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ARES Interim / Quarterly Report 2021

Dec 21, 2021

52107_rns_2021-12-21_916bac12-1b5a-4499-b496-e2c984b20ca2.pdf

Interim / Quarterly Report

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ARES INTERNATIONAL CORP. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS’ REVIEW REPORT MARCH 31, 2021 AND 2020

For the convenience of readers and for information purpose only, the 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. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

~1~

INDEPENDENT AUDITORS’ REVIEW REPORT TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of ARES INTERNATIONAL CORP.

Introduction

We have reviewed the accompanying consolidated balance sheets of Ares International Corp. and subsidiaries (the “Group”) as at March 31, 2021 and 2020, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the three months then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission. Our responsibility is to express a conclusion on these consolidated financial statements based on our reviews.

Scope of Review

Except as explained in the following paragraph, we conducted our reviews in accordance with the Statement of Auditing Standards No. 65, “Review of Financial Information Performed by the Independent Auditor of the Entity” in the Republic of China. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Conclusion

The financial statements of certain non-significant consolidated subsidiaries and investments accounted for using the equity method were not reviewed by independent auditors. Those statements reflect total assets (including investments accounted for using the equity method) amounting to NT$167,777 thousand and NT$133,754 thousand, constituting 13.01% and 11.06% of the consolidated total assets, and total liabilities amounting to NT$26,078 thousand and NT$10,450 thousand, constituting 5.18% and 2.28% of the consolidated total liabilities as of March 31, 2021 and 2020, respectively, and total comprehensive income (including share of profit of associates and joint ventures accounted for using equity method) amounting to NT$12,486 thousand and NT$1,655 thousand, constituting 87.56% and

~2~

29.73% of consolidated total comprehensive income for the three months then ended, respectively.

Qualified Conclusion

Except for the adjustments to the consolidated financial statements, if any, as might have been determined to be necessary had the financial statements of certain consolidated subsidiaries and investments accounted for using equity method been reviewed by independent auditors, that we might have become aware of had it not been for the situation described above, based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as at March 31, 2021 and 2020, and of its consolidated financial performance and its consolidated cash flows for the three months then ended, in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission.

CPA Lin, Yi-Fan CPA Liao, Fu-Ming

For and on behalf of PricewaterhouseCoopers, Taiwan May 10, 2021

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

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

~3~

ARES INTERNATIONAL CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

MARCH 31, 2021, DECEMBER 31, 2020 AND MARCH 31, 2020

(Expressed in thousands of New Taiwan dollars) (The consolidated balance sheets as of March 31, 2021 and 2020 are unaudited))

Assets Notes March 31, 2021
AMOUNT
%
$
589,108
46
278,065
22
94,923
8
778
-
80,167
6
-
-
968
-
29,974
2
41,557
3
1,115,540
87
-
-
97,286
8
6,167
-
31,279
2
467
-
30,799
2
7,685
1
173,683
13
$
1,289,223
100		 December 31, 2020
AMOUNT
%
$
618,306
47
286,211
22
79,030
6
1,058
-
109,095
8
682
-
1,397
-
23,686
2
46,214
4
1,165,679
89
-
-
86,804
7
5,809
-
3,912
-
533
-
32,521
3
7,447
1
137,026
11
$
1,302,705
100		 March 31, 2020 March 31, 2020
AMOUNT
$
589,108
278,065
94,923
778
80,167
-
968
29,974
41,557
1,115,540
-
97,286
6,167
31,279
467
30,799
7,685
173,683
$
1,289,223		 AMOUNT
$
618,306
286,211
79,030
1,058
109,095
682
1,397
23,686
46,214
1,165,679
-
86,804
5,809
3,912
533
32,521
7,447
137,026
$
1,302,705		 AMOUNT
$
520,178
279,998
81,002
2,574
98,957
-
2,235
35,931
45,876
1,066,751
1,403
82,283
7,008
13,804
-
30,761
7,678
142,937
$
1,209,688		 %
Current assets
1100
Cash and cash equivalents
1136
Financial assets at amortised cost -
current
1140
Contract assets - current
1150
Notes receivable, net
1170
Accounts receivable, net
1180
Accounts receivable - related
parties, net
1200
Other receivables
1410
Prepayments
1470
Other current assets
11XX
Total current assets
Non-current assets
1517
Financial assets at fair value
through other comprehensive
income - non-current
1550
Investments accounted for using
the equity method
1600
Property, plant and equipment, net
1755
Right-of-use assets
1780
Intangible assets
1840
Deferred income tax assets
1900
Other non-current assets
15XX
Total non-current assets
1XXX
Total assets		 6(1)
6(2) and 8
6(16)
6(3)
6(3)
7
6(4) and 7
8
6(5)
6(6)
6(7)
6(8)
8		 43
23
7
-
8
-
-
3
4
88
-
7
1
1
-
2
1
12
100

(Continued)

~4~

ARES INTERNATIONAL CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

MARCH 31, 2021, DECEMBER 31, 2020 AND MARCH 31, 2020

(Expressed in thousands of New Taiwan dollars)

(The consolidated balance sheets as of March 31, 2021 and 2020 are unaudited))

March 31, 2021 December 31, 2020 December 31, 2020 March 31, 2020
Liabilities and Equity Notes AMOUNT % AMOUNT % AMOUNT %
Current liabilities
2130 Contract liabilities - current 6(16) $ 180,536 14 $ 175,210 14 $ 167,638 14
2150 Notes payable 14 - - - - -
2170 Accounts payable 6(9) 44,343 3 49,790 4 41,043 3
2180 Accounts payable - related parties 7 884 - 606 - 1,821 -
2200 Other payables 6(10) 86,172 7 131,907 10 78,447 7
2230 Current income tax liabilities 14,902 1 14,358 1 14,663 1
2250 Provisions for liabilities - current 6(12) 8,134 1 8,641 1 612 -
2280 Current lease liabilities 16,317 1 3,244 - 14,084 1
2300 Other current liabilities - - - - 126 -
21XX Total current liabilities 351,302 27 383,756 30 318,434 26
Non-current liabilities
2580 Non-current lease liabilities 15,029 1 756 - 44 -
2640 Accrued pension liabilities 136,862 11 146,423 11 139,652 12
25XX Total non-current liabilities 151,891 12 147,179 11 139,696 12
2XXX Total liabilities 503,193 39 530,935 41 458,130 38
Equity attributable to owners of
parent
Share capital 6(13)
3110 Common stock 472,539 37 472,539 36 472,539 39
Capital surplus 6(14)
3200 Capital surplus 142,965 11 142,965 11 142,897 12
Retained earnings 6(15)
3310 Legal reserve 59,516 4 59,516 4 51,866 4
3320 Special reserve 9,242 1 9,242 1 7,708 1
3350 Unappropriated retained earnings 103,926 8 90,265 7 81,808 7
Other equity interest
3400 Other equity interest ( 5,884 ) - ( 6,342 ) - ( 8,962) ( 1)
31XX Equity attributable to owners
of the parent 782,304 61 768,185 59 747,856 62
36XX Non-controlling interest 3,726 - 3,585 - 3,702 -
3XXX Total equity 786,030 61 771,770 59 751,558 62
Significant contingent liabilities and 9
unrecognised contract commitents
3X2X Total liabilities and equity $ 1,289,223 100 $ 1,302,705 100 $ 1,209,688 100

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

~5~

ARES INTERNATIONAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME THREE MONTHS ENDED MARCH 31, 2021 AND 2020

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

Items Three months ended March 31
2021
2020
Notes
AMOUNT
%
AMOUNT
%
6(16) and 7
$
172,315
100
$
187,804
100
6(20)(21) and 7(
116,659) (
68) (
129,926) (
69)
55,656
32
57,878
31
6(20)(21) and 7
(
14,047) (
8) (
17,397) (
9)
(
12,945) (
7) (
13,182) (
7)
(
23,544) (
14) (
24,286) (
13)
6(20) and 12(2)
398
- (
3,542) (
2)
(
50,138) (
29) (
58,407) (
31)
5,518
3 (
529)
-
6(17)
938
-
1,981
1
6(18)
527
-
1,239
-
6(19)
(
689)
-
109
-
6(8)
(
117)
- (
111)
-
6(6)
10,009
6
3,139
2
10,668
6
6,357
3
16,186
9
5,828
3
6(22)
(
2,391) (
1) (
549)
-
$
13,795
8
$
5,279
3
4000
Operating revenue
5000
Operating costs
5950
Gross profit
Operating expenses
6100
Selling expenses
6200
General and administrative
expenses
6300
Research and development
expenses
6450
Reversal of (provision for)
expected credit losses
6000
Total operating expenses
6900
Operating profit (loss)
Non-operating income and
expenses
7100
Interest income
7010
Other income
7020
Other gains and losses
7050
Finance costs
7060
Share of profit of associates and
joint ventures accounted for
using equity method
7000
Total non-operating income
and expenses
7900
Profit before income tax
7950
Income tax expense
8200
Profit for the period

(Continued)

~6~

ARES INTERNATIONAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME THREE MONTHS ENDED MARCH 31, 2021 AND 2020

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

Items Three
2021
Notes
AMOUNT
6(5)
$
-
6(22)
-
-
579
6(22)
(
114)
465
$
14,260
$
13,661
134
$
13,795
$
14,119
141
$
14,260
6(23)
$
6(23)
$		 Three months ended March 31 months ended March 31
2021 2020
%
AMOUNT
- ($
382)
-
76
- (
306)
-
740

- (
146)
-
594
8
$
5,567
8
$
5,307
- (
28)
8
$
5,279
8
$
5,588
- (
21)
8
$
5,567
0.29
$
0.29
$		 2020
%
Other comprehensive income
Components of other
comprehensive income that will
not be reclassified to profit or
loss
8316
Unrealized losses from
investments in equity
instruments measured at fair
value through other
comprehensive income
8349
Income tax relating to
components of other
comprehensive income
8310
Other comprehensive loss that
will not be reclassified to profit
or loss
Other comprehensive income
that will be reclassified to profit
or loss
8361
Financial statements translation
differences of foreign operations
8399
Income tax relating to
components of other
comprehensive income
8360
Other comprehensive income
that will be reclassified to
profit or loss
8500
Total comprehensive income for
the period
Profit (loss) attributable to:
8610
Owners of the parent
8620
Non-controlling interest
Total comprehensive income (loss)
attributable to:
8710
Owners of the parent
8720
Non-controlling interest
Earnings per share (in dollars)
9750
Basic earnings per share
9850
Diluted earnings per share
-
-

-
-

-
-
3
3

-
3
3

-
3
0.11
$ $ 0.11

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

~7~

ARES INTERNATIONAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

THREE MONTHS ENDED MARCH 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

Three months ended March 31, 2020
Balance at January 1, 2020
Profit (loss) for the period
Other comprehensive income (loss) for the preiod
Total comprehensive income (loss)
Balance at March 31, 2020
Three months ended March 31, 2021
Balance at January 1, 2021
Profit for the period
Other comprehensive income for the preiod
Total comprehensive income
Balance at March 31, 2021		 Notes Equity attributable to owners of the parent Equity attributable to owners of the parent Equity attributable to owners of the parent Equity attributable to owners of the parent Equity attributable to owners of the parent Equity attributable to owners of the parent Equity attributable to owners of the parent Non-controlling
interest		 Total equity
Share capital -
common stock		 Capital surplus Retained Earnings Other Equity Interest Total
Legal reserve Special reserve Unappropriated
retained
earnings		 Financial
statements
translation
differences of
foreign
operations		 Unrealised
gains (losses)
from financial
assets measured
at fair value
through other
comprehensive
income



$ 472,539
-
-
-
$ 472,539
$ 472,539
-
-
-
$ 472,539


$ 142,897
-
-
-
$ 142,897
$ 142,965
-
-
-
$ 142,965		 $
51,866
-
-
-
$
51,866
$
59,516
-
-
-
$
59,516


$
7,708
-
-
-
$
7,708
$
9,242
-
-
-
$
9,242


$
76,501
5,307
-
5,307
$
81,808
$
90,265
13,661
-
13,661
$ 103,926		 ($
4,402 )
-
587
587
($
3,815 )
($
4,342 )
-
458
458
($
3,884 )		 ($
4,841 )
-
(
306 )
(
306 )
($
5,147 )
($
2,000 )
-
-
-
($
2,000 )




$ 742,268
5,307
281
5,588
$ 747,856
$ 768,185
13,661
458
14,119
$ 782,304		 $
3,723
(
28 )
7
(
21 )
$
3,702
$
3,585
134
7
141
$
3,726		 $ 745,991
5,279
288
5,567
$ 751,558
$ 771,770
13,795
465
14,260
$ 786,030

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

~8~

ARES INTERNATIONAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
(Reversal of) provision for expected credit loss
impairment

Depreciation of property, plant and equipment

Depreciation of right-of-use asset

Amortization

Interest income

Interest expense

Share of profit of associates and joint ventures
accounted for using equity method

Changes in operating assets and liabilities
Changes in operating assets
Notes receivable
Accounts receivable
Accounts receivable - related parties
Other receivables
Prepayments
Other current assets
Changes in operating liabilities
Contract liabilities
Notes payable
Accounts payable
Accounts payable - related parties
Other payables
Provisions for liabilities - current
Other current liabilities
Accrued pension liabilities
Cash outflow generated from operations
Interest received
Income tax paid
Net cash flows used in operating activities		 Three months ended March 31
Notes
2021
2020
$
16,186 $
5,828
6(20) and 12(2)
(
398 )
3,542
6(7)(20)
673
807
6(8)(20)
4,302
4,138
6(20)
66
96
6(17)
(
938 ) (
1,981 )
6(8)
117
111
6(6)
(
10,009 ) (
3,139 )
280 (
1,905 )
13,433 (
9,085 )
682
1,339
(
29 ) (
68 )
(
6,288 ) (
5,768 )
4,657
3,897
5,326
16,156
14
-
(
5,447 )
886
278 (
1,441 )
(
45,735 ) (
38,492 )
(
507 ) (
489 )
-
126
(
9,561 ) (
2,675 )
(
32,898 ) (
28,117 )
1,380
2,376
(
119 ) (
223 )
(
31,637 ) (
25,964 )

(Continued)

~9~

ARES INTERNATIONAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

CASH FLOWS FROM INVESTING ACTIVITIES
Increase in financial assets at amortised cost-current
Decrease in financial assets at amortised cost-
current
Acquisition of property, plant and equipment

(Increase) decrease in refundable deposits (shown in
other non-current assets)
Net cash flows from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of lease liability

Net cash flows used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period		 Three months ended March 31
Notes
2021
2020

($
226,415 ) ($
227,950 )
234,565
240,749
6(7)
(
1,033 ) (
800 )
(
238 )
4
6,879
12,003
6(24)
(
4,440 ) (
4,267 )
(
4,440 ) (
4,267 )
(
29,198 ) (
18,228 )
618,306
538,406
$
589,108 $
520,178

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

~10~

ARES INTERNATIONAL CORP. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2021 AND 2020

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

(UNAUDITED)

1. HISTORY AND ORGANISATION

Ares International Corp. (hereinafter referred to as the ‘Company’) was established on December 3, 1980. The Company and subsidiaries (hereinafter referred to as the ‘Group’) are engaged in the design, sales, lease, maintenance and technology consultation of computer equipment, internet and related software, and analysis, design, modification, installment and maintenance of application software. The Company’s stock was traded at the Taipei Exchange from March 1999, and was listed at the Taiwan Stock Exchange after the application of listing was approved.

2. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

These consolidated financial statements were authorised for issuance by the Board of Directors on May 10, 2021.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

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

New standards, interpretations and amendments endorsed by the FSC
follows:		 effective from 2021 are
New Standards,Interpretations andAmendments Effective date by
International Accounting
StandardsBoard
Amendments to IFRS 4, ‘Extension of the temporary exemption from
applying IFRS 9’
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, 'Interest
Rate Benchmark Reform— Phase 2’
Amendment to IFRS 16, ‘Covid-19-related rent concessions beyond 30
June 2021’
Note: Earlier application from January 1, 2021 is allowed by the FSC.		 January 1, 2021
January 1, 2021
April 1, 2021 (Note)

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

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

the Group

None.

~11~

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

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

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

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted are consistent with Note 4 in the consolidated financial statements for the year ended December 31, 2020, except for the compliance statement, basis of preparation, basis of consolidation and additional policies as set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

  • A. The consolidated financial statements of the Group have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Accounting Standard 34, ‘Interim financial reporting’ as endorsed by the FSC.

  • B. These consolidated financial statements are to be read in conjunction with the consolidated financial statements for the year ended December 31, 2020.

  • (2) Basis of preparation

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

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

~12~ 

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

  • B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

  • (3) Basis of consolidation

  • A. Basis for preparation of consolidated financial statements:

The basis for preparation of consolidated financial statements are consistent with those of the year ended December 31, 2020.

  • B. Subsidiaries included in the consolidated financial statements:
Name of
Investor		 Name of
Subsidiary		 Main Business
March 31, December 31, March 31,
Activities
2021
2020
2020
Computer
installation and
information
software service
－
－
100%
Investment
business
100%
100%
100%
Investment
business
100%
100%
－
Investment
business
100%
100%
100%
Research,
development and
sales in business
managenment
software
95.88%
95.88%
95.88%
Ownership (%)		 Description
Ares International
Corp.
Ares International
Corp.
Ares International
Corp.
ARES GROUP
CORP.
WELJOIN
TECHNOLOGIES
LIMITED (BVI)		 APLUSOFT CO.,
LTD.
ARES GROUP
CORP.
WELJOIN
TECHNOLOGIES
LIMITED (BVI)
SHARP KEEN
MANAGEMENT
LIMITED
APLUSOFT
(SUZHOU)
CORPORATION		 Notes 1 and
2
Note 2
Notes 1 and
2
Note 2
Note 2

  • Note 1: APLUSOFT CO., LTD. was dissolved after merging with the Company on October 1, 2020 and shares in WELJOIN TECHNOLOGIES LIMITED (BVI) originally held by the investee were assumed by the Company.

  • Note 2: The financial statements of the above subsidiaries were not reviewed by independent auditors as the entity did not meet the definition of a significant subsidiary.

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

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

~13~

  • E. Significant restrictions: None.

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

(4) Employee benefits

Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate derived from the actuarial valuation at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. Also, the related information is disclosed accordingly.

(5) Income taxes

  • If a change in tax rate is enacted or substantively enacted in an interim period, the Group recognises the effect of the change immediately in the interim period in which the change occurs. The effect of the change on items recognised outside profit or loss is recognised in other comprehensive income or equity while the effect of the change on items recognised in profit or loss is recognised in profit or loss.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

There was no significant change during the reporting period. Please refer to Note 5 in the consolidated financial statements for the year ended December 31, 2020.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash on hand and revolving funds
Checking accounts and demand
deposits
Time deposits		 March31,2021
170
$ 333,680
255,258
589,108
$		 December31,2020
366
$ 370,860
247,080
618,306
$		 March 31, 2020
175
$ 259,293
260,710
520,178
$

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

  • B. As of March 31, 2021, December 31, 2020, and March 31, 2020, cash and cash equivalents were restricted to the bid bonds and performance guarantee. Please refer to Note 8.

(2) Financial assets at amortised cost

Items
Current items:
Time deposits with maturity over
three months
Pledged time deposits
Interest rate range of time deposits		 March31,2021
273,490
$ 4,575
278,065
$ 0.3%~1.4%		 December31,2020
281,636
$ 4,575
286,211
$ 0.1%~2.45%		 March31,2020
275,423
$ 4,575
279,998
$
0.49%~2.30%

~14~

  • A. Amounts recognised in profit or loss in relation to financial assets at amortised cost are listed below:
below:
Three months ended March 31
2021 2020
Interest income $ 467
 $ 843

  • B. As at March 31, 2021, December 31, 2020, and March 31, 2020, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at fair value through other comprehensive income held by the Group were $278,065, $286,211 and $279,998, respectively.

  • C. Details of the Group’s financial assets at amortised cost pledged to others as collateral are provided in Note 8.

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

(3) Notes and accounts receivable

Notes and accounts receivable
March31,2021 December 31, 2020 March31,2020
Notes receivable $ 778
 $ 1,058
 $ 2,574
Less: Allowance for uncollectible
accounts -
 - -
$ 778
 $ 1,058 $ 2,574
Accounts receivable $ 86,832
 $ 116,166
 $ 104,748
Less: Allowance for uncollectible
accounts ( 6,665)
 ( 7,071)
 ( 5,791)
$ 80,167 $ 109,095 $ 98,957
  • A. The ageing analysis of notes and accounts receivable that were past due but not impaired is as follows:
follows:
Not past due
Up to 90 days
91 to 180 days
181 to 271 days
Over 271 days		 March31,2021
Accountsreceivable
60,043
$ 19,910
227
-
6,652
86,832
$		 Notesreceivable
778
$ -
-
-
-
778
$

~15~

Not past due
Up to 90 days
91 to 180 days
181 to 271 days
Over 271 days
Not past due
Up to 90 days
91 to 180 days
181 to 271 days
Over 271 days		 Accounts receivable
Notes receivable
96,416
$ 1,058
$ 11,297
-
1,386
-
-

-
7,067
-
116,166
$ 1,058
$ Accounts receivable
Notes receivable
82,985
$ 2,574
$ 11,950
-
2,713

-
1,284

-
5,816
-
104,748
$ 2,574
$ December31,2020
March 31, 2020

The above ageing analysis was based on past due date.

  • B. As of March 31, 2021, December 31, 2020, and March 31, 2020, accounts receivable and notes receivable were all from contracts with customers. As of January 1, 2020, the balance of receivables from contracts with customers amounted to $103,020.

  • C. The Group has no notes and accounts receivable pledged to others.

  • D. The Group has no discounted notes receivable.

  • E. The Group does not hold any collateral as security.

  • F. As at March 31, 2021, December 31, 2020, and March 31, 2020, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents notes and accounts receivable held by the Group was $80,945, $110,153 and $101,531, respectively.

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

(4) Prepayments

Prepaid project cost
Other prepayments		 March31,2021
25,290
$ 4,684
29,974
$		 December31,2020
20,485
$ 3,201
23,686
$		 March31,2020
25,350
$ 10,581
35,931
$

~16~

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

Items March31,2021 December 31,2020 March31,2020
Non-current items:
Equity instruments
Unlisted stocks $ 2,000
 $ 2,000
 $ 6,444
Valuation adjustment ( 2,000)
 ( 2,000)
 ( 5,041)
$ -
 $ -
 $ 1,403

  • A. The Group has elected to classify equity investments that are considered to be strategic investments as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $0, $0 and $1,403 as at March 31, 2021, December 31, 2020, and March 31, 2020, respectively.

  • B. For the three months ended March 31, 2021 and 2020, the Group recognised the amount of $0 and ($382), respectively, in profit or loss and other comprehensive income.

  • C. The Group received proceeds from capital reduction of the equity instruments in the amount of $1,379 in June 2020.

  • D. Equity instruments that the Group invested in were liquidated as approved by the shareholders in October 2020. The Group reclassified cumulative valuation losses amounting to $3,065 to retained earnings due to derecognition.

  • E. The Group has no financial assets at fair value through other comprehensive income pledged to others.

(6) Investments accounted for using the equity method

Associates:
BLITZ IT CONSULTANTS
PTE. LTD.
ARES INTERNATIONAL
(THAILAND) CO., LTD.
ARGO INTERNATIONAL
CORPORATION
M-Power Information Co., Ltd.		 March31,2021
18,637
$ 6,943
25,220
46,486
97,286
$		 December31,2020
15,970
$ 7,909
22,260
40,665
86,804
$		 March31,2020
16,233
$ 6,833
22,268
36,949
82,283
$

~17~

A. The basic information of the associates of the Group is as follows:

==> picture [470 x 44] intentionally omitted <==

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

Principal Ownership (%)
place March 31, December 31, March 31, Nature of Method of
Company name of business 2021 2020 2020 relationship measurement
----- End of picture text -----

BLITZ IT Singapore 25.00% 25.00% 25.00% - Equity method
CONSULTANTS
PTE. LTD.
ARES Thailand 49.00% 49.00% 49.00% Note 2 Equity method
INTERNATIONAL
(THAILAND)
CO., LTD.
ARGO Taiwan 34.83% 34.83% 34.83% Note 1 Equity method
INTERNATIONAL
CORPORATION
M-Power Information Taiwan 24.39% 24.39% 24.39% Note 2 Equity method
Co., Ltd.

Note 1: The Group made purchases from this associate company. Note 2: The Group had sales to this associate company.

  • B. The carrying amount of the Group’s interests in all individually immaterial associates and the Group’s share of the operating results are summarised below:

As of March 31, 2021, December 31, 2020, and March 31, 2020, the carrying amounts of the Group’s individually immaterial associates amounted to $97,286, $86,804 and $82,283, respectively.

respectively.
Profit for the year from continuing operations
Other comprehensive income, net of tax
Total comprehensive income		 2021
2020
10,009
$ 3,139
$ -
-
10,009
$ 3,139
$ Three months ended March31
3,139
$ -
3,139
$

  • C. For the three months ended March 31, 2021 and 2020, the Group recognised share of profit of associates in the amounts of $10,009 and $3,139, respectively, which were based on the financial statements which were not reviewed by independent auditors of the same period.

  • D. The Group is the single largest shareholder of ARGO INTERNATIONAL CORPORATION and M-Power Information with a 34.83% and 24.39% equity interest, respectively. As the Group has no current ability to direct the relevant activities of ARGO INTERNATIONAL CORPORATION and M-Power Information, the Group has no control, but only has significant influence, over the investee.

~18~

(7) Property, plant and equipment

Machinery and Machinery and Machinery and Transportation Transportation Office Leasehold Other
equipment equipment equipment improvements facilities Total
At January 1, 2021
Cost $ 7,723
 $ 12,190
 $ 1,681
 $ 5,335
 $ 918
 $ 27,847
Accumulated depreciation ( 5,960)
 ( 8,953)
 ( 1,500)
 ( 5,263)
 ( 362)
 ( 22,038)
$ 1,763 $ 3,237 $ 181
 $ 72 $ 556 $ 5,809
2021
At January 1 $ 1,763
 $ 3,237
 $ 181
 $ 72
 $ 556
 $ 5,809
Additions 1,033 - -
 - - 1,033
Depreciation charges ( 158)
 ( 363)
 ( 36)
 ( 72)
 ( 44)
 ( 673)
Net exchange differences ( 2)
 - - - -
 ( 2)
At March 31 $ 2,636 $ 2,874 $ 145 $ - $ 512
 $ 6,167
At March 31, 2021
Cost $ 8,754
 $ 12,190
 $ 1,681
 $ 5,335
 $ 918
 $ 28,878
Accumulated depreciation ( 6,118)
 ( 9,316)
 ( 1,536)
 ( 5,335)
 ( 406)
 ( 22,711)
$ 2,636 $ 2,874 $ 145 $ - $ 512 $ 6,167

~19~

Machinery and Machinery and Machinery and Transportation Transportation Office Leasehold Other
equipment equipment equipment improvements facilities Total
At January 1, 2020
Cost $ 9,914
 $ 12,190
 $ 1,681
 $ 5,335
 $ 1,014
 $ 30,134
Accumulated depreciation ( 9,150)
 ( 7,348)
 ( 1,355)
 ( 4,981)
 ( 283)
 ( 23,117)
$ 764
 $ 4,842 $ 326 $ 354 $ 731 $ 7,017
2020
At January 1 $ 764
 $ 4,842
 $ 326
 $ 354
 $ 731
 $ 7,017
Additions 800
 - - - -
 800
Depreciation charges ( 142)
 ( 514)
 ( 36)
 ( 71)
 ( 44)
 ( 807)
Net exchange differences ( 2)
 - - -
 - ( 2)
At March 31 $ 1,420 $ 4,328
 $ 290 $ 283
 $ 687 $ 7,008
At March 31, 2020
Cost $ 10,714
 $ 12,190
 $ 1,681
 $ 5,335
 $ 975
 $ 30,895
Accumulated depreciation ( 9,294)
 ( 7,862)
 ( 1,391)
 ( 5,052)
 ( 288)
 ( 23,887)
$ 1,420 $ 4,328 $ 290 $ 283
 $ 687 $ 7,008

A. The Group has no interest capitalization.

B. The Group has no property, plant and equipment pledged to others.

~20~

－ (8) Leasing arrangements lessee

  • A. The Group’s leased assets are buildings. Rental contracts are typically made for periods of 1 to 3 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.

  • B. Right-of-use assets are not recognised for short-term leases with a lease term of 12 months or less for part of leased buildings of the Group.

  • C. The carrying amounts of right-of-use assets and the depreciation charge are as follows:

Buildings
Buildings		 March31,2021
Carryingamount
31,279
$		 December31,2020
March31,2020
Carryingamount
Carryingamount
3,912
$ 13,804
$ 2021
2020
Depreciation charge
Depreciation charge
4,302
$ 4,138
$ Threemonths endedMarch31		 March31,2020
Carryingamount
13,804
$

  • D. For the three months ended March 31, 2021 and 2020, the additions to right-of-use assets were $31,667 and $0, respectively.

  • E. Information on profit or loss not recognised as depreciation charge but in relation to lease contracts is as follows:

contracts is as follows:
Items affecting profit or loss
Interest expense on lease liabilities
Expense on short-term lease contracts		 2021
2020
117
$ 111
$ 477
255
594
$ 366
$ Threemonths endedMarch31
111
$ 255
366
$

  • F. For the three months ended March 31, 2021 and 2020, the Group’s total cash outflow for leases were $4,917 and $4,522, respectively.

  • G. The Group has applied the practical expedient to “Covid-19-related rent concessions”, and recognised the gain from changes in lease payments arising from the rent concessions amounting to $327 by decreasing depreciation charge of right-of-use assets.

(9) Accounts payable

Accounts payable
Accounts payable
Project costs payable		 March31,2021
10,093
$ 34,250
44,343
$		 December31,2020
12,286
$ 37,504
49,790
$		 March31,2020
6,455
$ 34,588
41,043
$

~21~

(10) Other payables

Other payables
Wages and bonus payable
Labor and health insurance fees
payable
Employees’compensation and
directors’ and supervisors’
remuneration payable
Other accrued expenses		 March31,2021
50,815
$ 3,928

17,628

13,801

86,172
$		 December31,2020
93,299
$ 3,649

15,380

19,579

131,907
$		 March31,2020
47,735
$ 3,524
14,155
13,033
78,447
$

(11) Pensions

A. Defined benefit plan

  • (a) The Company has a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company will make contributions for the deficit by next March.

  • (b) For the aforementioned pension plan, the Group recognised pension costs of $737 and $865 for the three months ended March 31, 2021 and 2020, respectively.

  • (c) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2022 amount to $1,798.

  • B. Defined contribution plans:

  • (a) Effective July 1, 2005, the Company has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount no less than 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment. The pension costs under the defined contribution pension plans of the Group for the three months ended March 31, 2021 and 2020 were $3,175 and $3,019, respectively.

~22~

  • (b) The Company’s mainland China subsidiary, APLUSOFT (SUZHOU) CORPORATION, has a defined contribution plan. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC) are based on a certain percentage of employees’ monthly salaries and wages. The contribution percentage was 7% for the three months ended March 31, 2021 and 2020. Other than the monthly contributions, the Group has no further obligations. The pension costs under the defined contribution pension plan of APLUSOFT (SUZHOU) CORPORATION for the three months ended March 31, 2021 and 2020 were $71 and $66, respectively.

(12) Provisions

Provisions
Warranty
2021 2020
Balance at January 1 $ 8,641
 $ 1,101
Additional provisions 1,004 196
Used during the year ( 1,418)
 ( 265)
Unused amounts reversed ( 93)
 ( 420)
Balance at March 31 $ 8,134
 $ 612
Analysis of total provisions:
March 31, 2021 December31,2020 March31, 2020
Current 8,134
$		 $ 8,641 $ 612

The Group provides warranties on project contract. Provision for warranty is estimated based on historical warranty data.

(13) Share capital

As of March 31, 2021, the Company’s authorised capital was $1,156,000 (including 10 million shares reserved for employee stock options and 20 million shares reserved for convertible bonds issued by the Company), and the paid-in capital was $472,539, consisting of 47,254 thousand shares of ordinary stock, with a par value of $10 (in dollars) per share.

(14) Capital surplus

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

~23~

2021

Changes in equity of associates and joint ventures accounted for Treasury share Donated assets using equity Share premium transactions received method Total At January 1 and March 31 $ 92,839 $ 48,738 $ 209 $ 1,179 $ 142,965 2020 Changes in equity of associates and joint ventures Treasury share Donated assets accounted for Share premium transactions received method Total At January 1 and March 31 $ 92,839 $ 48,738 $ 141 $ 1,179 $142,897

(15) Retained earnings

  • A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall be distributed in the following methods and order:

  • (a) Pay all taxes.

  • (b) Offset prior years’ operating losses.

  • (c) 10% of the remaining amount shall be set aside as legal reserve.

  • (d) Set aside or reverse a special reserve in accordance with related laws.

    • The remaining earnings shall be distributed as dividends to shareholders which shall be proposed by the Board of Directors and resolved by the shareholders, The Board of Directors may decide not to distribute earnings for operation needs.

  • B. As the Company is engaged in information technology, which is a rapidly advance and growing market, the dividend policy of the Company is based on the Company’s capital expenditure requirement and optimal financial plan for long-term operations. When the Board of Directors propose the distribution of retained earnings after deducting (a)~(d) above, the Board of Directors will propose the distribution of cash dividends and share dividends based on the operating requirements. Cash dividends shall comprise not less than 10% of total dividends distributed. However, the proportion of cash dividend could be adjusted based on the operating situation of current year.

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

~24~

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

  • E. Distribution of retained earnings:

On March 22, 2021, the Board of Directors proposed and approved the distribution of 2020 retained earnings, and on June 19, 2020, the shareholders during their meeting resolved the distribution of 2019 retained earnings. The distribution of retained earnings is as follows:

Year ended December 31, 2020 Year ended December 31, 2020 Year ended December 31, 2020 Year ended December 31, 2020 YearendedDecember31,2019 YearendedDecember31,2019 YearendedDecember31,2019
Dividend Dividend
per share per share
Amount (in dollars) Amount (indollars)
Legal reserve $ 9,026
 7,650
$
Appropriation for ( 2,900)
 1,534
special reserve
Cash dividends 70,881 $ 1.50
 67,316
 $ 1.42

Abovementioned distribution of 2020 retained earnings has not yet been resolved at the stockholders’ meeting.

(16) Operating revenue

Operating revenue
Revenue from contracts with customers
Sales revenue
Services revenue		 Three months ended March31
2021
6,180
$ 166,135
172,315
$		 2020
26,780
$ 161,024
187,804
$
  • A. Disaggregation of revenue from contracts with customers

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

Three months ended
March31,2021(Note)
Total segment revenue
Revenue from external customer
contracts
Inter-segment
Timing of revenue recognition
At a point in time
Over time		 Asia
21,274
$ 4,473
25,747
$ 952
$ 20,322
21,274
$		 America
80
$ -
80
$ -
$ 80
80
$		 Taiwan
150,106
$ -
150,106
$ 5,228
$ 144,878
150,106
$		 Others
855
$ -
855
$ -
$ 855
855
$		 Total
172,315
$ 4,473
176,788
$
6,180
$ 166,135
172,315
$

~25~

Three months ended
March31,2020 (Note)
Total segment revenue
Revenue from external customer
contracts
Inter-segment
Timing of revenue recognition
At a point in time
Over time		 Asia
19,184
$ 2,127
21,311
$ 1,688
$ 17,496
19,184
$		 America
95
$ -
95
$ 14
$ 81
95
$		 Taiwan
168,486
$ -
168,486
$ 25,078
$ 143,408
168,486
$		 Others
39
$ -
39
$ -
$ 39
39
$		 Total
187,804
$ 2,127
189,931
$
26,780
$ 161,024
187,804
$

Note: Segmental information is provided in Note 14.

B. Contract assets and liabilities

(a) The Group has recognised the following revenue-related contract assets and liabilities:

Contract assets -
customer contract
Contract liabilities
- advance receipt
from customers		 March31,2021
94,923
$ 180,536
$		 December31,2020
79,030
$ 175,210
$		 March31,2020
81,002
$ 167,638
$		 January1,2020
72,065
$
151,481
$

(b) Revenue recognised that was included in the contract liability balance at the beginning of the period

period
Revenue recognised that was included in
the contract liabilities balance at the beginning
of the period
Advance receipts		 Three months ended March31
2021
2020
31,026
$
18,950
$

The Group does not expect to have any contracts wherein the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year or contracts that are billed in accordance with actual service hour. As permitted under IFRS 15, the transaction price allocated to these unsatisfied contracts is not disclosed.

~26~

(17) Interest income

Interest income from bank deposits
Interest income from financial assets measured at
amortised cost		 2021
2020
471
$ 1,138
$ 467
843
938
$ 1,981
$
Three months ended March31
(18)Other income
Three months ended March31
2021 2020
Commission income $ 104
 $ 131
Other income 423 1,108
$ 527 $ 1,239
(19)Other gains and losses
Threemonths ended March31
2021 2020
Foreign exchange (losses) gains ($ 572)
 $ 184
Miscellaneous disbursements ( 117)
 ( 75)
($ 689)
 $ 109

(20) Expenses by nature

Expenses by nature
Threemonths ended March31
2021 2020
Employee benefit expense $ 108,335
 $ 108,726
Depreciation charges on property, plant and equipment 673 807
Depreciation charges on right-of-use assets 4,302 4,138
Amortizations 66 96
Advertising costs 181 181
Operating lease payments 477 255
Traveling expense 635 855
Service fees 2,656 2,006
Outsourcing software 38,874 44,146
(Reversal of) provision for expected credit losses ( 398)
 3,542
Other expenses 6,423 242
Cost of sales 4,573 23,339
Operating costs and expenses $ 166,797 $ 188,333

~27~

(21) Employee benefit expense

Employee benefit expense
Threemonths ended March31
2021 2020
Wages and salaries $ 92,581
 $ 94,687
Labor and health insurance fees 8,125
 7,314
Pension costs 3,983 3,950
Other personnel expenses 3,646 2,775
$ 108,335 $ 108,726

As of March 31, 2021 and 2020, the Group had 312 and 310 employees, respectively.

  • A. In accordance with the Articles of Incorporation of the Company, a ratio of distributable profit of the current year, after covering accumulated losses, shall be distributed as employees’ compensation and directors’ and supervisors’ remuneration. The ratio shall not be lower than 5% and not higher than 15% for employees’ compensation and shall not be higher than 3% for directors’ and supervisors’ remuneration.

  • B. For the three months ended March 31, 2021 and 2020, employees’ compensation was accrued at $1,686 and $613, respectively; while directors’ and supervisors’ remuneration was accrued at $562 and $204 respectively. The aforementioned amounts were recognised in salary expenses. Employees’ compensation and directors’ and supervisors’ remuneration were estimated and accrued based on 9% and 3% of distributable profit of current year, respectively. Employees’ compensation and directors’ remuneration for 2020 as resolved by the Board of Directors were in agreement with those amounts recognised in the 2020 financial statements. Information about employees’ compensation and directors’ and supervisors’ remuneration of the Company as resolved at the meeting of Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(22) Income tax

  • A. Income tax expense

  • (a) Components of income tax expense:

Components of income tax expense:
Current tax:
Current tax on profits for the period
Tax on undistributed surplus earnings
Total current tax
Deferred tax:
Origination and reversal of temporary
differences
Income tax expense		 Threemonths endedMarch31
2021
-
$ 663
663
1,728
2,391
$		 2020
17
$ -
17
532
549
$

~28~

  • (b) The income tax (charge)/credit relating to components of other comprehensive income and loss is as follows:
loss is as follows:
Threemonths ended March31
2021 2020
Changes in fair value of financial assets at fair $ -
 $ 76
value through other comprehensive income
Currency translation differences ( 114)
 ( 146)

  • B. As of March 31, 2021, the Company’s income tax returns through 2018 have been assessed and approved by the Tax Authority.

  • C. ARES GROUP CORP., WELJOIN TECHNOLOGIES LIMITED (BVI) and SHARP KEEN MANAGEMENT LIMITED are companies that were established in Seychelles and British Virgin Islands, respectively. These companies have no income tax.

  • (23) Earnings per share

)Earnings per share
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Assumed conversion of all
dilutive potential ordinary
shares
Employees' compensation
Profit attributable to ordinary
shareholders of the parent
plus assumed conversion of
all dilutive potential
ordinary shares		 Three months ended March31,2021
Amount aftertax
13,661
$ 13,661
$ -
13,661
$		 Weighted average
number of ordinary
shares outstanding
(sharesinthousands)
47,254
47,254
485
47,739		 Earnings per share
(indollars)
0.29
$
0.29
$

~29~

Basic earnings per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Assumed conversion of all
dilutive potential ordinary
shares
Employees' compensation
Profit attributable to ordinary
shareholders of the parent
plus assumed conversion of
all dilutive potential
ordinary shares		 Three months ended March31,2020 Three months ended March31,2020 Three months ended March31,2020
Amount aftertax
5,307
$ 5,307
$ -
5,307
$		 Weighted average
number of ordinary
shares outstanding
(sharesinthousands)
47,254
47,254
666
47,920		 Earnings per share
(indollars)
0.11
$
0.11
$

(24) Changes in liabilities from financing activities

At January 1
Changes in cash flow from
financing activities
Impact of changes in foreign
exchange rate
Changes in other non-cash items
At March 31		 2021 2021 2020
Lease liabilities Liabilities from
financing
activities-gross		 Lease liabilities
Liabilities from
financing
activities-gross
18,462
$ 18,462
$ 4,267)
(
4,267)
(
178)
(
178)
(
111
111
14,128
$ 14,128
$
4,000
$ 4,440)
(
2

31,784
31,346
$		 4,000
$ 4,440)
(
2
31,784
31,346
$

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

)Names of related parties and relationship
Names of relatedparties
ARGO INTERNATIONAL CORPORATION
M-Power Information Co., Ltd.
ARES INTERNATIONAL (THAILAND) CO., LTD.
MiTAC INC.
SHUTTLE INC.		 Relationship with theCompany
Associate
Associate
Associate
Key management
Other related party

~30~

(2) Significant related party transactions

A. Operating revenue

Operating revenue
Three months ended March 31
2021 2020
Sales of goods:
-Other related parties $ 45
 $ 67
-Key management 532
 45
$ 577
 $ 112

Most of the transactions in relation to sales, services and maintenance made with related parties are separate cases, thus the transaction prices are determined based on mutual agreement. Except for the payment term of 60 days after monthly billings, other terms would be available to third parties.

B. Purchases

Purchases
Purchases of goods:
-Associates
Purchases of services:
-Associates		 Three months ended March 31
2021
45
$ 3,035
3,080
$		 2020
1,273
$ 10,689
11,962
$

  • (a) The Group’s purchases are made for each system integration projects and are only purchased from related parties. Therefore, the purchase price is determined based on mutual agreement. Except for the payment term of 60 days after monthly billings, other terms would be available to third parties.

  • (b) Most of the transactions in relation to services and maintenance made with related parties are separate cases, thus the transaction prices are determined based on mutual agreement. Except for the payment term of 60 days after monthly billings, other terms would be available to third parties.

  • C. Receivables from related parties

-ARGO
INTERNATIONAL
CORPORATION
Accounts receivable		 March31,2021
-
$		 December31,2020
682
$		 March31,2020
-
$

~31~

D. Payables to related parties

D. Payables to related parties
E. Prepayments
-ARGO
INTERNATIONAL
CORPORATION
-M-Power Information
Co., Ltd.
Accounts payable
Associates		 March31,2021
884
$ -

884
$
March31,2021
187
$		 December31,2020
532
$ 74

606
$ December 31, 2020
-
$		 March31,2020
1,821
$ -
1,821
$
March 31, 2020
180
$

  • F. In 2021 and 2018, the Group entered into a three-year Argo ERP maintenance contract with an associate in the amount of $748 and $720, respectively. The aforementioned amount was recognised in prepayments amounting to $62 and $60 as of March 31, 2021 and 2020 respectively, and recognised in operating expenses amounting to $187 and $180 for the three months ended, respectively.

  • G. The Group paid the service fee to an associate. For the three months ended March 31, 2021 and 2020, operating expense was recognised amounting to $51 and $60, respectively.

(3) Key management compensation

(3)Key management compensation
8. PLEDGED ASSETS
Salaries and other short-term employees' benefits		 Three months ended March 31
2021
20,234
$		 2020
19,063
$

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

Pledged asset
Pledged as time deposits
(shown as financial assets
at amortised cost - current)
Guarantee deposits paid
(shown as other current
assets)
Guarantee deposits paid
(shown as other non-
current assets)		 Bookvalue March31,2020
Purpose
4,575
$ Bid bond
45,876
Bid bond and
performance
bond
7,678
Guarantees
provided
for leasing
58,129
$		 Purpose
March31,2021
4,575
$ 41,557
7,685
53,817
$		 December31,2020
4,575
$ 46,214
7,447
58,236
$

~32~

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS

(1) Contingencies

None.

(2) Commitments

  • A. Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:
March 31, 2021
December 31, 2020
Software products
2,661
$ 9,311
$		 March31,2020
5,541
$
  • B. As of March 31, 2020, the Group issued promissory notes amounting to $240 for the execution of contract projects.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

12. OTHERS

(1) Capital management

There was no significant change during the reporting period. Please refer to Note 12 in the consolidated financial statements for the year ended December 31, 2020.

~33~

(2) Financial instruments

A. Financial instruments by category

Financial instruments by category
Financial assets
Financial assets at fair value
through other comprehensive
income
Designation of equity
instrument
Financial assets at amortised
cost/Loans and receivables
Cash and cash equivalents
Current financial assets at
amortised cost
Notes receivable
Accounts receivable
Accounts receivable due
from related parties
Other receivables
Guarantee deposits paid
(shown as other current
assets)
Guarantee deposits paid
(shown as other non-
current assets)
Financial liabilities
Financial liabilities at
amortised cost
Notes payable
Accounts payable
Accounts payable to
related parties
Other payables
Lease liabilities		 March31,2021
-
$ 589,108
278,065
778
80,167
-
968
41,557
7,685
998,328
$ March31,2021
14
$ 44,343
884
86,172
31,346
162,759
$		 December31,2020
-
$ 618,306
286,211
1,058
109,095
682
1,397
46,214
7,447
1,070,410
$ December31,2020
-
$ 49,790
606
131,907
4,000
186,303
$		 March31,2020
1,403
$ 520,178
279,998
2,574
98,957
-
2,235
45,876
7,678
958,899
$
March31,2020
-
$ 41,043
1,821
78,447
14,128
135,439
$

B. Financial risk management policies

There was no significant change during the reporting period. Please refer to Note 12 in the consolidated financial statements for the year ended December 31, 2020.

~34~

  • C. Significant financial risks and degrees of financial risks

  • (a) Market risk

Foreign exchange risk

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

  • ii. The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk.

  • iii. The Group’s businesses involve some non-functional currency operations (the Company’s functional currency: NTD; other certain subsidiaries’ functional currency: USD and RMB). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

==> picture [427 x 104] intentionally omitted <==

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

March 31, 2021
Foreign currency
amount Exchange Book value
(in thousands) rate (NTD)
(Foreign currency: functional currency)
Financial assets
Monetary items
----- End of picture text -----

(inthousands)
rate
(NTD)
(Foreign currency: functional currency)
Financial assets
Monetary items




 (inthousands)
rate
(NTD)
)




 (inthousands)
rate
(NTD)
)




 (inthousands)
rate
(NTD)
)
USD:NTD
8,075
$ 28.54
230,461
$ HKD:NTD
13,601
3.67
49,916
AUD:NTD
480
21.71
10,421
EUR:NTD
114
33.48
3,817
RMB:NTD
20,314
4.34
88,163
Non-monetary items
USD:NTD
2,169
28.54
61,903
THB:NTD
7,589
0.91
6,906
Foreign currency
amount
Exchange
Book value
(inthousands)
rate
(NTD)
(Foreign currency: functional currency)
Financial assets
Monetary items
USD:NTD
7,981
$ 28.48
227,299
$ HKD:NTD
12,809
3.67
47,009
AUD:NTD
480
21.95
10,536
EUR:NTD
114
35.02
3,992
RMB:NTD
22,502
4.38
98,559
Non-monetary items
USD:NTD
1,969
28.48
56,077
THB:NTD
8,276
0.96
7,945
December31,2020		 8,075
$ 28.54
230,461
$ 13,601
3.67
49,916
480
21.71
10,421
114
33.48
3,817
20,314
4.34
88,163
2,169
28.54
61,903
7,589
0.91
6,906
December31,2020
Exchange
rate
28.48
3.67
21.95
35.02
4.38
28.48
0.96		 Book value
(NTD)
227,299
$ 47,009
10,536
3,992
98,559
56,077
7,945








~35~

==> picture [427 x 211] intentionally omitted <==

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

March 31, 2020
Foreign currency
amount Exchange Book value
(in thousands) rate (NTD)
(Foreign currency: functional currency)
Financial assets
Monetary items
USD:NTD $ 8,011 30.23 $ 242,173
HKD:NTD 10,275 3.90 40,073
AUD:NTD 478 18.64 8,910
EUR:NTD 114 33.24 3,789
RMB:NTD 19,778 4.26 84,254
Non-monetary items
USD:NTD 539 30.23 16,294
THB:NTD 7,371 0.93 6,855
----- End of picture text -----

iv. Please refer to the following table for the details of unrealised exchange gain (loss) arising from significant foreign exchange variation on the monetary items held by the Group.

Threemonths endedMarch31, Threemonths endedMarch31, 2021 2021
Exchange gain(loss)
Foreign currency amount Exchange Book value
(Inthousands) rate (NTD)
(Foreign currency: functional currency)
Financial assets
Monetary items
USD:NTD 28.54 $ 458
HKD:NTD 3.67 32
AUD:NTD 21.71 ( 115)
EUR:NTD 33.48 ( 175)
RMB:NTD 4.34 ( 279)
Threemonths endedMarch31, 2020
Exchange loss
Foreign currency amount Exchange Book value
(Inthousands) rate (NTD)
(Foreign currency: functional currency)
Financial assets
Monetary items
USD:NTD 30.23 $ 1,969
HKD:NTD 3.90 496
AUD:NTD 18.64 ( 1,132)
EUR:NTD 33.24 ( 40)
RMB:NTD 4.26 ( 939)

~36~

  • v. Analysis of foreign currency market risk arising from significant foreign exchange variation:
variation:
Degree of
Effect on
Effect on other
comprehensive
variation
profit or loss
income
(Foreign currency: functional currency)
Financial assets
Monetary items
USD:NTD
1.00%
2,305
$ -
$ HKD:NTD
1.00%
499
-
AUD:NTD
1.00%
104
-
EUR:NTD
1.00%
38
-
RMB:NTD
1.00%
882
-
Non-monetary items
USD:NTD
1.00%
-
619
THB:NTD
1.00%
-
69
Degree of
Effect on
Effect on other
comprehensive
variation
profit or loss
income
(Foreign currency: functional currency)
Financial assets
Monetary items
USD:NTD
1.00%
2,422
$ -
$ HKD:NTD
1.00%
401
-
AUD:NTD
1.00%
89
-
EUR:NTD
1.00%
38
-
RMB:NTD
1.00%
843
-
Financial liabilities
Monetary items
USD:NTD
1.00%
-
163
THB:NTD
1.00%
-
69
Three months ended March31,2021
Sensitivityanalysis
Three months ended March31,2020
Sensitivity analysis		 Three months ended March31,2021
Sensitivityanalysis
Effect on other
comprehensive
income
-
$ -
-
-
-
619
69
31,2020
Sensitivity analysis
Effect on
profit or loss
2,422
$ 401
89
38
843
-
-		 Effect on other
comprehensive
income
-
$ -
-
-
-
163
69


Price risk

  • i. The Group’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.

  • ii. The Group’s investments in equity securities comprise domestic beneficiary certificates and equity instrument issued by foreign listed companies. The prices of equity securities

~37~

would change due to the variation of the future value of investee companies. If the prices of these equity securities had increased or decreased by 1% with all other variables held constant, post-tax profit for the three months ended March 31, 2021 and 2020 would have increased or decreased by $0 and $14, respectively, as a result of other comprehensive income classified as equity investment at fair value through other comprehensive income.

  • (b) Credit risk

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

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

  • iii. The Group adopts the following assumption under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition:

    • If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.

  • iv. The Group adopts the assumption under IFRS 9, that is, the default occurs when the contract payments are past due over 90 days.

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

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

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

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

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

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

~38~

vii.The Group used the forecastability to adjust historical and timely information to assess the default possibility of accounts receivable and contract assets. On March 31, 2021, December 31, 2020, and March 31, 2020, the provision matrix and loss rate methodology are as follows:

are as follows:
Not Up to 90 91-180 181-270 Over 270
Group1 past due days days days days Total
March 31, 2021
Expected loss rate 0% 0.05%~ 0.56%~ 14.99%~ 100%
0.26% 5.27% 58.33%
Total book value $ 54,543
 $ 19,910
 $ 227
 -
$		 $ 6,652
 $ 81,332
Loss allowance $ 2
 $ 10
 $ 1
 -
$		 $ 6,652
 $ 6,665
Not Up to 90 91-180 181-270 Over 270
Group1 past due days days days days Total
December 31, 2020
Expected loss rate 0% 0.01%~ 0.07%~ 0.66%~ 100%
0.04% 0.22% 16.23%
Total book value $ 78,472
 $ 11,297
 $ 1,386
 -
$		 $ 7,067
 $ 98,222
Loss allowance $ 1
 $ 2
 $ 1
 -
$		 $ 7,067
 $ 7,071
Not Up to 90 91-180 181-270 Over 270
Group1 past due days days days days Total
March 31, 2020
Expected loss rate 0% 0.01%~ 0.07%~ 0.66%~ 100%
0.04% 0.22% 16.23%
Total book value $ 54,469
 $ 11,950
 $ 2,713
 1,284
$		 $ 5,816
 $ 76,232
Loss allowance $ 109
 $ 121
 $ 81
 127
$		 $ 5,353
 $ 5,791
Group2 Group 3 Total
March 31, 2021
Expected loss rate 0% 0%
Total book value $ 3,137
 $ 2,363
 $ 5,500
Loss allowance $ -
 $ -
 $ -
Group2 Group 3 Total
December 31, 2020
Expected loss rate 0% 0%
Total book value $ 11,273
 $ 6,671
 $ 17,944
Loss allowance $ -
 $ -
 $ -

~39~

Group2
March 31, 2020
Expected loss rate
0%
Total book value
25,457
$ Loss allowance
-
$		 Group 3
0%
3,059
$ -
$		 Total
28,516
$ -
$

Group 1: General business

Group 2: Government-owned corporation

Group 3: Government organisations

As of March 31, 2021, December 31, 2020, and March 31, 2020, contract assets amounted to $94,923, $79,030 and $81,002, respectively, and loss allowance was $0 if measured at expected credit loss rate of 0%.

  • ix. Movements in relation to the group applying the simplified approach to provide loss allowance for accounts receivable and contract assets are as follows:
allowance for accounts receivable and contract assets are as follows: ontract assets are as follows:
Accounts
receivable
Contract assets

At January 1
7,071
$ -
$ Reversal of impairment loss
398)
(
-
Effects of foreign exchange
8)
(
-
At March 31
6,665
$ -
$ Accounts
receivable
Contract assets

At January 1
2,255
$ -
$ Impairment loss
3,542

-
Effects of foreign exchange
6)
(
-
At March 31
5,791
$ -
$ 2021
2020		 2021
Notesreceivable
-
$ -
-
-
$ Notes receivable
-
$ -
-
-
$

(c) Liquidity risk

  • i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs.

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

~40~

Non-derivative financial liabilities:
March 31, 2021
Notes payable
Accounts payable
Accounts payable to
related parties
Other payables
Lease liabilities
Non-derivative financial liabilities:
December 31, 2020
Accounts payable
Accounts payable to
related parties
Other payables
Lease liabilities
Non-derivative financial liabilities:
March 31, 2020
Accounts payable
Accounts payable to
related parties
Other payables
Lease liabilities		 Less than
3months		 Between 3
months and 2years		 Between 2 and
5 years
14
$ 42,908
884
58,536
4,281
Less than
3months		 -
$ 1,435
-
27,636
26,255
Between 3
months and2years		 -
$ -
-
-
1,801
Between 2 and
5 years
48,774
$ 606
83,767
2,096
Less than
3months		 1,016
$ -
48,140
1,942
Between 3
months and 2 years		 -
$ -
-
-
Between 2 and
5 years
40,095
$ 1,821
52,360
4,438		 948
$ -
26,087
9,867		 -
$ -
-
-

(3) Fair value information

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

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

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

  • Level 3: Unobservable inputs for the asset or liability.

  • B. Financial instruments not measured at fair value

Except for those listed in the table below, the carrying amounts of cash and cash equivalents, notes receivable, accounts receivable, other receivables, notes payable, accounts payable and other payables are approximate to their fair values.

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

~41~

==> picture [459 x 293] intentionally omitted <==

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

March 31, 2021 Level 1 Level 2 Level 3 Total
Assets
Recurring fair value measurements
Financial assets at fair value
through other comprehensive
- - - -
income $ $ $ $
December 31, 2020 Level 1 Level 2 Level 3 Total
Assets
Recurring fair value measurements
Financial assets at fair value
through other comprehensive
- - - -
income $ $ $ $
March 31, 2020 Level 1 Level 2 Level 3 Total
Assets
Recurring fair value measurements
Financial assets at fair value
through other comprehensive
income $ - $ - $ 1,403 $ 1,403
----- End of picture text -----

  • D. The methods and assumptions the Group used to measure fair value are as follows:

  • (a) The instruments the Group used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

Listed shares Closed-end fund Open-end fund Market quoted price Closing price Closing price Net asset value

  • (b) Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the consolidated balance sheet date (i.e. yield curves on the Taipei Exchange, average commercial paper interest rates quoted from Reuters).

  • E. For the three months ended March 31, 2021 and 2020, there was no transfer between Level 1 and Level 2.

  • F. For the three months ended March 31, 2021 and 2020, there was no transfer into or out from Level 3.

  • G. Finance segment is in charge of valuation procedures for fair value measurements being categorised within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the

~42~

  • exercisable price, and frequently calibrating valuation model, performing back-testing, updating inputs used to the valuation model and making any other necessary adjustments to the fair value.

  • H. Valuation techniques of fair value that the Group used in level 3 are net asset value and market comparable companies. The significant unobservable input of market comparable companies is the discount for lack of marketability. If the input and discount for lack of marketability are higher, the fair value will be lower.

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

  • A. Loans to others: None.

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

  • C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 1.

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

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

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

  • G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: None.

  • H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: None.

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

  • J. Significant inter-company transactions during the reporting periods: None.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 2.

(3) Information on investments in Mainland China

  • A. Basic information: Please refer to table 3.

  • B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: None.

(4) Major shareholders information

Major shareholders information: Please refer to table 4.

14. SEGMENT INFORMATION

(1) General information

Management has determined the reportable operating segments based on the reports reviewed by

~43~

the Board of Directors that are used to make strategic decisions.

There is no material change in the basis for formation of entities and division of segments in the Group or in the measurement basis for segment information during this period.

(2) Segment information

The Group’s segment profit and loss is measured with the operating income and loss, which is used as a basis for the Group in assessing the performance of the operating segments. The segment information provided to the Chief Operating Decision-Maker for the reportable segments is as follows:

Three months ended March 31, 2021:

Three months ended March 31, 2021:
Commercial Financial Project
segment segment segment Total
Revenue from external
customers $ 86,500
 $ 42,833
 $ 42,982
 $ 172,315
Inter-segment revenue 4,473 - -
 4,473
Total segment revenue $ 90,973
 $ 42,833 $ 42,982
 $ 176,788
Segment income $ 19,390 ($ 9,056) ($ 343)
 $ 9,991
Segment income (loss),
including:
Depreciation and
amortisation ($ 2,187)
 ($ 1,899) ($ 955) ($ 5,041)
Three months ended March 31, 2020:
Financial
Commercial business Project
segment segment segment Total
Revenue from external
customers $ 99,565
 $ 56,837
 $ 31,402
 $ 187,804
Inter-segment revenue 2,127 - - 2,127
Total segment revenue $ 101,692 $ 56,837 $ 31,402 $ 189,931
Segment income (loss) $ 7,579 ($ 6,455) $ 474 $ 1,598
Segment income (loss),
including:
Depreciation and
amortisation ($ 2,018) ($ 1,878) ($ 1,145) ($ 5,041)

The Group did not disclose the information in relation to segment assets and segment liabilities as this information is not provided to the Chief Operating Decision-Maker.

~44~

(3) Reconciliation for segment income and loss

The segment operating income reported to the Chief Operating Decision-Maker is measured in a manner consistent with that in the statement of comprehensive income. The Group did not provide the amounts of total assets and total liabilities to the Chief Operating Decision-Maker for making operating decisions. The reconciliation on segment revenue, operating revenue, segment income/loss and income/loss before tax from continuing operations of reportable segment are as follows:

follows:
Threemonths ended March31
Profit or loss 2021 2020
Total reportable segment revenue $ 176,788
 $ 189,931
Write-off of inter-segment revenue ( 4,473)
 ( 2,127)
Operating revenue $ 172,315 $ 187,804
Three months ended March 31
Profit or loss 2021 2020
Segment income $ 9,991
 $ 1,598
Adjustments and write-offs ( 4,473)
 ( 2,127)
Non-operating income and expenses 10,668 6,357
Income before tax from continuing operations $ 16,186 $ 5,828

~45~

Ares International Corp. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures) Three months ended March 31, 2021

Table 1

Expressed in thousands of NTD (Except as otherwise indicated)

Securities held by
Marketable securities(Note 1)
Relationship with the
securities issuer（Note 2）
General
ledger account		 As of March 31,2021 Footnote(Note 4)
Number of
shares		 Book value
(Note 3)		 Ownership
(%)
Fair value
Ares International Corp.
Common shares/Formosa First Country Club
-
Financial assets at fair
value through other
comprehensive income		 2,025 -
$		 0.01%
-
$		 -

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities in accordance with IFRS 9, ‘Financial instruments’. Note 2: Leave the column blank if the issuer of marketable securities is a non-related party.

Note 3: Fill in the amount after adjusted at fair value and deducted by accumulated impairment for the marketable securities measured at fair value; fill in the acquisition cost or amortised cost deducted by accumulated impairment for the marketable securities not measured at fair value.

Note 4: The number of shares of securities and their amounts pledged as security or pledged for loans and their restrictions on use under some agreements should be stated in the footnote if the securities presented herein have such conditions.

Table 1 Page 1

Names, locations, and related information on investees (excluding information on investment in Mainland China) Three months ended March 31, 2021

Ares International Corp.

Table 2

Expressed in thousands of NTD (Except as otherwise indicated)

Investor Investee(Note 1 and 2) Location Main business activities Initial investment amount Initial investment amount Shares held as at March 31,2021 Shares held as at March 31,2021 Shares held as at March 31,2021 Net profit (loss)
of the investee for
the three months
ended March 31,
2021(Note 2(2))		 Investment income
(loss) recognised by the
Company for the three
months ended March
31,2021(Note 2(3))		 Footnote
Balance
as at March 31,
2021		 Balance
as at December
31,2020		 Number of
shares		 Ownership (%) Book value
Ares International Corp.
Ares International Corp.
Ares International Corp.
Ares International Corp.
APLUSOFT CO., LTD.
ARES GROUP CORP.
SHARP KEEN
MANAGEMENT
LIMITED		 ARGO INTERNATIONAL
CORPORATION
M-Power Information Co., Ltd.
ARES GROUP CORP.
ARES INTERNATIONAL
(THAILAND) CO., LTD.
WELJOIN TECHNOLOGIES
LIMITED (BVI)
SHARP KEEN
MANAGEMENT LIMITED
BLITZ IT CONSULTANTS
PTE LTD.		 Taiwan
Taiwan
Seychelles
Thailand
British
Virgin
Islands
British
Virgin
Islands
Singapore		 Provides professional service
of computer application
software and sells computer
peripheral equipments
Agency and sale of database
system and professional
service of software
Investment business
Provides professional service
of computer application
software and sells computer
peripheral equipments
Investment business
Investment business
Agency of computer software
and internet		 14,014
$ 21,493
35,029
6,865
26,177
34,115
33,256		 14,014
$ 21,493
35,029
6,865
26,177
34,115
33,256		 1,567,476
2,438,527
1,500,000
1,470,000
50,000
1,120,000
484,000		 34.83
24.39
100
49
100
100
25		 25,220
$ 46,486
18,997
6,943
43,194
18,697
18,637		 8,502
$ 23,865
1,874
1,321)
(
3,049
1,874
7,496		 2,961
$ 5,821
1,874
647)
(
3,049
Note 3
Note 3		 Subsidiary
Subsidiary
Second-tire
subsidiary

Note 1: If a public company is equipped with an overseas holding company and takes consolidated financial report as the main financial report according to the local law rules, it can only disclose the information of the overseas holding company about the disclosure of related overseas investee information.

Note 2: If situation does not belong to Note 1, fill in the columns according to the following regulations:

(1)The columns of ‘Investee’, ‘Location’, ‘Main business activities’, Initial investment amount’ and ‘Shares held as at March 31, 2021’ should fill orderly in the Company’s (public company’s) information on investees and every directly or indirectly controlled investee’s investment information, and note the relationship between the Company (public company) and its investee each (ex. direct subsidiary or indirect subsidiary) in the ‘footnote’ column.

(2)The ‘Net profit (loss) of the investee for the three months ended March 31, 2021’ column should fill in amount of net profit (loss) of the investee for this period.

(3)The ‘Investment income (loss) recognised by the Company for the three months ended March 31, 2021’ column should fill in the Company (public company) recognised investment income (loss) of its direct subsidiary

and recognised investment income (loss) of its investee accounted for under the equity method for this period. When filling in recognised investment income (loss) of its direct subsidiary, the Company (public company) should confirm that direct subsidiary’s net profit (loss) for this period has included its investment income (loss) which shall be recognised by regulations. Note 3: Investment income (loss) for the period was recognised by subsidiaries of investees.

Table 2 Page 1

Ares International Corp.

Information on investments in Mainland China Three months ended March 31, 2021

Table 3

Expressed in thousands of NTD (Except as otherwise indicated)

Investment flows

Investment income Accumulated Beginning (loss) recognised amount balance of Ending balance Net income of Ownership by the Company Book value of of investment accumulated of accumulated investee for the held by for the three investments in income outflow of Remitted to Remitted outflow of three months the Company months ended Mainland China remitted back to Main business Paid-in capital Investment investment Mainland back to investment from ended March (direct or March 31, 2021 as of March 31, Taiwan as of Investee in Mainland China activities (Note 3) method from Taiwan China Taiwan Taiwan 31, 2021 indirect) （Note 2） 2021 March 31, 2021 Note APLUSOFT (SUZHOU) Research and $ 25,228 Note 1 $ 23,806 - - $ 23,806 $ 3,239 95.88 $ 3,105 $ 34,574 - CORPORATION. development of enterprise management software and sale of self-produce product of the Company

Note 1: Through investing in an existing company in the third area, which then invested in the investee in Mainland China. The investee in the third area is WELJOIN TECHNOLOGIES LIMITED (BVI). Note 2: The financial statements were not reviewed by independent auditors.

Note 3: The paid-in capital of Aplusoft (Suzhou) Corporation amounted to RMB5,215,000 (USD750,592).

Accumulated Investment Ceiling on amount of amount approved investments in remittance from by the Investment Mainland China Taiwan to Commission of imposed by the Mainland China the Ministry of Investment as of March 31, Economic Affairs Commission of Company name 2021 (MOEA) MOEA Ares International Corp. $ 73,252 $ 86,349 $ 469,382

Table 3 Page 1

Ares International Corp. Major shareholders information March 31, 2021

Table 4

Name of major shareholders YU, HONG-YANG

Shares Shares
Name of shares held Ownership (%)
$ 3,282,449 6.94%

Note1: (1) The major shareholders information was derived from the data that the Company issued common shares (including treasury shares) and preference shares in dematerialised form which were registered and he the shareholders above 5% on the last operating date of each quarter and was calculated by Taiwan Depository & Clearing Corporation. The share capital which was recorded in the financial statements is different from the actual number of shares issued in dematerialised form because of the different calculation basis or the differences.

  • (2) If the aforementioned data contains shares which were held in trust by the shareholders, the data was disclosed as separate account of client which was set by the trustee. As for the shareholder who reports share equity as an insider whose shareholding ratio greater than 10% in accordance with Securities and Exchange Act, the shareholding ratio includes the self-owned shares and trusted shares, at the same time, the shareholders have power to decide how to allocate the trust assets. For the information of reported share equity of insider, please refer to Market Observation Post System.

Table 4 Page 1

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