AEC — Annual Report 2020

Nov 11, 2020

Stock code: 1514

Allis Electric Co., Ltd.

Parent Company Only Financial Statements for the Years Ended December 31, 2020 and 2019 (With Auditors' Report Thereon)

12F., No. 19-11, Sanchong Rd., Taipei

TEL:(02)26553456 FAX:(02)26553388

The independent auditors’ report and the accompanying parent company only financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and parent company only financial statements shall prevail.

Allis Electric Co., Ltd. Table of Contents

Contents I. Cover page II. Table of Contents III. Independent Auditors’ Report IV. Parent Company Only Balance Sheets V. Parent Company Only Statements of Comprehensive Income VI. Parent Company Only Statements of Changes in Equity VII. Parent Company Only Statements of Cash Flows VIII. Notes to the Parent Company Only Financial Statements 1. General 2. Approval Date and Procedures of the Financial Statements 3. Application of New, Amended and Revised Standards and Interpretations 4. Summary of Significant Accounting Policies 5. Critical Accounting Judgments and Key Sources of Estimation Uncertainty 6. Significant Accounts Disclosures 7. Transactions with Related Parties 8. Pledged Assets 9. Significant Contingent Liabilities and Unrecognized Commitments 10. Significant Loss from Disasters 11. Significant Subsequent Events 12. Others 13. Additional Disclosures (1) Information on Significant Transactions (2) Information on Investees (3) Information on Investment in Mainland China (4) Information of Major Shareholder IX. The Contents of Statements of Major Accounting Items

Page

I～IV 1 2 3 4～5 6 6 6～7 7～17 17 17～42 42～45 45 45~46 － － － 46、48~53 46、54 46~47、55 47 56~74

Earnest & Co., CPAs.

惠眾聯合會計師事務所
台北市堤頂大道二段501 號4 樓
TEL:(02)87519698   FAX:(02)87515658

4F., No.501, Sec.2, Tiding Blvd., Taipei, Taiwan (R.O.C)

INDEPENDENT AUDITORS’ REPORT

Allis Electric Co., Ltd.

Opinion

We have audited the accompanying parent company only financial statements of Allis Electric Co., Ltd., which comprise the parent company only balance sheets as of December 31, 2020 and 2019, and the parent company only statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors (refer to Other Matter section), the parent company only financial statements referred to above present fairly, in all material respects, the parent company only financial position of Allis Electric Ltd. as of December 31, 2020 and 2019, and its parent company only financial performance and its parent company only cash flows for the years then ended, in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements section of our report. We are independent of Allis Electric Ltd. in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The descriptions of the key audit matters of the parent company only financial statements for the year ended December 31, 2020 are as follows:

Revenue Recognition

Please refer to Note 4(16) of the parent company only financial statements for the accounting policies on revenue recognition.

Because revenue is high-risk in nature and parts of goods are customized, revenue recognition was identified as one of the key audit matters.

We have obtained understanding and have verified the accounting policy and the design and implementation of internal controls with respect to revenue recognition. We checked the

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compliance with the accounting policy on revenue recognition by reviewing the relevant documents. For ensuring Allis Electric Ltd.’s compliance with IFRS 15, samples from the recognized revenue have been selected to test if the conditions of revenue recognition were met.

Estimated Impairment of Accounts Receivable

Please refer to Note 4(6) of the parent company only financial statements for the accounting policies on impairment of accounts receivables and Note 5 of the parent company only financial statements for uncertainty of accounting estimation and assumptions for the estimated impairment of accounts receivable.

Because of measuring expected credit losses on accounts receivable involve significant judgments and uncertainties, the estimated impairment of accounts receivables was identified as one of the key audit matters.

We evaluated the reasonableness of allowance for impairment loss by testing the aging of accounts receivables and by quantifying the potential risk of accounts receivables that were overdue at the balance sheet date. We tested the recoverability of the accounts receivables by vouching cash receipts after the balance sheet date. For the estimated impairment of accounts receivable, we evaluated the adequacy of management’s provision for impairment based on customers’ past default experience, current financial position, any collateral pledged, existing market conditions as well as forward looking estimates.

Other Matter

We did not audit the financial statements of certain investee companies as of and for the years ended December 31, 2020 and 2019, which reflected in the parent company only financial statements using the equity of accounting, but such financial statements were audited by other auditors whose reports have been furnished to us. Thus, our opinion, insofar as it relates to the amounts included in Allis Electric Ltd.’s parent company only financial statements for such investee companies, is based solely on the reports of other auditors. As of December 31, 2020 and 2019, the aforementioned investment accounted for using equity method were NT$328,682 thousand and NT$276,015 thousand, respectively, which represented 5.56% and 4.89%, respectively, of the total assets. Allis Electric Ltd.’s share of comprehensive income or loss of such investee companies were NT$41,216 thousand and NT$47,615 thousand for the years ended December 31, 2020 and 2019, respectively, which represented 11.08% and 14.09%, respectively, of total comprehensive income.

Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial Statements

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

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

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

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Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements

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

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

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

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

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

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

5. Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within Allis Electric Ltd. to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision, and performance of the audit. We remain solely responsible for our audit opinion.

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

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

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where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements for the year ended December 31, 2020 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Min-Chih Chuo and Wen-Ting Hsiang.

Earnest & Co., CPAs. Taipei, Taiwan Republic of China

March 30, 2021

Notice to Readers

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

For the convenience of readers, the auditors’ report and the accompanying parent company only financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and parent company only financial statements shall prevail.

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Allis Electric Co., Ltd. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS 1100 Cash and cash equivalents 1120 Financial assets at fair value through other comprehensive income 1140 Contract assets 1150 Notes receivable, net 1160 Notes receivable from related parties 1170 Accounts receivable, net 1180 Accounts receivable from related parties 1200 Other receivables 1310 Inventories 1410 Prepayments 1479 Other current assets 11xx Total current assets NON-CURRENT ASSETS 1517 Financial assets at fair value through other comprehensive income 1550 Investments accounted for using equity method 1600 Property, plant and equipment 1755 Right-of-use assets 1760 Investment properties 1780 Intangible assets 1840 Deferred tax assets 1915 Prepayments for equipment 1920 Refundable deposits 1980 Other receivables 1990 Other non-current assets 15xx Total non-current assets 1xxx TOTAL ASSETS	Notes Note 4 and 6 Note 4 and 6 Note 4 Note 4 and 6 Note 7 Note 4 and 6 Note 6 and 7 Note 4, 6,7 and 8 Note 4 and 6 Note 7 Note 6 Note 4 and 6 Note 4 and 6 Note 4, 6 and 8 Note 4 and 6 Note 4, 6 and 8 Note 4 and 6 Note 4 and 6 Note 6 Note 6	2020.12.31 Amount % $ 455,866 7.71 144 0.00 106,581 1.80 63,892 1.08 613 0.01 1,752,953 29.64 65,678 1.11 147,191 2.49 941,782 15.92 34,758 0.59 175 0.00 3,569,633 60.35 225,560 3.81 661,248 11.18 974,161 16.47 8,954 0.15 357,850 6.05 8,061 0.14 17,523 0.30 － － 44,921 0.77 36,530 0.62 9,748 0.16 2,344,556 39.65 $ 5,914,189 100.00	2019.12.31 Amount % $ 264,767 4.69 171 0.00 235,722 4.17 79,386 1.41 5,094 0.09 1,426,799 25.26 33,098 0.59 250,549 4.44 1,145,947 20.29 29,301 0.52 24 0.00 3,470,858 61.46 166,839 2.95 607,226 10.75 902,016 15.98 13,579 0.24 359,999 6.37 9,965 0.17 20,461 0.36 6,131 0.12 41,453 0.73 38,987 0.69 9,748 0.18 2,176,404 38.54 $ 5,647,262 100.00	LIABILITIES AND EQUITY CURRENT LIABILITIES 2100 Short-term loans 2120 Financial liabilities at fair value through profit or loss 2130 Contract liabilities 2170 Accounts payable 2180 Accounts payable to related parties 2200 Other payables 2230 Current tax liabilities 2250 Provisions 2255 Short-term onerous contracts provision 2280 Lease liabilities 2399 Other current liabilities 21xx Total current liabilities NON-CURRENT LIABILITIES 2540 Long-term loans 2571 Deferred tax liabilities-land value increment tax 2580 Lease liabilities 2640 Net defined benefit liabilities 2645 Guarantee deposits 25xx Total non-current liabilities 2xxx Total liabilities EQUITY 3100 Share capital 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated earnings 3300 Total retained earnings 3400 Other equity 3500 Treasury Stock 3xxx Total equity TOTAL LIABILITIES AND EQUITY	Notes Note 6 Note 4 and 6 Note 4 Note 7 Note 7 Note 4 Note 4 and 6 Note 4 Note 6 Note 4 Note 4 and 6 Note 6	2020.12.31 Amount ％ $ 735,000 12.43 1,775 0.03 200,719 3.39 991,043 16.76 162,846 2.75 205,100 3.47 28,018 0.47 12,100 0.20 1,633 0.03 2,827 0.05 712 0.01 2,341,773 39.59 47,000 0.80 174,220 2.95 6,293 0.11 80,448 1.35 3,298 0.06 311,259 5.27 2,653,032 44.86 2,174,540 36.77 68,870 1.16 132,753 2.24 452,190 7.65 393,242 6.65 978,185 16.54 81,178 1.37 (41,616) (0.70) 3,261,157 55.14 $ 5,914,189 100.00	2019.12.31 Amount ％ $ 738,038 13.07 － － 204,638 3.63 1,068,283 18.91 117,340 2.08 176,600 3.13 13,325 0.23 12,100 0.21 8,537 0.14 4,584 0.08 961 0.02 2,344,406 41.50 － － 174,220 3.09 9,120 0.16 83,525 1.49 3,382 0.06 270,247 4.80 2,614,653 46.30 2,070,990 36.67 67,172 1.18 102,580 1.82 452,994 8.02 328,398 5.82 883,972 15.66 52,091 0.93 (41,616) (0.74 ) 3,032,609 53.70 $ 5,647,262 100.00
		Amount $ 455,866 144 106,581 63,892 613 1,752,953 65,678 147,191 941,782 34,758 175 3,569,633 225,560 661,248 974,161 8,954 357,850 8,061 17,523 － 44,921 36,530 9,748 2,344,556 $ 5,914,189	Amount $ 264,767 171 235,722 79,386 5,094 1,426,799 33,098 250,549 1,145,947 29,301 24 3,470,858 166,839 607,226 902,016 13,579 359,999 9,965 20,461 6,131 41,453 38,987 9,748 2,176,404 $ 5,647,262			Amount $ 735,000 1,775 200,719 991,043 162,846 205,100 28,018 12,100 1,633 2,827 712 2,341,773 47,000 174,220 6,293 80,448 3,298 311,259 2,653,032 2,174,540 68,870 132,753 452,190 393,242 978,185 81,178 (41,616) 3,261,157 $ 5,914,189	Amount $ 738,038 － 204,638 1,068,283 117,340 176,600 13,325 12,100 8,537 4,584 961 2,344,406 － 174,220 9,120 83,525 3,382 270,247 2,614,653 2,070,990 67,172 102,580 452,994 328,398 883,972 52,091 (41,616) 3,032,609 $ 5,647,262

The accompanying notes are an integral part of the parent company only financial statements. (With Earnest & Co., CPAs auditors’ report dated March 30, 2021)

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Allis Electric Co., Ltd.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

4000 OPERATING REVENUE 5000 OPERATING COST 5900 GROSS PROFIT 5910 LESS: UNREALIZED GROSS PROFIT ON SALES 5920 ADD: REALIZED GROSS PROFIT ON SALES 5950 NET GROSS PROFIT OPERATING EXPENSES 6100 Selling and marketing expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Expected credit impairment loss 6000 Total operating expenses 6900 OPERATING INCOME NON-OPERATING INCOME AND EXPENSES 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of profit of subsidiaries and associates accounted for using equity method 7000 Total non-operating income and expenses 7900 INCOME BEFORE INCOME TAX 7950 INCOME TAX EXPENSE 8200 NET INCOME OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss 8311 Remeasurement of defined benefit plans 8316 Unrealized gains from investments in equity instruments measured at fair value through other comprehensive income 8330 Share of other comprehensive income of subsidiaries and associates accounted for using equity method Items that may be reclassified subsequently to profit or loss 8361 Exchange differences on translating foreign operation 8380 Share of other comprehensive income (loss) of subsidiaries and associates accounted for using equity method 8300 Other comprehensive income, net 8500 TOTAL COMPREHENSIVE INCOME FOR THE YEAR 9750 EARNINGS PER SHARE	Notes Note 4, 6 and 7 Note 6 and 7 Note 7 Note 7 Note 6 and 7 Note 6 Note 6 Note 4 and 6 Note 4 and 6 Note 4 and 6 Note 4 and 6 Note 6	2020

The accompanying notes are an integral part of the parent company only financial statements.

(With Earnest & Co., CPAs auditors’ report dated March 30, 2021)

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Allis Electric Co., Ltd.

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

BALANCE, JANUARY 1, 2019 Appropriation of the 2018 earnings Legal reserve appropriated Cash dividends-NT$0.70 per share Stock dividends-NT$0.30 per share Net income in 2019 Other comprehensive income and loss in 2019, net of income tax Total comprehensive income in 2019 Cash dividends distributed to subsidiaries Changes in ownership interests in subsidiaries Donation from owners Reversal of special reserve BALANCE, DECEMBER 31, 2019 Appropriation of the 2019 earnings Legal reserve appropriated Cash dividends-NT$0.70 per share Stock dividends-NT$0.50 per share Net income in 2020 Other comprehensive income and loss in 2020, net of income tax Total comprehensive income in 2020 Cash dividends distributed to subsidiaries Disposal of investments in equity instruments at fair value through other comprehensive income Return of donation from owners Reversal of special reserve BALANCE, DECEMBER 31, 2020	Share Capital Shares (In Thousands) Amount 201,067 $ 2,010,670 － － － － 6,032 60,320 － － － － － － － － － － － － － － 207,099 2,070,990 － － － － 10,355 103,550 － － － － － － － － － － － － － － 217,454 $ 2,174,540	Capital Surplus Legal Reserve $ 65,429 $ 80,989 － 21,591 － － － － － － － － － － 1,654 － (5 ) － 94 － － － 67,172 102,580 － 30,173 － － － － － － － － － － 1,703 － － － (5 ) － － － $ 68,870 $ 132,753		RetainedEarnings Special Reserve Unappropriated earnings $ 454,797 $ 249,325 － (21,591) － (140,747) － (60,320) － 295,581 － 5,347 － 300,928 － － － － － － (803 ) 803 452,994 328,398 － (30,173) － (144,969) － (103,550) － 323,925 － (21,366) － 302,559 － － － 40,173 － － (804) 804 $ 452,190$ 393,242	Other Equity Exchange differences on translating foreignoperation Unrealized Gains (Losses)on Financial Assets Measuredat Fair Value Through OtherComprehensive Income $ (7,271) $ 22,288 － － － － － － － － (4,335) 41,409 (4,335) 41,409 － － － － － － － － (11,606) 63,697 － － － － － － － － 596 68,664 596 68,664 － － － (40,173) － － － － $ (11,010) $ 92,188	Treasury Stock $ (41,616) － － － － － － － － － － (41,616) － － － － － － － － － － $ (41,616)	Total Equity $ 2,833,611 － (140,747 ) － 295,581 42,421 338,002 1,654 (5 ) 94 － 3,032,609 － (144,969 ) － 323,925 47,894 371,819 1,703 － (5 ) － $ 3,261,157
	Shares (In Thousands) 201,067 － － 6,032 － － － － － － － 207,099 － － 10,355 － － － － － － － 217,454			Special Reserve $ 454,797 － － － － － － － － － (803 ) 452,994 － － － － － － － － － (804) $ 452,190	Exchange differences on translating foreignoperation $ (7,271) － － － － (4,335) (4,335) － － － － (11,606) － － － － 596 596 － － － － $ (11,010)

The accompanying notes are an integral part of the parent company only financial statements. (With Earnest & Co., CPAs auditors’ report dated March 30, 2021)

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Allis Electric Co., Ltd.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES: Income before income tax Adjustments for Adjustments to reconcile profit (loss) Depreciation expense Amortization expense Expected credit impairment loss Net loss (gain) on financial instruments at fair value through profit or loss Interest expense Interest income Dividend income Share of profit of subsidiaries and associates accounted for using equity method Net gain on disposal of property, plant and equipment Unrealized (realized ) gross profit on sales Changes in operating assets and liabilities Decrease in contract assets Decrease (increase) in notes receivable Decrease in notes receivable from related parties Decrease (increase) in accounts receivable Decrease (increase) in accounts receivable from related parties Decrease (increase) in other receivables Decrease (increase) in inventories Decrease (increase) in prepayments Decrease (increase) in other current assets Changes in financial instruments at fair value through profit or loss Increase (decrease) in contract liabilities Increase (decrease) in accounts payable Increase (decrease) in accounts payable to related parties Increase in other payables Increase (decrease) in short-term onerous contracts provision Increase (decrease) in other current liabilities Decrease in net defined benefit liabilities Cash inflow generated from operations Income tax paid Net cash generated from operating activities	2020 $ 379,016 41,084 3,338 15,088 4,370 9,173 (3,472) (2,148) (36,835) (10) 4,585 129,141 15,582 4,481 (353,904) (32,580) 105,598 204,165 (5,457) (151) (2,595) (3,919) (77,240) 45,506 28,550 (6,904) (249) (23,351) 440,862 (37,460) 403,402	2019 $ 324,859 39,460 3,449 49,879 (4,427) 8,775 (5,389) (1,855) (38,173) (267) (81) 55,534 (9,177) 1,115 176,477 79,175 (244,245) (127,271) 21,828 9 3,958 103,368 9,868 (168,599) 19,430 8,537 94 (14,177) 292,154 (47,547) 244,607

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Allis Electric Co., Ltd.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM INVESTING ACTIVITIES: Decrease in other receivables from related parties Acquisition of financial assets at fair value through other comprehensive income Acquisition of investments accounted for using equity method Proceeds from liquidation of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Increase in prepayments for equipment Increase in refundable deposits Decrease in other receivables Interest received Cash dividend received Net cash flows used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES： Increase in short-term loans Decrease in short-term loans Increase (decrease) in guarantee deposits Repayment of the principal portion of lease liabilities Increase inlong-term loans Interest paid Cash dividends paid Others Net cash flows used in financing activities NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS, END OF THE YEAR	2020 $ － (2,925) (19,662) 5,969 (100,324) 10 (1,434) － (3,468) － 3,689 20,745 (97,400) 4,558,568 (4,561,606) (84) (4,584) 47,000 (9,223) (144,969) (5) (114,903) 191,099 264,767 $ 455,866	2019 $ 58,083 － (30,000 ) － (38,060 ) 267 (1,066 ) (1,981 ) (14,780 ) 969 5,495 19,555 (1,518 ) 3,837,635 (3,879,597 ) 200 (5,074 ) － (8,823 ) (140,747 ) 94 (196,312 ) 46,777 217,990 $ 264,767

The accompanying notes are an integral part of the parent company only financial statements. (With Earnest & Co., CPAs auditors’ report dated March 30, 2021)

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Allis Electric Co., Ltd.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL

Allis Electric Co., Ltd. (the “Company”) was incorporated in September 1968. The Company is engaged in manufacturing and selling of switchgear, transformer, electrical products, and construction and installation of electrical equipment.

2. APPROVAL DATE AND PROCEDURES OF THE FINANCIAL STATEMENTS

The parent company only financial statements were approved by the Company’s board of directors on March 30, 2021.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

• (1) Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

The initial application of the IFRSs endorsed and issued into effect by the FSC did not have any material impact on the Company’s accounting policies.

• (2) The IFRSs issued by IASB and endorsed by the FSC for application starting from 2021

New,Amended and Revised Standards and Interpretations Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9” Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform - Phase 2”	Effective Date Announced byIASB
	Effective immediately upon promulgation by the IASB January 1, 2021

• (3)New IFRSs in issue but not yet endorsed and issued into effect by the FSC

New,Amended and RevisedStandards and Interpretations Annual Improvements to IFRS Standards 2018–2020 Amendments to IFRS 3 “Reference to the Conceptual Framework” Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” Amendments to IFRS 17 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”

Effective Date Announced byIASB

January 1, 2022 January 1, 2022 To be determined by IASB January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2022 January 1, 2022

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As of the date the parent company only financial statements were authorized for issue, the Company is continuously assessing the possible impact that the application of the aforementioned standards and interpretations will have on the Company’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Statement of compliance

These parent company only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

(2) Basis of preparation

When preparing the parent company only financial statements, the Company account for subsidiaries and associates by using the equity method. In order to agree with the amount of net income, other comprehensive income and equity attributable to shareholders of the parent in the consolidated financial statements, the differences of the accounting treatment between the parent company only basis and the consolidated basis are adjusted under the heading of investments accounted for using equity method, share of profits of subsidiaries and associates and share of other comprehensive income of subsidiaries and associates in the parent company only financial statements.

(3) Foreign currencies

In preparing the parent company only financial statements, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period in which they arise.

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

For the purpose of presenting parent company only financial statements, the assets and liabilities of the Company’s foreign operations are translated into the New Taiwan dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in equity.

• (4) Classification of current and non-current assets and liabilities

Current assets include:

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• a. Assets held primarily for the purpose of trading;

• b. Assets expected to be realized within twelve months after the reporting period; and

• c. Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

Current liabilities include:

• a. Liabilities held primarily for the purpose of trading;

• b. Liabilities due to be settled within twelve months after the reporting period, even if an agreement to refinance or to reschedule payments on a long-term basis is completed after the reporting period and before the parent company only financial statements are authorized for issue; and

• c. Liabilities for which the Company does not have an unconditional right to defer settlement for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Assets and liabilities that are not classified as current are classified as non-current.

The Company engages in the construction business, which has an operating cycle of over one year, the normal operating cycle applies when considering the classification of the Company’s construction-related assets and liabilities.

• (5) Cash and cash equivalents

Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value. Cash and cash equivalents are cash on hand, checking accounts, demand deposit, and short-term time deposits with original maturities less than one year.

(6) Financial instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments.

Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss.

Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

a. Measurement categories

Financial assets are classified into the following categories: Financial assets at

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FVTPL, financial assets at amortized cost and investments in equity instruments at FVTOCI.

 Financial assets at FVTPL

Financial assets are classified as at FVTPL when the financial asset is mandatorily classified as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI and debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria.

Financial assets at FVTPL are subsequently measured at fair value, and any remeasurement gains or losses on such financial assets are recognized in profit or loss.

• Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

• i. The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

• ii. The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost are measured at amortized cost, which equals to their gross carrying amount determined by the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

• Investments in equity instruments at FVTOCI

On initial recognition, the Company may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments, instead, they will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Company’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

• b. Impairment of financial assets

At the end of each reporting period, a loss allowance for expected credit loss is recognized for financial assets at amortized cost (including accounts receivable).

The loss allowance for accounts receivable is measured at an amount equal to lifetime expected credit losses. For all other financial assets, when the credit risk on the

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financial instrument has not increased significantly since initial recognition, a loss allowance is recognized at an amount equal to expected credit loss resulting from possible default events of a financial instrument within 12 months after the reporting date. If, on the other hand, there has been a significant increase in credit risk since initial recognition, a loss allowance is recognized at an amount equal to expected credit loss resulting from all possible default events over the expected life of a financial instrument.

Expected credit losses reflect the weighted average of credit losses with the respective risks of a default occurring as the weights. 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date. In contrast, Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument.

The impairment loss of all financial assets is recognized in profit or loss by a reduction in their carrying amounts through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in other comprehensive income and the carrying amounts of such financial assets are not reduced.

c. Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in an equity instrument at FVTOCI, the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

Equity instruments

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

Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.

The repurchase of the Company’s own equity instruments is recognized in and deducted directly from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.

Financial liabilities

a. Subsequent measurement

Financial liabilities are subsequently measured either at amortized cost using effective interest method or at FVTPL.

Financial liabilities at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss.

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b.Derecognition of financial liabilities

The Company derecognizes financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of a financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

Derivative financial instruments

The Company enters into the foreign exchange forward contracts to manage its exposure to foreign exchange rate risks.

Derivatives are initially recognized at fair value at the date on which the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately. When the fair value of a derivative financial instrument is positive, the derivative is recognized as a financial asset; when the fair value of a derivative financial instrument is negative, the derivative is recognized as a financial liability.

(7) Inventories

Inventories consist of raw materials, finished goods and work-in-process and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. Net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at standard cost and adjusted to approximate weighted-average cost on the reporting date.

(8) Investments accounted for using equity method

Investments accounted for using equity method include investments in subsidiaries and associates.

a. Investment in subsidiaries

A subsidiary is an entity that is controlled by the Company.

Under the equity method, investments in a subsidiary are initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the subsidiary as well as the distribution received. The Company also recognizes the changes in the Company’s share of equity of subsidiaries. When the Company’s share of losses of an subsidiary equals or exceeds its interest in that subsidiary (which includes any carrying amount of the investment accounted for by the equity method and long-term interests that, in substance, form part of the Company’s net investment in the subsidiary), the Company continues recognizing its share of further losses.

Changes in the Company’s ownership interests in subsidiaries that do not result in the Company losing control over the subsidiaries are accounted for as equity transactions. Any difference between the carrying amount of the subsidiary and the fair value of the consideration paid or received is recognized directly in equity.

When the Company loses control of a subsidiary, a gain or loss is recognized in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and any investment retained in the former

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subsidiary at its fair value at the date when control is lost and (ii) the previous carrying amount of the investments in such subsidiary. In addition, the Company accounts for all amounts recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Company had directly disposed of the related assets or liabilities.

When the Company transacts with its subsidiaries, profits and losses resulting from the transactions with the subsidiaries are recognized in the Company’s parent company only financial statements only to the extent of interests in the subsidiaries that are not owned by the Company.

b.Investment in associates

An associate is an entity over which the Company has significant influence and that is not a subsidiary. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control over those policies.

The Company uses the equity method to account for its investments in associates. Under the equity method, investments in an associate are initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the associate as well as the distribution received. The Company also recognizes the changes in the Company’s share of equity of associates. When the Company’s share of losses of an associate equals or exceeds its interest in that associate (which includes any carrying amount of the investment accounted for by the equity method and long-term interests that, in substance, form part of the Company’s net investment in the associate), the Company discontinues recognizing its share of further losses, if any. Additional losses and liabilities are recognized only to the extent that the Company has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of an associate at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities over the cost acquisition, after reassessment, this is recognized immediately in profit or loss.

The entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

When the Company subscribes to additional shares in an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Company’s proportionate interest in the net assets of the associate. The Company records such a difference as an adjustment to investments accounted for using equity method with the corresponding amount charged or credited to capital surplus. If the Company’s ownership interest is reduced due to the additional subscription to the shares of associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate shall be reclassified to profit or loss on the same basis as would be required if the associate had directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for by the equity method is insufficient, the shortage is debited

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to retained earnings.

The Company discontinues the use of the equity method from the date on which its investment ceases to be an associate. Any retained investment is measured at fair value at that date and the fair value is regarded as its fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate. The Company accounts for all amounts previously recognized in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities.

When the Company transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the Company’s parent company only financial statements only to the extent of interests in the associate that are not related to the Company.

(9) Property, plant and equipment

Property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment loss.

Property, plant and equipment in the course of construction are carried at cost, less any recognized impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization. Such properties are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for intended use.

Freehold land is not depreciated.

Depreciation on property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

(10) Leases

• a. The Company as lessee

The Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for low-value asset leases and short-term leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the parent company only balance sheets.

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Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments, in-substance fixed payments, variable lease payments which depend on an index or a rate. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the parent company only balance sheets.

b.The Company as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Lease income from operating leases is recognized on a straight-line basis over the terms of the lease. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms.

(11) Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties also include land held for a currently undetermined future use.

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss. Depreciation on buildings is recognized using the straight-line method.

On derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount of the asset is included in profit or loss.

(12) Intangible assets

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful life, residual value, and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. The residual value of an intangible asset with a finite useful life shall be assumed to be zero unless the Company expects to dispose of the intangible asset before the end of its economic life.

On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

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(13) Impairment of tangible and intangible assets other than goodwill

At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized immediately in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

(14) Provisions

Provisions are measured at the best estimate of the discounted cash flows of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

(15) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as expenses when employees have rendered services entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost, past service cost and gains or losses on settlements) and interest on the net defined benefit liability (asset) are recognized as employee benefits expense in the period they occur. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liability (asset) represents the actual deficit (surplus) in the Company’s defined benefit plan. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

(16) Revenue Recognition

The Company identifies the performance obligations in the contract with the customers, allocates transaction price to each performance obligation and recognizes revenue when performance obligations are satisfied.

a. Revenue from sale of goods

Revenue from sale of goods comes from sales of transformer, switchgear,

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transmission and distribution apparatus and electrical equipment. Sales of goods are recognized as revenue when the goods are delivered to the customer’s specific location or shipped because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility for sales to future customers and bears the risks of obsolescence. Revenue and accounts receivables are recognized concurrently. Advance receipts received before the merchandise has been transferred are recognized as a contract liability.

b. Construction contract revenue

Customers control construction contract while they are construction in progress, and thus, the Company recognizes revenue over time. The Company measures the progress on the basis of costs incurred relative to the total expected costs as there is a direct relationship between the costs incurred and the progress of satisfying the performance obligations. Contract assets are recognized during the construction and are reclassified to accounts receivables at the point at which the customer is invoiced. If the milestone payments exceed the revenue recognized to date, then the Company recognizes contract liabilities for the difference. Certain payments, which are retained by the customer as specified in the contract, are intended to ensure that the Company adequately completes all of its contractual obligations. Such retention receivables are recognized as contract assets until the Company satisfies its performance obligations.

(17) Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

a. Current tax

According to the Income Tax Law, an additional tax on unappropriated earnings is provided for as income tax in the year the shareholders approve to retain earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

b. Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences, unused loss carryforwards and unused tax credits to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and

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recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the asset realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

c. Current and deferred tax

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity; in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity, respectively.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Estimated impairment of accounts receivables

The provision for impairment of account receivables is based on assumptions about risk of default and expected loss. The Company uses judgment in making these assumptions and in selecting the inputs to the impairment calculation, based on the Company’s historical experience, existing market conditions as well as forward looking estimates as of the end of each reporting period. Where the actual future cash inflows are less than expected, a material impairment loss may arise.

As of December 31, 2020 and 2019, the carrying amounts of accounts receivable were NT$1,818,631 thousand and NT$1,459,897 thousand, respectively.

6. SIGNIFICANT ACCOUNTS DISCLOSURES

• (1) Cash and cash equivalents

ash and cash equivalents
Petty cash and cash on hand Checking accounts and demand deposits Cash equivalents Time deposits with original maturities less than one year Total	2020.12.31 $ 900 426,866 28,100 $ 455,866	2019.12.31
		$ 900 233,877 29,990
		$ 264,767

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2020.12.31 2019.12.31

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

Financial liabilities held for trading Derivative Instruments: Foreign exchange contracts	$ (1,775)	$ －

• a. The Company entered into forward exchange contracts to manage exposures due to fluctuations of foreign exchange rates. These forward exchange contracts did not meet the criteria for hedge accounting. Therefore, the Company did not apply hedge accounting treatment for these forward exchange contracts.

• b. Outstanding forward exchange contracts consisted of the following:

2020.12.31 Sell NTD/Buy USD	MaturityDate 2021.02.03-2021.04.15	Contract Amount
		USD 1,739 /NTD 50,624

Net (loss) gain on derivative instruments recognized for the years ended December 31, 2020 and 2019 were NT$(4,370) thousand and NT$4,427 thousand, respectively.

• (3) Financial assets at fair value through other comprehensive income (FVTOCI)

Listed shares Unlisted shares Total Current Non-current Total	2020.12.31 $ 144 225,560 $ 225,704 $ 144 225,560 $ 225,704	2019.12.31 $ 171 166,839 $ 167,010 $ 171 166,839 $ 167,010

As of December 31, 2020 and 2019, FVTOCI were not pledged as collateral for bank borrowings.

• (4) Notes receivable and accounts receivable

Notes receivable Less: Allowance for impairment loss Notes receivable, net Accounts receivable Less：Unrealized interest income Allowance for impairment loss Accounts receivable, net Accounts receivable from related parties	2020.12.31 $ 64,244 (352 ) $ 63,892 $ 1,842,272 (8,830 ) (80,489 ) $ 1,752,953 $ 65,678	2019.12.31 $ 79,826 (440 ) $ 79,386 $ 1,598,429 (8,794 ) (162,836 ) $ 1,426,799 $ 33,098

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The Company applies the simplified approach to allowing for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss allowances for all accounts receivables. The expected credit losses on accounts receivables are estimated with reference to past default experiences of the debtor and an analysis of the debtor’s current financial position, adjusted for general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecasted direction of economic conditions at the reporting date.

All notes receivable were not past due.

The following table details the loss allowance of accounts receivables:

2020.12.31

2020.12.31	31
Not Past Due Gross carrying amount $ 1,221,049 Loss allowance (27,844 Amortized cost $ 1,193,205 2019.12.31 Not Past Due Gross carrying amount $ 901,141 Loss allowance (9,011 ) Amortized cost $ 892,130	Not Past Due	Past Due 0-3 Months $ 356,414 ) (3,564 ) $ 352,850 Past Due 0-3 Months $ 351,493 (5,883 ) $ 345,610	Past Due 3-6 Months $ 104,094 (1,041 ) $ 103,053 Past Due 3-6 Months $ 112,639 (4,282 ) $ 108,357	Past Due 6-9 Months $ 64,408 (644 ) $ 63,764 Past Due 6-9 Months $ 73,754 (10,287 ) $ 63,467	Past Due 9-12 Months Past Due 1-2 Years Past Due Over 2 Years Total $ 67,614 $ 42,570 $ 51,801 $ 1,907,950 (676 )(10,066 ) (36,654 ) (80,489 ) $ 66,938 $ 32,504 $ 15,147 $ 1,827,461 Past Due 9-12 Months Past Due 1-2 Years Past Due Over 2 Years Total $ 29,248 $ 75,545 $ 87,707 $ 1,631,527 (13,725 )(45,708 ) (73,940 )(162,836 ) $ 15,523 $ 29,837 $ 13,767 $ 1,468,691
	$ 1,221,049 (27,844
	$ 1,193,205

The movements of the loss allowance of notes receivable and accounts receivables were as follows:

Balance, beginning of the year Loss allowance recognized Amounts written off Balance, end of the year (5) Other receivables, net Pledged time deposits Loan receivable Restricted deposit Others Other receivables, net Current Non-current Total	2020 $ 163,276 15,088 (97,523 ) $ 80,841 2020.12.31 $ － 36,530 143,524 3,667 $ 183,721 $ 147,191 36,530 $ 183,721	2019 $ 139,413 49,176 (25,313 ) $ 163,276 2019.12.31 $ 3,577 38,987 242,731 4,241 $ 289,536 $ 250,549 38,987 $ 289,536

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(6) Inventories

Finished goods Work-in-process Raw materials Inventory in transit Inventories, net	2020.12.31 $ 234,331 229,495 448,732 29,224 $ 941,782	2019.12.31 $ 338,372 286,832 518,969 1,774 $ 1,145,947

For the cost of inventories recognized as cost of goods sold for the years ended December 31, 2020 and 2019, please refer to Note 6(19).

For the years ended December 31, 2020 and 2019, reversal of write-down of inventories resulting from disposal of slowing-moving inventories and write-down of inventories to net realizable value were included in the cost of goods sold as follows:

Inventory losses (reversal of write-down of inventories)	2020 $ (5,210)	2019 $ 26,857

As of December 31, 2020 and 2019, inventories were not pledged as collateral for bank borrowings.

• (7) Investments accounted for using equity method

Investments accounted for using the equity method consisted of the following:

Subsidiaries Associates	2020.12.31 $ 363,100 298,148 $ 661,248	2019.12.31 $ 331,211 276,015 $ 607,226

a. Investments in subsidiaries

Subsidiaries consisted of the following:

Name of Subsidiaries Air King Industrial Co., Ltd. Ares Technology Co., Ltd. Allis Communications Co., Ltd. Yishun Investment Co., Ltd. Qingdao Liming Industry Co., Ltd. Hengyuan Allis Electric Co., Ltd. Allis International Inc. AEC International S.r.l. PHD Powerhouse Distributions (PTY) Ltd. Total	2020.12.31 % of Ownership Amount 83.12% $ 56,540 100.00% 62,474 76.86% 35,989 99.94% 99,060 65.38% 72,625 65.38% 5,878 100.00% － 100.00% 11,179 90.00% 19,355 $363,100	2019.12.31 % of Ownership Amount 83.12% $ 49,324 99.79% 64,023 76.86% 37,768 99.94% 86,730 65.38% 78,125 65.38% 8,776 100.00% 6,465 － － － － $ 331,211
	% of Ownership 83.12% 100.00% 76.86% 99.94% 65.38% 65.38% 100.00% 100.00% 90.00%	% of Ownership 83.12% 99.79% 76.86% 99.94% 65.38% 65.38% 100.00% － －

～ 20 ～

The aforementioned subsidiaries were not listed companies.

Please refer to Table 5 and 6 for the details of the subsidiaries.

• b. Investments in associates

Associates consisted of the following:

Name of Associates Nissin-Allis Electric Co., Ltd. Nissin Allis Union Ion Equipment Co., Ltd. AYM International Corporation Intelicis Corporation PHD Powerhouse Distributions (PTY) Ltd. Total	2020.12.31 % of Ownership Amount 30.00% $ 197,597 40.00% 100,551 40.00% － 29.16% － － － $ 298,148	2019.12.31	2019.12.31
	% of Ownership 30.00% 40.00% 40.00% 29.16% －	% of Ownership	Amount
		30.00% 40.00% 40.00% 29.16% 45.00%	$ 173,028 88,821 － － 14,166
			$ 276,015

The aforementioned associates were not listed companies and immaterial to the Company.

Aggregate information of associates that are not individually material:

Equity The Company’s share of : Net income for the year Other comprehensive income (loss) Total comprehensive income for the year Impairment loss recognized roperty, plant and equipment Land Buildings Machinery and equipment Transportation equipment Other equipment Construction in progress Total carrying amounts	2020.12.31 $ 911,550 2020 $ 56,901 (291) $ 56,610 $ 12,000 2020.12.31 $ 573,475 199,644 61,550 8,017 40,372 91,103 $ 974,161	2019.12.31 $ 809,325 2019 $ 39,706 (962 ) $ 38,744 $ 5,000 2019.12.31 $ 573,475 208,435 67,797 6,893 45,416 － $ 902,016

(8) Property, plant and equipment

～ 21 ～

Cost	Land	Buildings	Machinery and Equipment	Transportation Equipment
Balance at January 1, 2020 Additions Disposals Transfer from prepayments for equipment Balance at December 31, 2020 Accumulated depreciation	$573,475 － － －	$ 553,374 2,413 － －
	$ 573,475	$555,787	$ 426,505	$ 39,289
	$ － － －	$ 344,939 11,204 －	$ 352,393 14,646 (2,084 )	$ 30,534 1,298 (560)
Balance at January 1, 2020 Depreciation expense Disposals Balance at December 31, 2020 Carrying amounts at December 31, 2020
	$ －	$356,143	$ 364,955	$ 31,272
	$573,475	$199,644	$ 61,550	$ 8,017

Cost	Land	Buildings	Machinery and Equipment	Transportation Equipment	Other Equipment $ 105,384 8,931 (7,170) $ 107,145 $ 62,356 6,543 (7,170 ) $ 61,729 $ 45,416	Construction in Progress	Total $ 1,672,048 38,060 (18,497) $1,691,611 $ 775,980 32,112 (18,497 ) $ 789,595 $ 902,016
Balance at January 1, 2019 Additions Disposals Balance at December 31, 2019 Accumulated depreciation	$573,475 － －	$ 546,974 6,400 －	$ 411,573 18,877 (10,260	$ 34,642 3,852 ) (1,067)		$ － － －
	$ 573,475	$553,374	$ 420,190	$ 37,427		$ －
	$ － － －	$ 334,161 10,778 －	$ 348,911 13,742 (10,260 )	$ 30,552 1,049 (1,067 )		$ － － －
Balance at January 1, 2019 Depreciation expense Disposals Balance at December 31, 2019 Carrying amounts at December 31, 2019
	$ －	$344,939	$ 352,393	$ 30,534		$ －
	$573,475	$208,435	$ 67,797	$ 6,893		$ －

• a. The above items of property, plant and equipment are depreciated on a straight-line basis over the estimated useful lives as follows:

Buildings

3-55 years

～ 22 ～

Machinery and equipment	3-13 years
Transportation equipment	5-13 years
Other equipment	3-13 years

• b. For the carrying amount of property, plant and equipment pledged as collateral for bank borrowings, please refer to Note 8.

• c. There were no capitalized interests for the years ended December 31, 2020 and 2019.

• d. As of December 31, 2020, the title of farmland with carrying amounts of NT$308 thousand were temporarily registered in the name of Herr-Yeh Sung who had signed an agreement and had pledged the land to the Company.

• (9) Right-of-use assets

Buildings Transportation equipment Other equipment Total carrying amounts Cost Balance at January 1, 2020 Additions Disposals Balance at December 31, 2020 Accumulated depreciation Balance at January 1, 2020 Depreciation expense Disposals Balance at December 31, 2020 Carrying amounts at December 31, 2020 Cost Balance arising from Initial application at January 1, 2019 Additions Balance at December 31, 2019 Accumulated depreciation Balance at January 1, 2019 Depreciation expense Balance at December 31, 2019 Carrying amounts at December 31, 2019	Buildings $ 761 － － $ 761 $ 234 234 － $ 468 $ 293 Buildings $ 761 － $ 761 $ － 234 $ 234 $ 527	2020.12.31 2019.12.31 $ 293 $ 527 － 1,793 8,661 11,259 $ 8,954$ 13,579 Transportation Equipment Other Equipment Total $ 4,159 $ 13,858 $ 18,778 － － － (509 ) － (509 ) $ 3,650 $ 13,858 $ 18,269 $ 2,366 $ 2,599$ 5,199 1,793 2,598 4,625 (509) － (509 ) $ 3,650 $ 5,197$ 9,315 $ － $ 8,661$ 8,954 Transportation Equipment Other Equipment Total $ 4,159 $ 13,858 $ 18,778 － － － $ 4,159 $ 13,858 $ 18,778 $ － $ －$ － 2,366 2,599 5,199 $ 2,366 $ 2,599 $ 5,199 $ 1,793$ 11,259$ 13,579

～ 23 ～

(10) Investment properties

Land Buildings Total carrying amounts Cost Balance at January 1, 2020 Additions Balance at December 31, 2020 Accumulated depreciation Balance at January 1, 2020 Depreciation expense Balance at December 31, 2020 Carrying amounts at December 31, 2020 Cost Balance at January 1, 2019 Additions Balance at December 31, 2019 Accumulated depreciation Balance at January 1, 2019 Depreciation expense Balance at December 31, 2019 Carrying amounts at December 31, 2019	Land $ 308,269 － $ 308,269 $ － — $ － $ 308,269 $ 308,269 － $ 308,269 $ － － $ － $ 308,269	2020.12.31 $ 308,269 49,581 $ 357,850 Buildings $ 74,077 － $ 74,077 $ 22,347 2,149 $ 24,496 $ 49,581 $ 74,077 － $ 74,077 $ 20,198 2,149 $ 22,347 $ 51,730	2019.12.31 $ 308,269 51,730 $ 359,999 Total $ 382,346 － $ 382,346 $ 22,347 2,149 $ 24,496 $ 357,850 $ 382,346 － $ 382,346 $ 20,198 2,149 $ 22,347 $ 359,999

• a. The investment properties held by the Company are depreciated on a straight-line basis over the estimated useful lives of 45 to 60 years.

• b. For the carrying amount of investment properties pledged as collateral for bank borrowings, please refer to Note 8.

• c. The fair values of the investment properties owned by the Company were NT$488,329 thousand and NT$487,926 thousand as of December 31, 2020 and 2019, respectively. The fair value of investment properties was measured using the comparison approach with unobservable inputs (Level 3).

• (11) Intangible assets

Computer software Other intangible assets Total carrying amounts	2020.12.31 $ 1,724 6,337 $ 8,061	2019.12.31 $ 1,784 8,181 $ 9,965

～ 24 ～

Cost Balance at January 1, 2020 Additions Balance at December 31, 2020 Accumulated amortization Balance at January 1, 2020 Amortization expense Balance at December 31, 2020 Carrying amounts at December 31, 2020 Cost Balance at January 1, 2019 Additions Disposals Balance at December 31, 2019 Accumulated amortization Balance at January 1, 2019 Amortization expense Disposals Balance at December 31, 2019 Carrying amounts at December 31, 2019	Computer Software $ 32,775 1,194 $ 33,969 $ 30,991 1,254 $ 32,245 $ 1,724 Computer Software $ 31,824 951 － $ 32,775 $ 29,770 1,221 － $ 30,991 $ 1,784	Other Intangible Assets $ 33,732 240 $ 33,972 $ 25,551 2,084 $ 27,635 $ 6,337 Other Intangible Assets $ 34,757 115 (1,140) $ 33,732 $ 24,463 2,228 (1,140) $ 25,551 $ 8,181	Total $ 66,507 1,434 $ 67,941 $ 56,542 3,338 $ 59,880 $ 8,061 Total $ 66,581 1,066 (1,140) $ 66,507 $ 54,233 3,449 (1,140) $ 56,542 $ 9,965

The above items of intangible assets are amortized on a straight-line basis over the estimated useful lives as follows:

Computer software 2-5 years Other intangible assets 3-10 years

(12) Other assets

Golf club card Others Less: Accumulated impairment Total Current Non-current Total	2020.12.31 $ 12,847 175 (3,099) $ 9,923 $ 175 9,748 $ 9,923	2019.12.31 $ 12,847 24 (3,099) $ 9,772 $ 24 9,748 $ 9,772

～ 25 ～

(13) Short-term loans

		2020.12.31	2019.12.31
Material purchase loans	$	—$	3,038
Unsecured loans		325,000	130,000
Secured loans		410,000	605,000
	$	735,000$	738,038
Annual interest rate	0.95%～1.10% 1.00%～3.30%

• (14) Provisions

Warranty provision Balance, beginning of the year Provisions recognized Utilized Balance, end of the year	2020 $ 12,100 3,930 (3,930) $ 12,100	2019
		$ 12,100 3,855 (3,855
		$ 12,100

Provisions were estimated based on historical experience, management judgment, and any known factors that would significantly affect the warranty.

• (15) Long-term loans

5) Long-term	loans
		2020.12.31			2019.12.31
Bank	Loanperiod and repayment term	Interest (%)		Amount	Interest (%)	Amount
Taiwan		1.4%	$	47,000	－	$	－
Cooperative	2020.12.24～2022.12.24
Bank
Total			$	47,000		$	－

• (16) Retirement benefit plans

a. Defined contribution plans

The Company adopted a pension plan under the R.O.C. Labor Pension Act (the “LPA”), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages. For employee benefit expenses under the defined contribution plan for the years ended December 31, 2020 and 2019, please refer to Note 6(23).

b. Defined benefit plans

The defined benefit plan adopted by the Company in accordance with the R.O.C. Labor Standards Law is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Company contributes amounts equal to 8.9% of total monthly salaries and wages to a pension fund administered by the pension

～ 26 ～

fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Company assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company is required to fund the difference in one appropriation that should be made before the end of March of the following year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (“the Bureau”); the Company has no right to influence the investment policy and strategy.

The amounts included in the balance sheets in respect of the Company’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities	2020.12.31 $ (452,930) 372,482 $ (80,448)	2019.12.31 $ (447,942) 364,417 $ (83,525)

Movements in the present value of the defined benefit obligation were as follows:

Balance, beginning of year Current service cost Interest expense Remeasurement Actuarial loss - changes in financial assumptions Actuarial loss - experience adjustments Benefits paid Balance, end of year	2020 $ 447,942 1,084 2,650 8,294 24,370 (31,410) $ 452,930	2019 $ 450,950 1,400 3,576 5,721 1,395 (15,100) $ 447,9422

Movements in the fair value of the plan assets were as follows:

Balance, beginning of year Interest revenue Remeasurement Return on plan assets (excluding amounts included in net interest expense) Contributions from employer Benefits paid Balance, end of year	2020 $ 364,417 2,197 12,390 15,822 (22,344) $ 372,482	2019 $ 347,466 2,814 12,898 16,205 (14,966) $ 364,417

For information on the utilization of the labor pension fund assets, including the assets allocation and yield of the fund, please refer to the website of the Bureau.

～ 27 ～

The pension costs of the defined benefit plans were recognized as follows:

Current service cost Net interest expense Total	2020 $ 1,084 453 $ 1,537	2019
		$ 1,400 762
		$ 2,162

Through the defined benefit plans under the Labor Standards Law, the Company is exposed to the following risks:

• Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2 year time deposit with local banks.

• Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments.

• Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate Expected rate of salary increase	Measurement Date	Measurement Date
	2020.12.31 0.3% 1.8%	2019.12.31
		0.6% 1.8%

If possible reasonable change in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

Discount rates 0.1 % increase 0.1 % decrease Expected rate of salary increase 0.1 % increase 0.1 % decrease	2020.12.31 $ (2,799) 2,832 2,376 (2,359)	2019.12.31 $ (6,304) 2,916 2,475 (5,870)

～ 28 ～

The expected contributions to the plan for the next year The average duration of the defined benefit obligation	2020.12.31 $15,600 5.8 years	2019.12.31
		$16,200 6.1 years

• (17) Equity

• a. Ordinary shares

Authorized share capital Issued share capital	2020.12.31 $ 2,400,000 $ 2,174,540	2019.12.31 $ 2,400,000 $ 2,070,990

The par value is NT$10 dollars.

The capitalization of retained earnings of NT$103,550 thousand and issuance of 10,355 thousand shares have been approved in the stockholders’ meeting on June 23, 2020. The ex-right date and stock issuance date were September 2, 2020 and September 30, 2020, respectively.

The capitalization of retained earnings of NT$60,320 thousand and issuance of 6,032 thousand shares have been approved in the stockholders’ meeting on June 20, 2019. The ex-right date and stock issuance date were September 3, 2019 and October 17, 2019, respectively.

b. Capital surplus

From the issuance of ordinary shares From treasury stock transactions From difference between consideration and carrying amount arising from actual disposal of subsidiaries From donations	2020.12.31 $ 58,393 8,626 99 1,752 $ 68,870	2019.12.31 $ 58,393 6,923 99 1,757 $ 67,172

Under Company Act, the capital surplus arising from shares issued in excess of par (including share premium from the issuance of ordinary shares and treasury stock transactions) and donations may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital once a year within a certain percentage of the Company’s paid-in capital.

• c. Retained Earnings and Dividend Policy

• Under the dividend policy as set forth in the Company’s Articles of Incorporation, where the Company made profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting aside or reversing a special reserve in accordance with the laws and regulations or in the necessary situation, and then any remaining profit

～ 29 ～

together with any undistributed retained earnings shall be used for distribution of dividends and bonuses to shareholders.

The Company considers its long-term financial planning, future funding requirements, interest of shareholders as well as the amount of capital surplus, retained earnings and profit forecast when determining the stock dividends or cash dividends to be paid. However, distribution of earnings shall be made preferably by way of cash dividends. Distribution of earnings may also be made by way of stock dividend, provided that the ratio for stock dividends shall not exceed 50% of the total distribution.

• Appropriation of earnings to the legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. The legal reserve may be used to offset deficits. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

• Items referred to under Rule No. 1010012865 and Rule No. 1010047490 issued by the FSC and the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs” should be appropriated to or reversed from a special reserve by the Company. For any subsequent reversal of the deduction in other shareholders’ equity, the appropriate amount of earnings distribution should be reversed from the net debit balance.

• The appropriations of earnings for 2019 and 2018 approved in the shareholders’ general meetings on June 23, 2020 and June 20, 2019, respectively.

The appropriations of 2019 and 2018 earnings were as follows:

Legal reserve Cash dividends (NT$0.7 per share for 2019 and 2018) Share dividends (NT$0.5 and NT$0.3 per share for 2019 and 2018, respectively)	2019 $ 30,173 144,969 103,550 $ 278,692	2018
		$ 21,591 140,747 60,320
		$ 222,658

The appropriations of earnings for 2020 were proposed by the Company’s board of directors on March 30, 2021 as follows:

Legal reserve Cash dividends (NT$0.7 per share) Share dividends (NT$0.5 per share)	2020
	$ 34,354 152,218 108,727
	$ 295,299

The appropriations of 2020 earnings are subject to the resolution of the shareholders’ meeting to be held on June 24, 2021.

• d. Special reserves

～ 30 ～

Balance, beginning of year Reversal: Depreciation expense on investment properties Balance, end of year e. Other equity Exchange Differences on Translating Foreign Operation Balance at January 1, 2020 $ (11,606 ) Exchange differences on translating foreign operation 114 Unrealized gains (loss) from investments in equity instruments measured at fair value through other comprehensive income － Share of other comprehensive income (loss) of subsidiaries and associates accounted for using equity method 482 Balance at December 31, 2020 $ (11,010) Exchange Differences on Translating Foreign Operation Balance at January 1, 2019 $ (7,271 ) Exchange differences on translating foreign operation (3,302 ) Unrealized gains (loss) from investments in equity instruments measured at fair value through other comprehensive income － Share of other comprehensive income (loss) of subsidiaries and associates accounted for using equity method (1,033 ) Balance at December 31, 2019 $ (11,606)	2020 $ 452,994 $ (804) $ 452,190 $ Unrealized Gains (Losses) on Financial Assets Measured at Fair Value Through Other Comprehensive Income $ 63,697 － 55,769 (27,278 ) $ 92,188 Unrealized Gains (Losses) on Financial Assets Measured at Fair Value Through Other Comprehensive Income $ 22,288 － 24,463 16,946 $ 63,697		2019 453,797 (803) 452,994 Total $ 52,091 114 55,769 (26,796) $ 81,178 Total $ 15,017 (3,302 ) 24,463 15,913 $ 52,091
		$
		$

f. Treasury stock Shares held by the subsidiaries	(In thousands of shar 2020.12.31 2019.12.31 2,555 2,434	(In thousands of shar 2020.12.31 2019.12.31 2,555 2,434
		2,434

(In thousands of shares)

The Corporation’s shares held by the subsidiary, Yishun Investment Co., Ltd., are

～ 31 ～

accounted for as treasury stock. As of December 31, 2020 and 2019, the book value of treasury stock were NT$41,616 thousand; the market value of treasury stock were NT$66,693 thousand and $43,561 thousand, respectively.

The Company’s shares held by subsidiaries are regarded as treasury stock with all shareholders’ rights, except the rights to participate in the Company’s capital increase in cash and right to vote.

(18) Operating revenue

Revenue from sale of goods Construction contract revenue Other operating revenue (19) Operating cost Cost of goods sold Construction contract cost Technical service cost (20) Other income Interest income Bank deposits Others Rental income Others (21) Other gains and losses Net foreign exchange losses Net (loss) gain on financial instruments at fair value through profit or loss Net gain on disposal of property, plant and equipment Depreciation on investment properties Other losses	2020 $ 4,062,991 935,067 14,310 $ 5,012,368 2020 $ 3,288,988 883,821 10,060 $ 4,182,869 2020 $ 716 2,756 12,755 9,382 $ 25,609 2020 $ (19,817 ) (4,370 ) 10 (2,149 ) (250) $ (26,576)	2019 $ 4,014,567 693,072 11,386 $ 4,719,025 2019 $ 3,295,355 641,749 8,446 $ 3,945,550 2019 $ 1,016 4,373 13,490 6,476 $ 25,355 2019 $ (7,973) 4,427 267 (2,149) (115) $ (5,543)

～ 32 ～

(22) Finance costs

2020 Interest on bank loans $ 8,931 Interest on lease liabilities 206 Others 36 $ 9,173 (23) Additional information of expenses by nature Net income included the following items: 2020 Depreciation and amortization expense Depreciation on property, plant and equipment $ 34,310 Depreciation on right-of-use assets 4,625 Depreciation on investment properties 2,149 Amortization on intangible assets 3,338 Total $ 44,422 Operating expenses directly related to investment properties: 2020 Direct operating expenses of investment properties that generated rental income $ 1,190 Direct operating expenses of investment properties that did not generated rental income 5 Total $ 1,195 2020 Research and development costs expensed as incurred $ 99,772 Employee benefits expense 2020 Post-employment benefits (Note 6(16)) Defined contribution plans $ 18,522 Defined benefit plans 1,537 Subtotal 20,059 Salaries and bonus expense 519,568 Insurance expense 42,675 Others 23,856 Total $ 606,158	2019
	$ 8,445 297 33
	$ 8,775
	2019
	$ 32,112 5,199 2,149 3,449
	$ 42,909
	2019
	$ 1,206 5
	$ 1,211
	2019
	$ 96,728
	2019
	$ 17,963 2,162
	20,125 494,664 42,942 23,215
	$ 580,946

～ 33 ～

According to Articles of Incorporation, the Company accrued employees’ compensation and remuneration of directors at the rates of 4% and no higher than 2%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors. The employees’ compensation and remuneration of directors for the years ended December 31, 2020 and 2019 were as follows:

Employees’ compensation Remuneration of directors	2020 $ 16,128 8,064 $ 24,192	2019
		$ 13,824 6,912
		$ 20,736

If there is a change in the amounts after the annual financial statements were authorized for issue, the differences are recorded as a change in the accounting estimate.

There is no difference between the actual amounts of employees’ compensation and remuneration of directors paid and the amounts recognized in the financial statements for the year ended December 31, 2019.

Information on the employees’ compensation and remuneration of directors resolved by the Company’s board of directors is available at the Market Observation Post System website of the Taiwan Stock Exchange.

• (24) Income taxes

• a. Income tax expense recognized in profit or loss

  • Major components of income tax expense ：

Current tax In respect of the current year Adjustments for prior years Subtotal Deferred tax Origination and reversal of temporary differences Income tax expense	2020 $ 48,679 3,474 52,153 2,938 $ 55,091	2019 $ 32,838 4,624 37,462 (8,184) $ 29,278

 A reconciliation of accounting profit and income tax expense was as follows:

Income before tax Income tax expense calculated at the statutory rate (20%) Tax effect of adjusting items: Nondeductible items in determining taxable income Tax-exempt income	2020 $ 379,016 $ 75,803 228 (429 )	2019 $ 324,859 $ 64,971 248 (371 )

～ 34 ～

Origination and reversal of temporary differences Income tax on unappropriated earnings Investment tax credit Adjustments for prior years Current tax Deferred tax Origination and reversal of temporary differences Income tax expense	2020 (21,706 ) 272 (5,489 ) 3,474 52,153 2,938 $ 55,091	2019 (23,682 ) － (8,328 ) 4,624 37,462 (8,184) $ 29,278

• b. Deferred tax assets

The movements of deferred tax assets were as follows:

Temporary differences Allowance for inventory loss Unrealized exchange losses Payable for annual leave Others Temporary differences Allowance for inventory loss Unrealized exchange losses Payable for annual leave Others	2020.1.1 $ 9,965 1,619 4,243 4,634 $ 20,461 2019.1.1 $ 4,593 453 4,194 3,037 $ 12,277	Recognized in Profit or Loss $ (4,090 ) 898 363 (109 ) $ (2,938 ) Recognized in Profit or Loss $ 5,372 1,166 49 1,597 $ 8,184

• c.Deductible temporary differences and unused loss carryforwards for which no deferred tax assets have been recognized

Deductible temporary differences	2020.12.31 $ 65,481	2019.12.31 $ 149,359

• d.The income tax returns of the Company through 2018 have been assessed by the tax authority.

• (25) Earnings per share

Basic earnings per share (NT$)	2020 $ 1.51	2019 $ 1.38

The earnings and weighted average number of ordinary shares outstanding in the

～ 35 ～

computation of earnings per share were as follows:

Net income for the year attributable to common shareholders Weighted average number of ordinary shares in computation of basic earnings per share ( in thousands of shares)	2020 $ 323,925 214,899	2019
		$ 295,581
		214,899

Retroactive adjustments were applied to the Company’s basic earnings per share for the years ended December 31, 2020 and 2019.

• (26) Significant lease agreements

• a. The Company as lessee

Expenses relating to short-term leases Total cash outflow for leases	2020 $ 13,563 $ 18,353	2019
		$ 12,568
		$ 17,642

• c. The Company as lessor

As of December 31, 2020 and 2019, the future lease payments receivable under operating leases of investment properties were as follows:

Not later than 1 year 1-2 years 2-3 years 3-4 years 4-5 years Later than 5 years Total	2020.12.31 $ 12,849 11,753 6,457 5,249 5,354 18,345 $ 60,007	2019.12.31 $ 12,783 12,702 11,753 6,457 5,249 23,698 $ 72,642

(27) Capital management

In consideration of the industry dynamics and future developments, as well as external environment factors, the Company maintains an optimal capital structure to enhance long-term shareholder value by managing its capital in a manner to ensure that it has sufficient and necessary financial resources to fund its working capital needs, research and development activities, dividend payments, and other business requirements for continuing operations to reward shareholders and take into consideration the interests of other stakeholders. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, issue new shares, return capital to shareholders, or repurchase shares.

(28) Financial instruments

• a. Fair value of financial instruments

• The management of the Company considers that the carrying amounts of those

～ 36 ～

financial instruments that are not measured at fair value approximate their fair values or their fair values cannot be reliably measured.

• Financial instruments that are measured at fair value

Fair value measurements are grouped into Levels 1 to 3 based on the degree to which the fair value is observable:

• ⚫ Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

• ⚫ Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

• ⚫ Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The following table presents the Company’s financial instruments measured at fair value on a recurring basis:

Financial assets at FVTOCI Listed shares Unlisted shares Total Financial liabilities at FVTPL Financial assets at FVTOCI Listed shares Unlisted shares Total		2020.12.31	2020.12.31	Total $ 144 225,560 $225,704 $ 1,775 Total $ 171 166,839 $ 167,010
	Level 1 $ 144 － $ 144 $ －	Level 2 Level 3 $ －$ － － 225,560 $ － $225,560 $ 1,775$ － 2019.12.31
	Level 1 $ 171 － $ 171	Level 2 $ － － $ －	Level 3 $ － 166,839 $ 166,839

There were no transfers between Levels 1 and 2 for the years ended December 31, 2020 and 2019.

Reconciliation of Level 3 fair value measurements of financial instruments was as follows:

as follows:
Balance, beginning of the year Acquistion of financial assets at FVTOCI Accounted for unrealized gains from investments in equity instruments measured at FVTOCI Balance, end of the year	Financialassets atFVTOCI
	2020 $ 166,839 2,925 55,796 $ 225,560	2019
		$ 142,409 － 24,430
		$ 166,839

～ 37 ～

 Valuation techniques and inputs applied for the purpose of Level 2 fair value measurement

The fair values of derivatives - foreign exchange forward contracts were determined using discounted cash flow approach. Future cash flows are estimated based on observable forward exchange rates at the end of the reporting period and contract forward rates, discounted at a rate that reflects the credit risk of various counterparties.

 Valuation techniques and inputs applied for the purpose of Level 3 fair value measurement

The fair values of unlisted equity securities were determined using the market approach. The market approach refers to the comparable market transaction price and related information to estimate the fair value of the investment target. The significant unobservable inputs are discounted prices for the lack of marketability.

b. Categories of financial instruments

Financialassets FVTOCI Amortized cost (Note) Total Financial liabilities Amortized cost Short-term loans Accounts payable Current tax liabilities Other payables Long-term loans Lease liabilities Guarantee deposits FVTPL Total	2020.12.31 $ 225,704 2,567,644 $ 2,793,348 $ 735,000 1,153,889 28,018 205,100 47,000 9,120 3,298 1,775 $ 2,183,200	2019.12.31 $ 167,010 2,140,133 $ 2,307,143 $ 738,038 1,185,623 13,325 176,600 － 13,704 3,382 － $ 2,130,672

Note: The balances include cash and cash equivalents, notes and accounts receivable, other receivables and refundable deposits.

c. Financial risk management objectives and policies

The Company’s major financial risk management goal is to manage risks that relate to operating activities. These risks include currency risk, interest rate risk, credit risk and liquidity risk. In order to lower relevant financial risks, the Company identifies and assesses the risks and takes actions to manage uncertainty of the market with the objective to reduce the potentially adverse effects the market fluctuations may have on its financial performance.

～ 38 ～

The Company’s important financial activities are reviewed by the board of directors in accordance with related regulations and internal controls. Compliance with policies and exposure limits is reviewed by the internal auditors on a continuous basis.

d. Market risk

The Company’s activities exposed it primarily to the market risks of changes in foreign currency exchange rates and interest rates. The Company entered into forward exchange contracts to hedge portion of foreign exchange risk.

 Foreign currency risk

The Company undertook transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arose. The Company used foreign exchange forward contracts to partially offset the risk of foreign currency exposure. These foreign exchange forward contracts are intended to reduce the influence of the exchange rate fluctuations on the Company’s income.

The information on assets and liabilities denominated in non-functional currency whose values would be materially affected by the exchange rate fluctuations at the end of the reporting period and sensitivity analysis were as follows (in thousands of respective foreign currencies or New Taiwan dollars):

2020.12.31

Financial assets Monetary items USD EUR JPY SGD RMB Non-monetary items RMB ZAR EUR Financial liabilities Monetary items USD EUR RMB	Foreign Currencies $ 10,084 38 2 474 8,197 18,678 4,861 373 1,173 467 1,947	Exchange Rate 28.10 34.59 0.2725 21.27 4.325 4.325 1.921 34.59 28.10 34.59 4.325	Carrying Amounts (NTD)	SensitivityAnalysis Variations Impact on Profit(loss) Impact on Equity ±10% ±28,335 ±28,335 ±10% ±132 ±132 ±10% － － ±10% ±1,008 ±1,008 ±10% ±3,545 ±3,545 ±10% － ±8,078 ±10% － ±934 ±10% － ±1,290 ±10% ∓3,297 ∓3,297 ±10% ∓1,615 ∓1,615 ±10% ∓842 ∓842	SensitivityAnalysis Variations Impact on Profit(loss) Impact on Equity ±10% ±28,335 ±28,335 ±10% ±132 ±132 ±10% － － ±10% ±1,008 ±1,008 ±10% ±3,545 ±3,545 ±10% － ±8,078 ±10% － ±934 ±10% － ±1,290 ±10% ∓3,297 ∓3,297 ±10% ∓1,615 ∓1,615 ±10% ∓842 ∓842
				Variations ±10% ±10% ±10% ±10% ±10% ±10% ±10% ±10% ±10% ±10% ±10%	Impact on Profit(loss) ±28,335 ±132 － ±1,008 ±3,545 － － － ∓3,297 ∓1,615 ∓842
			283,351 1,321 1 10,084 35,452 80,782 9,338 12,902 32,972 16,148 8,422

～ 39 ～

2019.12.31

Financial assets Monetary items USD EUR JPY SGD RMB Non-monetary items RMB ZAR Financial liabilities Monetary items USD EUR JPY RMB	Foreign Currencies $11,558 40 2 572 6,575 20,233 2,189 447 32 11,187 146	Exchange Rate 29.99 33.64 0.2761 22.26 4.295 4.295 2.12 29.99 33.64 0.2761 4.295	Carrying Amounts (NTD)	SensitivityAnalysis Variations Impact on Profit(loss) Impact on Equity ±10% ±34,663 ±34,663 ±10% ±134 ±134 ±10% － － ±10% ±1,274 ±1,274 ±10% ±2,824 ±2,824 ±10% － ±8,690 ±10% － ±464 ±10% ∓1,341 ∓1,341 ±10% ∓107 ∓107 ±10% ∓309 ∓309 ±10% ∓63 ∓63	SensitivityAnalysis Variations Impact on Profit(loss) Impact on Equity ±10% ±34,663 ±34,663 ±10% ±134 ±134 ±10% － － ±10% ±1,274 ±1,274 ±10% ±2,824 ±2,824 ±10% － ±8,690 ±10% － ±464 ±10% ∓1,341 ∓1,341 ±10% ∓107 ∓107 ±10% ∓309 ∓309 ±10% ∓63 ∓63
				Variations ±10% ±10% ±10% ±10% ±10% ±10% ±10% ±10% ±10% ±10% ±10%	Impact on Profit(loss) ±34,663 ±134 － ±1,274 ±2,824 － － ∓1,341 ∓107 ∓309 ∓63
			346,632 1,338 1 12,739 28,238 86,901 4,641 13,412 1,073 3,089 628

The sensitivity analysis included only outstanding foreign currency denominated items at the end of the reporting period under the assumption of a 10% change in foreign currency rates.

 Interest rate risk

The Company is exposed to interest rate risks related to floating rate short-term loans. The management of the Company expected no material change in interest rate; therefore, the Company did not enter into derivative financial instruments to manage the interest rate risk.

For sensitivity analysis of interest rate risk, the analysis was prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. If interest rates had been a quarter of a percent higher/lower and all other variables were held constant, the Company’s pre-tax profit for the years ended December 31, 2020 and 2019 would decrease/increase by NT$1,838 thousand and NT$1,845 thousand, respectively.

 Other price risk

The Company is exposed to equity price risk through its investments in equity securities. Equity investments are held for strategic rather than trading purposes.

～ 40 ～

The Company does not actively trade these investments. All material investments should be approved by the board of directors in order to manage the equity price risk through its investments in equity securities.

If equity prices had been 5% higher/lower, the other comprehensive income for the years ended December 31, 2020 and 2019 would have increased/decreased by NT$11,285 thousand and NT$8,351 thousand, respectively, as a result of the changes in fair value of financial assets at FVTOCI.

e. Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial losses to the Company. The Company is exposed to credit risks from operating activities, primarily accounts receivables, and from investing activities, primarily bank deposits, fixed-income investments and other financial instruments with banks. Credit risk is managed separately for business related and financial related exposures. As of the end of the reporting period, the Company’s maximum credit risk exposure is equal to the carrying amount of the recognized financial assets as stated in the parent company only balance sheets.

 Business related credit risk

In order to maintain the credit quality of accounts receivables, the Company has established procedures to monitor and limit exposure to credit risk on accounts receivables. Credit evaluation is performed in the consideration of the relevant factors, such as customer's financial condition, transaction history and economic conditions. The Company grants credit to customers on the basis of the credit evaluation and collects installments to reduce credit risk.

As of December 31, 2020 and 2019, the Company’s ten largest customers accounted for 68.35% and 88.99% of its total accounts receivables, respectively.

 Financial credit risk

The Company’s exposure to financial credit risk which pertained to bank deposits, fixed-income investments and other financial instruments were evaluated and monitored by the Company’s financial department. Since the counterparties are creditworthy banks and financial institutions with good credit rating, thus, there’s no significant credit risk.

f. Liquidity risk management

The Company manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Company’s operations and mitigate the effects of fluctuations in cash flows. In addition, the management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

The Company relies on bank borrowings as a significant source of liquidity. As of December 31, 2020 and 2019, the amount of unused financing facilities were NT$2,446,353 thousand and NT$2,627,286 thousand, respectively.

 Liquidity risk table for non-derivative financial liabilities

The table below summarized the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments.

～ 41 ～

Non-derivative financial liabilities Short-term loans Accounts payable Current tax liabilities Other payables Long-term loans Lease liabilities Guarantee deposits		2020.12.31	Total $ 735,000 1,153,889 28,018 205,100 47,000 9,120 3,298 $ 2,181,425		2019.12.31
	Less than 1 Year $ 735,000 1,115,497 28,018 183,166 － 2,827 － $ 2,064,508	More than 1 Year $ － 38,392 － 21,934 47,000 6,293 3,298 $ 116,917		Less than 1 Year $ 738,038 1,133,316 13,325 155,124 － 4,584 1,307 $ 2,045,694	More than 1 Year $ － 52,307 － 21,476 － 9,120 2,075 $ 84,978	Total
						$ 738,038 1,185,623 13,325 176,600 － 13,704 3,382
						$ 2,130,672

• Liquidity risk table for derivative financial liabilities

The following table detailed the Company’s liquidity analysis for its derivative financial instruments. The table was based on the undiscounted contractual net cash inflows and outflows on derivative instruments that settle on a net basis, and the undiscounted gross inflows and outflows on those derivatives that require gross settlement. When the amount payable or receivable was not fixed, the amount disclosed was determined by reference to the projected interest rates as illustrated by the yield curves at the end of the year.

Derivative financial instruments Gross settled foreign exchange contract Inflows Outflows	Less than 1 Year 2020.12.31 2019.12.31 $ 48,849 $ － (50,624) － $ (1,775 )$ －
	2020.12.31 $ 48,849 (50,624) $ (1,775 )

7. TRANSACTIONS WITH RELATED PARTIES

Details of transactions between the Company and other related parties were disclosed below:

(1) Names and relationships of related parties

Related Party Air King Industrial Co., Ltd. Ares Technology Co., Ltd. Allis Communications Co., Ltd. Qingdao Liming Industry Co., Ltd. (Qingdao Liming)	Relationship with the Company
	Subsidiary Subsidiary Subsidiary Subsidiary

～ 42 ～

Related Party Relationship with the Company Hengyuan Allis Electric Co., Ltd. Subsidiary PHD Powerhouse Distributions (PTY) Ltd. Subsidiary (Note) AEC International S.r.l (AEC) Subsidiary Nissin-Allis Electric Co., Ltd. Associate Nissin Allis Union Ion Equipment Co., Ltd. Associate Le-Min Industrial Co., Ltd. Related party in substance Taiwan Marine Electric Co., Ltd. Related party in substance Impact Power Inc. Related party in substance Herr-Yeh Sung Key management personnel

Note: Change from associate to subsidiary on December 1, 2020.

(2) Operating revenue

～43～ Line Items Related Parties Categories Operating Revenue Subsidiaries Associates Others Purchase and factory overhead LineItems Related Parties Categories Purchase and factory overhead Subsidiaries Associates Others Receivables from related parties Line Items Related Parties Categories Notes receivable from related parties Others Accounts receivable from related parties Subsidiaries Associates Others	2020 $ 40,933 62,424 2,376 $ 105,733 2020 $ 243,532 116,856 155,617 $ 516,005 2020.12.31 $ 613 $ 52,675 12,766 237 $ 65,678	2019 $ 5,073 68,105 6,270 $ 79,448 2019 $ 220,939 107,633 137,159 $ 465,731 2019.12.31 $ 5,094 $ 975 30,772 1,351 $ 33,098

(3) Purchase and factory overhead

(4) Receivables from related parties

Line Items Other receivables	Related Parties Categories Subsidiaries Associates Others	2020.12.31 $ 38 69 － $ 107	2019.12.31
			$ 20 49 4
			$ 73

The outstanding receivables from related parties are unsecured.

For the years ended December 31, 2020 and 2019, no impairment loss was recognized for receivables from related parties.

(5) Payable to related parties

LineItems Accounts payable to related parties Other payables Others Line Items Selling and marketing expenses Research and development expenses Other income Prepayments Construction in Progress	Related Parties Categories Subsidiaries Associates Others Subsidiaries Others Related Parties Categories Subsidiaries Others Subsidiaries Others Subsidiaries Associates Subsidiaries Subsidiaries	2020.12.31 $ 77,714 39,853 45,279 $ 162,846 $ 562 567 $ 1,129 2020 $ － 629 $ 629 $ 423 － $ 423 $ 154 1,120 $ 1,274 2020.12.31 $ － $ 8,496	2019.12.31 $ 74,757 10,527 32,056 $ 117,340 $ 747 1,053 $ 1,800 2019 $ 30 973 $ 1,003 $ 320 98 $ 418 $ 154 1,027 $ 1,181 2019.12.31 $ 383 $ －

(6) Others

～ 44 ～

The sales and purchase prices and payment terms to related parties were not significantly different from those to third parties. The rental collected monthly was based on those prevailing in the market.

(7) Financing provided

AEC Qingdao Liming			2020
	Highest Balance $ 39,416	Ending Balance $ 36,530	Allowance for Impairment Loss $ － 2019	Interest Rate 3%	Interest revenue
					$ 339
	Highest Balance $ 58,828	Ending Balance $ －	Allowance for Impairment Loss $ －	Interest Rate 3%	Interest revenue
					$ 903

The financing provided to AEC and Qingdao Liming are unsecured.

• (8) Compensation of key management personnel

Compensation of key management personnel
Short-term benefits Post-employment benefits	2020 $ 34,578 455 $ 35,033	2019
		$ 29,944 373
		$ 30,317

The compensation of key management personnel was determined by the remuneration committee based on the performance of individuals and market trends.

(9) Other

As of December 31, 2020 and 2019, the title of farmland with carrying amounts of NT$308 thousand were temporarily registered in the name of Herr-Yeh Sung who had signed an agreement and had pledged the land to the Company. Please refer to Note 6(8).

8. PLEDGED ASSETS

The following assets had been pledged or mortgaged as collateral for short-term and long-term loans, tender bonds provided on construction bidding or performance bonds:

Pledged time deposits (accounted for as other receivables) Property, plant and equipment, net Investment properties, net Total	2020.12.31 $ － 715,152 350,625 $ 1,065,777	2019.12.31 $ 3,577 748,191 352,572 $ 1,104,340

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

As of December 31, 2020, significant contingent liabilities and unrecognized commitments of the Company were as follows:

• (1) The guaranteed notes issued were NT$1,978,575 thousand, including:

～ 45 ～

• a. The guaranteed notes issued for bank loans were NT$1,750,000 thousand.

• b. The guaranteed notes issued for sales contracts performance guarantees were NT$228,575 thousand.

• (2) Information related endorsements/guarantees provided, please refer to Table 2 attached.

• (3) Unused letters of credit were USD$2,146 thousand.

10. SIGNIFICANT LOSS FROM DISASTERS: None.

11. SIGNIFICANT SUBSEQUENT EVENTS: None.

12. OTHERS: None.

13. ADDITIONAL DISCLOSURES

• (1) Information on significant transactions:

• a. Financing provided to others: Please refer to Table 1 attached.

• b. Endorsements/guarantees provided: Please refer to Table 2 attached.

• c. Marketable securities held (excluding investment in subsidiaries, associates and joint controlled entities): Please refer to Table 3 attached.

• d. Marketable securities acquired and disposed at costs or prices at least NT$300 million or 20% of the paid-in capital: None.

• e. Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital: None.

• f. Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None.

• g. Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: Please refer to Table 4 attached.

• h. Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: None.

• i. Trading in derivative instruments ： Please refer to Note 6(2).

• (2) Information on investees (excluding investee company in mainland China): Please refer to Table 5 attached.

(3) Information on investment in mainland China:

• a. Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area: Please refer to Table 6 attached.

～ 46 ～

• b. Significant direct or indirect transactions with the investee, its prices and terms of payment, unrealized gain or loss, and other related information which is helpful to understand the impact of investment in mainland China on financial reports: Please refer to Note 7.

• (4) Information of major shareholder

List of all shareholders with ownership of 5 percent or greater showing the names and the number of shares and percentage of ownership held by each shareholder: None.

～ 47 ～

Allis Electric Co., Ltd. FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2020 Table 1 (In Thousands of New Taiwan Dollars)

No.	Lender	Borrower	Financial Statement Account	Highest Balance for the Period	Ending Balance	Actual Borrowing Amount	Interest Rate	Nature of Financing	Business Transaction Amounts	Reasons for Short-term Financing	Allowance for Impairment Loss	Collateral	Collateral	Financing Limit for Each Borrower (Note 1)	Aggregate Financing Limits (Note 2)
												Item	Value
0	Allis Electric Co., Ltd.	AEC International S.r.l.	Other receivables	$ 39,416	$ 36,530	$ 36,530	3.00%	Business Transaction	$ 49,530	－	$ －	None	None	$ 326,116	$ 652,231

Note 1: The total amount for lending to a company should not exceed 10% of the Company’s net equity.

Note 2: The aggregate amount available for lending to others should not exceed 20% of the Company’s net equity.

～ 48 ～

Allis Electric Co., Ltd. and Subsidiaries ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2020

Table 2 (In Thousands of New Taiwan Dollars)

No .	Endorser/ Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limits on Endorsement/ Guarantee Given on Behalf of Each Party	Maximum Amount Endorsed/ Guaranteed During the Year	Outstanding Endorsement/ Guarantee at the End of the Year	Amount Actually Drawn	Amount Endorsed/ Guaranteed by Collaterals	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in the Latest Financial Statements	Aggregate Endorsement/ Guarantee Limit	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China
		Name	Relation- ship (Note 1)
0	Allis Electric Co., Ltd.	Nissin-Allis Electric Co.,Ltd.	f	$ 1,087,052 (Note 2)	$ 34,500	$ 34,500	$ 22,911	－	1.06%	$ 1,630,579 (Note 2)	－	－	－
		Ares Technology Co.,Ltd.	b		$ 125,000	$ 125,000	$ 62,000	－	3.83%		Y	－	－
		Air King Industrial Co., Ltd.	b		$ 70,000	$ 70,000	$ －	－	2.15%		Y	－	－
		Zhong Mou Construction Co., Ltd.	e		$ 271,962	$ 271,962	$ 271,962	－	8.34%		－	－	－
1	Air King Industrial Co., Ltd.	Allis Electric Co., Ltd.	c	$ 450,000 (Note 3)	$ 71,499	$ 71,499	$ 71,499	－	105.11%	$ 500,000 (Note 3)	－	Y	－

Note 1: Relationships between the endorser/guarantor and the party being endorsed/guaranteed are as follows:

• a. A company that the Corporation has business relationship with.

• b. The Corporation owns directly or indirectly over 50% ownership of the investee company.

• c. The company that owns directly or indirectly hold over 50% ownership of the Corporation.

• d. In between companies that were held over 90% of voting shares directly or indirectly by an entity.

• e. The Corporation is required to provide guarantees or endorsements for the construction project based on the construction contract.

• f. Shareholder of the investee provides endorsements/guarantees to the company in proportion to their shareholding percentages.

• g. According to Consumer Protection Act, companies in the same industry enter into collateral performance guarantees for pre-construction home sales agreements.

• Note2: The total amount of the guarantee provided by the Company to any individual entity should not exceed 1/3 of the Company’s net equity. The total amount of guarantee should not exceed 1/2 of the Company’s net equity.

• Note 3:The total amount of the guarantee provided by Air King Industrial Co., Ltd. to the parent company and the other individual entities should not exceed NT$450,000 thousand and NT$50,000 thousand, respectively. The total amount of guarantee should not exceed NT$500,000 thousand.

～ 49 ～

Allis Electric Co., Ltd. and Subsidiaries MARKETABLE SECURITIES HELD

(Excluding Investment in Subsidiaries, Associates and Joint Controlled Entities) DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars)

Table 3

Table 3
Holding Company Name	Type and Name of Marketable Securities	Relationship with the Company	Financial Statement Account		December 31, 2020
				Shares/Units	Carrying Amount	Percentage of Ownership	Fair Value
Allis Electric Co., Ltd.	Stocks of FIC Global, Inc.	－	Financial assets at fair value through other comprehensive income-current	1,273	17	－	17
	Stocks of Taiwan High Speed Rail Corporation	－	Financial assets at fair value through other comprehensive income-current	4,000	127	－	127
	Stocks of Pacific Electric Wire and Cable Co.,Ltd.	－	Financial assets at fair value through profit or loss- noncurrent	585	－	－	－
	Stocks of Prodisc Technology Inc.	－	Financial assets at fair value through profit or loss- noncurrent	47,632	－	－	－
	Stocks of Yuquan Technology Inc.	－	Financial assets at fair value through profit or loss- noncurrent	35,150	－	－	－
	Stocks of Uni-Circuit Inc.	－	Financial assets at fair value through profit or loss- noncurrent	30,000	－	－	－
	Stocks of Le-Min Industrial Co., Ltd.	Related party in substance	Financial assets at fair value through other comprehensive income-noncurrent	1,948,072	46,014	19.68%	46,014
	Stocks of Arch Meter Corporation	－	Financial assets at fair value through other comprehensive income-noncurrent	1,548,000	27,616	4.29%	27,616
	Stocks of Tangeng Advanced Vehicles Co.,Ltd.	－	Financial assets at fair value through other comprehensive income-noncurrent	7,440,000	137,789	15.48%	137,789
	Stocks of Leadtang Technology Co., Ltd.	－	Financial assets at fair value through other comprehensive income-noncurrent	1,000,000	10,380	12.50%	10,380
	Stocks of ProMOS Technologies Inc.	－	Financial assets at fair value through other comprehensive income-noncurrent	133,366	2,260	0.30%	2,260
	Stocks of Advantage International Green EnergyCo.,Ltd.	－	Financial assets at fair value through other comprehensive income-noncurrent	－	1,501	－	1,501

Allis Electric Co., Ltd. and Subsidiaries

～ 50 ～

MARKETABLE SECURITIES HELD

(Excluding Investment in Subsidiaries, Associates And Joint Controlled Entities)

DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars)

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Company	Financial Statement Account	December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2020
				Shares/Units	Carrying Amount	Percentage of Ownership	Fair Value
Yishun Investment Co., Ltd.	Stocks of Allis Electric Co., Ltd.	Parent company	Financial assets at fair value through other comprehensive income-current	2,556,805	66,733	1.18%	66,733
	Stocks of Taiwan Cement Corporation	－	Financial assets at fair value through other comprehensive income-current	10,000	432	－	432
	Stocks of DaChan Greatwall Corporation	－	Financial assets at fair value through other comprehensive income-current	22,470	1,141	－	1,141
	Stocks of Uni-President Corporation	－	Financial assets at fair value through other comprehensive income-current	10,000	675	－	675
	Stocks of Shihlin Electric & EngineeringCorporation	－	Financial assets at fair value through other comprehensive income-current	5,000	254	－	254
	Stocks of Hong Tai Corporation	－	Financial assets at fair value through other comprehensive income-current	10,000	181	－	181
	Stocks of China Steel Chemical Corporation	－	Financial assets at fair value through other comprehensive income-current	10,000	1,085	－	1,085
	Stocks of China Steel Corporation	－	Financial assets at fair value through other comprehensive income-current	10,000	248	－	248
	Stocks of United Microelectronics Corporation	－	Financial assets at fair value through other comprehensive income-current	30,000	1,415	－	1,415
	Stocks of Yageo Corporation	－	Financial assets at fair value through other comprehensive income-current	2,000	1,036	－	1,036
	Stocks of Taiwan Semiconductor ManufacturingCompanyLimited	－	Financial assets at fair value through other comprehensive income-current	8,000	4,240	－	4,240
	Stocks of United Integrated Services Co.,Ltd.	－	Financial assets at fair value through other comprehensive income-current	5,000	1,080	－	1,080

～ 51 ～

Allis Electric Co., Ltd. and Subsidiaries

MARKETABLE SECURITIES HELD

(Excluding Investment in Subsidiaries, Associates And Joint Controlled Entities)

DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars)

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Company	Financial Statement Account	December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2020
				Shares/Units	Carrying Amount	Percentage of Ownership	Fair Value
	Stocks of Celxpert Energy Corporation	－	Financial assets at fair value through other comprehensive income-current	10,000	467	－	467
	Stocks of Vanguard International Semiconductor Corporation	－	Financial assets at fair value through other comprehensive income-current	15,000	1,740	－	1,740
	Stocks of Sigurd Microelectronics Co.	－	Financial assets at fair value through other comprehensive income-current	30,000	1,357	－	1,357
	Stocks of Watron Technology Corporation	－	Financial assets at fair value through other comprehensive income-noncurrent	822,400	17,188	15.23%	17,188
Allis Communications Co.,Ltd.	Stocks of Watron Technology Corporation	－	Financial assets at fair value through other comprehensive income-noncurrent	206,400	4,314	3.82%	4,314
AEC	Banca Popolare di Bari Spa	－	Financial assets at fair value through other comprehensive income-noncurrent	17,169	751	－	751

～ 52 ～

Allis Electric Co., Ltd. and Subsidiaries

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars)

Table 4

Table 4			FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)	FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)	FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)	FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)
Buyer	Related Party	Relationship	Transaction Details				Abnormal Transaction		Notes/Accounts Receivable (Payable)
			Purchase/ Sale	Amount	% of Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% of Total
Allis Electric Co., Ltd.	Air King Industrial Co., Ltd.	Subsidiary	Purchase	$ 169,645	4.67%	115 days	－	－	$ (36,626)	(3.17%)
Allis Electric Co., Ltd.	Nissin-Allis Electric Co., Ltd.	Associate	Purchase	$ 116,856	3.22%	115 days	－	－	$ (39,853)	(3.45%)

～ 53 ～

Allis Electric Co., Ltd. and Subsidiaries

INFORMATION ON INVESTEES (EXCLUDING INVESTEE COMPANY IN MAINLAND CHINA) FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars)

Table 5

Table 5
Investor Company	Investee Company	Location	Principle Businesses Activities	Original Investment Amount		As of December 31, 2020			Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				December 31,2020	December 31,2019	Shares	%	Carrying Amount
Allis Electric Co., Ltd.	Air King Industrial Co.,Ltd.	Taipei, Taiwan	Design and installation of electrical equipment	$ 28,458	$ 28,458	4,114,275	83.12%	$ 56,540	$ 10,357	$ 8,609	－
	Nissin-Allis Electric Co.,Ltd.	Taoyuan, Taiwan	Manufacturing of SF6 capacitor and GIS	90,000	90,000	9,000,000	30.00%	197,597	108,900	32,670	－
	Ares Technology Co.,Ltd.	New Taipei City, Taiwan	Manufacturing of UPS	75,560	74,652	6,800,000	100.00%	62,474	(1,565 )	(1,884 )	－
	Allis Communications Co.,Ltd.	New Taipei City, Taiwan	Manufacturing of GPS antennas	85,410	85,410	7,685,981	76.86%	35,989	(3,876 )	(2,978 )	－
	Yishun Investment Co.,Ltd.	Taipei, Taiwan	Investment and holding	179,900	179,900	17,990,000	99.94%	99,060	2,016	311	Note
	Nissin Allis Union Ion Equipment Co., Ltd.	Hsinchu, Taiwan	Manufacturing of mechanical equipment and electronicparts	30,000	30,000	4,000,000	40.00%	100,551	54,297	21,718	－
	Allis International Inc.	British Virgin Islands	Investment and holding	－	121,175	－	－	－	(496 )	(496 )	－
	AYM International Corporation	Guam, U.S.	Construction and sale of power and electrical equipment	5,942	5,942	2,000	40.00%	－	－	－	－
	PHD Powerhouse Distributions (PTY) Ltd.	South Africa	Selling of UPS	40,974	21,766	90	90.00%	19,355	1,155	(13,325 )	－
	AEC International S.r.l.	Italy	Selling of electrical equipment	62,771	－	300,000	100.00%	11,179	444	444	－
	Intelicis Corporation	Santa Clara, U.S.	Developing of radio frequency products	－	－	1,875,500	29.16%	－	－	－	－

Note: The Company’s shares held by the subsidiary are recorded as treasury stock, and its dividends received from the Company are excluded from share of profit

～ 54 ～

(loss).

～ 55 ～

Allis Electric Co., Ltd.

INFORMATION ON INVESTMENTS IN MAINLAND CHINA

FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Table 6

Table 6
Investee Company	Principle Businesses Activities	Paid-in Capital		Method of Investment	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2020	Remittance of Funds			Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2020	Net Income (Loss) of the Investee	Ownership of Direct or Indirect Investment	Share of Profit (Loss) (Note)	Carrying Amount as of December 31, 2020	Accumulated Repatriation of Investment Income as of December 31, 2020
						Outward		Inward
Hengyuan Allis Electric Co., Ltd.	Selling of electrical equipment	USD 800		Direct investment	＄12,769 (USD421)	$－		$－	＄12,769 (USD421)	$ (1,114)	65.38%	$ (729)	$ 5,878	$ －
Qingdao Liming Industry Co., Ltd.	Selling of electrical equipment	USD 2,600		Direct investment	$55,012 (USD1,700)	$－		$－	$55,012 (USD1,700)	$ (11,479)	65.38%	$ (7,505)	$ 72,625	$ －
							Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA Net equity＊60% 1,956,694
Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2020			Investment Amounts Authorized by the Investment Commission, MOEA				Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA
							Net equity＊60%
＄106,207(USD3,266)			＄206,102(USD 6,411)				1,956,694

Note: The share of profit (loss) was recognized based on the financial statements certificated by the CPA of the parent company in Taiwan.

～ 56 ～

Allis Electric Co., Ltd.

The CONTENTS OF STATEMENTS OF IMPORTANT ACCOUNTING ITEMS

2020

Statement	of cash and cash equivalents	Statement 1
Statement	of financial assets at FVTOCI-current	Statement 2
Statement	of notes receivable	Statement 3
Statement	of accounts receivable	Statement 4
Statement	of inventories	Statement 5
Statement	of prepayments	Statement 6
Statement	of financial assets at FVTOCI-noncurrent	Statement 7
Statement	of changes in investments accounted for using equity method	Statement 8
Statement	of changes in property, plant and equipment	Note 6(8)
Statement	of changes in right-of-use assets	Note 6(9)
Statement	of changes in investment properties	Note 6(10)
Statement	of changes in intangible assets	Note 6(11)
Statement	of refundable deposits	Statement 9
Statement	of short-term loans	Statement 10
Statement	of accounts payable	Statement 11
Statement	of other payables	Statement 12
Statement	of long-term loans	Statement 13
Statement	of operating revenue	Statement 14
Statement	of operating cost	Statement 15
Statement	of selling and marketing expenses, general and administrative	Statement 16
expenses	and research and development expenses
Statement	of other income	Note 6(20)
Statement	of employee benefits expense, depreciation and amortization by	Statement 17
function

～ 57 ～

Allis Electric Co., Ltd. STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars)

Statement 1
	Item		Amount
Petty cash and cash on hand		$	900
Cash in banks
Checking accounts			2,012
Demand deposits			326,008
Foreign currency deposits (Note)			98,846
Cash equivalents- Time deposits with original maturities			28,100
less than one year
Total		$	455,866
Note：Including US$2,413	thousand, EUR38 thousand, JPY2 thousand	RMB4,585 and SGD465
thousand at exchange rates USD$1=NT$28.10、EUR$1=NT$34.59、JPY$1=NT$0.2725、
CNY$1= NT$4.325	and SGD$1= NT$21.27, respectively.

～ 58 ～

Allis Electric Co., Ltd. STATEMENT OF FINANCIAL ASSETS AT FVTOCI-CURRENT DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Statement 2

Financial instrument name Ordinary shares： Stocks of FIC Global, Inc. Stocks of Taiwan High Speed Rail Corporation Total	Shares 1,273 4,000	Par value (NT$) 10 10	Total Amount $ 13 40 $ 53	Cost $ 30 40 $ 70	Fair Value Unit Price (NT$) Total Amount 13.75 $ 17 31.70 127 $ 144	Pledge
					Unit Price (NT$) 13.75 31.70
						Nil Nil

～ 59 ～

Allis Electric Co., Ltd. STATEMENT OF NOTES RECEIVABLE DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Statement 3

Client Name		Amount
Yuan Lih Electrical Engineering Co., Ltd.	$	10,254
Liu Ho Engineering Co.		8,041
Taiwan Power Engineering Co., Ltd		3,653
Fu Shyang Electric Co., Ltd.		7,198
Fhua-Hsing Electricity Engineering Co., Ltd.		18,048
Land Far Electric Co., Ltd.		4,463
Others（The amount of individual client does not exceed NT$3,212
thousand)		12,587
Total		64,244
Less: Allowance for impairment loss		(352)
Notes receivable, net	$	63,892

～ 60 ～

Allis Electric Co., Ltd. STATEMENT OF ACCOUNTS RECEIVABLE DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars)

Statement 4

Client Name Taiwan Semiconductor Manufacturing Company Limited Taiwan Power Company Nippon Signal Co., Ltd. Taipei Branch Chang Jia M & E Engineering Co. Others ( The amount of individual client does not exceed NT$91,672 thousand) Total Less: Allowance for impairment loss Accounts receivable, net	Amount $ 220,521 404,317 169,522 92,765 946,317 1,833,442 (80,489 ) $ 1,752,953

～ 61 ～

Allis Electric Co., Ltd. STATEMENT OF INVENTORIES DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars)

Statement 5

Item Finished goods Work in process Raw materials Inventory in transit Inventories, net	Amount	Amount
	Cost ＄ 234,331 229,495 448,732 29,224 ＄ 941,782	Net Realizable Value
		＄ 284,896 485,004 448,732 29,224
		＄ 1,247,856

～ 62 ～

Allis Electric Co., Ltd. STATEMENT OF PREPAYMENTS DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Statement 6
Item	Descriptions		Amount
Prepayment for purchases	Down payment	$	9,788
Prepayment for bank guarantee charge	Performance guarantee fee and loan guarantee fee, etc.		13,102
Overpaid Sales Tax			4,765
Others	Prepaid Insurance and prepaid sales tax, etc.		7,103
Total		$	34,758

～ 63 ～

Allis Electric Co., Ltd.

STATEMENT OF FINANCIAL ASSETS AT FVTOCI-NONCURRENT FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars)

		(In Thousands of New Taiwan Dollars)
Statement 7 Financial instrument name Ordinary shares Le-Min Industrial Co., Ltd. Arch Meter Corporation Tangeng Advanced Vehicles Co., Ltd. Leadtang Technology Co., Ltd. ProMOS Technologies Inc Advantage International Green Energy Co., Ltd.	Balance, January 1, 2020 Shares Fair value 1,948,072 $ 32,377 1,431,000 11,705 7,440,000 110,782 1,000,000 10,290 133,336 1,241 － 444 $ 166,839	Increase in 2020 Shares Amount － $ 13,637 117,000 15,911 － 27,007 － 90 － 1,019 － 1,057 $ 58,721	Decrease in 2020 Shares Amount －$ － － － － － － － － － － $ －	Balance, December 31, 2020 Shares Fair value 1,948,072 $ 46,014 1,548,000 27,616 7,440,000 137,789 1,000,000 10,380 133,336 2,260 － 1,501 $ 225,560	Collateral or Pledge
	Shares 1,948,072 1,431,000 7,440,000 1,000,000 133,336 －	Shares － 117,000 － － － －	Shares － － － － － －	Shares 1,948,072 1,548,000 7,440,000 1,000,000 133,336 －
					Nil Nil Nil Nil Nil Nil

～ 64 ～

Allis Electric Co., Ltd. STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars)

Statement 8

Investee Company Air King Industrial Co., Ltd. Nissin-Allis Electric Co., Ltd. Ares Technology Co., Ltd. Allis Communications Co., Ltd. Yishun Investment Co., Ltd. Nissin Allis Union Ion Equipment Co., Ltd. Qingdao Liming Industry Co., Ltd. Hengyuan Allis Electric Co., Ltd. Allis International Inc. AYM International Coporation PHD Powerhouse Distributions (PTY) Ltd. AEC International S.r.l. Intelicis Corporation	Balance, January1, 2020	Balance, January1, 2020	Increase(Decrease)in 2020 Share of Profit (Loss) Remeasurement of defined benefitplans Shares (In Thousands) Amount －$ (1,193 (Note1 ) ) $ 8,609 $ (200) － (7,200 (Note1 ) ) 32,670 (507) 15 454 (Note2) (1,884) (119) － (2,978) － － － 311 － － (10,204 (Note1 ) ) 21,718 (266) － － (7,505) － － － (729) － － (5,969 (Note4 ) ) (496) － － － － － 45 19,208 (Note2 ) (13,325) － 300 12,574 (Note3 ) 444 － － － － － $ 7,670 $ 36,835 $ (1,092)	Unrealized gross profit on sales $ － (394) － － － － － (2,278) － － (176) (1,737) － $ (4,585)	Capital Surplus $ － － － － 1,703 － － － － － － － － $ 1,703	Unrealized gains (loss) from investments in equity instruments measured at fair value through other comprehensive income $ － － － 1,199 10,316 － 1,380 － － － － － － $ 12,895	Exchange differences on translating foreign operation $ － － － － － 482 625 109 － － (518) (102) － $ 596	Balance, December 31, 2020 Shares (In Thousands) Percentage of ownership Amount 4,114 83.12% $ 56,540 9,000 30.00% 197,597 6,800 100.00% 62,474 7,686 76.86% 35,989 17,990 99.94% 99,060 4,000 40.00% 100,551 － 65.38% 72,625 － 65.38% 5,878 3,630 100.00% － － 40.00% － 90 90.00% 19,355 － 100.00% 11,179 － 29.16% － $ 661,248	Balance, December 31, 2020 Shares (In Thousands) Percentage of ownership Amount 4,114 83.12% $ 56,540 9,000 30.00% 197,597 6,800 100.00% 62,474 7,686 76.86% 35,989 17,990 99.94% 99,060 4,000 40.00% 100,551 － 65.38% 72,625 － 65.38% 5,878 3,630 100.00% － － 40.00% － 90 90.00% 19,355 － 100.00% 11,179 － 29.16% － $ 661,248	Share of equity $ 56,540 198,052 62,474 35,989 165,753 100,551 72,625 8,156 － － 9,339 12,915 － $ 722,394	Collateral or Pledge
	Shares (In Thousands) 4,114 9,000 6,785 7,686 17,990 4,000 － － － 3,630 45 － －	Amount	Shares (In Thousands) － － 15 － － － － － － 45 300 －					Shares (In Thousands) 4,114 9,000 6,800 7,686 17,990 4,000 － － 3,630 － 90 － －	Percentage of ownership 83.12% 30.00% 100.00% 76.86% 99.94% 40.00% 65.38% 65.38% 100.00% 40.00% 90.00% 100.00% 29.16%
		$ 49,324 173,028 64,023 37,768 86,730 88,821 78,125 8,776 6,465 － 14,166 － －									Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil
		$ 607,226

Note 1: Cash dividends received.

Note 2: Increase investment.

Note 3: Capital contributed by assigning the monetary claim.

Note 4: Proceeds from liquidation.

～ 65 ～

Allis Electric Co., Ltd. STATEMENT OF REFUNDABLE DEPOSITS DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars)

Statement 9

Item Taiwan Power Company Sewerage Systems Office, Public Works Department, Taipei City Government Chunghwa Telecom Co., Ltd. Others（The amount of each item does not exceed NT$2,246 thousand） Total	Descriptions Performance bonds, warranty bonds, and tender bonds, etc. Performance bonds, warranty bonds, etc. Performance bonds, warranty bonds, etc. Deposits	Amount
		$ 18,727 4,673 7,314 14,207
		$ 44,921

～ 66 ～

Allis Electric Co., Ltd. STATEMENT OF SHORT-TERM LOANS DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars)

Statement 10

Bank Bank of Taiwan Mega Bank Taiwan Cooperative Bank Bank SinoPac First Commercial Bank Hua Nan Commercial Bank Ltd Chang Hua Commercial Bank,Ltd.	Type Unsecured loans Unsecured loans Secured loans Secured loans Unsecured loans Unsecured loans Secured loans Secured loans	Amount $ 100,000 40,000 40,000 80,000 100,000 85,000 190,000 100,000 $ 735,000	Period ofthe Contract 2020/12/22~2021/03/23 2020/11/25~2021/02/23 2020/04/27~2021/04/27 2020/11/20~2021/01/19 2020/11/18~2021/01/15 2020/12/24~2021/03/24 2020/10/27~2021/02/25 2020/10/30~2021/01/29	Range of InterestRate	Loan Commitments	Collateralor Pledge
				1.00% 1.06% 1.10% 1.00% 1.00% 0.95% 1.03% 1.05%	200,000 400,000 460,000 1,115,000 300,000 350,000 1,000,000	Nil Land、buildings and machinery Land and buildings Land and buildings Nil Land and buildings Land

～ 67 ～

Allis Electric Co., Ltd. STATEMENT OF ACCOUNTS PAYABLES DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars)

Statement 11 Client Name Monisun International Co., Ltd. Mercuries Data Systems Ltd. Others（The amount of individual client does not exceed NT$49,552 thousand) Total	Amount $ 174,293 49,727 767,023 $ 991,043

～ 68 ～

Allis Electric Co., Ltd. STATEMENT OF OTHER PAYABLES DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars)

Statement 12

Item Salaries and wages payable Others（The amount of each item does not exceed NT$10,255 thousand） Total	Descriptions Salaries and bonus Commissions payable and equipment payable, etc.	Amount
		$ 113,653 91,447
		$ 205,100

～ 69 ～

Allis Electric Co., Ltd. STATEMENT OF LONG-TERM LOANS (In Thousands of New Taiwan Dollars)

Statement 13

Bank Taiwan Cooperative Bank	Amount $ 47,000	Period of the Contract 2020/12/24~2021/12/24	Range of Interest Rate 1.40%	Loan Commitments 460,000	Collateralor Pledge
					Land and buildings

==> picture [119 x 160] intentionally omitted <==

～ 70 ～

Allis Electric Co., Ltd. STATEMENT OF OPERATING REVENUES FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Statement 14

Item Revenue from sale of goods: Power and electrical equipment Transmission and Distribution apparatus Switchgear Transformer Installation Others Less: Sales return Sales allowance Net revenue from sale of goods Construction contract revenue Other operating revenue: Technical service revenue Net operating revenue	Quantities 7,208 set 24,580set 8,082set 3,127 pcs	Unit price @ 172.34 @ 42.89 @ 121.45 @ 135.89	Amount
			$ 1,242,244 1,054,210 981,519 424,916 220,660 142,404
			4,065,953 450 2,512
			4,062,991 935,066 14,311
			$ 5,012,368

～ 71 ～

Allis Electric Co., Ltd.

STATEMENT OF OPERATING COST FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Statement 15

Statement 15
Item Cost of goods sold： Raw materials used Raw materials, beginning of year Inventory in transit, beginning of year Add: Raw material purchased Freight in Transferred from finished goods Inventory overage Less: Raw materials, end of year Inventory in transit, end of year Raw materials sold Direct labor Factory overhead Manufacturing cost Add: Work-in-process, beginning of year Adjusted standard cost of work-in-process Less: Work-in-process, end of year Transferred to additional cost Transferred to factory overhead Transferred to research and development expenses Cost of finished goods Add: Finished goods, beginning of year Less: Finished goods, end of year Add: Raw materials sold Additional cost Less: Transferred to raw materials Transferred to construction contract cost Adjusted standard cost of finished goods Inventory shortage Allocation of standard cost variances Subtotal Add: After-sale service cost Inventory shortage Less: Revenue from sale of scraps Cost of goods sold Construction contract cost Technical service cost Total	Amount
	Subtotal $ 518,969 1,774 3,614,329 19,351 660,782 6 448,732 29,224 92,624	Total
		$ 4,244,631 134,485 280,495
		4,659,611 286,832 20,419 229,495 5,047 3,778 28,266
		4,700,276 338,372 234,331 92,624 5,047 660,782 883,821 54,956 481 15,890
		3,286,058 3,930 475 1,475
		3,288,988 883,821 10,060
		$ 4,182,869

～ 72 ～

Allis Electric Co., Ltd.

STATEMENT OF SELLING AND MARKETING EXPENSES, GENERAL AND ADMINISTRATIVE EXPENSES AND RESEARCH AND DEVELOPMENT EXPENSES

FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars)

Statement 16

Item Salary and related expense Travelling Expense Freight-out Insurance expense Depreciation expense Material expense Experimental manufacturing expense Others (Note) Total	Selling and Marketing Expenses $ 148,037 12,174 13,431 14,542 235 － － 44,067 $ 232,486	General and Administrative Expenses $ 66,139 1,352 66 4,309 12,730 － － 40,651 $ 125,247	Research and Development Expenses $ 47,547 561 51 3,597 3,466 23,487 9,581 11,482 $ 99,772	Total
				$ 261,723 14,087 13,548 22,448 16,431 23,487 9,581 96,200
				$ 457,505

(Note) The amount of each item in others does not exceed 5% of the account balance.

～ 73 ～

Allis Electric Co., Ltd. STATEMENT OF EMPLOYEE BENEFITS EXPENSE, DEPRECIATION AND AMORTIZATION BY FUNCTION

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars)

Statement 17 Employee benefits expense Salary Labor and health insurance Pension Board compensation Others Depreciation Amortization		2020	Total $ 506,704 42,675 20,059 12,864 23,856 38,935 3,338		2019
	Classified as Operating Costs $ 268,497 22,536 9,407 － 14,459 22,504 1,992	Classified as Operating Expenses $ 238,207 20,139 10,652 12,864 9,397 16,431 1,346		Classified as Operating Costs $ 241,880 22,359 9,431 － 14,514 20,784 2,105	Classified as Operating Expenses $ 241,059 20,583 10,694 11,724 8,701 16,527 1,344	Total
						$ 482,939 42,942 20,125 11,724 23,215 37,311 3,449

• Note 1. For the years ended December 31, 2020 and 2019, the Company had 644 and 638 monthly average number of employees, respectively, which included 6 non-employee directors for both years.

• 2.Average employee benefits expense for the years ended December 31, 2020 and 2019 were $930 thousand and $901 thousand, respectively. Average salary for the years ended December 31, 2020 and 2019 were $794 thousand and $764 thousand, respectively. The average salary changed by 3.93% year over year.

• The Company did not have supervisors for the years ended December 31, 2020 and 2019. Therefore, there was no compensation to the supervisor.

• The Company’s compensation and remuneration policy:

• A.Remuneration to Directors is paid with reference to the typical pay level. According to the Company’s Articles of Incorporation, if there is profit in any given fiscal year, compensation and remuneration to directors is accrued and reviewed by the Compensation Committee and the Board of Directors. The compensation arrangement shall be reported in the shareholders’ meeting. Directors who also serve as executive officers will receive compensation based on the following rules B & C.

• B. The compensation and remuneration of executive officers is guided in accordance with the Company’s “Rules for Distribution of Salaries and Bonus to Employees (including the executive officers)”. Executives’ compensation are based on individual performance, their contribution to the Company's overall performance and industry standards. It is reviewed by the Compensation Committee and consequently reward the executive officers with the approval of the Board of

～ 74 ～

Directors.

• C. The compensation and remuneration of employees is based on individual competence, contribution, and performance appraisal results, which shows positive relation to the Company’s overall performance. The compensation program includes base salary, bonus & profit sharing, and benefits. Base salary is determined by roles & responsibilities, current market salary standards and Company’s policy. Bonus & profit sharing are in relation to individuals’ contribution, achievements of departmental targets or the Company’s performance. Benefits are not intended to only meet regulations and requirements but also designed to meet individuals’ needs and for mutual good of all employees.

～ 75 ～