AEC — Annual Report 2022

Nov 10, 2022

Stock code: 1514

Allis Electric Co., Ltd.

Parent Company Only Financial Statements for the Years Ended December 31, 2022 and 2021 (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 18～42 42～45 45 45 － － － 45～54 46、55 46、56 － 57～75

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, 2022 and 2021, 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, 2022 and 2021, 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 Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the 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, 2022. 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, 2022 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

～ I ～

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, 2022 and 2021, 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, 2022 and 2021, the aforementioned investment accounted for using equity method were NT$435,050 thousand and NT$332,930 thousand, respectively, which represented 4.56% and 4.21%, respectively, of the total assets. Allis Electric Ltd.’s share of comprehensive income or loss of such investee companies were NT$82,180 thousand and NT$44,411 thousand for the years ended December 31, 2022 and 2021, respectively, which represented 17.55% and 10.46%, 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.

～ II ～

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 Standards on Auditing of the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent company only financial statements.

As part of an audit in accordance with the Standards on Auditing of 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

～ III ～

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, 2022 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 Yu-Ling Hung and Min-Chih Chuo.

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

March 14, 2023

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.

～ IV ～

Allis Electric Co., Ltd. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2022 AND 2021

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss 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 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 6 Note 4 and 6 Note 4 and 6 Note 4, 6,7 and 8 Note 4 and 6 Note 4, 6 and 8 Note 4 and 6 Note 4 and 6 Note 6 and 7 Note 6	2022.12.31 2021.12.31 Amount % Amount % LIABILITIES AND EQUITY CURRENT LIABILITIES $ 423,536 4.44 $ 278,868 3.53 2100 Short-term loans 1,883 0.02 － － 2120 Financial liabilities at fair value through profit or loss 162 0.00 215 0.00 2130 Contract liabilities 302,814 3.18 237,505 3.01 2170 Accounts payable 119,487 1.25 102,259 1.29 2180 Accounts payable to related parties 3,504 0.04 － － 2200 Other payables 3,177,045 33.33 2,878,867 36.44 2230 Current tax liabilities 180,016 1.89 133,737 1.69 2250 Provisions 91,566 0.96 105,699 1.33 2255 Short-term onerous contracts provision 2,173,600 22.80 1,423,257 18.02 2280 Lease liabilities 58,018 0.61 66,950 0.85 2399 Other current liabilities 17 0.00 － － 21xx Total current liabilities 6,531,648 68.52 5,227,357 66.16 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 241,789 2.54 249,837 3.16 856,412 8.98 746,150 9.44 EQUITY 1,358,834 14.25 1,175,322 14.88 3100 Share capital 3,465 0.04 6,122 0.08 3200 Capital surplus 353,552 3.71 355,701 4.50 Retained earnings 5,791 0.06 7,776 0.10 3310 Legal reserve 23,524 0.25 20,730 0.26 3320 Special reserve 720 0.01 5,719 0.07 3350 Unappropriated earnings 126,612 1.33 70,565 0.89 3300 Total retained earnings 19,971 0.21 26,272 0.34 3400 Other equity 9,748 0.10 9,748 0.12 3500 Treasury Stock 3,000,418 31.48 2,673,942 33.84 3xxx Total equity $ 9,532,066 100.00$ 7,901,299 100.00 TOTAL LIABILITIES AND EQUITY The accompanying notes are an integral part of the parent company only financial statements.	Notes Note 6 Note 4 and 6 Note 4 and 7 Note 7 Note 7 Note 4 Note 4 and 6 Note 4 Note 6 Note 4 Note 4 and 6 Note 6	2022.12.31 Amount ％ $ 2,027,000 21.27 － － 720,992 7.56 1,824,949 19.15 344,256 3.61 382,897 4.02 40,326 0.42 12,100 0.13 62 0.00 2,688 0.03 1,424 0.01 5,356,694 56.20 150,000 1.57 174,220 1.83 907 0.01 15,515 0.16 3,369 0.04 344,011 3.61 5,700,705 59.81 2,397,430 25.15 73,039 0.76 204,656 2.15 450,584 4.73 693,356 7.27 1,348,596 14.15 53,912 0.57 (41,616 ) (0.44) 3,831,361 40.19 $ 9,532,066 100.00	2021.12.31 Amount ％ $ 1,718,353 21.75 442 0.01 242,229 3.07 1,402,644 17.75 326,966 4.14 233,614 2.96 38,820 0.49 12,100 0.15 62 0.00 2,698 0.03 724 0.01 3,978,652 50.36 150,000 1.90 174,220 2.20 3,595 0.05 55,965 0.71 3,297 0.04 387,077 4.90 4,365,729 55.26 2,283,267 28.90 71,031 0.90 167,107 2.11 451,387 5.71 473,428 5.99 1,091,922 13.81 130,966 1.66 (41,616 ) (0.53 ) 3,535,570 44.74 $ 7,901,299 100.00
				Amount $ 2,027,000 － 720,992 1,824,949 344,256 382,897 40,326 12,100 62 2,688 1,424 5,356,694 150,000 174,220 907 15,515 3,369 344,011 5,700,705 2,397,430 73,039 204,656 450,584 693,356 1,348,596 53,912 (41,616 ) 3,831,361 $ 9,532,066	Amount $ 1,718,353 442 242,229 1,402,644 326,966 233,614 38,820 12,100 62 2,698 724 3,978,652 150,000 174,220 3,595 55,965 3,297 387,077 4,365,729 2,283,267 71,031 167,107 451,387 473,428 1,091,922 130,966 (41,616 ) 3,535,570 $ 7,901,299

(With Earnest & Co., CPAs auditors’ report dated March 14, 2023)

～ 1 ～

Allis Electric Co., Ltd.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (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 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 Note 6	2022	％ 100.00 85.89 14.11 0.02 14.09 4.69 2.46 1.59 0.12 8.86 5.23 0.32 0.48 (0.33 ) 2.17 2.64 7.87 0.79 7.08 0.36 (0.49 ) (0.53 ) 0.09 0.01 (0.56 ) 6.52	2021	％ 100.00 84.98 15.02 0.09 14.93 4.66 2.51 1.66 0.13 8.96 5.97 0.43 (0.01 ) (0.19 ) 1.34 1.57 7.54 0.84 6.70 0.20 0.30 0.73 (0.05 ) (0.01 ) 1.17 7.87
		Amount $ 7,185,438 6,171,307 1,014,131 1,364 1,012,767 337,485 176,539 114,317 8,472 636,813 375,954 23,220 34,317 (24,144 ) 156,128 189,521 565,475 56,644 508,831 25,931 (35,328 ) (37,999 ) 6,067 762 (40,567 ) $ 468,264 $ 2.15		Amount $ 5,390,995 4,581,055 809,940 4,704 805,236 251,177 135,598 89,477 7,007 483,259 321,977 23,286 (457 ) (9,973 ) 72,298 85,154 407,131 45,610 361,521 10,130 16,236 39,379 (2,465 ) (332 ) 62,948 $ 424,469 $ 1.53

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

(With Earnest & Co., CPAs auditors’ report dated March 14, 2023)

～ 2 ～

Allis Electric Co., Ltd.

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

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

BALANCE, JANUARY 1, 2021 Appropriation of the 2020 earnings Legal reserve appropriated Cash dividends-NT$0.70 per share Stock dividends-NT$0.50 per share Net income in 2021 Other comprehensive income and loss in 2021, net of income tax Total comprehensive income in 2021 Cash dividends distributed to subsidiaries Changes in ownership interests in 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, 2021 Appropriation of the 2021 earnings Legal reserve appropriated Cash dividends-NT$0.75 per share Stock dividends-NT$0.50 per share Net income in 2022 Other comprehensive income and loss in 2022, net of income tax Total comprehensive income in 2022 Cash dividends distributed to subsidiaries Changes in ownership interests in 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, 2022	Share Capital Shares (In Thousands) Amount 217,454 $ 2,174,540 － － － － 10,873 108,727 － － － － － － － － － － － － － － － － 228,327 2,283,267 － － － － 11,416 114,163 － － － － － － － － － － － － － － － － 239,743 $ 2,397,430	Capital Surplus $ 68,870 － － － － － － 1,789 511 － (139) － 71,031 － － － － － － 2,012 － (4) － $ 73,039		RetainedEarnings Special Reserve Unappropriated Earnings $ 452,190 $ 393,242 － (34,354) － (152,217) － (108,727) － 361,521 － 9,647 － 371,168 － － － － － 3,513 － － (803) 803 451,387 473,428 － (37,549) － (171,245) － (114,163) － 508,831 － 29,165 － 537,996 － － － (3,236) － 7,322 － － (803) 803 $ 450,584$ 693,356	Other Equity Exchange Differences on Translating Foreign Operation Unrealized Gains (Losses) on Financial Assets Measured at Fair Value Through Other Comprehensive Income $ (11,010) $ 92,188 － － － － － － － － (2,797) 56,098 (2,797) 56,098 － － － － － (3,513) － － － － (13,807) 144,773 － － － － － － － － 6,829 (76,561) 6,829 (76,561) － － － － － (7,322) － － － － $ (6,978) $ 60,890	Treasury Stock $ (41,616) － － － － － － － － － － － (41,616) － － － － － － － － － － － $ (41,616)	Total Equity $ 3,261,157 － (152,217 ) － 361,521 62,948 424,469 1,789 511 － (139 ) － 3,535,570 － (171,245 ) － 508,831 (40,567 ) 468,264 2,012 (3,236 ) － (4 ) － $ 3,831,361
	Shares (In Thousands) 217,454 － － 10,873 － － － － － － － － 228,327 － － 11,416 － － － － － － － － 239,743		Legal Reserve $ 132,753 34,354 － － － － － － － － － － 167,107 37,549 － － － － － － － － － － $ 204,656	Special Reserve $ 452,190 － － － － － － － － － － (803) 451,387 － － － － － － － － － － (803) $ 450,584	Exchange Differences on Translating Foreign Operation $ (11,010) － － － － (2,797) (2,797) － － － － － (13,807) － － － － 6,829 6,829 － － － － － $ (6,978)

The accompanying notes are an integral part of the parent company only financial statements. (With Earnest & Co., CPAs auditors’ report dated March14, 2023)

～ 3 ～

Allis Electric Co., Ltd.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(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 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 loss on disposal of property, plant and equipment Unrealized gross profit on sales Changes in operating assets and liabilities Increase in contract assets Increase in notes receivable Decrease (increase) in notes receivable from related parties Increase in accounts receivable Increase in accounts receivable from related parties Decrease in other receivables 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 in contract liabilities Increase in accounts payable Increase in accounts payable to related parties Increase in other payables Decrease in short-term onerous contracts provision Increase in other current liabilities Decrease in net defined benefit liabilities Cash inflow (outflow) generated from (used in) operations Income tax paid Net cash generated from (used in) operating activities	2022 $ 565,475 45,379 3,029 8,472 (10,918) 24,144 (3,413) (1,562) (156,128) － 1,364 (65,309) (17,332) (3,504) (306,546) (46,279) 13,310 (750,343) 8,932 (17) 8,593 478,763 422,305 17,290 121,402 － 700 (14,519) 343,288 (57,932) 285,356	2021 $ 407,131 39,229 2,923 7,007 (1,187) 9,973 (3,105) (1,953) (72,298) 481 4,704 (130,924) (38,536) 613 (1,132,752) (68,059) 101,325 (481,475) (32,192) 175 (146) 41,510 411,601 164,120 28,213 (1,571) 12 (14,353) (759,534) (38,015) (797,549)

～ 4 ～

Allis Electric Co., Ltd.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of financial assets at fair value through other comprehensive income Disposal of financial assets at fair value through other comprehensive income Acquisition of investments accounted for using equity method Acquisition of property, plant and equipment Acquisition of intangible assets Decrease (increase) in prepayments for equipment Increase in refundable deposits Decrease (increase) 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 generated from financing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS, END OF THE YEAR	2022 $ (37,995) 10,768 (69,026) (196,966) (1,044) 4,999 (56,047) 6,801 3,736 82,696 (252,078) 12,169,221 (11,860,574) 72 (2,698) － (23,382) (171,245) (4) 111,390 144,668 278,868 $ 423,536	2021 (8,112 ) － (14,997 ) (235,890 ) (2,638 ) (5,719 ) (25,644 ) (49,456 ) 2,986 38,524 (300,946 ) 7,707,728 (6,724,375 ) (1 ) (2,827 ) 103,000 (9,672 ) (152,217 ) (139 ) 921,497 (176,998 ) 455,866 $ 278,868

The accompanying notes are an integral part of the parent company only financial statements. (With Earnest & Co., CPAs auditors’ report dated March 14, 2023)

～ 5 ～

Allis Electric Co., Ltd.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (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 14, 2023.

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

• (1) Initial application of the amendments to 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 endorsed by the FSC for application starting from 2023

New,Amended and Revised Standards and Interpretations Amendments to IAS 1 “Disclosure of Accounting Policies “ Amendments to IAS 8 “Definition of Accounting Estimates” Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”	Effective Date Announced byIASB
	January 1, 2023 January 1, 2023 January 1, 2023

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.

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

New,Amended and RevisedStandards and Interpretations Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” Amendments to IFRS 16 “Lease Liability in a Sale and Leaseback ” IFRS 17 “Insurance Contracts”	Effective Date Announced byIASB
	To be determined by IASB January 1, 2024 January 1, 2023

～ 6 ～

Effective Date Announced New, Amended and Revised Standards and Interpretations by IASB Amendments to IFRS 17 January 1, 2023 Amendments to IFRS 17 “Initial Application of IFRS 17 and IFRS 9- January 1, 2023 Comparative Information ” Amendments to IAS 1 “Classification of Liabilities as Current or January 1, 2024 Non-current” Amendments to IAS 1 “Non-current Liabilities with Covenants” January 1, 2024

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

～ 7 ～

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:

• 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

～ 8 ～

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 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.

～ 9 ～

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 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

～ 10 ～

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.

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.

～ 11 ～

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 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.

Unrealized profits and losses from downstream transactions with a subsidiary are eliminated in full in the parent company only financial statements. Profits and losses from upstream transactions with a subsidiary and sidestream transactions between subsidiaries are recognized in the parent company only financial statements only to the extent of interests in the subsidiary that are not related to 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

～ 12 ～

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 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

～ 13 ～

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.

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

～ 14 ～

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.

(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.

～ 15 ～

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, 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

～ 16 ～

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 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, 2022 and 2021, the carrying amounts of accounts receivable were NT$3,357,061 thousand and NT$3,012,604 thousand, respectively.

～ 17 ～

6. SIGNIFICANT ACCOUNTS DISCLOSURES

• (1) Cash 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	2022.12.31 $ 980 422,556 － $ 423,536	2021.12.31 $ 950 250,263 27,655 $ 278,868

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

Financial liabilities held for trading Derivative Instruments: Foreign exchange contracts	2022.12.31 $ 1,883	2021.12.31 $ (442)

• 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:

2022.12.31 Sell NTD / Buy USD 2021.12.31 Sell NTD / Buy USD	MaturityDate 2023.03.01-2023.06.02 2022.01.14-2022.06.01	Contract Amount
		USD 2,800 /NTD 83,195 USD 10,818 /NTD 108,162

Net gain on derivative instruments recognized for the years ended December 31, 2022 and 2021 were NT$10,918 thousand and NT$1,187 thousand, respectively.

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

Listed shares Unlisted shares Total Current Non-current Total	2022.12.31 $ 162 241,789 $ 241,951 $ 162 241,789 $ 241,951	2021.12.31 $ 215 249,837 $ 250,052 $ 215 249,837 $ 250,052

As of December 31, 2022 and 2021, FVTOCI were not pledged as collateral for bank borrowings.

～ 18 ～

(4) Notes receivable and accounts receivable

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	2022.12.31	2021.12.31 $ 102,780 (521) $ 102,259 $ 2,981,209 (15,015 ) (87,327 ) $ 2,878,867 $ 133,737
	$ 120,112 (625)
	$ 119,487
	$ 3,267,737 (19,527 ) (71,165 )
	$ 3,177,045
	$ 180,016

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:

2022.12.31
	Past Due				Past Due		Past Due		Past Due		Past Due		Past Due
Not Past Due	0-3 Months			3-6 Months		6-9 Months		9-12 Months			1-2 Years	Over 2 Years			Total
Gross
carrying
amount $ 2,536,658	$	343,594		$	257,269	$	122,131	$	121,662		$ 38,125	$	28,314	$	3,447,753
Loss
allowance (30,928)		(9,639	)		(2,572 )		(4,713)		(3,825	)	(8,497)		(10,991 )		(71,165)
Amortized
cost $2,505,730	$	333,955		$	254,697	$	117,418	$	117,837		$29,628	$	17,323	$	3,376,588
2021.12.31
	Past Due				Past Due		Past Due		Past Due		Past Due		Past Due
Not Past Due	0-3 Months			3-6 Months		6-9 Months		9-12 Months			1-2 Years	Over 2 Years			Total
Gross
carrying
amount $ 2,072,857	$	645,185		$	162,247	$	87,750	$	64,324		$ 38,786	$	43,797	$	3,114,946
Loss
allowance (35,476)		(6,452	)		(1,622 )		(877)		(2,822	)	(1,683)		(38,395)		(87,327)
Amortized
cost $2,037,381	$	638,733		$	160,625	$	86,873	$	61,502		$37,103	$	5,402	$	3,027,619
The movements of		the loss		allowance of notes receivable						and accounts receivables were
as follows:
									2022				2021
Balance, beginning	of the year								$		87,848		$	80,841
Loss allowance recognized											8,472				7,007
Amounts written off										(24,530 )					－
Balance, end of the	year								$		71,790		$	87,848

～ 19 ～

(5) Other receivables, net

Pledged time deposits Loan receivable Restricted deposit Others Other receivables, net Current Non-current Total Inventories Finished goods Work-in-process Raw materials Inventory in transit Inventories, net	2022.12.31 $ 5,072 79,185 17,760 9,520 $ 111,537 $ 91,566 19,971 $ 111,537 2022.12.31 $ 421,623 537,550 1,177,844 36,583 $ 2,173,600	2021.12.31 $ 5,033 85,986 37,798 3,154 $ 131,971 $ 105,699 26,272 $ 131,971 2021.12.31 $ 335,843 435,852 605,526 46,036 $ 1,423,257

(6) Inventories

For the cost of inventories recognized as cost of goods sold for the years ended December 31, 2022 and 2021, please refer to Note 6(19).

For the years ended December 31, 2022 and 2021, write-down of inventories to net realizable value were included in the cost of goods sold as follows:

Inventory losses	2022 $ 20,038	2021 $ 21,958

As of December 31, 2022 and 2021, inventories were not pledged as collateral for bank borrowings.

(7) Investments accounted for using equity method

Investments accounted for using equity method consisted of the following:

Subsidiaries Associates	2022.12.31 $ 513,588 342,824 $ 856,412	2021.12.31 $ 426,036 320,114 $ 746,150

～ 20 ～

a. Investments in subsidiaries

Subsidiaries consisted of the following:

	2022.12.31	2022.12.31	2021.12.31	2021.12.31	2021.12.31
	% of		% of
Name of Subsidiaries	Ownership	Amount	Ownership		Amount
Air King Industrial Co., Ltd.	83.12%	$113,072	83.12%	$	70,307
Ares Technology Co., Ltd.	100.00%	68,200	100.00%		64,081
Allis Communications Co., Ltd.	82.64%	62,507	82.64%		57,178
Yishun Investment Co., Ltd.	99.94%	103,400	99.94%		135,613
Hengyuan Allis Electric Co., Ltd.	65.38%	74,183	65.38%		86,041
AEC International S.r.l.	70.00%	17,682	100.00%		4,879
PHD Powerhouse Distributions
(PTY) Ltd.	90.00%	10,433	90.00%		7,937
Allis Electric (S) Pte. Ltd.	100.00%	64,111	－		－
Total		$513,588		$	426,036

The aforementioned subsidiaries were not listed companies.

Please refer to Table 6 and 7 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 Total	2022.12.31 % of Ownership Amount 30.00% $ 250,109 40.00% 92,715 40.00% － 29.16% － $ 342,824	2021.12.31	2021.12.31
	% of Ownership 30.00% 40.00% 40.00% 29.16%	% of Ownership	Amount
		30.00% 40.00% 40.00% 29.16%	$ 214,265 105,849 － －
			$ 320,114

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	2022.12.31 $ 1,071,857 2022 $ 70,649 2,823 $ 73,472	2021.12.31 $ 981,006 2021 $ 53,396 (835 ) $ 52,561

～ 21 ～

(8) Property, plant and equipment

Property, plant and equipment	Property, plant and equipment	Property, plant and equipment
Land Buildings Machinery and equipment Transportation equipment Other equipment Construction in progress Total carrying amounts Cost Land Buildings Balance at January 1, 2022 $ 579,483 $ 557,637 Additions － 1,727 Disposals － － Internal transfer －247,054 Balance at December 31, 2022 $579,483$806,418 Accumulated depreciation Balance at January 1, 2022 $ －$ 365,237 Depreciation expense — 16,174 Disposals － － Balance at December 31, 2022 $ － $381,411 Carrying amounts at December 31, 2022 $579,483$425,007 Cost Land Buildings Balance at January 1, 2021 $ 573,475 $ 555,787 Additions 6,008 3,812 Disposals － (1,962 Balance at December 31, 2021 $579,483$557,637 Accumulated depreciation Balance at January 1, 2021 $ －$ 356,143 Depreciation expense — 11,056 Disposals － (1,962 Balance at December 31, 2021 $ － $365,237 Carrying amounts at December 31, 2021 $579,483$192,400			Machinery and Equipment	Transportation Equipment	2022.12.31 2021.12.31 $ 579,483 $ 579,483 425,007 192,400 68,020 57,323 10,259 8,970 53,868 44,927 222,197 292,219 $ 1,358,834$ 1,175,322 Other Equipment Construction in Progress Total $ 114,507 $ 292,219 $ 2,007,677 17,385 177,032 224,085 ) (1,307 ) － (4,487 ) － (247,054 ) － $ 130,585 $ 222,197$2,227,275 $ 69,580 $ －$ 832,355 8,444 － 40,573 ) (1,307) － (4,487) $ 76,717$ － $ 868,441 $ 53,868$ 222,197$1,358,834 Other Equipment Construction in Progress Total $ 107,248 $ 91,103 $ 1,793,407 12,035 201,116 235,890 (4,776) － (21,620) $ 114,507 $ 292,219$2,007,677 $ 66,876 $ －$ 819,246 7,233 － 34,248 (4,529) － (21,139) $ 69,580$ － $ 832,355 $ 44,927$ 292,219$1,175,322
					Other Equipment $ 114,507 17,385 ) (1,307 ) － $ 130,585 $ 69,580 8,444 ) (1,307) $ 76,717 $ 53,868 Other Equipment $ 107,248 12,035 (4,776) $ 114,507 $ 66,876 7,233 (4,529) $ 69,580 $ 44,927
Balance at January 1, 2022 Additions Disposals Internal transfer Balance at December 31, 2022 Accumulated depreciation	$ 579,483 － － －	$ 557,637 1,727 － 247,054				$ 292,219 177,032 － (247,054
	$579,483	$806,418	$ 444,543	$ 44,049		$ 222,197
	$ － — －	$ 365,237 16,174 －	$ 364,954 14,281 (2,712 )	$ 32,584 1,674 (468		$ － － －
Balance at January 1, 2022 Depreciation expense Disposals Balance at December 31, 2022 Carrying amounts at December 31, 2022 Cost
	$ －	$381,411	$ 376,523	$ 33,790		$ －
	$579,483	$425,007	$ 68,020	$ 10,259		$ 222,197
	Land	Buildings	Machinery and Equipment	Transportation Equipment		Construction in Progress
Balance at January 1, 2021 Additions Disposals Balance at December 31, 2021 Accumulated depreciation	$ 573,475 6,008 －	$ 555,787 3,812 (1,962	$ 426,505 10,654 ) (14,882	$ 39,289 2,265 ) －		$ 91,103 201,116 －
	$579,483	$557,637	$ 422,277	$ 41,554		$ 292,219
	$ － — －	$ 356,143 11,056 (1,962	$ 364,955 14,647 ) (14,648)	$ 31,272 1,312 －		$ － － －
Balance at January 1, 2021 Depreciation expense Disposals Balance at December 31, 2021 Carrying amounts at December 31, 2021
	$ －	$365,237	$ 364,954	$ 32,584		$ －
	$579,483	$192,400	$ 57,323	$ 8,970		$ 292,219

～ 22 ～

• 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
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. For the year ended December 31, 2022 and 2021, capitalized interest were NT$1,350 thousand and NT$1,816 thousand, respectively; capitalization rate were 1.26% and 0.98%, respectively.

• d. As of December 31, 2022 and 2021, 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 Other equipment Total carrying amounts Cost Balance at January 1, 2022 Additions Decrease Balance at December 31, 2022 Accumulated depreciation Balance at January 1, 2022 Depreciation expense Decrease Balance at December 31, 2022 Carrying amounts at December 31, 2022 Cost Balance at January 1, 2021 Additions Decrease Balance at December 31, 2021 Accumulated depreciation Balance at January 1, 2021 Depreciation expense Decrease Balance at December 31, 2021 Carrying amounts at December 31, 2021	Buildings $ 761 － － $ 761 $ 702 59 － $ 761 $ － Buildings $ 761 － － $ 761 $ 468 234 － $ 702 $ 59	2022.12.31 2021.12.31 $ －$ 59 3,465 6,063 $ 3,465$ 6,122 Transportation Equipment Other Equipment Total $ － $ 13,858 $ 14,619 － － － － － － $ －$ 13,858 $ 14,619 $ －$ 7,795$ 8,497 － 2,598 2,657 － － － $ － $ 10,393 $ 11,154 $ － $ 3,465$ 3,465 Transportation Equipment Other Equipment Total $ 3,650 $ 13,858 $ 18,269 － － － (3,650 ) － (3,650) $ －$ 13,858 $ 14,619 $ 3,650 $ 5,197$ 9,315 － 2,598 2,832 (3,650 ) － (3,650) $ － $ 7,795 $ 8,497 $ － $ 6,063$ 6,122

～ 23 ～

(10) Investment properties

Land Buildings Total carrying amounts Cost Balance at January 1, 2022 Additions Balance at December 31, 2022 Accumulated depreciation Balance at January 1, 2022 Depreciation expense Balance at December 31, 2022 Carrying amounts at December 31, 2022 Cost Balance at January 1, 2021 Additions Balance at December 31, 2021 Accumulated depreciation Balance at January 1, 2021 Depreciation expense Balance at December 31, 2021 Carrying amounts at December 31, 2021	Land $ 308,269 － $ 308,269 $ － — $ － $ 308,269 Land $ 308,269 － $ 308,269 $ － — $ － $ 308,269	2022.12.31 $ 308,269 45,283 $ 353,552 Buildings $ 74,077 － $ 74,077 $ 26,645 2,149 $ 28,794 $ 45,283 Buildings $ 74,077 － $ 74,077 $ 24,496 2,149 $ 26,645 $ 47,432	2021.12.31 $ 308,269 47,432 $ 355,701 Total $ 382,346 － $ 382,346 $ 26,645 2,149 $ 28,794 $ 353,552 Total $ 382,346 － $ 382,346 $ 24,496 2,149 $ 26,645 $ 355,701

• 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$ 518,729 thousand and NT$ 483,666 thousand as of December 31, 2022 and 2021, 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	2022.12.31 $ 1,520 4,271 $ 5,791	2021.12.31 $ 2,622 5,154 $ 7,776

～ 24 ～

Cost Balance at January 1, 2022 Additions Balance at December 31, 2022 Accumulated amortization Balance at January 1, 2022 Amortization expense Balance at December 31, 2022 Carrying amounts at December 31, 2022 Cost Balance at January 1, 2021 Additions Balance at December 31, 2021 Accumulated amortization Balance at January 1, 2021 Amortization expense Balance at December 31, 2021 Carrying amounts at December 31, 2021	Computer Software $ 35,948 － $ 35,948 $ 33,326 1,102 $ 34,428 $ 1,520 Computer Software $ 33,969 1,979 $ 35,948 $ 32,245 1,081 $ 33,326 $ 2,622	Other Intangible Assets $ 34,631 1,044 $ 35,675 $ 29,477 1,927 $ 31,404 $ 4,271 Other Intangible Assets $ 33,972 659 $ 34,631 $ 27,635 1,842 $ 29,477 $ 5,154	Total $ 70,579 1,044 $ 71,623 $ 62,803 3,029 $ 65,832 $ 5,791
			Total $ 67,941 2,638 $ 70,579 $ 59,880 2,923 $ 62,803 $ 7,776

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

Computer software 2-7 years Other intangible assets 3-10 years

(12) Other assets

Other assets
		2022.12.31	2021.12.31
Golf club card	$	12,847 $	12,847
Others		17	－
Less: Accumulated impairment		(3,099)	(3,099)
Total	$	9,765$	9,748
Current	$	17 $	－
Non-current		9,748	9,748
Total	$	9,765$	9,748

～ 25 ～

(13) Short-term loans

Short-term loans
		2022.12.31	2021.12.31
Purchase loans	$	－$	48,353
Unsecured loans		1,227,000	870,000
Secured loans		800,000	800,000
	$	2,027,000$	1,718,353
Annual interest rate	1.40%～2.03% 0.82%～1.21%

• (14) Provisions

Warranty provision Balance, beginning of the year Provisions recognized Utilized Balance, end of the year	2022 $ 12,100 4,632 (4,632 ) $ 12,100	2021 $ 12,100 2,591 (2,591) $ 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	ans
Bank Loanperiod and repayment term Taiwan Cooperative Bank 2020.12.24～2029.12.24 Taiwan Cooperative Bank 2021.12.25～2029.12.24 Taiwan Cooperative Bank 2021.12.30～2029.12.30 Less: Current portion of long-term loans Total	Loanperiod and repayment term	2022.12.31		2021.12.31 Interest (%) Amount 1.40% $ 47,000 1.40% 103,000 － － － $ 150,000
		Interest (%) － － 1.901%	Amount	Interest (%) 1.40% 1.40% －
			$ － － 150,000 －
			$ 150,000

• (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, 2022 and 2021, please refer to Note 6(23).

～ 26 ～

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 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:

defined benefit plans were as follows:
	2022.12.31		2021.12.31
Present value of defined benefit obligation	$	(411,820)	$	(423,736)
Fair value of plan assets		396,305		367,771
Net defined benefit liabilities	$	(15,515)	$	(55,965)

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

follows:
		2022		2021
Balance, beginning of year	$	423,736	$	452,930
Current service cost		483		844
Interest expense		2,521		1,331
Remeasurement
Actuarial gain - changes in financial
assumptions		(12,675)		(7,273)
Actuarial loss - experience adjustments		15,843		2,665
Benefits paid		(18,088)		(26,761)
Balance, end of year	$	411,8204	$	423,7362
Movements in the fair value of the plan assets		were as follows:
		2022		2021
Balance, beginning of year	$	367,771	$	372,482
Interest revenue		2,230		1,113
Remeasurement
Return on plan assets (excluding amounts
included in net interest expense)		29,099		5,522
Contributions from employer		15,293		15,415
Benefits paid		(18,088)		(26,761)
Balance, end of year	$	396,305	$	367,771

For information on the utilization of the labor pension fund assets, including the yield of the fund and assets allocation, 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	2022 $ 483 291 $ 774	2021
		$ 844 218
		$ 1,062

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:

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:	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:	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:
MeasurementDate 2022.12.31 2021.12.31 Discount rate 1.2% 0.6% Expected rate of salary increase 1.8% 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: 2022.12.31 2021.12.31 Discount rates 0.1 % increase $ (2,031) $ (2,367) 0.1 % decrease 2,054 2,395 Expected rate of salary increase 0.1 % increase 1,683 1,984 0.1 % decrease (1,668) (1,965) 2022.12.31 2021.12.31 The expected contributions to the plan for the next year $15,240 $15,120 The average duration of the defined benefit obligation 4.9 years 5.3 years
		$15,120 5.3 years

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:

～ 28 ～

(17) Equity

• a. Ordinary shares

Authorized share capital Issued share capital The par value is NT$10 dollars.	2022.12.31 $ 3,500,000 $ 2,397,430	2021.12.31 $ 3,500,000 $ 2,283,267

The capitalization of retained earnings of NT$114,163 thousand and issuance of 11,416 thousand shares have been approved in the stockholders’ meeting on June 21, 2022. The ex-right date was September 4, 2022 and the stock issuance date was September 30, 2022.

The capitalization of retained earnings of NT$108,727 thousand and issuance of 10,873 thousand shares have been approved in the stockholders’ meeting on July 13, 2021. The ex-right date was September 5, 2021 and the stock issuance date was September 30, 2021.

b. Capital surplus

From the issuance of ordinary shares From treasury stock transactions From difference between consideration and carrying amount arising from actual acquisition or disposal of subsidiaries From donations	2022.12.31 $ 58,393 12,427 610 1,609 $ 73,039	2021.12.31 $ 58,393 10,415 610 1,613 $ 71,031

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 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

～ 29 ～

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 2021 and 2020 approved in the shareholders’ general meetings on June 21, 2022 and July 13, 2021, respectively.

The appropriations of 2021 and 2020 earnings were as follows:

		2021	2020
Legal reserve	$	37,549 $	34,354
Cash dividends (NT$0.75 per share for 2021
and NT$0.70 per share for 2020)		171,245	152,217
Stock dividends (NT$0.50 per share for
2021 and 2020)		114,163	108,727
	$	322,957 $	295,298

The appropriations of earnings for 2022 were proposed by the Company’s board of directors on March 14, 2023 as follows:

f directors on March 14, 2023 as follows:
		2022
Legal reserve	$		54,289
Cash dividends (NT$1.00 per share)			239,743
Stock dividends (NT$0.30 per share)			71,923
	$		365,955

The appropriations of 2022 earnings are subject to the resolution of the shareholders’ meeting to be held on June 21, 2023.

d. Special reserves

. Special reserves
Balance, beginning of year Reversal: Depreciation expense on investment properties Balance, end of year	2022 $ 451,387 (803) $ 450,584	2021
		$ 452,190 (803
		$ 451,387

～ 30 ～

e. Treasury stock

(In thousands of shares)

Shares held by the subsidiaries	2022.12.31 2,817	2021.12.31
		2,683

The Company’s shares held by the subsidiary, Yishun Investment Co., Ltd., are accounted for as treasury stock. As of December 31, 2022 and 2021, the book value of treasury stock were NT$41,616 thousand; the market value of treasury stock were NT$82,684 thousand and $69,759 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

		2022		2021
Revenue from sale of goods	$	5,873,840	$	4,459,364
Construction contract revenue		1,297,020		919,795
Other operating revenue		14,578		11,836
	$	7,185,438	$	5,390,995

(19) Operating cost

Cost of goods sold Construction contract cost Technical service cost	2022 $ 4,965,528 1,202,536 3,243 $ 6,171,307	2021 $ 3,726,945 852,041 2,069 $ 4,581,055

(20) Other income

Interest income Bank deposits Others Rental income Others	2022 $ 865 2,548 13,300 6,507 $ 23,220	2021
		$ 248 2,857 12,895 7,286
		$ 23,286

～ 31 ～

(21) Other gains and losses

2022 Net foreign exchange gain $ 28,859 Net gain on financial instruments at fair value through profit or loss 10,918 Net loss on disposal of property, plant and equipment － Depreciation on investment properties (2,149) Other losses (3,311) $ 34,317 (22) Finance costs 2022 Interest on bank loans $ 24,019 Interest on lease liabilities 89 Others 36 $ 24,144 (23) Additional information of expenses by nature Net income included the following items: 2022 Depreciation and amortization expense Depreciation on property, plant and equipment $ 40,573 Depreciation on right-of-use assets 2,657 Depreciation on investment properties 2,149 Amortization on intangible assets 3,029 Total $ 48,408 Operating expenses directly related to investment properties: 2022 Direct operating expenses of investment properties that generated rental income $ 1,198 Direct operating expenses of investment properties that did not generate rental income 5 Total $ 1,203 2022 Research and development costs expensed as incurred $ 114,317

2021 $ 986 1,187 (481) (2,149) － $ (457) 2021 $ 9,796 141 36 $ 9,973 2021 $ 34,248 2,832 2,149 2,923 $ 42,152 2021 $ 1,197 9 $ 1,206 2021 $ 89,477

～ 32 ～

Employee benefits expense		2022	2021
Post-employment benefits (Note 6(16))
Defined contribution plans	$	20,487 $	19,261
Defined benefit plans		774	1,062
Subtotal		21,261	20,323
Salaries and bonus expense		635,849	545,165
Insurance expense		51,309	46,886
Others		27,765	25,295
Total	$	736,184 $	637,669

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, 2022 and 2021 were as follows:

Employees’ compensation Remuneration of directors	2022 $ 24,063 12,031 $ 36,094	2021 $ 17,325 8,662 $ 25,987

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, 2021.

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	2022 $ 70,416 (10,978 ) 59,438 (2,794 ) $ 56,644	2021 $ 48,808 9 48,817 (3,207 ) $ 45,610

～ 33 ～

 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 Investment gain (loss) Origination and reversal of temporary differences Investment tax credit Adjustments for prior years Current tax Deferred tax Origination and reversal of temporary differences Income tax expense	2022 $ 565,475 $ 113,095 215 (312 ) 3,447 (35,132 ) (10,897 ) (10,978 ) 59,438 (2,794) $ 56,644	2021 $ 407,131 $ 81,426 221 (390 ) (9,395 ) (15,267 ) (7,787 ) 9 48,817 (3,207) $ 45,610

• b. Deferred tax assets

The movements of deferred tax assets were as follows:

			Recognized in
		2022.1.1	Profit or Loss	2022.12.31
Temporary differences
Allowance for inventory loss	$	10,266 $	4,008 $	14,274
Unrealized exchange losses
(gains)		978	(1,366 )	(388)
Payable for annual leave		4,600	267	4,867
Others		4,886	(115 )	4,771
	$	20,730 $	2,794 $	23,524
			Recognized in
		2021.1.1	Profit or Loss	2021.12.31
Temporary differences
Allowance for inventory loss	$	5,875 $	4,391 $	10,266
Unrealized exchange losses		2,517	(1,539 )	978
Payable for annual leave		4,606	(6 )	4,600
Others		4,525	361	4,886
	$	17,523 $	3,207 $	20,730

～ 34 ～

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

Deductible temporary differences	2022.12.31 $ 39,641	2021.12.31 $ 60,291

• d.The income tax returns of the Company through 2020 have been assessed by the tax authority.

• (25) Earnings per share

Earnings per share
Basic earnings per share (NT$)	2022 $ 2.15	2021
		$ 1.53

The earnings and weighted average number of ordinary shares outstanding in the 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)	2022 $ 508,831 236,926	2021
		$ 361,521
		236,926

Retroactive adjustments were applied to the Company’s basic earnings per share for the years ended December 31, 2022 and 2021.

• (26) Non-cash transactions

Partial cach investing activities: Acquisition of property, plant and equipment Increase in other payables Cash paid	2022 $ 224,085 (27,119) $ 196,966	2021
		$ － －
		$ －

• (27) Significant lease agreements

• a. The Company as lessee

Expenses relating to short-term leases Total cash outflow for leases	2022 $ 18,571 $ 21,358	2021
		$ 18,709
		$ 21,677

• b. The Company as lessor

As of December 31, 2022 and 2021, the future lease payments receivable under operating leases of investment properties were as follows:

～ 35 ～

Not later than 1 year 1-2 years 2-3 years 3-4 years 4-5 years Later than 5 years Total	2022.12.31 $ 11,996 8,021 5,354 5,406 5,514 7,424 $ 43,715	2021.12.31 $ 11,952 6,495 5,249 5,354 5,406 11,546 $ 46,002

• (28) 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.

• (29) Financial instruments

• a. Fair value of financial instruments

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

fair value on a recurring basis:
Financial assets at FVTPL Financial assets at FVTOCI Listed shares Unlisted shares Total		2022.12.31		Total $ 1,883 $ 162 241,789 $241,951
	Level 1 $ － $ 162 － $ 162	Level 2 $ 1,883 $ － 47,599 $ 47,599	Level 3 $ － $ － 194,190 $194,190

～ 36 ～

Financial assets at FVTOCI Listed shares Unlisted shares Total Financial liabilities at FVTPL		2021.12.31	2021.12.31	Total $ 215 249,837 $250,052 $ 442
	Level 1 $ 215 － $ 215 $ －	Level 2 $ － － $ － $ 442	Level 3 $ － 249,837 $249,837 $ －

There were no transfers between Levels 1 and 2 for the years ended December 31, 2022 and 2021.

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 Disposal of financial assets at FVTOCI Transfer from Level 3 Accounted for unrealized gains (losses) from investments in equity instruments measured at FVTOCI Balance, end of the year	Financialassets atFVTOCI
	2022 $ 249,837 37,995 (10,768 ) (47,599 ) (35,275) $ 194,190	2021
		$ 225,560 8,112 － － 16,165
		$ 249,837

• 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	2022.12.31 $ 241,951 4,141,737 $ 4,383,688	2021.12.31 250,052 3,596,267 $3,846,319

～ 37 ～

2021.12.31

Financial liabilities Amortized cost Short-term loans Accounts payable Current tax liabilities Other payables Long-term loans Lease liabilities Guarantee deposits FVTPL Total	2022.12.31	2021.12.31
	$ 2,027,000 2,169,205 40,326 382,897 150,000 3,595 3,369 － $ 4,776,392	$ 1,718,353 1,729,610 38,820 233,614 150,000 6,293 3,297 442
		$ 3,880,429

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.

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):

～ 38 ～

2022.12.31

			Carrying
			Amounts		SensitivityAnalysis
	Foreign	Exchange			Impact on	Impact on
Financial assets	Currencies	Rate	(NTD)	Variations	Profit(loss)	Equity
Monetary items
USD	$18,089	30.725	555,785	±10%	±55,579	±55,579
EUR	54	32.76	1,769	±10%	±177	±177
JPY	16,422	0.2321	3,812	±10%	±381	±381
SGD	1,103	22.87	25,226	±10%	±2,523	±2,523
RMB	8,091	4.411	35,689	±10%	±3,569	±3,569
ZAR	1,400	1.809	2,533	±10%	±253	±253
AUD	2	20.78	42	±10%	±4	±4
Non-monetary items
RMB	16,873	4.411	74,427	±10%	－	±7,443
ZAR	6,791	1.809	12,285	±10%	－	±1,229
EUR	820	32.76	26,863	±10%	－	±2,686
SGD	2,803	22.87	64,105	±10%	－	±6,411
Financial liabilities
Monetary items
USD	2,856	30.725	87,751	±10%	∓8,775	∓8,775
EUR	173	32.76	5,667	±10%	∓566	∓566
RMB	680	4.411	2,999	±10%	∓300	∓300
JPY	6,452	0.2321	1,498	±10%	∓150	∓150
			2021.12.31

Financial assets Monetary items USD EUR JPY SGD RMB ZAR Non-monetary items RMB ZAR EUR Financial liabilities Monetary items USD EUR RMB JPY	Foreign Currencies $10,992 56 4,697 1,073 6,515 1,400 19,821 5,537 459 4,515 69 4 6,983	Exchange Rate 27.655 31.38 0.2405 20.48 4.341 1.734 4.341 1.734 31.38 27.655 31.38 4.341 0.2405	Carrying Amounts (NTD)	SensitivityAnalysis Variations Impact on Profit(loss) Impact on Equity ±10% ±30,398 ±30,398 ±10% ±176 ±176 ±10% ±113 ±113 ±10% ±2,198 ±2,198 ±10% ±2,828 ±2,828 ±10% ±243 ±243 ±10% － ±8,604 ±10% － ±960 ±10% － ±1,440 ±10% ∓12,486 ∓12,486 ±10% ∓217 ∓217 ±10% ∓2 ∓2 ±10% ∓168 ∓168	SensitivityAnalysis Variations Impact on Profit(loss) Impact on Equity ±10% ±30,398 ±30,398 ±10% ±176 ±176 ±10% ±113 ±113 ±10% ±2,198 ±2,198 ±10% ±2,828 ±2,828 ±10% ±243 ±243 ±10% － ±8,604 ±10% － ±960 ±10% － ±1,440 ±10% ∓12,486 ∓12,486 ±10% ∓217 ∓217 ±10% ∓2 ∓2 ±10% ∓168 ∓168
				Variations ±10% ±10% ±10% ±10% ±10% ±10% ±10% ±10% ±10% ±10% ±10% ±10% ±10%	Impact on Profit(loss) ±30,398 ±176 ±113 ±2,198 ±2,828 ±243 － － － ∓12,486 ∓217 ∓2 ∓168
			303,984 1,757 1,130 21,975 28,282 2,428 86,043 9,601 14,403 124,862 2,165 17 1,679

～ 39 ～

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 and long-term loans. The risk is managed by the Company by maintaining an appropriate mix of fixed and floating rate borrowings.

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, 2022 and 2021 would decrease/increase by NT$5,443 thousand and NT$4,671 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. 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, 2022 and 2021 would have increased/decreased by NT$12,098 thousand and NT$12,503 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, 2022 and 2021, the Company’s ten largest customers accounted for 81.02% and 79.49% of its total accounts receivables, respectively.

～ 40 ～

 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, 2022 and 2021 the amount of unused financing facilities were NT$1,933,206 thousand and NT$1,492,434 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.

Non-derivative financial liabilities Short-term loans Accounts payable Current tax liabilities Other payables Long-term loans Lease liabilities Guarantee deposits		2022.12.31	Total $ 2,027,000 2,169,205 40,326 382,897 150,000 3,595 3,369 4,776,392		2021.12.31
	Less than 1 Year $ 2,027,000 2,139,434 40,326 358,297 － 2,688 67 $4,567,812	More than 1 Year $ － 29,771 － 24,600 150,000 907 3,302 $208,580		Less than 1 Year $ 1,718,353 1,697,223 38,820 205,653 － 2,698 － $3,662,747	More than 1 Year $ － 32,387 － 27,961 150,000 3,595 3,297 $217,240	Total
						$ 1,718,353 1,729,610 38,820 233,614 150,000 6,293 3,297
						3,879,987

 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

～ 41 ～

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 2022.12.31 2021.12.31 $ 85,078 $ 107,720 (83,195) (108,162 ) $ 1,883$ (442 )
	2022.12.31 $ 85,078 (83,195) $ 1,883

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. Yishun Investment Co., Ltd. Qingdao Liming Industry Co., Ltd. (Qingdao Liming) Hengyuan Allis Electric Co., Ltd. (Hengyuan) PHD Powerhouse Distributions (PTY) Ltd. AEC International S.r.l (AEC) Allis Electric (S) Pte. Ltd. Nissin-Allis Electric Co., Ltd. Nissin Allis Union Ion Equipment Co., Ltd. Le-Min Industrial Co., Ltd. Taiwan Marine Electric Co., Ltd. Impact Power Inc. Hui-De Industrial Co., Ltd. Herr-Yeh Sung

Relationship with the Company

Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary (Note) Subsidiary Subsidiary Subsidiary Subsidiary Associate Associate Related party in substance Related party in substance Related party in substance Related party in substance Key management personnel

Note:Qingdao Liming was merged into Hengyuan on September 27, 2021.

(2) Operating revenue

Operating revenue
	Related Parties
Line Items	Categories		2022	2021
Operating Revenue	Subsidiaries	$	302,930 $	161,293
	Associates		70,495	50,098
	Others		3,862	120
		$	377,287 $	211,511

～ 42 ～

(3) Purchase and factory overhead

Line Items Purchase and factory overhead	Related Parties Categories Subsidiaries Associates Others	2022 $ 527,194 256,222 97,951 $ 881,367	2021
			$ 358,923 228,125 105,354
			$ 692,402

(4) Receivables from related parties

	Related Parties
Line Items	Categories	2022.12.31		2021.12.31
Notes receivable from	Others
related parties		$	3,504 $	－
Accounts receivable from related parties	Subsidiaries		149,864	100,076
	Associates		29,773	33,661
	Others		379	－
		$	180,016 $	133,737
Other receivables	Subsidiaries	$	90 $	57
	Associates		101	102
		$	191 $	159

The outstanding receivables from related parties are unsecured.

For the years ended December 31, 2022 and 2021, no impairment loss was recognized for receivables from related parties.

(5) Payable to related parties

Line Items Accounts payable to related parties Other payables	Related Parties Categories Subsidiaries Associates Others Subsidiaries Others	2022.12.31 $ 214,578 100,498 29,180 $ 344,256 $ 13,892 1,593 $ 15,485	2021.12.31 $ 162,426 119,957 44,583 $ 326,966 $ 3,923 795 $ 4,718

～ 43 ～

(6) Others

Others
Line Items Selling and marketing expenses Research and development expenses Other income Contract liabilities Construction in Progress	Related Parties Categories Subsidiaries Others Subsidiaries Others Subsidiaries Associates Others Associates Subsidiaries	2022 $ － 744 $ 744 $ 141 45 $ 186 $ 190 1,318 24 $ 1,532 2022.12.31 $ － $ 30,660	2021
			$ 27 643
			$ 670
			$ － 72
			$ 72
			$ 181 79 18
			$ 278
			2021.12.31
			$ 315
			$ 74,677

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 AEC			2022		Interest income $ 707 Interest income $ 898
	Highest Balance $ 28,248	Ending Balance $ 19,971	Allowance for Impairment Loss $ － 2021	Interest Rate 3%
	Highest Balance $ 36,400	Ending Balance $ 26,272	Allowance for Impairment Loss $ －	Interest Rate 3%

The financing provided to AEC is unsecured.

(8) Compensation of key management personnel

		2022	2021
Short-term benefits	$	57,819 $	45,986
Post-employment benefits		822	807
	$	58,641 $	46,793

～ 44 ～

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, 2022 and 2021, 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	2022.12.31 $ 5,072 674,582 346,730 $ 1,026,384	2021.12.31 $ 5,033 679,337 348,678 $ 1,033,048

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

As of December 31, 2022, significant contingent liabilities and unrecognized commitments of the Company were as follows:

• (1) The guaranteed notes issued were NT3,784,838 thousand, including:

• a. The guaranteed notes issued for bank loans were NT$3,230,000 thousand.

• b. The guaranteed notes issued for sales contracts performance guarantees were NT$554,838 thousand.

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

• (3) Unused letters of credit were USD$6,954 thousand and JPY58,906 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.

～ 45 ～

• 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: Please refer to Table 5 attached.

• 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 6 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 7 attached.

• 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.

～ 46 ～

Allis Electric Co., Ltd. FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2022 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	$ 28,248	$ 19,971	$ 19,971	3.00%	Business Transaction	$ 225,210	－	$ －	None	None	$ 383,136	$ 766,272
		Zhong Mou Construction Co., Ltd.	Other receivables	$ 69,189	$ 59,214	$ 59,214	1.50%	Short-term Financing	$ －	Operating capital	$ －	None	None	$ 383,136	$ 766,272

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.

～ 47 ～

Allis Electric Co., Ltd. and Subsidiaries ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2022

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	$ 1,277,120 (Note 2)	$ 80,000	$ 80,000	$ 53,169	－	2.09%	$1,915,681 (Note 2)	－	－	－
		Ares Technology Co.,Ltd.	b		$ 125,000	$ 125,000	$ 74,000	－	3.26%		Y	－	－
		Air King Industrial Co.,Ltd.	b		$ 270,400	$ 270,400	$ 218,494	－	7.06%		Y	－	－
		Zhong Mou Construction Co., Ltd.	e		$ 271,962	$ 271,962	$ 271,962	－	7.10%		－	－	－
		Allis Electric (S) Pte. Ltd.	b		$ 64,105	$ 64,105	$ 64,105	－	1.67%		Y	－	－
1	Air King Industrial Co., Ltd.	Allis Electric Co., Ltd.	c	$ 450,000 (Note 3)	$ 27,766	$ 16,349	$ 16,349	－	11.24%	$ 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.

～ 48 ～

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

(Excluding Investment in Subsidiaries, Associates and Joint Controlled Entities) DECEMBER 31, 2022

(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, 2022
				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	47	－	47
	Stocks of Taiwan High Speed Rail Corporation	－	Financial assets at fair value through other comprehensive income-current	4,000	115	－	115
	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	41,494	19.68%	41,494
	Stocks of Arch Meter Corporation	－	Financial assets at fair value through other comprehensive income-noncurrent	1,248,000	47,599	3.98%	47,599
	Stocks of Tangeng Advanced Vehicles Co.,Ltd.	－	Financial assets at fair value through other comprehensive income-noncurrent	9,800,777	146,522	14.41%	146,522
	Stocks of Leadtang Technology Co., Ltd.	－	Financial assets at fair value through other comprehensive income-noncurrent	1,000,000	3,110	12.50%	3,110
	Stocks of ProMOS Technologies Inc.	－	Financial assets at fair value through other comprehensive income-noncurrent	133,366	1,788	0.30%	1,788
	Stocks of Advantage International Green EnergyCo.,Ltd.	－	Financial assets at fair value through other comprehensive income-noncurrent	－	786	1.00%	786
	Stocks of ChargeSmith Co., Ltd.	－	Financial assets at fair value through other comprehensive income-noncurrent	175,759	490	13.49%	490

～ 49 ～

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

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

DECEMBER 31, 2022

(In Thousands of New Taiwan Dollars)

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Company	Financial Statement Account	December 31,2022	December 31,2022	December 31,2022	December 31,2022
				Shares/Units	Carrying Amount	Percentage of Ownership	Fair Value
Yishun Investment Co., Ltd.	Convertible bonds of Evergreen Marine Co.(Taiwan)Ltd.	－	Financial assets at fair value through profit or loss - current	5,000	540	－	540
	Stocks of Allis Electric Co., Ltd.	Parent company	Financial assets at fair value through other comprehensive income-current	2,818,877	82,734	1.18%	82,734
	Stocks of Taiwan Cement Corporation	－	Financial assets at fair value through other comprehensive income-current	10,999	370	－	370
	Stocks of Great Wall Enterprise Co.,Ltd.	－	Financial assets at fair value through other comprehensive income-current	1,138	52	－	52
	Stocks of Hong Tai Electric Industrial Co.,Ltd.	－	Financial assets at fair value through other comprehensive income-current	20,000	325	－	325
	Stocks of China Steel Corporation	－	Financial assets at fair value through other comprehensive income-current	10,000	298	－	298
	Stocks of Sheng Yu Steel Co., Ltd..	－	Financial assets at fair value through other comprehensive income-current	10,000	245	－	245
	Stocks of TSRC Corporation	－	Financial assets at fair value through other comprehensive income-current	10,000	270	－	270
	Stocks of IKKA Holdings (Cayman)Limited	－	Financial assets at fair value through other comprehensive income-current	10,000	716	－	716
	Stocks of United Microelectronics Corporation	－	Financial assets at fair value through other comprehensive income-current	50,000	2,035	－	2,035
	Stocks of Yageo Corporation	－	Financial assets at fair value through other comprehensive income-current	1,591	718	－	718
	Stocks of Taiwan Semiconductor ManufacturingCompanyLimited	－	Financial assets at fair value through other comprehensive income-current	10,000	4,485	－	4,485

～ 50 ～

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

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

DECEMBER 31, 2022

(In Thousands of New Taiwan Dollars)

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Company	Financial Statement Account	December 31,2022	December 31,2022	December 31,2022	December 31,2022
				Shares/Units	Carrying Amount	Percentage of Ownership	Fair Value
Yishun Investment Co., Ltd.	Stocks of Macronix International Co.,Ltd.	－	Financial assets at fair value through other comprehensive income-current	40,000	1,350	－	1,350
	Stocks of Giga-byte Technology Co., Ltd.	－	Financial assets at fair value through other comprehensive income-current	3,000	320	－	320
	Stocks of United Integrated Services Co.,Ltd.	－	Financial assets at fair value through other comprehensive income-current	8,000	1,464	－	1,464
	Stocks of King Yuan Electronics Co.,Ltd.	－	Financial assets at fair value through other comprehensive income-current	10,000	362	－	362
	Stocks of Elan Microelectronics Corp.	－	Financial assets at fair value through other comprehensive income-current	10,000	860	－	860
	Stock of Walsin Technology Corp.	－	Financial assets at fair value through other comprehensive income-current	5,000	395	－	395
	Stocks of Evergreen Marine Corp. (Taiwan) Ltd.	－	Financial assets at fair value through other comprehensive income-current	4,000	652	－	652
	Stock of Yang Ming Marine Transport Corporation	－	Financial assets at fair value through other comprehensive income-current	20,000	1,310	－	1,310
	Stocks of Fubon Financial Holding Co.,Ltd.	－	Financial assets at fair value through other comprehensive income-current	11,550	650	－	650
	Stocks of Cathay Financial Holding Co.,Ltd.	－	Financial assets at fair value through other comprehensive income-current	5,000	200	－	200
	Stocks of Celxpert Energy Corporation	－	Financial assets at fair value through other comprehensive income-current	10,000	330	－	330
	Stocks of Xintec Inc.	－	Financial assets at fair value through other comprehensive income-current	10,000	963	－	963

～ 51 ～

Allis Electric Co., Ltd. and Subsidiaries

MARKETABLE SECURITIES HELD

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

DECEMBER 31, 2022

(In Thousands of New Taiwan Dollars)

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Company	Financial Statement Account	December 31,2022	December 31,2022	December 31,2022
				Shares/Units	Carrying Amount	Percentage of Ownership	Fair Value
Yishun Investment Co., Ltd.	Stocks of ASE Technology Holding Co.,Ltd.	－	Financial assets at fair value through other comprehensive income-current	20,000	1,878	－	1,878
	Stock of Fitipower Integrated TechnologyInc.	－	Financial assets at fair value through other comprehensive income-current	10,000	1,155	－	1,155
	Stocks of Vanguard International Semiconductor Corp.	－	Financial assets at fair value through other comprehensive income-current	22,000	1,705	－	1,705
	Stocks of Sonix Technology Co., Ltd.	－	Financial assets at fair value through other comprehensive income-current	5,000	251	－	251
	Stocks of Hannstar Display Corp.	－	Financial assets at fair value through other comprehensive income-current	10,000	111	－	111
	Stocks of Sigurd Microelectronics Corp.	－	Financial assets at fair value through other comprehensive income-current	30,000	1,456	－	1,456
	Stocks of Watron Technology Corp.	－	Financial assets at fair value through other comprehensive income- noncurrent	822,400	20,848	15.23%	20,848
Allis Communnications Company, Ltd.	Stocks of Watron Technology Corp.	－	Financial assets at fair value through other comprehensive income- noncurrent	206,400	5,232	3.82%	5,232

～ 52 ～

Allis Electric Co., Ltd.

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, 2022

(In Thousands of New Taiwan Dollars)

Table 4

Table 4			FOR THE YEAR ENDED DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars)	FOR THE YEAR ENDED DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars)	FOR THE YEAR ENDED DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars)	FOR THE YEAR ENDED DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars)
Seller/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.	AEC International S.r.l.	Subsidiary	Sales	$ (225,210)	(3.13%)	210 days	－	－	$ 119,166	3.42%
	Air King Industrial Co., Ltd.	Subsidiary	Purchase	$ 438,043	6.79%	115 days	－	－	$ (181,644)	(8.37%)
	Nissin-Allis Electric Co., Ltd.	Associate	Purchase	$ 256,222	3.97%	115 days	－	－	$ (100,498)	(4.63%)

～ 53 ～

Allis Electric Co., Ltd.

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2022

(In Thousands of New Taiwan Dollars)

Table 5

Table 5
Company Name	Related Party	Relationship	Ending Balance	Turnover Rate	Overdue		Amounts Received in Subsequent Period	Allowance for Bad Debts
					Amount	Action Taken
Allis Electric Co., Ltd.	AEC International S.r.l.	Subsidiary	$ 119,166	2.31%	$ －	－	$ 32,867	$ 17,269

～ 54 ～

Allis Electric Co., Ltd. and Subsidiaries

INFORMATION ON INVESTEES (EXCLUDING INVESTEE COMPANY IN MAINLAND CHINA) FOR THE YEAR ENDED DECEMBER 31, 2022

(In Thousands of New Taiwan Dollars)

Table 6

Table 6
Investor Company	Investee Company	Location	Principle Businesses Activities	Original Investment Amount		As of December 31, 2022			Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				December 31,2022	December 31,2021	Shares	%	Carrying Amount
Allis Electric Co., Ltd.	Air King Industrial Co.,Ltd.	Taipei, Taiwan	Design and installation of electrical equipment	$ 28,458	$ 28,458	5,101,701	83.12%	$ 113,072	$ 67,827	$ 56,619	－
	Nissin-Allis Electric Co.,Ltd.	Taoyuan, Taiwan	Manufacturing of SF6 capacitor and GIS	90,000	90,000	9,000,000	30.00%	250,109	184,365	55,310	－
	Ares Technology Co.,Ltd.	New Taipei City, Taiwan	Manufacturing of UPS	75,560	75,560	6,800,000	100.00%	68,200	3,493	3,493	－
	Allis Communications Co.,Ltd.	New Taipei City, Taiwan	Manufacturing of GPS antennas	86,909	86,909	4,958,380	82.64%	62,507	12,786	10,566	－
	Yishun Investment Co.,Ltd.	Taipei, Taiwan	Investment and holding	179,900	179,900	17,990,000	99.94%	103,400	3,786	1,771	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%	92,715	38,347	15,339	－
	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	40,974	90	90.00%	10,433	2,527	2,275	－
	AEC International S.r.l.	Italy	Selling of electrical equipment	66,444	62,771	420,000	70.00%	17,682	11,717	10,881	－
	Intelicis Corporation	Santa Clara, U.S.	Developing of radio frequency products	49,301	49,301	1,875,500	29.16%	－	－	－	－
	Allis Electric (S) Pte. Ltd.	Singapore	Selling of electrical equipment	65,353	－	3,000,000	100.00%	64,111	(4,449 )	(4,449 )	－

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 (loss).

～ 55 ～

Allis Electric Co., Ltd.

INFORMATION ON INVESTMENTS IN MAINLAND CHINA

FOR THE YEAR ENDED DECEMBER 31, 2022

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

Table 7

Table 7
Investee Company	Principle Businesses Activities	Paid-in Capital	Method of Investment	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2022	Remittance of Funds		Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2022	Net Income (Loss) of the Investee	Ownership of Direct or Indirect Investment	Share of Profit (Loss) (Note)	Carrying Amount as of December 31, 2022	Accumulated Repatriation of Investment Income as of December 31, 2022
					Outward	Inward
Hengyuan Allis Electric Co., Ltd.	Selling of electrical equipment	USD 3,400	Direct investment	$ 67,781 (USD2,121)	$ －	$ 17,234 (USD539)	$ 50,547 (USD1,582)	$ 6,612	65.38%	$ 4,323	$ 74,183	$ 17,234 (USD539)

Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2022	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)	2,298,817

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

2022

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, 2022

(In Thousands of New Taiwan Dollars)

Statement 1 Item Petty cash and cash on hand Cash in banks Checking accounts Demand deposits Foreign currency deposits (Note) Total	Amount
	$ 980 2,109 157,543 262,904
	$ 423,536

Note ： Including US$6,494 thousand, EUR54 thousand, JPY16,422 thousand, RMB7,373 thousand, SGD1,103 thousand and AUD2 thousand at exchange rates USD$1=NT$30.725, EUR$1=NT$32.76, JPY$1=NT$0.2321, CNY$1= NT$4.411, SGD$1= NT$22.87 and AUD$1=NT$20.78, respectively.

～ 58 ～

Allis Electric Co., Ltd. STATEMENT OF FINANCIAL ASSETS AT FVTOCI-CURRENT DECEMBER 31, 2022 (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 37.10 $ 47 28.75 115 $ 162	Pledge
					Unit Price (NT$) 37.10 28.75
						Nil Nil

～ 59 ～

Allis Electric Co., Ltd. STATEMENT OF NOTES RECEIVABLE DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars)

Statement 3

Client Name Yuan Lih Electrical Engineering Co., Ltd. You Sheng Engineering Co., Ltd. Johnson M&E Engineering CO., Ltd. Tong Hung Synthesis Pey Diann Co., Ltd. Yiang Chand Electrical & Plumbing Engineer Co., Ltd. Others（The amount of individual client does not exceed NT$6,006 thousand) Total Less: Allowance for impairment loss Notes receivable, net	Amount $ 45,193 15,534 8,972 14,781 10,080 25,552 120,112 (625) $ 119,487

～ 60 ～

Allis Electric Co., Ltd. STATEMENT OF ACCOUNTS RECEIVABLE DECEMBER 31, 2022

(In Thousands of New Taiwan Dollars)

Statement 4

Client Name Taiwan Power Company Taiwan Semiconductor Manufacturing Company Limited Information Technology Group, Chunghwa Telecom Co., Ltd. United Microelectronics Corporation Others ( The amount of individual client does not exceed NT$162,411 thousand) Total Less: Allowance for impairment loss Accounts receivable, net	Amount $ 430,592 649,305 246,183 273,273 1,648,857 3,248,210 (71,165 ) $ 3,177,045

～ 61 ～

Allis Electric Co., Ltd. STATEMENT OF INVENTORIES DECEMBER 31, 2022

(In Thousands of New Taiwan Dollars)

Statement 5

Item Finished goods Work in process Raw materials Inventory in transit Inventories, net	Amount	Amount
	Cost $ 421,623 537,550 1,177,844 36,583 $ 2,173,600	Net Realizable Value
		$ 531,506 790,070 1,177,844 36,583
		$ 2,536,003

～ 62 ～

Allis Electric Co., Ltd. STATEMENT OF PREPAYMENTS DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars)

Statement 6
Item	Descriptions		Amount
Prepayment for purchases	Down payment	$	21,881
Prepayment for bank guarantee charge	Performance guarantee fee and loan guarantee fee, etc.		11,700
Overpaid Sales Tax			15,038
Others	Prepaid Insurance and software fee, etc.		9,399
Total		$	58,018

～ 63 ～

Allis Electric Co., Ltd.

STATEMENT OF FINANCIAL ASSETS AT FVTOCI-NONCURRENT

FOR THE YEAR ENDED DECEMBER 31, 2022

(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. ChargeSmith Co., Ltd.	Balance, January 1, 2022 Shares Fair value 1,948,072 $ 36,624 1,548,000 28,174 8,251,225 170,883 1,000,000 10,970 133,366 2,003 － 1,183 － － $ 249,837	Increase in 2022 Shares Amount － $ 4,870 － 23,217 1,549,552 15,496 － － － － － － 4,500,000 22,500 $ 66,083	Decrease in 2022 Shares Amount － $ － 300,000 3,792 － 39,857 － 7,860 － 215 － 397 4,324,241 22,010 $ 74,131	Balance, December 31, 2022 Shares Fair value 1,948,072 $ 41,494 1,248,000 47,599 9,800,777 146,522 1,000,000 3,110 133,366 1,788 － 786 175,759 490 $ 241,789	Collateral or Pledge
	Shares 1,948,072 1,548,000 8,251,225 1,000,000 133,366 － －	Shares － － 1,549,552 － － － 4,500,000	Shares － 300,000 － － － － 4,324,241	Shares 1,948,072 1,248,000 9,800,777 1,000,000 133,366 － 175,759
					Nil 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, 2022

(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. Hengyuan Allis Electric Co., Ltd. PHD Powerhouse Distributions (PTY) Ltd. AEC International S.r.l. Allis Electric (S) Pte. Ltd. AYM International Coporation Intelicis Corporation	Balance, January1, 2022	Balance, January1, 2022	Increase(Decrease)in 2022 Share of Profit (Loss) Shares (In Thousands) Amount － $ (14,400 (Note1) )$ 56,619 － (19,500 (Note1) ) 55,310 － － 3,492 － － 10,565 － － 1,772 － (30,000 (Note1) ) 15,339 － (17,234 (Note1) ) 4,323 － － 2,275 120 3,673 (Note2) 10,881 3,000 65,353 (Note2) (4,448 ) － － － － － － $ (12,108) $ 156,128	Remeasurement of defined benefitplans $ 546 1,296 627 － － 765 － － － － － － $ 3,234	Unrealized gross profit on sales $ － (1,262 ) － － － － (244 ) (189 ) 331 － － － $ (1,364)	Capital Surplus $ － － － － 2,012 － － － － － － － $ 2,012	Retained earnings	Unrealized gains (loss) from investments in equity instruments measured at fair value through other comprehensive income Exchange differences on translating foreign operation $ － $ － － － － － (5,236 ) － (35,997 ) － － 762 － 1,297 － 410 － 1,154 － 3,206 － － － － $ (41,233 )$ 6,829	Balance, December 31, 2022 Shares (In Thousands) Percentage of ownership Amount 5,101 83.12% $ 113,072 9,000 30.00% 250,109 6,800 100.00% 68,200 4,958 82.64% 62,507 17,990 99.94% 103,400 4,000 40.00% 92,715 － 65.38% 74,183 90 90.00% 10,433 － 70.00% 17,682 － 100.00% 64,111 － 40.00% － － 29.16% － $ 856,412	Balance, December 31, 2022 Shares (In Thousands) Percentage of ownership Amount 5,101 83.12% $ 113,072 9,000 30.00% 250,109 6,800 100.00% 68,200 4,958 82.64% 62,507 17,990 99.94% 103,400 4,000 40.00% 92,715 － 65.38% 74,183 90 90.00% 10,433 － 70.00% 17,682 － 100.00% 64,111 － 40.00% － － 29.16% － $ 856,412	Share of equity $ 120,884 252,021 68,200 62,507 186,084 92,715 74,427 12,285 26,862 64,111 － － $ 960,096	Collateral or Pledge
	Shares (In Thousands) 4,114 9,000 6,800 4,958 17,990 4,000 － 90 － － － －	Amount	Shares (In Thousands) － － － － － － － － 120 3,000 － －						Shares (In Thousands) 5,101 9,000 6,800 4,958 17,990 4,000 － 90 － － － －	Percentage of ownership 83.12% 30.00% 100.00% 82.64% 99.94% 40.00% 65.38% 90.00% 70.00% 100.00% 40.00% 29.16%
		$ 70,307 214,265 64,081 57,178 135,613 105,849 86,041 7,937 4,879 － － －					$ (3,236 ) $ (3,236 )					Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil
		$ 746,150

Note 1: Cash dividends received.

Note 2: Increase investment.

～ 65 ～

Allis Electric Co., Ltd. STATEMENT OF REFUNDABLE DEPOSITS DECEMBER 31, 2022

(In Thousands of New Taiwan Dollars)

Statement 9

Item Chunghwa Telecom Co., Ltd. Taiwan Power Company Taoyuan International Airport Corporation Ltd. Others（The amount of each item does not exceed NT$6,331 thousand） Total	Descriptions Performance bonds, warranty bonds, and tender bonds, etc.. Performance bonds, warranty bonds, and tender bonds, etc. Deposits Deposits	Amount
		$ 28,929 42,515 30,208 24,960
		$ 126,612

～ 66 ～

Allis Electric Co., Ltd. STATEMENT OF SHORT-TERM LOANS DECEMBER 31, 2022

(In Thousands of New Taiwan Dollars)

Statement 10

Statement 10
Bank First Commercial Bank Co., Ltd. CTBC Bank Co., Ltd. Yuanta Commercial Bank Co., Ltd Bank of Taiwan Bank SinoPac Co., Ltd. E.SUN Commercial Bank, Ltd. Mega International Commercial Bank Co., Ltd. Taiwan Cooperative Bank Hua Nan Commercial Bank, Ltd. Chang Hwa Commercial Bank, Ltd.	Type Unsecured loans Unsecured loans Unsecured loans Unsecured loans Unsecured loans Unsecured loans Unsecured loans Secured loans Unsecured loans Secured loans Secured loans	Amount $ 90,000 140,000 170,000 100,000 250,000 50,000 137,000 40,000 290,000 110,000 650,000 $ 2,027,000	Period of the Contract 2022/12/21~2023/3/21 2022/12/08~2023/3/08 2022/12/27~2023/3/15 2022/11/25~2023/2/23 2022/11/22~2023/2/21 2022/10/21~2023/2/21 2022/12/23~2023/3/23 2022/11/25~2023/11/24 2022/6/23~2023/11/24 2022/12/23~2023/2/23 2022/10/14~2023/4/14	Range of Interest Rate	Loan Commitments	Collateral or Pledge
				1.78% 1.88% 1.70% 1.83% 1.89% 1.55% 1.94% 1.40% 1.40% 2.03% 1.60%	600,000 200,000 200,000 200,000 1,165,000 100,000 500,000 750,000 400,000 1,150,000	Nil Land and buildings Nil Nil Land and buildings Nil Land, buildings and machinery Land and buildings Nil Land and buildings Land

～ 67 ～

Allis Electric Co., Ltd. STATEMENT OF ACCOUNTS PAYABLES DECEMBER 31, 2022

(In Thousands of New Taiwan Dollars)

Statement 11 Client Name Max Power Technical Ltd. Eaton Phoenixtec Mmpl Co., Ltd. Others（The amount of individual client does not exceed NT$91,247 thousand) Total	Amount $ 106,898 95,273 1,622,778 $ 1,824,949

～ 68 ～

Allis Electric Co., Ltd. STATEMENT OF OTHER PAYABLES DECEMBER 31, 2022

(In Thousands of New Taiwan Dollars)

Statement 12

Item Salaries and wages payable Others (The amount of each item does not exceed NT$19,145 thousand) Total	Descriptions Salary, bonus, employee and director remuneration Commissions payable and equipment payable, etc.	Amount
		$ 210,442 172,455
		$ 382,897

～ 69 ～

Allis Electric Co., Ltd. STATEMENT OF LONG-TERM LOANS DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars)

Statement 13 Bank	Amount $ 150,000	Period of the Contract 2022/12/30~2029/12/30	Range of Interest Rate 1.901%	Loan Commitments 750,000	Collateralor Pledge
Taiwan Cooperative Bank					Land and buildings

==> picture [119 x 179] intentionally omitted <==

～ 70 ～

Allis Electric Co., Ltd. STATEMENT OF OPERATING REVENUES FOR THE YEAR ENDED DECEMBER 31, 2022

(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 11,020 set 19,400 set 16,630 set 9,510 pcs	Unit price @ 148.18 @ 41.95 @ 116.88 @ 106.68	Amount
			$ 1,632,904 813,768 1,943,636 1,014,482 327,285 152,977
			5,885,052 11,210 2
			5,873,840 1,297,020 14,578
			$ 7,185,438

～ 71 ～

Allis Electric Co., Ltd. STATEMENT OF OPERATING COST FOR THE YEAR ENDED DECEMBER 31, 2022 (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 Work-in-process 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 Less: Work-in-process, end of year Transferred to additional cost Transferred to raw materials Transferred to factory overhead Transferred to research and development expenses Adjusted standard cost of work-in-process Cost of finished goods Add: Finished goods, beginning of year Less: Finished goods, end of year Add: Raw materials sold Finished goods purchased Adjusted standard cost of finished goods Additional cost Allocation of standard cost variances Less: Transferred to raw materials Transferred to construction contract cost Subtotal Add: After-sale service cost Less: Revenue from sale of scraps Inventory overage Cost of goods sold Construction contract cost Technical service cost Total	Amount
	Subtotal $ 605,526 46,036 6,423,954 26,685 4,000 823,694 115 1,177,844 36,583 71,610	Total
		$ 6,643,973 152,354 342,493
		7,138,820 435,852 537,550 18,363 4,000 4,417 32,501 13,690
		6,964,151 335,843 421,623 71,610 160 18,719 18,363 2,341 823,694 1,202,536
		4,963,334 4,632 2,323 115
		4,965,528 1,202,536 3,243
		$ 6,171,307

～ 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, 2022

(In Thousands of New Taiwan Dollars)

Statement 16

Item Salary and related expense Freight-out Insurance expense Depreciation expense Past due fine Material expense Experimental manufacturing expense Others (Note) Total	Selling and Marketing Expenses $ 178,329 21,057 17,769 58 55,161 － － 65,111 $ 337,485	General and Administrative Expenses $ 112,430 66 9,836 10,920 － － － 43,287 176,539	Research and Development Expenses $ 55,017 62 4,145 3,660 － 30,925 9,590 10,918 114,317	Total
				$ 345,776 21,185 31,750 14,638 55,161 30,925 9,590 119,316
				628,341

(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, 2022 AND 2021

(In Thousands of New Taiwan Dollars)

Statement 17 Employee benefits expense Salary Labor and health insurance Pension Board compensation Others Depreciation Amortization		2022	Total $ 618,809 51,309 21,261 17,040 27,765 43,230 3,029		2021
	Classified as Operating Costs $ 301,685 23,776 9,649 － 16,916 28,592 1,663	Classified as Operating Expenses $ 317,124 27,533 11,612 17,040 10,849 14,638 1,366		Classified as Operating Costs $ 273,240 23,040 9,293 － 15,323 22,285 1,803	Classified as Operating Expenses $ 258,343 23,846 11,030 13,582 9,972 14,795 1,120	Total
						$ 531,583 46,886 20,323 13,582 25,295 37,080 2,923

• Note 1. For the years ended December 31, 2022 and 2021, the Company had 653 and 640 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, 2022 and 2021 were $1,112 thousand and $984 thousand, respectively. Average salary for the years ended December 31, 2022 and 2021 were $956 thousand and $838 thousand, respectively. The average salary changed by 14.08% year over year.

• The Company did not have supervisors for the years ended December 31, 2022 and 2021. 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 ～