100 million or 20% of the Company’s paid-in capital:

Name of Nature of Ending Turnoverrate (%) Overdue

Amounts receivedin subsequent Allowance

company Counter-party relationship balance (Note 2) (Note 3) Amount Action taken period (Note 1) for bad debtsThe Company RJM RJM' subsidiary 177,184 - - - -

Note 1: For period ended March 19, 2021.

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

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

(ix) Information regarding trading in derivative financial instruments: please refer to note 6(k).

(x) Significant transactions and business relationship between the parent company and its subsidiaries for the year endedDecember 31, 2020:

Nature of Intercompany transactionsNo.

(note 1)Name of company Name of counter-party relationship

(note 2)Account Amount Trading terms Percentage of the consolidated

net revenue or total assets1 RGP RJM 1 Sales 282,829 The price calculation

is made by the consentof the both parties.

16.02%

1 RGP RJM 1 Trade receivables 57,364 45~60 days 2.84%2 The Company RJM 2 Other receivables 177,184 The duration is one

year, and the annualinterest rates is at1.68%

9.18%

Note 1: Company numbering as follow:

No.1 represents RGP.

No.2 represents The Company.

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

No.1 represents a subsidiary to the parent company.

No.2 represents the parent company to a subsidiary.

Note 3: The account should be disclosed if the amount is over 1% of the total assets from the statement of financial position and total operating revenue from thestatement of comprehensive income.

(Continued)

58


(b) Related information on investee companies:

The following is the information on investees for the year ended December 31, 2020 (excluding information on investees inChina):

(In Thousands of New Taiwan Dollars)Main Original investment amount Balance as of December 31, 2020 Net income Share of

Name ofinvestor

Name ofinvestee Location businesses and products

December 31,2020

December 31,2019

Shares(thousands)

Percentage ofownership

Carryingvalue

(note 1)

(losses)of investee

(note 1)

profits/losses ofinvestee(note 1) Note

The Company RJM Thailand Designing, Manufacturing andSelling jewelry and gems

300,000 300,000 4,549,998 %99.99 988,862 149,709 149,709 Eliminated in theconsolidated financialstatements

The Company GVG HongKong

Hong Kong Investment activities 38,971 31,605 5,900,000 %100.00 3,365 (2,427) (2,427) 〞

The Company RMS Thailand Investment activities 15,230 9,560 3,996,000 %99.99 3,339 (8,414) (8,414) 〞

The Company Chaporo Seychelles Investment activities 154 154 3,500,000 %70.00 70 (40) (40) 〞

The Company RGI Taiwan Selling jewelry and gems 45,000 25,000 4,500,000 %100.00 20,360 (12,125) (12,125)RJM RGP Thailand Plating jewelry and gems 11,647 11,647 127,500 %51.00 162,819 21,488 11,025

(note 2)〞

RJM Linden Thailand Selling jewelry and gems 2,335 2,335 245,000 %49.00 964 (2,400) (1,176) 〞

Note 1: Investment gains (losses) have been recognized based on the financial statements of the investee companies audited by the Company's auditor.

Note 2: The investment gains included the inter-company gross profit amounting to $33 thousand.

(c) Information on investment in China:

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

(In Thousands of New Taiwan Dollars)

Accumulated outflow of Investment amount

remitted or recoveredCumulated

investment amountCurrentprofit of

Shareholdingratio of direct Book value of

Name of investee

Major business project

Paid-inCapital

InvestmentMethod (note 1)

Cumulated investment amountremitted from Taiwan at

beginning of period Remittance Recovery

remitted fromTaiwan at end of

period

investeecompany(note 3)

or indirectinvestment ofthe company

Investmentgains or losses(note 2 and 3)

investment atend of year

(note 2 and 3)

Accumulatedinvestment

income remittedGVG (ShenZhen

Selling jewelryand gems

CNY 8,100 2 (note 4) (note 4) (note 4) (note 4) (2,290) %100.00 (2,290) 3,429 -

Note1: Investment methods are divided into the following three kinds:

(1) Invest in China directly

(2) Invest in GVG Hong Kong, and then invest in China

(3) Other methods

Note 2: Long-term investment at the period end and investment gains or losses have been eliminated in the preparation of the consolidated financial statements.

Note 3: Financial statements of the investee company were reviewed by the auditors of the Company. Those investment gains (losses) have been recognized based on the financial statements of the investee company.

Note 4: The Company is not a Taiwan registered company, so no investment amount is shown.

(ii) Limitation on investment in China: Not applicable

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

(Continued)

59


(d) Major shareholders:

ShareholdingShareholder’s Name Shares Percentage

Solar Jewelers Group Corp. 13,760,000 %35.84Bank SinoPac as Custodian for Arianna Investment Co.,

Ltd. Investment Account2,549,559 %6.64

Note (1)The major shareholder information in the table above contains a listing of shareholderswith 5% or more ownership of the Company. The ownership information was calculated byTaiwan Depository & Clearing Corporation at the last trading date in each quarter usingthe number of common shares (including treasury stocks) and preferred shares issued inscripless form. There might be a difference between share capital on the financial reportand the actual share that have completed non-physical delivered due to different basis ofcalculation.

Note: (2)Shareholders who transferred their shares to trustees are disclosed by each settlor of thetrustee accounts. The ownership information disclosed by shareholders with ownershipabove 10% include their own shares and those shares that they transfer to trustees whileretains the power to decide the allocation of trust property. Information on insiderownership declaration is available on the Market Observation Post System website.

(14) Segment information:

(a) General information

The Group has two reportable segments: manufacturing and selling gems and jewelry departmentand electro-plating department. The Group did not allocate income tax expense to reportablesegments. Each reportable segment profit or loss included depreciation expenses, amortizationexpenses, and all other significant non-cash items. The reportable amount is consistent with that inthe report used by the chief operating decision maker. The accounting policies of the operatingsegments are the same as described in note (4) significant accounting policies. The Group's operatingsegments' profits and losses are measured based on the income before income tax, and used as thebasis for assessing the segments' performance. Adjustments and eliminations mainly arose frominter-segment transaction.

(Continued)

60


2020Manufacturing

and sellinggems andjewelry

department

Electro-plating

department

Adjustmentsand

eliminations TotalRevenue:

Revenue from external customers $ 1,631,729 133,828 - 1,765,557Revenue from transactions with other operating

segments- 282,829 (282,829) -

Interest income 458 185 - 643Total revenue $ 1,632,187 416,842 (282,829) 1,766,200Interest expense $ 8,678 - - 8,678Depreciation and amortization $ 43,341 11,484 - 54,825Reportable segment profit or loss $ 97,235 27,059 - 124,294

2019Manufacturing

and sellinggems andjewelry

department

Electro-plating

department

Adjustmentsand

eliminations TotalRevenue:

Revenue from external customers $ 1,432,918 376,379 - 1,809,297Revenue from transactions with other operating

segments- 141,127 (141,127) -

Interest income 1,717 1,682 - 3,399Total revenue $ 1,434,635 519,188 (141,127) 1,812,696Interest expense $ 4,228 - - 4,228Depreciation and amortization $ 51,137 8,715 - 59,852Reportable segment profit or loss $ (168,275) 57,427 - (110,848)

For the years ended December 31, 2020 and 2019, the adjustments and eliminations of operatingsegments were (282,829) thousand and (141,127) thousand, respectively.

(b) Product and service information

For the details refer to note 6(s).

(Continued)

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(c) Geographic information

In presenting information on the basis of geography, segment revenue is based on the geographicallocation of customers and segment assets are based on the geographical location of the assets.

Revenue from external customers: please refer to notes 6(s).

Non-current assets:

Geographical informationDecember 31,

2020December 31,

2019Thailand $ 336,864 387,945

Other countries 3,832 1,930

Total $ 340,696 389,875

Non-current assets include property, plant and equipment, and intangible assets excluding non-current financial assets at fair value through other comprehensive income, deferred tax assets andother financial assets－non-current.

(d) Major customers

2020 2019Customer D from manufacturing and selling jewelry and

gems department $ 739,010 702,276

Customer D from electro-plating department 114,158 376,103Customer E from manufacturing and selling jewelry and

gems department188,773 188,412

$ 1,041,941 1,266,791

REGAL HOLDING CO., LTD. AND SUBSIDIARIES

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