ANDERSON - Annual Report 2021 | FinancialReports.eu

Anderson Industrial Corporation

Financial Statements for the Years Ended December 31, 2021 and 2020 and Independent Auditors’ Report

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Stockholders Anderson Industrial Corporation

Opinion

We have audited the accompanying financial statements of Anderson Industrial Corporation (the “Company”), which comprise the balance sheets as of December 31, 2021 and 2020, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies (collectively referred to as the “financial statements”).

In our opinion, based on our audits and the report of other auditors (refer to the other matter paragraph) the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2021. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The key audit matters identified in the Company’s financial statements for the year ended December 31, 2021 are stated as follows:

Revenue Recognition

For the year ended December 31, 2021, the amount of the Company’s sales revenue from machineries was $787,934 thousand, which represented 83% of the total revenue. The terms of sales revenue from machineries may vary depending on individual customer, and a portion of the sales revenue from machineries is recognized at the time of completion of acceptance based on the terms of the transactions. Sales revenue from machineries may be recognized before the criteria of

sales revenue recognition are met; therefore, we identified revenue recognition as a key audit matter. Refer to Notes 4 and 17 to the financial statements.

The main audit procedures that we performed in respect of revenue recognition included understanding the appropriateness of internal controls, testing the operating effectiveness of design and implementation by inspecting sales contracts, confirming the consistency of transactions for revenue recognition, sampling of subsidiary ledgers, inspecting shipping invoices, clients’ receipts and export documentations, and verifying the accuracy of revenue recognition.

Estimated Impairment of Accounts Receivable

As of December 31, 2021, the balance of accounts receivable held by the Company was $526,614 thousand, which was significant and represented 14% of the total assets. The management applies the use of lifetime expected credit losses for all accounts receivable. The expected credit losses on accounts receivable are estimated by considering past default experience of the debtor, an analysis of the debtor’s current financial position and an assessment of both the current as well as the forecast direction of economic conditions at the reporting date. The evaluation of allowance for loss of accounts receivable, credit risk and appropriateness of provisioning policy involves significant judgments; therefore, we identified the estimated impairment of accounts receivable as a key audit matter. Refer to Notes 5 and 7 to the financial statements.

The main audit procedures that we performed in respect of the estimated impairment of accounts receivable included assessing the appropriateness of accounts receivable provisioning policy, testing the validity of aging reports, analyzing significant changes in accounts receivable and overdue accounts, assessing the reasonableness of impairment of individual accounts receivable, and confirming any indication of impairment at the end of the year. Recoverability was also tested by vouching cash receipts after the reporting period.

Other Matter

As mentioned in the opinion paragraph, the financial statements of Sogotec Enterprise Co., Ltd. (Sogotec) were audited by other independent auditors. As of December 31, 2020, Sogotec’s total assets amounted to $431,249 thousand, representing 12% of the total assets of the Company, and the total profit from investment amounted to $10,582 thousand, representing (8)% of the total pre-tax profit of the Company.

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

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

In preparing the financial statements, management is responsible for assessing the Company’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 Company 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 Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’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 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 Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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

We also provide those charged with governance with statements 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 safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for the year ended December 31, 2021 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Pei De Chen and Li Wen Kuo.

Deloitte & Touche Taipei, Taiwan Republic of China

March 8, 2022

Notice to Readers

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

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

ANDERSON INDUSTRIAL CORPORATION

BALANCE SHEETS DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash (Notes 4 and 6) Financial assets at amortized cost (Notes 4 and 26) Notes receivable, net (Notes 4 and 7) Accounts receivable - non-related parties (Notes 4, 5 and 7) Accounts receivable - related parties (Notes 4, 5, and 25) Other receivables (Notes 4 and 25) Current tax assets Inventories (Notes 4 and 8) Prepayments Other current assets Total current assets NON-CURRENT ASSETS Investments accounted for using the equity method (Notes 4 and 9) Property, plant and equipment (Notes 4, 10, 25 and 26) Right-of-use assets (Notes 4 and 11) Intangible assets (Notes 4 and 12) Deferred tax assets (Notes 4 and 19) Other non-current assets (Notes 10, 25 and 26) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 13 and 26) Contract liabilities (Note 17) Accounts payable (Note 25) Other payables (Notes 14 and 25) Provisions (Note 4) Short-term lease liabilities (Notes 4 and 11) Current portion of long-term borrowings (Notes 13 and 26) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 13 and 26) Long-term lease liabilities (Notes 4 and 11) Net defined benefit liabilities (Notes 4 and 15) Guarantee deposits Total non-current liabilities Total liabilities EQUITY (Note 16) Share capital Ordinary shares Capital surplus Unappropriated earnings (deficit to be compensated) Other equity Exchange differences on translation of the financial statements of foreign operations Unrealized (loss) gain on financial assets at fair value through other comprehensive income Total other equity Treasury shares Total equity TOTAL		2021 Amount % $ 83,876 2 79,002 2 55,895 1 109,522 3 417,092 11 138,645 4 2 - 359,987 10 21,624 1 603 - 1,266,248 34 1,618,187 43 636,058 17 23,736 1 38,433 1 71,321 2 72,996 2 2,460,731 66 $ 3,726,979 100 $ 747,318 20 26,903 1 216,917 6 78,143 2 9,894 - 10,753 1 84,926 2 1,772 - 1,176,626 32 330,337 9 15,122 - 26,913 1 400 - 372,772 10 1,549,398 42 1,993,310 53 233,024 6 216,565 6 (153,096) (4) (40,902) (1) (193,998) (5) (71,320) (2) 2,177,581 58 $ 3,726,979 100		2020
				Amount % $ 116,977 3 10,000 - 43,160 1 66,912 2 494,143 13 153,950 4 628 - 251,620 7 11,493 1 447 - 1,149,330 31 1,651,849 44 734,399 20 30,678 1 41,436 1 78,962 2 45,377 1 2,582,701 69 $ 3,732,031 100 $ 970,766 26 27,102 1 136,268 4 93,495 3 8,650 - 11,589 - 124,124 3 5,114 - 1,377,108 37 227,618 6 21,560 1 35,474 1 400 - 285,052 8 1,662,160 45 1,993,310 53 366,392 10 (114,235) (3) (113,832) (3) 9,556 - (104,276) (3) (71,320) (2) 2,069,871 55 $ 3,732,031 100

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

(With Deloitte & Touche auditors’ report dated March 8, 2022)

ANDERSON INDUSTRIAL CORPORATION

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

OPERATING REVENUE (Notes 4, 17 and 25) OPERATING COSTS (Notes 8, 18 and 25) GROSS PROFIT REALIZED GAIN ON TRANSACTIONS WITH SUBSIDIARIES REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 4, 18 and 25) Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit loss Total operating expenses LOSS FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES (Notes 4 and 18) Interest income (Note 25) Other income (Notes 21 and 25) Other gains and losses Finance costs (Note 25) Share of profits (losses) of subsidiaries accounted for using the equity method Total non-operating income and expenses PROFIT (LOSS) BEFORE INCOME TAX INCOME TAX (EXPENSE) BENEFIT (Notes 4 and 19) NET PROFIT (LOSS) FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS)		2021 Amount % $ 944,575 100 673,064 71 271,511 29 970 - 272,481 29 150,160 16 94,406 10 47,698 5 5,638 1 297,902 32 (25,421) (3) 944 - 43,506 5 187,980 20 (18,510) (2) 60,829 6 274,749 29 249,328 26 (31,106) (3) 218,222 23		2020
				Amount % $ 803,287 100 560,661 70 242,626 30 511 - 243,137 30 123,733 15 102,840 13 49,560 6 2,420 - 278,553 34 (35,416) (4) 1,918 - 55,151 7 (41,426) (5) (19,295) (2) (100,599) (13) (104,251) (13) (139,667) (17) 20,934 2 (118,733) (15) (Continued)

ANDERSON INDUSTRIAL CORPORATION

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized gain on investments in equity instruments at fair value through other comprehensive income Share of the other comprehensive (loss) income of subsidiaries accounted for using the equity method Income tax related to items that will not be reclassified subsequently to profit or loss (Note 19) Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of the financial statements of foreign operations Other comprehensive income (loss) for the year, net of income tax TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR EARNING (LOSS) PER SHARE (Note 20) Basic Diluted		2021 Amount % $ (2,270) - - - (50,299) (6) 454 - (39,264) (4) (91,379) (10) $ 126,843 13 $1.14 $1.14		2020
				Amount % $ 5,500 1 2,056 - 98 - (1,100) - (3,603) - 2,951 1 $ (115,782) (14) $(0.61) $(0.61)

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

(With Deloitte & Touche auditors’ report dated March 8, 2022)

(Concluded)

ANDERSON INDUSTRIAL CORPORATION

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

Ordinary Shares Capital Surplus BALANCE AT JANUARY 1, 2020 $ 1,993,310 $ 398,472 Appropriation of 2019 deficit Legal reserve to offset deficit - - Special reserve to offset deficit - - Capital surplus offset deficit - (9,753 ) Cash dividends distributed from capital surplus - (19,933 ) Net loss for the year ended December 31, 2020 - - Other comprehensive income (loss) for the year ended December 31, 2020 - - Total comprehensive income (loss) for the year ended December 31, 2020 - - Buy-back treasury shares - - Changes in percentage of ownership interests in subsidiaries - (2,394) BALANCE AT DECEMBER 31, 2020 1,993,310 366,392 Capital surplus to offset deficit - (114,235 ) Cash dividends distributed from capital surplus - (19,133 ) Net profit for the year ended December 31, 2021 - - Other comprehensive loss for the year ended December 31, 2021 - - Total comprehensive income for the year ended December 31, 2021 - - BALANCE AT DECEMBER 31, 2021 $ 1,993,310 $ 233,024	Retained Earnings (Accumulated Deficits) Legal Reserve Special Reserve Unappropriated Earnings (Deficit to be Compensated) $ 186,665 $ 75,178 $ (271,596 ) (186,665 ) - 186,665 - (75,178 ) 75,178 - - 9,753 - - - - - (118,733 ) - - 4,498 - - (114,235) - - - - - - - - (114,235 ) - - 114,235 - - - - - 218,222 - - (1,657) - - 216,565 $ - $ - $ 216,565	Other Equity Unrealized Valuation Gain (Loss) on Exchange Differences on Translation of the Financial Statements of Foreign Operation Financial Assets at Fair Value Through Other Comprehensive Income Treasury Shares $ (110,229 ) $ 7,500 $ (47,544 ) - - - - - - - - - - - - - - - (3,603) 2,056 - (3,603) 2,056 - - - (23,776 ) - - - (113,832 ) 9,556 (71,320 ) - - - - - - - - - (39,264) (50,458) - (39,264) (50,458) - $ (153,096) $ (40,902) $ (71,320)	Total Equity $ 2,231,756 - - - (19,933 ) (118,733 ) 2,951 (115,782) (23,776 ) (2,394) 2,069,871 - (19,133 ) 218,222 (91,379) 126,843 $ 2,177,581

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

(With Deloitte & Touche auditors’ report dated March 8, 2022)

ANDERSON INDUSTRIAL CORPORATION

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income (Loss) before income tax Adjustments for: Depreciation expense Amortization expense Expected credit loss recognized on accounts receivable Net gain on fair value changes of financial assets at fair value through profit or loss Finance costs Interest income Share of (profit) loss of subsidiaries accounted for using the equity method Gain on disposal of property, plant and equipment Impairment losses recognized on financial assets Write-downs of inventories Realized gain on transactions with subsidiaries Loss on foreign currency exchange Government grants Gain on lease modification Changes in operating assets and liabilities Financial assets mandatorily classified as at fair value through profit or loss Notes receivable Accounts receivable Accounts receivable - related parties Other receivables Finance lease receivables Inventories Prepayments Other current assets Contract liabilities Accounts payable Other payables Provisions Other liabilities Net defined benefit liabilities Cash generated from (used in) operations Interest received Interest paid Income tax (paid) returned Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial assets at amortized cost	2021 $ 249,328 68,649 3,003 5,638 - 18,510 (944) (60,829) (218,849) 4,973 6,456 (970) 18,817 (3,464) (18) - (12,735) (49,360) 65,237 1,168 - (112,809) (10,131) (156) (199) 81,067 (13,590) 1,244 122 (10,831) 29,327 940 (18,646) (22,385) (10,764) (69,002)	2020 $ (139,667) 62,554 3,065 2,420 (450) 19,295 (1,918) 100,599 - - 6,165 (511) 12,988 - - 19,277 (27,789) 19,065 (87,974) (40,333) 5,124 (11,663) 4,098 (203) (3,304) (16,470) (12,396) (666) 4,400 (5,934) (90,228) 1,903 (19,042) 1,622 (105,745) (10,000) (Continued)

ANDERSON INDUSTRIAL CORPORATION

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

Payments for investment properties Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease in refundable deposits (Increase) decrease in non-current assets Increase in prepayments for equipment Dividends received from subsidiaries Net cash generated from (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES (Decrease) Increase in short-term borrowings Decrease in short-term notes payable Proceeds from long-term borrowings Repayment of long-term borrowings Increase in receivable deposits Repayment of the principal portion of lease liabilities Cash dividends paid Increase in treasury shares Net cash (used in) generated from financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET (DECREASE) INCREASE IN CASH CASH AT THE BEGINNING OF THE YEAR CASH AT THE END OF THE YEAR	2021 $ (46,430) (17,603) 294,021 856 (189) (67) 5,898 167,484 (223,448) - 232,530 (169,009) - (11,994) (19,133) - (191,054) 1,233 (33,101) 116,977 $ 83,876	2020 $ - (71,051) 19,114 6,683 1,123 (12,135) 5,927 (60,339) 294,278 (30,000) 130,803 (126,977) 400 (9,764) (19,933) (23,776) 215,031 2,478 51,425 65,552 $ 116,977

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

(With Deloitte & Touche auditors’ report dated March 8, 2022)

(Concluded)

NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

ANDERSON INDUSTRIAL CORPORATION

1. GENERAL INFORMATION

Anderson Industrial Company (the “Company”) was incorporated in the Republic of China (ROC) in July 1972. The Company is mainly engaged in the design, manufacture, sale and import and export of computer numerical control (CNC) machinery, tooling, lumber, wood panels, and building materials.

Since October 11, 2000, the Company’s shares have been listed on the Taiwan Stock Exchange (TWSE).

The financial statements are presented in the Company’s functional currency, the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Company’s board of directors on March 8, 2022.

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

a. Initial application of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

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

b. The IFRSs endorsed by the FSC for application starting from 2022

New IFRSs “Annual Improvements to IFRS Standards 2018-2020” Amendments to IFRS 3 “Reference to the Conceptual Framework” Amendments to IAS 16 “Property, Plant and Equipment - Proceeds before Intended Use” Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a Contract”	Effective Date Announced by IASB
	January 1, 2022 (Note 1) January 1, 2022 (Note 2) January 1, 2022 (Note 3) January 1, 2022 (Note 4)

Note 1: The amendments to IFRS 9 will be applied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” will be applied prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” will be applied retrospectively for annual reporting periods beginning on or after January 1, 2022.
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Note 2: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after January 1, 2022.
Note 3: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.
Note 4: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

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

c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

Effective Date New IFRSs Announced by IASB (Note 1) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between An Investor and Its Associate or Joint Venture” IFRS 17 “Insurance Contracts” January 1, 2023 Amendments to IFRS 17 January 1, 2023 Amendments to IFRS 17 “Initial Application of IFRS 9 and IFRS January 1, 2023 17—Comparative Information” 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 (Note 2) Amendments to IAS 8 “Definition of Accounting Estimates” January 1, 2023 (Note 3) Amendments to IAS 12 “Deferred Tax related to Assets and January 1, 2023 (Note 4) Liabilities arising from a Single Transaction”

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.
Note 2: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 3: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.
Note 4: Except for deferred taxes that will be recognized on January 1, 2022 for temporary differences associated with leases and decommissioning obligations, the amendments will be applied prospectively to transactions that occur on or after January 1, 2022.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

The financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

b. Basis of preparation

The financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
3) Level 3 inputs are unobservable inputs for the asset or liability.

When preparing its parent company only financial statements, the Company used the equity method to account for its investments in subsidiaries and associates. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the parent company only financial statements to be the same as the amounts attributable to the owners of the Company in its consolidated financial statements, adjustments arising from the differences in the accounting treatment between the parent company only basis and the consolidated basis were made to investments accounted for by equity method, share of profit or loss of subsidiaries and associates, share of other comprehensive income of subsidiaries and associates and related equity items, as appropriate, in the parent company only financial statements.

c. Classification of current and non-current assets and liabilities

Current assets include:

1) Assets held primarily for the purpose of trading;
2) Assets expected to be realized within twelve months after the reporting period; and
3) Cash unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

Current liabilities include:

1) Liabilities held primarily for the purpose of trading;
2) Liabilities due to be settled within twelve months after the reporting period, even if an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting period and before the financial statements are authorized for issue; and
3) Liabilities for which the Company does not have an unconditional right to defer settlement for at least twelve months after the reporting period.
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Assets and liabilities that are not classified as current are classified as non-current.

d. Foreign currencies

In preparing the Company’s financial statements, transactions in currencies other than the Company’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period.

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

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

For the purpose of presenting the Company’s financial statements, the functional currencies of the Company and its entities (including subsidiaries in other countries that use currency different from the currency of the Company) are translated into the presentation currency - New Taiwan dollars as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income.

Goodwill and fair value adjustments on identifiable assets and liabilities acquired in the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each reporting period. Exchange differences arising are recognized in other comprehensive income.

e. Inventories

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

f. Investments in subsidiaries

The Company uses the equity method to account for its investments in subsidiaries.

Subsidiary is an entity that is controlled by the Company.

Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the subsidiary. The Company also recognizes the changes in the Company’s share in the equity of subsidiaries attributable to the Company.

Changes in the Company’s ownership interest in a subsidiary that do not result in the Company losing control of the subsidiary are equity transactions. The Company recognizes directly in equity any difference between the carrying amount of the investment and the fair value of the consideration paid or received.

When the Company’s share in losses of a subsidiary exceeds the interest in that subsidiary (which includes any carrying amount of the investment accounted for using the equity method and long-term interests that, in substance, form part of the Company’s net investment in the subsidiary), the Company continues recognizing its share of further losses.

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

The Company assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the entire financial statements of the invested company. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Company recognizes the reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

Profits or losses resulting from downstream transactions are eliminated in full only in the parent company’s financial statements. Profits and losses resulting from upstream transactions and transactions between subsidiaries are recognized only in the parent company’s financial statements only to the extent of interests in the subsidiaries of parties that are not related to the Company.

g. Property, plant and equipment

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

Except for freehold land which is not depreciated, the depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. If the lease term is shorter than the useful lives, assets are depreciated over the lease term. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

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

h. Intangible assets
1) Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful lives, residual value, and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are measured at cost less accumulated impairment loss.

16-
2) Derecognition of intangible assets

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

i. Impairment of property, plant and equipment, right-of-use asset and intangible assets other than goodwill

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

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the assets may be impaired.

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

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

j. Financial instruments

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

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

1) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

a) Measurement categories

Financial assets are classified into the following categories: Financial assets at amortized cost.

Financial assets at amortized cost

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

i The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
ii The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash, financial assets at amortized cost, notes and accounts receivable and other receivables, are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset.

b) Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses (ECLs) on financial assets at amortized cost, including accounts receivable.

The Company always recognizes lifetime ECLs for accounts receivable. For all other financial instruments, the Company recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

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

The Company recognizes an impairment loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

c) Derecognition of financial assets

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

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss.

2) Financial liabilities
a) Subsequent measurement

Financial liabilities are measured at amortized cost using the effective interest method.

b) Derecognition of financial liabilities
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The difference between the carrying amount of the financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

k. Provisions

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

Provisions for the expected cost of warranty obligations are recognized at the date of sale of the relevant products, at the best estimate of the expenditure required to settle the Company’s obligation by the management of the Company.

l. Revenue recognition

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

1) Revenue from the sale of goods

Revenue from the sale of goods comes from sales of precision machineries and wood panels. Sales of precision machineries and wood panels is recognized as revenue when the goods are shipped or accepted, and accounts receivable are recognized concurrently.

The Company does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control.

2) Revenue from the rendering of services

Revenue from the rendering of services comes from the repair services and hardware installation services.

As the Company provides repair services and hardware installation services. Consequently, the related revenue is recognized when services are rendered.

m. Leases

At the inception of a contract, the Company assesses whether the contract is, or contains, a lease.

1) The Company as lessor

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

Lease payments from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases.

2) The Company as lessee

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

Right-of-use assets are initially measured at cost. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the balance sheets.

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

Lease liabilities are initially measured at the present value of the lease payments. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses the lessee’s incremental borrowing rate.

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

n. Government grants

Government grants are not recognized until there is reasonable assurance that the Company will comply with the conditions attached to them and that the grants will be received.

Government grants related to income are recognized in other income on a systematic basis over the periods in which the Company recognizes as expenses the related costs that the grants intend to compensate.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognized in profit or loss in the period in which they are received.

o. Employee benefits

1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.

2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions.

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

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

3) Termination benefits

A liability for termination benefits is recognized at the earlier of when the Company can no longer withdraw the offer of the termination benefits and when the Company recognizes any related restructuring costs.

p. Taxation

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

1) Current tax

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

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

2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for deductible temporary differences or unused loss carryforward to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

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

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

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

3) Current tax and deferred tax for the year

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

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

The Company considers the possible impact of the recent development of the COVID-19 in Taiwan and its economic environment implications when making its critical accounting estimates on cash flow projections, growth rate, discount rate, profitability, etc. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Key Sources of Estimation Uncertainty

Estimated impairment of financial assets

The provision for impairment of trade receivables is based on assumptions on probability of default and loss given default. The Company uses judgment in making these assumptions and in selecting the inputs to the impairment calculation, based on the Company’s historical experience and existing market conditions as of the end of each reporting period. For details of the key assumptions and inputs used, see Note 7. Where the actual future cash inflows are less than expected, a material impairment loss may arise.

6. CASH

Cash on hand Checking accounts and demand deposits		December 31	December 31
		2021 $ 652 83,224 $ 83,876	2020 $ 748 116,229 $ 116,977

The market rate intervals of cash in bank at the end of the reporting period were as follows:

Bank balance	December 31
	2021 2020 0.001%-0.35% 0.001%-0.35%

7. NOTES RECEIVABLE AND ACCOUNTS RECEIVABLE

Notes receivable Accounts receivable At amortized cost Gross carrying amount Less: Allowance for impairment loss		December 31	December 31
		2021 $ 55,895 $ 122,880 (13,358) $ 109,522	2020 $ 43,160 $ 74,632 (7,720) $ 66,912

The average credit period of sales of goods was 90-180 days.

The Company measures the loss allowance for accounts receivable at an amount equal to lifetime expected credit losses. The lifetime ECLs on accounts receivable are estimated by reference to past collecting and default experiences of the debtor, an increase in deferred or overdue payments over average credit term and an analysis of the debtors’ current financial position, adjusted for general economic conditions of the industries in which the debtors operate. As the Company’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished according to the Company’s different customer base.

The Company writes off an accounts receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For accounts receivable that have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

The following table details the loss allowance for accounts receivable and notes receivable.

December 31, 2021

Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost December 31, 2020 Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost	Under 180 Days $ 173,685 (8,899) $ 164,786 Under 180 Days $ 114,663 (4,768) $ 109,895	181 to 365 Days Over 365 Days $ 2,101 $ 2,989 (1,470) (2,989) $ 631 $ - 181 to 365 Days Over 365 Days $ 499 $ 2,630 (322) (2,630) $ 177 $ -	Total $ 178,775 (13,358) $ 165,417 Total $ 117,792 (7,720) $ 110,072

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

Balance at January 1 Add: Net remeasurement of loss allowance Less: Amounts written off Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 7,720 5,638 - $ 13,358	2020 $ 5,383 2,420 (83) $ 7,720

8. INVENTORIES

Work in progress Raw materials Goods in transit Finished goods Merchandise		December 31	December 31
		2021 $ 135,018 166,477 49,602 6,004 2,886 $ 359,987	2020 $ 152,801 68,845 19,974 8,410 1,590 $ 251,620

The cost of goods sold for the years ended December 31, 2021 and 2020 included inventory write-downs of $6,456 thousand and $6,165 thousand, respectively.

9. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in Subsidiaries

Anderson Industrial (Hong Kong) Ltd. (Anderson Industrial) Anderson Europe GmbH Anderson America Corporation (U.S.A.) (Anderson America) Anderson Logistics Corporation (Anderson Logistics) Giben Holdings Co., Ltd. (BVI) (Giben BVI) Giben Holdings Co., Ltd. (SAMOA) (Giben SAMOA) Anderson Merchandise Corporation (Anderson Merchandise) Sogotec Enterprise Co., Ltd. (Sogotec) CNT Industrial (Shanghai) Co., Ltd. (CNT) Jentec Machinery (Shanghai) Co., Ltd. (Jentec)		December 31	December 31
		2021 $ 31,645 260,591 48,207 202,795 241,240 74,067 197,891 293,477 230,595 37,679 $ 1,618,187	2020 $ 31,885 291,452 33,922 262,464 205,118 82,475 163,908 293,491 247,891 39,243 $ 1,651,849

At the end of the reporting period, the proportion of ownership and voting rights in subsidiaries held by the Company were as follows:

Name of Subsidiaries Anderson Industrial Anderson Europe GmbH Anderson America Anderson Logistics Giben BVI Giben SAMOA Anderson Merchandise Sogotec CNT Jentec	December 31
	2021 2020 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 58.11% 58.11% 100.00% 100.00% 100.00% 100.00%

On May 10, 2016, the board of directors of Anderson Industrial resolved to liquidate the company. As of December 31, 2021, the process of liquidation is still ongoing.

The investments accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments for the years ended December 31, 2021 and 2020 were based on the subsidiaries’ financial statements audited by auditors for the same years.

10. PROPERTY, PLANT AND EQUIPMENT

Freehold Land Cost Balance at January 1, 2020 $ 131,237 Additions - Disposals (4,160 ) Reclassification - Balance at December 31, 2020 127,077 Accumulated depreciation and impairment Balance at January 1, 2020 - Disposals - Depreciation - Reclassification - Balance at December 31, 2020 - Carrying amount at December 31, 2020 $ 127,077	Buildings $ 773,200 14,506 (10,550 ) 4,455 781,611 308,848 (5,360 ) 33,673 - 337,161 $ 444,450	Machinery $ 142,236 55,288 (500 ) 11,014 208,038 52,872 (500 ) 12,782 (112 ) 65,042 $ 142,996	Research and Development Equipment $ 16,890 160 (4,988 ) 2,639 14,701 13,118 (4,988 ) 1,333 - 9,463 $ 5,238	Other Equipment Total $ 37,286 $ 1,100,849 1,097 71,051 (10,629 ) (30,827 ) 172 18,280 27,926 1,159,353 18,716 393,554 (10,629 ) (21,477 ) 5,201 52,989 - (112 ) 13,288 424,954 $ 14,638 $ 734,399 (Continued)

Freehold Land Cost Balance at January 1, 2021 $ 127,077 Additions - Disposals (37,421 ) Reclassification - Balance at December 31, 2021 89,656 Accumulated depreciation and impairment Balance at January 1, 2021 - Disposals - Depreciation - Reclassification - Balance at December 31, 2021 - Carrying amount at December 31, 2021 $ 89,656	Buildings $ 781,611 11,128 (76,699 ) 6,464 722,504 337,161 (40,379 ) 33,154 - 329,936 $ 392,568	Machinery $ 208,038 2,035 (24,367 ) (1,496) 184,210 65,042 (22,939 ) 14,942 (715) 56,330 $ 127,880	Research and Development Equipment $ 14,701 - (499 ) (103) 14,099 9,463 (499 ) 1,328 (57) 10,235 $ 3,864	Other Equipment Total $ 27,926 $ 1,159,353 4,440 17,603 (2,987 ) (141,973 ) 10,560 15,425 39,939 1,050,408 13,228 424,954 (2,984 ) (66,801 ) 7,545 56,969 - (772) 17,849 414,350 $ 22,090 $ 636,058 (Concluded)

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

Building 5-55 years Machinery 5-20 years Research and development equipment 5-10 years Other equipment 3-10 years

On May 3, 2021, the board of directors resolved to dispose of the land and buildings located in Xitun District, Taichung. The sale price was $290,800 thousand and the gain on disposal was $216,983 thousand. The registration for transfer of ownership was completed in August 2021.

In August 1996, the Company purchased land in Houlong Township of Miaoli Country for $11,000 thousand. However, due to the statutory restrictions on the transfer of farmland, the title deed has not been legally transferred to the Company; therefore, the Company entered into a contract with the seller to prevent any future claims on the land by the seller, the seller’s heir at law, or any other third parties. In addition, if the land zoning is changed, the seller is obligated to transfer the title immediately. Accordingly, the farmland is recorded under other non-current assets. In March 2005, the Company applied to the Land Office for the modification of land usage and changed parts of the land’s zoning designation from farmland to construction use, which amounted to $4,518 thousand. Accordingly, the Company has been registered as the legal owner, and has reclassified such land to property, plant and equipment.

Property, plant and equipment pledged as collateral for bank borrowings were set out in Note 26.

11. LEASE ARRANGEMENTS

a. Right-of-use assets

Carrying amount Land Transportation equipment Buildings Additions to right-of-use assets Depreciation charge for right-of-use assets Land Transportation equipment Buildings		December	31
	2021 2020 $ 13,017 $ 16,021 9,896 11,542 823 3,115 $ 23,736 $ 30,678 For the Year Ended December 31
		2021 $ 5,688 $ 3,004 5,687 2,989 $ 11,680	2020 $ 13,298 $ 3,004 3,891 2,670 $ 9,565

b. Lease liabilities

Carrying amount Current Non-current Range of discount rate for lease liabilities was as follows: Land Buildings Transportation equipment		December	31
		2021 $ 10,753 $ 15,122 December	2020 $ 11,589 $ 21,560 31
	2021 1.71% 1.71% 1.54%-1.71%		2020 1.71% 1.71% 1.71%

c. Material lease-in activities and terms

The Company leases land and buildings for the use of plants and offices with lease terms of 2 to 10 years. The Company does not have bargain purchase options to acquire the leasehold land and buildings at the end of the lease terms. In addition, the Company is prohibited from subleasing or transferring all or any portion of the underlying assets without the lessor’s consent.

d. Other lease information

Expenses relating to short-term leases Total cash outflow for leases	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 3,041 $ (15,520)	2020 $ 569 $ (10,894)

The Company’s leases of certain office and transportation equipment assets qualify as short-term leases. The Company has elected to apply the recognition exemption and thus, did not recognize right-of-use assets and lease liabilities for these leases.

The amounts of lease commitments for short term leases for which the recognition exemption is applied were $614 thousand and $1,788 thousand as of December 31, 2021 and 2020, respectively.

12. INTANGIBLE ASSETS

Cost Balance at January 1, 2020 Reclassification Balance at December 31, 2020 Accumulated amortization and impairment Balance at January 1, 2020 Amortization expense Balance at December 31, 2020 Carrying amount at December 31, 2020 Cost Balance at January 1, 2021 Additions Balance at December 31, 2021 Accumulated amortization and impairment Balance at January 1, 2021 Amortization expense Balance at December 31, 2021 Carrying amount at December 31, 2021	Patent Trademark $ 49,850 $ 33,664 1,541 - 51,391 33,664 47,617 - 1,378 - 48,995 - $ 2,396 $ 33,664 $ 51,391 $ 33,664 - - 51,391 33,664 48,995 - 1,327 - 50,322 - $ 1,069 $ 33,664	Software $ 8,181 - 8,181 1,118 1,687 2,805 $ 5,376 $ 8,181 - 8,181 2,805 1,676 4,481 $ 3,700	Total $ 91,695 1,541 93,236 48,735 3,065 51,800 $ 41,436 $ 93,236 - 93,236 51,800 3,003 54,803 $ 38,433

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

Patent 3-20 years Software 3-5 years

Management believes the Company will renew the trademark continuously and has the ability to do so. Various studies including studies about product life cycle, market, competitive and environmental trends, and brand extension opportunities have been performed by management of the Company, which supported their opinion that there is no foreseeable limit to the period over which the trademarked products are expected to generate net cash flows. Therefore, the trademark is considered to have an indefinite useful life. The trademark will not be amortized until its useful life is determined to be finite. Instead it will be tested for impairment annually and whenever there is an indication that it may be impaired.

13. BORROWINGS

a. Short-term borrowings

Secured borrowings (Note 26) Bank loans Unsecured borrowings Line of credit borrowings		December 31	December 31
		2021 $ 353,173 394,145 $ 747,318	2020 $ 230,000 740,766 $ 970,766

The range of interest rates on bank loans was 1.031%-1.68% and 1.031%-1.70% per annum as of December 31, 2021 and 2020, respectively.

b. Long-term borrowings

Secured borrowings (Note 26) Bank loans Unsecured borrowings Bank loans Less: Current portion Long-term borrowings		December 31	December 31
		2021 $ 309,352 105,911 415,263 (84,926) $ 330,337	2020 $ 225,416 126,326 351,742 (124,124) $ 227,618

As of December 31, 2021 and 2020, the interest rates of the bank borrowings secured by the Company’s freehold land and building were 1.42%-1.75% and 1.45%-1.60% per annum, respectively. The bank borrowings are due from September 2024 to December 2026.

14. OTHER PAYABLES

Payables for salaries and bonuses Payables for commission Payables for compensation of employees and remuneration to directors Payables for charges for service Payables for interest Others		December 31	December 31
		2021 $ 51,100 6,973 5,186 1,475 602 12,807 $ 78,143	2020 $ 27,835 4,342 - 2,204 992 58,122 $ 93,495

15. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

b. Defined benefit plans

The defined benefit plans adopted by the Company in accordance with the Labor Standards Law are operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The Company contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Company assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Company has no right to influence the investment policy and strategy.

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

Present value of defined benefit obligation Fair value of plan asset Net defined benefit liability		December 31	December 31
		2021 $ 94,315 (67,402) $ 26,913	2020 $ 90,308 (54,834) $ 35,474

Movements in net defined benefit liability were as follows:

	Present Value of	Present Value of
	the Defined			Net Defined
		Benefit	Fair Value of		Benefit
	Obligation		the Plan Assets	Liability
Balance at January 1, 2020	$	114,921	$ (68,013)	$	46,908
Service cost
Current service cost		668	-		668
Net interest expense (income)		862	(521)		341
Recognized in profit or loss		1,530	(521)		1,009
Remeasurement
Return on plan assets (excluding amounts
included in net interest)		-	(2,132)		(2,132)
Actuarial loss - changes in financial
assumptions		2,278	-		2,278
Actuarial gain - experience adjustments		(5,411)	-		(5,411)
Recognized in other comprehensive income		(3,133)	(2,132)		(5,265)
Contributions from the employer		-	(7,178)		(7,178)
Benefits paid from plan assets		(23,010)	23,010		-
		(23,010)	15,832		(7,178)
Balance at December 31, 2020		90,308	(54,834)		35,474
Service cost
Current service cost		398	-		398
Net interest expense (income)		452	(280)		172
Recognized in profit or loss		850	(280)		570
Remeasurement
Return on plan assets (excluding amounts
included in net interest)		-	(887)		(887)
Actuarial loss - changes in demographic
assumptions		2,663	-		2,663
Actuarial gain - changes in financial
assumptions		(1,115)	-		(1,115)
Actuarial gain - experience adjustments		1,609	-		1,609
Recognized in other comprehensive income		3,157	(887)		2,270
Contributions from the employer		-	(11,401)		(11,401)
Balance at December 31, 2021	$	94,315	$ (67,402)	$	26,913

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

1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.
2) Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments.
3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.
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The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate Expected rate of salary increase	December 31
	2021 2020 0.625% 0.500% 2.750% 2.750%

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

Discount rate 0.25% increase 0.25% decrease Expected rate of salary increase 0.25% increase 0.25% decrease		December	31
		2021 $ (2,230) $ 2,307 $ 2,220 $ (2,157)	2020 $ (2,278) $ 2,360 $ 2,268 $ (2,201)

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

The expected contributions to the plan for the next year The average duration of the defined benefit obligation		December	31
		2021 $ 2,597 9.5 years	2020 $ 12,023 10.2 years

16. EQUITY

a. Share capital

Ordinary shares

Number of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		December 31	December 31
		2021 300,000 $ 3,000,000 199,331 $ 1,993,310	2020 300,000 $ 3,000,000 199,331 $ 1,993,310

A holder of issued ordinary shares with par value of NT$10 per share is entitled to vote and to receive dividends.

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (1) Issuance of ordinary shares Conversion of bonds Treasury share transactions Difference between consideration and carrying amount from the acquisition or disposal of subsidiaries’ shares May only be used to offset a deficit Changes in percentage of ownership interests in subsidiaries (2) May not be used for any purpose Employee share options		December 31	December 31
		2021 $ 111,870 99,979 8,790 12,201 - 184 $ 233,024	2020 $ 131,003 99,979 59,673 12,201 63,352 184 $ 366,392

1) Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s number of shares fully paid).
2) Such capital surplus arises from the effect of changes in ownership interests in subsidiaries resulting from equity transactions other than actual disposals or acquisitions, or from changes in capital surplus of subsidiaries accounted for using the equity method.

c. Retained earnings and dividend policy

Under the dividends policy as set forth in the amended Articles, where the Company made a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as a legal reserve of 10% of the remaining profit, setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company’s board of directors as the basis for proposing a distribution plan with a proportion of no less than 10%, which should be resolved in the shareholders’ meeting for the distribution of dividends and bonuses to shareholders. For the policies on the distribution of compensation of employees and remuneration of directors after the amendment, refer to compensation of employees and remuneration of directors in Note 18-f.

According to the Articles, 30%-100% of dividends are to be distributed as cash dividends and 0%-70% as share dividends.

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

The appropriation of deficit for 2020 and 2019 were approved in the shareholders’ meeting on July 2, 2021 and May 27, 2020 as follows:

Legal reserve Special reserve Capital surplus	Appropriation of Deficits
	For the Year Ended December 31
	2020 2019 $ - $ 186,665 - 75,178 114,235 9,753

In the shareholders’ meeting on July 2, 2021 and May 27, 2020, the Company’s shareholders resolved to issue cash dividends from capital surplus of $19,133 thousand and $19,933 thousand.

On March 8, 2022, the Company’s board of directors proposed an earning distribution for 2021 which is subject to resolution of the shareholders in their meeting to be held on May 30, 2022.

d. Treasury shares

Purpose of Buy-back Number of Shares at January 1 Shares Transferred to Employees 2021 Shares transferred to employees (in thousands of shares) 8,000 - 2020 Shares transferred to employees (in thousands of shares) 5,000 3,000	Shares Cancelled Number of Shares at December 31 - 8,000 - 8,000

Under the Securities and Exchange Act, the Company shall neither pledge treasury shares nor exercise shareholders’ rights on these shares, such as rights to dividends and to vote.

17. REVENUE

Revenue from the sale of machinery Revenue from the rendering of services Others	For the Year Ended	For the Year Ended	December 31
		2021 $ 924,887 19,658 30 $ 944,575	2020 $ 788,664 14,596 27 $ 803,287

a. Refer to Note 4-l for information about disaggregation of revenue.
b. Contract balances: as of December 31, 2021 and 2020, the amounts of contract liabilities were $26,903 thousand and $27,102 thousand, respectively, which mainly comprised of unearned receipts.
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18. NET INCOME (LOSS)

a. Other income

Subsidy income Rental income Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 3,464 25,017 15,025 $ 43,506	2020 $ 23,479 23,334 8,338 $ 55,151

b. Other gains and losses

Gain on disposal of property, plant and equipment Net foreign exchange losses Impairment losses on financial assets Loss on compensations Net gain on financial assets at FVTPL Others	For the Year Ended	For the Year Ended	December 31
		2021 $ 218,849 (24,053) (4,973) - - (1,843) $ 187,980	2020 $ - (21,594) - (19,974) 450 (308) $ (41,426)

c. Finance costs

Interest on bank loans Interest on loans from related parties Interest on lease liabilities	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 16,307 1,718 485 $ 18,510	2020 $ 16,905 1,829 561 $ 19,295

d. Depreciation and amortization

Property, plant and equipment Right-of-use assets Intangible assets	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 56,969 11,680 3,003 $ 71,652	2020 $ 52,989 9,565 3,065 $ 65,619 (Continued)

An analysis of depreciation by function Operating costs Operating expenses An analysis of amortization by function Operating expenses Employee benefits expense Short-term benefits Salaries Insurance Post-employment benefits Defined contribution plans Defined benefit plans (Note 15) Other employee benefits Total employee benefits expense An analysis of employee benefits expense by function Operating costs Operating expenses	For the Year Ended	For the Year Ended	December 31
	2021 $ 33,546 35,103 $ 68,649 $ 3,003 For the Year Ended		2020 $ 24,108 38,446 $ 62,554 $ 3,065 (Concluded) December 31
		2021 $ 182,105 14,998 197,103 7,280 570 7,850 1,022 $ 205,975 $ 67,674 138,301 $ 205,975	2020 $ 170,677 16,123 186,800 7,812 1,009 8,821 1,281 $ 196,902 $ 71,186 125,716 $ 196,902

e. Employee benefits expense

f. Compensation of employees and remuneration of directors

According to the Articles of Incorporation of the Company, the Company accrues compensation of employees and remuneration of directors at the rates of 1%-10% and no higher than 3%, respectively, of net profit before income tax, compensation of employees, and remuneration of directors. Resulting from a loss for the year ended 2020, no estimation for employees’ compensation and remuneration of directors was made. The employees’ compensation and remuneration of directors for the years ended December 31, 2021 which have been approved by the Company’s board of directors on March 8, 2022 were as follows:

Accrual rate

Compensation of employees Remuneration of directors	For the Year Ended December 31
	2021 1% 1%

Amount

Compensation of employees Remuneration of directors	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 2,593 $ 2,593

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

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

19. INCOME TAXES

a. Income tax recognized in profit or loss

Major components of tax expense (benefit) are as follows:

Current tax Adjustments for prior years Land value increment tax Deferred tax In respect of the current year Income tax expense (benefit) recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ - 23,011 23,011 8,095 $ 31,106	2020 $ 3,166 99 3,265 (24,199) $ (20,934)

A reconciliation of accounting profit and income tax expense (benefit) is as follows:

Net profit (loss) before income tax Income tax expense (benefit) calculated at the statutory rate Tax-exempt income Nondeductible expenses in determining taxable income Unrecognized loss carryforwards and deductible temporary differences Land value increment tax Adjustments for prior years’ tax Income tax expense (benefit) recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2021 $ 249,328 $ 49,866 (46,244 ) 1,063 3,410 23,011 - $ 31,106	2020 $ (139,667) $ (27,933 ) (2,965 ) 3,824 2,875 99 3,166 $ (20,934)

b. Income tax recognized in other comprehensive income

Deferred tax In respect of the current period Remeasurement on defined benefit plan	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ (454)	2020 $ 1,100

c. Deferred tax assets

The movements of deferred tax assets was as follows:

For the year ended December 31, 2021

Deferred tax assets Defined benefit obligation Unrealized gain on transactions with associates Loss carryforward Share of loss of subsidiaries accounted for using the equity method Others For the year ended December 31, 2020 Deferred tax assets Defined benefit obligation Unrealized gain on transactions with associates Loss carryforward Share of loss of subsidiaries accounted for using the equity method Others	Recognized in Other Recognized Compre- Opening in Profit hensive Balance or Loss Income $ 7,772 $ (2,166) $ 454 2,429 (382) - 7,524 (2,680) - 40,054 (6,277) - 21,183 3,410 - $ 78,962 $ (8,095) $ 454 Recognized in Other Recognized Compre- Opening in Profit hensive Balance or Loss Income $ 10,105 $ (1,233) $ (1,100) 579 1,850 - 9,984 (2,460) - 16,679 23,375 - 18,516 2,667 - $ 55,863 $ 24,199 $ (1,100)	Closing Balance $ 6,060 2,047 4,844 33,777 24,593 $ 71,321 Closing Balance $ 7,772 2,429 7,524 40,054 21,183 $ 78,962

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d. Information about unused loss carryforwards.

Loss carryforwards as of December 31, 2021 comprised:

Unused Amount	Unused Amount	Expiry Year
$	38,564	2026
	24,133	2029
	11,638	2030
	22,550	2031
$	96,885

e. The Company’s income tax returns through 2019 were examined and cleared by the tax authorities.

20. EARNINGS (LOSS) PER SHARE

Basic earnings (loss) earnings per share Diluted earnings (loss) earnings per share	Unit: NT$ Per Share For the Year Ended December 31	Unit: NT$ Per Share For the Year Ended December 31	Unit: NT$ Per Share For the Year Ended December 31
		2021 $ 1.14 $ 1.14	2020 $ (0.61) $ (0.61)

The earnings (loss) and weighted average number of ordinary shares outstanding in the computation of earnings (loss) per share were as follows:

Net Profit (Loss) for the Year

For the Year Ended 2021 Earnings (loss) used in the computation of basic/diluted earnings (loss) per share $ 218,222 Weighted average number of ordinary shares outstanding (in thousands of shares):	For the Year Ended	For the Year Ended	December 31
		2021 $ 218,222 shares):	2020 $ (118,733)

Weighted average number of ordinary shares in computation of basic earnings (loss) per share Effect of potentially dilutive ordinary shares Compensation of employees Weighted average number of ordinary shares used in the computation of diluted earnings (loss) per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 191,331 217 191,548	2020 193,138 - 193,138

The Company may settle the compensation of employees in cash or shares; therefore, the Company assumed that the entire amount of the compensation will be settled in shares, and the resulting potential shares are included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

21. GOVERNMENT GRANTS

The Company obtained a subsidy in the amount of $14,827 thousand from the government in accordance with the handling of salary and working capital subsidies for difficult businesses of manufacturing and technical service industries that are affected by severe pneumonia with novel pathogens by the Ministry of Economic Affairs in 2020.

22. PARTIAL ACQUISITION OR DISPOSAL OF SUBSIDIARIES - WITHOUT LOSS OF CONTROL

In June 2020, Sogotec Limited bought back its ordinary shares, which increased the Company’s continuing interest from 57.82% to 58.11%.

The above transactions were accounted for as equity transactions, since the Company did not cease to have control over these subsidiaries. For details about the partial disposal of Sogotec Limited, refer to Note 23 to the Company’s consolidated financial statements for the year ended December 31, 2021.

23. CAPITAL MANAGEMENT

The Company manages its capital to ensure that the Company will be able to continue as going concerns while maximizing the return to stakeholders through the optimization of the debt and equity balance.

The capital structure of the Company consists of net debt (borrowings offset by cash) and equity of the Company (comprising issued capital, reserves, retained earnings, other equity and non-controlling interests).

Key management personnel of the Company review the capital structure on a quarterly basis. As part of this review, the key management personnel consider the cost of capital and the risks associated with each class of capital. Based on recommendations of the key management personnel, in order to balance the overall capital structure, the Company may adjust the amount of dividends paid to shareholders, the number of new shares issued or repurchased, and the amount of new debt issued or existing debt redeemed.

The Company is not subject to any externally imposed capital requirements.

24. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments that are not measured at fair value

The Company’s management considers the carrying amounts recognized in the financial statements for financial assets and financial liabilities not carried at fair value to approximate their fair values or their fair values cannot be reliably measured.

b. Categories of financial instruments

Financial assets Financial assets at amortized cost (1) Financial liabilities Financial liabilities at amortized cost (2)	December 31
	2021 2020 $ 884,032 $ 885,142 1,457,641 1,552,271

1) The balances include financial assets at amortized cost, which comprise cash, restricted deposits, notes receivable, accounts receivable and other receivables.
2) The balances included financial liabilities measured at amortized cost, which comprise short-term borrowings, accounts payable, other payables and long-term borrowings.
c. Financial risk management objectives and policies

The Company’s major financial instruments include accounts receivable, accounts payable, lease liabilities and short-term and long-term borrowings. The Company’s corporate treasury function provides services to the business, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk and interest rate risk), credit risk and liquidity risk.

1) Market risk

The Company’s activities is exposed primarily to the financial risks of changes in foreign currency exchange rates (see (a) below) and interest rates (see (b) below).

There had been no change to the Company’s exposure to market risks or the manner in which these risks were managed and measured.

a) Foreign currency risk

The Company had foreign currency sales and purchases, which were exposed to foreign currency risk. To protect against reductions in value and the volatility of future cash flows caused by changes in foreign exchange rates, the Company managed the risk by balancing positions of assets and liabilities denominated in foreign currencies.

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities and of the derivatives exposed to foreign currency risk at the end of the reporting period are set out in Note 29.

Sensitivity analysis

The Company was mainly exposed to the USD, RMB and EUR.

The following details the effects of a 1% increase or decrease in New Taiwan dollars (the functional currency) against the relevant foreign currencies. The rate of 1% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis included only outstanding foreign currency denominated monetary items and adjusts their translation at the end of the reporting period for a 1% change in foreign currency rates. For a 1% strengthening/weakening of NTD against the relevant currency, the net profit before tax would be a decrease/an increase of $5,912 thousand for the year ended December 31, 2021, and the net loss before tax would be an increase/a decrease of $6,533 thousand for the year ended December 31, 2020.

b) Interest rate risk

The Company was exposed to interest rate risk because the Company borrowed funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix of fixed and floating rate borrowings.

The carrying amounts of the Company’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows:

Fair value interest rate risk Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities	December 31
	2021 2020 $ 25,875 $ 33,149 162,221 126,223 1,162,581 1,322,508

Sensitivity analysis

The sensitivity analyses below were determined based on the Company’s exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis was prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 10 basis points increase or decrease was used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

The sensitivity analyses were determined based on the Company’s exposure to interest rates at the end of the reporting period. A 10 basis points increase or decrease was used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 10 basis points higher/lower and all other variables were held constant, the Company’s pre-tax profit for the years ended December 31, 2021 would have decreased/ increased by $1,000 thousand and the Company’s pre-tax loss for the year ended December 31, 2020 would have increased/decreased by $1,196 thousand, which was mainly attributable to the Company’s exposure to cash flow on its variable-rate bank borrowings.

2) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. As at the end of the reporting period, the Company’s maximum exposure to credit risk which will cause a financial loss to the Company due to failure of counterparties to discharge an obligation and due to financial guarantees provided by the Company could arise from:

a) The carrying amount of the respective recognized financial assets as stated in the balance sheets;
b) The amount of contingent liabilities in relation to financial guarantee issued by the Company.

The Company adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company only transacts with entities that are rated the equivalent of excellent grade. This information is supplied by a rating agency where available and, if not available, the Company uses other publicly available financial information to rate its major customers. The Company’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.

The Company did transactions with a large number of unrelated customers and, thus, no concentration of credit risk was observed.

3) Liquidity risk

Ultimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate liquidity risk management framework for the Company’s short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, and continuously monitoring forecast and actual cash flows as well as matching the maturity profiles of financial assets and liabilities. As of December 31, 2021 and 2020, the Company had available unutilized bank loan facilities set out in (b) below.

a) Liquidity and interest rate risk tables for non-derivative financial liabilities

The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables had been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Company can be required to pay. Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on the agreed repayment dates.

December 31, 2021

Non-derivative financial liabilities Non-interest bearing Lease liabilities Variable interest rate liabilities	Less than 3 Months $ 295,060 3,173 710,028 $ 1,008,261	3 Months to 1 Year $ - 7,914 129,161 $ 137,075	1-5 Years $ - 15,481 337,284 $ 352,765	5+ Years $ - - 12,316 $ 12,316

December 31, 2020

Non-derivative financial liabilities Non-interest bearing Lease liabilities Variable interest rate liabilities	Less than 3 Months $ 229,763 3,049 878,417 $ 1,111,229	3 Months to 1 Year $ - 8,999 223,342 $ 232,341	1-5 Years $ - 20,982 217,208 $ 238,190	5+ Years $ - 1,201 24,557 $ 25,758

The above amount of variable interest rate instruments for both non-derivative financial assets and liabilities was subject to change if changes in variable interest rates differ from those estimates of interest rates determined at the end of the reporting period.

b) Financing facilities

Unsecured bank overdraft facility, reviewed annually and payable on demand: Amount used Amount unused Secured bank overdraft facility: Amount used Amount unused		December 31	December 31
		2021 $ 500,056 522,081 $ 1,022,137 $ 662,525 1,667 $ 664,192	2020 $ 867,092 717,759 $ 1,584,851 $ 455,416 63,500 $ 518,916

25. TRANSACTIONS WITH RELATED PARTIES

The Company’s board of directors was fully re-elected on May 27, 2020. Parpro Corporation (Parpro) lost its control over the Company by not being able to acquire more than half the seats in the board of directors and its relationship with the Company had changed from parent company to associate. Parpro held 20.86% of the Company’s outstanding shares on December 31, 2021. Besides information disclosed elsewhere in the other notes, details of transactions between the Company and other related parties are disclosed below:

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a. Related parties and their relationships with the Company:

Related Party Parpro Corporation (Parpro) Anderson Industrial Anderson Europe GmbH Anderson America CNT Anderson Logistics Anderson Merchandise Sogotec Giben America, Inc. (Giben America) Giben do Brasil Maquinas e Equipamentos Ltda (Giben Brasil) MATEC Maschinenban GmbH (Matec GmbH) Monforts CNC Werkzeugmaschinentechnik GmbH (Monforts GmbH) Verite Corporation	Relationship with the Company
	Investor with significant influence over the Company (parent entity before May 27, 2020) Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary of the company before May 2020 Associate

b. Sales

Related Party Line Items Category/Name Sales of machinery Subsidiaries Anderson America Others	For the Year Ended	For the Year Ended	December 31
		2021 $ 299,937 40,093 $ 340,030	2020 $ 204,225 101,728 $ 305,953

The transaction terms with related parties were not significantly different from those with third parties.

c. Purchase of goods

Related Party Category/Name Subsidiaries	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 8,014	2020 $ 9,034

d. Receivables from related parties

Related Party Line Items Category/Name Accounts receivable Subsidiaries Anderson America Giben America CNT Giben Brasil Sogotec		December 31	December 31
		2021 $ 181,265 149,986 57,701 24,495 3,645 $ 417,092	2020 $ 208,772 161,835 64,321 53,258 5,957 $ 494,143

Related Party Line Items Category/Name Other receivables Investors with significant influence over the Company Subsidiaries CNT MATEC GmbH Others Associates		December 31	December 31
		2021 $ 5 50,474 31,809 5,652 - $ 87,940	2020 $ 6 52,203 35,536 6,178 31 $ 93,954

The outstanding trade receivables from related parties are unsecured. For the years ended December 31, 2021 and 2020, no impairment losses were recognized for trade receivables from related parties.

e. Payables to related parties

Related Party Line Items Category/Name Accounts payable Subsidiaries Anderson Europe Anderson Merchandise Other payables Subsidiaries Anderson Europe Others Prepayments Related Party Line Items Category/Name Prepayments for investment Subsidiaries (classified as other non-current assets) Anderson Logistics		December 31	December 31
		2021 2020 $ 2,113 $ 1,372 11 21 $ 2,124 $ 1,393 $ 8,341 $ 20,445 1,246 5,878 $ 9,587 $ 26,323 December 31
		2021 $ 46,430	2020 $ -

f. Prepayments
g. Acquisitions of property, plant and equipment

Related Party Category/Name Subsidiaries Anderson Merchandise	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ -	2020 $ 54,063

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h. Disposal of property, plant and equipment

Related Party Category/Name Subsidiaries Sogotec		Proceeds For the Year Ended December 31 2021 2020 $ - $ 19,114		Gain (Loss) on Disposal	Gain (Loss) on Disposal
				For the Year Ended December 31
		2021 $ -		2021 $ -	2020 $ -

i. Endorsements and guarantees

Information of endorsements and guarantees for subsidiaries was disclosed in Table 2.

j. Other transactions with related parties

Related Party Line Items Category/Name Rental income Parent entity Subsidiaries Sogotec Anderson America Anderson Merchandise Associates Management income Subsidiaries Anderson Merchandise Interest income Subsidiaries MATEC GmbH Others Interest expense Subsidiaries CNT j. Lease arrangements Related Party Line Items Category/Name Lease expense Investor with significant influence over the Company	For the Year Ended	For the Year Ended	December 31
	2021 2020 $ - $ 54 17,825 15,522 4,380 4,617 451 1,576 - 343 $ 22,656 $ 22,112 $ 6,551 $ 5,856 $ 823 $ 839 - 894 $ 823 $ 1,733 $ 1,718 $ 1,829 For the Year Ended December 31
		2021 $ 606	2020 $ -

The Company leases buildings for plants and office spaces which are under short-term lease regulation, and the lease is under common market price. The lease condition and rental payments are similar to ordinary leases.

k. Compensation of key management personnel

Short-term employee benefits Post-employment benefits	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 25,592 806 $ 26,398	2020 $ 28,346 742 $ 29,088

The remuneration of directors and key executives was determined by the remuneration committee having regard to the performance of individuals and market trends.

26. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets at book value were provided as collateral for bank borrowings and to obtain loan limit:

Bank deposits (classified as financial assets at amortized cost) Freehold land Building Other non-current assets		December 31	December 31
		2021 $ 79,002 88,037 314,286 6,482 $ 487,807	2020 $ 10,000 125,457 363,019 6,482 $ 504,958

27. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant commitments and contingencies of the Company were as follows:

As of December 31, 2021, unused letters of credit for purchases of raw materials amounted to $23,555 thousand.

28. OTHER ITEMS

The Company has evaluated the impact of the COVID-19 pandemic. As of the date the financial statements were authorized for issue, there was no significant impact on the Company’s operation, financing condition and asset impairment. However, the impact of the pandemic is still uncertain. As such, the Company will continue to monitor the development of the pandemic and evaluate its impact.

29. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The following information was aggregated by the foreign currencies other than functional currency of the Company and the exchange rates between foreign currencies and Company’s functional currency in NTD were disclosed. The significant assets and liabilities denominated in foreign currencies were as follows:

December 31, 2021

		Foreign		Carrying
	Currencies		Exchange Rate	Amount
Financial assets
Monetary items
USD	$	15,352	27.680 (USD:NTD)	$ 424,943
RMB		27,162	4.344 (RMB:NTD)	117,992
EUR		2,447	31.320 (EUR:NTD)	76,640
Financial liabilities
Monetary items
USD		511	27.680 (USD:NTD)	14,144
EUR		383	31.320 (EUR:NTD)	11,996
RMB		511	4.344 (RMB:NTD)	2,220
December 31, 2020
		Foreign		Carrying
	Currencies		Exchange Rate	Amount
Financial assets
Monetary items
USD	$	17,697	28.480 (USD:NTD)	$ 504,011
RMB		27,063	4.377 (RMB:NTD)	118,455
EUR		2,444	35.020 (EUR:NTD)	85,589
Financial liabilities
Monetary items
USD		1,359	28.480 (USD:NTD)	38,704
EUR		453	35.020 (EUR:NTD)	15,864
RMB		50	4.377 (RMB:NTD)	219

For the years ended December 31, 2021 and 2020, realized and unrealized net foreign exchange losses were $24,053 thousand and $21,594 thousand, respectively. It is impractical to disclose net foreign exchange gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions.

30. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions:
1) Financing provided to others. (Table 1)
2) Endorsements/guarantees provided. (Table 2)
49-
3) Marketable securities held (excluding investment in subsidiaries, associates and joint ventures). (Table 3)
4) Marketable securities acquired and disposed at costs or prices at least NT$300 million or 20% of the paid-in capital. (None)
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital. (None)
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital. (None)
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 4)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 5)
9) Trading in derivative instruments. (None)
b. Information on investees. (Table 6)
c. Information on investments in mainland China
1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area. (Table 7)
2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses. (None)
d. Information of major shareholders:

List all shareholders with ownership of 5% or greater showing the name of the shareholder, the number of shares owned, and percentage of ownership of each shareholder (Table 8)

TABLE 1

ANDERSON INDUSTRIAL CORPORATION

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

No.	Lender	Borrower	Financial Statement Account	Related Parties	Highest Balance for the Period (Note 1)	Ending Balance (Note 1)	Actual Borrowing Amount	Interest Rate	Nature of Financing	Business Transaction Amounts	Reasons for Short-term Financing	Allowance for Impairment Loss	Collateral	Collateral	Financing Limit for Each Borrower (Notes 1 and 3)	Aggregate Financing Limits (Notes 1 and 3)	Note
													Item	Value
0	The Company	MATEC Monforts GmbH	Accounts receivable - related parties Other accounts receivable	Yes No	$ 34,370 54,992	$ 31,320 50,112	$ 31,320 50,112	2.5% 2.5%-5%	Short-term financing Short-term financing	$ - -	Operation requirements Operation requirements	$ - 4,973	- -	$ - -	$ 435,516 435,516	$ 871,032 871,032	2 5
1	CNT	The Company	Accounts receivable - related parties	Yes	77,378	73,196	-	2.5%	Short-term financing	-	Operation requirements	-	-	-	233,885	233,885	3
2	Sogotec	Sogotec Shanghai	Other receivable - related parties	Yes	156,204	153,227	153,227	1.48%	Business transaction	356,922	-	-	-	-	227,894	227,894	4

Note 1: The balance for the period and ending balance represent the amount approved by the board of directors.

Note 2: The loan limit should not exceed 40% of total equity of the Company. The loan limit to one party should not exceed 20% of the total equity or business transaction amount.

Note 3: The loan limit should not exceed 100% of total equity of the Company.

Note 4: The loan limit should not exceed 40% of total equity of the Company. The loan limit to one party should not exceed the total loan limit or business transaction amount.

Note 5: In May 2020, the Company lost control over Monforts GmbH after designating its trustee in bankruptcy.

TABLE 2

ANDERSON INDUSTRIAL CORPORATION

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

No.	Endorser/Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limits on Endorsement/ Guarantee Given on Behalf of Each Party	Maximum Amount Endorsed/ Guaranteed During the Period	Outstanding Endorsement/ Guarantee at the End of the Period	Actual Borrowing Amount	Amount Endorsed/ Guaranteed by Collaterals	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Aggregate Endorsement/ Guarantee Limit	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China	Note
		Name	Relationship (Note 3)
0	The Company	Anderson Merchandise MATEC	b b	$ 653,274 653,274	$ 220,000 171,850	$ 220,000 43,848	$ 91,315 43,848	$ - -	10.10 2.01	$ 1,088,791 1,088,791	Yes Yes	- -	- -	1 1
1	Sogotec	Sogotec Shanghai	b	170,921	87,680	86,880	19,078	-	15.25	284,868	-	-	Yes	2

Note 1: The balance to one party should not exceed 30% of the total equity of the Company. The balance should not exceed 50% of total equity of the Company.

Note 2: The balance to one party should not exceed 30% of the total equity of the Sogotec Limited. The balance should not exceed 50% of total equity of the Sogotec Limited.

Note 3: The relationship is as follows:

b. The Company controls over 50% of subsidiary’s ordinary shares directly.
52-

TABLE 3

ANDERSON INDUSTRIAL CORPORATION

MARKETABLE SECURITIES HELD DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Holding Company Name	Type and Name of Marketable Securities (Note 1)	Relationship with the Holding Company	Financial Statement Account		December 31, 2021	December 31, 2021		Note
				Shares (In Thousands of Shares)	Carrying Amount	Percentage of Ownership (%)	Fair Value
CNT Anderson Logistics	China Guangfa Bank “Wuhua Tianbao Version W, Section 282, year 2021” Structured Deposit Harbinger Technology Corporation	- -	Financial assets at fair value through profit or loss - current Financial assets at fair value through other comprehensive income - non-current	- 4,559	$ 86,880 69,076	- 7.85	$ 86,880 69,076	- -

Note 1: Marketable securities in the table refer to shares, bonds, beneficiary certificates and other related derivative securities within the scope of IFRS 9 “Financial Instruments”.

Note 2: Information on investments in subsidiaries and associates, see Table 6 and Table 7 for details.

TABLE 4

ANDERSON INDUSTRIAL CORPORATION

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars)

Buyer	Related Party	Relationship		Transaction	Transaction	Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase/ Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
The Company Sogotec	Anderson America Sogotec Shanghai	Subsidiaries Subsidiaries	Sales Sales	$ (299,937) (398,884)	(32) (65)	Note 1 Net 360 days from the end of the month after acceptance	None Note 2	Note 1 Note 2	$ 181,265 475,505	31 91	- Note 3

Note 1: Collection depends on capital status.

Note 2: Sales price between Sogotech and related parties are decided mutually, the credit period for related parties is net 360 days from the end of the month after acceptance. The credit period for non-related parties is by installment or 30-150 days from the end of the month after acceptance.

Note 3: Receivable generated from related-party transactions is $628,732 thousand, recorded as accounts receivable of $475,505 thousand and other accounts receivable of $153,227 thousand.

TABLE 5

ANDERSON INDUSTRIAL CORPORATION

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars)

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate		Overdue	Amounts Received in Subsequent Period	Allowance for Impairment Loss
					Amount	Actions Taken
The Company Sogotec	Anderson America Giben America Sogotec Shanghai Sogotec Shanghai	Subsidiaries Subsidiaries Subsidiaries Subsidiaries	Accounts receivable $ 181,265 Accounts receivable 149,986 Accounts receivable 475,505 Other accounts receivable 153,227	1.54 0.02 0.82 N/A	$ - - 77,836 153,227	- - - -	$ - - - 49,486	$ - - - -

TABLE 6

ANDERSON INDUSTRIAL CORPORATION

INFORMATION ON INVESTEES (EXCLUDING INFORMATION ON INVESTMENT IN MAINLAND CHINA) FOR THE YEAR ENDED DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	As of	December 31, 2021	December 31, 2021	Net Income (Loss) of the Investee	Share of Profits (Loss)	Note
				December 31, 2021	December 31, 2020	Shares (In Thousands of Shares)	%	Carrying Amount
The Company Anderson Merchandise Anderson Logistics Giben SAMOA Giben BVI Anderson Europe GmbH MATEC	Anderson Industrial Anderson Europe GmbH Anderson America Anderson Logistics Giben BVI Giben SAMOA Anderson Merchandise Sogotec Sogotec Sogotec Verite Slice Bliss Giben America Giben Brasil Giben Brasil Monforts GmbH MATEC ASC Matec Schweiz AG	Hong Kong Germany USA Taiwan British Virgin Islands Samoa Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan USA Brazil Brazil Germany Germany Germany Schweiz	Importing, exporting and general investing activities Manufacture, sale of machinery and service Sale of machinery and service Importing and exporting Investment Investment Sale of wood panels and service Manufacture and sale of machinery Manufacture and sale of machinery Manufacture and sales of machinery Importing and Exporting Importing and Exporting Sale of machinery and service Manufacture and sale of machinery Manufacture and sale of machinery Manufacture and sale of machinery Manufacture and sale of machinery Sale of machinery and service Sale of machinery and service	$ 1,014 441,603 215,024 220,000 422,078 146,813 50,000 238,746 3,000 178,682 18,000 5,500 145,329 1,183 421,626 197,426 155,496 808 1,292	$ 1,014 441,603 215,024 220,000 422,078 146,813 50,000 238,746 3,000 178,682 18,000 - 145,329 1,183 421,626 197,426 155,496 808 -	300 Note 1 1 22,000 10 10 5,000 11,796 50 4,461 1,800 550 Note 1 Note 1 Note 1 Notes 1 and 2 Note 1 Note 1 0.51	100.00 100.00 100.00 100.00 100.00 100.00 100.00 58.11 0.25 21.97 33.33 33.33 100.00 0.28 99.72 - 100.00 100.00 51.00	$ 31,645 260,591 48,207 202,795 241,240 74,067 197,891 293,477 2,947 124,844 947 4,900 (43,071) 675 240,935 - 146,633 731 563	$ - 47 15,419 (9,354) 41,773 (9,157) 33,979 3,855 3,855 3,855 - - (28,581) 46,589 46,589 - (8,626) (19) -	$ - 341 15,419 (9,354) 41,773 (9,157) 33,979 4,821 Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable	- - - - - - - - - - - - - - - - - - -

Note 1: Limited company structure.

Note 2: In May 2020, the Company lost control over Monforts GmbH after designating its trustee in bankruptcy.

TABLE 7

ANDERSON INDUSTRIAL CORPORATION

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Investee Company	Main Businesses and Products	Main Businesses and Products	Paid-in Capital	Paid-in Capital	Method of Investment (Note 1)	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2021	Investment Flows	Investment Flows	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2021	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss)	Carrying Amount as of December 31, 2021	Accumulated Repatriation of Investment Income as of December 31, 2021	Note
							Outflow	Inflow
CNT Jentec Sogotec Shanghai	Manufacture and sale of woodworking machinery Manufacture and sale of machinery Sale of machinery and service		$ 264,167 70,640 26,487		a a b	$ 264,167 70,640 26,487	$ - - -	$ - - -	$ 264,167 70,640 26,487	$ (15,709) (1,267) (10,662)	100 100 100	$ (15,709) (1,284) (10,662)	$ 230,595 37,679 (78,330)	$ 104,731 - -	2 and 4 2 -

Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2021		Investment Amounts Authorized by Investment Commission, MOEA		Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA
$ 361,294		$ 361,294		$ - (Note 3)

Note 1: The methods of investment are as follows:
a. Direct investment in mainland China.
b. Sogotec has obtained 100% contribution for $26,487 thousand (US$800 thousand).

Note 2: The amount was calculated using the equity method valuation and based on the audited financial statements.

Note 3: In accordance with “Examination Principles for Licensing Investment or Technical Cooperation in Mainland China” (revised by the MOEA on August 29, 2008), the Company has acquired certificate of operating scope, therefore the upper limit does not have to be calculated.

Note 4: As of December 31, 2021, CNT has remitted investment income of RMB23,109 thousand, equivalent to NT$104,731 thousand.

TABLE 8

ANDERSON INDUSTRIAL CORPORATION

INFORMATION OF MAJOR SHAREHOLDERS DECEMBER 31, 2021

Name of Major Shareholder	Shares	Shares
	Number of Shares	Percentage of Ownership (%)
Parpro Corporation Yunyong Investment Co., Ltd.	39,904,488 20,000,000	20.01 10.03

Note: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of ordinary shares and preferred shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration (including treasury shares) by the Company as of the last business day for the current quarter. The share capital in the financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.

AI assistant

ANDERSON — Annual Report 2021

51851_rns_2021-11-09_0c8578e0-fefc-43d2-b114-3eff576859aa.pdf

Anderson Industrial Corporation

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

Revenue Recognition

Estimated Impairment of Accounts Receivable

Other Matter

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

Auditors’ Responsibilities for the Audit of the Financial Statements

Notice to Readers

ANDERSON INDUSTRIAL CORPORATION

BALANCE SHEETS DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

ANDERSON INDUSTRIAL CORPORATION

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

ANDERSON INDUSTRIAL CORPORATION

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

ANDERSON INDUSTRIAL CORPORATION

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

ANDERSON INDUSTRIAL CORPORATION

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

ANDERSON INDUSTRIAL CORPORATION

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

ANDERSON INDUSTRIAL CORPORATION

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1) Financial assets

Financial assets at amortized cost

k. Provisions

m. Leases

o. Employee benefits

1) Short-term employee benefits

3) Termination benefits

1) Current tax

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Key Sources of Estimation Uncertainty

6. CASH

7. NOTES RECEIVABLE AND ACCOUNTS RECEIVABLE

December 31, 2021

8. INVENTORIES

9. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in Subsidiaries

10. PROPERTY, PLANT AND EQUIPMENT

11. LEASE ARRANGEMENTS

a. Right-of-use assets

b. Lease liabilities

d. Other lease information

12. INTANGIBLE ASSETS

13. BORROWINGS

a. Short-term borrowings

b. Long-term borrowings

14. OTHER PAYABLES

15. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

b. Defined benefit plans

16. EQUITY

Ordinary shares

b. Capital surplus

c. Retained earnings and dividend policy

17. REVENUE

18. NET INCOME (LOSS)

a. Other income

b. Other gains and losses

c. Finance costs

d. Depreciation and amortization

e. Employee benefits expense

Accrual rate

Amount

19. INCOME TAXES

a. Income tax recognized in profit or loss

b. Income tax recognized in other comprehensive income

c. Deferred tax assets

20. EARNINGS (LOSS) PER SHARE

Net Profit (Loss) for the Year

21. GOVERNMENT GRANTS

ANDERSON Annual Report 2021