Altek — Audit Report / Information 2020

Nov 10, 2020

ALTEK CORPORATION AND

SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

INDEPENDENT AUDITORS’ REPORT

DECEMBER 31, 2020 AND 2019

(Stock Code ： 3059)

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INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

PWCR 20000187

To the Board of Directors and Shareholders of ALTEK CORPORATION

Opinion

We have audited the accompanying consolidated balance sheets of ALTEK CORPORATION AND SUBSIDIARIES (the “Group”) as of December 31, 2020 and 2019, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and generally accepted auditing standards in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the Norm of Professional Ethics for Certified Public Accountants of 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.

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Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Group’s 2020 consolidated financial statements. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters for the Group’s 2020 consolidated financial statements are stated as follows:

Allowance for inventory valuation losses

Description

Please refer to Note 4(14) for description of accounting policy on inventory valuation. Please refer to Note 5(2) for accounting estimates and assumption uncertainty in relation to inventory valuation. Please refer to Note 6(6) for the details of inventories.

The Group is primarily engaged in manufacturing and sales of digital image application products. As the Group is in a rapidly changing industry and the short life cycle of electronic products and the highly competitive nature of the market, there is a higher risk of incurring inventory valuation losses or having obsolete inventory. The Group measures inventories sold at the lower of cost and net realisable value. For inventory that is over a certain age and individually identified obsolete or damaged inventory, the Group recognises losses at net realisable value. Aforementioned allowance for inventory valuation losses mainly arises from individually identified obsolete or damaged inventory. Since the value of inventories is significant, involves various types of inventory, and the individual identification of inventory usually involves management judgement which is an area that also needs to be assessed using our judgement during the audit process. Thus, we identified valuation of allowance for inventory losses as one of the key audit matters.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

• A. Obtained an understanding and assessed the provision policy on inventory valuation losses.

• B. Obtained the statement of individually identified obsolete inventory prepared by management and checked the accuracy of stock age analysis report and relevant information.

• C. Checked the accuracy of net realisable value of inventory, assessed the consistency between valuation of market value decline and its provision policy, and assessed the reasonableness of allowance for valuation losses determined by the Group.

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Timing of sales revenue recognition

Description

Please refer to Note 4(29) for accounting policies of revenue recognition. The Group’s revenue mainly arises from export sales and the cash amounts are material. As the sales terms vary from customers who are located in Mainland China, Europe and America, the terms in customer orders and contracts needs to be properly assessed. Since this involves judgement in the determination of timing of control transfer, we consider the timing of revenue recognition as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

• A. Assessed the appropriation of policies on sales revenue recognition.

• B. Assessed and tested the design of internal controls that are relevant to sales revenue recognition and the effectiveness of execution.

• C. Performed cut-off test on sales revenue in specific period around balance sheet date.

• D. Performed confirmation and substantive test on the balance of accounts receivable at the end of period to confirm accounts receivable and that relevant sales revenue have been recorded in the proper period.

Other matter – Parent company only financial reports

We have audited and expressed an unqualified opinion on the parent company only financial statements of Altek Corporation as at and for the years ended December 31, 2020 and 2019.

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

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

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

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

Auditors’ responsibilities for the audit of the consolidated financial statements

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

As part of an audit in accordance with the generally accepted auditing standards in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: A. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and

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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.

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

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

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

• E. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• F. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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 where applicable, related

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safeguards.

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

Li, Tien-Yi

[Chiang, Tsai-Yen ]

For and on behalf of PricewaterhouseCoopers, Taiwan March 25, 2021

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

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

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ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Assets	Notes 6(1) 6(2) 6(4) 6(5) 6(6) 6(2) 6(3) 6(4) 6(7) and 8 6(8) 6(9) and 8 6(10) 6(28)	December31,2020 AMOUNT % $ 5,373,406 37 349,664 2 423,387 3 4,414 - 1,273,383 9 68,825 - 3,292 - 1,106,726 8 217,600 1 4,535 - 8,825,232 60 48,229 - 43,130 - 1,419,002 10 2,420,736 17 122,863 1 1,406,586 10 215,261 1 182,361 1 34,746 - 5,892,914 40 $ 14,718,146 100	December31,2019	December31,2019
		AMOUNT $ 5,373,406 349,664 423,387 4,414 1,273,383 68,825 3,292 1,106,726 217,600 4,535 8,825,232 48,229 43,130 1,419,002 2,420,736 122,863 1,406,586 215,261 182,361 34,746 5,892,914 $ 14,718,146	AMOUNT $ 6,666,055 - 371,900 - 918,019 42,095 5,481 1,038,629 194,345 5,869 9,242,393 40,156 50,644 365,285 3,135,694 131,950 763,733 153,541 161,572 40,466 4,843,041 $ 14,085,434	%
Current assets 1100 Cash and cash equivalents 1110 Current financial assets at fair value through profit or loss 1136 Current financial assets at amortised cost 1140 Current contract assets 1170 Accounts receivable, net 1200 Other receivables 1220 Current income tax assets 130X Inventories, net 1410 Prepayments 1470 Other current assets 11XX Current Assets Non-current assets 1510 Non-current financial assets at fair value through profit or loss 1517 Non-current financial assets at fair value through other comprehensive income 1535 Non-current financial assets at amortised cost 1600 Property, plant and equipment 1755 Right-of-use assets 1760 Investment property 1780 Intangible assets 1840 Deferred income tax assets 1900 Other non-current assets 15XX Non-current assets 1XXX Total assets				47 - 3 - 7 - - 8 1 -
				66
				- - 3 22 1 6 1 1 -
				34
				100

(Continued)

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ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity

December31,2020 December31,2019 Notes AMOUNT % AMOUNT % 6(11) $ 2,330,000 16 $ 2,200,000 16 6(12) 299,798 2 229,962 2 32,568 - 34,096 - - - 4,316 - 1,296,475 9 1,010,670 7 485,953 4 424,512 3 36,763 - 39,762 - 6(16) 9,295 - 5,823 - 9,336 - 7,274 - 6(13) 437,093 3 200,878 2 4,937,281 34 4,157,293 30 6(16) 160,395 1 136,568 1 6(28) 464,691 3 449,924 3 95,176 1 95,531 1 36,750 - 29,392 - 757,012 5 711,415 5 5,694,293 39 4,868,708 35 6(17) 2,794,973 19 2,753,613 19 6(18) 2,335,226 16 2,280,487 16 6(19) 1,402,467 9 1,394,151 10 592,325 4 435,679 3 2,249,655 15 2,394,976 17 6(20) ( 697,698) ( 5) ( 615,359) ( 4 ) 6(17) ( 209,287) ( 1) - - 8,467,661 57 8,643,547 61 556,192 4 573,179 4 9,023,853 61 9,216,726 65 $ 14,718,146 100 $ 14,085,434 100

Current liabilities 2100 Short-term borrowings 2110 Short-term notes and bills payable 2130 Current contract liabilities 2150 Notes payable 2170 Accounts payable 2200 Other payables 2230 Current income tax liabilities 2250 Provisions for liabilities - current 2280 Current lease liabilities 2300 Other current liabilities 21XX Current Liabilities Non-current liabilities 2550 Provisions for liabilities - non-current 2570 Deferred income tax liabilities 2580 Non-current lease liabilities 2600 Other non-current liabilities 25XX Non-current liabilities 2XXX Total Liabilities Equity attributable to owners of parent Share capital 3110 Common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 3500 Treasury stocks 31XX Equity attributable to owners of the parent 36XX Non-controlling interest 3XXX Total equity 3X2X Total liabilities and equity

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

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ALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

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

Items

Year ended December 31 2020 2019 Notes AMOUNT % AMOUNT % 6(21) $ 6,102,675 100 $ 6,189,352 100 6(6)(26)(27) ( 4,580,745 ) ( 75) ( 5,174,937) ( 84 ) 1,521,930 25 1,014,415 16 6(26)(27) ( 50,790 ) ( 1) ( 57,328) ( 1 ) ( 327,897 ) ( 6) ( 335,763) ( 5 ) ( 1,058,505 ) ( 17) ( 787,765) ( 13 ) 12(2) 731 - 9,771 - ( 1,436,461 ) ( 24) ( 1,171,085) ( 19 ) 85,469 1 ( 156,670) ( 3 ) 6(22) 103,379 2 143,999 2 6(23) 49,171 1 45,845 1 6(24) 28,613 - 23,951 - 6(25) ( 25,195 ) - ( 25,703) - 155,968 3 188,092 3 241,437 4 31,422 - 6(28) ( 79,929 ) ( 2) ( 35,275) - $ 161,508 2 ($ 3,853) -

4000 Operating revenue 5000 Operating costs 5900 Net operating margin Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Expected credit gains 6000 Total operating expenses 6900 Operating profit (loss) Non-operating income and expenses 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit (loss) for the year

(Continued)

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ALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

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

Items

Year ended December 31 2020 2019 Notes AMOUNT % AMOUNT % 6(14) ( $ 1,153 ) - ($ 1,430) - 6(3) ( 3,787 ) - ( 61,872) ( 1 ) 6(28) 988 - 558 - ( 3,952 ) - ( 62,744) ( 1 ) ( 88,390 ) ( 1) ( 310,899) ( 5 ) 6(28) 14,051 - 59,375 1 ( 74,339 ) ( 1) ( 251,524) ( 4 ) ( $ 78,291 ) ( 1) ($ 314,268) ( 5 ) $ 83,217 1 ($ 318,121) ( 5 ) $ 160,357 2 $ 84,308 1 1,151 - ( 88,161) ( 1 ) $ 161,508 2 ($ 3,853) - $ 100,204 1 ($ 215,938) ( 3 ) ( 16,987 ) - ( 102,183) ( 2 ) $ 83,217 1 ($ 318,121) ( 5 ) 6(29) $ 0.60 $ 0.31 6(29) $ 0.59 $ 0.31

Other comprehensive income Components of other comprehensive income that will not be reclassified to profit or loss 8311 Losses on remeasurements of defined benefit plans 8316 Unrealised losses from financial assets measured at fair value through other comprehensive income 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8310 Components of other comprehensive (loss) income that will not be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8361 Currency translation differences of foreign operations 8399 Income tax relating to the components of other comprehensive income 8360 Components of other comprehensive loss that will be reclassified to profit or loss 8300 Total other comprehensive loss for the year 8500 Total comprehensive income (loss) for the year Profit (loss), attributable to: 8610 Owners of the parent 8620 Non-controlling interest Profit (loss) for the year Comprehensive (loss) income attributable to: 8710 Owners of the parent 8720 Non-controlling interest Total comprehensive income (loss) for the year 9750 Basic earnings per share 9850 Diluted earnings per share

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

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ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

2019 Balance at January 1, 2019 Profit (loss) for the year Other comprehensive loss for the year Total comprehensive income (loss) Appropriation of 2018 earnings Legal reserve Special reserve Cash dividends Share-based payment transactions Restricted stocks Retirement of employee restricted shares Balance at December 31, 2019 2020 Balance at January 1, 2020 Profit for the year Other comprehensive loss for the year Total comprehensive income (loss) Appropriation of 2019 earnings Legal reserve Special reserve Cash dividends Share-based payment transactions Restricted stocks Retirement of employee restricted shares Changes in ownership interests in subsidiaries Treasury shares repurchased Balance at December 31, 2020	Notes								Equity attribu	ta	bleto owners of the	parent	parent						Non-controlling interest		Totalequity
			Commonstock		Additional paid-in capital				Retained earnings			Otherequityinterest			Treasury stocks		Total
							Legal reserve		Special reserve		Unappropriated retained earnings	Currency translation differences of foreignoperations	Other
	6(20) 6(19) 6(15)(20) 6(15)(17)(18)(20) 6(15)(17)(18)(20) 6(20) 6(19) 6(15)(20) 6(15)(17)(18)(20) 6(15)(17)(18)(20) 6(18) 6(17)	$ 2,740,113 - - - - - - - 14,500 ( 1,000 ) $ 2,753,613 $ 2,753,613 - - - - - - - 43,120 ( 1,760 ) - - $ 2,794,973		$ 2,262,397 - - - - - - - 19,430 ( 1,340 ) $ 2,280,487 $ 2,280,487 - - - - - - - 54,798 ( 2,194 ) 2,135 - $ 2,335,226			$ 1,381,094 - - - 13,057 - - - - - $ 1,394,151 $ 1,394,151 - - - 8,316 - - - - - - - $ 1,402,467		$ 425,580 - - - - 10,099 - - - - $ 435,679 $ 435,679 - - - - 156,646 - - - - - - $ 592,325	$ 2,471,973 84,308 ( 1,144 ) 83,164 ( 13,057 ) ( 10,099 ) ( 137,005 ) - - - $ 2,394,976 $ 2,394,976 160,357 ( 922 ) 159,435 ( 8,316 ) ( 156,646 ) ( 139,794 ) - - - - - $ 2,249,655		($ 256,833 ) - ( 237,502 ) ( 237,502 ) - - - - - - ($ 494,335 ) ($ 494,335 ) - ( 56,201 ) ( 56,201 ) - - - - - - - - ($ 550,536 )	($ 38,105 ) - ( 61,600 ) ( 61,600 ) - - - 10,271 ( 33,930 ) 2,340 ($ 121,024 ) ($ 121,024 ) - ( 3,030 ) ( 3,030 ) - - - 70,856 ( 97,918 ) 3,954 - - ($ 147,162 )	$ - - - - - - - - - - $ - $ - - - - - - - - - - - ( 209,287 ) ($ 209,287 )		$ 8,986,219 84,308 ( 300,246 ) ( 215,938 ) - - ( 137,005 ) 10,271 - - $ 8,643,547 $ 8,643,547 160,357 ( 60,153 ) 100,204 - - ( 139,794 ) 70,856 - - 2,135 ( 209,287 ) $ 8,467,661		$ 675,362 ( 88,161 ) ( 14,022 ) ( 102,183 ) - - - - - - $ 573,179 $ 573,179 1,151 ( 18,138 ) ( 16,987 ) - - - - - - - - $ 556,192		$ 9,661,581 ( 3,853 ) ( 314,268 ) ( 318,121 ) - - ( 137,005 ) 10,271 - - $ 9,216,726 $ 9,216,726 161,508 ( 78,291 ) 83,217 - - ( 139,794 ) 70,856 - - 2,135 ( 209,287 ) $ 9,023,853

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

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ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments Adjustments to reconcile profit (loss) Depreciation Amortisation Expected credit gains Net gain on financial assets at fair value through profit Interest expense Interest income Dividend income Share-based payment compensation cost Reversal of impairment loss on investments accounted for under the equity method Gain on disposal of property, plant and equipment Changes in operating assets and liabilities Changes in operating assets Financial assets at fair value through profit or loss Current contract asset Notes receivable Accounts receivable Other receivables Inventories Prepayments Other current assets Changes in operating liabilities Current contract liabilities Notes payable Accounts payable Other payables Provisions for liabilities Other current liabilities Other non-current liabilities Cash inflow generated from operations Interest received Dividends received Interest paid Income tax paid Net cash flows from operating activities

Year ended December 31 Notes 2020 2019 $ 241,437 $ 31,422 6(7)(8)(9)(26) 182,683 196,903 6(10)(26) 88,966 29,352 12(2) ( 731 ) ( 9,771 ) 6(2)(24) ( 8,541 ) ( 16,710 ) 6(25) 25,195 25,703 6(22) ( 103,379 ) ( 143,999 ) 6(23) ( 1,526 ) ( 763 ) 6(15) 72,991 10,271 6(24) - ( 649 ) 6(24) ( 17 ) ( 1,922 ) - 237 ( 4,415 ) - - 1,389,593 ( 352,778 ) 1,506,379 ( 199 ) 21,074 ( 51,772 ) ( 78,118 ) ( 119,323 ) ( 107,492 ) 1,370 91 ( 1,574 ) 34,228 ( 4,294 ) ( 1,046,737 ) 265,644 ( 829,267 ) 56,294 15,079 27,284 ( 6,108 ) ( 13,759 ) ( 21,651 ) 51 64 299,607 997,209 77,946 111,086 1,526 763 ( 22,980 ) ( 24,258 ) ( 71,795 ) ( 54,691 ) 284,304 1,030,109

(Continued)

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ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of financial assets at amortised cost Proceeds from repayments of financial assets at amortised cost Acquisition of financial asset at fair value through profit or loss Proceeds from capital reduction of financial assets at fair value through other comprehensive income Proceeds from capital reduction of investments accounted for under the equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Increase (decrease) in guarantee deposits paid Net cash flows used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term borrowings Proceeds from issuance of short-term notes and bills payable Repayment of short-term notes and bills payable Increase in long-term borrowings Repayment of long-term borrowings Decrease in guarantee deposits received Repayment of principal portion of lease liabilities Acquisition of treasury stocks Cash dividends paid Net cash flows from (used in) financing activities Effect of exchange rate Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

Year ended December 31 Notes 2020 2019 ($ 1,084,605 ) ($ 769,005 ) 13,421 262,533 ( 344,683 ) - 4,364 - - 27,529 6(30) ( 61,226 ) ( 17,948 ) 311 4,076 6(30) ( 55,852 ) ( 85,612 ) 5,713 ( 2,347 ) ( 1,522,557 ) ( 580,774 ) 6(31) 130,000 440,000 6(31) 1,158,741 709,203 6(31) ( 1,090,000 ) ( 480,000 ) 6(31) 250,000 - 6(31) - ( 600,000 ) 6(31) 5,816 424 6(31) ( 9,615 ) ( 7,966 ) 6(17) ( 209,287 ) - 6(19) ( 139,794 ) ( 137,005 ) 95,861 ( 75,344 ) ( 150,257 ) ( 202,953 ) ( 1,292,649 ) 171,038 6(1) 6,666,055 6,495,017 6(1) $ 5,373,406 $ 6,666,055

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

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ALTEK CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2020 AND 2019

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

1. HISTORY AND ORGANIZATION

Altek Corporation (the “Company”) was incorporated as a company limited by shares under the provisions of the Company Law of the Republic of China (R.O.C.). The Company and its subsidiaries (collectively referred herein as the “Group”) are primarily engaged in the development, manufacturing and sale of digital image technology application, and related export and import trade.

The Company was listed in the Taiwan Stock Exchange on December 24, 2002, as approved by the TaiTz (91) Letter No. 024976 of the former Securities and Futures Commission, Ministry of Finance, R.O.C., dated September 27, 2002.

2. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORISATION

These consolidated financial statements were authorized for issuance by the Board of Directors on March 25, 2021.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

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

follows:
New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IAS 1 and IAS 8, ‘Disclosure initiative-definition of material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 9, IAS 39 and IFRS7 , ‘Interest rate benchmark Amendment to IFRS 16, ‘Covid-19-related rent concessions’	January 1, 2020 January 1, 2020 January 1, 2020 June 1, 2020 (Note)

Note ： Earlier application from January 1, 2020 is allowed by FSC.

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

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

the Group

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

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

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

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

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

==> picture [493 x 49] intentionally omitted <==

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

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

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

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

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(1) Compliance statement

• The consolidated financial statements of the Group have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”).

• (2) Basis of preparation

• A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:

  • (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

  • (b) Financial assets at fair value through other comprehensive income.

  • (c) Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.

• B. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

• A. Basis for preparation of consolidated financial statements:

• (a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.

• (b) Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

• (c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the noncontrolling interests having a deficit balance.

• (d) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity.

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• (e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognised in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

(Blank below)

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B. Subsidiaries included in the consolidated financial statements:

Name of Investor	Name ofSubsidiaries	Main Business Activities	Ownership (%)	Ownership (%)	Note
			December31,2020 100 100 100 100 100 100 50 100 100 100 100 100 100 100 100 100	December31,2019
Altek Corporation " " " Altek International Investment Co., Ltd. " " " Note 1 Note 1 Note 1 Note 1 Note 1 Note 2 Altek Semiconductor (Cayman) Co., Ltd. "	Altek International Investment Co., Ltd. Altek Japan Corporation Altek International Holding (BVI) Co., Ltd. Altek Investment Corporation Altek Lab Inc. Altek Optical (Cayman) Co., Ltd. Altek Semiconductor (Cayman) Co., Ltd. Altek International Trading Co., Ltd. Altek (Kunshan) Co., Ltd. Altek EMS (Kunshan) Co., Ltd. Altek Precision (Kunshan) Co., Ltd. Altek Trading (Shanghai) Limited Altek Optical Technology (Kunshan) Co., Ltd. Altek Biotechnology Corporation Altek Semiconductor Corporation Altek Semiconductor (Shanghai) Co., Ltd.	Investments Sales of optical instruments Investments Investments Design service Investments Investments Intercompany transactions Manufacture and sales of digital still camera and its accessories Manufacture and sales of related engineering services Manufacture and sales of digital camera parts Wholesale, import and export of related electronic and their associated accessories Manufacture and sales of related electronic services and its accessories and optical components Research and development, manufacture and sales of medical electronic equipments Research design and sales of ASIC Research design and sales of imaging technologies, electronic software and hardware		100 100 100 - 100 100 50 100 100 100 100 100 100 100 100 100	- - - Note 3 - - - Note 4 - - Note 5 - - - - -

Note 1: Invested by Leading Tech. Co., Ltd., Toptek Investment Cayman Co., Ltd., Altek Imaging Technology (Cayman) Co., Ltd., Altek Trading (Cayman) Co., Ltd., Altek Optical Technology (Cayman) Co., Ltd., which are wholly owned by Altek International Investment Co., Ltd.

Note 2: Invested by Altek Biotechnology Holding (Cayman) Co., Ltd., which is wholly owned by Altek International Holding (BVI) Co., Ltd. Note 3: Invested by Altek Corporation and established on September, 2020.

Note 4: Invested by Altek International Investment Co., Ltd. and established on July, 2019. Note 5: From January 6, 2020, the investor of Altek Precision (Kunshan) Co., Ltd. adjusted from Altek Imaging Technology (Cayman) Co., Ltd. to Leading Tech. Co., Ltd

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• C. Subsidiaries not included in the consolidated financial statements: None.

• D. Adjustments for subsidiaries with different balance sheet dates: None.

• E. Significant restrictions: None.

• F. Subsidiaries that have non-controlling interests that are material to the Group: None.

• (4) Foreign currency translation

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in New Taiwan Dollar, which is the Company’s functional and the Group’s presentation currency.

• A. Foreign currency transactions and balances

• (a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.

• (b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss.

• (c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.

• (d) All foreign exchange gains and losses are presented in the statement of comprehensive income within ‘other gains and losses’.

• B. Translation of foreign operations

• (a) The operating results and financial position of all the group entities, associates and joint arrangements that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

  • i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;

  • ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and

  • iii. All resulting exchange differences are recognised in other comprehensive income.

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• (b) When the foreign operation partially disposed of or sold is an associate or joint arrangement, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, even when the Group retains partial interest in the former foreign associate or joint arrangement after losing significant influence over the former foreign associate, or losing joint control of the former joint arrangement, such transactions should be accounted for as disposal of all interest in these foreign operations.

• (c) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, even when the Group retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.

• (d) Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing exchange rates at the balance sheet date.

(5) Classification of current and non-current items

• A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

• (a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;

• (b) Assets held mainly for trading purposes;

• (c) Assets that are expected to be realised within twelve months from the balance sheet date;

• (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the balance sheet date.

• B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:

• (a) Liabilities that are expected to be settled within the normal operating cycle;

• (b) Liabilities arising mainly from trading activities;

• (c) Liabilities that are to be settled within twelve months from the balance sheet date;

• (d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

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(6) Cash equivalents

Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.

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

• A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income.

• B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using settlement date accounting.

• C. At initial recognition, the Group measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Group subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.

• D. The Group recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

(8) Financial assets at fair value through other comprehensive income

• A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognise changes in fair value in other comprehensive income.

• B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognised and derecognised using settlement date accounting.

• C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. The Group subsequently measures the financial assets at fair value:

• The changes in fair value of equity investments that were recognised in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognised as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

(9) Financial assets at amortised cost

• The Group’s time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.

(10) Accounts and notes receivable

• A. Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services.

• B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

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(11) Impairment of financial assets

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

(12) Derecognition of financial assets

• The Group derecognises a financial asset when the contractual rights to receive the cash flows from the financial asset expire.

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

• A. The contractual rights to receive the cash flows from the financial asset expire.

• B. The contractual rights to receive cash flows of the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.

• C. The contractual rights to receive cash flows of the financial asset have been transferred; however, the Group has not retained control of the financial asset.

－ (13) Leasing arrangements (lessor) operating leases

Lease income from an operating lease (net of any incentives given to the lessee) is recognised in profit or loss on a straight-line basis over the lease term.

• (14) Inventories

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

(15) Investments accounted for using equity method / associates

• A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognised at cost.

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• B. The Group’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

• C. When changes in an associate’s equity do not arise from profit or loss or other comprehensive income of the associate and such changes do not affect the Group’s ownership percentage of the associate, the Group recognizes the Group’s share of change in equity of the associate in ‘capital surplus’ in proportion to its ownership.

• D. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

• E. In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital surplus’ and ‘investments accounted for under the equity method’ shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Group’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.

• F. Upon loss of significant influence over an associate, the Group remeasures any investment retained in the former associate at its fair value. Any difference between fair value and carrying amount is recognised in profit or loss.

• G. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it retains significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.

• H. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss. If it retains significant influence over this associate, the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss proportionately.

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(16) Property, plant and equipment

• A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.

• B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

• C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.

• D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

Buildings and structures Machinery and equipment Utility equipment Other equipment

     - 3 ~ 40 years 3 ~ 10 years 3 ~ 6 years 2 ~ 11 years

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

• A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of lowvalue assets, lease payments are recognised as an expense on a straight-line basis over the lease term.

• B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. The Group subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognised as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

• C. At the commencement date, the right-of-use asset is stated at cost comprising the following: (a) The amount of the initial measurement of lease liability

  • (b) Any initial direct costs incurred by the lessee

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The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognised as an adjustment to the right-of-use asset.

(18) Investment property

An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 10 ~ 46 years.

(19) Intangible assets

Computer software, reticle and patent rights are stated at cost and amortised on a straight-line basis over their estimated useful lives of 1 ~ 5 years.

(20) Impairment of non-financial assets

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

(21) Borrowings

Borrowings comprise long-term and short-term bank borrowings. Borrowings are recognised initially at fair value, net of transaction costs incurred.

(22) Notes and accounts payable

• A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.

• B. The Group initially measures notes and accounts payable at fair value and subsequently amortises the interest expense in profit or loss over the period of circulation using the effective interest method.

(23) Provisions

Provisions (warranties) are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date.

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(24) Employee benefits

A. Short-term employee benefits

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

• B. Pensions

• (a) Defined contribution plans

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

• (b) Defined benefit plans

  • i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep market in high-quality corporate bonds, the Group uses interest rates of government bonds (at the balance sheet date) instead.

  • ii. Remeasurements arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings.

  • iii. Past service costs are recognised immediately in profit or loss.

• C. Termination benefits

Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Group’s decision to terminate an employee’s employment before the normal retirement date, or an employee’s decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Group recognises expense as it can no longer withdraw an offer of termination benefits or it recognises relating restructuring costs, whichever is earlier. Benefits that are expected to be due more than 12 months after balance sheet date shall be discounted to their present value.

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• D. Employees’ compensation and directors’ remuneration

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

• (25) Employee share based payment

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

• B. Restricted stocks:

  • (a) Restricted stocks issued to employees are measured at the fair value of the equity instruments granted at the grant date, and are recognised as compensation cost over the vesting period.

  • (b) For restricted stocks where those stocks do not restrict distribution of dividends to employees and employees are not required to return the dividends received if they resign during the vesting period, the Group recognises the fair value of the dividends received by the employees who are expected to resign during the vesting period as compensation cost at the date of dividends declared.

  • (c) For restricted stocks where employees have to pay to acquire those stocks, if employees resign during the vesting period, they must return the stocks to the Group and the Group must refund their payments on the stocks, the Group recognises the payments from the employees who are expected to resign during the vesting period as liabilities at the grant date, and recognises the payments from the employees who are expected to be eventually vested with the stocks in ’capital surplus – others’.

(26) Income tax

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

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• B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

• C. Deferred tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

• D. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred tax assets are reassessed.

• E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.

• F. A deferred tax asset shall be recognised for the carryforward of unused tax credits resulting from acquisitions of equipment or technology, research and development expenditures and equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilised.

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(27) Share capital

• A. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.

• B. Where the Company repurchases the Company’s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders. Where such shares are subsequently reissued, the difference between their book value and any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

(28) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are resolved by the Company’s shareholders. Cash dividends are recorded as liabilities.

• (29) Revenue recognition

• A. Sales of goods

  • (a) The Group manufactures and sells digital image technology application products. Sales are recognised when control of the products has transferred, being when the products are delivered to the buyer, the buyer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the wholesaler’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the wholesaler, and either the wholesaler has accepted the products in accordance with the sales contract, or the Group has objective evidence that all criteria for acceptance have been satisfied.

  • (b) Revenue from these sales is recognised based on the price specified in the contract, net of the value-added tax, sales return, volume discounts, sales discounts and allowances.

  • (c) The Group’s obligation to provide a repair for faulty products under the standard warranty terms is recognised as a provision.

  • (d) A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

• B. Technical service revenue

The Group provides technical support services. Revenue from providing services is recognised in the accounting period in which the services are rendered. For fixed-price contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided. This is determined based on the number of delivered report relative to the total number of committed report.

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• C. Royalty income

  • (a) The Group entered into a contract with a customer to grant a licence of patented technology to the customer. Given the licence is distinct from other promised goods or services in the contract, the Group recognises the revenue from licencing when the licence transfer to a customer either at a point in time or over time based on the nature of the licence granted. The nature of the Group’s promise in granting a licence is a promise to provide a right to access the Group’s intellectual property if the Group undertakes activities that significantly affect the patents to which the customer has rights, the customer is affected by the Group’s activities and those activities do not result in the transfer of a good or a service to the customer as they occur. The royalties are recognised as revenue on a straight-line basis throughout the licencing period. In case the abovementioned conditions are not met, the nature of the Group’s promise in granting a licence is a promise to provide a right to use the Group’s intellectual property and therefore the revenue is recognised when transferring the licence to a customer at a point in time.

  • (b) Some contracts require a usage-based royalty in exchange for a licence of intellectual property. The Group recognises revenue when the performance obligation has been satisfied and the subsequent usage occurs. The customer pays at the time specified in the payment schedule. If the services rendered exceed the payment, a contract asset is recognised. If the payments exceed the services rendered, a contract liability is recognised.

• (30) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The Group’s chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments.

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

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

3. (a) Critical judgements in applying the Group’s accounting policies None.

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(b) Critical accounting estimates and assumptions

Evaluation of inventories

As inventories are stated at the lower of cost and net realisable value, the Group must determine the net realisable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation.

As of December 31, 2020, the carrying amount of inventories was $1,106,726.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

ETAILS OF SIGNIFICANT ACCOUNTS Cash and cash equivalents
Cash on hand revolving funds Checking accounts and demand deposits Time deposits Total	December 31,2020 1,052 $ 1,260,822 4,111,532 5,373,406 $	December 31,2019
		901 $ 252,974 6,412,180
		6,666,055 $

• A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

• B. The Group has no cash and cash equivalents pledged to others.

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

Financial assets at fair value through profit or loss
Items Current items: Financial assets mandatorily measured at fair value through profit or loss Structured deposits Valuation adjustment Total Non-current items: Financial assets mandatorily measured at fair value through profit or loss Unlisted stocks Valuation adjustment Total	December 31, 2020 349,186 $ 478 349,664 $ 10,312 $ 37,917 48,229 $	December 31,2019
		- $ -
		- $
		10,312 $ 29,844
		40,156 $

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• A. Amounts recognised in profit or loss in relation to financial assets at fair value through profit or loss are listed below:

loss are listed below:
		For the year ended		For the year ended
	December31,2020		December 31, 2019
Equity instruments	$	8,073	$	16,710
Structured deposit		468		-
Total	$	8,541	$	16,710

• B. The Group has no financial assets at fair value through profit or loss pledged to others as at December 31, 2020 and 2019.

• C. Information relating to credit risk of financial assets at fair value through profit or loss is provided in Note 12(2).

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

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Items December 31, 2020 December 31, 2019
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Non-current items:
Equity instruments
Unlisted stocks	$	144,405	$	148,132
Valuation adjustment	(	101,275)	(	97,488)
Total	$	43,130	$	50,644

• A. The Group has elected to classify equity instruments that are considered to be strategic investments as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $43,130 and $50,644 as at December 31, 2020 and 2019, respectively.

• B. Amounts recognised in profit or loss and other comprehensive income in relation to the financial assets at fair value through other comprehensive income amounted to ($3,787) and ($61,872) for the years ended December 31, 2020 and 2019, respectively.

• C. The Group has no financial assets at fair value through profit or loss as at December 31, 2020 and 2019 pledged to others.

(4) Financial assets at amortised cost

2019 pledged to others. Financial assets at amortised cost
Items Current items: Time deposit with maturity from three months to one year Non-current items: Time deposit with maturity over one year	December 31,2020 423,387 $ 1,419,002 $	December 31,2019
		371,900 $
		365,285 $

• A. Amounts recognised in profit or loss in relation to financial assets at amortised cost are listed below:

below:
Interest income	For the year ended December 31,2020 46,323 $	For the year ended December 31,2019
		17,989 $

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• B. The Group has no financial assets at amortised cost pledged to others.

• C. Information relating to credit risk of financial assets at amortised cost is provided in Note 12(2).

• (5) Accounts receivable

Accounts receivable
	December31,2020		December 31, 2019
Accounts receivable	$	1,273,648	$	923,301
Less: Allowance for uncollectible accounts	(	265)	(	5,282)
	$	1,273,383	$	918,019
A. The ageing analysis of accounts receivable that was past due but not impaired is as				follows:
	December 31, 2020		December 31,2019
Not past due	$	1,257,413	$	874,130
Up to 30 days		8,351		38,011
31 to 90 days		7,884		2,798
91 to 180 days		-		3,568
180 to 360 days		-		337
Over 361 days		-		4,457
	$	1,273,648	$	923,301

The above ageing analysis was based on past due date.

• B. As of December 31, 2020 and 2019, accounts receivable was all from contracts with customers. And as of January 1, 2019, the balance of accounts receivable and notes receivable from contracts with customers amounted to $3,801,997.

• C. The Group’s accounts receivable does not hold any collateral provided by customers.

• D. As at December 31, 2020 and 2019, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Group’s notes and accounts receivable was $1,273,383 and $918,019, respectively.

• E. Information relating to credit risk of accounts receivable is provided in Note 12(2).

(6) Inventories

Inventories
Raw materials Work in progress Finished goods Total		December 31, 2020
	Cost 771,902 $ 165,380 208,592 1,145,874 $	Allowance for valuation loss 26,938) ($ 3,468) ( 8,742) ( 39,148) ($	Book value
			744,964 $ 161,912 199,850
			1,106,726 $

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			December 31,2019	December 31,2019
				Allowance for
		Cost		valuation loss		Book value
Raw materials	$	627,464	($	34,134)	$	593,330
Work in progress		180,747	(	5,317)		175,430
Finished goods		285,494	(	15,625)		269,869
Total	$	1,093,705	($	55,076)	$	1,038,629

The cost of inventories recognised as expense for the period:

		For the year ended	For the year ended
	December31,2020		December31,2019
Cost of goods sold and others	$	4,596,673	5,173,793 $
(Rreversal of) loss in market value	(	15,928)	1,144
Total	$	4,580,745	5,174,937 $

For the year ended December 31, 2020, the Group reversed from a previous inventory write-down and accounted for as reduction of cost of goods sold because inventory that has been appropriated as loss on decline in market value was partially sold.

(Blank below)

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(7) Property, plant and equipment

At January 1 Cost Accumulated depreciation Opening net book amount Additions Disposals Reclassifications Depreciation charge Net exchange differences Closing net book amount At December 31 Cost Accumulated depreciation				2020

~36~

2019

At January 1 Cost Accumulated depreciation Opening net book amount Additions Disposals Reclassifications Depreciation charge Net exchange differences Closing net book amount At December 31 Cost Accumulated depreciation

Construction in progress and Buildings and prepayment for Land structures Machinery Test equipment equipment Others Total 468,684 $ 3,316,999 $ 1,089,739 $ 157,605 $ 10,459 $ 461,630 $ 5,505,116 $ - 765,750) ( 768,358) ( 151,959) ( - 442,704) ( 2,128,771) ( 468,684 $ 2,551,249 $ 321,381 $ 5,646 $ 10,459 $ 18,926 $ 3,376,345 $ 468,684 $ 2,551,249 $ 321,381 $ 5,646 $ 10,459 $ 18,926 $ 3,376,345 $ - 2,535 6,958 2,630 4,055 1,439 17,617 - - 2,021) ( 53) ( - 80) ( 2,154) ( - 9,094 - 983 10,459) ( 382 - - 87,683) ( 80,811) ( 3,296) ( - 10,061) ( 181,851) ( - 64,203) ( 9,633) ( 60) ( 154) ( 213) ( 74,263) ( 468,684 $ 2,410,992 $ 235,874 $ 5,850 $ 3,901 $ 10,393 $ 3,135,694 $ 468,684 $ 3,243,125 $ 901,360 $ 153,649 $ 3,901 $ 406,631 $ 5,177,350 $ - 832,133) ( 665,486) ( 147,799) ( - 396,238) ( 2,041,656) ( 468,684 $ 2,410,992 $ 235,874 $ 5,850 $ 3,901 $ 10,393 $ 3,135,694 $

A. For the years ended December 31, 2020 and 2019, there was no capitalisation of borrowing interests attributable to the property, plant and equipment. B. Information about the property, plant and equipment that were pledged to others as collaterals is provided in Note 8.

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－ (8) Leasing arrangements lessee

• A. The Group leases various assets including land, buildings, business vehicles. Rental contracts are typically made for periods of 1 to 49 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.

• B. Short-term leases with a lease term of 12 months or less comprise buildings and equipment. Lowvalue assets comprise printers.

• C. The carrying amount of the depreciation charge are as follows:

Land Buildings Transportation equipment (Business vehicles) Land Buildings Transportation equipment (Business vehicles)	December 31,2020 December 31, 2019 110,455 $ 123,882 $ 1,421 3,264 10,987 4,804 122,863 $ 131,950 $ Carrying amount Depreciation charge
	For the year ended For the year ended December 31, 2020 December 31, 2019 3,949 $ 4,040 $ 1,701 1,777 4,142 2,417 9,792 $ 8,234 $

• D. For the years ended December 31, 2020 and 2019, the additions to right-of-use assets were $10,325 and $2,191, respectively.

• E. The information on profit and loss accounts relating to lease contracts is as follows:

Items affecting profit or loss Interest expense on lease liabilities Expense on short-term lease contracts Expense on leases of low-value assets	For the year ended December 31,2020 1,139 $ 7,846 137	For the year ended December 31,2019
		1,170 $ 8,475 114

• F. For the years ended December 31, 2020 and 2019, the Group’s total cash outflow for leases were $17,598 and $16,555, respectively.

• G. Extension and termination options

In determining the lease term, the Group takes into consideration all facts and circumstances that create an economic incentive to exercise an extension option. The assessment of lease period is reviewed if a significant event occurs which affects the assessment.

~38~

(9) Investment property

Investment property
				2020
		Land	Buildings and structures			Total
At January 1
Cost	$	573,532	$	245,710	$	819,242
Accumulated depreciation		-	(	55,509)	(	55,509)
	$	573,532	$	190,201	$	763,733
At January 1	$	573,532	$	190,201	$	763,733
Reclassifications		9,722		629,619		639,341
Depreciation charge	(	49)	(	9,785)	(	9,834)
Net exchange differences		202		13,144		13,346
At December 31	$	583,407	$	823,179	$	1,406,586
At December 31
Cost	$	587,286	$	1,054,765	$	1,642,051
Accumulated depreciation	(	3,879)	(	231,586)	(	235,465)
	$	583,407	$	823,179	$	1,406,586
				2019
		Land	Buildings and structures			Total
At January 1
Cost	$	573,532	$	245,710	$	819,242
Accumulated depreciation		-	(	48,691)	(	48,691)
	$	573,532	$	197,019	$	770,551
At January 1	$	573,532	$	197,019	$	770,551
Depreciation charge		-	(	6,818)	(	6,818)
At December 31	$	573,532	$	190,201	$	763,733
At December 31
Cost	$	573,532	$	245,710	$	819,242
Accumulated depreciation		-	(	55,509)	(	55,509)
	$	573,532	$	190,201	$	763,733

~39~

• A. Rental income from investment property and direct operating expenses arising from investment property are shown below:

For the year ended December 31,2020 Rental income from investment property 37,690 $ Direct operating expenses arising from the investment property that generated rental income during the year 12,828 $	For the year ended December 31,2019 26,127 $ 8,250 $

• B. The fair value of the investment property held by the Group as at December 31, 2020 and 2019 all amounted to $1,632,152 and $870,022, which were valued by independent valuers. Valuations were made using the comparative method and income approach to perform evaluation capitalization.

• C. There was no capitalization of borrowing interests attributable to investment property.

• D. Information about the investment property that was pledged to others as collaterals is provided in Note 8.

(10) Intangible assets

in Note 8. Intangible assets
			2020			2019
At January 1
Cost	$		245,090	$		168,707
Accumulated amortisation	(		91,549)	(		68,565)
	$		153,541	$		100,142
At January 1	$		153,541	$		100,142
Additions			56,130			84,378
Adjustments			97,837			-
Amortisation charge	(		88,966)	(		29,352)
Net exchange differences	(		3,281)	(		1,627)
At December 31	$		215,261	$		153,541
At December 31
Cost	$		380,197	$		245,090
Accumulated amortisation	(		164,936)	(		91,549)
	$		215,261	$		153,541
A. Details of amortisation on intangible assets are as follows:
			For the year ended			For the year ended
		December 31,2020			December 31,2019
Operating costs		$	144		$	170
Operating expense			88,822			29,182
		$	88,966		$	29,352

~40~

B. The Group has no intangible assets pledged to others.

(11) Short-term borrowings

Type of borrowings December 31, 2020 Interest rate range Collateral Bank borrowings Unsecured borrowings $ 2,330,000 0.82%~0.94% None Type of borrowings December 31, 2019 Interest rate range Collateral Bank borrowings Unsecured borrowings $ 2,200,000 0.9% ~1% None

(12) Short-term notes and bills payable

Short-term notes and bills payable
		December 31, 2020			December	31, 2019
Commercial paper payable	$		300,000	$		230,000
Less: Discount on short-term notes
and bills payable	(		202)	(		38)
	$		299,798	$		229,962
Interest rate ranges			0.85%~0.87%			0.997%

- (13) Long term borrowings

	Borrowing period	Interest rate
Type of borrowings	and repayment term	range	Collateral		December	31,2020
Secured borrowings	Borrowing period is
	from August 24, 2018 to
	May 8, 2021. Revolving		Yes
	credit facility.	0.8%~1%	(Note)	$		250,000
Less: Current portion	(classified under other current liabilities)			(		250,000)
				$		-

As at December 31, 2019 : None

During the terms of the unsecured borrowing, in accordance with the unsecured borrowing agreements contracted with bank, the Group is required to maintain the consolidated net value over $8 billion and the debt ratio under 100% based on the annual consolidated financial statements and the semi-annual consolidated financial statements.

Note: Information about collateral for long-term borrowings is provided in Note 8.

~41~

(14) Pensions

• A. (a) The Company and its domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Act, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Act. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Group contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee.

(b) The amounts recognised in the balance sheet are as follows:

	December	31,2020	December	31,2019
Present value of defined benefit obligations	($	54,843)	($	52,536)
Fair value of plan assets		44,573		43,470
Net defined benefit liability	($	10,270)	($	9,066)

• (c) Movements in net defined benefit liabilities are as follows:

At January 1 Interest (expense) income Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) Change in financial assumptions Experience adjustments Pension fund contribution Paid pension At December 31			2020
	Present value of defined benefit obligations		Fair value ofplan assets	Net defined benefit liability
	52,536) ($ 368) ( 52,904) ( - 1,954) ( 713) ( 2,667) ( - 728 54,843) ($	43,470 $ 305 43,775 1,514 - - 1,514 12 728) ( 44,573 $		9,066) ($ 63) ( 9,129) ( 1,514 1,954) ( 713) ( 1,153) ( 12 - 10,270) ($

~42~

2019

				2019
	Present value of
	defined benefit			Fair value		Net defined
		obligations		ofplan assets	benefit liability
At January 1	($	49,943)	$	42,370	($	7,573)
Interest (expense) income	(	499)		424	(	75)
	(	50,442)		42,794	(	7,648)
Remeasurements:
Return on plan assets		-		1,498		1,498
(excluding amounts included in
interest income or expense)
Change in financial assumptions	(	1,492)		-	(	1,492)
Experience adjustments	(	1,436)		-	(	1,436)
	(	2,928)		1,498	(	1,430)
Pension fund contribution		-		12		12
Paid pension		834	(	834)		-
At December 31	($	52,536)	$	43,470	($	9,066)

• (d) The Bank of Taiwan was commissioned to manage the Fund of the Group’s and domestic subsidiaries’ defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Group’s and domestic subsidiaries have no right to participate in managing and operating that fund and hence the Group’s and domestic subsidiaries are unable to disclose the classification of plan assets fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2020 and 2019 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.

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(f) The principal actuarial assumptions used were as follows:

	For the year ended	For the year ended
	December 31,2020	December 31,2019
Discount rate	0.30%	0.70%
Future salary increases	3.00%	3.00%
Because the main actuarial assumption changed, the present value		of defined benefit
obligation is affected. The analysis was as follows:

==> picture [457 x 126] intentionally omitted <==

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

Discount rate Future salary increases
Increase 0.25% Decrease 0.25% Increase 0.25% Decrease 0.25%
December 31, 2020
Effect on present value of
defined benefit obligations ($ 1,234) $ 1,277 $ 1,123 ($ 1,093)
December 31, 2019
Effect on present value of
defined benefit obligations ($ 1,248) $ 1,294 $ 1,150 ($ 1,117)
----- End of picture text -----

The sensitivity analysis above is based on one assumption which changed while the other conditions remain unchanged. In practice, more than one assumption may change all at once. The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.

• (g) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2021 amount to $12.

• (h) As of December 31, 2020, the weighted average duration of the retirement plan is 9 years. The analysis of timing of the future pension payment was as follows:

Within 1 year 2-5 years Over 5 years	9,017 $ 6,389 16,249
	31,655 $

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• B.(a) Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment. The pension costs under defined contribution pension plans of the Group for the years ended December 31, 2020 and 2019, were $29,910 and $28,907, respectively, under the above pension scheme.

• (b) The foreign subsidiaries provided defined contribution plans for its employees. Pursuant to local regulations, such employees and the subsidiaries each make contributions based on a certain percentage based of the salaries and wages to the pension funds. The subsidiaries had recognised pension costs of $1,994 and $19,597 for the years ended December 31, 2020 and 2019, respectively.

(15) Share-based payment

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

arrangements were as follows:
Type of arrangement	Grant date	Quantity granted (share in thousands)	Contract period	Vesting conditions
Employee stock options " Plan for restricted shares to employee(2015-1) " " Plan for restricted shares to employee(2018-1) " Plan for restricted shares to employee(2019-1) " "	October 28, 2011 March 21, 2012 November 13, 2015 March 18, 2016 May 5, 2016 August 12, 2019 January 20, 2020 August 12, 2019 January 20, 2020 April 24, 2020	3,000 3,000 2,440 1,190 370 630 2,196 820 2,030 86	9.2 years 8.9 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years	Note 1 Note 1 Note 2, Note 4 Note 2, Note 4 Note 2, Note 4 Note 3, Note 4 Note 3, Note 4 Note 3, Note 4 Note 3, Note 4 Note 3, Note 4

Note 1: 2 years’ service vest 40%, 3 years’ service vest 70%, 4 years’ service vest 100%.

~45~

• Note 2: The restricted shares were issued at no consideration to the Company’s existing employees whose service years have reached 2 years and 3 years and who achieved the performance requirement. The vested ratio is 50% and 50%, respectively. If employees who are entitled to receive restricted stocks do not meet the vesting conditions, the Company will redeem at no consideration and retire those shares.

• Note 3: The restricted shares were issued at no consideration to the Company’s existing employees whose service years have reached 1 year, 2 years and 3 years and who achieved the performance requirement. The vested ratio is 40%, 30% and 30%, respectively. If employees who are entitled to receive restricted stocks do not meet the vesting conditions, the Company will redeem at no consideration and retire those shares.

• Note 4:The stocks and dividends distributed to employees during the vesting period shall be given by the Company at no consideration. Employees are not required to return the stocks and dividends if they resign during the vesting period.

• B. Details of the share-based payment arrangements are as follows:

• (a) For the years ended December 31, 2020 and 2019, the information on the share options and the weighted number of average exercise price of compensation plan employee stock options are as follows:

are as follows:
		For the	year ended				For the	year ended
		December		31,2020			December		31,2019
				Weighted-average					Weighted-average
				exercise	price				exercise	price
		No. of options	(in NT dollars)(Note)				No. of options	(in NT dollars)(Note)
Options outstanding at
beginning of the period		1,701	$		29.81		1,941	$		30.61
Option expired	(	1,701)			29.81	(	240)			29.85
Options outstanding at end
of the period		-			-		1,701			29.81
Options exercisable at end
of the period		-			-		1,701			29.81

Note: The exercise price of stock options was adjusted based on the cash dividends, stock dividends and cash capital reduction per share distributed.

• (b) No stock options were exercised during the years ended December 31, 2020 and 2019.

• (c) The expiry date and exercise price of stock options outstanding at balance sheet date are as follows:

Issue date approved	Expirydate December 31, 2020 December 31, 2020	Exercise price No. of shares (in NT dollars) (in thousands) (Note) - 28.8 $ - 28.7 $ December 31,2020	December 31,2019	December 31,2019
		No. of shares (in thousands) - -	No. of shares (in thousands) 920 781	Exercise price (in NT dollars) (Note)
October 28, 2011 March 21, 2012				29.9 $ 29.7 $

~46~

Note: The exercise price of stock options was adjusted based on the cash dividends, stock dividends and cash capital reduction per share distributed.

• (d) The fair value of stock options granted is measured using the Black-Scholes option-pricing model. Relevant information is as follows:

Type of arrangement Grant date	Stock price (in NT dollars)	Exercise price (Note) (in NT dollars) Expected price volatility 28.8 $ 30.27% 28.7 $ 33.54%	Expected option life Expected dividends	Risk- free interest rate Fair value per unit (in NT dollars)
Employee stock options October 28, 2011 " March 21, 2012	$ 30.65 27.85		5 years 1.4% 4.9 years 1.4%	1.18% 7.42 $ 1.08% 7.35

Note: The exercise price of stock options was adjusted based on the cash dividends, stock dividends and cash capital reduction per share distributed.

• C. Restricted shares to employees:

• (a) The information on restricted shares to employees is as follows (share in thousands):

		For the year ended		For the year ended
		December 31, 2020		December 31,2019
Shares ungranted beginning balance		1,350		715
Given at period (Note 1 and 2)		4,312		1,450
Shares exercised	(	518)	(	715)
Shares forfeited - retired	(	176)	(	100)
Shares ungranted ending balance		4,968		1,350

  - Note 1: For the restricted stocks granted with the compensation cost accounted for using the

     - fair vale method, the fair values on the grant date are calculated based on the closing price on the grant date.

  - Note 2: The fair value of restricted stocks granted in January 20, April 24, 2020 and August 12, 2019 was $22.8 (in NT dollars), $18.2 (in NT dollars) and $23.4 (in NT dollars).

• (b) As of December 31, 2020, the Company collected 176 thousand shares of restricted shares because certain employees did not meet the vesting condition, and the change of registration has been completed.

• D. Expenses incurred on share-based payment transactions are shown below:

Equity-settled	For the year ended December31,2020 72,991 $	For the year ended December31,2019
		10,271 $

~47~

(16) Provisions

Provisions
				Warranty
At January 1, 2020			$	142,391
Additional provisions				34,606
Used during the period			(	11)
Reversed during the period			(	7,311)
Exchange differences				15
At December 31, 2020			$	169,690
	December 31,2020		December 31,2019
Current	$	9,295	$	5,823
Non-current	$	160,395	$	136,568
The Group gives warranties on digital image technology application products				sold. Provision for
warranty is estimated based on historical warranty data of digital image			technology application
products.

(17) Share capital

As of December 31, 2020, the Company’s authorized capital was $5,000,000, consisting of 500,000 thousand shares of ordinary stock, and the paid-in capital was $2,794,973 with a par value of $10 (in NT dollars) per share.

• A. Movements in the number of the Company’s ordinary shares outstanding are as follows (share in thousands):

(share in thousands):
		2020		2019
At January 1		275,361		274,011
Establish employee restricted shares		4,312		1,450
Retired restricted shares to employees that
did not meet the vesting conditions	(	176)	(	100)
Shares repurchases	(	11,000)		-
At December 31		268,497		275,361

B. Treasury shares

• (a) Reason for share reacquisition and the number of the Company’s treasury shares are as follows :

follows :
Name of company holdingthe shares	None. Reason for reacquisition Number of shares (share in thousands) To be reissued to employees 11,000 December	December	Carryingamount 209,287 $ 31,2020
December 31, 2019 : The Company

~48~

• (b) Pursuant to the R.O.C. Securities and Exchange Act, the number of shares bought back as treasury share should not exceed 10% of the number of the Company’s issued and outstanding shares and the amount bought back should not exceed the sum of retained earnings, paid-in capital in excess of par value and realised capital surplus.

• (c) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares should not be pledged as collateral and is not entitled to dividends before it is reissued.

• (d) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares should be reissued to the employees within five years from the reacquisition date and shares not reissued within the five-year period are to be retired.

• (18) Capital surplus

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

2020

At January 1 Changes in ownership interests in subsidiaries Issuance of restricted shares to employees Employee restricted share granted Retirement of employee restricted shares At December 31	Share Employee stock premium options 1,814,532 $ 49,102 $ - - - - 6,941 - - - 1,821,473 $ 49,102 $	Difference between consideration and carrying amount of subsidiaries acquired or disposed 1,534 $ - - - - 1,534 $	Changes in ownership interests in subsidiaries 395,774 $ 2,135 - - - 397,909 $	Proceeds from sales of treasury Restricted shares to shares employees Total 1,455 $ 18,090 $ 2,280,487 $ - - 2,135 - 54,798 54,798 - 6,941) ( - - 2,194) ( 2,194) ( 1,455 $ 63,753 $ 2,335,226 $

~49~

2019

At January 1 Issuance of restricted shares to employees Employee restricted share granted Retirement of employee restricted shares At December 31	Share Employee stock premium options 1,802,659 $ 49,102 $ - - 11,873 - - - 1,814,532 $ 49,102 $	Difference between consideration and carrying amount of subsidiaries acquired or disposed 1,534 $ - - - 1,534 $	Changes in ownership interests in subsidiaries 395,774 $ - - - 395,774 $	Proceeds from sales of treasury Restricted shares to shares employees Total 1,455 $ 11,873 $ 2,262,397 $ - 19,430 19,430 - 11,873) ( - - 1,340) ( 1,340) ( 1,455 $ 18,090 $ 2,280,487 $

(19) Retained earnings

• A. According to the Company’s Articles of Incorporation, the annual earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve. Special reserve shall be set aside in accordance with the rules. The remaining amount plus the unappropriated earnings of prior years were distributed in new shares, which were proposed by the Board of Directors and resolved at the shareholders’ meeting.

• All or some of the dividends and bonus could, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, be distributed in the form of cash and reported at the shareholders’ meeting.

• B. The amount of dividends appropriated is based on the Company’s current year’s net income and prior years’ retained earnings, taking into account the Company’s financial structure and future operating plans. The distribution ratio of cash dividends to stock dividends is based on the Company’s funding status, diluted earnings per share and other factors. According to the dividend policy adopted by the Board of Directors, cash dividends shall account for at least 20% of the total dividends distributed.

• C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the balance of the reserve exceeds 25% of the Company’s paid-in capital.

• D. (a) In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.

~50~

• (b) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Order No. Financial-Supervisory-Securities-Corporate1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are investment property of land, and reversed over the use period if the assets are investment property other than land.

• E. The appropriation of 2019 and 2018 earnings had been resolved at the stockholders’ meeting on June 12, 2020 and June 13, 2019, respectively. Details are summarized below:

Legal reserve Special reserve Cash dividends	Dividends per share Dividends per share Amount (in NT dollars) Amount (in NT dollars) 8,316 $ 13,057 $ 156,646 10,099 139,794 0.5 $ 137,005 0.5 $ 304,756 $ 160,161 $ 2019 2018	Dividends per share Dividends per share Amount (in NT dollars) Amount (in NT dollars) 8,316 $ 13,057 $ 156,646 10,099 139,794 0.5 $ 137,005 0.5 $ 304,756 $ 160,161 $ 2019 2018
		0.5 $

The appropriation of 2019 and 2018 earnings were the same as that approved by the Board of Directors on March 20, 2020 and March 15, 2019, respectively.

• F. The appropriation of 2020 earnings had been proposed at the Board of Directors on March 25, 2021. Details are summarized below:

2021. Details are summarized below:
Legal reserve Special reserve Cash dividends	Dividends per share Amount (in NT dollars) 15,943 $ 59,231 134,249 0.5 $ 209,423 $ 2020
		0.5 $

Aforementioned distribution of 2020 earnings, except cash dividends were resolved and approved by the Board of Directors on March 25, 2021, others were pending for approval from the shareholders.

~51~

(20) Other equity items

Other equity items
						2020
					Unrealized
		Foreign currency				losses on			Unearned
			translation			valuation		compensation			Total
At January 1	($		494,335)	($		97,990)	($		23,034)	($	615,359)
Valuation adjustment			-	(		3,030)			-	(	3,030)
Currency translation differences:
-Group	(		56,201)			-			-	(	56,201)
Issuance of restricted shares
to employees			-			-	(		97,918)	(	97,918)
Retirement of restricted shares
to employees			-			-			3,954		3,954
Share-based payment transactions			-			-			70,856		70,856
At December 31	($		550,536)	($		101,020)	($		46,142)	($	697,698)
						2019
					Unrealized
		Foreign currency				losses on			Unearned
			translation			valuation		compensation			Total
At January 1	($		256,833)	($		36,390)	($		1,715)	($	294,938)
Valuation adjustment			-	(		61,600)			-	(	61,600)
Currency translation differences:
-Group	(		237,502)			-			-	(	237,502)
Issuance of restricted shares to
employees			-			-	(		33,930)	(	33,930)
Retirement of restricted shares			-			-			2,340		2,340
to employees
Share-based payment transactions			-			-			10,271		10,271
At December 31	($		494,335)	($		97,990)	($		23,034)	($	615,359)

(21) Operating revenue

Operating revenue
Disaggregation of revenue from contracts with customers For the year ended December31,2020 Revenue from contracts with customers 6,102,675 $	For the year ended December31,2019
	6,189,352 $

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

~52~

(22) (23)	Interest income Other income For the year ended December 31,2020 Asia Revenue from external customer contracts 3,415,337 $ Timing of revenue recognition At a point in time 3,323,127 $ Over time 92,210 Total 3,415,337 $ For the year ended December 31,2019 Asia Revenue from external customer contracts 3,508,238 $ Timing of revenue recognition At a point in time 3,415,594 $ Over time 92,644 Total 3,508,238 $ Interest income from bank deposits Interest income from financial assets measured at amortised cost Other interest income Rent income Dividend income Other income - others	Europe America Taiwan Total 1,041,331 $ 1,522,933 $ 123,074 $ 6,102,675 $ 1,041,331 $ 1,522,933 $ 123,074 $ 6,010,465 $ - - - 92,210 1,041,331 $ 1,522,933 $ 123,074 $ 6,102,675 $ Europe America Taiwan Total 1,226,724 $ 1,407,566 $ 46,824 $ 6,189,352 $ 1,226,724 $ 1,407,566 $ 46,824 $ 6,096,708 $ - - - 92,644 1,226,724 $ 1,407,566 $ 46,824 $ 6,189,352 $ For the year ended For the year ended December 31, 2020 December 31,2019 57,016 $ 125,984 $ 46,323 17,989 40 26 103,379 $ 143,999 $ For the year ended For the year ended December 31,2020 December 31,2019 36,185 $ 31,479 $ 1,526 763 11,460 13,603 49,171 $ 45,845 $	Europe America Taiwan Total 1,041,331 $ 1,522,933 $ 123,074 $ 6,102,675 $ 1,041,331 $ 1,522,933 $ 123,074 $ 6,010,465 $ - - - 92,210 1,041,331 $ 1,522,933 $ 123,074 $ 6,102,675 $ Europe America Taiwan Total 1,226,724 $ 1,407,566 $ 46,824 $ 6,189,352 $ 1,226,724 $ 1,407,566 $ 46,824 $ 6,096,708 $ - - - 92,644 1,226,724 $ 1,407,566 $ 46,824 $ 6,189,352 $ For the year ended For the year ended December 31, 2020 December 31,2019 57,016 $ 125,984 $ 46,323 17,989 40 26 103,379 $ 143,999 $ For the year ended For the year ended December 31,2020 December 31,2019 36,185 $ 31,479 $ 1,526 763 11,460 13,603 49,171 $ 45,845 $	Total 6,102,675 $
				6,010,465 $ 92,210
				6,102,675 $
				Total
				6,189,352 $
				6,096,708 $ 92,644
				6,189,352 $
			125,984 $ 17,989 26
			143,999 $
			For the year ended December 31,2019
			31,479 $ 763 13,603
			45,845 $

~53~

(24) Other gains and losses

Other gains and losses
			For the year ended			For the year ended
		December 31,2020			December 31,2019
Gains on disposal of property, plant and
equipment	$		17	$		1,922
Net currency exchange gains			21,723			5,737
Net gains on financial assets at fair value
through profit			8,541			16,710
Reversal of impairment loss of investments
accounted for under the equity method			-			649
Other expenses	(		1,668)	(		1,067)
Total	$		28,613	$		23,951
Finance costs
			For the year ended			For the year ended
		December 31,2020			December 31, 2019
Interest expense :
Bank loan	$		22,961	$		23,774
Lease liabilities			1,139			1,170
Other			1,095			759
	$		25,195	$		25,703
Expenses by nature
			For the year ended			For the year ended
		December 31, 2020			December 31, 2019
Employee benefit expenses	$		1,195,937	$		1,102,313
Depreciation charges on property, plant and
equipment			163,057			181,851
Depreciation charges on right-of-use assets			9,792			8,234
Depreciation charges on investment property			9,834			6,818
Amortisation charges on intangible assets			88,966			29,352
Employee benefit expenses
			For the year ended			For the year ended
		December 31,2020			December 31,2019
Wages and salaries	$		1,080,574	$		969,326
Labour and health insurance fees			51,533			52,122
Pension costs			31,967			48,579
Other personnel expenses			31,863			32,286
Total	$		1,195,937	$		1,102,313

(25) Finance costs

(26) Expenses by nature

(27) Employee benefit expenses

~54~

• A. According to the Articles of Incorporation of the Company, when distributing earnings, the Company shall distribute compensation to the employees and pay remuneration to the directors that account for 10% to 20% and no higher than 2%, respectively, of distributable profit of the current period. If a company has accumulated deficit, earnings should be channeled to cover losses. Employees’ compensation can be distributed in the form of shares or in cash. Employees of subsidiaries that the Company holds more than 50% shareholding are entitled to receive aforementioned stock or cash.

• Abovementioned distributable profit of the current period refers to the pre-tax profit before deduction of employees’ compensation and directors’ remuneration. A company may, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, have the profit distributed as employees’ compensation and directors’ remuneration; and in addition thereto a report of such distribution shall be submitted to the shareholders’ meeting.

• B. For the years ended December 31, 2020 and 2019, employees’ compensation was accrued at $31,624 and $16,220, respectively; directors’ remuneration was accrued at $4,217 and $2,163, respectively. The aforementioned amounts were recognised in salary expenses.

• Employees’ compensation and directors’ and supervisors’ remuneration for 2019 amounting to $16,220 and $2,163, respectively, as resolved at the meeting of Board of Directors were in agreement with those amounts recognized in the 2019 financial statements.

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

(28) Income tax

• A. Income tax expense

• (a) Components of income tax expense:

Current tax: Current tax on profits for the period Charge on unassigned retained earnings Tax paid outside of the territory of the Republic of China Prior year income tax under(over)estimation Total current tax Deferred tax: Origination and reversal of temporary differences Income tax expense	For the year ended For the year ended December 31,2020 December 31,2019 60,287 $ 47,675 $ 7,315 4,759 3,293 1,026 17 22,105) ( 70,912 31,355 9,017 3,920 79,929 $ 35,275 $

~55~

(b) The income tax charged to other comprehensive income is as follows:

Reconciliation between income tax expense and accounting profit： For the year ended For the year ended December 31, 2020 December 31, 2019 Changes in fair value of financial assets at fair value through other comprehensive income 757) ($ 272) ($ Translation differences of foreign operations 14,051) ( 59,375) ( Benefit obligations revaluation 231) ( 286) ( 15,039) ($ 59,933) ($ For the year ended December 31,2020 For the year ended December 31,2019 Tax calculated based on profit before tax and statutory tax rate 153,035 $ 33,409 $ Expenses disallowed by tax regulation 66,521) ( 7,538) ( Tax on undistributed earnings 7,315 4,759 Change in assessment of realisation of deferred tax assets 3,748) ( 4,683 Effect from investment tax credits 4,537) ( 9,022) ( Loss deducted not recognised as deferred tax assets 8,925) ( 30,063 Prior year income tax under(over)estimation 17 22,105) ( Effect of different tax rates in countries in which the group operates 3,293 1,026 Income tax expense 79,929 $ 35,275 $	Reconciliation between income tax expense and accounting profit： For the year ended For the year ended December 31, 2020 December 31, 2019 Changes in fair value of financial assets at fair value through other comprehensive income 757) ($ 272) ($ Translation differences of foreign operations 14,051) ( 59,375) ( Benefit obligations revaluation 231) ( 286) ( 15,039) ($ 59,933) ($ For the year ended December 31,2020 For the year ended December 31,2019 Tax calculated based on profit before tax and statutory tax rate 153,035 $ 33,409 $ Expenses disallowed by tax regulation 66,521) ( 7,538) ( Tax on undistributed earnings 7,315 4,759 Change in assessment of realisation of deferred tax assets 3,748) ( 4,683 Effect from investment tax credits 4,537) ( 9,022) ( Loss deducted not recognised as deferred tax assets 8,925) ( 30,063 Prior year income tax under(over)estimation 17 22,105) ( Effect of different tax rates in countries in which the group operates 3,293 1,026 Income tax expense 79,929 $ 35,275 $	Reconciliation between income tax expense and accounting profit： For the year ended For the year ended December 31, 2020 December 31, 2019 Changes in fair value of financial assets at fair value through other comprehensive income 757) ($ 272) ($ Translation differences of foreign operations 14,051) ( 59,375) ( Benefit obligations revaluation 231) ( 286) ( 15,039) ($ 59,933) ($ For the year ended December 31,2020 For the year ended December 31,2019 Tax calculated based on profit before tax and statutory tax rate 153,035 $ 33,409 $ Expenses disallowed by tax regulation 66,521) ( 7,538) ( Tax on undistributed earnings 7,315 4,759 Change in assessment of realisation of deferred tax assets 3,748) ( 4,683 Effect from investment tax credits 4,537) ( 9,022) ( Loss deducted not recognised as deferred tax assets 8,925) ( 30,063 Prior year income tax under(over)estimation 17 22,105) ( Effect of different tax rates in countries in which the group operates 3,293 1,026 Income tax expense 79,929 $ 35,275 $
	153,035 $ 66,521) ( 7,315 3,748) ( 4,537) ( 8,925) ( 17 3,293 79,929 $	33,409 $ 7,538) ( 4,759 4,683 9,022) ( 30,063 22,105) ( 1,026 35,275 $

B. Reconciliation between income tax expense and accounting profit ：

~56~

• C. Amounts of deferred tax assets or liabilities as a result of temporary differences, tax losses and investment tax credits are as follows:

Deferred tax assets: Temporary differences: Cost of after-sales service and other estimated expenses Currency translation differences Others Tax losses Investment tax credits Subtotal Deferred tax liabilities: Temporary differences: Gain on foreign investment under equity method Pension expenses Others Subtotal Total			2020	2020	2020
		January1	Recognised in profit or loss		Recognised in other comprehensive income December 31 - $ 51,602 $ 14,051 108,143 255 255 - 16,347 - 6,014 14,306 $ 182,361 $ - $ 461,253) ($ 231 889) ( 502 2,549) ( 733 $ 464,691) ($ 15,039 $ 282,330) ($
	46,238 $ 94,092 - 10,351 10,891 161,572 $ 441,904) ($ 1,130) ( 6,890) ( 449,924) ($ 288,352) ($		5,364 $ - - 5,996 4,877) ( 6,483 $ 19,349) ($ 10 3,839 15,500) ($ 9,017) ($

~57~

Deferred tax assets: Temporary differences: Cost of after-sales service and other estimated expenses Currency translation differences Others Tax losses Investment tax credits Subtotal Deferred tax liabilities: Temporary differences: Gain on foreign investment under equity method Pension expenses Others Subtotal Total	January1 45,464 $ 34,717 235 - 22,280 102,696 $ 444,069) ($ 1,429) ( 1,563) ( 447,061) ($ 344,365) ($	January1	Recognised in profit or loss Recognised in other comprehensive income December 31 774 $ - $ 46,238 $ - 59,375 94,092 235) ( - - 10,351 - 10,351 11,389) ( - 10,891 499) ($ 59,375 $ 161,572 $ 2,165 $ - $ 441,904) ($ 13 286 1,130) ( 5,599) ( 272 6,890) ( 3,421) ($ 558 $ 449,924) ($ 3,920) ($ 59,933 $ 288,352) ($ 2019	Recognised in profit or loss Recognised in other comprehensive income December 31 774 $ - $ 46,238 $ - 59,375 94,092 235) ( - - 10,351 - 10,351 11,389) ( - 10,891 499) ($ 59,375 $ 161,572 $ 2,165 $ - $ 441,904) ($ 13 286 1,130) ( 5,599) ( 272 6,890) ( 3,421) ($ 558 $ 449,924) ($ 3,920) ($ 59,933 $ 288,352) ($ 2019
			774 $ - 235) ( 10,351 11,389) ( 499) ($ 2,165 $ 13 5,599) ( 3,421) ($ 3,920) ($

• D. Details of the amount the Company is entitled as investment tax credit and unrecognised deferred tax assets are as follows:

tax assets are as follows:
Qualifyingitems		Unused tax credits		Unrecognised deferred tax assets December 31,2020	Expiry year
Research and development Research and development Qualifyingitems		16,014 $ 2,457 18,471 $		12,457 $ - 12,457 $ December 31,2019	2021 2022
		Unused tax credits		Unrecognised deferred tax assets	Expiry year
Research and development Research and development		14,469 $ 2,840 17,309 $		6,418 $ - 6,418 $	2020 2021

~58~

• E. Expiration dates of unused tax losses and amounts of unrecognised deferred tax assets are as follows:

follows:
Year incurred 2018 2019 2020 Year incurred 2018 2019				December 31,2020
		Amount filed/ assessed			Unused amount		Unrecognised deferred tax assets	Expiry year
	17,466 $ 187,895 79 205,440 $ Amount filed/ assessed 18,382 $ 187,895 206,277 $	17,466 $ 187,895 79						2028 2029 2030 Expiry year 2028 2029
		205,440 $
			14,173 $ 187,895 202,068 $

• F. The amounts of deductible temporary difference that are not recognised as deferred tax assets are as follows: None.

• G. The Company’s income tax returns through 2018 have been assessed and approved by the Tax Authority.

(29) Earnings per share

Authority. Earnings per share
Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Restricted shares to employees Employees’ bonus Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares	For	theyear ended December 31,2020
	Amount after tax 160,357 $ 160,357 $ 160,357 $	Weighted average number of ordinary shares outstanding (share in thousands) 265,758 3,458 1,156 270,372	Earnings per share (in dollars)
			0.60 $
			0.59 $

~59~

(30)

Supplemental cash flow information Investing activities with partial cash payments： Weighted average number of ordinary shares outstanding Earnings per share Amount after tax (share in thousands) (in dollars) Basic earnings per share Profit attributable to ordinary shareholders of the parent 84,308 $ 273,838 0.31 $ Diluted earnings per share Profit attributable to ordinary shareholders of the parent 84,308 $ Assumed conversion of all dilutive potential ordinary shares Restricted shares to employees 170 Employees’ bonus 894 Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares 84,308 $ 274,902 0.31 $ For theyear ended December 31,2019 For the year ended For the year ended December 31,2020 December 31, 2019 Acquisitions of property, plant, and equipment 64,531 $ 17,617 $ Add: Property and equipment and construction billings payable at beginning of year 898 1,229 Less: Property and equipment and construction billings payable at end of year 4,203) ( 898) ( Cash paid 61,226 $ 17,948 $ For the year ended For the year ended December 31,2020 December 31,2019 Acquisitions of intangible assets 56,130 $ 84,378 $ Add: Payables at beginning of period - 1,234 Less: Payables at end of period 278) ( - Cash paid 55,852 $ 85,612 $

~60~

(31) Changes in liabilities from financing activities

January 1, 2020 Changes in cash flow from financing activities Impact of changes in foreign exchange rate Changes in other non-cash items December 31, 2020 January 1, 2019 Changes in cash flow from financing activities Impact of changes in foreign exchange rate Changes in other non-cash items December 31, 2019		Short-term borrowings		Short-term notes and billspayable		Long-term borrowings (Note)		Guarantee deposits received	Lease liabilities		Total
		2,200,000 $ 130,000 - - 2,330,000 $ Short-term borrowings		229,962 $ 68,741 - 1,095 299,798 $ Short-term notes and billspayable		- $ 250,000 - - 250,000 $ Long-term borrowings		20,326 $ 5,816 338 - 26,480 $ Guarantee deposits received	102,805 $ 9,615) ( 12 11,310 104,512 $ Lease liabilities		2,553,093 $ 444,942 350 12,405 3,010,790 $ Total
		1,760,000 $ 440,000 - - 2,200,000 $		- $ 229,203 - 759 229,962 $	600,000 $ 600,000) ( - - - $		20,470 $ 424 568) ( - 20,326 $		107,196 $ 7,966) ( 132) ( 3,707 102,805 $	2,487,666 $ 61,661 700) ( 4,466 2,553,093 $

Note: The loan will be due within 1 year, and it classified under other current liabilities.

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship: None.

(2) Significant transactions and balances with related parties:

No significant related party transactions.

(3) Key management compensation

No significant related party transactions. Key management compensation
Salaries and other short-term employee benefits Post-employment benefits Share-based payments Total	For the year ended December 31,2020 41,659 $ 908 15,619 58,186 $	For the year ended December 31,2019
		37,151 $ 783 3,019
		40,953 $

8. PLEDGED ASSETS

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

PLEDGED ASSETS The Group’s assets pledged as	collateral are as follows:
Pledged asset	Purpose Long-term borrowings Long-term borrowings	Book value
		December 31,2020 734,116 $ 756,915 1,491,031 $	December 31,2019
Land, buildings and structures Investment property			745,589 $ 763,733
			1,509,322 $

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9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS

None.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT SUBSEQUENT EVENT

None.

12. OTHERS

(1) Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends, return capital or issue new shares to achieve the optimal capital structure.

(2) Financial instruments

A. Financial instruments by category

ucture. ancial instruments Financial instruments by category
Financial assets Financial assets measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets at amortised cost Cash and cash equivalents Current financial assets at amortised cost Current contract assets Accounts receivable Other accounts receivable Guarantee deposit paid	December31,2020 397,893 $ 43,130 $ 5,373,406 $ 1,842,389 4,414 1,273,383 68,825 34,746 8,597,163 $	December 31, 2019
		40,156 $
		50,644 $
		6,666,055 $ 737,185 - 918,019 42,095 40,466
		8,403,820 $

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==> picture [456 x 199] intentionally omitted <==

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

December 31, 2020 December 31, 2019
Financial liabilities
Financial liabilities at amortised cost
Short-term borrowings $ 2,330,000 $ 2,200,000
Short-term notes and bills payable 299,798 229,962
-
Notes payable 4,316
Accounts payable 1,296,475 1,010,670
Other accounts payable 485,953 424,512
Long-term borrowings
-
(including current portion) 250,000
Guarantee deposits received 26,480 20,326
$ 4,688,706 $ 3,889,786
Lease liabilities $ 104,512 $ 102,805
----- End of picture text -----

• B. Financial risk management policies

• (a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. To minimize any adverse effects on the financial performance of the Group, derivative financial instruments, such as foreign exchange forward contracts and foreign currency option contracts are used to hedge certain exchange rate risk, and interest rate swaps are used to fix variable future cash flows. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.

• (b) Risk management is carried out by a central treasury department (Group treasury) under policies approved by the Board of Directors. Group treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

• C. Significant financial risks and degrees of financial risks

• (a) Market risk

Foreign exchange risk

• i. The Group operates internationally and is exposed to exchange rate risk arising from the transactions of the Company and its subsidiaries used in various functional currency, primarily with respect to the USD and RMB. Exchange rate risk arises from future commercial transactions and recognised assets and liabilities.

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• ii. Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency. The companies are required to hedge their entire foreign exchange risk exposure with the Group treasury. Exchange rate risk is measured through a forecast of highly probable USD and RMB expenditures. Forward foreign exchange contracts are adopted to minimize the volatility of the exchange rate affecting cost of forecast inventory purchases.

• iii. The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency exposure arising from the net assets of the Group’s foreign operations is managed primarily through borrowings denominated in the relevant foreign currencies.

• iv. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

(Foreign currency: functional currency) Financial assets Monetary items USD:NTD USD:RMB Financial liabilities Monetary items USD:NTD USD:RMB		December 31,2020	December 31,2020	December 31,2020	December 31,2020
	Foreign Currency Amount (In thousands) 60,233 USD 42,521 USD 50,084 USD 40,800 USD	Exchange Rate 28.480 6.5249 28.480 6.5249	Book Value (NTD) 1,715,436 $ 1,210,998 1,426,392 $ 1,161,984	SensitivityAnalysis
				Effect on Extent of Profit or Variation (Loss) 1% 17,154 $ 1% 12,110 1% 14,264) ($ 1% 11,620) (	Effect on Other Comprehensive Income(Loss)
					- $ - - $ -

~64~

December 31, 2019

(Foreign currency: functional currency) Financial assets Monetary items USD:NTD USD:RMB Financial liabilities Monetary items USD:NTD USD:RMB	Foreign Currency Amount Exchange (In thousands) Rate 56,893 USD 29.980 61,047 USD 6.9762 53,500 USD 29.980 29,564 USD 6.9762	Effect on Effect on Other Book Value Extent of Profit or Comprehensive (NTD) Variation (Loss) Income(Loss) 1,705,652 $ 1% 17,057 $ - $ 1,830,189 1% 18,302 - 1,603,930 $ 1% 16,039) ($ - $ 886,329 1% 8,863) ( - SensitivityAnalysis

• v. Total exchange (loss)gain including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2020 and 2019 amounted to $21,723 and $5,737, respectively.

Price risk

• i. The Group’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income.

• ii. The Group’s investments in equity securities comprise shares issued by the domestic companies. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 10% with all other variables held constant, post-tax profit for the years ended December 31, 2020 and 2019 would have increased/decreased by $4,823 and $4,016, respectively, as a result of gains/losses on equity securities classified as at fair value through profit or loss. Other components of equity would have increased/decreased by $4,313 and $5,064, respectively, as a result of other comprehensive income classified as equity investment at fair value through other comprehensive income.

Cash flow and fair value interest rate risk

Interest risk arises from the changes of market interest rate causing fluctuation in financial instruments’ fair value or cash received and paid in the future.

The Group raised short-term and long-term borrowings at fixed rates during the years ended December 31, 2020 and 2019, and thus had no significant cash flow interest rate risk.

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(b) Credit risk

• i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms.

• ii. The Group manages their credit risk taking into consideration the entire group’s concern. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilisation of credit limits is regularly monitored.

• iii. The Group measured internal operating procedures, past experience of trading customers, and actual transaction status. If the contract payments were past due over 90 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition. If the contract payments were past due over 360 days based on the term, the default has occurred.

• iv. The following indicators are used to determine whether the credit impairment of debt instruments has occurred:

• (i) It becomes probable that the issuer will enter bankruptcy or other financial reorganization due to their financial difficulties;

• (ii) The disappearance of an active market for that financial asset because of financial difficulties;

• (iii) Default or delinquency in interest or principal repayments;

• (iv) Adverse changes in national or regional economic conditions that are expected to cause a default.

• v. The Group classifies customers’ accounts receivable and contract asset in accordance with customer types. The Group applies the simplified approach using loss provision matrix to estimate expected credit loss under the provision matrix basis.

• vi. The Group wrote-off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures. However, the Group will continue executing the recourse procedures to secure their rights.

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vii. The Group used the forecastability to adjust historical and timely information to access the default possibility of contract assets and accounts receivable. As of December 31, 2020 and 2019, respectively, the provision matrix is as follows:

December 31,2020 Expected loss rate Total book value Loss allowance December 31, 2019 Expected loss rate Total book value Loss allowance	Up to 90 days past due	91~180 days past due	181 to 360 days past due	Upto 361 days	Total
	0.02%~0.03% 1,278,063 $ 266 $ Up to 90 days past due	15%~20% - $ - $ 91~180 days past due	30%~40% - $ - $ 181 to 360 days past due	100% - $ - $ Up to 361 days	1,278,063 $ 266 $ Total
	0.02%~0.03% 914,939 $ 189 $	15%~20% 3,568 $ 535 $	30%~40% 337 $ 101 $	100% 4,457 $ 4,457 $	923,301 $ 5,282 $

viii. Movements in relation to the group applying the simplified approach to provide loss allowance for contract assets and accounts receivable are as follows:

At January 1 Provision for impairment Reversal of impairment loss Write-offs Effect of foreign exchange At December 31 At January 1 Reversal of impairment loss Write-offs Effect of foreign exchange At December 31		Contract assets Accounts receivable - $ 5,282 $ 1 - - 732) ( - 4,285) ( - - 1 $ 265 $ 2020 Contract assets Accounts receivable - $ 15,879 $ - 9,771) ( - 835) ( - 9 - $ 5,282 $ 2019	Contract assets Accounts receivable - $ 5,282 $ 1 - - 732) ( - 4,285) ( - - 1 $ 265 $ 2020 Contract assets Accounts receivable - $ 15,879 $ - 9,771) ( - 835) ( - 9 - $ 5,282 $ 2019
		Contract assets
		- $ - - - - $	15,879 $ 9,771) ( 835) ( 9 5,282 $

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• ix. The Group’s recorded financial assets at amortized cost include time deposits with contract period over three months, restricted bank deposits and structured deposits of guaranteed floating revenue of financial assets at fair value through profit or loss. Because of the low credit risk, expected credit losses for the period are measured through a loss allowance at an amount equal to the 12-month expected credit losses. There is no significant provision for the losses.

• (c) Liquidity risk

• i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities. Such forecasting takes into consideration the Group’s debt financing plans, and compliance with internal balance sheet ratio targets.

• ii. Surplus cash held by the operating entities over and above the balance required for working capital management are transferred to the Group treasury. Group treasury invests surplus cash in interest bearing current accounts, time deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the above-mentioned forecasts.

• iii.The Group has following undrawn borrowing facilities:

0 Fixed rate: Expiring within one year Expiring beyond one year	December31,2020 2,814,256 $ 950,000 3,764,256 $	December31,2019 2,814,000 $ 1,200,000
		4,014,000 $

• iv.The table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

December 31, 2020 Non-derivative financial liabilities: Short-term borrowings Short-term notes and bills payable Accounts payable Other payables Lease liabilities Long-term borrowings (including current portion) Guarantee deposits received	Less than 1year 2,330,000 $ 299,798 1,296,475 485,953 10,443 250,000 -	Over 1year
		- $ - - - 111,661 - 26,480

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December 31, 2019 Less than 1 year Over 1 year Non-derivative financial liabilities: - Short-term borrowings $ 2,200,000 $ - Short-term notes and bills payable 229,962 - Notes payable 4,316 - Accounts payable 1,010,670 - Other payables 424,512 Lease liabilities 8,632 112,904 - Guarantee deposits received 20,326

(3) Fair value estimation

• A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s investment in equity investment without active market, structured deposits and investment property are included in Level 3.

• B. Fair value information of investment property at cost is provided in Note 6(9).

• C. Financial instruments was not measured at fair value, including the carrying amounts of cash and cash equivalents, financial assets at amortized cost, accounts receivable, other receivables, deposits paid, long-term borrowings, short-term borrowings, short-term bills payable, notes payable, accounts payable, other payables, deposit received and lease liabilities are approximate to their fair values.

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• D. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities are as follows:

• (a) The related information of natures of the assets is as follows:

==> picture [441 x 430] intentionally omitted <==

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

December 31, 2020 Level 1 Level 2 Level 3 Total
Assets
Recurring fair value
measurements
Financial assets at fair
value through profit
or loss
- -
Structured deposits $ $ $ 349,664 $ 349,664
Unlisted stocks $ - $ - $ 48,229 $ 48,229
Financial assets at fair
value through other
comprehensive income
Unlisted stocks - - 43,130 43,130
$ - $ - $ 441,023 $ 441,023
December 31, 2019 Level 1 Level 2 Level 3 Total
Assets
Recurring fair value
measurements
Financial assets at fair
value through profit
or loss
Unlisted stocks $ - $ - $ 40,156 $ 40,156
Financial assets at fair
value through other
comprehensive income
Unlisted stocks - - 50,644 50,644
$ - $ - $ 90,800 $ 90,800
----- End of picture text -----

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• (b) The methods and assumptions the Group used to measure fair value are as follows:

  • i. Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the consolidated balance sheet date.

• ii. The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Group’s financial and non-financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs.

• E. For the years ended December 31, 2020 and 2019, there was no transfer between Level 1 and Level 2.

• F. The following chart is the movement of Level 3 for the years ended December 31, 2020 and 2019:

		2020		2019
At January 1	$	90,800	$	77,676
Purchases in the period		344,683	$	-
Gains recognised in profit or loss		8,541		16,710
Losses recognised in other comprehensive income	(	3,787)	(	1,357)
Sold in the period		-	(	237)
Capital reduction in the period	(	4,364)		-
Effect of exchange rate changes		5,150	(	1,992)
At December 31	$	441,023	$	90,800

• G. For t the years ended December 31, 2020 and 2019, there was no transfer of Level 3.

• H. Accounting Department segment is in charge of valuation procedures for fair value measurements being categorised within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, and frequently calibrating valuation model, performing back-testing, updating inputs used to the valuation model and making any other necessary adjustments to the fair value.

~71~

• I. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

Financial assets at fair value through profit or loss Unlisted shares Structured deposit Financial assets at fair value through other comprehensive income Unlisted shares	Fair value at December 31, 2020	Valuation technique	Significant unobservable input	Relationship of inputs to fair value
	48,229 $ 349,664 43,130	Market comparable companies Depend on individual contract Net asset value	Price to earnings ratio multiple, price to book ratio multiple,discount for lack of marketability, control premium Depend on individual contract Not applicable	The higher the multiple and control premium, the higher the fair value Depend on individual contract Not applicable

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Fair value at Relationship of December 31, Valuation Significant inputs to 2019 technique unobservable input fair value Financial assets at fair value through profit or loss Unlisted shares $ 40,156 Market Price to The higher the comparable earnings ratio multiple and companies multiple, price control to book ratio premium, the multiple,discount higher the fair for lack of value marketability, control premium

Financial assets at fair value through other comprehensive income Unlisted shares 50,644 Net asset value Not applicable Not applicable

• ’

• (4) The impact of the COVID 19 pandemic to the Group s operation

• The Company’s significant subsidiary, Altek (Kunshan) Co., Ltd., located in a region in Mainland China where a lockdown was implemented, was affected by restrictions that prevented most people from entering and exiting the region in January 2020 due to the COVID-19 pandemic. Consequently, employees outside of the region were unable to return to work after the Lunar New Year holiday as planned. The Group has taken countermeasures to adjust the delivery schedules for goods from suppliers or to customers as well as the number of working days for employees. As Mainland China gradually eased the restrictions in February 2020 and the pandemic started to slow down, the Group assessed that the COVID-19 pandemic had no significant impact to its overall operating activities and financial statements as of December 31, 2020.

13. SUPPLEMENTARY DISCLOSURES

• (1) Significant transactions information

• A. Loans to others: Please refer to table 1.

• B. Provision of endorsements and guarantees to others: None.

• C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures) : Please refer to table 2.

• D. Acquisition or sale of the same security with the accumulated cost exceeding NT$300 million or 20% of the Company’s paid-in capital: None.

• E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

• F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

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• G. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paidin capital or more: Please refer to table 3.

• H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to table 4.

• I. Trading in derivative financial instruments undertaken during the reporting periods: None.

• J. Significant inter-company transactions during the reporting periods: Please refer to table 5.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 6.

(3) Information on investments in Mainland China

• A. The related information of investments in Mainland China: Please refer to table 7.

• B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area:

For the significant purchases, sales, accounts payable and accounts receivable transactions between the Company and the investee companies in Mainland China through its subsidiaries, please refer to table 3 ~ table 5.

(4) Major shareholders information

Please refer to table 8.

14. SEGMENT INFORMATION

(1) General information

The Group mainly operates in one segment. The Chief Operating Decision-Maker reviews the Group’s reporting to assess performance and allocate resources. The Group mainly has a single reportable segment.

(2) Measurement of segment information

The Group evaluates performance based on profit or loss by using sales revenue and operation profit measurements. The accounting policies of the Group's operating segments are the same as the significant accounting policies summarized in Note 4.

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

• The Group has a single reportable segment. The revenue from external customers, the related gain or loss, and the assets correspond with the consolidated revenue, consolidated operating income, and consolidated assets.

(4) Reconciliation for segment income (loss)

The amounts provided to the chief operating decision-maker with respect to department assets, liabilities and profit are measured in a manner consistent with that of the financial statements.

(5) Information on products and services

The revenue from external customers are mainly derived from the sales of digital related products and related export and import trade.

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(6) Geographical information

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

Revenue Non-current assets Asia 3,415,337 $ 1,844,374 $ Europe 1,041,331 - America 1,522,933 - Taiwan 123,074 2,321,072 6,102,675 $ 4,165,446 $ Year ended December 31, 2020	Revenue Non-current assets 3,508,238 $ 1,898,765 $ 1,226,724 - 1,407,566 - 46,824 2,286,153 6,189,352 $ 4,184,918 $ Year ended December 31, 2019

Note: Financial instruments and deferred income tax assets are excluded from Non-current assets.

(7) Major customer information

Major customer information of the Group for the years ended December 31, 2020 and 2019 is as follows:

A B C

	Revenue	Revenue
Year ended December	31,2020	Year ended December 31, 2019
$	1,847,986	2,260,160 $
	1,475,849	1,456,770
	788,395	824,539

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Altek Corporation and subsidiaries Loans to other For the year ended December 31, 2020

Table 1

Expressed in thousands of NTD (Except as otherwise indicated)

No.	Creditor	Borrower	General ledger account	Is a related party	Maximum outstanding balance during the year December 31, 2020	Balance at December 31, 2020	Actual amount drawn down	Interest rate	Nature of loan	Amount of transactions with the borrower	Reason term financing	Allowance for doubtful accounts	Collateral	Collateral	Limit on loans granted to a single party （Note)	Ceiling on total loans granted (Note)
													Item	Value
1	Altek Semiconductor (Cayman) Co., Ltd.	Altek Semiconductor Corporation	Other receivables- related party	Yes	105,875 $	- $	- $	0%	Reason for short-term financing	- $	Operational need	- $		- $	1,089,001 $	1,089,001 $

Note 1: The ”Procrdure for Provision of Loans” policy for loans granted by Altek Semiconductor (Cayman) Co.,Ltd. is as follows: the ceiling on total loans is 100% of the net assets value of lender. For the short-term financing, the ceiling on loans is 40% of the net assets value of lender.

Note 2: If the amount of NTD in this Note relates to foreign currencies, it is converted to NTD at the exchange rate at the end of the financial reporting period.

Table 1

Altek Corporation and subsidiaries

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

December 31, 2020

Table 2

Expressed in thousands of NTD

(Except as otherwise indicated)

Securitiesheld by	Marketable securities	Relationship with the securitiesissuer	General ledgeraccount		As of December31,2020	As of December31,2020
				Numberofshares	Bookvalue	Ownership (%)	Fairvalue
Altek Corporation " Altek (Kunshan) Co., Ltd. "	Gianta Co., Ltd. - Common stock Hua-chuang Automobile Information Technical Center Co., Ltd. - Common stock Guangdong Kingding Optical Technology Co., Ltd. CPEC Huachuang Private Equity (Kunshan) Enterprise (Limited Partnership)	Director None None None	Financial assets at fair value through profit or loss - non-current Financial assets measured at fair value through other comprehensive income - non-current " "	762,876 2 1,200,000 N/A	48,229 $ - 3,666 39,464	14.55% 0.00% 6.45% (Note)	48,229 $ - 3,666 39,464

Note : 1% of CPEC Huachuang Private Equity (Kunshan) Enterprise (Limited Partnership)’s capital contribution.

Table 2

Altek Corporation and subsidiaries

Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more

For the year ended December 31, 2020

			For	the year ended December 31, 2020	the year ended December 31, 2020
Table 3 Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction			Differences in transaction terms compared to third party transactions		Notes/accounts receivable(payable) Expressed in thousands of NTD (Except as otherwise indicated)
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
Altek Corporation Altek International Trading Co., Ltd. Altek Biotechnology Corporation Altek Biotechnology Holding (Cayman) Co., Ltd. Taiwan Branch Altek (Kunshan) Co., Ltd.	Altek International Trading Co., Ltd. Altek (Kunshan) Co., Ltd. Altek International Trading Co., Ltd. " "	The same ultimate parent company " " " "	Purchases Purchases Purchases Purchases Purchases	2,657,515 $ 4,509,644 1,277,385 283,334 195,172	93% 100% 100% 100% 5%	Net 120 days Net 75 days " " "	Approximately the same price with third parties " " " "	Note " " " "	895,635) ($ 1,195,251) ( 392,271) ( 146,342) ( -	97% 99% 99% 100% 0%

Note: The payment term with third parties was net 60~120 days.

Table 3

Altek Corporation and subsidiaries

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

December 31, 2020

Table 4 Creditor	Counterparty	Relationship with the counterparty	Balance as at December31,2020	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date Allowance for doubtful accounts Expressed in thousands of NTD (Except as otherwise indicated)	Amount collected subsequent to the balance sheet date Allowance for doubtful accounts Expressed in thousands of NTD (Except as otherwise indicated)
					Amount	Action taken
Altek International Trading Co., Ltd. " " Altek (Kunshan) Co., Ltd.	Altek Corporation Altek Biotechnology Corporation Altek Biotechnology Holding (Cayman) Co., Ltd. Taiwan Branch Altek International Trading Co., Ltd.	The same ultimate parent company " " "	895,635 $ 392,271 146,342 1,195,251	4.03 4.30 5.64 4.90	- $ - - -	N/A N/A N/A N/A	817,425 $ 382,354 127,036 1,111,498	- $ - -

Table 4

Altek Corporation and subsidiaries

Significant inter-company transactions during the reporting periods

For the year ended December 31, 2020

Table 5

Expressed in thousands of NTD

(Except as otherwise indicated)

Companyname	Counterparty	Relationship (Note1)			Transaction
			General ledgeraccount	Amount	Transactionterms	Percentage of consolidated total operating revenues ortotalassets (Note2)
Altek Corporation " Altek International Trading Co., Ltd. " Altek Semiconductor Corporation " " " " Altek Biotechnology Corporation " Altek Biotechnology Holding (Cayman) Co., Ltd. Taiwan Branch " Altek (Kunshan) Co., Ltd. Altek Trading (Shanghai) Limited	Altek International Trading Co., Ltd. " Altek (Kunshan) Co., Ltd. " Altek International Trading Co., Ltd. " " Altek Corporation " Altek International Trading Co., Ltd. " " " " Altek (Kunshan) Co., Ltd.	(1) (1) (3) (3) (3) (3) (3) (3) (3) (3) (3) (3) (3) (3) (3)	Purchases Accounts payable Purchases Accounts payable Sales Purchases Accounts payable Purchases Accounts payable Purchases Accounts payable Purchases Accounts payable Purchases Purchases	2,657,515 $ 895,635 4,509,664 1,195,251 12,614 17,801 19,301 14,025 13,136 1,277,385 392,271 283,334 146,342 195,172 20,171	Net 120 days " Net 75 days " " Net 120 days " Net 75 days " " " " " " "	44% 6% 74% 8% 0% 0% 0% 0% 0% 21% 3% 5% 1% 3% 0%

Note 1: Relationship between transaction and counterparty is classified into the following categories:

(1) Parent company to subsidiary.

(2) Subsidiary to parent company.

(3) Subsidiary to subsidiary.

Note 2: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

Note 3: The Company may decide to disclose or not to disclose transaction details in this table based on the Materiality Principle.

Table 5

Altek Corporation and subsidiaries

Information on investees

Table 6

Expressed in thousands of NTD

(Except as otherwise indicated)

For the year ended December 31, 2020

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as at December 31,2020	Shares held as at December 31,2020	Shares held as at December 31,2020	Net profit (loss) of the investee for the year ended December 31,2020	Investment income(loss) recognised by the Company for the year ended December 31,2020	Footnote
				Balance as at December 31, 2020	Balance as at December 31, 2019	Number of shares	Ownership (%)	Book value
Altek Corporation " " " Altek International Investment Co., Ltd. " " Altek International Holding (BVI) Co, Ltd. Altek Semiconductor (Cayman) Co., Ltd. Altek Biotechnology Holding (Cayman) Co., Ltd.	Altek International Investment Co., Ltd. Altek Japan Corporation Altek International Holding (BVI) Co, Ltd. Altek Investment Corporation Altek Lab Inc. Altek Semiconductor (Cayman) Co., Ltd. Altek International Trading Co,. Ltd. Altek Biotechnology Holding (Cayman) Co. ,Ltd. Altek Semiconductor Corporation Altek Biotechnology Corporation	British Virgin Islands Japan British Virgin Islands Republic of China U.S.A. Cayman Islands Republic of Seychelles Cayman Islands Republic of China Republic of China	Investment Sale of optical optical instruments Investment Investment Design service Investment Intercompany transactions Investment Research design and sales of ASIC Research and development, manufacture and sales of medical electronic equipments	2,882,512 $ 2,869 415,376 100,000 104,799 175,073 284,800 415,376 350,000 415,376	2,882,512 $ 2,869 415,376 - 104,799 175,073 85,440 415,376 200,000 415,376	87,769,559 1,000 12,865,921 10,000,000 11,311,875 20,000,000 10,000,000 12,865,921 35,000,000 40,100,000	100 100 100 100 100 50 100 100 100 100	8,369,784 $ 11,223 906,110 99,921 59,104 555,723 253,643 906,110 251,526 756,980	194,555 $ 218) ( 153,756 79) ( 77) ( 2,303 18,969) ( 153,756 7,133 75,957	194,977 $ 218) ( 153,756 79) ( 77) ( 1,299 18,969) ( 153,756 3,567 75,957	Note

Note: The difference between the profit or loss of the investee for the current period and the investment profit or loss recognized in the current period is the unrealized profit and loss adjustments for countercurrent transactions between subsidiaries.

Table 6

Information on investments in Mainland China

Table 7

Expressed in thousands of NTD (Except as otherwise indicated)

Altek Corporation and subsidiaries

For the year ended December 31, 2020

Investee in Mainland China	Mainbusiness activities	Paid-incapital	Investment method （Note1）	Accumulated amount of remittance from Taiwan to Mainland China as of January1,2020	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the year ended December31,2020	Accumulated amount of remittance from Taiwan toMainland China as of December31,2020	Net profit (loss) of investee for the year ended December31,2020	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the year ended December 31, 2020 (Note4)	Accumulated amount of investment income remitted back to Taiwan as of December31,2020 Book value of investments in Mainland China as of December31,2020
					Remitted to Mainland China Remitted back to Taiwan
Altek (Kunshan) Co., Ltd. (Note 2) Altek EMS (Kunshan) Co., Ltd. (Note 3) Altek Trading (Shanghai) Limited Altek Precision (Kunshan) Co., Ltd. Altek Optical Technology (Kunshan) Co., Ltd. Altek Semiconductor (Shanghai) Co., Ltd.	Manufacture and sale of digital still cameras and its accessories Manufacture and sale of related engineering services Wholesale, import and export of digital cameras, digital video cameras and their associated accessories Design, manufacture and sales of digital camera parts Manufacture and sales of digital camera and its accessories and optical components Research design and sales of imaging technologies, electronic software and hardware	1,412,608 $ 142,400 242,080 393,024 318,976 42,720	2 2 2 2 2 2	1,281,600 $ 258,684 242,080 393,024 318,976 -	- $ - $ - - - - - - - - - -	1,281,600 $ 258,684 242,080 393,024 318,976 -	270,691 $ 14,892 7,877 1,941 127) ( 9,845) (	100 100 100 100 100 50	270,691 $ 14,892 7,877 1,941 127) ( 4,923) (	4,256,503 $ - $ 784,704 - 309,227 - 151,127 - 6,001 - 117,371 -

Note 1: Investment methods are classified into the following three categories; fill in the number of category each case belongs to: (1)Directly invest in a company in Mainland China.

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

(3)Others.

Note 2: Including retained earnings capitalized of US$4,600 (In thousand of US dollars). Note 3: Including retained earnings capitalized of US$3,600 (In thousand of US dollars).

Note 4: Investment income or loss was recognised in the financial statements that are audited by the R.O.C. parent company’s independent accountants.

Companyname	Accumulated amount of remittance from Taiwan to MainlandChina as of December31,2020	Investment amount approved by the Investment Commission of the Ministryof Economic Affairs(MOEA)	Ceiling on investments in Mainland China imposed bythe InvestmentCommission of MOEA
Altek Corporation	$2,494,364	$2,863,717	$5,080,597

Table 7

Altek Corporation and subsidiaries Information of major shareholders December 30, 2020

Table 8

Name of major shareholders	Shares	Shares
	Number of shares held	Holding percentage
Yitsang International Co., Ltd.	14,200,100	5.08%

Table 8