AVC — Annual Report 2020

Aug 11, 2021

Stock Code: 3017

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ASIA VITAL COMPONENTS CO., LTD.

Annual Report 2020

Annual Report is available at Taiwan Stock Exchange Market Observation Post System: http://mops.twse.com.tw

Official website of the Company: http://www.avc.co Printed on March 23, 2021

The reader is advised that this annual report have been prepared originally in Chinese. In the event of a conflict between this annual report and the original Chinese version or difference in interpretation between the two versions, the Chinese financial statements shall prevail.

1. Names, titles, contact numbers, and emails of the Company’s spokesperson and deputy spokesperson:

Spokesperson: Chen, Yi Chen / Chief Financial Officer Tel: (07) 815-7612

e-mail ： allen_chen@avc.co Deputy spokesperson: Kuo, Hui Ying / Company Secretary Tel: (02)2299-6930

e-mail ： patty_kuo@avc.co Deputy spokesperson: Li, Yi Fen / Director of Human Resource Division Tel: (02)2299-6930

e-mail ： angela@avc.co

2. Address and phone number

Headquarter Address: Rm.27, No. 248, Xin Sheng Rd., Qian Zhen Dist., Kaohsiung City, Taiwan (R.O.C.) Tel: (07)815-7612 Taipei Address: Rm. 3, 7F., No.24, Wuquan 2nd Rd., Xinzhuang Dist., New Taipei City 242, Taiwan (R.O.C.) Tel: (02)2299-6930

3. Stock Transfer Agent

Title: Stock Transfer Division of Yuanta Financial Holding Co., Ltd. Address: B1, No. 210, Sec. 3, Cheng Te Rd., Da Tong Dist., Taipei City, Taiwan (R.O.C.) Website: http://www.yuanta.com.tw Tel: (02)2586-5859

4. Certified Public Accountant

Accountant: Chen, Cheng Chu; Huang, Shi Jie Accounting Firm: Ernst & Young Global Limited Address: 17F, No. 2, Chung Cheng 3[rd] Rd., Kaohsiung City, Taiwan (R.O.C.) Website: http://www.ey.com Tel: (07)238-0011

5. Overseas Securities Exchange Agency: None

6. Corporate website: http://www.avc.co

Content

I. Letter to Shareholders ................................................................................................ 4 II. Company Profile ......................................................................................................... 6 2.1 Date of Incorporation .................................................................................... 6 2.2 Company History ........................................................................................... 6 III. Corporate Governance Report .................................................................................. 8 3.1 Organization .................................................................................................. 8 3.1.1Organizational Chart ...................................................................................... 8 3.2 Directors, Supervisors, General Manager, Vice President, Associate Manager, and directors of the divisions and branches ................................. 9 3.3 Remuneration paid to Directors, Supervisors, General Manager, and Vice President in the Most Recent Year .............................................................. 14 3.4 Implementation of Corporate Governance ................................................. 18 3.5 Information Regarding the Company’s Audit Fee ....................................... 68 3.6 Information on replacement of certified public accountant ....................... 69 3.7 The period during which the company's chairperson, general manager, or any managerial officer in charge of finance or accounting matters has in the most recent year held a position at the accounting firm of its certified public accountant or at an affiliated enterprise of such accounting firm ... 70 3.8 The transfer of equity interests and/or pledge of or change in equity interests by a director, supervisor, managerial officer, or shareholder with a stake of more than 10 percent during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report . 70 3.9 Related information, if among the company’s 10 largest shareholders any one is a related party, the spouse, or a relative within the second degree of kinship of another ....................................................................................... 72 3.10 The total number of shares and total equity stake held in any single enterprise by the company, the Director and Supervisors, Managers, and any companies controlled either directly or indirectly by the company. .... 73 IV. Capital Overview ..................................................................................................... 74 4.1 Capital and Shares ....................................................................................... 74 4.2 Corporate Bond ........................................................................................... 79 4.3 Preferred Stocks........................................................................................... 80 4.4 Global Depository Receipts ......................................................................... 80 4.5 Employee Stock Option Certificates ............................................................ 80 4.6 Restricted Stock Awards .............................................................................. 80 4.7 New shares for merger or acquisition of shares from other companies .... 80 4.8 Financing Plans and Implementation .......................................................... 80 V. Operational Highlights.............................................................................................. 81 5.1 Business Content ......................................................................................... 81 5.2 Market and Sales Overview ......................................................................... 84 5.3 Employees ................................................................................................... 90 5.4 Environmental Expenditure Information ..................................................... 90 5.5 Labor Relations ............................................................................................ 90 5.6 Important contracts ..................................................................................... 93 VI. An Overview of the Company’s Financial Status .................................................... 95 6.1 Condensed balance sheets and statement of comprehensive income for

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the past 5 fiscal years .................................................................................. 95 6.2 Financial analyses of the past 5 fiscal years adopt to International Financial Reporting Standards .................................................................................... 99 6.3 Supervisor’s or audit committee’s report for the most recent year’s financial statement .................................................................................... 102 6.4 Financial Statements audited and certificated by certified public accountants for the most fiscal year ......................................................... 103 6.5 A parent company only financial statement for the most recent fiscal year, certified by a CPA ....................................................................................... 103 6.6 If the company or its affiliates have experienced financial difficulties in the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report, the annual report shall explain how said difficulties will affect the company's financial situation ........................... 103 VII. Review and Analysis of Financial Status and Business Results and Risk Issues ... 104 7.1 Review and Analysis of Financial Status .................................................... 104 7.2 Financial Performance ............................................................................... 105 7.3 Cash flow ................................................................................................... 106 7.4 Major capital expenditures during the most recent fiscal year ................ 107 7.5 The most recent annual investment policy, the main reason for the annual investment profit or loss, the improvement plan and the investment plan for the next year ........................................................................................ 107 7.6 Risk assessment ......................................................................................... 107 7.7 Other important matters ........................................................................... 112 VIII. Special Disclosure ............................................................................................... 113 8.1 Information related to the company's affiliates ........................................ 113 8.2 Consolidated Financial Report of the Company and Affiliates. ................. 120 8.3 Private placement during the most recent fiscal year and up to the date of publication of the annual report. .............................................................. 120 8.4 Holding or disposal of shares in the company by the company's subsidiaries during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report ............................................ 120 8.5 Other matters that require additional description ................................... 120 8.6 If any of the situations listed in Article 36, paragraph 3, subparagraph 2 of the Securities and Exchange Act, which might materially affect shareholders' equity or the price of the company's securities, has occurred during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report, such situations shall be listed one by one ................................................................................................. 120

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I. Letter to Shareholder’s

1.1 Operation of the Company in 2020

• A. Consolidated operating revenue and net income

Unit: thousand NT dollars

			Increased
	2020	2019		Variation ratio
			(Decreased)amount
Operating revenue	39,665,534	36,534,445	3,131,089	8.57%
Grossprofit	6,231,723	4,314,299	1,917,424	44.44%
Net income	1,915,846	957,969	957,877	99.99%
Earnings per share(NT dollar)	5.42	2.71	2.71	100.00%

• B. Execution of budget plan ： Not applicable. （ the Company didn’t prepare financial forecast at the end of 2020. ）

• C. Profitability.

Unit: thousand NT dollars

Item	2020	2019
Return on Asset(%)	5.43%	3.44%
Return on Equity (%)	19.60%	10.45%
Net Profit margin(%)	4.83%	2.62%

D. Research and Development

• The consolidated expenses on research and development of the Company in 2020 and 2019 are amounted to be 1.93 billion NT dollars and 1.94 billion NT dollars respectively, taking up 4.86% and 5.30% of the consolidated operating revenue.

The Company devotes itself in sustainable operation and creating its value, making every possible effort to develop new products and techniques to remain the leading position in the industry.

1.2 Business plan of 2021

With the rapid spread of the COVID-19 pandemic in a short period of time from late 2019 onwards, the global economy and daily life have also been severely affected. In spite of the ongoing pandemic, all of our employees were able to withstand the difficulties together as one and overcome the shortage of labor and materials, so that our factories in China could resume work rapidly. In spite of border closures in various countries and inconveniences imposed on land, sea and air transport, we were able to do our best to satisfy the needs of our customers. Thus, we have achieved a full year revenue of NT$39.8 billion in 2020 despite the difficult circumstances, which represents a growth of about NT$3.3 billion compared with the previous year. We have continued to achieve great results and record high profits. Our colleagues will continue to strive as one, and develop and grow stronger together with a more globalized mindset on corporate sustainability.

• A. Guideline of management: the Company aims to become “the leader in industry of institutional heat dissipation,” actively developing new techniques in heat dissipation and enhancing productivity in the plants. It will continue to assist its client and create long-term value.

• B. Forecast in sales number and the reference:

• The Company develops its business in heat dissipation of 3C products, servers, and communication gadgets. It lowers the weighing on a single industry and devote in different industries to lower risks.

• C. Important policies in production and marketing:

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• a. Marketing strategies: the Company would cater to clients’ needs and catch up with the trend on the market, sustaining the relationship with existing customers and enhancing the exploration of market and customer service.

• b. Research strategies: the Company devotes itself in development of essential techniques in heat dissipation and recruiting qualified talents in the professional field to level up the design, quality, and efficiency of the products.

• c. Production strategies: the Company makes use of the most of the resources in each of its plants and equips the plants with automatic production facilities to enhance the quality and productivity as well as gain competitiveness in delivery, quality, and cost.

1.3 Future Development of the company:

The corporate values of Asia Vital Components Co., Ltd. (AVC) are “being supportive to the client, being faithful and responsible, being enthusiastic and perseverant, being open-minded and innovative, and being cooperative with the team.” The Company aligns itself with the trend of the industry and fulfills the requirements in techniques and costs of the clients, leading itself to the strategic development and a win-win situation.

• 1.4 Impact of the external competition, legal regulations, and the overall environment of the operation:

Compared to 2019, the output value of major global IT hardware industries in 2020 is estimated to have increased slightly by 1.65%. In observing the growth and decline factors of the world’s IT hardware output value after the global spread of COVID-19, although the annual growth rate of desktop PC shipments has shown a double-digit decline, in order to cope with the development of non-contact applications, the demand for cloud technology has correspondingly increased. This has resulted in positive growth of shipments of servers and notebooks.

In terms of notebook computers, global shipments reached 170.48 million units in 2020, a year-on-year increase of 6.0% compared to 2019. The laptop computer market has directly benefited from the COVID-19 outbreak, and positive growth was seen for the first time over the past ten years. Under stringent anti-epidemic measures such as the lockdown order and social distancing, the demand for remote office and remote teaching has suddenly increased, and the demand for commercial laptops and educational laptops has also grown exponentially. The new lifestyle driven by the COVID-19 pandemic is the main reason for the growth of demand for cloud data centers. Due to the emerging developments of cloud applications, strong demand for data centers and new processor platforms will be seen, with a positive outlook for the server industry in 2021.

Chairperson: Shen, Ching Hang

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II. Company Profile

2.1 Date of Incorporation December 17, 1991

2.2 Company History

Year 1991 2000 2002 2006 2009 2011 2012 2013 2014 2015

Milestones

The Asia Vital Component Co., Ltd. was founded with NT5,000,000 paid-in capital. Furukawa Electric Co., Ltd. held 33.4% of the Company and became largest shareholder. Company was public listed at Taiwan Stock Exchange and had the initial public offering on September 27th. The private placement for stock issuance of NT$ 300,000,000, and the paid-in capital after the capital increase was NT$ 2,511,121,150. The Company bought back and cancelled 8,517,000 of its stocks, and the paid-in capital after the capital decrease was NT$ 2,515,000,860. The earnings of NT$ 303,560,090 was transferred to capital increase, and the paid-in capital was NT$ 3,339,511,020 after the capital increase. The earnings of NT$16,746,0550 was transferred to capital increase, and the paid-in capital was NT$3,533,101,570 after the capital increase. The Company was ranked No. 195 in the top 2000 Taiwanese enterprises of manufacturing industry by CommonWealth Magazine in 2013, ranked No. 39 in the “Top 100 Domestic Corporate Patent Applicants” by the Intellectual Property Office, R.O.C., ranked No. 74 in “Top 100 Patent Applicants and Assignees,” and ranked No. 84 in “Top 100 Domestic Corporate Patent Applicants.” The AVC (Wuhan) Corp. was established. The Company was ranked No. 170 in the top 2000 Taiwanese enterprises of manufacturing industry by CommonWealth Magazine in 2014, ranked No. 35 in “Top 100 Domestic Corporate Patent Applicants” by the Intellectual Property Office, R.O.C., ranked No. 57 in “Top 100 Patent Applicants and Assignees,” ranked No. 64 in “Top 100 Domestic Corporate Invention Patent Applicants,” and ranked No. 96 in “Top 100 Domestic Corporate Invention Patent Assignees.” The Company invested in First Dome Corp. in capital increase and obtained 30.20% of its shares. The Company was ranked No. 144 in the top 2000 Taiwanese enterprises of manufacturing industry by CommonWealth Magazine in 2015, ranked No. 43 in “Top 100 Domestic Corporate Patent Applicants” by the Intellectual Property Office, R.O.C., ranked No. 65 in “Top 100 Domestic Corporate Patent Assignees,” ranked No. 78 in “Top 100 Domestic Corporate Invention Patent Applicants,” and ranked No. 90 in “Domestic Corporate Invention Patent Assignees.” The Company acquired 100% of the Subsidiary D-Max’s shares to reach effective share of resources to increase competitiveness of camera modules.

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Year 2016 2017 2018 2019 2020

Milestones

The Company was ranked No. 126 in the top 2000 Taiwanese enterprises of manufacturing industry by CommonWealth Magazine in 2016, ranked No. 33 in “Top 100 Domestic Corporate Patent Applicants” by the Intellectual Property Office, R.O.C., ranked No. 42in “Top 100 Domestic Corporate Patent Assignees,” ranked No. 54 in “Top 100 Domestic Corporate Invention Patent Applicants,” and ranked No. 61 in “Top 100 Domestic Corporate Invention Patent Assignees.” The Company was shortlisted as one of the 100 Index Constituent stocks for Corporate Governance by Taiwan Stock Exchange on July 20th, 2016. The Company was ranked No. 120 in the top 2000 Taiwanese enterprises of manufacturing industry by CommonWealth Magazine in 2017, ranked No. 36 in “Top 100 Domestic Corporate Patent Applicants” by the Intellectual Property Office, R.O.C., ranked No. 31 in “Top 100 Domestic Corporate Patent Assignees,” ranked No. 61 in “Domestic Corporate Invention Patent Applicants,” and ranked No. 43 in “top 100 Domestic Corporate Invention Patent Assignees.” The Company was shortlisted as one of the 100 Index Constituent stocks for Corporate Governance by Taiwan Stock Exchange. The Company was ranked No. 129 in the top 2000 Taiwanese enterprises of manufacturing industry by CommonWealth Magazine in 2018, ranked No. 48 in “Top 100 Domestic Corporate Patent Applicants” by the Intellectual Property Office, R.O.C., ranked No. 30 in “Top 100 Domestic Corporate Patent Assignees,” ranked No. 65 in “Top Domestic Corporate Invention Patent Applicants,” and ranked No. 50 in “Top 100 Domestic Corporate Invention Patent Assignees.” The Company was shortlisted as one of the 100 Index Constituent stocks for Corporate Governance by Taiwan Stock Exchange. The Company was ranked No. 126 in the top 2000 Taiwanese enterprises of manufacturing industry by CommonWealth Magazine in 2019, ranked No. 30 in “Top 100 Domestic Corporate Patent Applicants” by the Intellectual Property Office, R.O.C., ranked No. 54 in “Top 100 Domestic Corporate Patent Assignees,” ranked No. 79 in “Top Domestic Corporate Invention Patent Applicants,” and ranked No. 65 in “Top 100 Domestic Corporate Invention Patent Assignees.” The Company was ranked No. 96 in the top 2000 Taiwanese enterprises of manufacturing industry by CommonWealth Magazine in 2020, ranked No. 78 in “Top 100 Domestic Corporate Patent Applicants” by the Intellectual Property Office, R.O.C., ranked No. 31 in “Top 100 Domestic Corporate Patent Assignees,” and ranked No. 78 in “Top 100 Domestic Corporate Invention Patent Assignees.”, Ranked 351st among the world's best employers by Forbes magazine in 2020, ranked 3rd among Taiwan companies.

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III. Corporate Governance Report

3.1 Organization

3.1.1Organizational Chart

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Shareholders’ Meeting
Supervisors
Audit Committee
Board of
Directors
Compensation and
Remuneration Committee Group Auditing Division
Nomination Committee
General Office of the General
Special Committee for Manager Manager
Mergers
Division of Sales Corporate Finance & Human System Central
Individual Business Quality Accounting Resource Information Procurement
Products Group Division Division Division Technology Division
Division
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3.1.2 Major Corporate Functions

Operational Auditing Division	To inspect and evaluate intactness of internal control system, internal auditing system, and self-evaluation procedure of the internal control system, and provide appropriate improvement suggestions to ensure the effectiveness of the internal control system as well as for continuous improvement.
Office of the General Manager	To plan overall strategies, integrate the systems, handle legal affairs, and create operationalprocedure.
Division of Individual Products	To research, develop, design, and manufacture various products.
Sales Business Group	Responsible for cultivation of markets and sales affairs of individual products.
Corporate Quality Division	Responsible for testing and inspecting quality of each product.
Finance & Accounting Division	Responsible for financing, communication with the financial institutions, and affairs related to accountingand booking.
Human Resource Division	Responsible for affairs related to purchasing, personnel, and on-the-job training.
System Information TechnologyDivision	Responsible for maintenance of each system of Internet and Applications of the Company.
Central Procurement Division	Responsible for purchasing raw materials.

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3.2 Directors, Supervisors, General Manager, Vice President, Associate Manager, and directors of the divisions and branches

3.2.1 Directors and Supervisors

3.2.1.1 Information of Directors and Supervisors

																		March 23,2021	March 23,2021	March 23,2021
Title	Nation ality/ Countr y of Origin	Name	Gender	Date of Election (Service)	Term	Date First Elected	Shareholding W	hen Elected	Current Sh	areholding	Spouse & Mino	r Shareholding	Shareh Nominee	olding by Assignment	Experience (Education)	Other Position	Director, S Executiv or with	upervisor and other es who are spouses in two degrees of kinship		Remark
							Shares	Ratio	Shares	Ratio	Shares	Ratio	Shares	Ratio			Title	Name	Relati on	In order to facilitate the smooth operation of the company, Mr. Shen Ching-Hang serves as both Chairman and General Manager. In addition, a new independent director seat has been added during the full re-election of directors in 2019. Among the 13 directors, 4 are independent directors. There are 8 directors (more than half) who do not serve as current staff members or managers.
Chairpers on	R.O.C.	Zing He Investment Co., Ltd.	-	June 13, 2019	3 years	June 18, 2000	6,547,174	1.85%	6,547,174	1.85%	0	0	0	0	(Inapplicable)	Director of the Company Corporate Director of First Dome Corp.	None	None	None
	R.O.C.	Representative: Shen, Ching Hang	Male	June 13, 2019	3 years	December 26, 1999	840,880	0.24%	840,880	0.24%	88,668	0.03%	0	0	Master of Business Administration, Michigan State University, U.S. First International Computer, Financial Officer of Portable Product Business Department	(Note 1)	None	None	None
																	None	None	None
Director	Japan	Furukawa Electric Co., Ltd. (Japan)	-	June 13, 2019	3 years	May 29, 1991	62,237,274	17.62%	62,237,274	17.62%	0	0	0	0	(Inapplicable)	(Note 2)	None	None	None
	Japan	Representative: Ono Ryoji	Male	June 13, 2019	3 years	June 17, 2001	0	0.00%	0	0.00%	0	0	0	0	Waseda University, Department of Mechanical Engineering	Furukawa Electric Co., Ltd., executive employee of the Functional Product Business Department;	None	None	None
	Japan	Representative: Motomura Takuya	Male	June 13, 2019	3 years	March 20, 2018	0	0.00%	0	0.00%	0	0	0	0	Meiju University, Department of Economics	Furukawa Electric Co., Ltd., director of Heat Dissipation Product and Electronic Component Business Department; Director of Furukawa Asia Vital Component (Suzhou) Co., Ltd; Director of NTEC LIMITED; Director of Furukawa Electric Group; Director of ORIEX LIMITED; Director of Furukawa Electric Thermal Management Solutions And Products Laguna Inc.	None	None	None
	Japan	Representative: Kobayashi Takuya	Male	June 13, 2019	3 years	April 24, 2019	0	0.00%	0	0.00%	0	0	0	0	Shibaura Institute of Technology, Department of Engineering	Corporate Director Representative of the Company; General Manager and Chairperson of Furukawa Electric Group	None	None	None
Director	Japan	Kitanoya, Atsushi	Male	June 13, 2019	3 years	June 13, 2019 (Note 6)	0	0.00%	0	0.00%	0	0	0	0	Consultant of Furukawa Electric Co., Ltd. Supervisor of AVC	Director of AVC	None	None	None
Director	R.O.C.	Chen, Yi Chen	Male	June 13, 2019	3 years	June 15, 2004	1,219,148	0.35%	1,219,148	0.35%	0	0	0	0	National Sun Yat-sen University, Master of Finance and Administration; Quintain Steel Co., Ltd., Vice President of Finance department; TaiFlex Scientific Co., Ltd., Finance Officer	(Note 3)	None	None	None
Director	R.O.C.	Wang, Jui Pin	Male	June 13, 2019	3 years	May 24th, 2002 (Note 5)	446,784	0.13%	363,784	0.10%	0	0	0	0	University of Houston, U.S., Master of Accounting; Eastern Michigan University, U.S., Master of Business Administration; First International Computer, Vice President of Information and Internet Business Division	(Note 4)	None	None	None
Director	R.O.C.	Huang, Chiu Mo	Male	June 13, 2019	3 years	June 18, 2000	347,245	0.10%	347,245	0.10%	0	0	0	0	Master of Science and Engineering Administration, Chinese Academy of Science; Executive Vice President of AVC	(Note 7)	None	None	None
Director	R.O.C.	Gao, Pai Ling	Male	June 13, 2019	3 years	June 13, 2019	0	0.00%	0	0.00%	0	0	0	0	PhD in Fluid Dynamics, Ecole Polytechnique de Toulouse, France General Manager of Thermal Division I of the AVC.	Manager of Thermal Division I of the AVC.; Board Representative of Zhuzhou CRRC-AVC Thermal Technology Co., Ltd.	None	None	None

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Title	Nation ality/ Countr y of Origin	Name	Gender	Date of Election (Service)	Term	Date First Elected	Shareholding W	hen Elected	Current Sh	areholding	Spouse & Mino	r Shareholding	Shareh Nominee	olding by Assignment	Experience (Education)	Other Position	Director, S Executiv or with	upervisor and other es who are spouses in two degrees of kinship	upervisor and other es who are spouses in two degrees of kinship	Remark
							Shares	Ratio	Shares	Ratio	Shares	Ratio	Shares	Ratio			Title	Name	Relati on	In order to facilitate the
Independ ent Director	R.O.C.	Chen, Chun Cheng	Male	June 13, 2019	3 years	June 16, 2005	0	0.00%	0	0.00%	0	0	0	0	Feng Jia University, Department of Accounting; Tamkang University, Graduate Institute of History; Vice President, the CID Group; Supervisor, Flexium Interconnect, Inc.	(Note 8)	None	None	None
Independ ent Director	R.O.C.	Cho, I Lang	Male	June 13, 2019	3 years	June 18, 2010	0	0.00%	0	0.00%	0	0	0	0	National Kaohsiung University of Applied Science, Department of Civil Engineering Retired from Chunghwa Telecom Co.,Ltd.	Independent Director of the Company; Chairperson and Vice President, Good Star Construction Co., Ltd.	None	None	None
Independ ent Director	R.O.C.	Peng, Tai Hsiung	Male	June 13, 2019	3 years	June 11, 2013	11,546	0.00%	11,546	0.00%	0	0	0	0	National Central University, Department of Atmospheric Science; Director, Nylex Plastic Industrial Limited	Independent Director of the Company	None	None	None
Independ ent Director	USA	Ueng Joseph Chehchung	Male	June 13, 2019	3 years	June 13, 2019	0	0.00%	0	0.00%	0	0	0	0	Instructor of Finance, Saint Louis University, Saint Louis City, Missouri, U.S.A	Chair and Finance Professor, Department of Financing in Cameron School of Business, University of St. Thomas (Houston), U.S.A.; Dean of Research, Research Center in Cameron School of Business, University of St. Thomas (Houston), U.S.A; Chartered Financial Analyst, U.S.A.; Director of Houston Society of Financial Analysts Ltd.	None	None	None
Note 1：Chairperson and General Manager of the Company;AVC International Co., Ltd.—B.V.I. Corporate Director Representative; Chihung International Ltd. Corporate Director Representative; Tonbridge Investments Limited Corporate Director Representative; Rayney International Limited Corporate Director Representative; MERIT TRADING CORPORATION Corporate Director Representative; MACE TECH CORP.—B.V.I. Corporate Director Representative; JADS Corporation (HK) Limited Corporate Director Representative; Chairperson of Zing He Investment Co., Ltd.; AVC International (SAMOA) Co., Ltd. Corporate Director Representative; AVC INTERNATIONAL CO., LTD.—SAMOACorporate Director Representative;D-Max Co., Ltd., Corporate Director Representative; D-Max International Co., Limited (D-Max HK)., Corporate Director Representative; Wuchida International Co., Ltd. Corporate Director Representative; Owner of Asia Vital Component (Chengdu) Co., Ltd.; AVC OPTICS CORP.—CAYMANCorporate Director Representative; Owner of AVC Optics (Wuhan) Corp.; Wuhan Asia Vital Components Co.,Ltd. Corporate Director Representative. Note 2：Corporate Director of the Company; Director and Supervisor of Furukawa Electric Group; Director of Furukawa Asia Vital Component (Suzhou) Co., Ltd.; Director and Supervisor of NTEC LIMITED; Director and Supervisor of Furukawa Shanghai Ltd. Note 3：Director and Vice President of the Company; Rayney International Limited, Corporate Director Representative; Director of Sentelic Co., Ltd.; Director of SHENG-SHING CORP.; Hung Ye Investment Co., Ltd .Corporate Director Representative; Zimag Technology Co., Ltd., Corporate Director Representative; Independent Director of PanJit Co., Ltd.; Chairperson of Li Cheng Investment Co., Ltd.; Fositek Corp Corporate Director Representative

Note 4 ： Director and Vice President of the Company; AVC AMERICA INC.Corporate Director Representative; Supervisor of Bestec Power Electronics Co., Ltd.; Hung Ye Investment Co., Ltd., Corporate Director Representative; Zhuzhou CRRC-AVC Thermal Technology Co., Ltd. Corporate Director Representative 。

Note 5 ： Elected to be Supervisor on May 24[th] , 2002 and resigned on February 16[th] , 2004; Elected to be Director on June 15[th] , 2004 and have served until now.

Note 6 ： Served as Representative of Directors Furukawa Electric Co., Ltd. (Japan) between May 29[th] , 2001 and June 17[th] , 2010; Reelected as Supervisor on June 18[th; ] Reelected as director on Jun 13[th] 2019. now.

• Note 7 ： Director and Vice President of the Company; Corporate Director Representative of Beijing AVC Technology Research Center Co., Ltd.; AVC America Inc. Corporate Director Representative; Corporate Director Representative and Chairperson of Fositek Corp.; Shenzhen TimeLink Technology Co., Ltd., Corporate Director Representative; Corporate Director Representative of MARKETHILL INVESTMENTS LIMITED.; Director of Xianyan Investment Co., Ltd.

• Note 8 ： Independent Director of the Company; Director of Taiwan Taxi Co., Ltd..; Han Yu Investment Co., Ltd.; Supervisor of Paragon Semiconductor Lighting Technology Co., Ltd.; Chairperson of TFAT Audio Ltd.; Chairperson of WSapc Co., Ltd. ; Corporate Director Representative of Bossdom DigiInnovation Co., Ltd.

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3.2.1.2 Corporate Shareholders holding more than 10 percent of the Company’s shares and Shareholders of top ten shareholding ratio

Corporate shareholders	Major Shareholders of the Corporate Shareholder
ZingHe Investment Co.,Ltd.	Shen,ChingHang (36%);Wang,Yao(24%)
Furukawa Electric Co., Ltd. (Japan)	Japan Trustee Service Bank, Ltd. (Trustee Window); The Master Trust Bank of Japan, Ltd. (Trustee Window); Mizuho Trust & Banking, Pension payment trustee, Retrustee—Trust&Custody Service Bank Ltd.; Japan Trustee Services Bank (Trustee Window 4), THE BANK OF NEW YORK, NON－ TREATY JASDEC ACCOUNT; Asahi Mutual Life Insurance Co.; Furukawa Co., Ltd. Japan Trustee Service Bank, Ltd. (Trustee Window 5); GOVERNMENT OF NORWAY; Fuki Electric Global Co.,Ltd.
3.2.1.3 Major shareholders	of Corporate Shareholders:
Corporate shareholders	Major Shareholders of the Corporate Shareholder
Furukawa Machinery & Metal Co., Ltd.	Asahi Life Insurance Company, Master Trust Bank of Japan, Ltd. (trust account), Seiwa Sogo Tatemono Co., Ltd., Yokohama Rubber Co., Ltd., Japan Trustee Services Bank, Ltd. (trust account), Furukawa Electric Co., Ltd., Fuji Electric Co., Ltd., Sompo Japan Nipponkoa Insurance Inc., Chuo Real Estate Co.,Ltd.,JUNIPER
Fuji Electric Co., Ltd.	Fuji Electric Co., Ltd. Japan Trustee Services Bank, Ltd. (trust account), The Master Trust Bank of Japan, Ltd. (trust account), Fujitsu Limited, Asahi Mutual Life Insurance Company, FANUC Corporation, Japan Trustee Services Bank, Ltd. (Trust Account 5), Japan Trustee Services Bank, Ltd. (Trust Account 7), Mizuho Bank, Ltd., Furukawa Machinery & Metal Co., Ltd., JP MORGAN CHASE BANK 385151

3.2.1.4 Directors and Supervisors

Criteria Name	Meet One of the Follo Together with	wing Professional Qualification R at Least Five Years Work Experi	equirements, ence			Independence Criteria(Note1)	Independence Criteria(Note1)	Independence Criteria(Note1)	Independence Criteria(Note1)	Independence Criteria(Note1)	Independence Criteria(Note1)	Independence Criteria(Note1)	Independence Criteria(Note1)	Independence Criteria(Note1)	Independence Criteria(Note1)	Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director	Remark
	An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University	A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company	Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company	1	2	3	4	5	6	7	8	9	10	11	12
Shen, Ching Hang (ZingHe Representative)	No	No	Yes	-	-	v	-	v	v	v	-	v	-	v	-	0
Ono, Ryoji (Representative of Furukawa Co.,Ltd.)	No	No	Yes	v	v	-	v	-	-	v	v	v	-	v	-	0
Motomura, Takuya (Representative of Furukawa Co.,Ltd)	No	No	Yes	v	v	-	v	-	-	v	v	v	-	v	-	0
Kobayashi, Takuya (Representative of Furukawa Co.,Ltd)	No	No	Yes	v	v	-	v	-	-	v	v	v	-	v	-	0
Kitanoya,Atsushi	No	No	Yes	v	v	v	v	-	-	v	v	v	v	v	v	0
Chen,Yi Chen	No	No	Yes	-	-	v	v	v	v	v	v	v	v	v	v	2
Wang,Jui Pin	No	No	Yes	-	-	v	v	v	v	v	v	v	v	v	v	0
Huang,Chiu Mao	No	No	Yes	-	-	v	v	v	v	v	v	v	v	v	v	0
Gao,Pai Ling	No	No	Yes	-	-	v	v	v	v	v	v	v	v	v	v	0
Chen,Chun Cheng	No	No	Yes	v	v	v	v	v	v	v	v	v	v	v	v	0
Cho,I Lang	No	No	Yes	v	v	v	v	v	v	v	v	v	v	v	v	0
Peng,Tai Hsiung	No	No	Yes	v	v	v	v	v	v	v	v	v	v	v	v	0
UengJoseph Chieh Chung	Yes	No	Yes	v	v	v	v	v	v	v	v	v	v	v	v	0

• Note 1 ： Please tick the corresponding boxes that apply to the director or supervisors during the two years prior to being elected or during the term of office.

• (1) Not an employee of the Company or any of its affiliates.

(2) Not a director or supervisor of the Company or any of its affiliates. (Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares.)

• (3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.

• (4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three subparagraphs.

• (5) Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of outstanding shares of the Company or who holds shares ranking in the top five holdings.

(6) Not a director, supervisor, officer, or shareholder holding 5% or more of the shares, of a specified company or institution which has a financial or business relationship with the Company.

(7) Not a professional individual who is an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company, or a spouse thereof. These restrictions do not apply to any member of the remuneration committee who exercises powers pursuant to Article 7 of the “Regulations Governing the Establishment and Exercise of Powers of Remuneration Committees of Companies whose Stock is Listed on the TWSE or Traded on the TPEx”.

(8) Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.

• (9) Not been a person of any conditions defined in Article 30 of the Company Law.

• (10) Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law.

• (11) Not been a person of any conditions defined in Article 30 of the Company Law.

• (12) Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law.

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3.2.2. General Manager, Vice President and directors of the Divisions and Branches

													March 23,2021	March 23,2021	March 23,2021
Title	Nationality	Name	Gender	Date Effective	Shareholding		Spouse & Minor Shareholding		Shareholding by Nominee		Experience (Education)	Other Position	Executives who are Spouses or Within Two Degrees of Kinship
					Shares	Sharehold ing ratio	Shares	Shareholdi ng ratio	Shares	Sharehol ding Ratio			Title	Name	Relation
CEO & President	R.O.C.	Shen, Ching Hang	Male	Oct. 26 1999	840,880	0.24%	88,668	0.03%	0	0.00%	Master of Business Administration, Michigan State University, U.S. First International Computer First International Computer, Financial Officer of Portable Product Business Department	(Note 1)	None	None	None
Vice President	R.O.C.	Chen, Yi Chen	Male	Feb. 18, 2002	1,219,148	0.35%	0	0.00%	0	0.00%	National Sun Yat-sen University, Master of Finance and Administration; Quintain Steel Co., Ltd., Vice President of Finance department; TaiFlex Scientific Co., Ltd., Finance Officer	(Note 2)	None	None	None
Vice President	R.O.C.	Wang, Jui Pin	Male	Feb. 17, 2004	446,784	0.13%	0	0.00%	0	0.00%	University of Houston, U.S., Master of Accounting; Eastern Michigan University, U.S., Master of Business Administration; First International Computer, Vice President of Information and Internet Business Division	(Note 3)	None	None	None
Vice President	R.O.C.	Huang, Chiu Mao	Male	May 16, 2000	347,245	0.10%	0	0.00%	0	0.00%	Master of Science and Engineering Administration, Chinese Academy of Science; Executive Vice President of AVC	(Note 4)	None	None	None
Vice President	R.O.C.	Chen, Jiang Han	Male	Oct. 18 , 1999	0	0.00%	0	0.00%	0	0.00%	National Taipei University of Business, Department of Accounting Vice President of First International Computer.	Vice President of the Company	None	None	None

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Title	Nationality	Name	Gender	Date Effective	Shareholding	Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee	Shareholding by Nominee	Experience (Education)	Other Position	Executives who are Spouses or Within Two Degrees of Kinship	Executives who are Spouses or Within Two Degrees of Kinship	Executives who are Spouses or Within Two Degrees of Kinship
					Shares	Sharehold ing ratio	Shares	Shareholdi ng ratio	Shares	Sharehol ding Ratio			Title	Name	Relation
Company Secretary	R.O.C.	Kuo, Hui Ying	Female	Mar. 13, 2020	100,000	0.03%	0	0.00%	0	0.00%	Graduated from Soochow University Accounting Department; Senior Leader of Audit Department of PwC Taiwan Certified Public Accountants; Underwriting manager of Yuanta Securities Co., Ltd. Internal Audit Officer of AVC	(Note 5)	None	None	None
Accounting Officer	R.O.C.	Lin, Shu Hua	Female	Jan. 1, 2021	0	0.00%	0	0	0	0.00%	Master of Accounting, Fu Jen Catholic University Director of AVC’s accounting department	AVC Europe Technology GmbH Director	None	None	None

Note 1 ： Chairperson and General Manager of the Company; AVC International Co., Ltd.—B.V.I. Corporate Director Representative; Chihung International Ltd. Corporate Director Representative; Tonbridge Investments Limited Corporate Director Representative; Rayney International Limited Corporate Director Representative; MERIT TRADING CORPORATION Corporate Director Representative; MACE TECH CORP.—B.V.I. Corporate Director Representative; JADS Corporation (HK) Limited Corporate Director Representative; Chairperson of Zing He Investment Co., Ltd.; AVC International (SAMOA) Co., Ltd. Corporate Director Representative; AVC INTERNATIONAL CO., LTD.—SAMOA Corporate Director Representative; D-Max Co., Ltd., Corporate Director Representative; D-Max International Co., Limited (D-Max HK)., Corporate Director Representative; Wuchida International Co., Ltd. Corporate Director Representative; Owner of Asia Vital Component (Chengdu) Co., Ltd.; AVC OPTICS CORP.—CAYMAN Corporate Director Representative; Owner of AVC Optics (Wuhan) Corp.; Wuhan Asia Vital Components Co.,Ltd. Corporate Director Representative.

Note 2 ： Director and Vice President of the Company; Rayney International Limited, Corporate Director Representative; Director of Sentelic Co., Ltd.; Director of SHENG-SHING CORP.; Hung Ye Investment Co., Ltd .Corporate Director Representative; Zimag Technology Co., Ltd., Corporate Director Representative; Independent Director of PanJit Co., Ltd.; Chairperson of Li Cheng Investment Co., Ltd.; Fositek Corp Corporate Director Representative

Note 3 ： Director and Vice President of the Company; AVC International Co., LTD—B.V.I., Corporate Director Representative; MACE TECH CORP.—B.V.I., Corporate Director Representative; AVC AMERICA INC. Corporate Director Representative; Supervisor of Bestec Power Electronics Co., Ltd.; Supervisor of D-Max Co., Ltd.; Hung Ye Investment Co., Ltd., Corporate Director Representative; CRRC Asia Vital Component Heat Dissipation Technology Co., Ltd., Corporate Director Representative.

Note 4 ： Director and Vice President of the Company; Corporate Director Representative of Beijing AVC Technology Research Center Co., Ltd.; AVC America Inc. Corporate Director Representative; Corporate Director Representative and Chairperson of Fositek Corp.; Shenzhen TimeLink Technology Co., Ltd., Corporate Director Representative; Corporate Director Representative of MARKETHILL INVESTMENTS LIMITED.; Director of Xianyan Investment Co., Ltd.

Note 5 ： Furukawa Electronics (ShenZhen) Co., Ltd. Director Representative; Furukawa AVC Electronics (Suzhou) Co., Ltd. Director Representative; Zhuzhou CRRC-AVC Thermal Technology Co., Ltd. Supervisor Representative; Hung Ye Investment Co., Ltd. Supervisor Representative.

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3.3 Remuneration paid to Directors, Supervisors, General Manager, and Vice President in the Most Recent Year

3.3.1 Remuneration of Directors (including Independent Directors)

the year of 2020/ unit: NT$ thousand ; thousand shares

Title	Name				Remuner	ation				Ratio of Remuneration to Net Inco	Total (A+B+C+D) me (%)			Relevant R	emuneration R	eceived by Di	rectors Who are A	lso Employees		Ratio of Total (A+B+C+D+E Incom	Compensation +F+G) to Net e (%)	Compensation Paid to Directors from an Invested Company Other than the Company’s Subsidiary
		Compen	sation(A)	Severa	nce Pay (B)	Bonus to D (No	irectors (C) te 1)	Allowa	nces (D)			Salary, Bo Allowa	nuses, and nces (E)	Severanc	e Pay (F)		Profit Shar	ing- Employee Bonus (Note 2)	(G)
		Company	Companies in the consolidated financial statements	Compan y	Companies in the consolidated financial statements	Compan y	Companie s in the consolidat ed financial statement s	Company	Companies in the consolidated financial statements	Company	Companie s in the consolidat ed financial statement s	Compan y	Companie s in the consolidat ed financial statement s	Compan y	Companie s in the consolidat ed financial statement s	Co	mpany	Companies in the stat	consolidated financial ements	Company	Companies in the consolidated financial statements
																Cash	Stock	Cash	Stock
Chairman/ Director	Zing He Investment Co., Ltd. Representative：Shen, Ching Hang	0	0	0	0	25,179	26,042	135	153	1.32%	1.37%	18,411	54,697	432	432	7,140	0	7,140	0	2.68%	4.62%	0
Director	Furukawa Electric Co. (Japan), Ltd. Representative：Ono, Ryoji
Director F	urukawa Electric Co.(Japan), Ltd. Representative: Kobayashi Takashi
Director	Kitanoya Atsushi
Director	Chen,Yi Chen
Director	Wang,Jui Pin
Director	Huang,Chiu Mao
Director	Gao,Pai-Ling
Independ ent Director	Chen, Chun Cheng	0	0	0	0	~~1~~1,191	~~1~~1,191	60	60	0.59%	0.59%	0	0	0	0	0	0	0	0	0.59%	0.59%	0
Independ ent Director	Cho, I Lang
Independ ent Director	Peng, Tai Hsiung
Independ ent Director	Ueng Joseph Chiehchung

Note 1: The amount of Remuneration was adopted by the Board of Directors Meeting on March 23, 2021; it is an estimated amount, and the details in distribution have not been determined yet. Note 2: Please state the policies, systems, standards, and structure of independent directors’ remuneration, and, according to the responsibilities, risks, time invested, and other factors, describe the relevance to the remuneration amount: The remuneration of independent directors of the Company is the same as that of other directors’ remuneration. The total amount of directors' remuneration is allocated in accordance with the Company's Articles of Association. The relevance is as follows: The more profitable the company, the higher the director's remuneration. The rationale is as follows: Within the total remuneration of directors, the distribution basis is based on the ratio of directors’ attendance at board of directors meetings and the ratio of directors' numbers of days served. Note 3: In addition to the disclosures above, state for the most recent year the remuneration received by directors of the company for providing services to all companies in the financial report (such as serving as consultants for non-employees): No such situation.

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Range of Remuneration of Directors (Including Independent Directors)

	Range of Remuneration of Directors(Including Independent Directors)	Range of Remuneration of Directors(Including Independent Directors)	Range of Remuneration of Directors(Including Independent Directors)	Range of Remuneration of Directors(Including Independent Directors)
Range of Remuneration	Name of Director
	Total of(A+B+C+D)		Total of A+B+C+D+E+F+G)
	Company	Companies in the consolidated financial statements	Company	Companies in the consolidated financial statements
Under NT$1,000,000	0	0	0	0
NT$ 1,000,000～NT$ 1,999,999	0	0	0	0
NT$ 2,000,000～NT$ 3,499,999	Zing He Investment Co., Ltd. Representative：Shen, Ching Hang、 Furukawa Electric Co. (Japan), Ltd. Representative：Ono, Ryoji、 Furukawa Electric Co.(Japan), Ltd. Representative: Kobayashi Takashi、Kitanoya Atsushi、Chen, Yi Chen、Wang, Jui Pin、Huang, Chiu Mao、Gao, Pai-Ling、Chen, Chun Cheng、 Cho, I Lang、Peng, Tai Hsiung、Ueng Joseph Chiehchung	Zing He Investment Co., Ltd. Representative：Shen, Ching Hang、 Furukawa Electric Co. (Japan), Ltd. Representative：Ono, Ryoji、Furukawa Electric Co.(Japan), Ltd. Representative: Kobayashi Takashi、Kitanoya Atsushi、Chen, Yi Chen、Wang, Jui Pin、Huang, Chiu Mao、Gao, Pai-Ling、Chen, Chun Cheng、Cho, I Lang、Peng, Tai Hsiung、Ueng Joseph Chiehchung	Furukawa Electric Co. (Japan), Ltd. Representative：Ono, Ryoji、Furukawa Electric Co.(Japan), Ltd. Representative: Kobayashi Takashi、Kitanoya Atsushi、Chen, Chun Cheng、Cho, I Lang、 Peng, Tai Hsiung、Ueng Joseph Chiehchung	Furukawa Electric Co. (Japan), Ltd. Representative：Ono, Ryoji、Furukawa Electric Co.(Japan), Ltd. Representative: Kobayashi Takashi、Kitanoya Atsushi、Chen, Chun Cheng、Cho, I Lang、 Peng, Tai Hsiung、Ueng Joseph Chiehchung
NT$ 3,500,000～NT$ 4,999,999	0	0	0	0
NT$ 5,000,000～NT$ 9,999,999	0	0	Chen, Yi Chen、Wang, Jui Pin、Huang, Chiu Mao、Gao, Pai-Ling	Wang, Jui Pin
NT$ 10,000,000～NT$14,999,999	0	0	Zing He Investment Co., Ltd. Representative：Shen, ChingHang	Chen, Yi Chen、Huang, Chiu Mao、Gao, Pai-Ling、
NT$ 15,000,000～NT$29,999,999	0	0	0	Zing He Investment Co., Ltd. Representative：Shen,ChingHang
NT$ 30,000,000～NT$49,999,999	0	0	0	0
NT$ 50,000,000～NT$99,999,999	0	0	0	0
Over NT$100,000,000	0	0	0	0
Total	13	13	13	13

15

3.3.2 Remuneration of Supervisors: The Company established an audit committee to replace the supervisors in 2019, and this item is not applicable.

3.3.3 Remuneration of General Manager and Vice President

								The Year 2020/Unit NT$thousand dollars/thousand shares	The Year 2020/Unit NT$thousand dollars/thousand shares	The Year 2020/Unit NT$thousand dollars/thousand shares	The Year 2020/Unit NT$thousand dollars/thousand shares	The Year 2020/Unit NT$thousand dollars/thousand shares	The Year 2020/Unit NT$thousand dollars/thousand shares	The Year 2020/Unit NT$thousand dollars/thousand shares
Title	Name	Compensa	tion (A)	Severanc	e Pay (B)	Bonuses and	Allowances (C)	Profit	Sharing- Employee Bonus (D) (note 1)			Ratio of total com C+D)to N	pensation (A+B+ et Income	Compensation paid to the President and Vice President from an Invested Company Other Than Company’s Subsidiary
		The Company	Companies in the consolidated financial statements	Company	Companies in the consolidated financial statements	Company	Companies in the consolidated financial statements	Com	pany	Companies in the financial sta	consolidated tements	Company	Companies in the consolidated financial statements
								Cash	Stock	Cash	Stock
CEO & President	Shen,ChingHang	14,390	18,369	513	513	5,720	34,868	10,711	0	10,711	0	1.64%	3.36%	0
Vice President	Chen,JiangHan
Vice President	Chen,Yi Cheng
Vice President	Wang, Jui Pin
Vice President	Huang,Chiu Mao
Company Secretary	Kuo, Hui Ying (Note 2)

Note 1: The sum of remuneration of Employees was adopted on the Board of Directors Meetings on March 23, 2021; it is an estimated sum, and the listed of employees who will receive the bonuses has not been finalized until the printing date of the Annual Report.

Note 2: Newly appointed as a Manager on March 13, 2020.

Range of Remuneration of General Manager and Vice President

	Name of General Manager and Vice President	Name of General Manager and Vice President
Range of Remuneration		Companies in the consolidated
	Company
		financial statements
Under NT$1,000,000	0	0
NT$ 1,000,000～NT$ 1,999,999	0	0
NT$ 2,000,000～NT$ 3,499,999	0	0
NT$ 3,500,000～NT$ 4,999,999	Chen, Jiang Han、Chen, Yi Chen、Wang, Jui Pin、Huang, Chiu Mao、Kuo,Hui Ying	Kuo, Hui Ying
NT$ 5,000,000～NT$ 9,999,999	Shen,ChingHang	Chen,JiangHan、Chen,Yi Chen、Wang,Jui Pin
NT$ 10,000,000～NT$ 14,999,999	0	Huang,Chiu Mao
NT$ 15,000,000～NT$ 29,999,999	0	Shen,ChingHang
NT$ 30,000,000～NT$ 49,999,999	0	0
NT$ 50,000,000～NT$ 99,999,999	0	0
Over NT$100,000,000	0	0
Total	6	6

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3.3.4 Executive Officers who distribute remuneration of Employees and distribution

the year of 2020 /Unit: NT$ Thousand ; percentage

				Employee		Ratio of Total
			Employee
	Title	Name		Bonus in	Total	Amount to Net
			Bonus in Stock
				Cash		Income(%)
Executive Officers	General Manager	Shen, Ching Hang	Not applicable (Note 1)	10,711 (Note 2)	10,711	0.56%
	Vice President	Chen,Yi Chen
	Vice President	Wang,Jui Pin
	Vice President	Chen,JiangHan
	Vice President	Huang, Chiu Mao
	Company Secretary (Not 3)	Kuo, Hui Ying

Not 1: The Board of Directors Meeting resolved that the remuneration of

• employees is distributed in cash; no shares are assigned.

Note 2: The name list for remunerations has not been finalized until the printing date of the annual report. This is an estimated amount.

Note 3: Newly appointed as a Manager on March 13, 2020.

• 3.3.5 Comparison of the ratio of total remuneration paid by the Company and by all companies included in the consolidated financial statements for the most recent years to for Directors, Supervisors, General Managers and Vice Presidents, to the Net income, and the policies, standards, and portfolios or the payment of remuneration, the procedures for determining remuneration, and the correlation with business performance.

• A. Analysis of the ratio of total remuneration to directors, supervisors, general managers, and Vice Presidents of the Company, to the net income of 2020:

Item Title	The ratio of total remuneration to Net Income	The ratio of total remuneration to Net Income
	Company	Companies in the consolidated financial statements
Director (Including independent directors)	3.26	5.2
Supervisor	0	0
General Manager and Vice President	1.64	3.36

• B. The remuneration paid to the General Manager and Vice President of the

• Company include salaries, bonuses, and compensation of employees; the salaries and bonuses are appropriated according to the business performance of the Company in the year, which influence the distribution of the bonuses of the General Managers and Vice Presidents. Remuneration of employees is appropriated according to the business performance of the Company in the year and the stipulated percentage in the Articles of Incorporation, which is determined by the Remuneration Committee of the Company, resolved by the Board of Directors Meeting with presence of over

17

two-thirds of the directors while being agreed by the majority of the attendees, and reported to the Shareholders’ Meeting.

3.4 Implementation of Corporate Governance

3.4.1 Board of Directors:

A total of six (A) meetings of the Board of Directors were held in the previous period. The attendances of directors were as follows:

Title	Name	Attendance in Person (B)	By Proxy	Expected attendance in person(A)	Attendance Rate (B/A) (%)	Remarks
Chairperson	Zing He Investment Co., Ltd. Representative：Shen,ChingHang	6	0	6	100.00	－
Director	Furukawa Electric Co., Ltd.(Japan) Representative: Ono,Ryoji	5	1	6	83.33	－
Director	Furukawa Electric Co., Ltd. (Japan) Representative: Motomura,Takuya	6	0	6	100.00	—
Director	Furukawa Electric Co., Ltd. (Japan) Representative: Kobayashi Takashi	6	0	6	100.00	－
Director	Kitanoya Atsushi	6	0	6	100.00	－
Director	Chen, Yi Chen	6	0	6	100.00	－
Director	Wang, Jui Pin	6	0	6	100.00	－
Director	Huang, Chiu Mao	6	0	6	100.00	－
Director	Gao, Pai Ling	6	0	6	100.00	－
Independent Director	Chen, Chun Cheng	6	0	6	100.00	－
Independent Director	Cho, I Lang	6	0	6	100.00	－
Independent Director	Peng, Tai Hsiung	6	0	6	100.00	－
Independent Director	Ueng Joseph Chiehchung	6	0	6	100.00	－
Other mention items 1. If the following circumstances related to the operation of the Board of Directors, the date of the meetings, sessions, contents of motion, all independent directors’ opinions a and the company’s responses should be specified: (1) the items specified in Article 14-3 of the Securities and Exchange Act: refer to page 68 of the annual report for important resolutions of the Board of Directors Meeting. (2) other resolutions of the directors’ meetings objected to by independent directors or subject to retained opinions recorded or declared in writing: refer to page 68 of the annual report for important resolutions of the Board of Directors Meeting. 2. If there are directors’ avoidance of motions in conflict of interest, the directors’ names, content of motion, causes for avoidance and participation of voting should be specified: four directors who were hired as managers did not participate in voting on the motion on November 10, 2020, related to distributed amount of remuneration in cash and performance bonus for the management team, including Shen Ching Hang, Chen Yi Cheng, Wang Jui Pin, Huang Zhu Mo and Gao, Pai-Ling. The Chairperson Zho Yi Lang served as proxy of the meeting’s president and adopted the proposal with consent of all directors in presence. 3.Information on the evaluation cycle and period, evaluation scope, method, and evaluation content of the board's self (or peer) evaluation: The Company has a performance evaluation method of the board seats involving annual self-assessment of the board of directors and individual directors, and evaluation results are revealed on the Company's website. 4. Measures taken to strengthen the functionalityof the board:

18

Title	Name	Attendance in Person (B)	By Proxy	Expected attendance in person(A)	Attendance Rate (B/A) (%)	Remarks
(1) The Company has established Principles for Board of Directors Meeting, which should be followed by the Board of Directors’ Meeting. The attendance of the directors is disclosed on the Market Observation Post System, and major resolutions have been disclosed on the Company’s Websites for the public’s reference. (2) To strengthen the Company’s Governance and strengthen the Board’s functionality, the Company has established four independent directors according to Article 14-2 of the Securities Exchange Act. The independent directors have established the Remuneration Committee, Nomination Committee, and Special Committee of Merger to assist the Board in carrying out various duties in management of remunerations, nomination of directors, supervisors, and senior managers, and censoring the fairness and reasonability of mergerplans and trades.

3.4.2. Evaluation of the implementation of the board of directors

Evaluation cycle	Evaluation period	Scope of evaluation	Evaluation method	Evaluation items
Once a year	Performance evaluation for January 1, 2020 to December 31, 2020	Board of Directors	Board of Directors self-evaluation	Participation in the operation of the company; Improvement of the quality of the board of directors' decision making.; Composition and structure of the board of directors.; Selection and continuing education of directors.; Internal control.
		Individual directors	Board member self-evaluation	Grasping the company's goals and mission, understanding of directors' responsibilities, participation in company operations, internal relationship management and communication, professional and continuous training of directors, internal controls,etc.
		Functional Committee	Board of Directors self-evaluation	Participation in the operation of the company, the recognition of functional committee responsibilities, the improvement of the quality of functional committee decisions, the composition and selection of functional committee members, and internal control.

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3.4.3 Audit Committee (or Attendance of Supervisors at Board Meetings): A. The Company’s the audit committee met five times in 2020 (A), and the independent directors attended the meeting as follows:

Title	Name	Attendance in Person	Expected Attendance inperson	Attendance Rate (%)	Remarks
Independent Director	Chen, Chun Cheng	5	5	100.00	－
Independent Director	Cho, I Lang	5	5	100.00	－
Independent Director	Peng, Tai Hsiung	5	5	100.00	－
Independent Director	Ueng Joseph Chiehchung	5	5	100.00	－
Other mentionable items: 1. If any of the following circumstances occurs in the operation of the Audit Committee, the date, period, content of the proposals, the Audit Committee's resolution, and the Company's handling of Audit Committee members' opinions shall be stated: (1)Matters referred to in Article 14-5 of the Securities and Exchange Act Audit Committee Agenda items and resolutions March 13, 2020 (4thmeeting of 1st-term) 1. The financial statements, consolidated financial statement, and business report of 2019. 2. 2019 surplus distributionproposal. 3. The 2019 Review of Effectiveness of Internal Control System and Internal Control Statements. 4. To adopt Certified Public Accountant and remuneration. 5. Independence of the Company’s Certified Public Accountant 6. Guarantee for the Subsidiaries. 7. Internal audit officer changes. 8. Revisepartprovisions of internal control system. Audit Committee members' opinions: No dissenting or unqualified opinions. The Company's handling of Audit Committee members' opinions: N/A. Resolution: Passed as proposed after the chairperson consulted all attendingmembers. May 14, 2020 (5thmeeting of 1st-term) 1. The consolidated financial statement of the Company and the Subsidiaries inquarter 1 of 2020. 2. Guarantee for the Subsidiary. 3. Revised someprovisions of the "Internal Audit Implementation Rules". Audit Committee members' opinions: No dissenting or unqualified opinions. The Company's handling of Audit Committee members' opinions: N/A. Resolution: Passed as proposed after the chairperson consulted all attendingmembers. June19, 1. The Company intends to apply for a syndicate loan credit and

20

	Title		Name	Attendance in Person	Expected Attendance inperson	Attendance Rate (%)	Remarks	Remarks
	2020 (6thmeeting of 1st-term)		guarantee line from the joint management group led by E.Sun Commercial Bank as the main arrangement and management bank. The total line of credit is NT$3 billion(increase or decrease within 20%).
			2. The Company intends to issue the first tranche of guaranteed common bonds in 2020.
			Audit Committee members' opinions: No dissenting or unqualified opinions. The Company's handling of Audit Committee members' opinions: N/A. Resolution: Passed as proposed after the chairperson consulted all attendingmembers.
	August 11, 2020 (7thmeeting of 1st-term)		1. The consolidated financial statement of the Company and the Subsidiaries inquarter 2 of 2020.
			2. Guarantee for the Subsidiary.
			3. Revision of the internal control system "C-GA06 Property, plant and equipment control system form-C-GD001 Purchase order acceptance form".
			4. Disposal ofpart of the shares of Fositek Corp.
			Audit Committee members' opinions: No dissenting or unqualified opinions. The Company's handling of Audit Committee members' opinions: N/A. Resolution: Passed as proposed after the chairperson consulted all attendingmembers.
	November 11, 2020 (8thmeeting of 1st-term)		1. The consolidated financial statement of the Company and the Subsidiaries inquarter 3 of 2020.
			2. Accountingofficer change case.
			3. Guarantee for the Subsidiary.
			4. Disposal ofpart of the shares of Assem TecinologyCo.,Ltd.
			5. Disposal ofpart of the shares of Sentelic Corporation.
			6. Revised the internal control system "Payroll control system, T-HR4-013 Satisfaction and LearningFeedback Form after External Training".
			Audit Committee members' opinions: No dissenting or unqualified opinions. The Company's handling of Audit Committee members' opinions: N/A. Resolution: Passed as proposed after the chairperson consulted all attendingmembers.
	March 23, 2021 (9thmeeting of 1st-term)		1. The financial statements, consolidated financial statement, and business report of 2020.
			2. 2020 capital surplus and additional paid in capital distribution proposal.
			3. The 2020 Review of Effectiveness of Internal Control System and Internal Control Statements.
			4. Appointment of Accountant and Compensation.
			5. Audit of the Accountant's Independence.
			6. Guarantee for the Subsidiary.

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	Title		Name	Attendance in Person	Expected Attendance inperson	Attendance Rate (%)	Remarks
Audit Committee members' opinions: No dissenting or unqualified opinions. The Company's handling of Audit Committee members' opinions: N/A. Resolution: Passed as proposed after the chairperson consulted all attendingmembers. (2) Besides the matters above, other resolutions adopted with the approval of two-thirds or more of all directors, without having been passed by the Audit Committee: None. 2. If independent directors recused from themselves from an agenda item in which they have a conflict of interest, specify the name of the independent director, agenda item, reason for recusal, and participation in voting: None. 3. Communication between independent directors and the chief internal auditor and CPAs (must include material matters of communication, methods, results relating to the Company's financial reports and business conditions): Date Communicatio n counterparty Communic ation method Communication matters and results March 13, 2020 Head of Internal Audit Forum Audit performance report from October 2019 to February2020 May 14, 2020 Head of Internal Audit Forum March 2020 audit performance report June 19, 2020 Head of Internal Audit Forum April 2020 audit performance report Accountant Forum The accountants report and explain to the independent directors and supervisors regarding the financial condition and profit and loss situation of 2019, the financial situation of the subsidiaries, the overall operation situation and the internal control inspection situation, and communicate whether there are major adjustment entries or legal amendments that affect accounting. August 11 2020 Head of Internal Audit Forum May-July 2020 audit performance report. November 10,2020 Head of Internal Audit Forum August-September 2020 audit performance report.			Audit Committee members' opinions: No dissenting or unqualified opinions. The Company's handling of Audit Committee members' opinions: N/A. Resolution: Passed as proposed after the chairperson consulted all attendingmembers.

B. After the shareholders' meeting on June 13, 2019, the Audit Committee replaced the supervisory authority. The attendance of the supervisors was not applicable.

3.4.3 Corporate Governance Implementation Status and Derivations from “the Corporate Governance Best-Practice Principle for TWSE/TPEx Listed Companies”

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Evaluated Items			Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustrations
1.Does the company establish and disclose the Corporate Governance Best-Practice Principles based on “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”?			The Company has established the Corporate Governance Best-Practice Principles based on “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies.” The information has been disclosed on the Company’s website.	None
2.Shareholding structure & shareholders’ rights (1)Does the company establish an internal operating procedure to deal with shareholders’ suggestions, doubts, disputes and litigations, and implement based on the procedure? (2)Does the company possess the list of its major shareholders as well as the ultimate owners of those shares? (3)Does the company establish and execute the risk management and firewall system within its conglomerate structure? (4)Does the company establish internal rules against insiders trading with undisclosed information?	   		(1) The Company has established Principles of Best Practice of Corporate Governance and Procedures in Prevention of Insider Trading, and has designated spokesperson and deputy spokesperson of the Company to serve as representative to deal with Shareholders’ advices, doubts, disputes, and lawsuits according to the nature and means of the affairs. (2) The Company has designated professional proxies of stock affairs to manage equities, and can be aware of the major shareholders as well as their ultimate controllers. (3)The Company has established Procedures for Trading with Related Persons and strengthen risk management between related corporations and firewall system. (4)The Company has established Procedures of Preventing Insiders Trading to rule against employees of the Company to trade securities with undisclosed information	None
3. Composition and Responsibilities of the Board of Directors (1)Does the Board developand			(1) The Company has established	None

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Evaluated Items			Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustrations
implement a diversified policy for the composition of its members? (2)Does the company voluntarily establish other functional committees in addition to the Remuneration Committee and the Audit Committee? (3) Does the company establish standards and method for evaluating Board performance, conduct annual performance evaluations, submit performance evaluation results to the Board, and use the results as a basis for determining the remuneration and nomination of individual directors?	 		Corporate Governance Best Practice Principles on Board of Directors Meeting held on November 12th, 2014. Considering the required functions of the Board of Directors specified in Article 20 of the Principles, the 12thsession of the Board of Directors elected the incumbent Directors in 2019. (note 1) (2) In addition to the Remuneration Committee, the Company has established Nomination Committee and Special Committee for Mergers in resolution of Board of Directors Meetings on March 23rd, 2015, and March 17th, 2016, so as to strengthen functions of the Board of Directors and the management system. (3) The Company has established Self-Evaluation or Peer Evaluation of the Board of Directors. The Remuneration Committee proposes evaluation report and practical advices for improvement Performance evaluation and self-evaluation of the year 2020 has been completed. The average score of performance self-evaluation by the Board of Directors was 96.89 (out of 100), and average score of the performance self-evaluation by members of the Board was 98.12 (out of 100). The report was submitted to the Board of Directors Meeting held on March 23, 2021 for discussion and improvement. More course information will be provided in the future, or lecturers would be hired to deliver lessons at the directors’ and supervisors’ residences. The Company

24

Evaluated Items			Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustrations
(4)Does the company regularly evaluate the independence of CPAs?			plans to invite CPAs to attend the Board of Directors Meeting at least twice per year to discuss financial statements of half or the whole year so as to understand financial condition of the company. (4) The Company reviews the independence of CPAs annually. In the recent year before the printed date of the annual report, such review has been conducted on March 13, 2020, and March 23, 2021. The Board of Directors Meeting checked whether the CPAs are Directors or Shareholders, or receive remunerations from the Company and make sure they are not stakeholders. The Board of Directors reviews independence of CPAs (note 2) before electing the CPAs, and the CPAs are required to offer “Statements of Independence.” When the accountant has been proven to have no financial interest and business relations other than the fairs for certification and tax management of the Company, and the family members of the CPA are not in any condition violating the independence principle, the hiring and fees of the CPA could be proposed and resolved.

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Evaluated Items			Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustrations
4. Does the public company have a suitable number of competent corporate governance personnel, and has it appointed a corporate governance supervisor responsible for corporate governance matters (including but not limited to providing information for directors and supervisors to perform their duties, assisting directors and supervisors with regulatory compliance, handling matters related to Board meetings and shareholders' meetings, and preparing proceedings for Board meetings and shareholders' meetings)?			On March 13, 2020, the Company gained authorized from the board of directors to appoint Kuo Hui-Ying as corporate governance supervisor. Kuo Hui-Ying has more than three years of experience engaging in finance, deliberations and stock affairs for publicly listed companies. The main responsibilities of the corporate governance supervisor are to handle matters related to the meetings of the board of directors and shareholders’ meetings in accordance with the law, to prepare the minutes of the board of directors and shareholders' meetings, to assist the directors and supervisors in taking office and continuing with their training, provide the directors and supervisors with the necessary information for the execution of their duties, assist the directors and supervisors in complying with laws and regulations, and so on. The corporate governance supervisor had already been relevant matters in 2020 was as follows: ①Develop and plan an appropriate corporate system and organizational structure to promote the independence of the board of directors, the Company's transparency and compliance with laws and regulations, and the implementation of internal audit and internal control.	None

~~26~~

Evaluated Items			Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustrations
			② Consult the opinions of directors before the board of directors meeting to plan and draw up the agenda, notify all directors to attend and provide sufficient meeting materials at least 7 days before the meeting, and let the directors understand the content of the relevant issues; if the topic at hand involves matters related to personal interest and calls for recusal, the related personnel will be advised in advance. ③Register the date of the shareholders’ meeting every year in accordance with the time constraints set by law; prepare and report the meeting notice, meeting manual and meeting minutes before the deadline; and handle relevant changes following an amendment of the articles of association or the re-election of directors and supervisors. ④In addition to the performance evaluation of individual directors every year, also conduct an internal performance evaluations of overall operations. Please refer to Note 3 for the situation of the Corporate Governance Supervisor in 2020.

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Evaluated Items			Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustrations
5. Does the company establish a communication channel and build a designated section on its website for stakeholders (including but not limited to shareholders, employees, customers and suppliers), as well as handle all the issues they care for in terms of corporate social responsibilities?			The Company maintains good cooperative relation with its stakeholders, including the clients, suppliers, employees, and shareholders. The Company also built a designated section on its website for stakeholders. There are designated units to serve as communication channel handle all issues stakeholders care for in terms of corporate social responsibilities.	None
6.Does the company appoint a professional shareholder service agency to deal with shareholder affairs?			The Company entrusted the professional shareholder service agency—department of agent for stock affairs, Yuanta Securities Co., Ltd—to deal with shareholders’ matters so that shareholders meetings could be held in a legal,effective,and secured manner.	None
7.Information Disclosure (1) Does the company have a corporate website to disclose both financial standings and the status of corporate governance? (2)Does the company have other information disclosure channels (e.g. building an English website, appointing designated people to handle information collection and disclosure, creating a spokesman system, webcasting investor conferences)? (3)Does the companyannounce and	  		(1) The Company has set up a website (http://www.avc.co)to disclose information about financial affairs and corporate governance periodically and periodically. (2) The Company has assigned an appropriate person of the information department to collect and disclose information for shareholders and stakeholders on the Company’s website. The Company has designated a spokesperson or a deputy spokesperson to reveal the Company’s financial business strategies and content to the public. The Company was invited to participate two meetings of corporate legal person in 2020, and has uploaded report to the Market Observation Post System and the Company’s website. (3)Because the Company has many	The company has not been able to announce and declare its annual financial affairs within two months after the end of the year. In the future, each subsidiary will be urged to complete the annual report as soon as possible to comply with this requirement.

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Evaluated Items			Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustrations
report annual financial statements within two months after the end of each fiscal year, and announce and report Q1, Q2, and Q3 financial statements, as well as monthly operation results, before the prescribed time limit?			subsidiaries, and there is a Lunar New Year holiday from January to February, it has not been able to announce and declare the annual financial report within two months after the end of the year. The financial reports for the first, second and third quarters and monthly operating conditions were all declared before the statutory announcement period.
8.Is there any other important information to facilitate a better understanding of the company’s corporate governance practices (e.g., including but not limited to employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, directors’ and supervisors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors and supervisors)?			1. Compensation & Benefits: the company purchases various insurances for the employees, including labor insurance, health insurance, group insurance, and travel insurance for personnel on business trips. The Company also offers periodical health exam, complete on-the-job training system, good career path plan, intact leave plans, periodical labor-management meetings, etc. 2. Welfare of the employees: The Company has established Welfare Committee to deal with affairs regarding employees’ welfares, including special bonuses on three major holidays, birthdays, bonuses for newly-weds, subsidies for education of offspring, consolation money for deaths or illness, subsidies for domestic or oversea travel, etc. 3. Relation with the investors: a spokesperson is designated to deal with shareholders’ suggestions. 4. Relation with suppliers: the Company maintains good relationship with the suppliers. 5. Relation with the stakeholders:	None

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Evaluated Items			Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustrations
			stakeholders can communicate with or offer suggestions to the Company to maintain their legal rights. 6. On-the-job training courses for directors and supervisors: the Company periodically offers information about training courses and conferences held by related organizations to Directors and Supervisors to enhance their professional competence about management and improve the performance of governance of the company. 7. Implementation of risk management policies and risk evaluation standard: the Company establishes internal regulations in accordance with the laws to manage and evaluate various risks. 8. Implementation of policies for dealing with clients: the Company maintains good relationship with the clients by visiting clients periodically to understand their needs and offer technical supports so as to create more profits. 9. Condition of purchasing liability insurance for Directors and Supervisors: the Company has purchased liability insurance for Directors, Supervisors, and significant managers. 10. Correspondence between the performance evaluation of Directors and Manager and their remunerations: the Remunerations of the Company follows Article 27 of the Corporate Articles, and no more than 2 percent of earnings in the year could be set aside as remunerations for Directors. The directors did not receive compensations other than the remunerations and

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Evaluated Items	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustrations
			honorariums from the company. The remuneration is distributed according to the evaluation following Principles for Performance of Evaluation of Directors and Managers. The overall development, risks of operation and developing trends of the industry, also consider the manager individual seniority, rank, and the individual’s reaching rate as well as contribution to the company’s performance would be considered to offer each individual reasonable compensation. The Compensation Committee and the Board of Directors would review the evaluation of performance and justification of remunerations as well as assess the remuneration system by considering operation conditions and related laws so as to maintain the balance between sustainable operation and risk management for the company.
9. Please illustrate improvement according to the evaluation outcome issued by Taiwan Stock Exchange Corporate Governance in the most recent year, and propose prioritized items to strengthen and improve: In the 6th(the year of 2019) Outcome of Evaluation on Corporate Governance issued by the Securities & Futures Institute, the Company was listed as a company of top 6 to 20 percent, and the major items to be improved are as below: Unscored items Improvements Does the Company hold regular shareholders’ meetings before the end of May? In the future, the shareholders’ meeting will be convened before the end of May as much as possible based on actual operations. Does the Company avoid hiring the Chairperson or the Chairperson’s spouse as the General Manager (Executive Officer)? In consideration of smooth operation, Mr. Shen Ching Hang serves the position of Chairperson and General Manager. AVC added one more independent director during the reelection of directors in 2019. Is the proportion of the Company’s Directors who are hired by the affiliated companies no The Company plans to elect the Directors with professional backgrounds of the extended

31

	Evaluated Items			Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
		Yes	No	Abstract Illustrations
	more than one third of the total members of the Board?			business, diversifying the backgrounds of the Board members.
	Does the Company hire at least one female Director as the member of the Board?			The Company plans to elect the Directors with professional backgrounds of the extended business, diversifying the backgrounds of the Board members.
	Does the company voluntarily set up more independent director seats than required by law?			There are 13 directors of the Company, and regulations stipulate that there should be 3 independent directors. The Company elected 4 independent directors in 2019, constituting more seats than required bylaw.
	Does the company set up full-time personnel for corporate governance to be responsible for corporate governance-related matters, and explain the operation and implementation of the established unit in the annual report and companywebsite?			In 2020, the establishment of a corporate governance supervisor and the establishment of full-time corporate governance personnel were completed. The follow-up operation and implementation will be explained in the annual report and companywebsite.
	Has the company's board of directors performance evaluation methods or procedures been approved by the board of directors, clearly stipulated that the external evaluation should be carried out at least every three years, and the evaluation shall be carried out in accordance with the time limit set by the method, and the execution status and evaluation results will be disclosed on the company's website or annual report?			The company has a board performance evaluation method, and conducts a board performance evaluation self-assessment every year; and this will be evaluated by an external professional independent agency or an external expert study team based on actual needs.
	Do the Directors and Supervisors complete on-the-job training in accordance with Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies?			In the year of 2019, six directors including Chen Yi Cheng, Wang Jui Pin, Chen Jun Cheng, Cho Yi Lang, Peng Tai Hsiung and Ueng Joseph Chiehchung, have completed six hours of on-the-job training course. The Company plans to the hire lecturers from external institutions to deliver courses to all Directors and Supervisors so as to help them complete the required on-the-job training.
	Does the company publish its annual financial report within two months of the end of the			The Company has many subsidiaries, and there is a Lunar New Year holiday in January-February. It is

32

	Evaluated Items			Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
		Yes	No	Abstract Illustrations
	fiscal year?			not yet possible to announce and declare the annual financial report within two months after the year end.
	Does the company voluntarily publish its four-quarter financial forecast report without correction for omissions in its related operations byTSEC or TPEx?			The Company has no plan to voluntarily announce four-quarter financial forecasts.
	Does the company's annual report disclose the remuneration of individual directors and supervisors?			The Company has no plans to disclose the remuneration of individual directors and supervisors.
	Does the Company's annual report disclose the individual remuneration of the management team?			The Company currently has no plan to disclose the individual remuneration of the management team.
	Has the company's corporate social responsibility report and other reports divulging the company's non-financial information been verified bya thirdparty?			The company prepares a corporate social responsibility report every year, but has not yet obtained third-party verification.
	Has the company signed a collective bargaining agreement with the trade union in accordance with the Collective Agreement Act?			The company has no plan to sign a collective bargaining agreement with the trade union.

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Note 1 ： Implementation of diversifying the Board members

A. Diversifying according to Professions

Name	Judgements on Operation	Accounting and Financial Analysis	Management	Crisis Management	Knowledge of the Industry	International Market	Leadership	Strategic Competence
Shen,ChingHang	V	V	V	V	V	V	V	V
Ono,Ryoji	V	--	V	V	V	V	V	V
Motomura,Takuya	V	--	V	V	V	V	V	V
Kobayashi Takashi	V	--	V	V	V	V	V	V
Kitanoya Atsushi	V	V	V	V	V	V	V	V
Chen,Yi Chen	V	V	V	V	V	V	V	V
Wang,Jui Pin	V	V	V	V	V	V	V	V
Huang,Chiu Mao	V	--	V	V	V	V	V	V
Gao,Pai Ling	V	--	V	V	V	V	V	V
Chen,Chun Cheng	V	V	V	V	V	V	V	V
Cho,I Lang	V	V	V	V	V	V	V	V
Peng,Tai Hsiung	V	V	V	V	V	V	V	V
UengJoseph Chehchung	V	V	V	V	V	V	V	V

B. The proportion of directors with employee status is 38.46%, the proportion of independent directors is 30.77%, and there is 1 independent director who has been in office for less than 3 years, In addition to the Taiwanese Directors, the Company hires four Japanese Directors, one American Director, taking the proportion of 38.46%. C. Refer to Page 10-11 for the education background and experiences of the members of the Board.

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Note 2: Criteria for Evaluation of the CPA’s independence

	Evaluation	Evaluation
	Chen,	Huang,	Fulfill the criteria
Independence of CPAs
	Cheng	r Shi Jie	independence
	Chu
Does the accountant have direct or indirect major relationshipof financial interests with the Company?	No.	No.	Yes.
Does the accountant have guaranteed for Company or the Company’s Directors?	No.	No.	Yes.
Does the accountant have close business relationship or potential relationshipof employment with the Company?	No.	No.	Yes.
Does the accountant and the auditing group member take the positions of Directors, Managers, or other positions having great influence on auditing currently or within the past twoyears?	No.	No.	Yes.
Does the accountant offer non-auditing service to the Companywhich could directlyinfluence the auditingwork?	No.	No.	Yes.
Does the accountant serve as agent for the stocks issued bythe Companyor other securities?	No.	No.	Yes.
Does the accountant serve as the defender of the Company or negotiate about a conflict with a third party for the Company?	No.	No.	Yes.
Is there kinship between the accountant and the Directors, Managers, or persons in the positions having major impact on the auditingcases?	No.	No.	Yes.

Note 3 ： On-the-job training of the Company Secretary

Date of on-the-job training courses	Date of on-the-job training courses	Organizer	Course Title	Hours	Total hours of received on-the-job training of theyear
Start
	End
September 24, 2020	September 24, 2020	Association of Corporate Governance Professionals	2020 Substantial Beneficiary Legal Seminar	3	18
September 28, 2020	September 29, 2020	Accounting Research and Development Foundation	Continuing Education Course for Accounting Executives of Issuer Securities Exchanges	12
October 16, 2020	October 16, 2020	Taiwan Stock Exchange Corporation and Taipei Exchange.	2020 Corporate Governance and Corporate Integrity Directors and Supervisors Seminar	3

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3.4.4 If the Company has set up Remuneration Committee, the composition, responsibilities, and operation should be revealed:

• A. Members of the Remuneration Committee

Title （Note1）	Criteria Name	Meets One of the Following Professional Qualification Requirements, Together with at Least Five Years’ Work Experience	Meets One of the Following Professional Qualification Requirements, Together with at Least Five Years’ Work Experience	Meets One of the Following Professional Qualification Requirements, Together with at Least Five Years’ Work Experience			Independence Criteria (Note 2)	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Independence Criteria (Note 2)	Number of Other Public Companies in Which the Individual is Concurrent ly Serving as an Remunerat ion Committee Member	Remarks
		An instructor or higher position in a departmen t of commerce, law, finance, accounting, or other academic departmen t related to the business needs of the Company in a public or private junior college, college or university	A judge, public prosecutor, attorney, Certified Public Accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the Company	Has work experience in the areas of commerce, law, finance, or accounting, or otherwise necessary for the business of the Company	1	2	3	4	5	6	7	8	9	10
Independent director	Cho I Lang	No	Yes	Yes											0	None
Independent director	Chen Chun Chen	No	No	Yes											0	None
Independent director	Peng Tai Hsiung	No	No	Yes											0	None
Independent director	Ueng Joseph Chiehchun g	Yes	No	Yes											0	None

Note 1: The titles include Director, Independent Director, and Other.

• Note 2: Please tick the corresponding boxes that apply to a member during the two years prior to being elected or during the term(s) of office.

• a. Not an employee of the Company or any of its affiliates.

• b. Not a director or supervisor of the Company or any of its affiliates (not applicable in cases where the person is an independent director of the Company, its parent company, subsidiary, or the subsidiary of the same parent company in accordance with the Act or with local laws).

• c. Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate amount of one percent or more of the total number of issued shares of the company or ranks as one of its top ten shareholders.

• d. Not a spouse, relative within the second degree of kinship, or lineal relative

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within the third degree of kinship of a manager in (1) or personnel in (2) and (3).

• e. Not a director, supervisor, or employee of a corporate shareholder that directly holders 5% or more of the Company's outstanding shares, is a top five shareholder, or appointed a representative as the Company's director or supervisor in accordance with Article 27, Paragraph 1 or 2 of the Company Act (not applicable in cases where the person is an independent director of the Company, its parent company, subsidiary, or the subsidiary of the same parent company in accordance with the Act or with local laws).

• f. Not a director, supervisor, or employee of other companies controlled by the same person with over half of the Company's director seats or shares with voting rights (not applicable in cases where the person is an independent director of the Company, its parent company, subsidiary, or the subsidiary of the same parent company in accordance with the Act or with local laws).

• g. Not a director, supervisor, or employee of another company or institution who is the same person or spouse of the Company's chairperson, president or equivalent position (not applicable in cases where the person is an independent director of the Company, its parent company, subsidiary, or the subsidiary of the same parent company in accordance with the Act or with local laws).

• h. Shareholders (not applicable in cases where the specific company or institution holds 20% or more but less than 50% of the Company's outstanding shares, and is an independent director of the Company, its parent company, subsidiary, or the subsidiary of the same parent company in accordance with the Act or with local laws).

• i. Not a professional individual who, or an owner, partner, director, supervisor, or manager of a sole proprietorship, partnership, company, or institution that audited or provided commercial, legal, financial, or accounting services for total compensation not exceeding NT$500,000 in the most recent two years to the company or to any affiliate of the company, or a spouse thereof, This does not apply to members of the Remuneration Committee, Public Tender Offer Review Committee, or Merger and Acquisition Special Committee performing duties in accordance with the Securities and Exchange Act or laws and regulations related to mergers and acquisitions.

• j. Not having any of the situations set forth in Article 30 of the Company Act of the R.O.C.

• B. Responsibilities of the Remuneration Committee:

• The Remuneration Committee should carry out its obligation with good will and perform the duties faithfully. It shall submit the proposals to the Board of Directors for discussion. The suggestions about remunerations of the supervisors shall be specified in the Corporate Articles or resolved to be authorized to the Board of Directors before being submitted to the Board for discussion:

• i. review the Articles and make suggestions for improvement periodically;

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• ii. establish and periodically review the annual and long-term performance goal of the Company’ directors, supervisors, and managers, and the policies, system, criteria, and structure of the remuneration;

• iii. periodically evaluate the completion level of the performance goal as well as determine the content and amount of remuneration for each individual.

• The Remuneration Committee should follow the following principles when fulfilling its duties:

• i. It should make sure the remunerations are arranged in accordance with the related laws and the compensation is appealing to talents.

• ii. It should evaluate the performance and remuneration of directors, supervisors, and managers with reference of the standard adopted by other companies of the same industry, the time devoted by an individual, the duties, achieving rate of personal goal, performance in other positions, and remuneration that the Company assigned to others persons in positions of the same level. Reasonability of the connection between individual performance and the Company’s performance as well as potential risks should also be judged based on the achieving rate of short-term and long-term goals and the financial condition of the Company.

• iii. It should not lead the directors and managers to conduct behaviors beyond the Company’s risk appetite.

• iv. It should consider the characteristics of the industry and the nature of the Company’s business to determine the portion of the short-term merit bonuses distributed to directors and senior managers as well as the payment time of variable pay.

• v. Members of the Committee shall not participate in the discussion and voting regarding the individual’s remuneration. Remuneration in the preceding two subparagraphs include cash remuneration, stock option, dividend share, retirement welfare or severance pay, subsidies, and other measures with substantial rewarding effects; the designated range should be in correspondence with remunerations of directors, supervisors, and managers specified in the Regulations Governing Information to be Published in Annual Reports of Public Companies. Objection or modification on suggestions of the Committee shall be adopted by majority of the attendees in the Board of the Directors’ meeting present with more than two-thirds of all directors. Any concrete suggestions indicating that the Board’s remuneration plan established according to the aforementioned principles which is superior to that submitted by the Remuneration Committee shall be specified in the recorded resolutions.

• If the remuneration passed by the Board of Directors exceeds the recommendation of the remuneration committee, the circumstances and cause for the difference shall be specified in the proceedings, and should be publicly reported in the information website designated by the authorities within two days after the Board of Directors’ Meeting.

If stratified decision procedure requires that remunerations for the directors and managers of Subsidies of the Company should be adopted by the Board of the Company, the Remuneration Committee should offer its suggestions before the case is submitted to the Board of Directors’ Meeting for discussion.

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• C. Operation of the Remuneration Committee

• i. The Company’s Remuneration Committee consists of four members.

• ii. The term of the committee members is from June 13, 2019, to June 12, 2022. A total of three (A) Remuneration Committee meetings were held in the previous year (2020). The attendance record of the Remuneration Committee members was as follows:

Title	Name	Attendance in Person(B)	By Proxy	Attendance rate (%) (B/A)	Remarks
Convener	Cho, I Lang	3	0	100%	－
Committee member	Chen, Chun Cheng	3	0	100%	－
Committee member	Peng, Tai Hsiung	3	0	100%	－
Committee member	Ueng Joseph Chiehchung	3	0	100%	－
Other mentionable items: 1. If the board of directors declines to adopt or modifies a recommendation of the remuneration committee, it should specify the date of the meeting, session, content of the motion, resolution by the board of directors, and the Company’s response to the remuneration committee’s opinion (e.g., the remuneration passed by the Board of Directors exceeds the recommendation of the remuneration committee, the circumstances and cause for the difference shall be specified): None. 2. Resolutions of the remuneration committee objected to by members or subject to a qualified opinion and recorded or declared in writing, the date of the meeting, session, content of the motion, all members’ opinions and the response to members’ opinion should be specified: None.

D. Items for discussion and resolutions of Remuneration Committee Meeting in the year of 2020:

Date / Session	Items for discussion	Resolutions	The company handles the opinions of the Remuneration Committee
2020/3/13 (the second meeting of the fourth session)	Review the amendments to the organizational rules of the Company's Compensation and Remuneration Committee and submit them for consideration.	The proposal was adopted by all attendees.	The proposed board of directors was approved by all attending directors and independent directors without objection.
	To censor remunerations distributed to the Company’s director and employees in the year of 2019.	The proposal was adopted by all attendees.	The proposed board of directors was approved by all attending directors and independent directors without objection.
	Review of the Company's designation company secretary.	The proposal was adopted by all attendees.	The proposed board of directors was approved by all attending directors and independent directors without objection.
2020/8/11 (the third meeting of the fourth session)	To censor the Company’s plan for assignment and date of distributing remunerations from earnings in the year of 2019.	The proposal was adopted by all attendees.	The proposed board of directors was approved by all attending directors and independent directors without objection.

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Date / Session	Items for discussion	Resolutions	The company handles the opinions of the Remuneration Committee
2020/11/10 (the fourth meeting of the fourth session)	to discuss the amount of remunerations in cash for the employees assigned by the managers in the year of 2019 and year-end performance bonus in theyear of 2020.	The proposal was adopted by all attendees.	The proposed board of directors was approved by all attending directors and independent directors without objection.
	Accounting supervisor change case.	The proposal was adopted by all attendees.	The proposed board of directors was approved by all attending directors and independent directors without objection.
	Review the amendments to the organizational rules of the Company's Compensation and Remuneration Committee and submit them for consideration.	The proposal was adopted by all attendees.	The proposed board of directors was approved by all attending directors and independent directors without objection.

3.4.5 Corporate Social Responsibilities and differences and causes of differences in corporate social responsibility practices with listed companies:

Evaluation item			Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Explanation
1. Does the company assess ESG risks associated with its operations based on the principle of materiality, and establish related risk management policies or strategies?			The Company has established Corporate Social Responsibilities Best Practice Principles and periodically (once every year) publish its Corporate Social Responsibility (CSR) report and disclose the practical conducts to fulfill the corporate social responsibility. Major policy and reflections of the Company are as below: (1) The Company and the management team are aware that it is a fundamental requirement and the expectation from consumers, clients, the public, and the government that a responsible company should follow international standards for laborers and protect laborers’ rights. (2) The Company commits itself to follow national laborers’ laws,abide bythe	None

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Evaluation item			Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Explanation
			internationally recognized laborers’ standard, and other criteria adopted by the industry, and international convention, as well as improving the work condition and welfare. (3) The Company regards management of Corporate Social Responsibility / EICC as important as quality control and takes it as a significant part of the regular operation. Implementation of CSR is a requirement to cater to clients’ needs. The Company designates the senior manager to organize, establish, implement, and maintain a good CSR / EICC system, and the requirement is imposed on the supplier and contractors. (4) The Company devotes itself to integrate Corporate Social Responsibility to various aspect of the Company’s operation, including the policies, models for management of internal operation, procedures of various implementations, and educational training as well as audits the suppliers and contractors so as to pursue optimal benefits for the clients and stakeholders.
2. Does the company establish a dedicated or concurrent unit in charge of promoting CSR with senior management authorized by the board to take charge of proposing CSR policies and reporting to the board?			The Company has a corporate social responsibility promotion department under the Central Quality Assurance-Quality System Department. To deal with related corporate social responsibility promotion, the department is divided into three groups. The responsibilities of each group are as follows: (1) Economic development promotion group: Board independence, corporate information disclosure transparency, risk control,shareholders' equity.	None

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Evaluation item			Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Explanation
			(2) Sustainable environment promotion group: Propose and promote specific goals and practices in environmental protection, energy conservation, and technology development. (3) Social participation promotion group: The staff fosters, cares about and invests in specific issues with core functions over the long term, exerting a positive influence. At the end of each year, each group gathers the opinions of stakeholders, evaluates and reviews the corresponding countermeasures, and sets the goals of the project, and is responsible for the implementation of social responsibility related matters in the following year. The latest report to the board of directors on May 14, 2020 reviewed the effectiveness of operations and its vital concerns.
3. Environmental issues (1) Does the company establish proper environmental management systems based on the characteristics of their industries? (2) Does the company endeavor to improve the efficiency of resource utilization and use recycled materials which have a low impact on the environment?	 		(1) The Company’s operation system has been recognized by several international standard certification, including ISO 9001、ISO 14001、OHSAS 18001、ISO/TS16949、S8000、 QC080000、ISO140646、TL9000、 TS-16949、ISO27001, etc. The Company is also devoted to promoting quality control and environmental management system. (2)To reduce remission of greenhouse gas, the Company has established Procedures of Managing Greenhouse Gases Inventory and has obtained the ISO14064 Greenhouse Gasses Inventory: the Company aims to reduce 5% of greenhouse gas emission with the same unit output value. Energysavingand carbon reduction	None.

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Evaluation item			Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Explanation
(3) Does the company evaluate potential risks and opportunities brought by climate change, and take response measures to climate-related issues? (4) Does the company compile statistics of greenhouse gas emissions, water use, and total weight of waste in thepast two	 		policies: major source of the Company’s greenhouse emission include purchased electricity and the use of diesel and gasoline. The purchased electricity gives off the largest proportion of the greenhouse gas. To effectively reduce the impact of greenhouse effect on the environment and reduce the energy consumption, the Company keeps create, evaluate, and implement a series of plans save energy, such as renovating equipment and supplying hot water to the dormitory with residual heat of air compressor. (3) As a citizen of the world, The Company knows that greenhouse gas emissions will intensify global warming and cause extreme climate change. Therefore, it has been active in regard to environmental protection. In accordance with the ISO14064 series of standards developed by the International Standards Organization (ISO), the ISO14064 carbon inventory system certification has been implemented in the Shenzhen factory since 2010. The Company will continue to pay attention to the issue of climate warming and actively seek solutions for energy saving and emission reduction in order to reduce the environmental impact caused by the company's warm gas emissions. (4) In order to reduce greenhouse gas emissions, the Company has formulated "greenhouse gas inventory managementprocedures" andpassed

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Evaluation item			Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Explanation
years, and does it establish policies for energy conservation & carbon reduction, greenhouse gas emission reduction, water use reduction, and other waste management?			the ISO14064 greenhouse gas inventory certification. Greenhouse gas emission reduction goals: Under conditions of the same unit output value, the 2021 target is to reduce carbon emissions by 2.5%. Energy saving and carbon reduction management policy: The company's greenhouse gas emissions are mainly used for purchases of electricity, diesel and gasoline. Among them, purchased electricity is the largest source of greenhouse gas emissions. In order to effectively reduce the environmental impact of the greenhouse effect, we reduce the Company's energy resource consumption. The company continues to develop, evaluate and implement a series of energy-saving and emission-reduction plans every year. Examples include equipment modification, the use of air compressor waste heat to supply hot water in dormitories,and so on.
4. Preserving Public Welfare (1) Does the company formulate appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights?			(1) To fulfill the corporate social responsibility, ensure the fundamental human rights of all staff, the clients, and stakeholders, the Company abides by the local legal regulations, support and respect international regulations regarding laborers’ human rights, including International Labor Office Tripartite Declaration of Principles, OECD Multinational Enterprise Guiding Principles, Electronic Industry Citizenship Coalition, and other related regulations. In addition to abidance by the Labor Law and related legal rules, the Company also establish channel for smooth	None.

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Evaluation item			Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Explanation
(2)Does the company have reasonable employee benefit measures (including salaries, leave, and other benefits), and do business performance or results reflect on employee salaries? (3) Does the company provide a healthy and safe working environment and organize trainingon health and safety	 		communication so as to allow employees to fully express their opinions, such as convening labor-management conferences periodically, innovating proposing system, etc. (2) A. Formulate and implement reasonable employee welfare measures (including salary and other benefits): According to the Corporate articles specified a profit for the year, no less than 3% of the annual profit should be allocated as employee compensation. In addition, the "AVC Group Bonus Measures" were established and the performance bonuses were calculated based on the profitability of the group and the performance assessment results of various business departments and individuals, so that the remuneration of colleagues and the company's operations can grow together. B. Operating performance or results are appropriately reflected in employee compensation: The performance bonus is limited to the full-time employees of the Company and its subsidiaries. The amount of payment will be based on seniority, rank, job performance, overall contribution or special merit. (3) It is the one of the fundamental obligations of the AVC Company for its corporate citizenship to offer employees a safe and healthywork environment. A

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Evaluation item			Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Explanation
for its employees on a regular basis?			designated Environmental Security and Sanitation Unit is established in each production plant of the Company, which is responsible for planning, promoting, and reviewing the management of environmental security and sanitation. The Company emphasizes the real-time protection and rescue for employees in practical work tasks. An adequate number of qualified part-time security personnel are assigned in each plan. The production site is equipped with laborer protection equipment and first-aid kits so that employees can get immediate medical treatment. To improve employees’ knowledge in work security and sanitation, we offer internal and external training courses to entry-level and full-time employees in each production plant. Over 21,163 person-times participated in the periodical safety fire drill in plants of ShenZhen, Dongguan, ChengDu, Jiashan, Wuhan and Kaohsiung factories in 2020, which helps to raise awareness of fire prevention and reduce damage brought by the disaster. The Company protects the employees’ health and security by actively maintaining, upgrading, and improving environmental security and sanitation works. The AVC Company holds a humane principle, eliminating hazardous work conditions from the origin and reducing risks in employees’ health and security. The Company conducts evaluation of occupational hazards and intact occupational health management in all productionplants for multifaceted

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Evaluation item			Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Explanation
(4)Does the company set up effective career development and training programs for its employees? (5) Does the company comply with relevant regulations and international standards in customer health and safety, customer privacy, and marketing and labeling its goods and services, and has it established consumer rights protection policies and complaint procedures?	 		management in reducing control form the origin, engineering protection, individual protection, periodical health check, and periodical inspection. (4) The Company creates a favorable environment for the career development of employees, and establishes an effective career development training program in order to pass on the company's culture and business philosophy and implement the goal of cultivating talent. Corresponding training is set every year according to the Company’s strategic objectives, regulations, professional needs of various positions, grades, etc., and to provide comprehensive courses. (5) The Company has a dedicated person and an email address to deal with issues related to the Company's consumer rights complaints, and handles consumer complaints promptly and fairly. The marketing and labeling of the Company's products follow the relevant laws and international standards to ensure product quality. When introducing new suppliers, manufacturers with ISO14000 or green supply chain certification will be listed as qualified suppliers first. When introducing new materials, suppliers must provide relevant certification documents. The materials comply with RoHs and REACH specifications.

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Evaluation item	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Explanation
(6) Does the company have a supplier management policy, require suppliers to comply with regulations on environmental protection, occupational safety and health, and labor rights, and what is its implementation status?			(6) The Company appoints senior managers to be responsible for social responsibility / EICC management; to establish, implement and maintain a good social responsibility / EICC management system; and to extend this requirement to suppliers and subcontractors. The Company requires all suppliers to sign a sustainable development agreement. The agreement is also the primary prerequisite for reviewing the supplier’s eligibility. Suppliers must be based on EICC and SA8000 specifications, and the required suppliers comply with all legal regulations and international standards. This includes business decision-making, social and environmental development, effective prevention, and control of related risks.
5. Does the company reference internationally accepted reporting standards or guidelines, and prepare reports that disclose non-financial information of the company, such as corporate social responsibility reports? Do the reports above obtain assurance from a third party verification unit?			The Company has been preparing corporate social responsibility reports with reference to internationally-prepared reporting standards. The previous reports did not obtain the confidence or assurance opinions of a third-party verification unit.	The Company will send to a third-party verification unit to issue a confidence or guarantee opinion according to actual needs in the future.
6. If the Company has established the corporate social responsibility principles based on “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies”, please describe any discrepancy between the Principles and their implementation: The Company conduct corporate governance in accordance with the Company Law and related regulations of the Financial Supervisory Commission R.O.C., practicingthe majorgoverning principles.
7. Other important information to facilitate better understanding of the company’s corporate social responsibility practices：

1. If the Company has established the corporate social responsibility principles based on “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies”, please describe any discrepancy between the Principles and their implementation: The Company conduct corporate governance in accordance with the Company Law and related regulations of the Financial Supervisory Commission R.O.C., practicing the major governing principles.

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Evaluation item	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Explanation
AVC actively participates in regional gatherings and community-related activities. In November 2020, the Company donated NT$200,000 to Taishin Charity Foundation’s 11th "Power of Love" charitable activities. The Company also participated in the “2020 Run For Future Charity Run” organized by Sunfar and Kaohsiung Entrepreneur Association and donated NT$50,000 to its charitable cause. The Company will also continue to hire visually impaired masseurs to relieve physical and mental fatigue of employees and effectively improve work efficiency, thereby successfully building a happy enterprise that not only contributes to employment opportunities for the disabled, but also make the company a friendly workplace. In order to encourage physical fitness, enrich the spare time of employees and conduct cultural exchanges with surrounding enterprises as well as promote the development of urban culture and economy, the Shenzhen plant in mainland China participated in the "Party Building Cup” Men’s Basketball Tournament in Shajing Street in 2020 and the fifth "Trade Union Cup" basketball game in Bao’an District in 2020. The Company also participated in the Shajing Street Environmental Protection Station Friendship Game and AVC Football Stadium Inauguration Ceremony. Furthermore the Company also coordinated with police stations, fire squadrons, and working communities to implement large-scale fire emergency drills, and actively participated in the 2020 ShajingTop100 Enterprises Health Walk and other communityactivities.

3.4.6 Ethical Corporate Management and Situations and reasons for differences with the Code of Business Conduct and Ethics for TSEC/TPEx Listed Companies.

Evaluation Item:			Implementation Status	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
1. Establishment of ethical corporate management policies and programs (1) Did the company establish an ethical corporate management policy that was approved by the Board of Directors, and declare its ethical corporate management policy and methods in its regulations and external documents, as well as the commitment of its Board and management to implementing the managementpolicies?			(1) The Company has established Procedures for Ethical Management and Guideline for Conduct to ensure a high level of integrity in its business interaction with shareholders, employees, suppliers, governmental units, and the general public (including conditions in which personal interests was in conflict with the Company’s interest). It also	None.

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Evaluation Item:			Implementation Status	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
(2) Does the company establish mechanisms for assessing the risk of unethical conduct, periodically analyze and assess operating activities within the scope of business with relatively high risk of unethical conduct, and formulate an unethical conduct prevention plan on this basis, which at least includes preventive measures for conduct specified in Article 7, Paragraph 2 of the Ethical Corporate Management Best- Practice Principles for TWSE/TPEx Listed Companies? (3) Did the company specify operating procedures, guidelines for conduct, punishments for violation, rules of appeal in the unethical conduct prevention plan, and does it implement and periodically review and revise the plan?	 		promises to ensure that information disclosed in reports submitted to the supervisory institutions of the government and other public organizations in intact, sufficient, accurate, up-to-date, and comprehensible. (2) The Company puts its corporate belief, establishes the workplace culture, promotes five core values in accordance with work ethics and behavioral guidelines. It also establishes and maintains fair, efficient, and superior work environment to ensue sustainable operation of the enterprise. A reporting system was established, which allows employees and related persons to report any inappropriate conducts, and senior executive officers of the Company would be designated to deal with the case in personal. (3) To promote ethical conducts, the Company revealed related regulations on the internal website for the employees’ reference. In the meantime, it promotes the corporate core value and system to abide by to each individual employee as well as offer educational courses of related issues.
2. Fulfill operations integrity policy (1) Does the company evaluate business partners’ ethical records and include ethics-related clauses			(1) The employees should keep an impartial stance while interacting with the suppliers. Theyshall not	None.

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Evaluation Item:			Implementation Status	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
in business contracts? (2) Did the company establish a dedicated unit under the board of directors to promote ethical corporate management, and periodically (at least once a year) report to the Board of Directors and supervise the implementation of the ethical corporate management policy and unethical conduct prevention plan? (3)Does the companyestablishpolicies	 		show any attempt for gaining bribes in any form by trying the interfere with the deal, for this would be hazardous to the competitive procedure in choosing the external suppliers. There should be appropriate review for the negotiation of purchasing, and information including the service and products offered by the supplier, illustration of calculation method, and reasonable prices or fees. The payment should reasonable in proportion to the service or products. (2)①The Company established Integrity Operations Promotion Team to ensure principles of ethical management has been practiced in accordance with each division’s range of duties. The Integrity Operations Promotion Team will report to the Board of Directors on May 14, 2020 on the status of implementation. ②To avoid conflict of interest and provide appropriate channel for stating opinions, the Company has established Procedures for Ethical Management and Guidelines for Conduct in 2014. ③The implement policies of ethical management, the Company offered training sessions for related issues in 2020, and 139 person/time participated in the courses, and 277 person/hours of training was accomplished. (3)To ensure the implementation of

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Evaluation Item:			Implementation Status	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
to prevent conflicts of interest and provide appropriate communication channels, and implement it? (4) Does the company have effective accounting system and internal control systems set up to facilitate ethical corporate management, does the internal auditing unit formulate audit plans based on unethical conduct risk assessment results, and does it audit compliance with the unethical conduct prevention plan or commission a CPA to perform the audit? (5) Does the company regularly hold internal and external educational trainings on operational integrity?	 		Procedures for Ethical Management and Guidelines for Conduct and eliminate breaches of the employees, the Company established a designated phoneline and an email account for Filing Complaints. The Company is willing to take any complaints from the public about the breaches of the Company’s employees through the designated phoneline or email box. (4) The Company has established an internal control and processing system of accounting so as to ensure that every internal trade was conducted under appropriate authorization, with clear records, and in compliance with all laws. The internal auditing persons would review the implementation of internal control system and submit an audit report to the Board. (5) The Company considers “Ethnicity and Responsibility” in the five corporate core values to be of top priority. Thus, the importance of ethical management would be repeatedly emphasized in pre-service training for novice workers and in the regular meetings of the current staff. Totally, approximately 139 hours/person of education training regarding ethical management was accomplished in 2020.
3. Operation of the integrity channel (1) Does the company establish both a reward/punishment system and an integrityhotline? Can the accused			(1) The Company specifies the rewards and related procedures in Article 21 of the Procedures for Ethical	None.

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Evaluation Item:	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
be reached by an appropriate person for follow-up? (2) Does the company establish standard operating procedures for investigating reported cases, and does it take subsequent measures and implement a confidentiality mechanism after completing investigation? (3) Does the company provide proper whistleblower protection?	 		Management and Guidelines for Conduct, and has been working in accordance with related regulations. (2) The company guarantees confidentiality of the reporters’ identities, but it retains the right to impose penalties on employees who make such reports with malicious, harassing, or unjust intentions. (3) Any employee shall not be subject for vengeance by the Company or other employees.
4. Strengthening information disclosure (1) Does the company disclose its ethical corporate management policies and the results of its implementation on the company’s website and MOPS?			(1) The Company shall periodically reveal information related its implementation of ethical management on the Company’s website and the annual report.	None.
5. If the company has established the ethical corporate management policies based on the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies, please describe any discrepancy between the policies and their implementation. The Company has established Procedures for Ethical Management and Guidelines for Conduct in accordance with Ethical Corporate Management Best Principles for TWSE/GTSM Listed Companies. All staff, management team, and the Board of Directors of the Company shall abide by the Procedures and regulations in related Articles. The range of duties is mostly in correspondence with those specified in Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies. The ultimate goal is the eradicate corruption in the enterprise and ensure that internal control system of the enterprise could prevent and detect corruptive conducts in the corporate.
6. Other important information to facilitate a better understanding of the company’s ethical corporate management policies (e.g., review and amend its policies). The Company discloses important information about implementation of the ethical management periodically in the annual report, and it offers educational training sessions about the five corporate core values so as to promote its determination in this aspect. The Company emphasizes ethical management as the fundamentalprinciple for operation and requires that the employees abide bylegal regulations and

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Implementation Status Deviations from “the Ethical Corporate Management Evaluation Item: Best-Practice Yes No Abstract Illustration Principles for TWSE/TPEx Listed Companies” and Reasons behavioral ethics when performing business duties for the Company. The five corporate core values are as follows: take catering to the clients’ need as priority, take ethics and responsibility as the fundamentals, show enthusiasm and perseverance, be liberal and innovative, and work with the team. The essence of “ethics and responsibility” can be conceptualized as below: be prudent and observant, support an argument with statistics, be self-disciplined, keep one’s words, and pursue excellence. The employees should offer clients effective solutions with professional judgment and keep their promises to the clients so as to establish the credibility of the Company.

3.4.7 Corporate Governance Guidelines and Regulations: Please refer to the Company’s website at http://www.avc.co or Market Observation Post System for the Company’s Corporate Articles.

3.4.8 Other Important Information Regarding the Corporate Governance

3.4.8.1. On-the-job training of the Directors and Supervisors in the recent year and preceding the date of publication of the annual report:

				Date of Taking
		Date of	Election		Date of on-the-job
				the Position for			Course
Title	Name				training courses	Organizer
				the first time			Title
		Start	End		End
				Start
Director	Shen, Ching-Hang	November 3, 2020	November 3, 2020	Taiwan Corporate Governance Association	Corporate Governance and Securities Law	3	3.0
Director	Chen, Yi Chen	May 6, 2020	May 6, 2020	Securities & Futures Institute of R.O.C.	Corporate Governance and Securities Law	3	6.0
		September 3, 2020	September 3, 2020	Securities & Futures Institute of R.O.C.	The 2020 Annual Workshop for Prevention of Insider Trading	3
Director	Wang, Jui Ping	September 22, 2020	September 22, 2020	Taiwan Stock Exchange Corporation (TWSE), Taipei Exchange	Corporate Governance 3.0 - A Blueprint for Sustainable Development	3	6.0
		October 22, 2020	October 22, 2020	Securities & Futures Institute of R.O.C.	The 2020 Annual Workshop for Prevention of Insider Trading	3

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				Date of Taking
		Date of	Election		Date of on-the-job
				the Position for			Course
Title	Name				training courses	Organizer
				the first time			Title
		Start	End		End
				Start
Director	Huang, Chiu-Mao	November 3, 2020	November 3, 2020	Taiwan Corporate Governance Association	Corporate Governance and Securities Law	3	3.0
Independent Director	Chen, Chun Cheng	September 30, 2020	September 30, 2020	Securities & Futures Institute of R.O.C.	The 2020 Annual Workshop for Prevention of Insider Trading	3	6.0
		2020/10/22	2020/10/22	Securities & Futures Institute of R.O.C.	The 2020 Annual Workshop for Prevention of Insider Trading	3
Independent Director	Cho, I Lang	September 3, 2020	September 3, 2020	Securities & Futures Institute of R.O.C.	The 2020 Annual Workshop for Prevention of Insider Trading	3	6.0
		November 13, 2020	November 13, 2020	Taiwan Stock Exchange Corporation (TWSE), Taipei Exchange	2020 Corporate Governance and Corporate Integrity Directors and Supervisors Seminar	3
Independent Director	Peng, Tai Hsiung	September 30, 2020	September 30, 2020	Securities & Futures Institute of R.O.C.	2020 Corporate Governance and Corporate Integrity Directors and Supervisors Seminar	3	6.0
		October 16, 2020	October 16, 2020	Taiwan Stock Exchange Corporation (TWSE), Taipei Exchange	2020 Corporate Governance and Corporate Integrity Directors and Supervisors Seminar	3
Independent Director	Ueng Joseph Chiehchung	July 29, 2020	July 29, 2020	Accounting Research and Development Foundation	Common deficiencies in the preparation of corporate financial reports and compliance with internal audit and internal control laws	6	6.0

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• 3.4.8.2. Operation of Corporate Governance Unit, Corporate Social Responsibility Unit, and Ethical Management Unit of the Company and implementation of related policies:

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Corporate Corporate Social Ethical Management
Governance Unit Responsibility Unit Unit
General Manager
Office General Manager
Central Quality Office
Finance & Assurance –
Accounting Division Department of
Quality System Human Resource
Group Auditing Division
Division
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• A. Corporate Governance Unit:

• The Company has established Corporate Governance Unit which is convened by General Manager and consisted of senior executives from Office of General Manager, Division of Financing and Accounting, and Division of Operational Auditing. The major duties of the Unit are as below:

• a. To plan for proper corporate system and organizational structure to improve independence of the Board, transparence of the Company, abidance by the laws, and internal control.

• b. To collect opinions from each Director and list the agenda before the Board of Directors Meeting as well as deliver the notice and offer sufficient information regarding issues to be discussed to all Directors at least seven days prior to the Meeting day so that Directors could have full understanding of the proposals; it there are conditions where conflicts of interest with stakeholders occur, related persons should be reminded in advance to avoid the discussion of relevant proposals.

• c. To register for Shareholders Meetings annually in accordance with the law, create and report notification, handbook, and proceedings for the Meeting before deadline, and register for alternations after amendments in Corporate Articles or reelections of Directors or Supervisors.

• d. To conduct performance review of each Director and overall evaluation of internal operational performance annually, and designate an independent professional institution or experts outside the Company to conduct an external performance evaluation at least once every three years.

• B. Corporate Social Responsibility Unit

The Company has the units that concurrently promote Corporate Social Responsibility subordinated to Central Quality Assurance—Department of Quality System deal with CSR affairs. There are four units promoting

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CSR affairs, including: Unit of Human Resources, Unit of Environment, Health, and Safety Management, Unit of Engineering Affairs, and Unit of Security. Each unit evaluates the system and proposed plans for improvement annually and implements affairs related to social responsibility.

• C. Ethical Management Unit

  • a. The Office of General Manager and Division of Human Resources worked together to establish Ethical Management Unit. Each section of the Company should ensure implementation of ethical management principles in accordance with its business nature and duties. The designated unit shall periodically report the condition of implementation to the Board once every year.

  • b. To avoid policies with conflicts of interests and provide proper channel for stating opinions, the Company has established Procedures for Ethical Management and Guidelines for Conduct.

  • c. To implement policies of ethical management, the Company offers courses of related issues for 139 hours / person in total in 2020.

• Information system and network security risks: The sources of information system risk damage the company faces can be divided into two levels: external and internal. Part of the risk comes from the external Internet, such as malicious system intrusion, downloading of unsafe data on the Internet, and implanting destructive and malicious programs inside, causing personal or overall system delays, paralysis or even shutdown. The other risk can be considered as internally derived risks, including the spread of viruses in internal emails, the installation and use of destructive malicious programs, system vulnerability updates, ransomware, data leakage, inappropriate permission opening, and human operations, etc., resulting in serious loopholes in internal data integrity.

The hazards of the above systemic risks can affect the company's overall business operations; there may be obstacles, delays, and even leakage and interruptions, which may cause significant adverse effects on the company's operating activities, financial conditions, prospects and reputation. Although the occurrence of risk sources cannot be completely eliminated, the correct establishment of system risk management principles and protective measures can effectively strengthen information security. Therefore, the management and implementation of the information security system is relatively important. This is to ensure the grasp of problems at the fastest speed to minimize potential risks.

(1) Information security policy:

Purpose: To strengthen information security management and ensure the confidentiality, integrity and availability of information assets, and to comply with relevant information security requirements, so as to protect the Company from internal and external threats of deliberate destruction. Goals:

• A. Maintain continuous operations of various information systems

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• B. Prevent hackers and various viruses from intrusion and destruction

• C. Prevent improper intent and illegal use by persons with malicious intent

• D. Prevent leakage of sensitive information

• E. Avoid accidents due to human error

• F. Maintain the security of the host's physical environment

(2) Information security management organization:

==> picture [243 x 217] intentionally omitted <==

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

System Information
Security Team
Systems Information
Department
1st Department - 2nd Department -
Systems Information Systems Information
1st Division -
Enterprise Network
Application System ERP System Division
Technology Division
Development
2nd Division -
Network Technology
Office Application System
Development
----- End of picture text -----

(3) Promotion of information security management:

To ensure the effective implementation of the Company’s "Measures for Electronic Data Processing Cycle" so that relevant internal departments and maintenance management personnel can follow required regulations and procedures, internal information security audit measures are implemented every year, with an objective third-party commissioned to conduct an internal annual audit of the company’s operations. The Company's business audit team conducts internal audits and self-assessment audits in August and December each year. External audits are conducted from time to time by an accounting firm to ensure the effectiveness and applicability of information security management and its efficacy, so as to continuously promote information security measures that meet the requirements and expectations of related stakeholders and organizations.

(4) Management scope:

• A. Environment safety management of equipment - System equipment placement and personnel environment protection and access control

• B. Computer system security management - Standardize measures put in place to prevent internal and external intrusion and destruction while ensuring data backup protection

• C. Network anti-hacking security management - Network, firewall and mail data transmission and anti-virus and anti-hacking security mechanisms

• D. System access authorization and control - Standardize the access and change of authorized accounts and data.

• E. Continuous security management - Reviews are conducted at least once a year to truly reflect information security management policies and make it consistent with the latest developments in the company's

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business environment and the latest developments in information security to ensure the feasibility and effectiveness of the management system put in place. This will ensure business continuity and provide reliable services to daily operations.

(5) Response measures and risk management:

• A. External risk management measures:

 In order to avoid the risk of external intrusion, the Internet firewall and anti-virus system are strategically updated and reviewed and adjusted, and the computer is regularly updated with vulnerability patches. At the same time, the Company carries out daily anti-virus risk and vulnerability detection and virus code updates, and sets real-time scanning protection and regular virus scanning procedures, so that system security vulnerabilities can be detected and protected in real time.

 Spam mail filters in the Company’s internal mail system reduce the amount of external spam, which in turn reduces burden on mail servers and effectively improves internal message communication. At the same time, the Company performs virus scanning and filtering to achieve first-line mail entry intrusion protection.

B. Internal risk management measures:

• Authorization for use of and alterations to the Company's important system permissions are classified according to data security permission levels, and users are authenticated and authorized through electronic forms. This has been implemented to avoid users' improper modification of data and the possibility of accidental deletion or leakage of important data, and ensure the accuracy and completeness of the overall internal data.

• Furthermore, to protect the security of the data center, access to the data center is controlled and restricted to authorized personnel. Data and systems integrity is regularly checked to ensure the availability of the company's business data when needed.

• Regular (January and July) and irregular random checks and inspections of computer software are conducted every year to keep the system in a healthy state and reduce the threat of possible damage.

• Warranty contracts are signed with manufacturers/vendors every year for data center host servers and networking backbone equipment, with provisions requiring service standards in the SLA (Service Level Agreement) are met. Evaluations are conducted annually and computer systems are replaced, optimized, or upgraded with new hardware to minimize possible hardware damage.

• ERP, PLM, BPM...etc. systems are of critical importance. If the core database system is damaged, it will inevitably incur high risks to the company’s business operations. Therefore, a hardware/software system backup mechanism has been put in place to ensure reliable availability and service of the system with no interruptions. In terms of data preservation, in addition to a complete backup of the local system, a second copy is stored in another secure location to ensure

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that the risk of sudden disasters or man-made accidents can be restored to normal operating conditions immediately.

(6) ISO27001 certification:

Dongguang Plant: The certificate was successfully introduced in September 2016 and certification has been continuously renewed every year.

Shezhen Plant: The certificate was successfully introduced in March 2020 and certification has been continuously renewed.

==> picture [435 x 290] intentionally omitted <==

1. Greenhouse gas emissions, water consumption and total waste tonnage: Based on concerns about global climate change, and in accordance with the ISO01064 series of standards formulated by the International Organization for Standardization (ISO), major production plants have successively obtained ISO 14064-1 greenhouse gas emissions certification; the results are as follows:

	2019	2020	TestingInstitution
Scope1 - Greenhouse Gas Emissions	3,624.05 tons of CO2e	4,068.63 tons of CO2e	Shenzhen Hongcai Testing Technology Co.,Ltd., Sichuan Province Academy of Industrial Environmental Monitoring, Wuhan Jinglan Detection Co., Ltd.
Scope 2- Greenhouse Gas Emissions	95,051.15 tons of CO2e	98,924.71 tons of CO2e
Total Water Consumption	1,187,271 tons	1,577,493.65 tons
Total Waste Generated	Hazardous waste: 420.74 tons	Hazardous waste: 659.00 tons General waste: 923.3 tons

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1. Energy-saving and carbon-reduction management policies, measures and goals:

2. In 2020, due to the expansion of our manufacturing plants, carbon emissions, water consumption, and total waste increased compared to 2019. In 2021, the following management policies will be implemented to achieve target reductions.

   • A. Greenhouse gas emission policy: The dominant energy used by the Company is externally purchased electricity, and electricity consumption is also the main source of the Company's greenhouse gas emissions. The Company sets goals for reductions in electricity consumption and formulates corresponding management plans and measures accordingly. This is intended to achieve the purpose of reductions in energy use and decreases in greenhouse gas emissions. The Company has always been committed to reducing power consumption, and has carried out refitting of factory-floor lighting into more energy-efficient models. Furthermore, process improvements have been put in place to reduce the use of fans and test on energy consumption of aging equipment as well as energy-saving adjustments to the central air-conditioning system. The implementation of these projects has effectively reduced electricity consumption. With regards to bottlenecks in energy-saving targets due to continuous improvements over the years, the Company has implemented the ISO 50001 energy management system in 2018 to realize greater improvements in energy reduction plans.

Goal: The main reason for the increase in production was the introduction of automation equipment in some factory floors. The Shenzhen factory installed air-conditioning for all staff dormitories in the dormitory area, which led to an increase in overall electricity consumption. The unit output value of greenhouse gas emissions increased by 12.27% compared to 2019. With consistent production output expected in the year 2021, greenhouse gas emissions are to be reduced by 2.5% compared to the previous year.

• B. Wastewater management: The Company sets water-saving goals every year and formulates management plans to achieve water resources management and control. The up-to-standard discharge of treated wastewater is a fundamental responsibility and obligation of the Company as a benchmark enterprise. The Company regularly commissions third-party inspection institutions to inspect the discharged wastewater every year. The testing institutions verify that the discharged water quality complies with all current laws and regulations and has no environmental impact on local water bodies. Goal: The ramping up of production output and the increase in the number of employees led to an increase in overall water consumption. Wastewater discharge increased by 4.08% compared with 2019. With

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consistent production output expected in the year 2021, water use are to be reduced by 5.5% compared to the previous year.

• C. Waste management: The Company attaches great importance to the recycling and appropriate treatment of waste, and stringently implements measures in strict compliance with laws and regulations; all wastes generated by the Company are classified and handed over to legally license recycling firms for further recycling and processing. Waste in manufacturing plants is categorized into resource waste, hazardous waste and general waste. Resource wastes include metal wastes, packaging wastes, pallets, etc., which are classified and collected and handed over to local qualified firms for recycling. Hazardous waste is mainly sludge from sewage treatment, with a small amount of toxic and harmful chemicals. Solvents or containers are classified and collected and then handed over to a qualified firm for proper disposal. General waste refers to general waste in production or domestic waste from employees, which is collectively buried or incinerated by the local municipal services or service providers.

• Goal: Data disclosures in previous years pertain to the total amount of hazardous waste generated. This year, in response to recommendations by third-party advisors, general waste data will be included. Due to the increase in production line output, hazardous waste increased by 56.63% compared with 2019. It is expected that in 2021, under the same production volume, goals in the reduction of waste will be continuously implemented and monitored.

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3.4.9 Items to be disclosed regarding implementation of the Internal Control System: 3.4.9.1 Statements of Internal Control:

Asia Vital Components Co., Ltd. Statements of Internal Control System

Date: March 23, 2021 The internal control system from January 1 to December 31, 2020, according to the result of self-assessment is thus stated as follows:

• A. The Company acknowledges that establishment, implementation, and maintenance of internal control system is the responsibility of Board of Directors and management team, and the Company has established such system. The internal capital system is aimed to reasonably assure that the goals such as the effectiveness and the efficiency of operations (including profitability, performance and protection of assets), the reliability, immediacy, and transparency of financial reporting, and the compliance of applicable law and regulations are achieved.

• B. The internal control system has its innate restriction. An effective internal control system can only ensure the foregoing three goals are achieved; nevertheless, due to the change of environment and conditions, the effectiveness of internal control system will be changed accordingly. However, the internal control system of the Company has self-monitoring function and the Company will take corrective action once any defect is identified.

• C. According to the effective judgment items for the internal control system specified in "Highlights for Implementation of Establishing Internal control System by Listed Companies" (hereinafter referred to as "Highlights"), the Company has made judgment whether or not the design and execution of internal control system is effective. The judgment items for internal control adopted by “Highlights” are, based on the process of management control, for classifying the internal control into five elements: 1. Control environment; 2. Risk assessments; 3. Control activities; 4. Information and communication; and 5. Monitoring. Each element also includes a certain number of items. For the foregoing items, refer to "Highlights"

• D. The Company has adopted the aforesaid judgment items for internal control to evaluate the effectiveness of design and execution of internal control system.

• E. Based on the above-mentioned result of evaluation, the Company suggests that the internal control system (which covers the supervision and management of subsidiaries) on December 31, 2020, including the design and execution of internal control relating to the effectiveness and efficiency of operation, the reliability, immediacy, and transparency of financial reporting, the compliance of applicable law and regulations has been effective and they can reasonably assure the aforesaid goals have been achieved.

• F. This statement will be the main content for annual report and prospectus and will be disclosed publicly. If the above contents have any falsehood and concealment, it will involve in the liability as mentioned in Article 20, 32, 171 and 174 of Securities and Exchange Law.

• G. This statement has been approved by the meeting of Board of Directors on March 23, 2021, and those 13 directors in presence all agree at the contents of this statement

Asia Vital Components Co., Ltd. Chairperson: Shen, Ching Hang General Manager: Shen, Ching Hang

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3.4.9.2 Conditions where the company has retained CPAs to exclusively review its internal control systems, the prospectus shall set forth the reason for doing so, the CPAs' review opinions, measures the company has taken for improvement, and the condition of improvement on lacking items: None.

3.4.10 Legal sanctions against the company or its internal personnel, or any disciplinary action taken by the company against its own personnel for violation of internal controls, during the most recent fiscal year or during the current fiscal year up to the date of printing of the prospectus; If the result of the punishment may have a significant impact on shareholders ’equity or securities prices, the content of the punishment and a description of the main shortcomings in the company's internal control system as well as an indication of measures for improvement: None.

3.4.11 Major Resolutions of Shareholders’ Meetings and Board Meetings in the recent year before the printed date of the annual report

A. Major resolutions of the Shareholders’ Meeting and Implementation

Date	Major Resolutions	Implementation
June 19, 2020	1. Approval of the 2019 annual business report and financial statements.	Adoption of the proposal.
	2. Approval of the distribution of 2019 retained earnings.	The distribution of the Company’s retained earnings of 2019 was acknowledged by the Shareholders’ Meeting, and the Board of Directors Meeting designated September 29th, 2020 as the ex-dividend date, and distribution of cash dividend amounting to NT 459,303,204 dollars has been completed on October 23th, 2020.
	3. Amendments on Procedure for Acquisition and Disposal of Assets	The resolution was passed and implemented in accordance with the resolution of the shareholders' meeting.
	4. Amendments on Rules of Procedure for Shareholders Meetings	The resolution was passed and implemented in accordance with the resolution of the shareholders' meeting.

B. Major resolutions of the Board Meeting

Date / Session	Major Resolutions	Matters specified in Article 14-3 of the Securities and Exchange Act	Reserved opinion or opposition of the independent Directors
January 17 , 2020 (The 4th meeting of the Twelve Session)	1. Determine the date, agenda, and related matters of Shareholders’ regular Meeting in 2020, and the electronic votingsystem shall be adopted.	--	None
	2. Matters related to authority that Shareholders Regular meetingacceptproposals of shareholders.	--	None

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Date / Session	Major Resolutions	Matters specified in Article 14-3 of the Securities and Exchange Act	Reserved opinion or opposition of the independent Directors
	Reserved opinions or opposition of the Independent Directors: None The Company’s responses to the Independent Directors’ opinions: None Resolution: Allproposals were adopted with consensus of all directors inpresence.
March 13 , 2020 (The 5th meeting of the Twelve Session)	1. The distribution of remuneration for Directors and employees of 2019.	--	None
	2. The financial statement, consolidated financial statement,and business report of 2019.	--	None
	3. The distribution of retained earnings in 2019.	--	None
	4. The 2019 Review of Effectiveness of Internal Control System and Internal Control Statements.	--	None
	5. The 2020 Operation Plan.	--	None
	6. To adopt Certified Public Accountant and remuneration.		None
	7. Independence of the Company’s Certified Public Accountant	--	None
	8. Increase loans from the financial institutions.	--	None
	9. Guarantee for the Subsidiaries.		None
	10. Designation a companysecretary.	--	None
	11. Internal audit officer changes.		None
	12. Revisepartprovisions of internal control system.		None
	13. Amend part provisions of the "Rules of Procedure for Shareholders' Meetings".	--	None
	14. Revise such as the date and agenda of the 2020 regular shareholders meeting.	--	None
	Reserved opinions or opposition of the Independent Directors: None The Company’s responses to the Independent Directors’ opinions: None Resolution: Allproposals were adopted with consensus of all directors inpresence.
May 14 , 2020 (The 6th meeting of the Twelve Session)	1. The consolidated financial statement of the Companyand the Subsidiaries inquarter 1 of 2020.	--	None
	2. Increase loans from the financial institutions.	--	None
	3. Guarantee for the Subsidiary.		None
	4. Revised some provisions of the "Internal Audit Implementation Rules".	--	None
	Reserved opinions or opposition of the Independent Directors: None The Company’s responses to the Independent Directors’ opinions: None Resolution: Allproposals were adopted with consensus of all directors inpresence.
June 19 , 2020 (The 7th meeting of the Twelve	1. The Company intends to apply for a syndicate loan credit and guarantee line from the joint management group led by E.Sun Commercial Bank as the main arrangement and management bank. The total line of	--	None

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Date / Session	Major Resolutions	Matters specified in Article 14-3 of the Securities and Exchange Act	Reserved opinion or opposition of the independent Directors
Session)	credit is NT$3 billion (increase or decrease within 20%).
	2. The Company intends to issue the first tranche of guaranteed common bonds in 2020.		None
	3. Increase loans from the financial institutions.	--	None
	Reserved opinions or opposition of the Independent Directors: None The Company’s responses to the Independent Directors’ opinions: None Resolution: Allproposals were adopted with consensus of all directors inpresence.
August 11 , 2020 (The 8th meeting of the Twelve Session)	1. The consolidated financial statement of the Companyand the Subsidiaries inquarter 2 of 2020.	--	None
	2. To determine ex-dividend date for distribution on cash dividend and related matters.	--	None
	3. Increase loans from the financial institutions.	--	None
	4. Guarantee for the Subsidiary.		None
	5. Revised the "Organizational Rules of the Nominating Committee", "Board of Directors' Performance Evaluation Method", "Procedures for Election of Directors" and the "Code of Ethical Conduct"part article.	--	None
	6. Revision of the internal control system "C-GA06 Property, plant and equipment control system form-C-GD001 Purchase order acceptance form".		None
	7. Review the distribution of remuneration for Directors and Supervisors in 2019.	--	None
	8. Disposal ofpart of the shares of Fositek Corp.		None
	Reserved opinions or opposition of the Independent Directors: None The Company’s responses to the Independent Directors’ opinions: None Resolution: Allproposals were adopted with consensus of all directors inpresence.
November 11 , 2020 (The 9th meeting of the Twelve Session)	1. The consolidated financial statement of the Companyand the Subsidiaries inquarter 3 of 2020.	--	None
	2. Auditplan for theyear of 2021.	--	None
	3. Accountingofficer change case.		None
	4. Increase loans from the financial institutions.	--	None
	5. Guarantee for the Subsidiary.		None
	6. Disposal of part of the shares of Assem Tecinology Co.,Ltd.		None
	7. Disposal of part of the shares of Sentelic Corporation.		None
	8. Revised the internal control system "Payroll control system, T-HR4-013 Satisfaction and Learning		None

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Date / Session	Major Resolutions	Matters specified in Article 14-3 of the Securities and Exchange Act	Reserved opinion or opposition of the independent Directors
	Feedback Form after External Training".
	9. Cash remuneration of 2019 for managers of the company and the amount to distribute as annual performance bonus of 2020.	--	None
	Reserved opinions or opposition of the Independent Directors: None The Company’s responses to the Independent Directors’ opinions: None Resolution: Allproposals were adopted with consensus of all directors inpresence.
March 23 , 2021 (The 10thmeeting of the Twelve Session)	1. The distribution of remuneration for Directors, and employees of 2020.	--	None
	2. The financial statements, consolidated financial statement,and business report of 2020.	--	None
	3. 2020 capital surplus and additional paid in capital distributionproposal.	--	None
	4. The 2020 Review of Effectiveness of Internal Control System and Internal Control Statements.	--	None
	5. Appointment of Accountant and Compensation.		None
	6. Audit of the Accountant's Independence.	--	None
	7. The 2021 Operation Plan.	--	None
	8. Increase loans from the financial institutions.	--	None
	9. Guarantee for the Subsidiary.		None
	10. Amend part provisions of the "Rules of Procedure for Shareholders' Meetings".	--	None
	11. Determine the date, agenda, and related matters of Shareholders’ regular Meeting in 2021, and the electronic votingsystem shall be adopted.	--	None
	12. Matters related to authority that Shareholders Regular meetingacceptproposals of shareholders.	--	None
	13. Establishing "Risk Management Policies and Procedures”.	--	None
	Reserved opinions or opposition of the Independent Directors: None The Company’s responses to the Independent Directors’ opinions: None Resolution: Allproposals were adopted with consensus of all directors inpresence.

3.4.12 Major Issues of Record or Written Statements Made by Any Director or Supervisor Dissenting to Important Resolutions Passed by the Board of Directors in the recent year preceding the date of publication of the annual report: None

• 3.4.13 Resignation or Dismissal of the Company’s Key Individuals, Including the Chairman, CEO, and Heads of Accounting, Finance, Internal Audit, Company Secretary and R&D in the recent year preceding the date of publication of the annual report:

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Title	Name	Date of taking office	Date of Relieved	Reasons for resignation or termination
Internal Audit Officer	Kuo, Hui Ying	September 1, 2007	March 13, 2020	Reasons for resignation or termination: On March 13, 2020, the board of directors of the Company authorized Kuo Hui-Ying, the head of internal audit, to become the corporate governance supervisor. The original auditor, Shen Pei-Ju, has taken over as audit manager.
Accounting Officer	Chen, Yi Chen	February 18, 2002	January 1, 2021	On November 10, 2020, the Board of Directors of the Company approved the reassignment of the former accounting officer, Chen Yi Cheng, to the position of accounting officer, Lin Shu Hua, due to the internal duty adjustment of the Company.

3.5 Information Regarding the Company’s Audit Fee

Accounting firm	Name of CPA	Name of CPA	Period Covered by CPA’s Audit	Remarks
Ernst & Young, Taiwan	Chen, Cheng Chu	Huang, Shi Jie	January 1st, 2020 to December 31st,2020	None

Unit: thousand NT dollars

Fee items Fee range	Fee items Fee range	Audit Fee	Non-audit fee	Total
1	Under NT$2,000,000		
2	NT$ 2,000,000～3,999,999			
3	NT$ 4,000,000～5,999,999
4	NT$ 6,000,000～7,999,999
5	NT$ 8,000,000～9,999,999
6	Over NT$10,000,000

3.5.1. When non-audit fees paid to the certified public accountant, to the accounting firm of the certified public accountant, and/or to any affiliated enterprise of such

68

accounting firm are one quarter or more of the audit fees paid thereto, the amounts of both audit and non-audit fees as well as details of non-audit services shall be disclosed

Unit: thousand NT dollars

Accounting Firm	Name of CPA	Audit Fee	Non-audit Fee	Non-audit Fee				Period Covered by CPA’s Audit	Remarks
			System of design	Company	Human	Other	Subtotal
				Registration	Resource
Ernst & Young	Chen, Cheng Chu; Huang, Shi Jie	2,980	0	200	0	474	674	January 1st, 2020 ~ December 31st, 2020	Note 1

Note 1: The non-audit fees include the advance payment (fairs for typing, copying, and traffic expenses) and transfer pricing.

3.5.2. When the company changes its accounting firm and the audit fees paid for the fiscal year in which such change took place are lower than those for the previous fiscal year, the amounts of the audit fees before and after the change and the reasons shall be disclosed: Not applicable.

3.5.3. When the audit fees paid for the current fiscal year are lower than those for the previous fiscal year by 15 percent or more, the reduction in the amount of audit fees, reduction percentage, and reason(s) therefor shall be disclosed: None.

3.6 Information on replacement of certified public accountant If the company has replaced its certified public accountant within the last 2 years or any subsequent interim period, it shall disclose the following information:

(1)information about the former certified public accountant:

Accountant changed	January1,2019	January1,2019	January1,2019	January1,2019	January1,2019
Reason and explanation for the change	Due to internal adjustments from EY, the company’s current CPA has been changed as ofQ1 in 2019.
Explanation for termination or refusal of appointment from the company or the accountant	Director			CPA	Company
	Active termination of contract			NA	NA
	No longer accepting commission			NA	NA
Audit opinion and reasons for opinions other than issuance of unqualified-standard wording in the most recent twoyears:	None
Differences of opinion with financial statement issuer	Yes	-	Accounting principles orpractices
		-	Disclosure of financial statement
		-	Scope of verification orprocedures
		-	Others
	No	
	Comment
Other matters of disclosure	None

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(2)information about the succeeding certified public accountant:

Name of the AccountingFirm	Ernst & YoungGlobal Limited
Name of CPA	Chen,ChengChu;Huang,Shi Jie
Appointed on	January1,2019
Consultation for the accounting methods or accounting principles and likely opinions that may be issued for the financial statements and results for specific transactions before appointment	None
Written opinion from successor CPA for expressing different opinions from theprevious CPA	None

• (3) The former certified public accountant should reply in mail about matters specified in Article 15 Subparagraph 1 and subparagraph 2-3 of Regulation Governing Information to be Published in Annual Reports of Public Companies: Not applicable.

• 3.7 The period during which the company's chairperson, general manager, or any managerial officer in charge of finance or accounting matters has in the most recent year held a position at the accounting firm of its certified public accountant or at an affiliated enterprise of such accounting firm None.

• 3.8 The transfer of equity interests and/or pledge of or change in equity interests by a director, supervisor, managerial officer, or shareholder with a stake of more than 10 percent during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report

• 3.8.1 Changes in equity interests by Directors, Supervisors, Managerial officers, and major Shareholders:

unit: shares

		2020	2020	As of March 23,2021	As of March 23,2021
			Pledged		Pledged
		Holding		Holding
Title	Name		Holding		Holding
		Increase		Increase
			Increase		Increase
		(Decrease)		(Decrease)
			(Decrease)		(Decrease)
Director	Zing He Investment Co., Ltd.	0	0	0	0
Corporate Director Representative and General Manager	Shen, Ching Hang	0	0	0	0
Director	Furukawa Electric Co., Ltd. in Japan	0	0	0	0
Corporate Director Representative	Ono, Ryoji	0	0	0	0
Corporate	Motomura,Takuya	0	0	0	0

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		2020	2020	As of March 23,2021	As of March 23,2021
			Pledged		Pledged
		Holding		Holding
Title	Name		Holding		Holding
		Increase		Increase
			Increase		Increase
		(Decrease)		(Decrease)
			(Decrease)		(Decrease)
Director Representative
Corporate Director Representative	Kobayashi Takashi	0	0	0	0
Director	Kitanoya Atsushi	0	0	0	0
Director and Vice President	Chen, Yi Chen	0	0	0	0
Director and Vice President	Wang, Jui Pin	-83,000	0	0	0
Director and Vice President	Huang, Chiu Mao	0	0	0	0
Director	Gao,Pai Ling	0	0	0	0
Independent Director	Chen, Chun Cheng	0	0	0	0
Independent Director	Cho, I Lang	0	0	0	0
Independent Director	Peng, Tai Hsiung	0	0	0	0
Independent Director	Ueng Joseph Chiehchung	0	0	0	0
Vice President	Chen,JiangHan	0	0	0	0
Company Secretary	Kuo, Hui Ying (inaugurated on March 13,2020)	0	0	0	0
Accounting Officer	Lin, Shu Hua (inaugurated on January1,2021)	0	0	0	0

3.8.2 Information about transfer of stock right: no such condition occurred between related persons.

3.8.3 Information about pledge of stock rights: no such condition occurred between related persons.

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• 3.9 Related information, if among the company’s 10 largest shareholders any one is a related party, the spouse, or a relative within the second degree of kinship of another

Shareholding Record Date: September 29, 2020 (Ex-dividend Date)

Name			Spouse’s/minor’s Shareholding	Spouse’s/minor’s Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees	Remarks
	Current Shareholding
	Shares	percentage	Shares	percentage	Shares	percentage	Title(or Name)	Relationship
Furukawa Electric Co., Ltd. in Japan	62,244,693	17.62%	Not applicable	Not applicable	0	0	Taiwan Furukawa Electric Co.,Ltd.	Affiliated Companies	None
New System Labor Retirement Fund's 2nd discretionaryinvestment account in 2018	27,878,500	7.89%	Not applicable	Not applicable	0	0	None	None	None
Old System Labor Retirement Fund	11,241,500	3.18%	Not applicable	Not applicable	0	0	None	None	None
Taiwan Furukawa Electric Co., Ltd.	9,398,895	2.66%	Not applicable	Not applicable	0	0	Furukawa Electric Co., Ltd. in Japan	Affiliated Companies	None
Cathay Life Insurance	6,682,000	1.89%	Not applicable	Not applicable	0	0	None	None	None
Zing He Investment Co., Ltd.	6,547,174	1.85%	Not applicable	Not applicable	0	0	None	None	None
The Public Employees' Retirement Pension Fund Management Committee entrusted Nomura Investment Trust with domestic investment accounts for 2019.	6,412,000	1.81%	Not applicable	Not applicable	0	0	None	None	None
HSBC Escrow Yakaidi Emerging Markets Small Capital EquityFund	4,992,129	1.41%	Not applicable	Not applicable	0	0	None	None	None
HSBC Commercial Bank (Taiwan) was entrusted with the custody of Merrill Lynch International Inc. Fund	4,716,559	1.34%	Not applicable	Not applicable	0	0	None	None	None
Citibank (Taiwan) Commercial Bank is entrusted with the custody of the investment account of the Central Bank of NorwayFund	4,660,702	1.32%	Not applicable	Not applicable	0	0	None	None	None

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3.10 The total number of shares and total equity stake held in any single enterprise by the company, the Director and Supervisors, Managers, and any companies controlled either directly or indirectly by the company.

As of to December 31[st] , 2020 Unit: thousand shares; %

Companies directly or indirectly controlled by the Company (Invested by the Company with Equity Method)	Investment of the Company	Investment of the Company	Investments of Directors and Supervisors to companies directly or indirectly controlled bythe Company	Investments of Directors and Supervisors to companies directly or indirectly controlled bythe Company	Comprehensive Investment	Comprehensive Investment
	Stocks	Ratio	Stocks	Ratio	Stocks	Ratio
AVC International Co., Ltd.-B.V.I.	16	100.00%	0	0	16	100.00%
ChihungInternational Ltd.	32,770	100.00%	0	0	32,770	100.00%
MERIT TRADING CORPORATION	892	100.00%	0	0	892	100.00%
RayneyInternational Limited	2,400	100.00%	0	0	2,400	100.00%
AVC AMERICA INC.	41	100.00%	0	0	41	100.00%
AVC International (SAMOA) Co.,Ltd.	300	100.00%	0	0	300	100.00%
JADS CORPORATION (HK) LTD.	10	100.00%	0	0	10	100.00%
ZimagTechnologyCo.,Ltd.	2,700	9.53%	0	0	2,700	9.53%
AVC International Co., Ltd.-SAMOA	1,000	100.00%	0	0	1,000	100.00%
Fositek Corp	7,524	19.71%	1,908	5%	9,432	24.71%
HungYe Investment Co.,Ltd.	6,000	100.00%	0	0	6,000	100.00%
D-Max TechnologyLtd.	28,500	100.00%	0	0	28,500	100.00%
AVC Europe Technology GmbH	250	100.00%	0	0	250	100.00%
AVC TECHNOLOGY (VIETNAM) COMPANY LIMITED	--	100.00%	0	0	--	100.00%

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IV. Capital Overview

4.1 Capital and Shares

4.1.1 Source of Capital

		As of March 23,2021(Unit: shares/NT dollars)	As of March 23,2021(Unit: shares/NT dollars)	As of March 23,2021(Unit: shares/NT dollars)	As of March 23,2021(Unit: shares/NT dollars)	As of March 23,2021(Unit: shares/NT dollars)	As of March 23,2021(Unit: shares/NT dollars)	As of March 23,2021(Unit: shares/NT dollars)
Month/ Year	Par Value (NT$)	Authorized Capital		Paid-in Capital			Remark
		Shares	Amount (NT$ thousands)	Shares	Amount (NT$ thousands)	Sources of Capital	Capital Increased by Assets Other than Cash	Other
－	－	400,000,000	4,000,000,000	353,310,157	3,533,101,570	－	－	－

Note 1: No increase in the cost of shares in 2019 and 2020 preceding the date of publication of the annual report.

	As of March 23,2021(Unit: shares)	As of March 23,2021(Unit: shares)	As of March 23,2021(Unit: shares)	As of March 23,2021(Unit: shares)
Share Type	Authorized Capital			Remarks
	Outstanding Shares	Unissued shares	Total Shares
Common stocks	353,310,157 stocks	46,689,843 Stocks	400,000,000 Stocks	The outstanding stocks are all listed stocks.

4.1.2 Status of Shareholders

4.1.2 Status of Shareholders	4.1.2 Status of Shareholders	4.1.2 Status of Shareholders	4.1.2 Status of Shareholders	4.1.2 Status of Shareholders	4.1.2 Status of Shareholders	4.1.2 Status of Shareholders
As of September 29,2020(Ex-dividend Date)
Shareholder status Number	Government Agencies	Financial Institutions	Other Juridical Persons	Domestic Natural Persons	Foreign Institutions & Natural Persons	Total
Number of Shareholders	6	15	142	30,182	165	30,510
Shareholding (shares)	49,094,035 shares	12,435,000 shares	48,010,753 shares	111,146,092 shares	132,624,277 shares	353,310,157 shares
Percentage	13.9%	3.52%	13.58%	31.46%	37.54%	100.00%

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4.1.3 Shareholding Distribution Status

As of September 29, 2020 (Ex-Dividend Date)

Class of Shareholding (Unit:	Number of	Shareholding
			Percentage
Share)	Shareholders	(Shares)
1~ 999	10,292	1,324,061	0.37
1,000~ 5,000	16,641	31,217,582	8.84
5,001~ 10,000	1,830	14,764,828	4.18
10,001~ 15,000	543	6,956,748	1.97
15,001~ 20,000	341	6,426,799	1.82
20,001~ 30,000	265	6,835,300	1.93
30,001~ 40,000	109	3,959,610	1.12
40,000~ 50,000	91	4,304,490	1.22
50,001~ 100,000	174	12,858,822	3.64
100,001~ 200,000	81	11,622,346	3.29
200,001~ 400,000	51	14,538,229	4.11
400,001~ 600,000	30	14,755,898	4.18
600,001~ 800,000	10	7,253,865	2.05
800,001~1,000,000	15	13,894,538	3.93
1,000,001 or over	37	202,597,041	57.35
Total	30,510	353,310,157	100

4.1.4 List of Shareholders

As of September 29, 2020 (Ex-dividend Date)

Name	Shareholding	Shareholding
	Shares	percentage
Furukawa Electric Co.,Ltd. in Japan	62,244,693	17.62%
New System Labor Retirement Fund's 2nd discretionary investment account in 2018	27,878,500	7.89%
Old System Labor Retirement Fund	11,241,500	3.18%
Taiwan Furukawa Electric Co.,Ltd.	9,398,895	2.66%
CathayLife Insurance	6,682,000	1.89%
ZingHe Investment Co.,Ltd.	6,547,174	1.85%
The Public Employees' Retirement Pension Fund Management Committee entrusted Nomura Investment Trust with domestic investment accounts for 2019.	6,412,000	1.81%
HSBC Escrow Yakaidi EmergingMarkets Small Capital EquityFund	4,992,129	1.41%
HSBC Commercial Bank (Taiwan) was entrusted with the custody of Merrill Lynch International Inc. Fund	4,716,559	1.34%
Citibank (Taiwan) Commercial Bank is entrusted with the custody of the investment account of the Central Bank of NorwayFund	4,660,702	1.32%

4.1.5 Market Prices, Net Worth, Earnings, and Dividends per share and related information in the recent two years

	Year			Present year
		2019	2020	preceding February
Item				28,2021(note 8)
Market Price Per share (note 1)	Highest Market Price	47.75	79.9	76.5
	Lowest Market Price	23.70	24.9	62.8
	Average Market Price	37.95	50.41	68.55
Net Worth	Before Distribution	25.41	29.94	Not applicable.

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	Year	Year			Present year
			2019	2020	preceding February
Item					28,2021(note 8)
per Share (note 2)	After Distribution		25.41	29.94	Not applicable.
Earnings Per Share	Weighted Average Shares (thousand shares)		353,310	353,310	353,310
	Diluted Earnings Per Share		2.71	5.42	Not applicable.
	Adjusted Diluted Earnings Per Share		2.71	5.42	Not applicable.
Dividends Per Share	Cash Dividends		1.3	2.8	Not applicable.
	Bonus stocks	Dividends from Retained Earnings	0	0	Not applicable.
		Dividends from Capital Surplus	0	0	Not applicable.
	Accumulated Undistributed Dividends(Note 4)		0	0	Not applicable.
Return on Investment	Price / Earnings Ratio (Note 5)		10.81	9.3	Not applicable.
	Price / Dividend Ratio (Note 6)		20.87	28.01	Not applicable.
	Cash Dividend Yield Rate (Note 7)		4.79%	5.55	Not applicable.

• ＊ If retained earnings or capital surplus are transferred to common shares, the Company should disclose market price with retroactive adjustment in accordance with the number of distributed stocks and information about dividends.

• Note 1: The highest and lowest market price of the common stocks are listed, and average market prices are calculated according to the annual turnover and total volume of the year.

• Note 2: The cells in the table should be filled according to the number of outstanding stocks at the end of the year and in compliance with distribution status resolved by the Shareholders Meeting in the following year.

Note 3: If retroactive adjustment should be made on status of bonus stock

• distribution, the earnings per share before and after the adjustments should be disclosed.

• Note 4: If the criteria for issuance of equity securities speculate that undistributed dividends of the year could be accumulated to the year with retained earnings, the accumulated undistributed dividends as of the year should be disclosed separately.

Note 5: Price / Earnings Ratio = Average Market Price of the year / Earnings per Share Note 6: Price / Dividend Ratio = Average Market Price of the year / Cash Dividends per Share

Note 7: Cash Dividend Yield Rate = Cash Dividends per Share / Average Market Price of the year

• Note 8: The net value per share and retained earnings per share should be filled according to the information reviewed (audited) by CPAs in the most recent quarter preceding the date of publication of the annual report; the other columns should be filled according to the annual data preceding the date of publication of the annual report.

4.1.6 Dividend Policy and Implementation Status:

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• A. Regulations related to Dividend Policy in the present Corporate Articles are as below:

• Article 28: The Company’s Annual Final Budget should include net income of the period, which should firstly be utilized to compensate for accumulated losses (including adjustment in undistributed profits), and 10 percent of it should be allocated for Legal Reserve; the restriction is lifted when the Legal Profit Reserve reaches the Company’s total paid-in capital. Secondly, special Legal Reserve of Profit should be allocated or reversed according to the laws or regulations of supervisory institutions. The rest of the profit, along with the undistributed profit in the initial period (including the adjusted sum of undistributed profit) should be included in the proposal of distribution of profits in issuance of new shares by the Board of Directors, which is to be resolved by the Shareholders’ Meeting on distribution.

According to Article 240 Paragraph 5 of The Company Act, with attendance of two-thirds of the directors and agreement of over have of attendees in the voting on the meeting, the Board of Directors is authorized to resolve that the dividends and bonuses, or part or all of the Legal Profit Reserve and Capital Reserve should be distributed in cash, and a report should be made on the Shareholders’ Meeting.

Article 29: The dividend policy of the Company caters to the current and future development plan with consideration of factors like investing environment, capital needs, the domestic and overseas competitions, as well as benefits of the shareholders. Each year, no less than five percent of retained earnings to be distributed shall be allocated as bonus dividends of shareholders except when accumulated retained earnings to be distributed come to be lower than ten percent of the paid-in capital. The shareholders’ bonus dividend could be distributed in cash or stocks, and the cash dividend shall not be lower than ten percent of the total amount of the dividends.

• B. The condition of proposals regarding distribution of dividends in the Shareholders’ Meeting:

The Board of Directors Meeting convened on March 23, 2021, resolved that a cash dividend of NT$2.8 dollar shall be distributed per share (surplus dividends NT$1.8 and additional paid in capital NT$1). If the number of outstanding stocks and the ratio of dividends for shareholders should be amended because of fluctuations, the chairperson shall be authorized by shareholders’ meeting to deal with the matter.

• 4.1.7 Influence of issuing bonus shares on operational performance and earnings per share: Not Applicable.

4.1.8 Employee Bonus and Directors’ Remuneration

• A. The proportion of remuneration for employees and Directors as specified in Article 27 of the Corporate Articles: no less than three percent of any annual retained earnings of the Company shall be allocated as

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remunerations of the employees, and no more than two percent shall be allocated as remunerations of the Directors. However, should there be any accumulated losses, the amount of compensation should be set aside. Remunerations in stocks could also be distributed to employees of affiliated companies meeting certain criteria.

B. The basis for estimating the amount of employee bonus and remuneration to directors, the basis for calculating the number of shares to be distributed as stock bonuses, and the accounting treatment of discrepancy, if any, between the actual distributed amount and the estimated figure, for the current period:

a. The basis for estimating the amount of employee bonus and remuneration to directors:

According to stipulations in Article 27 of the Corporate Articles, maximal amount allocated for remunerations of Directors is 2%. An amount of NT$ 36,369,828 dollars was allocated (1.50% of net income within this period). The minimum amount allocated for remunerations of employees is 3%. An amount of NT$ 84,862,932 dollars was allocated (3.51% of net income within this period). The remunerations are all distributed in cash.

b. The basis for calculating the number of bonus shares to be distributed:

According to stipulations specified in official letter No. 0960013218 ratified as category 6 by Financial Supervisory Commission R.O.C. (Taiwan) pm March 30[th] , 2007, calculation of employees’ bonus shares to be assigned is based on the closing price of the day prior to the date on which resolution is made by Shareholders Meeting with consideration of potential influence on earnings of Ex-rights.

c. Accounting measures in cases where discrepancies exist between distributed amount and estimated amount: If discrepancies exist between the amount distributed to any employees, Directors and the estimated amount, the fees of the year (fiscal year of acknowledged employees’ remuneration) should be adjusted; yet, when the distributed amount of remunerations for employees, Directors differ from the estimated amount, changes should be made in accordance with estimation of the accountant, and the diverse amount is listed as adjustment in the income of the year when the fact of distribution occur.

• C. Adopting status of proposals for distributing remunerations by the Board of Directors’ Meeting:

a. Amount of remunerations for employees, Directors distributed in cash or shares: The Board of Directors’ Meeting on March 23, 2021, proposed to distribute the employees’ cash remuneration of NT$ 84,862,932 as well as the Directors’ remunerations of NT$ 36,369,828.

b. Ratio of Recommended Employee Stock Bonus to Net Income of the period and total amount of employees’ remunerations: Not applicable.

• D. The actual distribution of employee bonus and remuneration to directors for the previous fiscal year, and, if there is any discrepancy between the

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actual distribution and the recognized employee bonus and director compensation, additionally the discrepancy, reasons therefor, and how it is treated.

Unit: thousand NT dollars

	The amount	The amount	Discrepancies	Reasons for the
	originally	actually		gap
	allocated	distributed
Bonus of Employees	44,098,242	44,098,242	0	Not applicable.
Remunerations of Directors	18,899,247	18,899,247	0

4.1.9 Buyback of Treasury Stock: The Company did not buy back its stocks in the years of 2020 and 2021 preceding the date of publication of the annual report.

4.2 Corporate Bond

Corporate Bond Type	Corporate Bond Type	2020 issuance of 1stsecured Corporate Bonds
IssuingDate		August 21,2020
Denomination		NT$1,000,000
Issuingand transaction location		Taipei Exchange
Issueprice		Issue bydenomination
Total amount		NTD2,400 million
Interest rate		Fixed Annual Interest Rate 0.62%
Term		5years ExpiryDate: August 21,2025
Guarantee institution		9 banks includingE.SUN Bankjointly guarantee
Custodian institution		Fubon Bank Trust Department.
Underwritinginstitution		E.SUN COMMERCIAL BANK,LTD.
Legal Counsel		None
Auditor		None
Repayment method		Repayment in lump sum upon Maturity
Outstanding principal		NTD2,400 million
Redemption or Early Repayment Clause		None
Covenants		None
Name of credit rating agency / Rating date / Rating of corporate bonds		None
Other Rights of Bondholders	Amount of Converted or Exchanged Common Shares, ADRs or Other Securities	None
	Conversion Right	None

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Corporate Bond Type	2020 issuance of 1stsecured Corporate Bonds
Dilution Effect and Other Adverse Effects on ExistingShareholders	None
Custodian	None

4.3 Preferred Stocks

4.4 The Company did not issue or handle Preferred Stocks in the last year.

4.5 Global Depository Receipts

The Company did not issue or handle Global Depository Receipts in the last year.

4.6 Employee Stock Option Certificates and Restricted Stock Awards

The Company did not issue or handle Employee Stock Option Certificates and Restricted Stock Awards in the last year.

4.7 Restricted Stock Awards

The Company did not issue or handle Restricted Stock Awards in the last year.

4.8 New shares for merger or acquisition of shares from other companies

The Company did not issue or handle new shares for merger or acquisition of shares from other companies in the last year.

4.9 Financing Plans and Implementation

4.8.1 A description of the plans:

For each uncompleted public issue or private placement of securities, and for such issues and placements that were completed in the most recent three years but have not yet fully yielded the planned benefits: No such condition.

4.8.2 Status of implementation:

With respect to funds usage under the plans referred to in the preceding subparagraph, the annual report shall (for the period as of the quarter preceding the date of publication of the annual report) analyze the status of implementation and compare actual benefits with expected benefits: No such condition.

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V. Operational Highlights

• 5.1 Business Content

• 5.1.1 Scope of Business

• A. The main operational categories of the company:

• (1) CA01100 Aluminum Material Rolls over

• (2) CB01010 Machinery and Equipment Manufacturing

• (3) CC01040 Lighting Facilities Manufacturing

• (4) CC01060 Wired Communication Equipment and Apparatus Manufacturing

• (5) CC01070 Telecommunication Equipment and Apparatus Manufacturing

• (6) CC01080 Electronic Parts and Components Manufacturing

• (7) CC01110 Computers and Computing Peripheral Equipments Manufacturing

• (8) CC01990 Electrical Machinery, Supplies Manufacturing

• (9) E605010 Computing Equipment’s Installation Construction

• (10) F219010 Retail Sale of Electronic Materials

• (11) F401010 International Trade

• (12) CD01030 Automobiles and Parts Manufacturing

• (13) CD01990 Other Transport Equipment and Parts Manufacturing

• (14) CC01101 Restrained Telecom Radio Frequency Equipments and Materials Manufacturing

• (15) F401021 Restrained Telecom Radio Frequency Equipments and Materials Import

• (16) ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval.

• B. The net sales proportion of the main product of the business

	UNITS: NT$thousand;%	UNITS: NT$thousand;%
Main product	2020year
	amount	proportion
	39,665,534	100.00%

C. Main products and services of our company:

The main products of our company are CPU heat sink, cooler, fan, laptop thermal module, radiator, graphite, heat pipe/vapor chamber, liquid-cooling heat sink, liquid cold plates and other kinds of cooling solution products, as well as desktop computer case, All-in-One PC, server, and other products of system assembly. The majority are used in

communication/Internet, energy/power, transportation, server, PC and smart phone.

D. New product development projects:

Our company will focus on its high reliability and long product life, with low-noise, high-efficiency, eco-friendly and energy-saving qualities of our existing products as the direction of R&D of new products in the future. We

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will consider the market as the development trend and design products that meet the future environmental requirements according to the different needs of customers.

• 5.1.2 Industry Overview:

• 5.1.2.1 Industry situation and development

• When “slim and sleek”, “high performance” and “multi-function” have gradually become key indicators in the pursuit of new tech products, it indicates that the performance of “heat dissipation” in products must keep pace with the times in response to consumer demand. The thermal development of emerging applications such as IoT, IoV, smart manufacturing, and smart cities is also driving the demand for greater thermal efficiencies. The global thermal management components market is extremely competitive. Among them, Taiwan has a solid technological foundation and a complete supply chain of related components manufacturers. Taiwan's thermal management industry accounts for more than 50% of the world’s total output. The industry produces a wide range of thermal management products, such as cooling fans, liquid cooling systems, and cooling fins, heat pipes, vapor chambers, etc., with Taiwan having a pivotal position in the global export market.

• 5.1.2.2 The relevance between upstream, middle stream, and downstream of industry Thermal module industry can be divided into upstream, middle stream and downstream. The upstream includes fan’s blade assembly, drive circuit board, thermal pad, heat pipe, copper or aluminum block, etc. Middle stream includes the thermal module or heat sink and downstream is the application part, including desktop computers, servers, multi-function printer, home appliances and smartphones.

In the thermal module industry, Taiwan's PC-related heat sinks are flawless no matter in R&D or manufacturing technology, and Taiwanese manufacturers are better at developing R&D technology and service quality than their competitors from other countries. Cooling industry can be divided into basic raw materials of upstream, thermal modules of middle stream and electronic product applications of downstream:

Upstream	Middle stream	Middle stream	Downstream
basic raw material	Component	module
Aluminum sheet, aluminum ingot, copper powder, copper block	Heat pipe, heat sink, fan		CPU, graphics processing unit, display card, DT, NB, Server, game console, DVD camcorder, LED module, and devices of communication, car radiator and smartphone

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• 5.1.2.3 Future growth and competition of product

A. Future growth of product

The impact of the COVID-19 pandemic last year throttled the originally highly anticipated growth of the mobile phone vapor chamber market. Fortunately, from the second half of the year, thanks to the rising business opportunities for the stay-at-home economy and the rapid development of automotive electronics, as well as the strong demand for heat dissipation components used in PCs, NBs, servers, and automobiles. This year, due to the continuing impact of the COVID-19 pandemic, demand for home office related laptop computers, desktop computers, motherboards, servers, e-sports products, etc. has risen, which has become a driving force to support the growth momentum of the industry. The continuation of home office orders and the increase in shipments of server cooling modules and cases have also greatly increased the growth opportunities of related revenue streams.

It is estimated that Intel will begin mass production of Ice Lake processors in the second quarter of 2021, and the rise in replacement demands will kick-off in the second half of 2021. Compared with the previous-generation Intel Purely, although thermal management for the new-generation CPUs will still be dominated by heat pipe solutions, due to the increase in heat and power, the demand for cooling solutions is set to increase.

B. Product competition

Most of the world’s supply of heat dissipation products formerly originated from Taiwan. With the advent of the 5G era, in recent years, many mainland Chinese heat dissipation manufacturers have joined and made the overall market more competitive. The Company has balanced development in various fields such as 3C industry heat dissipation, server heat dissipation and telecommunication heat dissipation. It has dispersed the Company's business risks through decentralizing its industries, reducing the proportion of single industry and product operations, and continuing to actively develop new heat dissipation technologies to improve factory manufacturing efficiency. It continues to create long-term value for customers to strengthen the difference between the Company and other competitors.

5.1.3 Technology and R&D overview

5.1.3.1 Technical level and research development

• Our company assembles relevant professional cooling technology, including natural convection, forced convection, evaporation conduction, liquid cooling and thermoelectric cooling technology, and integrates them into different industrial applications. In addition to taking hold of the key heat sink material, heat flow simulation analysis, and manufacturing process technology, we need to take care of different demands and characteristics in cooling convection in

83

order to put forward the best solutions for our clients. Our product line includes DC fan, EC fan, active heat sink, heat pipe/vapor chamber/, far-end radiator, radiator and graphite, compressor radiator and liquid-cooling heat sink etc. solutions.

With these products and the application of cooling technology as well as AVC’s strong cooling simulation and analytic ability, we are able to offer our clients an integrated cooling solution to computers, communication equipment, energy, cars, transportation and other applicable field of industrial cooling. We also pour in resources on R&D and focus on the development of new technologies to satisfy our clients’ cooling needs in the future.

5.1.3.2 R&D expense

D expense	D expense	D expense
UNITS: NT$ thousand；%
Year		2021 year
	2020 year	As of 29, February
Items		(non-audited)
R&D expense	1,929,062	357,886
Total amount	39,665,534	6,264,954
Accounted for the total amount ratio of the year(%)	4.86%	5.71%

5.1.3.3 Successful developed technology and product

The R&D group of our company is equipped with the experience of system design and is familiar with the regulations of various countries. We provide compliant solutions and assist customers in obtaining product certifications of various countries. We also fully integrate self-manufactured components such as thermal module, casing, hinge, camera module, and create competitive products for our customers. One-stop production process includes system assembly, test, pre-loading procedure, packaging and shipping. Thus, we offer a complete production service to our customers.

5.1.3.4 Long-term and short-term business development project

1. Short-term business development plan: We will continue to invest in the development of high-efficiency, high-accumulation, low-cost, and low-power consumption products, and actively dig into the heat dissipation market of other non-electronic industries such as telecommunications to create differentiation from other competitors.

2. Long-term business development project: We will deeply devote to enhance the market share of various cooling products of the company.

3. 5.2 Market and Sales Overview

4. 5.2.1 Market analysis:

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5.2.1.1 Main product sales area

UNITS: NT$ thousand ； %

Year	2019year	2019year	2020year	2020year
	Sales amount	Ratio	Sales amount	Ratio
Area
Asia	32,153,672	88.01%	34,551,891	87.11%
America	1,852,861	5.07%	2,649,965	6.68%
Europe	2,447,973	6.70%	2,404,460	6.06%
Others	79,939	0.22%	59,218	0.15%
Total	36,534,445	100%	39,665,534	100.00%

5.2.1.2 Market share

The company is currently the world's leading supplier of cooling solutions, such as CPU Cooler, laptop computer thermal modules, servers, communication products and smart handheld devices. The company can provide more competitive, efficient solutions and related products to customers, and we are still exploring new areas and accepting bigger and more difficult challenges to ensure that our company keeps the leading position in the cooling field.

5.2.1.3 Supply and demand situation and growth

As electronic products place greater emphasis on efficiency and speed, problems arise such as overheating of electronic products, abnormal fan sounds, and slow operations, and these topics drive the heat dissipation industry. Faced with the development of information products that tend to be small and mobile, the application of heat dissipation modules tends to be more extensive. In response to the emergence of various types of 5G related heat dissipation products, products with different heat dissipation solutions will be launched one after another in the future. There will be considerable growth potential in the future.

5.2.1.4 Competitive niche

A. Complete R&D team and technical capabilities

Due to the short life cycle of information products as well as their complicate design, rapid development and requirements of high quality, components that can be renovated and have high-speed are more important. Our company has been deeply involved in the field of cooling technology for many years, therefore we have a strong R&D team which not only can coordinate with customer demand specifications but also respond to the changes in the market. Moreover, we continue to do research in the thermal conductivity materials and design to pursue the improvement of cooling efficiency. We will enhance the technology in manufacturing and R&D by cooperating with international companies and the academic community.

B. Provide complete system of cooling products

Our range of products include DC fan, EC fan, thin centrifugal fan and fan array, active heat sink, heat pipe/vapor chamber/heat equalization plate, far-end radiator, radiator,

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compressor radiator and liquid-cooling heat sink etc solutions, we can offer a variety of cooling solutions to meet different customers’ needs.

C. Effectively handle the market movement

Since our company has established long-time cooperative relationships with world renowned corporations, it has deepened the company's professional understanding of the current situation of the industry and the direction of future development, therefore we can effectively handle the market movement.

D. Ability to vertically integrate suppliers

Since we also have long-term cooperation relationships with suppliers, our company applies the method of the development cooperation with suppliers for new products. We enhance the technical ability of suppliers to meet the strict quality requirements and ensure that we have a stable and high-quality source of materials. On the other hand, facing the variety of radiator products, specifications and the short delivery time, the company has the ability to integrate the supply and development of suppliers, which will enhance the competitiveness of the products.

E. Rigorous requirements for the quality of products

Regarding the quality of products, the company's manufacturing sites all have obtained ISO international quality assurance certification, ISO/TS16949 of the Bureau Vertas Quantity International of France, environmental management quality certification, etc., and we also control the process of manufacturing to ensure that the quality meets international standards. The products of our company are mainly used in the information technology industry and have the function of protecting electronic components so that they continuously operate normally. As a result, the requirements of the quality and cooling efficiency are extremely strict. In fact, the quality of our products has been recognized by international renowned corporations. 5.2.1.5 Favorable factors and unfavorable factors of future development prospect, as well as countermeasures.

• A. Favorable factors

• a. The information industry is growing fast: As electronic products place greater emphasis on efficiency and speed, problems arise such as overheating of electronic products, abnormal fan sounds, slow operations, etc., together driving topics in the heat dissipation industry. In the face of the development of information products that tend to be small and mobile, the application of heat dissipation modules tends to be more extensive. In response to the emergence of various types of 5G related heat dissipation products, products with different heat dissipation solutions will be launched one after another in the future. There will be considerable growth potential in the future.

• b. Technology of our R&D team and integration ability

• Due to the information products have a short life cycle, complicate design, rapid development and requirements of high quality, the component to fit the technologies of renovation and speed are more important. Our company has been deeply involved in the field of cooling technology for many years, we have a strong R&D team not only can coordinate with customer's demand of specifications development but also response to the changes in market. Moreover, we continue to do researches in the

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thermal conductivity materials and design to pursue the improvement of cooling efficiency. Ability to vertically integrate f suppliers

Since we have the long-term cooperation relationship with suppliers, our company adopts the method of the development cooperation with suppliers. Meanwhile, suppliers can enhance their technical ability of suppliers. Moreover, it allows to speed up the development of new products, as well as to keep our competitiveness to develop new products with our innovation earlier than other competitors.

B. Unfavorable factors and countermeasures

a. The increasing cost of workforce and decree change in China

The cost of workforce keeps increasing in China and changes in tax related decrees lead to the rising expense in workforce and manufacture.

Countermeasures:

We will gradually improve the production line towards automated production in order to reduce the demand for labor in the production process.

b. Price competition with other competitors

Due to the globally sluggish economy and market demand, and under the demand of maintaining the existing capacity utilization, competitors are seeking for new market opportunities. However, it is inevitable to face the phenomenon of price competition.

Countermeasures:

Actively strive for orders from major international corporations, achieving economies of scale to reduce the cost of production, and establishing a long-term cooperation.

 Give scope to our capability in R&D, developing products that meet the specifications in response to customer needs, and closely cooperate with customers from design to mass production to strengthen the relationship of coexistence and co-prosperity.

 Actively expand the other cooling market in other non-PC areas, so that the company will produce the best possible results in manpower and equipment, and then reduce the impact of price competition.

c. Risk in changing exchange rate

The main market of heat sink of our company is mostly located in the overseas regions such as China, Europe and the United States, and most of demands are from major international corporations. However, the main raw materials such as ball bearing, IC and Thermal gap filler still need to rely on imports. As a result, the stability of the exchange rate is also one of the important operational risks of our company.

Countermeasures:

Strengthen the collection of information that may affect the fluctuations of exchange rate, understanding change of exchange rate and future trends, adopt a stable and conservative way to manage the foreign exchange.

 Salespeople should refer to the fluctuations in exchange rate, and adjust prices in an appropriate timing.

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 Be aware of the trend in exchange rate and operate the forward exchange agreement to avoid the exchange rate risk arising from fluctuations in foreign currency assets or liabilities.

5.2.2 Important functions and production process of the main products

The main products of our company are CPU heat sink, heat sink, fan, laptop thermal module, radiator, heat pipe/vapor chamber, liquid-cooling heat sink, liquid cold plates, computer, All-in-One PC, system assembly of server. Most of them are used in communication/Internet, energy/power, transportation, server, and smart phone.

5.2.3 Primary raw material

The raw materials used in the cooling products produced by our company include copper, aluminum, steel and plastic materials. The supply status is as follows:

• A. Copper and aluminum: Through a strategic alliance with a number of suppliers to supply high-quality and stable sources of copper and aluminum materials. The price is formulated on the basis of the LME market price, and materials are carefully purchased when the prices are at the lowest in order to ensure our competitiveness.

• B. Steel: We refer to annual contract or market price with a number of domestic and oversea corporations and purchase when the prices are at the lowest to enhance our competitiveness.

• C. Plastic products: Development of cooperation for special materials for cooling products with domestic and oversea corporations to improve production quality. Referring to the annual contract, we will seize the advantages of bulk order and ensure the price competitiveness.

• D. Other related materials for manufacturing and assembly products, including sensor, IC, bearing etc. Our company has a long-term cooperation with many domestic and oversea corporations to enhance our competitiveness.

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5.2.4 Names of client who accounted for more than 10% of net sales and purchases in the last two years:

A. The name of the client who accounted for more than 10% of the net sales in the last two years

UNITS: NT$ thousand ； %

		2019year	2019year	2019year		2020year	2020year	2020year
			Annual net
				Relation			Annual net sales	Relation with
	Name	Amount	sales		Name	Amount
Item				with issuer			(%)	issuer
			(%)
1	Client A	11,464,136	31.38%	NA	Client A	9,823,102	24.76%	NA
2	Client B	4,031,025	11.03%	NA	Client B	6,709,970	16.92%	NA
3	Others	21,039,284	57.59%		Others	23,132,462	58.32%
	Net sales	36,534,445	100%		Net sales	39,665,534	100%

B. Names of factories that were accounted for making more than 10% of net purchases in the last two years:

UNITS: NT$ thousand ； %

		2019year	2019year			2020year
						Amount
							Annual net	Relatio
			Annual net	Relation
							purchase	n with
Item	Name	Amount	purchase	with issuer	Name
							(%)	issuer
			(%)
1	Client D	5,931,029	23.22%	NA	Client D	3,324,763	12.16%	NA
2	Others	19,611,719	76.78%		Others	24,018,730	87.84%
	Netpurchases	25,542,748	100%			27,343,493	100%

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5.2.5 Production value in the last two years

UNITS: NT$ thousand ； thousand pcs

2019year	2019year	2020year Output quantity Output value 238,889 38,347,628
Output quantity	Output value	Output quantity
243,065	33,407,121	238,889

5.2.6 Sales value in last two years

UNITS: NT$ thousand ； thousand pcs

	2019 year	2019 year	2019 year	2019 year	2020 year	2020 year	2020 year	2020 year
Year
	Domestic		Foreign		Domestic		Foreign
Sales value
Main product	Output	Output	Output	Output value	Output	Output	Output	Output
	quantity	value	quantity		quantity	value	quantity	value
3C electronic products	20,375	1,470,061	264,901	35,064,384	9,749	1,522,108	259,316	38,143,426

5.3 Employees

Year	Year	2019year	2020year	Mar 23, 2021
Number of employees		9,962	10,348	10,904
Average age		32.8	33.2	33.2
Average length of service		3.2	3.4	3.3
Education level distribution ratio	PHD.	11	11	10
	Master	175	196	192
	College	2,158	2,314	2,323
	High school	1,420	1,266	1,364
	Below high school	6,198	6,561	7,015

5.4 Environmental Expenditure Information

5.4.1 In recent years and up to the date of losses due to pollution of the environment (including compensation and environmental protection audits and violations of environmental protection laws and regulations, the date of punishment, the font size of the punishment, the provisions of the regulations, the content of the regulations and the content of the punishment: None.

5.4.2 Countermeasures (including improvements) and possible expenditure: Our company has obtained ISO 14001 environmental management system and OHSAS 18001 occupational safety and health management certification. Follow regulatory requirements, keep improving, and strive to keep our promise to avoid polluting the environment.

5.5 Labor Relations

5.5.1 Various aspects of employee welfare measures, continuing education, job training, retirement system and its implementation, as well as labor agreement, labor rights and employment protection measures

• 5.5.1.1 Employee benefits

• A. Welfare measures

• Reasonable working hours:

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Follow the labor-related laws and regulations, working hours are flexible and no more than 40 hours per week, employees can arrange working hours within principles according to their personal needs.

•  Follow the regulations of Labor Standards Law and Act of Gender Equality in Employment, in addition to annual leave, personal leave and sick leave, we also provide our employees marriage leave, maternity leave, prenatal exam leave, paternity leave, funeral leave, menstrual leave, family care leave, natural disaster leave, official leave, etc.

•  Respect the employee's right of vacation, the minimum of leave is 30 minutes, so that employees can flexibly use all types of leaves.

•  According to Act of Gender Equality in Employment, both male and female employees can apply for unpaid parental leave for raising children and guarantee their right to reinstatement.

•  In addition to labor and health insurance, we also provide group insurance for all employees and travel insurance for employees who go on an oversea business trip.

• We organize medical examination for employees every year, the inspection is carried out by professional doctors. We also provide follow-up, health promotion activities and medical consultation to confirm the physical condition of employees.

•  Encourage employees to be innovative, offer proposal bonus when the application for a patent is approved and patent bonus when issuing patent certificates.

• We also provide performance bonus, year-end banquet, subsidy for study club and parking space.

• Recognition and awards for outstanding employees.

• B. Employee welfare measures

•  Our company insists on the concept of sharing business accomplishment with employees and has an Employee Welfare Committee according to the law in order to plan welfare measures for our employees. The members of the Welfare Committee have regular meetings to discuss various activities and the situation of supervision execution. Since its establishment, all businesses have been well in accordance with the regulations. Moreover, it benefits employees both practically and spiritually.

•  In addition to welfare measures such as birthday, holiday bonus, marriage, childbirth, retirement bonus, hospital condolences, funeral condolences, scholarship for employees and their children, subsidies for domestic and abroad, we also regularly hold large-scale outdoor family days. And recreational activities such as festival celebrations and dinner subsidies in order to relax and promote communication between employees, as well as to enhance the centripetal force.

• 5.5.1.2 Continuous education and job training system

  • In order to cultivate talents for business development, we formulate employee training management methods and standardize the key point of the implementation of employee training. We also examine the business status and needs in the annually development of human resource to formulate annual training plans. Cultivating talents and strengthening management are

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the ways to develop the business knowledge and reserve professional talents at all levels of management.

We formulate corresponding training according to company’s strategic goals, laws, regulations, professional requirements of every position, including:

• A. New employee orientation: In order to enable new employees to understand the background, historical evolution, system, regulations, core values, quality policies and employee operation standards of the company, and quickly settle into the team by getting involved in the operations and training activities.

• B. On job training: it is planned according to the requirements for different positions, job level and grades, including professional skills, management skills, general knowledge, and training for necessary skills due to organizational policy and requirements for special job license.

• C. Establish a study club subsidy system in order to advocate reading habit between colleagues. Then share and exchange the knowledge they learned from books with other employees.

• D. Establish a talents training system, integrate training related information, fasten the automation of training operations, and work paperless to reduce waste of resources.

The results of the company's 2020 annual education and training are as follows:

Course	Classes	Trainees	Traininghours in total
Common skills training	76	617	1,396
Professional skills training	45	413	1,180
Job skills training	36	126	126
Leadership management training	2	5	10
Environmental safetytraining	12	308	910
Total	171	1,469	3,622

• 5.5.1.3 Retirement system and its implementation:

• A. Based on regulations of the Labor Standards Law and the Labor Pensions Statutes, the Company has enacted the “Retirement Management Measures” and established the “Labor Retirement Reserve Supervision Committee”. Since its establishment, the company provides retirement reparation funds for employees according to the law after an actuary’s work and makes a deposit in an account for retirement funds in the Bank of Taiwan. It applies, reviews and pays for employee pensions, according to the regulations of the Labor Standard Law.

• B. In accordance with the related regulations, the company makes monthly pensions deposits in the department of trust of Taiwan Bank to take care of employees' life after retirement. For those who choose the labor pension statutes after 1, July, 2015, our company will contribute 6% of the monthly salary of employees to the designated pension account of the Labor Insurance Bureau according to the government's salary grading table.

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Employees can also contribute up to 6% of their pensions according to their individual needs.

• 5.5.1.4 Agreement in labor and status of various employee rights maintenance measures:

• A. In order to improve the working efficiency and the working conditions, as well as to promote the extensive coordination between the employers and employees, Taipei labor-management conference was established in March, 2013 and reported to the competent authority. The company regularly holds labor-management conference, and employees can express their opinions through labor representatives and conferences, then transacts in accordance with the procedure after the collective bargaining.

• B. Since the establishment of our company, we have been committed to creating a good working environment and well-organized welfare measures for employees. In order to clearly define the rights and obligations between employers and employees, as well as the behaviors and ethics of employees, the work is based on the Labor Standards Law and related laws. We enact work rules and Professional ethics and code of conduct in accordance with the labor standard laws and its related regulations. It also provides a fair and smooth complaint mechanism and a way for employees to present their opinion while the company listens to their opinions and solves their problems.

• C. The company considers that the harmony between labor and the communication between colleagues are very important. Only a smooth communication between the supervisor and the employees can create a harmonious family. Therefore, our company maintains a harmonious relation, and there has been no labor disputes and no related losses in 2020 and 2021 up to the date of publication of the annual report.

• 5.5.2 In the most recent year and as of the date of publication of the annual report, list losses due to labor disputes (including a listing of the labor inspection results that violate the Labor Standards Act, the date of punishment, the serial number of the punishment, the provisions of the regulations, the content of the regulations, and the content of the punishment), and disclose the current and future estimated amount and corresponding measures: None.

5.6 Important contracts

Type of contract	Party	Contract duration	Contract content	Restrictions
Rental agreement	Export Processing Zone Administration	From 2019.5.1~2029.4.30. 10years in total	Land lease rent of Kaohsiung plant	No
Long term loans	Taiwan Cooperative Bank - DongSinjhuangBranch	2018.1.23~2023.1.23	Unsecured loan NT$135,000 thousand	No
Long term loans	The Shanghai Commercial & Savings Bank - Chien Chin Branch	2020.4.15~2023.4.15	Unsecured loan NT$125,000 thousand
Long term loans	Chang Hwa Bank -Wu-Ku Branch	2019.2.18~2022.2.18	Unsecured loan NT$136,111 thousand	No
Long term loans	Taiwan Business Bank - Wu-Ku Branch	2019.4.1~2022.4.1	Unsecured loan NT$133,334 thousand	No
Long term loans	E.SUN Commercial Bank -Taihe Branch	2019.5.30~2022.5.30	Unsecured loan NT$150,000 thousand	No

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Type of contract	Party	Contract duration	Contract content	Restrictions
Long term loans	KGI Commercial Bank	2020.10.23~2021.1.22	Unsecured loan NT$100,000 thousand	No
Long term loans	Taiwan Cooperative Bank - DongSinjhuangBranch	2019.9.3~2024.9.3	Unsecured loan NT$225,000 thousand	No
Long term loans	Land Bank of Taiwan – Luzhou Branch	2019.10.18~2022.10.18	Unsecured loan NT$183,332 thousand	No
Long term loans	HSBC Bank	2020.2.24~2023.2.24	Unsecured loan NT$120,000 thousand	No
Long term loans	Taiwan Business Bank - Wu-Ku Branch	2020.4.1~2024.4.1	Unsecured loan NT$416,667 thousand	No
Long term loans	Taiwan Cooperative Bank - DongSinjhuangBranch	2020.6.17~2025.6.17	Unsecured loan NT$270,000 thousand	No
Long term loans	JihSun International Commercial Bank - Tun-Hua Branch	2020.7.7~2022.7.7	Unsecured loan NT$262,500 thousand	No
Long term loans	Yuanta Commercial Bank - XinzhuangBranch	2020.9.7~2023.9.7	Unsecured loan NT$600,000 thousand	No
Long term loans	Hua Nan Commercial Bank – Pei HsinchuangBranch	2020.10.12~2023.10.12	Unsecured loan NT$377,778 thousand	No
Long term loans	Mega Bank - Tien-Mou Branch	2020.10.19~2025.10.19	Unsecured loan NT$490,000 thousand	No
Long term loans	Bank of Taiwan - Kaohsiung Export ProcessingZone	2020.11.12~2025.10.12	Unsecured loan NT$59,896 thousand	No

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VI. An Overview of the Company’s Financial Status

• 6.1 Condensed balance sheets and consolidated income statement for the past 5 fiscal years

6.1.1 Condensed balance sheets – International Financial Reporting Standards (IFRS)

• A. Consolidated Information

UNITS: NT$ thousand

Year	Year
		2016	2017	2018	2019	2020
Item
Current Assets		19,872,338	19,881,489	21,571,861	25,907,747	29,139,904
Property, plant and equipment		5,751,387	5,801,996	6,409,263	6,712,042	7,773,383
Intangible assets		47,987	40,458	145,089	141,642	149,594
Other assets		1,123,447	1,593,195	1,168,891	682,914	612,672
Total assets		27,623,043	28,214,076	30,396,264	35,558,727	40,676,236
Current liabilities	Before distribution	14,459,333	15,025,280	16,304,381	20,586,193	21,464,868
	After distribution	14,459,333	15,025,280	16,304,381	20,586,193	21,464,868
Non- current liabilities		4,558,037	4,362,112	5,083,313	5,638,624	7,923,030
Total liabilities	Before distribution	19,017,370	19,387,392	21,387,694	26,224,817	29,387,898
	After distribution	19,017,370	19,387,392	21,387,694	26,224,817	29,387,898
Equity Attributable to shareholders of theparent		8,398,299	8,591,450	8,770,127	8,975,985	10,576,598
Share Capital		3,533,101	3,533,101	3,533,101	3,533,101	3,533,101
Capital surplus		1,797,162	1,655,838	1,540,647	1,540,817	1,601,099
Retained earnings	Before distribution	3,340,703	3,940,956	4,691,662	5,304,640	6,768,885
	After distribution	3,340,703	3,940,956	4,691,662	5,304,640	6,768,885
Other equityinterest		(272,667)	(538,445)	(995,283)	(1,402,573)	(1,326,487)
Treasurystock		0	0	0	0	0
Non - ControllingInterests		207,374	235,234	238,443	357,925	711,740
Total equity	Before distribution	8,605,673	8,826,684	9,008,570	9,333,910	11,288,338
	After distribution	8,605,673	8,826,684	9,008,570	9,333,910	11,288,338

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B. Independent information

		UNITS: NT$thousand	UNITS: NT$thousand	UNITS: NT$thousand	UNITS: NT$thousand	UNITS: NT$thousand
Year
		2016	2017	2018	2019	2020
Item
Current Assets		5,759,233	5,960,372	7,720,353	11,266,826	12,331,873
Property, plant and equipment		402,375	389,766	392,036	400,872	434,590
Intangible assets		24,138	22,022	65,327	53,650	55,026
Other assets		6,269	27,838	25,728	25,217	27,431
Total assets		19,409,112	19,710,161	21,774,131	25,656,186	28,033,948
Current liabilities	Before distribution	7,502,788	7,632,156	8,799,068	11,985,140	11,439,847
	After distribution	7,502,788	7,632,156	8,799,068	11,985,140	11,439,847
Non- current liabilities		3,508,025	3,486,555	4,204,936	4,695,061	6,017,503
Total liabilities	Before distribution	11,010,813	11,118,711	13,004,004	16,680,201	17,457,350
	After distribution	11,010,813	11,118,711	13,004,004	16,680,201	17,457,350
Equity		8,398,299	8,591,450	8,770,127	8,975,985	10,576,598
Share Capital		3,533,101	3,533,101	3,533,101	3,533,101	3,533,101
Capital surplus		1,797,162	1,655,838	1,540,647	1,540,817	1,601,099
Retained earnings	Before distribution	3,340,703	3,940,956	4,691,662	5,304,640	6,768,885
	After distribution	3,340,703	3,940,956	4,691,662	5,304,640	6,768,885
Other equityinterest		(272,667)	(538,445)	(995,283)	(1,402,573)	(1,326,487)
Treasurystock		0	0	0	0	0
Total equity	Before distribution	8,398,299	8,591,450	8,770,127	8,975,985	10,576,598
	After distribution	8,398,299	8,591,450	8,770,127	8,975,985	10,576,598

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6.1.2 consolidated income statement - International Financial Reporting Standards (IFRS)

A. Consolidated Information

UNITS: NT$ thousand

Year
	2016	2017	2018	2019	2020
Item
Operatingrevenues	26,504,463	27,109,342	29,066,591	36,534,445	39,665,534
Grossprofit	3,695,049	3,331,212	3,447,278	4,314,299	6,231,723
Net operatingincome	1,436,488	1,153,775	719,339	1,259,296	3,260,132
Non- operatingincome and expenses	(155,414)	113,104	312,023	234,533	(327,230)
Profit before income tax,net	1,281,074	1,266,879	1,031,362	1,493,829	2,932,902
Net income from continuing operations	940,530	939,338	729,847	973,093	2,074,700
Loss from discontinued operation	0	0	0	0	0
Net income(loss)	940,530	939,338	729,847	973,093	2,074,700
Other comprehensive income,net	(719,617)	(294,355)	(142,112)	(403,577)	91,330
Total comprehensive income	220,913	644,983	587,735	569,516	2,166,030
Profit attributable to the equity holders of the company	860,131	886,681	711,261	957,969	1,915,846
Net profit attributable to non-controllinginterests	80,399	52,657	18,586	15,124	158,854
Comprehensive income attributable to the equityholders of the company	152,954	617,123	584,526	558,998	1,998,191
Comprehensive income attributable to non-controllinginterests	67,959	27,860	3,209	10,518	167,839
Earningsper share	2.43	2.51	2.01	2.71	5.42

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B. Independent information

B. Independent information	B. Independent information	B. Independent information	B. Independent information	B. Independent information	B. Independent information
UNITS: NT$thousand
Year
	2016	2017	2018	2019	2020
Item
Operatingrevenues	13,398,378	16,568,698	18,079,395	23,804,322	25,269,916
Grossprofit	1,392,899	1,456,393	1,664,349	1,930,094	2,432,662
Net operatingincome	511,147	571,257	659,252	646,863	1,346,824
Non- operating income and expenses	518,819	455,867	218,820	525,123	952,279
Profit before income tax,net	1,029,966	1,027,124	878,072	1,171,986	2,299,103
Net income from continuing operations	860,131	886,681	711,261	957,969	1,915,846
Loss from discontinued operation	0	0	0	0	0
Net income(loss)	860,131	886,681	711,261	957,969	1,915,846
Other comprehensive income, net	(707,177)	(269,558)	(126,735)	(398,971)	82,345
Total comprehensive income	152,954	617,123	584,526	558,998	1,998,191
Earningsper share	2.43	2.51	2.01	2.71	5.42

6.1.3 The name of accountant and the auditor’s opinion of thepast 5 fiscalyears:	6.1.3 The name of accountant and the auditor’s opinion of thepast 5 fiscalyears:	6.1.3 The name of accountant and the auditor’s opinion of thepast 5 fiscalyears:	6.1.3 The name of accountant and the auditor’s opinion of thepast 5 fiscalyears:
Year	Name of accountingfirm	Name of accountant	Audit opinion
2016	Ernst & Young	Li,FangWen/Huang,Shi Jie	Unqualified opinion
2017	Ernst & Young	Li,FangWen/Huang,Shi Jie	Unqualified opinion
2018	Ernst & Young	Li,FangWen/Huang,Shi Jie	Unqualified opinion
2019	Ernst & Young	Chen,ChengChu/Huang,Shi Jie	Unqualified opinion
2020	Ernst & Young	Chen,ChengChu/Huang,Shi Jie	Unqualified opinion

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6.2 Financial analyses of the past 5 fiscal years adopt to International Financial Reporting Standards

A. Consolidated Information

	Year
		2016	2017	2018	2019	2020
Item
Financial structure (%)	Debts Ratio	68.85	68.72	70.36	73.75	72.25
	Long-term funds to Property, plant and equipment	200.59	119.15	193.41	194.92	177.06
Solvency (%)	Current Ratio	137.44	132.32	132.31	125.85	135.76
	Quick Ratio	104.59	97.17	84.47	83.59	80.56
	Times Interest Earned	11.55	9.87	13.12	16.21	28.53
Operating Performance	Average Collection Turnover	4.22	4.18	4.93	5.68	6.79
	Average number of days	86	87	74	64	54
	InventoryTurnover(times)	5.02	4.93	4.06	4.07	3.38
	Average Payment Turnover(Times)	2.56	2.53	2.52	2.75	2.51
	Average sales days	73	74	90	90	108
	Property, Plant and Equipment Turnover(Times)	4.82	4.69	4.76	5.57	5.48
	Total Assets Turnover(Times)	0.97	0.97	0.99	1.11	1.04
Profitability	Return on Total Asset(%)	3.52	3.60	2.94	3.42	5.42
	Return on Equity (%)	10.12	10.44	8.19	10.8	19.60
	Pre-tax net profit to paid-in capital ratio(%)	36.26	35.86	29.19	42.28	83.01
	Net Margin(%)	3.25	3.27	2.45	2.62	4.83
	Earningsper share(NT)	2.43	2.51	2.01	2.71	5.42
Cash Flow	Cash Flow Ratio(%)	14.89	12.02	5.96	11.94	22.69
	Cash Flow Adequacy Ratio (%)	88.74	86.11	67.16	65.48	64.14
	Cash Flow Reinvestment Ratio(%)	10.21	7.94	2.80	11.51	20.08
Leverage	OperatingLeverage	1	1	1	1	1
	Financial Leverage	1.09	1.14	1.35	1.20	1.06

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B. Independent Information

	Year
		2016	2017	2018	2019	2020
Item (Note 2)
Financial structure (%)	Debts Ratio	56.73	56.41	59.72	65.01	62.27
	Long-term funds to Property, plant and equipment	2774.75	2904.09	3097.47	3174.37	3003.27
Solvency (%)	Current Ratio	76.76	78.10	87.74	94.01	107.80
	Quick Ratio	55.95	59.38	62.68	63.80	59.32
	Times Interest Earned	13.94	11.03	9.21	10.52	27.16
Operating Performance	Average Collection Turnover	6.96	8.11	8.23	7.47	9.54
	Average number of days	52	45	44	49	38
	InventoryTurnover(times)	7.19	10.13	9.10	7.55	5.00
	Average Payment Turnover(Times)	2.33	2.87	2.86	3.11	2.82
	Average sales days	51	36	40	48	73
	Property, Plant and Equipment Turnover(Times)	40.87	41.83	46.25	60.04	60.49
	Total Assets Turnover(Times)	0.69	0.85	0.87	1.00	0.94
Profitability	Return on Equity (%)	4.78	4.97	3.91	4.53	7.43
	Return on Equity (%)	10.12	10.44	8.19	10.80	19.60
	Pre-tax net profit to paid-in capital ratio(%)	29.15	29.07	24.85	33.17	65.07
	Net Margin(%)	6.42	5.35	3.93	4.02	7.58
	Earningsper share(NT)	2.43	2.51	2.01	2.71	5.42
Cash Flow	Cash Flow Ratio(%)	14.78	5.14	3.65	(5.42)	22.40
	Cash Flow AdequacyRatio(%)	188.62	169.32	133.99	40.20	59.32
	Cash Flow Reinvestment Ratio (%)	6.56	(0.27)	(1.11)	(7.75)	13.02
Leverage	OperatingLeverage	2.17	2.04	2.02	2.27	1.66
	Financial Leverage	1.18	1.22	1.23	1.28	1.08

Note 1: Financial statements of the past two years are audited by certified public accountants Note 2: Companies listed on a stock exchange or whose shares are traded in the securities firm's business premises must include financial information for the financial year ending in the first quarter of the date of the annual report in the analysis.

Note 3: End of the annual report, the formula is as follows:

1. Financial structure

(1) Debt Ratio = Total Liabilities / Total Assets

(2) Long-term Fund to Property, Plant and Equipment Ratio = (Shareholders’ Equity + Noncurrent Liabilities) /Net Property, Plant and Equipment

1. Solvency

(1) Current Ratio = Current Assets / Current Liabilities

(2) Quick Ratio = (Current Assets - Inventories - Prepaid Expenses) / Current Liabilities

(3) Times Interest Earned = Earnings before Interest and Taxes / Interest Expenses

1. Operating Performance

(1) Average Collection Turnover = Net Sales / Average Trade Receivables

(2) Days Sales Outstanding = 365 / Average Collection Turnover

(3) Average Inventory Turnover = Cost of Sales / Average Inventory

(4) Average Inventory Turnover Days = 365 / Average Inventory Turnover

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(5) Average Payment Turnover = Cost of Sales / Average Trade Payables

(6) Property, Plant and Equipment Turnover = Net Sales / Average Net Property, Plant and Equipment (7) Total Assets Turnover = Net Sales / Average Total Assets

1. Profitability

(1) Return on Total Assets = (Net Income + Interest Expenses * (1 - Effective Tax Rate)) / Average Total Assets

(2) Return on Equity Attributable to Shareholders of the Parent = Net Income Attributable to Shareholders of the Parent / Average Equity Attributable to Shareholders of the Parent

(3) Operating Income to Paid-in Capital Ratio= Operating Income / Paid-in Capital

(4) Pre-tax Income to Paid-in Capital Ratio = Income before Tax / Paid-in Capital (Note:4)

(5) Net Margin = Net Income / Net Sales

• (6) Earnings Per Share = (Net Income Attributable to Shareholders of the Parent - Preferred Stock Dividend) /Weighted Average Number of Shares Outstanding

• Cash Flow

• (1) Cash Flow Ratio = Net Cash Provided by Operating Activities / Current Liabilities

• (2) Cash Flow Adequacy Ratio = Five-year Sum of Cash from Operations / Five-year Sum of Capital Expenditures, Inventory Additions, and Cash Dividend

(3) Cash Flow Reinvestment Ratio = (Cash Provided by Operating Activities - Cash Dividends)/ (Gross Property, Plant and Equipment + Long-term Investments + Other Noncurrent Assets + Working Capital (Note:5)

1. Leverage

2. (1) Operating Leverage = (Net Sales - Variable Cost) / Income from Operations (Note: 6)

(2) Financial Leverage = Income from Operations / (Income from Operations - Interest Expenses) Note 4: The calculation of the earnings per share of the preceding paragraph shall pay special attention to the following:

1. Based on the weighted average number of ordinary shares, rather than the number of shares issued at the end of the year.

2. Where there is a cash replenishment or treasury stock trading, the weighted average number of shares shall be calculated during the period of circulation.

3. Where there is a surplus to capital increase or capital surplus to capital increase, the calculation of the earnings per share for the previous year and half-year should be adjusted by the proportion of capital increase, rather than the period the capital increase is issued.

4. If the preferred shares are non-convertible accumulative shares, its annual dividend (whether or not it is issued) shall be deductible from the net income or increased to net loss after tax. If the preferred shares are non-cumulative, then in the case of having a net profit after tax, the preferred dividend should be deducted from the net profit after tax; in the case of net loss after tax, no adjustments are required.

Note 5: Cash flow analysis should pay special attention to the following:

1. Net cash flow from operating activities refers to the net cash inflow from operating activities in the cash flow statement.

2. Capital expenditure refers to the annual cash outflow of capital flows.

3. The increase in inventories shall only be credited when the balance at the end of the period is greater than the balance at the beginning of the period. If the inventory is reduced at the end of the year, then the inventory amount should be accounted at zero.

4. Cash dividends include cash dividends for common stock and special shares.

5. Net plant property and equipment means the total amount of Property, plant and equipment before deducting accumulated depreciation.

Note 6: The issuer shall distinguish between the operating costs and operating expenses being fixed or variables. When involved in the estimation or subjective judgments, one should pay attention to its rationality and consistency.

Note 7: If the Company's shares are no par or not in the denomination of NT $ 10, the calculation of the ratio of the paid-in capital shall be calculated based on the equity ratio of the balance sheet attributable to the owners of the parent company.

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• 6.3 Supervisor’s or audit committee’s report for the most recent year’s financial statement

Asia Vital Components Co., Ltd.

Audit Committee’s Review Report

The Board of Directors has prepared the Company’s 2020 Business Report, Financial Statements, and proposal for allocation of earnings. The CPA firm of Ernst & Young Global Limited was retained to audit AVC’s Financial Statements and has issued an audit report relating to the Financial Statements. The Business Report, Financial Statements, and earnings allocation proposal have been reviewed and determined to be correct and accurate by the Audit Committee members of Asia Vital Components Co., Ltd. According to relevant requirements of the Securities and Exchange Act and the Company Law, we hereby submit this report.

Asia Vital Components Co., Ltd.

Chairman of the Audit Committee: Cho, I Lang

March 23, 2021

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• 6.4 Financial Statements audited and certificated by certified public accountants for the most fiscal year

• See page 121 for details

• 6.5 A parent company only financial statement for the most recent fiscal year, certified by a CPA

• See pages 216 for details.

• 6.6 If the company or its affiliates have experienced financial difficulties in the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report, the annual report shall explain how said difficulties will affect the company's financial situation

• None.

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VII. Review and Analysis of Financial Status and Business Results and Risk Issues

7.1 Review and Analysis of Financial Status

The main causes and effects of significant changes in assets, liabilities and equity in the past two years should be stated if the impact is significant.

			UNITS: NT$thousand	UNITS: NT$thousand
Year			Difference
Item	2020	2019	Amount	％
Current assets	29,139,904	25,907,747	3,232,157	12.48%
Property, plant and equipment	7,773,383	6,712,042	1,061,341	15.81%
Intangible assets	149,594	141,642	7,952	5.61%
Other assets	612,672	682,914	(70,242)	-10.29%
Total assets	40,676,236	35,558,727	5,117,509	14.39%
Current liabilities	21,464,868	20,586,193	878,675	4.27%
Non-current liabilities	7,923,030	5,638,624	2,284,406	40.51%
Total liabilities	29,387,898	26,224,817	3,163,081	12.06%
Interests attributable to parent companyowner	10,576,598	8,975,985	1,600,613	17.83%
Share capital	3,533,101	3,533,101	0	0.00%
Capital surplus	1,601,099	1,540,817	60,282	3.91%
Retained earnings	6,768,885	5,304,640	1,464,245	27.60%
Other interests	(1,326,487)	(1,402,573)	76,086	-5.42%
Treasurystock	0	0	0	0.00%
non-controllinginterests	711,740	357,925	353,815	98.85%
Total amount of equity	11,288,338	9,333,910	1,954,428	20.94%
Description of analysis: (deviation over 20% and the change amounted to NT $ 10 million should explain the reason) 1. Non-current liabilities: Mainly due to changes in non-current liabilities caused by the issuance of corporate bonds in 2020. 2. Retained surplus: Mainly due to changes in retained surplus caused by the increase in profit for the period. 3. Non-controlling interests: Mainly due to changes in non-controlling interests caused by changes in equity of subsidiary companies. 4. Total equity: Mainlydue to changes in equitycaused bythe increase inprofit for theperiod.

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7.2 Financial Performance

• 7.2.1 The main reasons for the significant changes in operating revenues, operating profit and net profit in the last two years

UNITS: NT$ thousand

			Increased
Item	2020	2019	(decreased)	% Change
			amount
Operatingrevenues	39,665,534	36,534,445	3,131,089	8.57%
Grossprofit	6,231,723	4,314,299	1,917,424	44.44%
Net operatingincome	3,260,132	1,259,296	2,000,836	158.89%
Non- operating income and expenses	(327,230)	234,533	(561,763)	-239.52%
Profit before income tax,net	2,932,902	1,493,829	1,439,073	96.33%
Net income from continuing operations	2,074,700	973,093	1,101,607	113.21%
Loss from discontinued operation	0	0	0	0.00%
Net income(loss)	2,074,700	973,093	1,101,607	113.21%
Other comprehensive income,net	91,330	(403,577)	494,907	-122.63%
Total comprehensive income	2,166,030	569,516	1,596,514	280.33%
Profit attributable to the equity holders of the company	1,915,846	957,969	957,877	99.99%
Net profit attributable to non-controllinginterests	158,854	15,124	143,730	950.34%
Comprehensive income attributable to the equity holders of the company	1,998,191	558,998	1,439,193	257.46%
Comprehensive income attributable to non-controlling interests	167,839	10,518	157,321	1495.73%
Earningsper share	5.42	2.71	2.71	100.00%
Description of analysis: (If the deviation is over 20% and the change amounted to NT $ 10 million, please explain the reason) 1. Operating gross profit, operating profit and loss, net profit before tax, continuing business net profit for the current period, current net profit (loss), total comprehensive profit and loss for the current period, net profit attributable to the owners of the parent company, total comprehensive profit and loss attributable to the owners of the parent company, earnings per share: Mainly due to changes in related profits due to increased revenue growth and profits. 2. Non-operating income and expenses: Mainly due to the increase in exchange losses arising from the disposal of fixed assets, loss of plant equipment and exchange rate changes. 3. Other comprehensive gains and losses in the current period (net after tax): Mainly due to changes in the conversion differences in the financial statements of foreign operating institutions 4. Net profit attributable to non-controlling interests, and total comprehensive profit and loss attributable to non-controllinginterests: Mainlydue to changes in subsidiaryequity.

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7.2.2 Expected sales quantity and its basis:

In recent years, the company has actively expanded to other cooling market in non-electronic industries such as communication heat sink. The proportion of non-electronic cooling products in 2020 is about 40%. It is estimated that the proportion of non-electronic heat cooling products will remain at around 40% in 2021.

7.2.3 The possible influence of financial business in the future and its countermeasures

In order to achieve a more balanced development of global market revenue distribution, the company's global investment is located in Taiwan, China, the United States and other locations. Our teams of marketing and technical support network that have been located all around the world are always on call to serve customers from all over Asia, North America, Europe and clients around the world. We provide customers with fast and complete solutions, and keep improving the production process in order to maintain leading and sustainable growth with high quality products and services.

7.3 Cash flow

7.3.1 Cash flow analysis for the recent years:

7.3 Cash flow 7.3.1 Cash flow analysis for the recentyears:	7.3 Cash flow 7.3.1 Cash flow analysis for the recentyears:	7.3 Cash flow 7.3.1 Cash flow analysis for the recentyears:	7.3 Cash flow 7.3.1 Cash flow analysis for the recentyears:	7.3 Cash flow 7.3.1 Cash flow analysis for the recentyears:	7.3 Cash flow 7.3.1 Cash flow analysis for the recentyears:
Year Item 2020 2019 % change Cash flow ratio(%) 22.69 11.94 90.03% Cash flow adequacy ratio(% 64.14 65.48 -2.05% Cash flow reinvestment ratio(% 20.08 11.51 74.46% Analysis of changes in cash flow over the next year: Cash flow ratio, cash reinvestment ratio: Mainly due to changes in cash flow from operatingactivities. 7.3.2 Insufficient capital liquidity improvement plan: The current flow ratio of our company is 135.76%, there are no liquidity concerns 7.3.3 Cash flow forecast analysis for the next year: UNITS: NT$thousand
	Ch fl f			Ch ht ti l
Beginning cash balance (A)	as ow rom operating activities (B)	Estimated annual cash outflow(C)	Net cash flow balance (A)+(B)-(C)	as sorage conngency pan
				Investment plan	Financing plan
11,108,016	1,500,000	2,000,000	10,608,016	0	0
It is estimated that in the coming year, the cash inflow from operating activities is approximately NT$1,500,000 thousand, and capital expenditures such as investment in plant refurbishments and additional equipment purchases will be increased. The increased cash outflow will be approximately NT$2,000,000 thousand, and the closing cash balance will be approximately NT$ 10,608,016 thousand.

It is estimated that in the coming year, the cash inflow from operating activities is approximately NT$1,500,000 thousand, and capital expenditures such as investment in plant refurbishments and additional equipment purchases will be increased. The increased cash outflow will be approximately NT$2,000,000 thousand, and the closing cash balance will be approximately NT$ 10,608,016 thousand.

106

7.4 Major capital expenditures during the most recent fiscal year

7.4.1 The implementation of significant capital expenditures and sources of funding:

UNITS: NT$ thousand

	Actual or			Actual or planned Use of
	expected	Actual or expected	Total amount	Capital
Planned item
	sources of	date of completion	required
				2021
	capital
Property, plant and equipment	Cash flow generated from operations and bank loan	Dec, 2021	2,000,000	2,000,000

7.4.2 Expected benefits: It is mainly in purchasing equipment in order to expand the production capacity of our company, and increase the amount of investment, in order to obtain more revenue from investment and create more profits.

7.5 The most recent annual investment policy, the main reason for the annual

• investment profit or loss, the improvement plan and the investment plan for the next year

7.5.1 Transfer investment policy: Our company's investment transfer policy is to vertically integrate the upstream and downstream industries to ensure both the control of product quality as well as order delivery.

7.5.2 Main reason for the recent annual investment loss/profit: The share of the interests of related companies recognized by the equity method in 2020 was NT$12,459 thousand which was mainly due to the operating profit of the investment company.

7.5.3 Future investment plan:

In the future, the Company will strengthen the transfer of investment management, implement the performance appraisal system, and bring into play the business synergy. It will also provide necessary assistance for the investment companies that operate losses, to quickly reverse the predicament. In the coming year, the investment plan will focus on the overall industrial situation and the development of the company's business. It will mainly integrate the upstream and downstream industries and will report it to the board of directors for review after careful evaluation.

7.6 Risk assessment

• 7.6.1 The impacts of interest rates, exchange rate fluctuations and the inflation on the company’s profit and loss and its actions.

• A. Interest rate risk:

  • Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to bank borrowings with fixed interest rates and variable interest rates.

The Group manages its interest rate risk by having a balanced portfolio of fixed and variable loans and borrowings and entering into interest rate

107

swaps. Hedge accounting does not apply to these swaps as they do not qualify for it.

The interest rate sensitivity analysis is performed on items exposed to interest rate risk as at the end of the reporting period. A change of 10 basis points of interest rate in a reporting period could cause the profit for 2020 and 2019 to decrease/increase by NT$3,221 thousand and NT$652 thousand, respectively.

B. Foreign currency risk:

The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenue or expense are denominated in a different currency from the Group’s functional currency) and the Group’s net investments in foreign subsidiaries.

The Group has certain foreign currency receivables to be denominated in the same foreign currency with certain foreign currency payables, therefore forming a natural hedge. Furthermore, as net investments in foreign subsidiaries are for strategic purposes, they are not hedged by the Group.

The foreign currency sensitivity analysis of the possible change in foreign exchange rates on the Group’s profit is performed on significant monetary items denominated in foreign currencies as at the end of the reporting period. The Group’s foreign currency risk is mainly related to the volatility in the exchange rates for USD and RMB. The information of the sensitivity analysis is as follows:

• (a) When NTD strengthens/weakens against USD by 1%, the profit for 2020 and 2019 is decreased/increased by NT$19,260 thousand and NT$28,404 thousand, respectively.

• (b) When NTD strengthens/weakens against RMB by 1%, the profit for 2020 and 2019 is increased/decreased by NT$32,729 thousand and decreased/increased by NT$20,866 thousand, respectively.

C. Inflation:

The inflation’s impact on the profit and loss of the company and its subsidiaries.

The company will continue to pay attention to inflation, however it is estimated that there should be no significant impact on profit or loss in the near future.

Inflation countermeasures

In recent years, Consumer Price Index has mitigated, and the prices of the raw materials needed by the company have remained. In the next years, the company will keep controlling the cost and quotation while paying attention to inflation to make appropriate adjustments.

• 7.6.2 The FCM's policy regarding high-risk investments, highly leveraged investments, loans to other parties, endorsement guarantees, and derivative transactions; the main reasons for the profits/losses generated thereby; and response measures to be taken in the future.

108

• A. High-risk investments: The company is engaged in manufacturing. Thus, there is no high-risk investment.

• B. Highly leveraged investments: The company is engaged in manufacturing. Thus, there is no high leverage investment.

• C. Loans to other parties: The company’s fund lending to other parties are processed in accordance with the “loans to other parties operating procedures”. The company loans short-term funds to its subsidiaries or related companies. These related companies must have a stable financial situation as well as good management. Therefore, there was no reported loss due to the loan of funds, up to the date of the publication of the annual report.

• D. Endorsement guarantees: The company’s external endorsement guarantees are processed in accordance with the “endorsement guarantee operation procedures”. All of it is done for subsidiaries or related companies. Most of the endorsement guarantee projects are guarantees for bank financing. The subsidiaries or affiliated companies that endorsed the guarantees have a strong and stable situation in financial and management, in the most recent fiscal year and up to date of publication of annual report. Therefore, there is not any loss has occurred due to the endorsement guarantees. E. Derivatives transactions

• a. Trading policy

• Handled in accordance with the Company's acquisition or disposition of assets processing requirements.

• b. Main reasons for profits or losses

The company did not undertake derivative trading in 2020.

• c. Future countermeasures

In the future, the company will continue to increase the US dollar account payable payment in the foreign exchange rate hedging strategy, increase the US dollar debt to reduce the net income of the US dollar. To achieve natural hedging effects; thereby reducing the operate of high-cost, high-risk foreign exchange hedging commodities of financial institutions.

• 7.6.3 Research and development work to be carried out in the future, and further expenditures expected for research and development work:

  • The company's most recent R&D program is to develop high-value-added cooling products or electronic-related products. We’ll keep taking it as an objective. The estimated R&D expenses in 2021 is NT$1.9 billion.

• 7.6.4 Effect on the company's financial operations since important policies adopted and changes in the legal environment domestic and abroad, and countermeasures:

• The business activities carried out by the company are all in compliance with the regulations in each of their locations. Moreover, the company has accounting management personnel in each of their locations. Thus, in the event of a change in regulations, the company can quickly turn to the local accounting management unit in order to deal with the new policies. The major policies are listed and explained below:

• (1) Outbreak of Severe Pneumonia with Novel Pathogens (COVID-19)

109

• A. Basis: The COVID-19 pandemic will continue to dominate the economic landscape in 2021. The speed at which governments control the pandemic will largely determine the economic winners and losers in the coming year. China’s effective control of the pandemic has allowed businesses and consumers to gradually return to normal economic activities. The economic rebound observed in China since the second quarter of 2020 is proof of this. It is expected that China will continue to lead the global economic recovery in 2021. As for other East Asian economies, such as Hong Kong, Taiwan, South Korea and Singapore, if a strong economic recovery is desired, not only are effective pandemic control measures required, but a rebound in the global trade cycle will be of key importance. In the United States and Europe, if the respective governments can better balance the control of the pandemic and maintain economic momentum, the prospects of economic recovery may improve. Once policymakers achieve a balance between the two, these economies will have sufficient domestic demand to promote economic recovery. In addition, if vaccine development and distribution are smooth, coupled with accurate and effective testing, this should help expedite economic recovery. However, considering the time required to manufacture and distribute vaccines, the impact on the real economy may not be effective until the second half of 2021 at the earliest. Furthermore, not all economies have the same access to vaccines at this early stage. The implication of this is that the pace of global economic recovery may be inconsistent across countries.

• B. Countermeasures: While vaccines for treating COVID-19 remain uncommon, the Company shall make use of digital tools to maintain customer relationships through video conferencing, or increase online order capacity through digitalized channeling. The Company also anticipates the purchase of additional machinery and equipment to meet the increased demand from remote work and work-from-home arrangements. Actively ensure material supply chain and logistics channels to facilitate the delivery of goods or emergency orders. The affected industries can partially suspend their services, and plan to handle staff training or on-the-job training, or improve operating sites, so that operations can be quickly resumed after the pandemic subsides, while industry upgrades can be promoted.

• (2) Depreciation of the U.S. Dollar

• A. So far this year, the U.S. dollar has fallen again against other major currencies in developed markets. It is expected that the world will continue to economically recover in 2021. Under this premise, we believe that the value of the U.S. dollar will continue to fall. The quantitative easing policies of the US Federal Reserve has eliminated the interest rate (or arbitrage) advantage of the U.S. dollar, and the dismal prospects of the US fiscal and external revenues and expenditures have also caused a drag on the US dollar. The Federal Reserve has adopted a new policy framework, including the average inflation targeting method, which heightens the risk of raising long-term inflation expectations. Since the Federal Reserve is

110

unlikely to raise the policy rate in the next two to three years, it will prevent a sharp change in nominal returns, which in turn promotes a decline in real income risk in the U.S. This is expected to further drag the U.S. dollar. However, a second, longer, wave of COVID-19 infections in winter will cause market volatility, and the U.S. dollar will temporarily rebound due to its safe-haven nature.

• B. Corresponding measures: The Company and its subsidiaries shall adopt dynamic and natural hedging measures in response to exchange rate fluctuations. Other undertakings include leveraging spot foreign exchange transactions and partial accounts receivable selling to reduce exchange rate fluctuation risks.

• 7.6.5 Effect on the company's financial operations of developments since science and technology as well as industrial change, and countermeasures: Today’s 3C electronic products are gradually becoming more energy-efficient, functional and action-oriented. Facing the rapid changes in the technology industry, the life cycle of technology products is shortening. However, Taiwanese technology manufacturers are also more flexible in responding to market changes, rapidly changing design according to market demands then integrate it, and seizing the best timing to launch. The company has a professional R&D team to design products that meet customer needs in order to enhance competitiveness.

• 7.6.6 Effect on the company's crisis management of changes in the company's corporate image, and countermeasures: The company does not have crisis in management due to changes in the company's corporate image.

• 7.6.7 Expected benefits and possible risks associated with any merger and acquisitions, and mitigation measures being or to be taken: There is no plan for mergers and acquisitions in the most recent fiscal year and up to the date end of the annual report, so there is no such risk.

• 7.6.8 Expected benefits and possible risks associated with any plant expansion, and mitigation measures being or to be taken: The expansion of the company's plant has undergone a complete, prudent and professional assessment process, and also has considered the effect of investment and possible risks.

• 7.6.9 Risks associated with any consolidation of sales or purchasing operations, and mitigation measures being or to be taken: The company's largest trade debtor in 2020 is the A group which accounts for approximately 24.76% of the net operating revenue. Moreover, in terms of purchasers, the company's largest purchaser in 2020 is Group D, which accounts for 12.16% of total purchases. There is no consolidation of purchasing, and through the strategic alliance with manufacturers to achieve the advantages of vertical integration, reducing impact might be brought by the risks of single-industry in order to achieve excellent business performance.

111

• 7.6.10 Effects, risks and countermeasures to the directors of the company or the major shareholders who hold more than 10% of the company and having made significant transfers or replacement of shares: Up to the date of publication of annual report, there is no significant transfer or replacement of shares.

• 7.6.11 Effects upon and risks to the company associated with any change in governance personnel or top management, and countermeasures: The most recent fiscal year and up to the date of publication the annual report, the operating class of our corporation is stable, and everyone commits to improve the company's operational performance and to create maximum interests for shareholders. Thus, there is no change in management rights.

• 7.6.12 Litigious and non-litigious matters. List major litigious, non-litigious or administrative disputes that: (1) involve the company and/or any company director, any company supervisor, the general manager, any person with actual responsibility for the firm, any major shareholder holding a stake of greater than 10 percent, and/or any company or companies controlled by the company; and (2) have been concluded by means of a final and unappeasable judgment, or are still under litigation. Where such a dispute could materially affect shareholders' equity or the prices of the company's securities, the annual report shall disclose the facts of the dispute, amount of money at stake in the dispute, the date of litigation commencement, the main parties to the dispute, and the status of the dispute as of the date of publication of the annual report.

• 7.6.13 Other important risks, and countermeasures: None.

• 7.7 Other important matters

None

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VIII. Special Disclosure

8.1 Information related to the company's affiliates

8.1.1 Organizational Chart of affiliate companies December 31, 2020

Asia Vital Components Co., Ltd.

==> picture [730 x 398] intentionally omitted <==

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

AVC
100%
100% 100% 100% AMERICA
100%
AVC AVC Tech. Chihung Rayney AVC International
International International Ltd. International 100% Co., Ltd.
(Vietnam) Co., --SAMOA
Co., Ltd.-B.V.I. Limited
Ltd.
100%
AVC
Asia Vital 100% 100% International
100% Components 100% Merit (SAMOA) Co.,
Ltd.
(Shen Zhen) Co., Tonbridge Asia Vital Trading
Ltd Investments Components Corporation
100% MACE TECH 100% Limited (China) Co., Ltd. 100% Investment Co., Hung Ye
Asia Vital
CORP. Ltd.
100%
Components (Dongguan) Asia Vital 100% AVC 100% Corporation JADS 100% AVC Europe
Precision, Technology GmbH
(HK) Limited
Asia Vital Components Co., Ltd.
100%
Components (Shanghai) 100%
(Chengdu) Co., Beijing AVC 19.71% D-Max
100% 100% Technology Fositek Corp Technology Ltd.
AVC OPTICS Research
100%
CORP. Center Co., 100% Wuchida
Ltd. International
Co., Ltd.
100% 100% Investments Markethill 100%
Limited
AVC Optics Whan Asia Vital D-Max International
(Wuhan) Components 100% Co., Limited
Corp. Co., Ltd. 100%
First Dome Corp
Telecom Ltd. （Jiashan）D-MAX
Electronics Co., Ltd.
----- End of picture text -----

113

December 31, 2020 UNITS: NT$ thousand

8.1.2 Basic Information of affiliate companies

				December 31, 20 UNITS: NT$thousa
Name of company	Date of incorporatio n	Address	Paid-in capital	Type of business
AVC International Co., Ltd.—B.V.I.	1998/02/24	Vistra Corporate Services Centre, Wickhams CayⅡRoad Town Tortola VG1110 Virgin Islands,British	5,147,294	Reinvestment
Chihung International Ltd.	2001/09/27	Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road,Apia,Samoa	1,040,647	Reinvestment
Rayney International Limited	2002/02/28	Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road,Apia,Samoa	78,950	Trading
Asia Vital Components (Shen Zhen) Co., Ltd.	2001/02/22	West Industrial Park, Xinyang Community, Shajing Street, Bao'an District, Shenzhen City	642,719	Manufacturing and trading of computer peripheral products and computer cooling fans
Tonbridge Investments Limited	2002/02/08	Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road,Apia,Samoa	101,772	Reinvestment
Asia Vital Components (Shanghai) Co., Ltd.	2002/05/17	No. 2.4.5.6, Lane 8, Lane, Rongjiang Road, Songjiang Export ProcessingZone,Shanghai	200,073	Manufacturing and trading of laptop coolingmodule
MACE TECH CORP.	1999/01/19	Vistra Corporate Services Centre, Wickhams CayⅡRoad Town Tortola VG1110 Virgin Islands,British	319,776	Trading
Asia Vital Components (Dongguan) Co. ,Ltd.	2001/01/15	Jinhu Industrial Zone, Qishi Town, Dongguan City	514,105	Manufacturing and trading of computer and components of electronic related products
Merit Trading Corporation	2004/05/07	Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road,Apia,Samoa	29,088	Trading
Asia Vital Components (China) Co., Ltd.	2005/12/19	Xinyang Industrial Zone, West Industrial Park, Shajing Street, Baoan District, Shenzhen	879,291	Manufacturing and trading of computer peripheral products and computer cooling fans
AVC AMERICA,INC.	1998/01/16	48501 WARM SPRINGS BLVD 109 FREMONT,CA 94539-7750	27,776	Trading
JADS Corporation (HK) Ltd.	2008/01/18	FLAT/RM 6 16/F WORKINGBOND COMMERCIAL CENTRE 162-164 PRINCE EDWARD RD WEST MONGKOK KL	327	Trading
AVC International (SAMOA) Co., Ltd.	2008/07/25	Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road,Apia,Samoa	10,157	Trading
AVC Precision, Co., Ltd.	2008/08/19	Jinhu Industrial Zone, Qishi Town, Dongguan City	734,140	Manufacturing, machining and trading of computer and components of electronic relatedproducts
Beijing AVC Technology Research Center Co., Ltd.	2007/08/22	A3A01, 4th Floor, Wangjing Technology Development Building, Block 3, Wangjing Xinxing Industrial Zone, Chaoyang District, Beijing	44,350	Development and maintenance of electronic products
AVC International Co., Ltd. -SAMOA	2009/12/09	Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road,Apia,Samoa	32,120	Trading

114

Name of company	Date of incorporatio n	Address	Paid-in capital	Type of business
HongYe Investment CO.,LTD	2011/06/09	7F.-3,No. 24,Wuquan 2nd Rd.,XinzhuangDist.,New Taipei City	60,000	Investment
Asia Vital Components (Chengdu) Co., Ltd.	2011/01/25	No. 77, Tianqin East Street, West District, Chengdu Kuo Xin Zone,Sichuan Province	1,055,897	Manufacturing and trading of computers and theirperipheralparts
D-Max Technology Ltd.	2001/07/24	7F.-3, No. 24, Wuquan 2nd Rd., Xinzhuang Dist., New Taipei City	285,000	Manufacturing and trading of components of electronic relatedproducts
Wuchida International (Samoa) Co., Ltd	2008/09/26	Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road,Apia,Samoa	132,004	Reinvestment
D-Max International Co., Limited	2008/10/17	FLAJ/RM6 16F WORKINGBOND COMMERCIAL CENTRE 162-164 PRINCE EDWARD ROAD W MONG KOK KL	132,004	Reinvestment
（Jiashan）D-MAX Electronics Co., Ltd.	2007/03/05	No. 106, Zhijiang Road, Huimin Street, Jiashan County	132,004	Manufacturing and trading of electronic equipment andphotographic equipment
AVC OPTICS CORP.	2013/02/27	P.O. Box 31119 Grand Pavilion, Hibiscus Way, 802 West Bay Road,Grand Cayman,KY1-1205 Cayman Islands.	3,128,775	Reinvestment
AVC Optics (Wuhan) Corp.	2013/06/13	777 Guanggu 3rd Road, Donghu New Technology Development Zone, Wuhan	3,128,775	Manufacturing and trading of computer peripheral products and computer cooling fans
Fositek Corp	2001/06/11	8F.-4, No. 24, Wuquan 2nd Rd., Xinzhuang Dist., New Taipei City	381,814	Manufacturing of components of electronic related product and trading of computer and itsperipherals
MARKETHILL INVESTMENTS CO., LIMITED	2003/02/05	Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road,Apia,Samoa	390,575	Reinvestment
First Dome Corp Telecom Ltd.	2011/09/15	West Industrial Park, Xinyang Community, Shajing Street, Bao'an District, Shenzhen City	287,809	Production and sales of various types of skid rails, spindle and metal stamping molds
Whan Asia Vital Components Co., Ltd.	2015/08/17	777 Guanggu 3rd Road, Donghu New Technology Development Zone,Wuhan	2,498	Trading
AVC Europe Technology GmbH	2018/10/4	Bismarckstraße 100 (c/o Regus Mönchengladbach City Center), 41061 Mönchengladbach	9,050	Trading
AVC TECHNOLOGY (VIETNAM) COMPANY LIMITED	2020/10/22	Lô CN05, Khu Công nghiệp hỗ trợ Đồng Văn III,Phường Đồng Văn, Thị xã Duy Tiên,Tỉnh Hà Nam,Việt Nam	253,411	Manufacturing of components of electronic related product and trading of computer and itsperipherals

115

8.1.3 Companies presumed to have a Relationship of Control and Subordination with Chunghwa Telecom: None.

• 8.1.4 Industries covered by Affiliates' Business Operation: Computer and peripheral equipment industry.

8.1.5 Affiliates' Directors, Supervisors and Executives Names and Shareholdings

			December 31,2020	December 31,2020	December 31,2020
				Shares owned
				Capital
Name of company	Title	Name of representative	Juristic person represented
				contribution	Percentage
				/share
AVC International Co.,Ltd. - B.V.I.	Chairman	SHEN, CHING-HANG (Representative)	Asia Vital Components Co.,Ltd	16	100.00%
Chihung International Ltd.	Chairman	SHEN, CHING-HANG (Representative)	Asia Vital Components Co., Ltd	32,770	100.00%
Rayney International Limited	Chairman	SHEN,CHING-HANG(Representative)	Asia Vital Components Co., Ltd	2,400	100.00%
	Directors	CHEN,YI-CHENG(Representative)
MERIT TRADING CORPORATION	Chairman	SHEN, CHING-HANG (Representative)	Asia Vital Components Co., Ltd	892	100.00%
AVC AMERICA INC.	Chairman	HUANG,CHIU-MAO	Asia Vital Components Co., Ltd	41	100.00%
	General manager	HUANG,SONG-HONG
	Directors	WANG,JUI-PIN
AVC INTERNATIONAL (SAMOA)CO.,LTD.	Directors	SHEN, CHING-HANG (Representative)	Asia Vital Components Co., Ltd	300	100.00%
JADS CORPORATION (HK) LTD.	Directors	SHEN, CHING-HANG (Representative)	Asia Vital Components Co., Ltd	10	100.00%
AVC International Co.,Ltd. -SAMOA	Directors	SHEN, CHING-HANG (Representative)	Asia Vital Components Co., Ltd	1,000	100.00%
Hong Ye Investment CO., LTD	Chairman	CHEN,YI-CHENG(Representative)	Asia Vital Components Co., Ltd	6,000	100.00%
	D i r e c t o r s	WANG,JUI-PIN(Representative)
	D i r e c t o r s	HUANG,XIAN-ZHOU(Representative)
	Supervisors	KUO,HUI-YING(Representative)
D-Max Technology Ltd.		SHEN, CHING-HANG (Representative)	Asia Vital Components Co., Ltd	28,500	100.00%
	Chairman
Fositek Corp		HUANG, CHIU-MAO	Xianyan Investment Co., Ltd.	40	0.10%
	Chairman
	Directors	SHEN,CHING HANG	ZingHe Investment Co.,Ltd.	1,458	3.82%
		CHEN, YI CHEN	Asia Vital Components Co., Ltd.	7,524	19.71%
	Directors
	Directors	SHEN,MIN XIE	--	1,481	3.88%
	Directors	Siu ChungYiu	--	--	--
	Directors	ChungKa Wing	--	--	--
	Independent	Wong Tin Ho	--	--	--
	Directors
	Independent	Wu Menglong	--	--	--
	Directors
	Independent	Tian Yingqian	--	--	--

116

				Shares owned
				Capital
Name of company	Title	Name of representative	Juristic person represented
				contribution	Percentage
				/share
	Directors
Asia Vital Components (Shen Zhen)Co.,Ltd.	Executive Director	SHEN,JIN-CHAN(Representative)	AVC International Co., Ltd. - B.V.I.	--	100.00 %
MACE TECH CORP.	Directors	SHEN, CHING-HANG (Representative)	AVC International Co., Ltd. - B.V.I.	11,068	100.00%
Asia Vital Components (Chengdu)Co.,Ltd.	Executive Director	SHEN, CHING-HANG (Representative)	AVC International Co., Ltd. - B.V.I.	--	100.00%
AVC OPTICS CORP.		SHEN, CHING-HANG (Representative)	AVC International Co., Ltd. - B.V.I.	100,000	100.00%
	Directors
Asia Vital Components (Dongguan)Co.,Ltd.	Chairman	HUANG,XIAN-ZHOU(Representative)	MACE TECH CORP.	--	100.00%
AVC Optics (Wuhan) Corp.	Executive	SHEN, CHING-HANG (Representative)	AVC OPTICS CORP.	--	100.00%
	Director
Tonbridge Investments Limited	Chairman	SHEN, CHING-HANG (Representative)	Chihung International Ltd.	3,000	100.00%
Asia Vital Components (China)Co.,Ltd.	Executive Director	JIANG,RUI-WEN(Representative)	Chihung International Ltd.	--	100.00%
Asia Vital Components (Shanghai)Co.,Ltd.	Chairman	LI,YI-FEN (Representative)	Tonbridge Investments Limited	--	100.00%
Beijing AVC Technology Research Center Co.,Ltd.	Executive Director	HUANG, CHIU-MAO(Representative)	Asia Vital Components (China) Co., Ltd.	--	100.00%
AVC Precision, Co., Ltd.	Chairman	HUANG,XIAN-ZHOU (Representative)	Asia Vital Components (China) Co., Ltd.	--	100.00%
WUCHIDA INTERNATIONAL (SAMOA)CO.,LTD.		SHEN, CHING-HANG (Representative)	D-Max Technology Ltd.	4,000	100.00%
	Directors
D-Max International Co., Limited		SHEN, CHING-HANG (Representative)	WUCHIDA INTERNATIONAL (SAMOA)CO.,LTD.	4,000	100.00%
	Directors
（Jiashan）D-MAX Electronics Co.,Ltd.		HUANG,XIAN-ZHOU (Representative)	D-Max International Co., Limited	--	100.00%
	Directors
MARKETHILL INVESTMENTS LIMITED		HUANG, CHIU-MAO (Representative)	FOSITEK CORP.	3,200	76.19%
	Directors
First Dome Corp Telecom Ltd.	Executive	ZHANG,XING-ROU(Representative)	MARKETHILL INVESTMENTS LIMITED	--	100.00%
	Director
Wuhan Asia Vital Components Co.,Ltd.	Executive	SHEN, CHING-HANG (Representative)	AVC Optics (Wuhan) Corp.	--	100.00%
	Director
AVC Europe Technology GmbH		HUANG, CHANG MOU (Representative)	Asia Vital Components Co., Ltd	250	100.00%
	Director
		LIN, SHU HUA (Representative)
	Director
AVC TECHNOLOGY (VIETNAM) COMPANY LIMITED		WANG, JUI-PIN (Representative)	Asia Vital Components Co., Ltd	--	100.00%
	Chairman

117

8.1.4 Overview of affiliate companies

	December 31,2020/Currency: NT$thousand	December 31,2020/Currency: NT$thousand	December 31,2020/Currency: NT$thousand	December 31,2020/Currency: NT$thousand	December 31,2020/Currency: NT$thousand	December 31,2020/Currency: NT$thousand	December 31,2020/Currency: NT$thousand	December 31,2020/Currency: NT$thousand
							Current net	Earing per
					Operating	Operating	income	shares
Name of company	Capital	Total assets	Total liabilities	Net Equities
					revenues	income		(NTD)(After
							(After tax)
								tax)
AVC INTERNATIONAL CO.,LTD.	5,147,294	21,189,199	12,411,340	8,777,859	26,835,051	888,285	536,751	32,569.89
CHIHUNG INTERNATIONAL LTD.	1,040,647	11,571,161	7,036,492	4,534,669	15,615,226	775,228	563,860	17.21
RAYNEY INTERNATIONAL LTD.	78,950	183,821	61,018	122,803	181,148	25	-2,804	-1.17
Asia Vital Components(Shen Zhen)Co.,Ltd.	642,719	7,460,157	4,643,287	2,816,870	8,544,417	163,442	-71,437	NA
TONBRIDGE INVESTMENTS LIMITED	101,772	904,709	673,435	231,274	2,025,717	-19,363	-23,101	-7.70
Asia Vital Components(Shanghai)Co.,Ltd.	200,073	273,488	43,965	229,523	193,674	-19,363	-23,109	NA
MACE TECH. CORP.	319,776	5,924,208	4,090,945	1,833,263	13,063,155	327,813	326,973	29.54
Asia Vital Components(Dongguan)Co.,Ltd.	514,105	5,769,998	4,228,966	1,541,032	13,063,155	431,444	430,674	NA
MERIT TRADING CORPORATION	29,088	3,542,769	3,371,921	170,848	7,445,528	-1,546	1,475	1.65
Asia Vital Components(China)Co.,Ltd.	879,291	10,651,524	6,363,057	4,288,467	13,609,439	792,526	584,611	NA
AVC AMERICA INC	27,776	365,189	250,220	114,969	1,398,077	34,116	24,639	598.36
JADS CORPORATION(HK)LTD.	327	390,437	363,638	26,799	597,615	-184	1,080	108.04
AVC INTERNATIONAL(SAMOA)CO.,LTD.	10,157	3,754,551	3,692,586	61,965	12,970,747	-6,257	-719	-2.40
AVC Precision,Co.,Ltd.	734,140	2,884,880	2,073,113	811,767	4,204,586	166,010	122,416	NA
Beijing AVC Technology Research Center Co.,Ltd.	44,350	117,742	25,748	91,994	87,508	2,055	3,411	NA
AVC INTERNATIONAL CO.,LTD.-SAMOA	32,120	369,679	80,444	289,235	794,029	-23,054	-14,292	-14.29
HungYe Investment CO.,LTD	60,000	5,395	0	5,395	0	-12	-8,964	-1.49
Asia Vital Components(Chengdu)Co.,Ltd.	1,055,897	2,554,982	1,174,020	1,380,962	2,003,126	209,862	142,926	NA
D-Max TechnologyLtd.	285,000	1,201,948	806,579	395,369	1,188,611	154,091	93,167	3.27
WUCHIDA INTERNATIONAL (SAMOA) CO., LTD.	132,004	1,145,386	843,014	302,372	1,188,611	154,351	119,772	29.94
D-MAX INTERNATIONAL(HK)CO.,LTD.	132,004	1,031,736	757,325	274,411	1,186,927	153,629	119,423	29.86
（Jiashan）D-MAX Electronics Co., Ltd.	132,004	1,031,390	757,325	274,065	1,186,927	153,629	119,423	NA
AVC OPTICS CORP.	3,128,775	5,313,589	2,571,362	2,742,227	3,315,056	193,868	141,328	1.41
AVC Optics(Wuhan)Corp.	3,128,775	5,313,578	2,571,362	2,742,216	3,315,056	193,868	141,328	NA
Fositek Corp	381,814	2,828,985	1,942,525	886,460	2,223,219	289,345	210,385	6.25

118

							Current net	Earing per
					Operating	Operating	income	shares
Name of company	Capital	Total assets	Total liabilities	Net Equities
					revenues	income		(NTD)(After
							(After tax)
								tax)
MARKETHILL INVESTMENTS LIMITED	390,575	2,540,010	1,774,061	765,949	2,116,948	250,621	222,131	44.87
DongGuan Dowa Electronics Co.,Ltd.	-	0	0	0	0	-182	-27,067	NA
First Dome CorpTelecom Ltd.	287,809	2,512,430	1,774,061	738,369	2,121,345	252,691	248,120	NA
Wuhan Asia Vital Components Co.,Ltd.	2,498	668	226	442	0	-301	-302	NA
AVC Europe TechnologyGmbH	9,050	9,018	192	8,826	2,965	223	189	0.76
AVC TECHNOLOGY (VIETNAM) COMPANY LIMITED	253,411	253,411	0	253,411	0	0	0	NA

119

• 8.2 Consolidated Financial Report of the Company and Affiliates. For more details, please refer to page 121.

• 8.3 Private placement during the most recent fiscal year and up to the date of publication of the annual report.

• The most recent fiscal year and up to the date of publication of the annual report our company doesn’t have private placement.

• 8.4 Holding or disposal of shares in the company by the company's subsidiaries during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report None.

• 8.5 Other matters that require additional description None.

• 8.6 If any of the situations listed in Article 36, paragraph 3, subparagraph 2 of the Securities and Exchange Act, which might materially affect shareholders' equity or the price of the company's securities, has occurred during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report, such situations shall be listed one by one

• None.

120

Independent Auditors’ Report

To ASIA VITAL COMPONENTS CO., LTD

Opinion

We have audited the accompanying consolidated balance sheets of ASIA VITAL COMPONENTS CO., LTD and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2020 and 2019, and notes to the consolidated financial statements, including the summary of significant accounting policies (together “the consolidated financial statements”).

In our opinion, based on our audits and the reports of other auditors (please refer to the Other Matter – Making Reference to the Audits of Component Auditors section of our report), the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2020 and 2019, and its consolidated financial performance and cash flows for the years ended December 31, 2020 and 2019, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed by Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants 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 Consolidated 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 (the “Norm”), and we have fulfilled our other ethical responsibilities in accordance with the Norm. Based on our audits and the reports of other auditors, 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 most significant in our audit of 2020 consolidated financial statements. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

121

1. Accounts receivable impairment

As of December 31, 2020, the Company’s net accounts receivable and allowance for bad debts amounted to NT$3,827,104 thousand and NT$135,643 thousand, respectively, constituting 9% of the consolidated balance. This ratio is significant to the Company whether or not allowance for bad debts can reflect accounts receivable credit risk and the ultimate net amount of accounts receivable, is related to the management’s significant judgement. Therefore, we considered the appropriateness of this policy and the resulting figures to be a key audit matter.

Our audit procedures included, but are not limited to, assessing the appropriateness of accounts receivable expected credit loss. Included evaluating and testing the effectiveness of internal controls around accounts receivable; selecting samples to test the accuracy of accounts receivable aging, analyzing the variation of accounts receivable, verifying the appropriateness of long-term accounts receivable, performing sample selection for external confirmation of accounts receivable, and cross-checking the receiving status in order to evaluate the possibility of receivable.

We also assessed the adequacy of disclosures of accounts receivable and related risk. Please refer to Note 5 and 6 to the Company’s consolidated financial statements.

2. Valuation for inventories

As of December 31, 2020, the Company’s net inventories amounted to NT$11,535,314 thousand, constituting 29% of consolidated total assets which is significant for the financial statements. The allowance for reduction of obsolete inventory due to the uncertainty caused by the rapid change of product technology, is closely related to the management’s judgement. Therefore, we considered this a key audit matter.

Our audit procedures included, but are not limited to, testing the effectiveness of the internal controls around inventories, including inventory cost carried down; evaluating the inventory status, evaluating management’s stock-taking plan, selecting the ideal warehouse site and performing the physical count to identify the number and status of inventory, testing the accuracy of inventory aging, and analyzing the variation of inventory aging and considering the anticipated demand and market value, evaluating the analysis of obsolete inventory of management, including the possibility of inventory realization and the evaluation of net realizable value, and testing the appropriateness of withdrawing inventory value from the allowance amount of inventory realization.

Please refer to Note 5 and 6 to the Company’s consolidated financial statements.

Other Matter – Making Reference to the Audits of Component Auditors

122

Certain subsidiaries included in the consolidated financial statements were audited by other independent accountants. These subsidiaries’ total assets amounted to NT$374,207 thousand and NT$531,940 thousand, which accounted for 0.92% and 1.50% of the total consolidated assets as of December 31, 2020 and 2019, respectively. The net sales of these subsidiaries amounted to NT$587,937 thousand and NT$483,487 thousand, which accounted for 1.48% and 1.32% of the consolidated net sales for the years ended December 31, 2020 and 2019, respectively. Certain investments, which were accounted for under the equity method based on the financial statements of the investees, were audited by other independent accountants. Our audit, insofar as it relates to the investments accounted for under the equity method balances of NT$175,957 thousand and NT$251,048 thousand, which accounted for 0.43% and 0.71% of the total consolidated assets as of December 31, 2020 and 2019, respectively, and the related shares of investment income from the associates amounted to NT$6,753 thousand and NT$5,565 thousand, which accounted for 0.23% and 0.37% of the consolidated income from continuing operations before income tax for the years ended December 31,2020 and 2019, respectively, and the related shares of other comprehensive income from the associated amounted to NT$6,887 thousand and (NT$412) thousand, which accounted for 7.54% and 0.10% of the consolidated total comprehensive income, for the years ended December 31, 2020 and 2019, respectively, is based solely on the reports of other independent accountants.

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

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretation Committee as endorsed and as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the ability to continue as a going concern of the Company, 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 financial reporting process of the Company.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

123

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s 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 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 consolidated financial statements.

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

1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and we 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 an override of internal controls.

2. Obtain an understanding of internal controls 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 internal control of the Company.

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

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

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

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

124

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of 2020 consolidated financial statements and are therefore the key audit matters. We describe these matters in our auditor’s 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.

We have audited and expressed an unqualified opinion on only the parent company’s financial statements of the Company as of and for the years ended December 31, 2020 and 2019, respectively.

Ernst & Young, Taiwan Republic of China March 23, 2021

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, results of operations 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 review such consolidated financial statements are those generally accepted and applied in the Republic of China.

125

English translation of Consolidated Financial Statements Originally issued in Chinese ASIA VITAL COMPONENTS CO., LTD CONSOLIDATED BALANCE SHEETS December 31, 2020 and 2019

(Expressed in thousands of New Taiwan Dollars)

Assets	Notes	December 31, 2020	December 31, 2020	December 31, 2019	December 31, 2019	Liabilities and Equity	Notes	December 31, 2020	December 31, 2020	December 31, 2019	December 31, 2019
		Amount	％	Amount	％			Amount	％	Amount	％
Current assets Cash and cash equivalents Financial assets measured at amortized costs, current Notes receivable, net Accounts receivable, net Other receivables Other receivables-related parties Inventories, net Prepayments Other current assets Total current assets Non-current assets Financial assets measured at fair value through other comprehensive income, noncurrent Investments accounted for under the equity method Property, plant and equipment Right-of-use assets Investment property Intangible assets Deferred tax assets Other non-current assets Total non-current assets Total assets	6(1) 6(2), 8 4,6(3) 4,6(4) 6(5) 6(5) 4,6(6) 4,6(7) 6(8) 4, 6(9), 8 4, 6(23) 4, 6(10), 8 6(11) 4, 6(27) 6(12), 8	$11,108,016 578,286 549,666 3,691,461 458,422 15,812 11,535,314 313,113 889,814	27 2 1 9 1 0 29 1 2	$8,154,556 349,340 551,952 6,897,838 492,793 24,067 8,264,715 434,623 737,863	23 1 2 20 1 0 23 1 2	Current liabilities Short-term loans Short-term notes payable Contract liabilities, current Notes payable Accounts payable Other payables Current tax liabilities Lease liabilities, current Other current liabilities Current portion of long-term loans Total current liabilities Non-current liabilities Corporate bonds payable Long-term loans Deferred tax liabilities Lease liabilities-Non current Long-term deferred revenue Net defined benefit liabilities, noncurrent Guarantee deposits Total non-current liabilities Total liabilities Equity attributable to the parent company Capital Common stock Additional paid-in capital Retained earnings Legal reserve Special reserve Undistributed earnings Total retained earnings Other components of equity Total equity attributable to the parent company Non-controlling interests Total equity Total liabilities and equity	6(13) 6(14) 6(22) 6(16) 4, 6(27) 4, 6(23) 6(15) 6(17) 6(15) 4, 6(27) 4, 6(23) 6(18) 4, 6(19) 6(20) 6(20) 6(20) 6(20)	$2,452,594 － 80,298 2,463,026 11,313,507 2,914,738 493,153 170,345 267,920 1,309,287	6 － 0 6 28 7 1 1 1 3	$2,000,456 100,000 16,103 2,098,634 10,758,502 2,665,912 436,540 131,016 217,363 2,161,667	6 0 0 6 30 8 1 0 1 6
		$29,139,904	72	25,907,747	73
		101,449 216,069 7,773,383 1,733,023 122,467 149,594 827,675 612,672	0 1 19 4 0 0 2 2	111,835 289,905 6,712,042 826,993 154,153 141,642 731,496 682,914	0 1 19 2 1 0 2 2			$21,464,868	53	$20,586,193	58
								2,400,000 2,475,331 1,228,920 1,048,455 755,714 5,233 9,377	6 6 3 2 2 0 0	－ 3,749,166 952,541 140,361 770,163 7,382 19,011	－ 11 3 0 2 0 0
		11,536,332	28	9,650,980	27			7,923,030	19	5,638,624	16
								$29,387,898	72	26,224,817	74
								3,533,101 1,601,099 865,492 1,402,573 4,500,820	9 4 2 3 11	3,533,101 1,540,817 769,695 995,284 3,539,661	10 4 2 3 10
								6,768,885	16	5,304,640	15
								(1,326,487)	(3)	(1,402,573)	(4)
								10,576,598 711,740	26 2	8,975,985 357,925	25 1
								11,288,338	28	9,333,910	26
		$40,676,236	100	$35,558,727	100			$40,676,236	100	$35,558,727	100

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

126

English translation of Consolidated Financial Statements originally issued in Chinese ASIA VITAL COMPONENTS CO., LTD

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31, 2020 and 2019

(Expressed in thousands of New Taiwan Dollars, except for earnings par share)

Items	Notes	2020		2019
		Amount	％	Amount	％
Operating Revenue Operating costs Gross profit Operating expenses Sales and marketing expenses General and administrative expenses Research and development expenses Subtotal Operating income Non-operating income and expenses Interest income Other income Other gains and losses Finance costs Share of profit or loss of associates Subtotal Income before income tax Income tax expense Net income Other comprehensive income (loss) Items that will not be reclassified subsequently to profit or loss: Remeasurements of defined benefit pension plans Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income Income tax related to items that will not be reclassified Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign operations Share of other comprehensive income (loss) of associates Income tax related to items that may be reclassified subsequently Total other comprehensive loss, net of tax Total comprehensive income Net income attributable to: Stockholders of the parent Non-controlling interests Comprehensive income (loss) attributable to: Common Stockholders of the parent Non-controlling interests Earnings per share (NTD) Earnings per share-basic Earnings per share-diluted	4,6(22) 6(23).(24), 7 6(23).(24) 6(25) 6(25) 6(25) 6(25) 4,6(9) 6(27) 6(26) 4, 6(28)	$39,665,534 (33,433,811)	100 (84)	$36,534,445 (32,220,146)	100 (88)
		6,231,723	16	4,314,299	12
		(589,645) (452,884) (1,929,062)	(2) (1) (5)	(647,866) (469,101) (1,938,036)	(2) (1) (6)
		(2,971,591)	(8)	(3,055,003)	(9)
		3,260,132	8	1,259,296	3
		34,725 356,931 (545,295) (186,050) 12,459	0 1 (1) (1) 0	36,935 475,153 (75,141) (211,252) 8,838	0 1 (0) (0) 0
		(327,230)	(1)	234,533	1
		2,932,902 (858,202)	7 (2)	1,493,829 (520,736)	4 (1)
		2,074,700	5	973,093	3
		602 16,808 (120) 71,773 5,137 (2,870)	0 0 (0) 0 0 (0)	10,398 1,071 (2,079) (473,393) (851) 61,277	0 0 (0) (1) (0) 0
		91,330	0	(403,577)	(1)
		$2,166,030	5	$569,516	2
		$1,915,846 158,854	5 0	$957,969 15,124	3 0
		$2,074,700	5	$973,093	3
		$1,998,191 167,839	5 0	$558,998 10,518	2 0
		$2,166,030	5	$569,516	2
		$5.42		$2.71
		$5.40		$2.70

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

127

English translation of Consolidated Financial Statements originally issued in Chinese ASIA VITAL COMPONENTS CO. , LTD CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the years ended December 31, 2020 and 2019

(Expressed in thousands of New Taiwan Dollars)

Items				Equity Attributable	to the Parent Comp	any			Non-Controlling Interests	Total Equity
	Capital	Additional Paid- in Capital		Retained Earnings		Other Comp	onents of Equity	Total
	Common Stock		Legal Reserve	Special Reserve	Unappropriated Earnings	Exchange Differences on Translation of Foreign Operations	Unrealized Gains (Losses) From Equity Instruments Investments Measured At Fair Value Through Other Comprehensive Income
Balance as of January 1, 2019 Appropriation and distribution of 2018 retained earnings Legal reserve Special reserve Cash dividends	$3,533,101	$1,540,647	$698,569	$538,746	$3,454,347	($655,207)	($340,076)	$8,770,127	$238,443	$9,008,570
			71,126	456,538	(71,126) (456,538) (353,310)			－ － (353,310)		－ － (353,310)
Donation from shareholders		170						170		170
Net income for the year ended December 31, 2019 Other comprehensive income (loss), net of tax for the year ended December 31, 2019 Total comprehensive income (loss)
					957,969			957,969	15,124	973,093
					8,319	(408,361)	1,071	(398,971)	(4,606)	(403,577)
	－	－	－	－	966,288	(408,361)	1,071	558,998	10,518	569,516
Increase in non-controlling interests								－	108,964	108,964
Balance as of December 31, 2019 Balance as of January 1, 2020 Appropriation and distribution of 2019 retained earnings Legal reserve Special reserve Cash dividends Donation from shareholders Net income for the year ended December 31, 2020 Other comprehensive income (loss), net of tax for the year ended December 31, 2020 Total comprehensive income (loss) Increase in non-controlling interests Difference between the actual acquisition or disposal price and carrying amounts of subsidiaries Disposal of equity investments at fair value through other comprehensive income Balance as of December 31, 2020	$3,533,101 $3,533,101 － $3,533,101	$1,540,817	$769,695	$995,284	$3,539,661	($1,063,568)	($339,005)	$8,975,985	$357,925	$9,333,910
		$1,540,817 260	$769,695 95,797	$995,284 407,289	$3,539,661 (95,797) (407,289) (459,303) 1,915,846 482	($1,063,568) 65,055	($339,005) 16,808	$8,975,985 － － (459,303) 260 1,915,846 82,345	$357,925 158,854 8,985	$9,333,910 － － (459,303) 260 2,074,700 91,330
		－	－	－	1,916,328	65,055	16,808	1,998,191	167,839	2,166,030
		60,022			7,220	1,443	(7,220)	－ 61,465 －	161,762 24,214 －	161,762 85,679 －
		$1,601,099	$865,492	$1,402,573	$4,500,820	($997,070)	($329,417)	$10,576,598	$711,740	$11,288,338

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

128

English translation of Consolidated Financial Statements originally issued in Chinese ASIA VITAL COMPONENTS CO., LTD

CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 2020 and 2019

(Expressed in thousands of New Taiwan Dollars)

For the years ended December 31, 2020 and 2019 (Expressed in thousands of New Taiwan Dollars)
Items		2020		2019
Cash flows from operating activities: Net income before tax Adjustments to reconcile net income before tax to net cash provided by operating activities: Income and expanse adjustments : Depreciation Amortization Amortization of royalty Expected credit (profit) losses Interest expense Interest income Dividend revenue Compensation costs of share-based payment transaction Share of (profit) of associates Loss on disposal of property, plant and equipment Loss on disposal of Intangible assets Loss (gain) on disposal of investments Impairment loss on non-financial assets Others Changes in operating assets and liabilities: Notes receivable Accounts receivable Other receivables Other receivables-related parties Inventories Prepayments Other current assets Other operation assets Contract liabilities Notes payable Accounts payable Other payables Other current liabilities Net defined benefit liabilities Cash generated from operations Interest received Interest paid Income tax paid Net cash provided by operating activities Cash flows from investing activities: Proceeds from disposal of financial assets measured at fair value through other comprehensive income Acquisition of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Disposal of investments accounted for using equity method Decrease in advance payments in investment Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment (Increase) in refundable deposits Acquisition of intangible assets Proceeds from disposal of intangible assets Decrease in other noncurrent assets-others (Increase) in other prepayments Dividends received Net cash (used) in investing activities Cash flows from financing activities: Increase in short-term loans (Decrease) in short-term loans (Decrease) increase in short-term notes payable Increase in corporate bonds payable Proceeds from long-term loans Repayments of long-term loans (Decrease) increase in guarantee deposits Repayment of lease liabilites Cash dividends Disposal of equity of subsidiariess (not lossing of control) Change in non-controlling interests Net cash provided in financing activities Effect of exchange rate changes on cash and cash equivalents Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year		$2,932,902 1,184,614 49,035 2,417 (19,467) 186,050 (34,725) (763) 9,450 (12,459) 116,010 － 823 255,563 225,818 1,509 3,316,439 (55,673) 8,255 (3,542,553) 121,510 (151,951) (228,946) 64,195 364,392 555,005 249,785 50,557 (1,547) 5,646,245 34,725 (187,009) (624,379) 4,869,582 22,220 (128,402) 130,482 64,680 － (2,407,497) 142,839 (12,459) (57,952) － 103,038 (21,372) 10,558 (2,153,865) 12,310,434 (11,768,151) (100,000) 2,400,000 7,369,896 (9,496,111) (9,634) (139,977) (459,303) 85,692 152,312 345,158 (107,415) 2,953,460 8,154,556 $11,108,016		$1,493,829 1,119,059 37,777 4,033 29,388 211,252 (36,935) (1,018) 8,880 (8,838) 48,328 825 (606) 52,652 693,969 (118,559) (1,989,176) (41,898) (6,644) (1,454,496) (203,050) (26,338) 98,343 (15,542) 258,717 1,994,655 835,079 34,742 (1,211) 3,017,217 36,935 (215,627) (380,690) 2,457,835 － (84,180) 83,330 － 9,050 (1,659,544) 61,501 (139,050) (41,841) 81 59,933 － 3,718 (1,707,002) 12,169,463 (11,743,496) 100,000 － 6,150,000 (5,409,340) 1,935 (147,159) (353,310) － 100,084 868,177 (240,431) 1,378,579 6,775,977 $8,154,556

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

129

English Translation of Financial Statements Originally Issued in Chinese ASIA VITAL COMPONENTS CO., LTD AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED 31 December 2020 AND 2019

(Unless otherwise stated, all amounts expressed are in thousands of New Taiwan Dollars)

1. History and organization

ASIA VITAL COMPONENTS CO., LTD. (the Company) was incorporated on December 17, 1991. The Company’s registered address is No.248-27, Xinsheng Rd., Qianzhen Dist., Kaohsiung City. The principal activities of the Company are to manufacture, process, assemble and to import and export electronic parts, electronic materials, communication electronic machinery products, automobile parts, lighting device, computer peripherals.

The Company’s ordinary shares were publicly listed on the Taiwan Stock Exchange (TWSE) on 27 September, 2002.

2. Date and procedures of authorization of financial statements for issue

The consolidated financial statements of the Company and its subsidiaries (“the Group”) for the years ended 31 December 2020 and 2019 were authorized for issue in accordance with a resolution of the Board of Directors’ meeting on March 23, 2021.

3. Newly issued or revised standards and interpretations

• (1) Changes in accounting policies resulting from applying for the first time certain standards and amendments.

The Group applied for the first time International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are recognized by Financial Supervisory Commission (“FSC”) and become effective for annual periods beginning on or after 1 January 2020. Apart from the nature and impact of the new standard and amendment is described below, the adoption of these new standards and amendments had no material impact on the Group.

• (2) Standards or interpretations issued, revised or amended, by International Accounting Standards Board “IASB” which are endorsed by FSC, but not yet adopted by the Group as at the end of the reporting period are listed below:

Items	New, Revised or Amended Standards and Interpretations	Effective Date issued byIASB
a	Interest Rate Benchmark Reform - Phase 2(Amendments to IFRS 9,IAS 39,	1 January2021

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IFRS 7, IFRS 4 and IFRS 16)

• A. Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

The final phase amendments mainly relate to the effects of the interest rate benchmark reform on the companies’ financial statements:

(a) A company will not have to derecognise or adjust the carrying amount of financial instruments for changes to contractual cash flows as required by the reform, but will instead update the effective interest rate to reflect the change to the alternative benchmark rate;

(b) A company will not have to discontinue its hedge accounting solely because it makes changes required by the reform, if the hedge meets other hedge accounting criteria; and

(c) A company will be required to disclose information about new risks arising from the reform and how it manages the transition to alternative benchmark rates.

The abovementioned amendments that are applicable for annual periods beginning on or after 1 January 2021 have no material impact on the Group.

• (3) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) which are not endorsed by FSC, but not yet adopted by the Company as at the end of the reporting period are listed below:

Items	New, Revised or Amended Standards and Interpretations	Effective Date issued by IASB
a	IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures	To be determined by IASB
b	IFRS 17 “Insurance Contracts”	January1,2023
c	Classification of Liabilities as Current or Non-current – Amendments to IAS 1	January 1, 2023
d	Narrow-scope amendments of IFRS, including Amendments to IFRS 3, Amendments to IAS 16, Amendments to IAS 37 and the Annual Improvements	1 January 2022
e	Disclosure Initiative - Accounting Policies – Amendments to IAS 1	1 January 2023
f	Definition of AccountingEstimates – Amendments to IAS 8	1 January2023

• A. IFRS 10“Consolidated Financial Statements” and IAS 28“Investments in Associates and Joint

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Ventures” — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures

The amendments address the inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures , in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of non-monetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint ventures. IFRS 10 requires full profit or loss recognition on the loss of control of the subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized in full.

IFRS 10 was also amended so that the gains or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors’ interests in the associate or joint venture.

B. IFRS 17 “Insurance Contracts”

IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects (including recognition, measurement, presentation and disclosure requirements). The core of IFRS 17 is the General (building block) Model, under this model, on initial recognition, an entity shall measure a group of insurance contracts at the total of the fulfilment cash flows and the contractual service margin. The fulfilment cash flows comprise of the following:

• (a) estimates of future cash flows;

• (b) Discount rate: an adjustment to reflect the time value of money and the financial risks related to the future cash flows, to the extent that the financial risks are not included in the estimates of the future cash flows; and

• (c) a risk adjustment of non-financial risk.

The carrying amount of a group of insurance contracts at the end of each reporting period shall be the sum of the liability for remaining coverage and the liability for incurred claims. Other than the General Model, the standard also provides a specific adaptation for contracts with direct participation features (the Variable Fee Approach) and simplified approach (Premium Allocation Approach) mainly for short-duration contracts.

IFRS 17 was issued in May 2017 and it was amended in June 2020. The amendments include deferral of the date of initial application of IFRS 17 by two years to annual beginning on or after 1 January 2023 (from the original effective date of 1 January 2021); provide additional transition reliefs; simplify some requirements to reduce the costs of applying IFRS 17 and

132

revise some requirements to make the results easier to explain. IFRS 17 replaces an interim Standard – IFRS 4 Insurance Contracts – from annual reporting periods beginning on or after 1 January 2023.

• C. Classification of Liabilities as Current or Non-current – Amendments to IAS 1

These are the amendments to paragraphs 69-76 of IAS 1 Presentation of Financial statements and the amended paragraphs related to the classification of liabilities as current or non-current.

• D. Narrow-scope amendments of IFRS, including Amendments to IFRS 3, Amendments to IAS 16, Amendments to IAS 37, Amendments to IAS 41 and the Annual Improvements

• (a)Updating a Reference to the Conceptual Framework (Amendments to IFRS 3)

The amendments updated IFRS 3 by replacing a reference to an old version of the Conceptual Framework for Financial Reporting with a reference to the latest version, which was issued in March 2018. The amendments also added an exception to the recognition principle of IFRS 3 to avoid the issue of potential “day 2” gains or losses arising for liabilities and contingent liabilities. Besides, the amendments clarify existing guidance in IFRS 3 for contingent assets that would not be affected by replacing the reference to the Conceptual Framework.

• (b)Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)

The amendments prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or loss.

• (c)Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)

The amendments clarify what costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous.

• (d)Annual Improvements to IFRS Standards 2018 - 2020

Amendment to IFRS 1

The amendment simplifies the application of IFRS 1 by a subsidiary that becomes a first-time adopter after its parent in relation to the measurement of cumulative translation differences.

Amendment to IFRS 9 Financial Instruments

The amendment clarifies the fees a company includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability.

133

Amendment to Illustrative Examples Accompanying IFRS 16 Leases

The amendment to Illustrative Example 13 accompanying IFRS 16 modifies the treatment of lease incentives relating to lessee’s leasehold improvements.

Amendment to IAS 41

The amendment removes a requirement to exclude cash flows from taxation when measuring fair value thereby aligning the fair value measurement requirements in IAS 41 with those in other IFRS Standards.

• (e) Disclosure Initiative - Accounting Policies – Amendments to IAS 1

The amendments improve accounting policy disclosures that to provide more useful information to investors and other primary users of the financial statements.

• (f) Definition of Accounting Estimates – Amendments to IAS 8

The amendments introduce the definition of accounting estimates and included other amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to help companies distinguish changes in accounting estimates from changes in accounting policies.

The abovementioned standards and interpretations issued by IASB have not yet endorsed by FSC at the date when the Group’s financial statements were authorized for issue, the local effective dates are to be determined by FSC. As the Group is still currently determining the potential impact of the standards and interpretations listed under (a) to (f), it is not practicable to estimate their impact on the Group at this point in time. The remaining new or amended standards and interpretations have no material impact on the Group.

4. Summary of significant accounting policies

(1) Statement of compliance

The consolidated financial statements of the Group for the years ended 31 December 2020 and 2019 have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”) and International Financial Reporting Standards, International Accounting Standards, International Financial Reporting Interpretations Committee and Standing Interpretations Committee as endorsed by the FSC.

(2) Basis of preparation

The consolidated financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The consolidated financial statements are expressed in thousands of New Taiwan Dollars (“NT$”) unless otherwise stated.

• (3) Basis of consolidation

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Preparation principle of consolidated financial statement

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:

• (a) power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)

• (b) exposure, or rights, to variable returns from its involvement with the investee, and

• (c) the ability to use its power over the investee to affect its returns

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

• (a) the contractual arrangement with the other vote holders of the investee

• (b) rights arising from other contractual arrangements

• (c) the Group’s voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.

Subsidiaries are fully consolidated from the acquisition date, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using uniform accounting policies. All intra-group balances, income and expenses, unrealized gains and losses and dividends resulting from intra-group transactions are eliminated in full.

A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction.

Total comprehensive income of the subsidiaries is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

If the Group loses control of a subsidiary, it:

• (a) derecognizes the assets (including goodwill) and liabilities of the subsidiary;

• (b) derecognizes the carrying amount of any non-controlling interest;

135

• (c) recognizes the fair value of the consideration received;

• (d) recognizes the fair value of any investment retained;

• (e) recognizes any surplus or deficit in profit or loss; and

• (f) reclassifies the parent’s share of components previously recognized in other comprehensive income to profit or loss.

The consolidated entities are listed as follows:

Investor	Subsidiary	Main businesses	Percentage of ownership (%)	Percentage of ownership (%)
			2020.12.31	2019.12.31
The Company	AVC INTERNATIONAL CO., LTD.－B.V.I. (AVCI－BVI)	Investmentholding	100.00%	100.00%
	CHIHUNG INTERNATIONAL LTD. (CHIHUNG)	Investmentholding	100.00%	100.00%
	RAYNEY INTERNATIONAL LTD. (RAYNEY)	Trade	100.00%	100.00%
	MERIT TRADING CORPORATION (MERIT)	Trade	100.00%	100.00%
	AVC AMERICA, INC. (AVCA)	Trade	100.00%	100.00%
	AVC INTERNATIONAL (SAMOA) CO., LTD. (AVCI(SAMOA))	Trade	100.00%	100.00%
	JADS CORPORATION (HK)LTD.(JADS)	Trade	100.00%	100.00%
	AVC INTERNATIONAL CO., LTD.－SAMOA (AVCI－SAMOA)	Trade	100.00%	100.00%
	HUNG YE INVESTMENT CO., LTD.(HUNG YE)	Investmentholding	100.00%	100.00%
	D-MAX TECHNOLOGY CO., LTD. (D-MAX)	Sales and manufacture of electronic parts and related products	100.00%	100.00%
	FOSITEK CORP. (FST)	Sales and manufacture of electronic parts and related products	19.71%	29.71%

136

Investor	Subsidiary	Main businesses	Percentage of ownership (%)	Percentage of ownership (%)
			2020.12.31	2019.12.31
	AVC EUROPE TECHNOLOGY GMBH (AVCEU)	Trade	100.00%	100.00%
	AVC TECHNOLOGY(VIETNAM) COMPANY LIMITED (AVCVN)	Sales and manufacture of electronic parts and related products	100.00%	－
AVCI－BVI	ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. (AVCSZ)	Sales and manufacture of electronic products	100.00%	100.00%
	MACE TECH CORP. (MACE)	Trade	100.00%	100.00%
	ASIA VITAL COMPONENTS (CHENGDU) CO., LTD. (AVCCD)	Sales and manufacture of computers, related parts and accessories	100.00%	100.00%
	AVC OPTICS CORP. (AVCOC)	Investment holding	100.00%	100.00%
MACE	ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD. (AVCDG)	Manufacture, process and sales of electronic products	100.00%	100.00%
AVCOC	AVC OPTICS (WUHAN) CORP. (AVCWH)	Sales and manufacture of computers, related parts and accessories	100.00%	100.00%
AVCWH	WUHAN ASIA VITAL COMPONENTS CO.,LTD. (AVCWN)	Trade	100.00%	100.00%
CHIHUNG	TONBRIDGE INVESTMENTS LTD. (TONBRIDGE)	Investment holding	100.00%	100.00%
	ASIA VITAL COMPONENTS (CHINA) CO., LTD. (AVCCN)	Sales and manufacture of electronic products	100.00%	100.00%
TONBRIDGE	ASIA VITAL COMPONENTS (SHANGHAI) CO.,LTD. (AVCSH)	Notebook thermal module	100.00%	100.00%
AVCCN	BEIJING AVC TECHNOLOGY	Maintenance, research and development of electronic	100.00%	100.00%

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Investor	Subsidiary	Main businesses	Percentage of ownership (%)	Percentage of ownership (%)
			2020.12.31	2019.12.31
	RESEARCH CENTER CO.,LTD.(AVCBJ)	products
	AVC PRECISION, CO., LTD.(AVCP)	Sales and manufacture of electronic products	100.00%	100.00%
D-MAX	WUCHIDA INTERNATIONAL (SAMOA) CO., LTD. (WUCHIDA)	Investment holding	100.00%	100.00%
WUCHIDA	D-Max INTERNATIONAL CO.,LIMITED(D-Max)	Investment holding	100.00%	100.00%
D-Max	（JIASHAN）D-MAX ELECTRONICS CO.,LTD.	Sales and manufacture of electronic and photographic equipment	100.00%	100.00%
FST	FOREVER RICH INVESTMENTS CO.,LTD. (FOREVER RICH)	Investment holding	－ (Note 1)	－ (Note 1)
	MARKETHILL INVESTMENTS LIMITED (MARKETHILL)	Investment holding	100.00% (Note 1)	100.00% (Note 1)
FOREVER RICH	MARKETHILL INVESTMENTS LIMITED (MARKETHILL)	Investment holding	－ (Note 1)	－ (Note 1)
MARKETHILL	DONG GUAN DOWA ELECTRONICS CO.,LTD.	Sales and manufacture of membrane switches	100.00% (Note 2)	100.00% (Note 2)
	FIRST DOME CORP TELECOM.,LTD.	Sales and manufacture of rails, shafts and metal stampingtooling	100.00%	100.00%

Note 1: FST, which was the surviving company, had a short-form merge with its 100% owned subsidiary, FOREVER RICH, as of May 15, 2020. The subsidiaries held by FOREVER RICH were transferred to FST.

• Note 2: FST’s Board of Directors’ meeting approved the dissolution and liquidation of DONG GUAN DOWA ELECTRONICS CO.,LTD. on May 12, 2020. DONG GUAN DOWA ELECTRONICS CO.,LTD. has completed the deregistration on Deccember, 2020 but has not yet completed the change registration with the Investment Board, Ministry of Economic Affairs.

Although the percentage of ownership interests in FST is less than 50%, the company determined that it has control over FST. This is due to a combination of factors : the company remains the single largest shareholder of FST since the increase of the investment in September 2014, the company

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could obtain proxies to achieve relative majority in the absence of a contractual arrangement in place; and the ability of the company to appoint or approve the key management personnel of FST who have the ability to direct the relevant activities.

(4) Foreign Currency Transactions

The Group’s consolidated financial statements are presented in NT$, which is also the Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

Transactions in foreign currencies are initially recorded by the Group entities at their respective functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency closing rate of exchange ruling at the reporting date. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.

All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following:

• A. Exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.

• B. Foreign currency items within the scope of IFRS 9 Financial Instruments are accounted for based on the accounting policy for financial instruments.

• C. Exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.

• (5) Traslation of financial statements in foreign currency

The assets and liabilities of foreign operations are translated into NT$ at the closing rate of exchange prevailing at the reporting date and their income and expenses are translated at an average rate for the period. The exchange differences arising on the translation are recognized in other comprehensive income. On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on

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disposal is recognized. The following partial disposals are accounted for as disposals:

• A. when the partial disposal involves the loss of control of a subsidiary that includes a foreign operation; and

• B. when the retained interest after the partial disposal of an interest in a joint arrangement or a partial disposal of an interest in an associate that includes a foreign operation is a financial asset that includes a foreign operation.

On the partial disposal of a subsidiary that includes a foreign operation that does not result in a loss of control, the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is re-attributed to the non-controlling interests in that foreign operation. In partial disposal of an associate or joint arrangement that includes a foreign operation that does not result in a loss of significant influence or joint control, only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is reclassified to profit or loss.

Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and expressed in its functional currency.

• (6) Current and non-current distinction

An asset is classified as current when:

• A. The Group expects to realize the asset, or intends to sell or consume it, in its normal operating cycle

• B. The Group holds the asset primarily for the purpose of trading

• C. The Group expects to realize the asset within twelve months after the reporting period

• D. The asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is classified as current when:

• A. The Group expects to settle the liability in its normal operating cycle

• B. The Group holds the liability primarily for the purpose of trading

• C. The liability is due to be settled within twelve months after the reporting period

• D. The Group does not have an unconditional right to defer settlement of the liability for at least twelve

months after the reporting period. Terms of a liability that could, at the option of the counterparty,

result in its settlement by the issue of equity instruments do not affect its classification.

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All other liabilities are classified as non-current.

• (7) Cash and cash equivalents

Cash and cash equivalents comprises cash on hand, demand deposits and short-term, highly liquid time deposits (including ones that have maturity within 12 months) or investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

• (8) Financial instruments

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

Financial assets and financial liabilities within the scope of IFRS 9 Financial Instruments are recognized initially at fair value plus or minus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

• A. Financial instruments: Recognition and Measurement

The Group accounts for regular way purchase or sales of financial assets on the trade date.

The Group classified financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss considering both factors below:

• (a) the Group’s business model for managing the financial assets and

• (b) the contractual cash flow characteristics of the financial asset.

Financial assets measured at amortized cost

A financial asset is measured at amortized cost if both of the following conditions are met and presented as note receivables, trade receivables financial assets measured at amortized cost and other receivables etc., on balance sheet as at the reporting date:

• (a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and

• (b) 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.

Such financial assets are subsequently measured at amortized cost (the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount and the maturity amount and adjusted for any loss allowance) and is not part of a hedging

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relationship. A gain or loss is recognized in profit or loss when the financial asset is derecognized, through the amortization process or in order to recognise the impairment gains or losses.

Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

• (a) purchased or originated credit-impaired financial assets. For those financial assets, the Group applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.

• (b) financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Group applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Financial asset measured at fair value through other comprehensive income

A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:

• (a) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and

• (b) 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.

Recognition of gain or loss on a financial asset measured at fair value through other comprehensive income are described as below:

• (a) A gain or loss on a financial asset measured at fair value through other comprehensive income recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses, until the financial asset is derecognized or reclassified.

• (b) When the financial asset is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.

• (c) Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

• i. Purchased or originated credit-impaired financial assets. For those financial assets, the Group

applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.

• ii. Financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Group applies the effective interest rate to the amortized cost of the financial asset in

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subsequent reporting periods.

Besides, for certain equity investments within the scope of IFRS 9 that is neither held for trading nor contingent consideration recognized by an acquirer in a business combination to which IFRS 3 applies, the Group made an irrevocable election to present the changes of the fair value in other comprehensive income at initial recognition. Amounts presented in other comprehensive income shall not be subsequently transferred to profit or loss (when disposal of such equity instrument, its cumulated amount included in other components of equity is transferred directly to the retained earnings) and these investments should be presented as financial assets measured at fair value through other comprehensive income on the balance sheet. Dividends on such investment are recognized in profit or loss unless the dividends clearly represents a recovery of part of the cost of investment.

Financial asset measured at fair value through profit or loss

Financial assets were classified as measured at amortized cost or measured at fair value through other comprehensive income based on aforementioned criteria. All other financial assets were measured at fair value through profit or loss and presented on the balance sheet as financial assets measured at fair value through profit or loss.

Such financial assets are measured at fair value, the gains or losses resulting from remeasurement is recognized in profit or loss which includes any dividend or interest received on such financial assets.

• B. Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses on debt instrument investments measured at fair value through other comprehensive income and financial asset measured at amortized cost. The loss allowance on debt instrument investments measured at fair value through other comprehensive income is recognized in other comprehensive income and not reduce the carrying amount in the statement of financial position.

The Group measures expected credit losses of a financial instrument in a way that reflects:

• (a) an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;

• (b) the time value of money; and

• (c) reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.

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The loss allowance is measures as follow:

• (a) At an amount equal to 12-month expected credit losses: the credit risk on a financial asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Group measures the loss allowance at an amount equal to lifetime expected credit losses in the previous reporting period, but determines at the current reporting date that the credit risk on a financial asset has increased significantly since initial recognition is no longer met.

• (b) At an amount equal to the lifetime expected credit losses: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial asset.

• (c) For trade receivables or contract assets arising from transactions within the scope of IFRS 15, the Group measures the loss allowance at an amount equal to lifetime expected credit losses.

At each reporting date, the Group needs to assess whether the credit risk on a financial asset has increased significantly since initial recognition by comparing the risk of a default occurring at the reporting date and the risk of default occurring at initial recognition. Please refer to Note 12 for further details on credit risk.

• C. Derecognition of financial assets

A financial asset is derecognized when:

• (a) The rights to receive cash flows from the asset have expired

• (b) The Group has transferred the asset and substantially all the risks and rewards of the asset have been transferred

• (c) The Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the consideration received or receivable including any cumulative gain or loss that had been recognized in other comprehensive income, is recognized in profit or loss.

• D. Financial liabilities and equity

Classification between liabilities or equity

The Group classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, and an equity instrument.

Equity instruments

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An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The transaction costs of an equity transaction are accounted for as a deduction from equity (net of any related income tax benefit) to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.

Compound instruments

The Group evaluates the terms of the convertible bonds issued to determine whether it contains both a liability and an equity component. Furthermore, the Group assesses if the economic characteristics and risks of the put and call options contained in the convertible bonds are closely related to the economic characteristics and risk of the host contract before separating the equity element.

For the liability component excluding the derivatives, its fair value is determined based on the rate of interest applied at that time by the market to instruments of comparable credit status. The liability component is classified as a financial liability measured at amortized cost before the instrument is converted or settled.

For the embedded derivative that is not closely related to the host contract (for example, if the exercise price of the embedded call or put option is not approximately equal on each exercise date to the amortized cost of the host debt instrument), it is classified as a liability component and subsequently measured at fair value through profit or loss unless it qualifies for an equity component. The equity component is assigned the residual amount after deducting from the fair value of the instrument as a whole the amount separately determined for the liability component. Its carrying amount is not remeasured in the subsequent accounting periods. If the convertible bond issued does not have an equity component, it is accounted for as a hybrid instrument in accordance with the requirements under IFRS 9 Financial Instruments .

Transaction costs are apportioned between the liability and equity components of the convertible bond based on the allocation of proceeds to the liability and equity components when the instruments are initially recognized.

On conversion of a convertible bond before maturity, the carrying amount of the liability component being the amortized cost at the date of conversion is transferred to equity.

Financial liabilities

Financial liabilities within the scope of IFRS 9 Financial Instruments are classified as financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost upon initial recognition.

Financial liabilities at fair value through profit or loss

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Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated as at fair value through profit or loss. A financial liability is classified as held for trading if:

• (a) it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term;

• (b) on initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or

• (c) it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

If a contract contains one or more embedded derivatives, the entire hybrid (combined) contract may be designated as a financial liability at fair value through profit or loss; or a financial liability may be designated as at fair value through profit or loss when doing so results in more relevant information, because either:

• (a) it eliminates or significantly reduces a measurement or recognition inconsistency; or

• (b) a group of financial assets, financial liabilities or both is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the group is provided internally on that basis to the key management personnel.

Gains or losses on the subsequent measurement of liabilities at fair value through profit or loss including interest paid are recognized in profit or loss.

Financial liabilities at amortized cost

Financial liabilities measured at amortized cost include interest bearing loans and borrowings that are subsequently measured using the effective interest rate method after initial recognition. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the effective interest rate method amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs.

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially

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different terms, or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor), such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

E. Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

• (9) Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• A. In the principal market for the asset or liability, or

• B. In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible to by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

• (10) Inventories

Inventories are valued at lower of cost and net realizable value item by item.

Costs incurred in bringing each inventory to its present location and condition are accounted for as follows:

Raw materials – Purchase cost on a first in, first out basis

Finished goods and work in progress – Cost of direct materials and labor and a proportion of

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manufacturing overheads based on normal operating capacity but excluding borrowing costs.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

• (11) Investments accounted for using the equity method

The Group’s investment in its associate is accounted for using the equity method other than those that meet the criteria to be classified as held for sale. An associate is an entity over which the Group has significant influence. A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture.

Under the equity method, the investment in the associate or an investment in a joint venture is carried in the balance sheet at cost and adjusted thereafter for the post-acquisition change in the Group’s share of net assets of the associate or joint venture. After the interest in the associate or joint venture is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. Unrealized gains and losses resulting from transactions between the Group and the associate or joint venture are eliminated to the extent of the Group’s related interest in the associate or joint venture.

When changes in the net assets of an associate or a joint venture occur and not those that are recognized in profit or loss or other comprehensive income and do not affects the Group’s percentage of ownership interests in the associate or joint venture, the Group recognizes such changes in equity based on its percentage of ownership interests. The resulting capital surplus recognized will be reclassified to profit or loss at the time of disposing the associate or joint venture on a prorata basis.

When the associate or joint venture issues new stock, and the Group’s interest in an associate or a joint venture is reduced or increased as the Group fails to acquire shares newly issued in the associate or joint venture proportionately to its original ownership interest, the increase or decrease in the interest in the associate or joint venture is recognized in Additional Paid in Capital and Investment accounted for using the equity method. When the interest in the associate or joint venture is reduced, the cumulative amounts previously recognized in other comprehensive income are reclassified to profit or loss or other appropriate items. The aforementioned capital surplus recognized is reclassified to profit or loss on a pro rata basis when the Group disposes the associate or joint venture.

The financial statements of the associate or joint venture are prepared for the same reporting period as the Group. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

The Group determines at each reporting date whether there is any objective evidence that the investment in the associate or an investment in a joint venture is impaired in accordance with IAS 28 Investments in Associates and Joint Ventures (before 1 January 2019: IAS 39 Financial Instruments: Recognition and Measurement). If this is the case the Group calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value and recognizes the amount in the ‘share of profit or loss of an associate’ in the statement of

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comprehensive income in accordance with IAS 36 Impairment of Assets. In determining the value in use of the investment, the Group estimates:

A. Its share of the present value of the estimated future cash flows expected to be generated by the associate or joint venture, including the cash flows from the operations of the associate and the proceeds on the ultimate disposal of the investment; or

B. The present value of the estimated future cash flows expected to arise from dividends to be received

from the investment and from its ultimate disposal.

Because goodwill that forms part of the carrying amount of an investment in an associate or an investment in a joint venture is not separately recognized, it is not tested for impairment separately by applying the requirements for impairment testing goodwill in IAS 36 Impairment of Assets.

Upon loss of significant influence over the associate or joint venture, the Group measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss. Furthermore, if an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the entity continues to apply the equity method and does not remeasure the retained interest.

• (12) Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such costs include the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognizes such parts as individual assets with specific useful lives and depreciation, respectively. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 Property, plant and equipment. When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

assets:
Buildings	20～57 years
Machinery and Equipment	1～15 years
Molding Equipment	1～10 years
Right-of-use assets/leased assets (Note)	1～50 years
Other Facilities	1～30 years

An item of property, plant and equipment and any significant part initially recognized is

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derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognized in profit or loss.

The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.

(13) Investment property

The Group’s owned investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met and excludes the costs of day-to-day servicing of an investment property. Subsequent to initial recognition, other than those that meet the criteria to be classified as held for sale (or are included in a disposal Group that is classified as held for sale) in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, investment properties are measured using the cost model in accordance with the requirements of IAS 16 Property, plant and equipment for that model. If investment properties are held by a lessee as right-of-use assets and is not held for sale in accordance with IFRS 5, investment properties are measured in accordance with the requirements of IFRS 16.

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Buildings 43 ～ 57 years

Investment properties are derecognized when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of derecognition.

The Group transfers to or from investment properties when there is a change in use for these assets. Properties are transferred to or from investment properties when the properties meet, or cease to meet, the definition of investment property and there is evidence of the change in use.

(14) Leases

For contracts entered on or after January 1, 2019, the Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of time, the Group assesses whether the contract, throughout the period of use, has both of the following:

A. the right to obtain substantially all of the economic benefits from use of the identified asset; and B. the right to direct the use of the identified asset.

For a contract that is, or contains, a lease, the Group accounts for each lease component within the contract as a lease separately from non-lease components of the contract. For a contract that contains

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a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The relative stand-alone price of lease and non-lease components shall be determined on the basis of the price the lessor, or a similar supplier, would charge the Group for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Group estimates the stand-alone price, maximising the use of observable information.

Group as a lessee

Except for leases that meet and elect short-term leases or leases of low-value assets, the Group recognizes right-of-use asset and lease liability for all leases which the Group is the lessee of those lease contracts.

At the commencement date, the Group measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses its incremental borrowing rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:

• A. fixed payments (including in-substance fixed payments), less any lease incentives receivable;

• B. variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

• C. amounts expected to be payable by the lessee under residual value guarantees;

• D. the exercise price of a purchase option if the Group is reasonably certain to exercise that option; and

• E. payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

After the commencement date, the Group measures the lease liability on an amortised cost basis, which increases the carrying amount to reflect interest on the lease liability by using an effective interest method; and reduces the carrying amount to reflect the lease payments made. At the commencement date, the Group measures the right-of-use asset at cost. The cost of the right-of-use asset comprises:

• A. the amount of the initial measurement of the lease liability;

• B. any lease payments made at or before the commencement date, less any lease incentives received;

• C. any initial direct costs incurred by the lessee; and

• D. an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

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For subsequent measurement of the right-of-use asset, the Group measures the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment losses. That is, the Group measures the right-of-use applying a cost model.

If the lease transfers ownership of the underlying asset to the Group by the end of the lease term or if the cost of the right-of-use asset reflects that the Group will exercise a purchase option, the Group depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Group depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

The Group applies IAS 36 “Impairment of Assets” to determine whether the right-of-use asset is impaired and to account for any impairment loss identified.

Except for those leases that the Group accounted for as short-term leases or leases of low-value assets, the Group presents right-of-use assets and lease liabilities in the balance sheet and separately presents lease-related interest expense and depreciation charge in the statements comprehensive income.

For short-term leases or leases of low-value assets, the Group elects to recognize the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis.

Group as a lessor

At inception of a contract, the Group classifies each of its leases as either an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset. At the commencement date, the Group recognizes assets held under a finance lease in its balance sheet and present them as a receivable at an amount equal to the net investment in the lease.

For a contract that contains lease components and non-lease components, the Group allocates the consideration in the contract applying IFRS 15.

The Group recognizes lease payments from operating leases as rental income on either a straight-line basis or another systematic basis. Variable lease payments for operating leases that do not depend on an index or a rate are recognized as rental income when incurred.

(15) Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of

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intangible assets acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditures are reflected in profit or loss for the year in which the expenditures are incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least once at the end of each financial year. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are recognized in profit or loss.

Research and development costs

Research costs are expensed as incurred. Development expenditures, on an individual project, are recognized as an intangible asset when the Group can demonstrate the following:

• A. the technical feasibility of completing the intangible asset so that it will be available for use or sale

• B. its intention to complete and its ability to use or sell the asset

• C. how the asset will generate future economic benefits

• D. the availability of resources to complete the asset

• E. the ability to measure reliably the expenditure during development

Following initial recognition of the development expenditure as an asset, the cost model is applied requiring the asset to be carried at cost less any accumulated amortization and accumulated impairment losses. During the period of development, the asset is tested for impairment annually. Amortization of the asset begins when development is complete and the asset is available for use. It is amortized over the period of expected future benefit.

A summary of the policies applied to the Group’s intangible assets is as follows:

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Useful lives Amortization method used Internally generated or acquired	Patents	Computer software Finite(1～10 years) Amortized on a straight- line basis Acquired
	Finite(5 years) Amortized on a straight- line basis Acquired

(16) Impairment of non-financial assets

The Group assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 Impairment of Assets may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (“CGU”) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

A cash generating unit, or groups of cash-generating units, to which goodwill has been allocated is tested for impairment annually at the same time, irrespective of whether there is any indication of impairment. If an impairment loss is to be recognized, it is first allocated to reduce the carrying amount of any goodwill allocated to the cash generating unit (group of units), then to the other assets of the unit (group of units) pro rata on the basis of the carrying amount of each asset in the unit (group of units). Impairment losses relating to goodwill cannot be reversed in future periods for any reason.

An impairment loss of continuing operations or a reversal of such impairment loss is recognized in profit or loss.

(17) Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probably that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that

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reflects the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

(18) Revenue recognition

The Group’s revenue arising from contracts with customers are primarily related to sale of goods and rendering of services. The accounting policies are explained as follow:

The Group manufactures and sells machinery. Sales are recognized when control of the goods is transferred to the customer and the goods are delivered to the customers. The main product of the Group is 3C electronic products and revenue is recognized based on the consideration stated in the contract.

The credit period of the Group’s sale of goods is from 90 to 150 days. For all of the contracts, when the Group transfers the goods to customers and has a right to an amount of consideration that is unconditional, these contracts are recognized as trade receivables. The Group usually collects the payments shortly after transfer of goods to customers; therefore, there is no significant financing component to the contract.

However, for some rendering of services contracts, part of the consideration was received from customers upon signing the contract, and the Group has the obligation to provide the services subsequently; accordingly, these amounts are recognized as contract liabilities.

The period between the transfers of contract liabilities to revenue is usually within one year, thus, no significant financing component is arised.

(19) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

(20) Share-based payment transactions

The cost of equity-settled transactions between the Group and its subsidiaries is recognized based on the fair value of the equity instruments granted. The fair value of the equity instruments is determined by using an appropriate pricing model.

The cost of equity-settled transactions is recognized, together with a corresponding increase in other capital reserves in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The income statement

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expense or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period.

No expense is recognized for awards that do not ultimately vest, except for equity-settled transactions where vesting is conditional upon a market or non-vesting condition, which are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

Where the terms of an equity-settled transaction award are modified, the minimum expense recognized is the expense as if the terms had not been modified, if the original terms of the award are met. An additional expense is recognized for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it vested on the date of cancellation, and any expense not yet recognized for the award is recognized immediately. This includes any award where non-vesting conditions within the control of either the entity or the employee are not met. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

(21) Government grants

Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. Where the grant relates to an asset, it is recognized as deferred income and released to income in equal amounts over the expected useful life of the related asset. When the grant relates to an expense item, it is recognized as income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate.

Where the Group receives non-monetary grants, the asset and the grant are recorded gross at nominal amounts and released to the statement of comprehensive income over the expected useful life and pattern of consumption of the benefit of the underlying asset by equal annual installments. Where loans or similar assistance are provided by governments or related institutions with an interest rate below the current applicable market rate, the effect of this favorable interest is regarded as additional government grant.

(22) Post-employment benefits

All regular employees of the Company and its domestic subsidiaries are entitled to a pension plan that is managed by an independently administered pension fund committee. Fund assets are deposited under the committee’s name in the specific bank account and hence, not associated with the

156

Company and its domestic subsidiaries. Therefore fund assets are not included in the Group’s consolidated financial statements. Pension benefits for employees of the overseas subsidiaries and the branches are provided in accordance with the respective local regulations.

For the defined contribution plan, the Company and its domestic subsidiaries will make a monthly contribution of no less than 6% of the monthly wages of the employees subject to the plan. The Company recognizes expenses for the defined contribution plan in the period in which the contribution becomes due. Overseas subsidiaries and branches make contribution to the plan based on the requirements of local regulations.

Post-employment benefit plan that is classified as a defined benefit plan uses the Projected Unit Credit Method to measure its obligations and costs based on actuarial assumptions. Re-measurements, comprising of the effect of the actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur.

Past service costs are recognized in profit or loss on the earlier of:

• A. the date of the plan amendment or curtailment, and

• B. the date that the Group recognizes restructuring-related costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset, both as determined at the start of the annual reporting period, taking account of any changes in the net defined benefit liability (asset) during the period as a result of contribution and benefit payment.

• (23) Income taxes

Income tax expense (income) is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.

Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Current income tax relating to items recognized in other comprehensive income or directly in equity is recognized in other comprehensive income or equity and not in profit or loss.

The income tax for undistributed earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the Shareholders’ meeting.

Deferred tax

Deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

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Deferred tax liabilities are recognized for all taxable temporary differences, except:

• A. where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

• B. in respect of taxable temporary differences associated with investments in subsidiaries and associates, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

• A. Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

• B. In respect of deductible temporary differences associated with investments in subsidiaries and associates, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

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

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets are reassessed at each reporting date and are recognized accordingly

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

(24)Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The consideration transferred, the identifiable assets acquired and liabilities assumed are measured at acquisition date fair value. For each business combination, the acquirer measures any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are accounted for as expenses in the periods in which the costs are incurred and are classified under administrative expenses.

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When the Group acquires a business, it assesses the assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognized at the acquisition-date fair value. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognized in accordance with IFRS 9 Financial Instruments either in profit or loss or as a change to other comprehensive income. However, if the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity.

Goodwill is initially measured as the amount of the excess of the aggregate of the consideration transferred and the non-controlling interest over the net fair value of the identifiable assets acquired and the liabilities assumed. If this aggregate is lower than the fair value of the net assets acquired, the difference is recognized in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Each unit or group of units to which the goodwill is so allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purpose and is not larger than an operating segment before aggregation.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation. Goodwill disposed of in this circumstance is measured based on the relative recoverable amounts of the operation disposed of and the portion of the cash-generating unit retained.

5. Significant accounting judgements, estimates and assumptions

The preparation of the Group’s consolidated financial statements require management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumption and estimate could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

Estimates and assumptions

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The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(1) Fair value of financial instruments

Where the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be derived from active markets, they are determined using valuation techniques including the income approach (for example the discounted cash flows model) or market approach. Changes in assumptions about these factors could affect the reported fair value of the financial instruments. Please refer to Note 12 for more details.

• (2) Impairment of non-financial assets

An impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date less incremental costs that would be directly attributable to the disposal of the asset or cash generating unit. The value in use calculation is based on a discounted cash flow model. The cash flows projections are derived from the budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the asset’s performance of the cash generating unit being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. The key assumptions used to determine the recoverable amount for the different cash generating units, including a sensitivity analysis, are further explained in Note 6.

(3) Pension benefits

The cost of post-employment benefit and the present value of the pension obligation under defined benefit pension plans are determined using actuarial valuations. An actuarial valuation involves making various assumptions. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Please refer to Note 6 for more details.

(4) Share-based payment transactions

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 6.

(5) Revenue recognition – sales returns and allowance

The Group estimates sales returns and allowance based on historical experience and other known factors at the time of sale, which reduces the operating revenue. In assessing the aforementioned sales returns and allowance, trevenue is recognized to the extent it is highly probable that a significant

160

reversal in the amount of cumulative revenue recognised will not occur. Please refer to Note 6 for more details.

• (6) Income tax

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Group establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective counties in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective Group company's domicile.

Deferred tax assets are recognized for all carryforward of unused tax losses and unused tax credits and deductible temporary differences to the extent that it is probable that taxable profit will be available or there are sufficient taxable temporary differences against which the unused tax losses, unused tax credits or deductible temporary differences can be utilized. The amount of deferred tax assets determined to be recognized is based upon the likely timing and the level of future taxable profits and taxable temporary differences together with future tax planning strategies.

• (7) Accounts receivables–estimation of impairment loss

The Group estimates the impairment loss of accounts receivables at an amount equal to lifetime expected credit losses. The credit loss is the present value of the difference between the contractual cash flows that are due under the contract (carrying amount) and the cash flows that expects to receive (evaluate forward looking information). However, as the impact from the discounting of short-term receivables is not material, the credit loss is measured by the undiscounted cash flows. Where the actual future cash flows are lower than expected, a material impairment loss may arise. Please refer to Note 6 for more details.

• (8) Inventories

Estimates of net realisable value of inventories take into consideration that inventories may be damaged, become wholly or partially obsolete, or their selling prices have declined. The estimates are based on the most reliable evidence available at the time the estimates are made.Please refer to Note 6 for more details.

6. Contents of significant accounts

• (1) Cash and cash equivalents

31 Dec 2020

31 Dec 2019

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(2)	Cash on hand and demand deposits $10,978,910 Time deposits 129,106 Total $11,108,016 Financial assets measured at amortized cost, current 30 Dec 2020 Bank deposits $578,286	$10,978,910 129,106 $11,108,016	$8,067,062 87,494
			$8,154,556
			31 Dec 2019 $349,340
	Bank deposits

The Group classified certain financial assets as financial assets measured at amortized cost. Please refer to Note 8 for more details on financial assets measured at amortized cost under pledge and Note 12 for details on credit risk and assessment of impairment loss.

(3) Notes receivable, net

Notes receivable, net
A. Notes receivable Less: loss allowance Total	31 Dec 2020	31 Dec 2019
	$553,116 (3,450)	$554,364 (2,412)
	$549,666	$551,952

• B. Notes receivables arised from operating activities and were not pledged.

• C. The Group follows the requirement of IFRS 9 to assess the impairment. The Group measures the loss allowance of its note receivables at an amount equal to lifetime expected credit losses. The movement in the provision for impairment of note receivables as of 31 December, 2020 and 2019 is as follows:

D. Movement of the loss allowance table:

As of 1 Jan 2020 Charge for the current period Foreign exchange adjustments As of 31 Dec 2020	Loss allowance
	$2,412 921 117
	$3,450

As of 1 Jan 2019 Charge for the current period Foreign exchange adjustments As of 31 Dec 2019	Loss allowance
	$2,111 406 (105)
	$2,412

(4) Accounts receivable, net

Accounts receivable, net
A. Account receivables Less: loss allowance	31 Dec 2020	31 Dec 2019
	$3,827,104 (135,643)	$7,053,893 (156,055)

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$3,691,461 $6,897,838

Total

• B. Accounts receivables were not pledged.

• C. Trade receivables are generally on 90-150 day terms. The total carrying amount as of 31 December, 2020 and 31 December, 2019 were $3,827,104 thousand and $7,053,893 thousand, respectively. The Group follows the requirement of IFRS 9 to assess the impairment, measure the loss allowance of its trade receivables at an amount equal to lifetime expected credit losses, condsider the grouping of note receivables by counterparties’ credit rating, by geographical region and by industry sector, and its loss allowance is recognized based on expected loss ratio, details are as follow. Please refer to Note 12 for more details on credit risk management.

31 Dec 2020 Gross carrying amount Loss ratio Lifetime expected credit losses Subtotal 31 Dec 2019 Gross carrying amount Loss ratio Lifetime expected credit losses Subtotal	Neither past due nor impaired	Past due but not impa	Past due but not impa	ired	Total
		31~90 days	91~180 days	>=181 days
	$3,796,894 0%~5% 125,078	$11,263 1%~10% 112	$1,467 5%~20% 74	$17,480 50%~100% 10,379	$3,827,104 135,643
	$3,671,816	$11,151	$1,393	$7,101	$3,691,461
	$7,032,630 0%~5% 149,357	$8,004 1%~10% 80	$6,704 5%~20% 335	$6,555 50%~100% 6,283	$7,053,893 156,055
	$6,883,273	$7,924	$6,369	$272	$6,897,838

• D. Movement of the loss allowance table:

Movement of the loss allowance table:
As of 1 Jan 2020 (Reversal) for the current period Foreign exchange adjustments As of 31 Dec 2020 As of 1 Jan 2019 Charge for the current period Foreign exchange adjustments As of 31 Dec 2019	Collectively impaired	Total
	$156,055 (19,830) (582)	$156,055 (19,830) (582)
	$135,643	$135,643
	$130,278 28,354 (2,577)	$130,278 28,354 (2,577)
	$156,055	$156,055

• E. The Group entered into a factoring agreement with the following banks to sell its accounts receivable. Under the agreement, the Group is not obligated to bear the default risk of the transferred accounts receivable, but is liable for the losses incurred on any business dispute. The Group does not have any continuing involvement in the transferred accounts receivable. Thus, the Group derecognized the transferred accounts receivable.

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As of 31 December 2020 and 2019, other receivables from banks incurred by accounts receivable factoring amounted to NT$248,672 thousand and NT$339,694 thousand, respectively.

As of 31 December 2020 and 31 December 2019, the relevant information of accounts receivable factored and derecognised by the Group is as follows:

(a) 31 December 2020:

The Factor (Transferee) E.SUN CTBC Total	Rates (%) － － －	Accounts receivable factoring not yet due (in thousands of dollars) $71,444 13,203 $84,647	Amount received (in thousands of dollars) $64,033 11,883 $75,916	Retention (recognized as other receivables) (in thousands of dollars) $7,411 1,320 $8,731	Credit Limit (in thousands of dollars)
					$110,000 20,000
					$130,000

(b) 31 December, 2019:

The Factor (Transferee) E.SUN CTBC Total	Rates (%) － － －	Accounts receivable factoring not yet due (in thousands of dollars) $90,233 21,402 $111,635	Amount received (in thousands of dollars) $81,046 19,258 $100,304	Retention (recognized as other receivables) (in thousands of dollars) $9,187 2,144 $11,331	Credit Limit (in thousands of dollars)
					$95,000 21,600
					$116,600

(5) Other receivables and other receivables-related parties

A.

Tax refund receivable Other receivables Less: loss allowance Subtotal Other receivables－related parties Total	2020.12.31	2019.12.31
	$80,335 390,669 (12,582)	$47,637 476,523 (31,367)
	458,422	492,793
	15,812	24,067
	$474,234	$516,860

• B. The Group follows the requirement of IFRS 9 to assess the impairment. The Group measures the loss allowance of its other receivables at an amount equal to lifetime expected credit losses, condsiders the grouping of note receivables by counterparties’ credit rating, by geographical

164

region and by industry sector and its loss allowance is recognized based on expected loss ratio, details are as follow. Please refer to Note 12 for more details on credit risk management.

C. Movement of the loss allowance table:

Movement of the loss allowance table:
As of 1 Jan 2020 (Reversal) for the current period Write off Foreign exchange adjustments As of 31 Dec 2020 As of 1 Jan 2019 Charge for the current period Foreign exchange adjustments As of 31 Dec 2019	Individually impaired $17,998 － (17,808) (190) － $18,696 － (698) $17,998	Collectively impaired $13,369 (558) － (229) $12,582 $13,743 628 (1,002) $13,369	Total
			$31,367 (558) (17,808) (419)
			$12,582
			$32,439 628 (1,700)
			$31,367

Impairment loss that was individually determined for the years ended 31 December 2020 and 2019, arose due to the fact that the counterparty was in financial difficulties. The amount of impairment loss recognized was the difference between the carrying amount of other receivables and the present value of its expected recoverable amount. The Group does not hold any collateral for such receivables.

(6) Inventories

Inventories
A. Raw materials Work in progress Finished goods Total	31 Dec 2020	31 Dec 2019
	$2,608,661 980,302 7,946,351	$1,521,259 875,340 5,868,116
	$11,535,314	$8,264,715

• B. Expenses and losses incurred on inventories for the years ended 31 December 2020 and 2019 were

as follows:

were as follows:
Cost of inventories sold Loss on inventory valuation Loss on disposal of Inventory Cost of goods sale	2020	2019 $31,445,561 522,784 251,801 $32,220,146
	$33,178,714 25,036 230,061
	$33,433,811

• C. No inventories were pledged.

(7) Financial assets at fair value through other comprehensive income, noncurrent

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Debt instrument investments measured at fair value through other comprehensive income – Non-current: Unlisted companies stocks	31 Dec2020	31 Dec2019
	$101,449	$111,835

Financial assets at fair value through other comprehensive income were not pledged.

(8) Investments accounted for under the equity method

A. The following table lists the investments in associates of the Group:

	31 Dec 2020	31 Dec 2020	31 Dec 2019	31 Dec 2019
Investees	Carrying	Percentage of	Carrying	Percentage of
	amount	ownership (%)	amount	ownership (%)
Investments in associates:
ZIMAG TECHNOLOGY CO., INC. (Note 1)	$40,112	9.53％	$38,857	9.53％
FURUKAWA AVC ELECTRONICS (SUZHOU) CO., LTD.	92,085	30.00％	95,022	30.00％
ZHUZHOU CRRC-AVC THERMAL TECHNOLOGY CO., LTD.	83,872	25.00％	147,071	45.00％
KEY APPLICATION TECHNOLOGY CO.,LTD. (Note 2)	－	16.31％	8,955	16.31％
Total	$216,069		$289,905

Note 1: The Group evaluated and concluded that it has significant influence over Innovision, thus, this

investment of the Group used the equity method for evaluation.

Note 2: The Group evaluated and concluded that it has significant influence over Innovision, thus, this

investment of the Group used the equity method for evaluation.

Certain investments accounted for under the equity method were audited by other independent accountants. Shares of profit or loss of these associates amounted to NT$6,753 thousand and NT$5,565 thousand for the years ended 31 December 2020 and 2019, respectively. Share of other comprehensive income (loss) of these associates amounted to NT$6,887 thousand and (NT$412) thousand for the years ended 31 December 2020 and 2019, respectively. The balances of investments accounted for under the equity method were NT$175,957 thousand and NT$251,048 thousand as of 31 December 2020 and 2019, respectively.

None of the aforementioned associates were pledged.

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B. Financial information of associates:

There is no individually significant associate for the Group. When an associate is a foreign operation, and the functional currency of the foreign entity is different from the Group, an exchange difference arising from translation of the foreign entity will be recognized in other comprehensive income (loss).

The aggregate financial information of the Group’s investments in its joint ventures is as follows:

Net income Other comprehensive income (loss) Total comprehensive income		For theyears ended	For theyears ended
		31 Dec 2020	31 Dec 2019
		$12,459 5,137	$8,838 (851)
		$17,596	$7,987

(9) Property, plant and equipment

Property, plant and equipment
Owner occupied property, plant and equipment	31 Dec 2020 $7,773,383	31 Dec 2019
		$6,712,042

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A. Owner occupied property, plant and equipment (applicable under IFRS 16 requirements)

Cost: As of 1 Jan 2020 Additions Disposals Transfers and reclassifications Exchange differences As of 31 Dec 2020 Depreciation and impairment: As of 1 Jan 2020 Depreciation Impairment loss Disposals Transfers and reclassifications Exchange differences As of 31 Dec 2020	Land	Buildings	Machinery and equipment	Molding equipment	Other facilities	Construction in progress and equipment awaiting examination	Total
	$167,151 － － － －	$3,323,319 2,332 (42,114) 33,755 15,035	$5,020,114 1,453,872 (590,859) － 25,022	$807,979 315,598 (129,648) － (12,902)	$2,414,863 615,241 (242,336) － (7,343)	$166,170 (20,454) － － 4,803	$11,899,596 2,407,497 (1,004,957) 33,755 24,615
	$167,151	$3,332,327	$5,908,149	$981,027	$2,780,425	$191,427	$13,360,506
	－ － － － －	$762,100 113,283 － (4,324) 4,695 (16,695)	$2,291,955 454,331 247,175 (357,081) － (52,321)	$696.130 114,565 － (129,301) － (9,365)	$1,437,369 291,451 － (228,323) － (28,521)	－ － － － － －	$5,187,554 973,630 247,175 (719,029) 4,695 (106,902)
	－	$859,059	$2,584,059	$672,029	$1,471,976	－	$5,587,123

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Cost: As of 1 Jan 2019 Additions Disposals Transfers and reclassifications Exchange differences As of 31 Dec 2019 Depreciation and impairment: As of 1 Jan 2019 Depreciation Impairment loss Disposals Transfers and reclassifications Exchange differences As of 31 Dec 2019 Net carrying amount as of: As of 31 Dec 2020 As of 31 Dec 2019	Land	Buildings	Machinery and equipment	Molding equipment	Other facilities	Construction in progress and equipment awaiting examination	Total
	$167,151 － － － －	$3,407,966 － (5,921) 35,041 (113,767)	$4,540,514 1,150,519 (372,452) － (298,467)	$782,359 98,842 (45,679) － (27,543)	$2,346,209 433,051 (274,107) － (90,290)	$191,736 (22,868) － － (2,698)	$11,435,935 1,659,544 (698,159) 35,041 (532,765)
	$167,151	$3,323,319	$5,020,114	$807,979	$2,414,863	$166,170	$11,899,596
	－ － － － － －	$650,631 118,107 － (743) 14,681 (20,576)	$2,324,116 400,957 52,652 (265,382) － (220,388)	$673,989 91,771 － (45,679) － (23,951)	$1,377,936 339,177 － (243,272) － (36,472)	－ － － － － －	$5,026,672 950,012 52,652 (555,076) 14,681 (301,387)
	－	$762,100	$2,291,955	$696,130	$1,437,369	－	$5,187,554
	$167,151	$2,473,268	$3,324,090	$308,998	$1,308,449	$191,427	$7,773,383
	$167,151	$2,561,219	$2,728,159	$111,849	$977,494	$166,170	$6,712,042

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• B. The Group has evaluated the value of some machinery and equipment has been impaired, and impairment losses are recognized amounted to NT$247,175 thousand and NT$52,652 thousand for the years ended 31 December 2020 and 2019, respectively. The recoverable amount is the difference between fair value and disposal cost, this fair value measurement is categorized under Level 3

• C. Please refer to Note 8 for more details on property, plant and equipment under pledge.

• (10) Investment property

Investment property includes the Group's own occupied investment property and the investment property held by the Group with the right-of-use assets. The Group enters into commercial property leasing contracts for its own investment property with a leasing period ranging from 1 to 10 years. The lease contract includes provisions for adjusting the rent based on the annual market environment.

Cost： As of 1 Jan 2020 Additions Transfers and reclassifications Exchange differences As of 31 Dec 2020 As of 1 Jan 2019 Additions Transfers and reclassifications Exchange differences As of 31 Dec 2019 Depreciation and impairment: As of 1 Jan 2020 Depreciation Transfers and reclassifications Exchange differences As of 31 Dec 2020 As of 1 Jan 2019 Depreciation Transfers and reclassifications Exchange differences As of 31 Dec 2019 Net carrying amount as at: As of 31 Dec 2020	Land $8,769 － － － $8,769 $8,769 － － － $8,769 － － － － － － － － － － $8,769	Buildings $240,624 － (33,755) 1,706 $208,575 $279,146 － (35,041) (3,481) $240,624 $95,240 4,066 (4,695) 266 $94,877 $105,735 4,657 (14,681) (471) $95,240 $113,698	Total
			$249,393 － (33,755) 1,706
			$217,344
			$287,915 － (35,041) (3,481)
			$249,393
			$95,240 4,066 (4,695) 266
			$94,877
			$105,735 4,657 (14,681) (471)
			$95,240
			$122,467

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As of 31 Dec 2019 Rental income from investment property Less: Direct operating expenses from investment property generating rental income Total		Land Buildings $8,769 $145,384 2020 $18,815 (5,889) $12,926	Land Buildings $8,769 $145,384 2020 $18,815 (5,889) $12,926	Total
				$154,153
				2019
		$18,815 (5,889)		$22,542 (6,859)
		$12,926		$15,683

Please refer to Note 8 for more details on investment property under pledge.

The investment property held by the Group is industrial land and buildings, and the fair value is equivalent to the carrying value.

(11) Intangible assets

11) Intangible assets
Cost: As of 1 Jan 2020 Addition Disposals Transfers and reclassifications Exchange differences As of 31 Dec 2020 As of 1 Jan 2019 Addition Disposals Transfers and reclassifications Exchange differences As of 31 Dec 2019 Amortization and impairment: As of 1 Jan 2020 Amortization Disposals	Computer software	Patents	License fee	Goodwill	Total
	$273,563 57,952 (31,991) － 2,210	$5,185 － － － －	$25,679 － － － －	$7,107 － － － －	$311,534 57,952 (31,991) － 2,210
	$301,734	$5,185	$25,679	$7,107	$339,705
	$239,507 41,841 (1,430) － (6,355)	$5,185 － － － －	$25,679 － － － －	$7,107 － － － －	$277,478 41,841 (1,430) － (6,355)
	$273,563	$5,185	$25,679	$7,107	$311,534
	$140,619 48,356 (30,626)	$5,185 － －	$16,981 2,417 －	$7,107 － －	$169,892 50,773 (30,626)

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Transfers and reclassifications Exchange differences As of 31 Dec 2020 As of 1 Jan 2019 Amortization Disposals Transfers and reclassifications Exchange differences As of 31 Dec 2019 Net carrying amount as at: 31 Dec 2020 31 Dec 2019	Computer software	Patents	License fee	Goodwill	Total
	－ 72	－ －	－ －	－ －	－ 72
	$158,421	$5,185	$19,398	$7,107	$190,111
	$107,149 37,120 (437) － (3,213)	$5,185 － － － －	$12,948 4,033 － － －	$7,107 － － － －	$132,389 41,153 (437) － (3,213)
	$140,619	$5,185	$16,981	$7,107	$169,892
	$143,313	－	$6,281	－	$149,594
	$132,944	－	$8,698	－	$141,642

Amortization expense of intangible assets under the statement of comprehensive income:

Operating costs Operating expenses	2020	2019
	$6,242	$2,050
	$44,531	$39,103

(12) Other non-current assets

Other non-current assets
Advance payments in equipments Refundable deposits Other advance Other non-current assets - other Total	31 Dec 2020	31 Dec 2019
	$407,087 179,670 21,372 4,543	$511,387 167,567 － 3,960
	$612,672	$682,914

Please refer to Note 8 for more details on other non-current assets under pledge.

(13) Short-term borrowings

A.

Unsecured bank loans	31 Dec 2020	31 Dec 2019
	$2,452,594	$2,000,456

• B. Interest rate ranges are within 0.7187%~1.2500% and 0.8648%~3.9966% as of 31 December 2020 and 2019, respectively.

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• C. The Group’s unused short-term lines of credits amounted to NT$7,597,009 thousand and NT$6,287,833 thousand as of 31 December 2020and 2019, respectively.

(14) Short-term notes and bills payable

31 Dec 2020 Guarantee or acceptance agency Issued Period Range of interest rates Amount － － － － Total － 31 Dec 2019 Guarantee or acceptance agency Issued Period Range of interest rates Amount China bills finance corporation 2019.12.18~2020.1.16 0.54% $100,000 (15) Long-term borrowings 31 Dec 2020 31 Dec 2019 Redemption Unsecured Long-Term Loan from Taiwan Cooperative Bank － $120,000 Effective 4 Jun 2016 to 4 Jun 2021. Principal is repaid in 20 quarterly payments with monthly interest payments. Unsecured Long-Term Loan from Taiwan Business Bank － 91,667 Effective 16 Nov 2017 to 16 Nov 2020. Three-year loan: principal is repaid in monthly payments. Interest payments are calculated on current principal amount. Unsecured Long-Term Loan from Mega International Commercial Bank － 160,000 Effective 21 Dec 2017 to 21 Dec 2020. Three-year loan: first period begins 9 months after first allocation. Principal is repaid in 10 quarterly payments (principal NT$40,000 thousand for each period) with monthly interest payments. Unsecured Long-Term Loan from Taiwan Cooperative Bank $135,000 195,000 Effective 23 Jan 2018 to 23 Jan 2023. Five-year loan: principal is repaid in 20 quarterly payments with monthly interest payments. Unsecured Long-Term Loan from Taiwan Cooperative Bank 270,000 －Effective 17 Jun 2020 to 17 Jun 2025. Five-year loan: principal is repaid in 20 quarterly payments with monthly interest payments. Unsecured Long-Term Loan from Shanghai Commercial & Savings Bank － 150,000 Effective 5 Mar 2018 to 5 Mar 2021. Three-year loan: interest-only for 6 months from		Guarantee or acceptance agency	Guarantee or acceptance agency	31 Dec 2020	31 Dec 2020	31 Dec 2020	Amount － － Amount $100,000 Redemption
				Issued Period		Range of interest rates
		－ Total Guarantee or acceptance agency
				Issued Period		Range of interest rates
			－ － － $135,000 270,000 －		$120,000 Effective 4 Jun 2016 to 4 Jun 2021. Principal is repaid in 20 quarterly payments with monthly interest payments. 91,667 Effective 16 Nov 2017 to 16 Nov 2020. Three-year loan: principal is repaid in monthly payments. Interest payments are calculated on current principal amount. 160,000 Effective 21 Dec 2017 to 21 Dec 2020. Three-year loan: first period begins 9 months after first allocation. Principal is repaid in 10 quarterly payments (principal NT$40,000 thousand for each period) with monthly interest payments. 195,000 Effective 23 Jan 2018 to 23 Jan 2023. Five-year loan: principal is repaid in 20 quarterly payments with monthly interest payments. －Effective 17 Jun 2020 to 17 Jun 2025. Five-year loan: principal is repaid in 20 quarterly payments with monthly interest payments. 150,000 Effective 5 Mar 2018 to 5 Mar 2021. Three-year loan: interest-only for 6 months from

- (15) Long term borrowings

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Unsecured Long-Term Loan from Shanghai Commercial & Savings Bank Unsecured Long-Term Loan from First Commercial Bank Unsecured Long-Term Loan from HSBC Unsecured Long-Term Loan from Taipei Fubon Bank Unsecured Long-Term Loan from Hua Nan Bank Unsecured Long-Term Loan from Jih Sun Bank Unsecured Long-Term Loan from Yuanta Commercial Bank Unsecured Long-Term Loan from Bank of Taiwan	31 Dec 2020	31 Dec 2019 Redemption
	$125,000 － － － － － － －	the first date of allocation. Principal and interest are repaid in 10 quarterly payments. －Effective 15 Apr 2020 to 15 Apr 2023. Three-year loan: principal is repaid in quarterly payments with monthly interest payments. $133,333 Effective 18 Apr 2018 to 18 Apr 2021. Three-year loan: principal is repaid in monthly payments with monthly interest payments. 225,000 Effective 21 May 2018 to 21 May 2021. Three-year loan: first period begins 18 months after first allocation. Principal is repaid in 4 quarterly payments with monthly interest payments. 300,000 Effective 20 Jun 2018 to 20 Jun 2021. Three-year loan: first period begins 18 months after first allocation. Principal is repaid in 6 quarterly payments with monthly interest payments. 222,222 Effective 1 Aug 2018 to 1 Aug 2021. Three-year loan: principal is repaid in monthly payments with monthly interest payments. 300,000 Effective 7 Oct 2019 to 7 Oct 2021.Two-year loan: Principal is repaid in 8 quarterly payments with monthly interest payments. 480,000 Three-year loan: split loan is available. The first period begins at the expiration date of interest-only. Principal is repaid in 9 quarterly payments with monthly interest payments. Payments 1 to 8 are for NT$60,000 thousand, and the final payment is for NT$120,000 thousand. 479,167 Effective 19 Nov 2018 to 19 Nov 2021. Three-year loan: interest-only payment for the

174

Unsecured Long-Term Loan from DBS Bank Unsecured Long-Term Loan from Chang Hwa Bank Unsecured Long-Term Loan from Taiwan Business Bank Unsecured Long-Term Loan from E. Sun Bank Unsecured Long-Term Loan from Kgi Bank Unsecured Long-Term Loan from Taiwan Cooperative Bank Unsecured Long-Term Loan from Land Bank of Taiwan Unsecured Long-Term Loan from CTBC Bank Unsecured Long-Term Loan from Shin Kong Bank Unsecured Long-Term Loan from Cathay United Bank Unsecured Long-Term Loan from Taishin International Bank	31 Dec 2020	31 Dec 2019 Redemption
	－ $136,111 133,334 150,000 100,000 225,000 183,332 － － － －	first year. Principal is repaid with monthly interest payments. $500,000 Revolving credit for 2 years from the first day of allocation 19 Mar 2019. Each loan must not exceed 6 months. 252,778 Effective 18 Feb 2019 to 18 Feb 2022. Three-year loan: principal is repaid with monthly interest payments. 233,333 Effective 1 Apr 2019 to 1 Apr 2022. Three-year loan: Principal is repaid in monthly payments with monthly interest payments. 200,000 Effective 30 May 2019 to 30 May 2022. Three-year loan: Principal is amortized on a quarterly basis, and interest is paid on a monthly basis. 200,000 Revolving credit for 2 years from the first day of allocation 24 Jun 2019. 285,000 Effective 3 Sep 2019 to 3 Sep 2024. Five-year loan: Principal is amortized on a quarterly basis, and interest is paid on a monthly basis. 283,333 Effective 18 Oct 2019 to 18 Oct 2022. Three-year loan: Principal is repaid in monthly payments with interest. 500,000 Revolving credit for 3 years from the first day of allocation 20 Nov 2019. 100,000 Revolving credit for 3 years from the first day of allocation 22 Aug 2021. 300,000 Revolving credit for 2 years from 12 Sep 2019 to 12 Sep 2021. 200,000 Three-year FRCP: first issued on 21 Jun, 2018. The full issuance of the agreement during the effective period(issued and guaranteed

175

Unsecured Long-Term Loan from HSBC Unsecured Long-Term Loan from Taiwan Business Bank Unsecured Long-Term Loan from Jih Sun Bank Unsecured Long-Term Loan from Yuanta Commercial Bank Unsecured Long-Term Loan from Hua Nan Bank Unsecured Long-Term Loan from Mega International Commercial Bank Unsecured Long-Term Loan from Bank of Taiwan Subtotal	31 Dec 2020	31 Dec 2019 Redemption
	$120,000 416,667 262,500 600,000 377,778 490,000 59,896	by Taishin Bank). －Effective 24 Feb 2020 to 24 Feb 2023. Three-year loan: first period begins 18 months after first allocation. Principal is repaid in 7 quarterly payments with monthly interest payments. －Effective 1 Apr 2020 to 1 Apr 2024. Four-year loan: Principal is repaid in monthly payments with monthly interest payments. － Effective 7 July 2020 to 7 July 2022.Two-year loan: Principal is repaid in 8 quarterly payments with monthly interest payments. －Three-year loan: split loan is available. The first period begins at the expiration date of interest-only. Principal is repaid in 9 quarterly payments with monthly interest payments. Payments 1 to 8 are for NT$60,000 thousand, and the final payment is for NT$120,000 thousand. － Effective 12 Oct 2020 to 12 Oct 2023. Three-year loan: principal is repaid in monthly payments with monthly interest payments. － Effective 19 Oct 2020 to 19 Oct 2025. Five-year loan: first period begins 18 months after first allocation. Principal is repaid in 14 quarterly payments with monthly interest payments. － Effective 12 Nov 2020 to 12 Nov 2025. Five-year loan: interest-only for 2 years from the first date of allocation. 5,910,833
	3,784,618

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Less: Due within one year Total Interest rates	31 Dec 2020	31 Dec 2019 Redemption
	(1,309,287)	(2,161,667) $3,749,166 0.6777％～1.28％
	$2,475,331
	0.9000％～1.08％

(16) Other payables

Salaries and bonus Employee’s compensation and remuneration of directors Others Total	30 Dec 2020 $991,444 133,473 1,789,821 $2,914,738	31 Dec 2019
		$890,628 64,969 1,710,315
		$2,665,912

(17) Corporate Bonds payable

) Corporate Bonds payable
5 year secured bonds - issued at par value. Issued in August 2020. Interest at 0.62%, bullet repayment, payable annually. Less: current portion Ending balance	30 Dec 2020	31 Dec 2019	Collateral None
	$2,400,000 －	－ －
	$2,400,000	－

The issuance of the above corporate bonds payable is to repay existing loans and expand working capital, the Company entered into a syndicated credit facility agreement with 9 banks by E.SUN Commercial Bank, Taiwan Cooperative Bank, Hua Nan Commercial Bank, Bank of Taiwan, Land Bank of Taiwan, Mega International Commercial Bank, The Shanghai Commercial & Savings Bank, First Commercial Bank and CTBC Bank for a NT$2,424,000 thousand credit line.

(18) Long-term deferred revenue

Government grants were as follows:

Long-term deferred revenue Government grants were as follows:
Beginning balance Released to the statement of comprehensive income Exchange differences Ending balance	2020 $770,163 (26,774) 12,325 $755,714	2019
		$828,001 (27,964) (29,874)
		$770,163

Government grants have been received for the purchase of certain items of property, plant and equipment.

(19) Post-employment benefits

A. Defined contribution plan

The Company and its domestic subsidiaries adopt a defined contribution plan in accordance with

the Labor Pension Act of the R.O.C. Under the Labor Pension Act, the Company and its

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domestic subsidiaries will make monthly contributions of no less than 6% of the employees’ monthly wages to the employees’ individual pension accounts. The Company and its domestic subsidiaries have made monthly contributions of 6% of each individual employee’s salaries or wages to employees’ pension accounts.

Expenses under the defined contribution plan for the years ended 31 December 2020 and 2019 were NT$30,139 thousand and NT$27,164 thousand, respectively.

B. Defined benefits plan

The Company and its domestic subsidiaries adopt a defined benefit plan in accordance with the Labor Standards Act of the R.O.C. The pension benefits are disbursed based on the units of service years and the average salaries in the last month of the service year. Two units per year are awarded for the first 15 years of services while one unit per year is awarded for each year after the completion of the 15th year. The total units shall not exceed 45 units. Under the Labor Standards Act, the Company and its domestic subsidiaries contribute an amount equivalent to 2% of the employees’ total salaries and wages on a monthly basis to the pension fund deposited at the Bank of Taiwan in the name of the administered pension fund committee. Before the end of each year, the Company and its domestic subsidiaries will estimate the aforementioned Labor Pension reserve accounts balance. If the balance is insufficient for the estimated payments to employees meeting the conditions of receiving labor pension within the following year, the Company will set aside the shortfall in full by end of March in the following year.

The Ministry of Labor is in charge of establishing and implementing the fund utilization plan in accordance with the regulations for revenues, expenditures, safeguard and utilization of the labor retirement fund. The pension fund is invested in-house or under a mandate, based on a passive-aggressive investment strategy for long-term profitability. The Ministry of Labor establishes checks and risk management mechanism based on the assessment of risk factors including market risk, credit risk and liquidity risk, in order to maintain adequate flexibility to achieve targeted return without over-exposure of risk. With regard to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. Treasury funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with IAS 19. The Company expects to contribute NT$2,644 thousand to its defined benefit plan for the following 12 months as of 31 December 2020.

The durations of defined benefit obligation for the years ended 31 December 2020 and 2019 will expire in 14 years and 15 years, respectively.

Pension costs recognized in profit or loss are as follows: 31 Dec 2020 Current period service costs $1,038 Net interest on the net defined benefit liabilities 59	Pension costs recognized in profit or loss are as follows: 31 Dec 2020 Current period service costs $1,038 Net interest on the net defined benefit liabilities 59	31 Dec 2019
	$1,038 59	$1,246 215

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Total $1,097 $1,461

Reconciliations of liabilities (assets) of the defined benefit obligation and plan assets at fair value are as follows:

are as follows:
Defined benefit obligation Plan assets at fair value Net defined benefit liabilities	31 Dec 2020	31 Dec 2019
	$126,167 (120,934)	$120,997 (113,615)
	$5,233	$7,382

Reconciliations of liabilities (assets) of the defined benefit plan are as follows:

As of 1 January 2019 Current service cost Interest expense (income) Subtotal Remeasurements of the defined benefit liabilities/assets: Actuarial gains and losses arising from changes in demographic assumptions Actuarial gains and losses arising from changes in financial assumptions Experience adjustments Remeasurements of the defined benefit assets Subtotal Payments from the plan Contribution by employer As of 31 December 2019 Current service cost Interest expense (income) Subtotal Remeasurements of the defined benefit liabilities/assets: Actuarial gains and losses arising from changes in demographic assumptions Actuarial gains and losses arising from changes in financial assumptions Experience adjustments Remeasurements of the defined benefit assets Subtotal Payments from the plan Contribution byemployer	Defined benefit obligation	Plan assets at fair value	Net defined benefit liabilities
	$126,638 1,246 1,432	($107,647) － (1,217)	$18,991 1,246 215
	129,316	(108,864)	20,452
	(2,142) 5,798 (10,445) －	－ － － (3,609)	(2,142) 5,798 (10,445) (3,609)
	(6,789)	(3,609)	(10,398)
	(1,530)	1,530	－
	－	(2,672)	(2,672)
	$120,997 1,038 986	($113,615) － (909)	$7,382 1,038 59
	123,003 (253) 6,445 (3,028) －	(114,524) － － － (3,766)	8,479 (253) 6,445 (3,028) (3,766)
	3,164	(3,766)	(602)
	－ －	－ (2,644)	－ (2,644)

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As of 31 December 2020	Defined benefit obligation	Plan assets at fair value	Net defined benefit liabilities
	$126,167	($120,934)	$5,233

The principal underlying actuarial assumptions are as follows:

Discount Rate Rate of future salary Increase	31 Dec.2020 0.42% 2.00%	31 Dec.2019
		0.80% 2.00%

Sensitivity analysis of each major actuarial assumption:

Sensitivity analysis of each major	actuarial assumption:	actuarial assumption:
Discount Rate increase 0.5% Discount Rate decrease 0.5% Future salary increase 0.5% Future salary decrease 0.5%	2020		2019
	Defined benefit obligations increase	Defined benefit obligations decrease	Defined benefit obligations increase	Defined benefit obligations decrease
	－ $9,152 $8,957 －	$8,361 － － $8,276	－ $9,353 $9,190 －	$8,506 － － $8,451

(20) Equities

A. Common stock

As of 31 December 2020 and 2019, the Group’s authorized capital was both NT$4,000,000 thousand, and both issued NT$3,533,101 thousand with 353,310 thousand shares, each at a par value of NT$10. Each share has one voting right and a right to receive dividends.

B. Additional paid-in capital

Additional paid-in capital
Share premium Difference between consideration and carrying amount of subsidiaries acquired or disposed Donated assets received Premium from merger Employee stock option Share options of convertible bonds Total	31 Dec 2020 $1,055,607 60,022 3,148 443,730 15,300 23,292 $1,601,099	31 Dec 2019
		$1,055,607 － 2,887 443,730 15,300 23,293
		$1,540,817

According to the Company Act, the capital reserve shall not be used except for making good the deficit of the group. When a company incurs no loss, it may distribute the capital reserves related to the income derived from the issuance of new shares at a premium or income from endowments received by the company. The distribution could be made in cash or in the form of dividend shares to its shareholders in proportion to the number of shares being held by each of them.

C. Retained earnings and dividend policies

According to the Group’s Articles of Incorporation, current year’s earnings, if any, shall be distributed in the following order:

(a)Payment of all taxes and dues;

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(b)Offset prior years’ operation losses;

• (c)Set aside 10% of the remaining amount after deducting items (a) and (b) as legal reserve, except for when accumulated legal reserve has reached total authorized capital.

(d)Set aside or reverse special reserve in accordance with law and regulations; and

• (e)The distribution of the remaining portion, if any, will be recommended by the Board of Directors and resolved in the shareholders’ meeting.

• (f)According to Paragraph 5, Article 240 of the Company Act, the resolution authorizing a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors shall, in the form of the distribution of dividends and dividends or all or part of the legal reserves and capital reserves provided for in Paragraph 1, Article 241 of the Companies Act, shall be paid in cash and shall be reported to the shareholders' meeting.

The policy of dividend distribution should reflect factors such as the current and future development plan, investment environment, fund requirements, domestic and international competition as well as the interest of the shareholders. A percentage of no less than 5% of the distributable profits of the accounting period shall be distributed as shareholders' dividends annually. When the accumulated distributable profits are less than 10% of our paid-up capital, we will no longer be required to make allowances for allocation. Shareholders' dividends could be paid in the form of shares or cash. Accordingly, at least 10% of the dividends must be paid in the form of cash.

According to the Company Act, the Company needs to set aside an amount to legal reserves unless where such legal reserve amounts to the total authorized capital. The legal reserve can be used to make good the deficit of the Company. When the Company incurs no loss, it may distribute the portion of legal reserves that exceeds 25% of the paid-in capital by issuing new shares or by cash in proportion to the number of shares being held by each of the shareholders.

Following the adoption of TIFRS, the FSC on 6 April 2012 issued Order No. Financial-Supervisory-Securities-Corporate-1010012865, which sets out the following provisions for compliance:

On a public company's first-time adoption of the TIFRS, for any unrealized revaluation gains and cumulative translation adjustments (gains) recorded to shareholders’ equity that the company elects to transfer to retained earnings by application of the exemption under IFRS 1, the company shall set aside an equal amount of special reserves. Following a company’s adoption of the TIFRS for the preparation of its financial reports, when distributing distributable earnings, it shall set aside to special reserves, from the profit/loss of the current period and the undistributed earnings from the previous period. The amount should equal to “other net deductions from shareholders’ equity for the current fiscal year, provided that the company has already set aside special reserves according to the requirements in the preceding point, it shall set aside supplemental special reserve based on the difference between the amount already set aside and other net deductions from shareholders’ equity. For any subsequent reversal of other net deductions from shareholders’ equity, the amount reversed may be distributed.

As of 31 December 2020 and 2019, special reserve set aside for the first-time adoption of TIFRS amounts to $95,481 thousand. Furthermore, the Group has not reversed special reserve during

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the year ended 2020 and 2019 as results of the no use, disposal or reclassification of related assets.

Details of the 2020 and 2019 earnings distribution and dividends per share as approved and resolved by the Board of Directors’ meeting and shareholders’ meeting on 23 March 2021 and 19 June 2020, respectively, are as follows:

Legal reserve Special reserve Common stock -cash dividend	Appropriation of earnings	Appropriation of earnings	Dividendper share(NT$)	Dividendper share(NT$)
	2020	2019	2020	2019 $1.3
	$192,355 (76,086) 989,268	$95,797 407,289 459,303	$2.8

Please refer to Note 6.23 for further details on employees’ compensation and remuneration to directors and supervisors.

• D. Non-controlling interests

Non-controlling interests
Beginning balance Profit attributable to non-controlling interests Other comprehensive income, attributable to non-controlling interests, net of tax: Exchange differences resulting from translating the financial statements of a foreign operation Increasing in non-controlling interests Difference between consideration and carrying amount of subsidiaries acquired or disposed Ending balance	2020	2019
	$357,925 158,854 8,985 161,762 24,214	$238,443 15,124 (4,606) 108,964 －
	$711,740	$357,925

(21) Share-based payment plans

A. Share-based payment plan for employees of the Group as of 31 December 2020

Type of agreement	Grant date	Total number of options granted (in thousands)	Contract period(year)	Vesting conditions
Employee stock option plan Employee stock option plan	2019.10.08 2020.06.12	8,000 1,000	1 1	Description (a) Immediately

(a)Voucher holders can exercise their full options after 6 months of issuance.

(b)The Group uses the Black-Scholes option evaluation model to estimate the fair value of the options for the share-based payment transaction. The related information is as follows:

Type of agreement	Grant date	Exercise price (NT$)	Expected volatility (％)	Expected duration (year)	Expected dividend rate (％) 0.00 0.00	Risk-free interest rate (％)	Fair value per unit
Employee stock option plan Employee stock option plan	2019.10.08 2020.06.12	17 18	28.02 34.16	1.00 0.04		1.04 0.77	2.22 0.57

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• B. The following table contains further details on the aforementioned share-based payment plan as of 31 December 2020:

	2020
Stock options	Number of share options outstanding (in thousands)	Weighted average exercise price of share options(NT$)	Range of exercise price (NT$)	Weighted average remaining contractual life
Outstanding at beginning of period Forfeited Exercised Outstanding at end of period Exercisable at end of period	8,000 1,000 (9,000)	$17 $18 $17 － －	－ －	－ －
	－
	－

• C. The above-mentioned employee shares options of the group were fully exercised from 1 January to 31 December, 2020. As of 31 December, 2020, the group did not have outstanding employee share options.

• D. For the year ended 31 December 2020 and 2019, the Group incurred expenses of NT$9,050 thousand and NT$7,104 thousand for the share-based payment plan, respectively.

(22) Operating revenues

• A. Disaggregation of revenue

erating revenues Disaggregation of revenue
Sale of goods Timing of revenue recognition: At a point in time	2020	2019
	$39,665,534	$36,534,445
	$39,665,534	$36,534,445

• B. Contract balances

Contract balances
Contract liabilities - current Sale of goods	2020	2019
	$80,298	$16,103

During the period, contract liabilities significantly increased as performance obligations are partially unsatisfied and $16,103 thousand included in the contract liability balance at the beginning of the period was recognized as revenue during the period.

(23) Leases

• A. Group as a lessee

The Group leases various properties, including real estate such as land and buildings, machinery and equipment and office equipment. The lease terms range from 1 to 50 years.

The Group’s leases effect on the financial position, financial performance and cash flows are as follow:

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• (a) Amounts recognized in the balance sheet

• I. Right-of-use assets

mounts recognized in the balance Right-of-use assets	sheet
Land Buildings Transportation equipment Office equipment Total	31 Dec 2020	31 Dec 2019
	$558,558 1,158,909 15,093 463	$567,826 242,524 16,308 335
	$1,733,023	$826,993

During the year ended of 31 December 2020, the Group’s additions to right-of-use assets amounted to $1,247,444 thousand.

II. Lease liabilities

Lease liabilities
Current Non-current Total	31 Dec 2020	31 Dec 2019
	$170,345 1,048,455	$131,016 140,361
	$1,218,800	$271,377

Please refer to Note 6.24(4) for the interest on lease liabilities recognized during the year ended 31 Dec 2020 and refer to Note 12.5 Liquidity Risk Management for the maturity analysis for lease liabilities as of 31 Dec 2020.

• (b) Amounts recognized in the statement of profit or loss

Depreciation charge for right-of-use assets

Land Buildings Transportation equipment Office equipment Total	2020	2019
	$14,144 184,603 7,998 173	$14,980 141,106 8,129 175
	$206,918	$164,390

• (c) Income and costs relating to leasing activities

(d) C ash outflow relating to leasing activities The expenses relating to short-term leases	2020	2019
	$28,059	$25,385

During the year ended 31 December 2020, the Group’s total cash outflows for leases amounting to $168,036 thousand.

• B. Group as a lessor (applicable to the disclosure requirement in IFRS 16)

Please refer to Note 6.10 for relevant disclosure of the Group's own occupied investment property. Leases of owned investment properties are classified as operating leases as they do not

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transfer substantially all the risks and rewards incidental to ownership of underlying assets.

Lease income for operating leases Income relating to fixed lease payments and variable lease payments that depend on an index or a rate	2020	2019
	$23,657	$50,388

Please refer to Note 6.10 for relevant disclosure of property, plant and equipment for operating leases under IFRS 16. For operating leases entered by the Group, the undiscounted lease payments to be received and a total of the amounts for the remaining years as of 30 September 2020 are as follow:

2020 are as follow:
Not later than one year Later than one year and not later than five years Later than five years Total	31 Dec 2020	31 Dec 2019
	$16,095 52,099 8,378	$16,954 51,786 19,103
	$76,572	$87,843

(24) Summary statement of employee benefits, depreciation and amortization expenses by function:

Function Nature		2020		2019	2019	2019
	Operating costs	Operating expenses	Total amount	Operating costs	Operating expenses	Total amount
Employee benefits expense
Salaries	$4,123,000	$1,519,384	$5,642,384	$3,390,218	$1,442,462	$4,832,680
Labor and health insurance	$190,854	$84,473	$275,327	$275,609	$104,692	$380,301
Pension	$4,925	$26,311	$31,236	$3,641	$24,865	$28,506
Other employee benefits expense	$82,790	$46,027	$128,817	$76,846	$45,281	$122,127
Depreciation	$947,478	$237,136	$1,184,614	$873,702	$245,357	$1,119,059
Amortization	$6,911	$44,541	$51,452	$2,781	$39,029	$41,810

According to the Company’s Articles of Incorporation, no less than 3% of profit of the current year is distributable as employees’ compensation and no higher than 2% of profit of the current year is distributable as remuneration to directors and supervisors. However, the company's accumulated losses shall have been covered. The Company may, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, have the profit distributed as employees’ compensation in the form of shares or in cash; and in addition thereto a report of such distribution is submitted to the shareholders’ meeting. Information on the board of directors’ resolution regarding the employees’ compensation and remuneration to directors and supervisors can be obtained from the “Market Observation Post System” on the website of the

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TWSE.

Based on the profit of the current year, the Company estimated the amounts of the employees’ compensation and remuneration to directors for the year ended 31 December 2020 to be NT$84,863 thousand and NT$36,370 thousand, respectively. The Company estimated the amounts of employees’ compensation and remuneration to directors and supervisors for the year ended 31 December, 2019 to be NT$44,098 thousand and NT$18,899 thousand, respectively. The aforementioned amounts were recognized as employee benefits expense. If the Board of Directors resolves to distribute employees’ compensation in the form of stocks, the number of stocks distributed was calculated based on the closing price of the day before the Board of Directors meeting. The difference between the estimation and the resolution of the stockholder’s meeting will be recognized in profit or loss in the subsequent year.

A resolution was passed at a Board of Directors meeting held on 23 March, 2021 to distribute NT$84,863 and NT$36,370 in cash as employees’ compensation and remuneration to directors and supervisors of 2020, respectively.

No material differences exist between the estimated amount and the actual distribution of the employee compensation and remuneration to irectors and audit committee for the year ended 31 December, 2019.

(25) Non-operating income and expenses

• A. Interest income

A. Interest income
Interest income from bank deposits Financial assets at amortized cost Others Total	2020	2019
	$30,148 4,562 15	$31,817 5,102 16
	$34,725	$36,935

• B. Other income

B. Other income
Rental income Others Total	2020	2019
	$23,657 333,274	$50,388 424,765
	$356,931	$465,153

• C. Other gains and losses

C. Other gains and losses
(Losses) on disposal of property, plant and equipment	2020	2019
	($116,010)	($48,328)

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(26)	(Losses) on disposal ofintangible assets (Losses) gains on disposal of investments Foreign exchange (losses) income, net Impairment loss Others Total D. Finance costs Interest on borrowings from bank Interest on corporate bonds payable Interest on lease liabilities Total Components of other comprehensive income For the year ended 31 December 2020	－ (825) (823) 606 (172,419) 44,270 (255,563) (52,652) (480) (18,212) ($545,295) ($75,141) 2020 2019 $131,923 $201,430 5,360 － 48,767 9,822 $186,050 $211,252	－ (823) (172,419) (255,563) (480)	(825) 606 44,270 (52,652) (18,212)
			($545,295)	($75,141)
		$131,923 5,360 48,767
		$186,050

(26) Components of other comprehensive income For the year ended 31 December 2020	sive income 2020
Arising during theperiod Not to be reclassified to profit or loss in subsequent periods: Remeasurements of defined benefit plans $602 Unrealized gains from equity instruments investments measured at fair value through other comprehensive income 16,808 To be reclassified to profit or loss in subsequent periods: Exchange differences resulting from translating the financial statements of a foreign operation 71,773 Share of other comprehensive income of associates accounted for using the equity method 5,137 Total of other comprehensive income $94,320 For the year ended 31 December 2019	Arising during theperiod	Reclassification adjustments during the period	Other comprehensive income, before tax	Income tax relating to components of other comprehensive income	Other comprehensive income, net of tax
	$602 16,808 71,773 5,137	－ － － －	$602 16,808 71,773 5,137	($120) － (2,870) －	$482 16,808 68,903 5,137
	$94,320	－	$94,320	($2,990)	$91,330

Arising during theperiod	Reclassification adjustments during the period	Other comprehensive income, before tax	Income tax relating to components of other comprehensive	Other comprehensive income, net of tax

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income

Not to be reclassified to profit or loss in subsequent periods: Remeasurements of defined benefit plans Unrealized gains from equity instruments investments measured at fair value through other comprehensive income To be reclassified to profit or loss in subsequent periods: Exchange differences resulting from translating the financial statements of a foreign operation Share of other comprehensive income of associates accounted for using the equity method Total of other comprehensive income	$10,398 1,071 (473,393) (851)	－ － － －	$10,398 1,071 (473,393) (851)	($2,079) － 61,277 －	$8,319 1,071 (412,116) (851)
	($462,775)	－	($462,775)	$59,198	($403,577)

(27) Income tax A. Income tax expense recognized in profit or loss Current income tax expense: Current income tax charge Deferred tax expense : Deferred tax expense (income) relating to origination and reversal of temporary differences Total income tax expense B. Income tax relating to components of other comprehensive income Deferred tax expense (income): Remeasurements of defined benefit plans Share of other comprehensive income of associates and joint ventures accounted for using the equity method Income tax relating to components of other comprehensive income	2020	2019
	$680,992 177,210	$558,785 (38,049)
	$858,202	$520,736
	2020	2019
	$120 2,870	$2,079 (61,277)
	$2,990	($59,198)

C. A reconciliation between income tax expense and income before tax follows: Accounting profit before tax from continuing operations Using related country’s statutory income tax rate Tax effect of expenses not deductible for tax purposes Surtax on undistributed retained earnings Adjustments in respect of current income tax of prior periods	at applicable tax rate was as 2020 2019 $2,932,902 $1,493,829 $983,911 $578,663 (42,163) (23,317) 1,547 12,017 (85,093) (46,627)	at applicable tax rate was as 2020 2019 $2,932,902 $1,493,829 $983,911 $578,663 (42,163) (23,317) 1,547 12,017 (85,093) (46,627)
	$2,932,902	$1,493,829
	$983,911 (42,163) 1,547 (85,093)	$578,663 (23,317) 12,017 (46,627)

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$858,202 $520,736

Total income tax expense recognized in profit or loss

• D. Deferred tax assets (liabilities) relate to the following: For the year ended 31 December 2020

Temporary differences Allowance for bad debts Allowance for losses on inventory Unrealized profit on intercompany sales Unrealized exchange gains (losses) Investments accounted for under the equity method Net defined benefit liabilities, noncurrent Others Unused tax losses Deferred tax (expense)/ income Net deferred tax assets (liabilities) Reflected in balance sheet as follows: Deferred tax assets Deferred tax liabilities	Beginning balance as of 1 Jan 2020	Deferred tax income (expense) recognized in profit or loss	Deferred tax income recognized in other comprehensive income	Deferred tax (expense) charged directly to equity	Ending balance as of 31 December 2020
	$12,156 33,947 42,671 8,570 (706,304) 1,477 346,630 39,808	$5,205 (7,352) 76,416 2,940 (291,132) (311) 44,662 (7,638)	－ － － － ($2,870) (120) － －	－ － － － － － － －	$17,361 26,595 119,087 11,510 (1,000,306) 1,046 391,292 32,170
	($221,045)	($177,210)	($2,990)	－	($401,245)
	$731,496				$827,675
	($952,541)				($1,228,920)

For the year ended 31 December 2019

Temporary differences Allowance for bad debts Allowance for losses on inventory Unrealized profit on intercompany sales Unrealized exchange (losses) Investments accounted for under	Beginning balance as of 1 Jan 2019	Deferred tax income (expense) recognized in profit or loss	Deferred tax income recognized in other comprehensive income	Deferred tax (expense) charged directly to equity	Ending balance as of 31 December 2019
	$10,993 10,702 12,656 61 (646,653)	$1,163 23,245 30,015 8,509 (120,928)	－ － － － $61,277	－ － － － －	$12,156 33,947 42,671 8,570 (706,304)

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the equity method Net defined benefit liabilities, noncurrent Others Unused tax losses Deferred tax (expense)/ income Net deferred tax assets (liabilities) Reflected in balance sheet as follows: Deferred tax assets Deferred tax liabilities	3,798 256,399 33,752	(242) 90,231 6,056	(2,079) － －	－ － －	1,477 346,630 39,808
	($318,292)	$38,049	$59,198	－	($221,045)
	$513,266				$731,496
	($831,558)				($952,541)

E. The following table contains information of the unused tax losses of the Group:

Year	Tax losses for the period 99,631 128,940 61,658 49,292 23,427 3,692 168 195 3,702	Unused tax	losses as at	Expirationyear
		31 Dec 2020	31 Dec 2019
2011 2012 2013 2014 2016 2017 2018 2019 2020		$44,108 80,416 26,386 2,427 － 3,663 149 － 3,702	$49,864 82,378 26,386 36,348 31 3,684 160 188 －	2021 2022 2023 2024 2026 2027 2028 2029 2030
		$160,851	$199,039

F. The assessment of income tax returns

The Company’s income tax returns through 2018 have been assessed and approved by the TaxAuthority.

(28) Earnings per share

Earnings per share
Basic earnings per share Profit attributable to ordinary		2020
	Amount $1,915,846	Number of shares (shares in thousands) 353,310	Earningsper share
			$5.42

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equity holders of the Company (in thousand NT$) Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Diluted earnings per share Profit attributable to ordinary equity holders of the Company (in thousand NT$) Basic earnings per share Profit attributable to ordinary equity holders of the Company (in thousand NT$) Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Diluted earnings per share Profit attributable to ordinary equity holders of the Company (in thousand NT$)	－ $1,915,846	1,284 354,594 2019
			$5.40
	Amount $957,969 － $957,969	Number of shares (shares in thousands) 353,310 1,120 354,430	Earningsper share
			$2.71
			$2.70

7. Related party transactions

• (1) Information of the related parties that had transactions with the Group during the financial reporting period is as follows:

Name of related parties

Nature of relationship of the related parties

FURUKAWA ELECTRIC (SHENZHEN) CO., LTD. Other related parties

• (2) Significant transactions with the related parties

• A. Purchases

2020

2019

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$302

Other related parties

－

The payment terms from the related party suppliers are comparable with third party suppliers.

B. Key management personnel compensation

Short-term employee benefits Post-employment benefits Total	2020	2019
	$82,044 889	$40,318 540
	$82,933	$40,858

8. Assets pledged as security

The following table lists assets of the Group pledged as security:

Assetspledged for security	Carryingamount	Carryingamount
	31 Dec 2020	31 Dec 2019
Financial assets measured at amortized cost Land Buildings Right-of-use assets Investment property Refundable deposits Total	$578,286 88,235 125,261 28,037 51,871 2,800	$349,340 88,235 108,739 － 54,246 2,800
	$874,490	$603,360

9. Commitments and contingencies

• (1) Legal claim contingency ： None

• (2) The urrecognized contractual commitments of the consolidated company are as follows ：

31 Dec 2020 31 Dec 2019 Purchase right-of-use assets $192,228 －

(3) Other

The Group guaranteed a deposit for customs in the amount of NT$2,500 thousand and NT$300 thousand from Bank of Taiwan and Taiwan Cooperative Bank, respectively.

10. Losses due to major disasters

None.

11. Significant subsequent events

AVC TECHNOLOGY(VIETNAM) COMPANY LIMITED, a subsidiary of the company, signed the contract in Vietnam on 12 Jan, 2021 planning to invest USD 7,500 thousand to obtain land-use right.

12. Financial instruments

• (1) Categories of financial instruments

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Financial assets

Financial assets
Financial assets at fair value through profit or loss: Financial assets at fair value through other comprehensive income Financial assets measured at amortized cost Cash and cash equivalents (excluding cash on hand) Financial assets measured at amortized cost Amounts receivables Subtotal Total Financial liabilities Financial liabilities at amortized cost: Short-term loans Short-term notes payable Amounts payables Corporate bonds payable (including current portion) Long-term loans (including current portion) Lease liabilities (including current portion) Total	31 Dec 2020	31 Dec 2019
	$101,449 11,100,437 578,286 4,715,361	$111,835 8,146,264 349,340 7,966,650
	$16,394,084	$16,462,254
	$16,495,533	$16,574,089
	31 Dec 2020	31 Dec 2019
	$2,452,594 － 16,691,271 2,400,000 3,784,618 1,218,800	$2,000,456 100,000 15,523,048 － 5,910,833 271,377
	$26,547,283	$23,805,714

• (2) Financial risk management objectives and policies

The Group’s principal financial risk management objective is to manage the market risk, credit risk and liquidity risk related to its operating activates. The Group identifies measures and manages the aforementioned risks based on the Group’s policy and risk appetite.

The Group has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant transactions, due approval process by the Board of Directors must be carried out based on related protocols and internal control procedures. The Group complies with its financial risk management policies at all times.

(3) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of the changes in market prices. Market prices comprise currency risk, interest rate risk and other price risk (such as equity risk).

In practice, it is rarely the case that a single risk variable will change independently from other risk variable, there is usually interdependencies between risk variables. However the sensitivity analysis disclosed below does not take into account the interdependencies between risk variables.

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A. Foreign currency risk

The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenue or expense are denominated in a different currency from the Group’s functional currency) and the Group’s net investments in foreign subsidiaries.

The Group has certain foreign currency receivables to be denominated in the same foreign currency with certain foreign currency payables, therefore forming a natural hedge. Furthermore, as net investments in foreign subsidiaries are for strategic purposes, they are not hedged by the Group.

The foreign currency sensitivity analysis of the possible change in foreign exchange rates on the Group’s profit is performed on significant monetary items denominated in foreign currencies as at the end of the reporting period. The Group’s foreign currency risk is mainly related to the volatility in the exchange rates for USD and RMB. The information of the sensitivity analysis is as follows:

• (a) When NTD strengthens/weakens against USD by 1%, the profit for 2020 and 2019 is decreased/increased by NT$19,260 thousand and NT$28,404 thousand, respectively.

• (b) When NTD strengthens/weakens against RMB by 1%, the profit for 2020 and 2019 is increased/decreased by NT$32,729 thousand and decreased/increased by NT$20,866 thousand, respectively.

B. Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to bank borrowings with fixed interest rates and variable interest rates.

The Group manages its interest rate risk by having a balanced portfolio of fixed and variable loans and borrowings and entering into interest rate swaps. Hedge accounting does not apply to these swaps as they do not qualify for it.

The interest rate sensitivity analysis is performed on items exposed to interest rate risk as at the end of the reporting period. A change of 10 basis points of interest rate in a reporting period could cause the profit for 2020 and 2019 to decrease/increase by NT$3,221 thousand and NT$652 thousand, respectively.

C. Equity price risk

The fair value of the Group’s unlisted equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Group’s unlisted

194

equity securities are classified as financial assets at fair value through other comprehensive income.

The equity price sensitivity analysis is based on fair value changes as at the end of the reporting period. For the years ended 31 December 2020 and 2019, a change of 5% in the price classified as equity instruments investments measured at fair value through other comprehensive income could cause the other comprehensive income to decrease/increase by NT$5,072 thousand and NT$5,592 thousand, respectively.

Please refer to Note 12.8 for sensitivity analysis information of other equity instruments or derivatives that are linked to such equity instruments whose fair value measurement is categorized under Level 3.

(4) Credit risk management

Credit risk is the risk that a counterparty will not meet its obligations under a contract, leading to a financial loss. The Group is exposed to credit risk from operating activities (primarily for accounts receivables and notes receivables) and from its financing activities, including bank deposits and other financial instruments.

Credit risk is managed by each business unit subject to the Group’s established policy, procedures and control relating to credit risk management. Credit limits are established for all counter parties based on their financial position, rating from credit rating agencies, historical experience, prevailing economic condition and the Group’s internal rating criteria etc. Certain counter parties’ credit risk will also be managed by taking credit enhancing procedures, such as requesting for prepayment or insurance.

As of 31 December 2020 and 2019, amounts receivables from top ten customers represent 88.19% and 88.70% of the total accounts receivables of the Group, respectively. The credit concentration risk of other accounts receivables is insignificant.

Credit risk from balances with banks, fixed income securities and other financial instruments is managed by the Group’s treasury in accordance with the Group’s policy. The Group only transacts with counterparties approved by the internal control procedures, which are banks and financial institutions, companies and government entities with good credit rating. Consequently, there is no significant credit risk for these counter parties.

(5) Liquidity risk management

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of cash and cash equivalents and bank borrowings. The table below summarizes the maturity profile of the Group’s financial liabilities based on the contractual undiscounted payments and

195

contractual maturity. The payment amount includes the contractual interest. The undiscounted payment relating to borrowings with variable interest rates is extrapolated based on the estimated interest rate yield curve as of the end of the reporting period.

Non-derivative financial liabilities

As of 31 December 2020 Loans Corporate bonds payable Amounts payables Lease liabilities As of 31 December, 2019 Loans Short-term notes payable Amounts payables Lease liabilities	< 1year	2 to 3years	4 to 5years	> 5years	Total
	$3,768,323 $5,360 $16,679,469 $170,345 $4,174,884 $100,000 $15,510,287 $131,016	$1,982,061 － － $339,528 $3,629,166 － － $133,289	$493,270 $2,400,000 － $323,036 $120,000 － － $2,980	－ － － $385,891 － － － $4,092	$6,243,654 $2,405,360 $16,679,469 $1,218,800 $7,924,050 $100,000 $15,510,287 $271,377

(6) Reconciliation of liabilities arising from financing activities Reconciliation of liabilities for 2020:

As at 1 Jan 2020 Cash flows Non-cash changes As at 31 Dec 2020	Short-term borrowings	Short-term notespayable	Corporate bondspayable	Long-term borrowings	Lease liabilities
	$2,000,456 542,283 (90,145)	$100,000 (100,000) －	－ $2,400,000 －	$5,910,833 (2,126,215) －	$271,377 (139,977) 1,087,400
	$2,452,594	－	$2,400,000	$3,784,618	$1,218,800

As at 1 Jan 2020 Cash flows Non-cash changes As at 31 Dec 2020	Guarantee deposits	Total liabilities from financing activities $8,301,677 566,457 997,255 $9,865,389
	$19,011 (9,634) －
	$9,377

Reconciliation of liabilities for 2019:

Total liabilities Short-term Short-term Lease[Guarantee ] from financing borrowings notes payable[ Long-term ] borrowings liabilities deposits activities

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As at 1 Jan 2019 Cash flows Non-cash changes As at 31 Dec 2019	$1,610,194 425,967 (35,705)	－ $100,000 －	$5,170,173 740,660 －	$19 (147,159) 418,517	$17,076 $6,797,462 1,935 1,121,403 － 382,812
	$2,000,456	$100,000	$5,910,833	$271,377	$19,011 $8,301,677

• (7) Fair values of financial instruments

• A. The methods and assumptions applied in determining the fair value of financial instruments:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used by the Group to measure or disclose the fair values of financial assets and financial liabilities:

• (a) The carrying amount of cash and cash equivalents, accounts receivables, accounts payable and other current liabilities approximate their fair value due to their short maturities.

• (b) Fair value of equity instruments without market quotations (including private placement of listed equity securities, unquoted public company and private company equity securities) are estimated using the market method valuation techniques based on parameters such as prices based on market transactions of equity instruments of identical or comparable entities and other relevant information (for example, inputs such as discount for lack of marketability, P/E ratio of similar entities and Price-Book ratio of similar entities).

• B. Fair value of financial instruments measured at amortized cost

The carrying amount of financial assets and financial liabilities measured at amortized cost approximate their fair value due to their short maturities.

• C. Fair value measurement hierarchy for financial instruments

Please refer to Note 12.8 for fair value measurement hierarchy for financial instruments of the Group.

• (8) Fair value measurement hierarchy

• A. Fair value measurement hierarchy

All asset and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole. Level 1, 2 and 3 inputs are described as follows:

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities that the entity can access at the measurement date

197

• 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

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorization at the end of each reporting period.

• B. Fair value measurement hierarchy of the Group’s assets and liabilities

The Group does not have assets that are measured at fair value on a non-recurring basis. Fair value measurement hierarchy of the Group’s assets and liabilities measured at fair value on a recurring basis is as follows:

As at 31 December 2020 Financial assets: Financial assets at fair value through other comprehensive income Equity instrument measured at fair value through other comprehensive income As at 31 December 2019 Financial assets: Financial assets at fair value through other comprehensive income Equity instrument measured at fair value through other comprehensive income	Level 1	Level 2	Level 3	Total
	－ Level 1	－ Level 2	$101,449 Level 3	$101,449 Total
	－	－	$111,835	$111,835

• C. Reconciliation for fair value measurements in Level 3 is as follows:

As at 1 Jan 2020 Unrealized (losses) from equity instruments investments measured at fair value through other comprehensive income Disposals Exchange differences As at 31 Dec 2020	Financial assets at fair value through other comprehensive income
	$111,835 16,808 (22,220) (4,974)
	$101,449

198

As at 1 Jan 2019 Unrealized (losses) from equity instruments investments measured at fair value through other comprehensive income Exchange differences As at 31 Dec 2019	Financial assets at fair value through other comprehensive income
	$112,069 1,071 (1,305)
	$111,835

• D. Fair value measurement hierarchy of the Group’s assets and liabilities not measured at fair value but for which the fair value is disclosed:

The fair value of long-term loans is determined using discounted cash flow model, based on the Company’s current incremental borrowing rates of similar loans.

As at 31 December 2020 Long-term borrowings (including current portion with maturity less than 1 year) As at 31 December 2019 Long-term borrowings (including current portion with maturity less than 1 year)	Level 1	Level 2	Level 3	Carrying amount
	－ －	$3,784,618 $5,910,833	－ －	$3,784,618 $5,910,833

• (9) Significant assets and liabilities denominated in foreign currencies

Information regarding the significant assets and liabilities denominated in foreign currencies is listed below:

below:
Financial assets		31 December 2020
	Foreign currencies (in thousands)	Foreign exchange rate	NT$ (in thousands)
	$357,475 $1,621,133 $289,848 $2,368,871	29.4800 4.3770 29.4800 4.3770 31 December 2019	$10,180,897 $7,095,697 $8,254,859 $10,368,550
Monetary items: USD RMB Financial liabilities
Monetary items: USD RMB Financial assets
	Foreign currencies (in thousands)	Foreign exchange rate	NT$ (in thousands)

199

Monetary items:
USD	$381,669	29.9800	$11,442,424
RMB	$1,294,253	4.3050	$5,571,758
Financial liabilities
Monetary items:
USD	$286,927	29.9800	$8,602,062
RMB	$1,778,946	4.3050	$7,658,363

The Group’s functional currency are various, and hence is not able to disclose the information of exchange gains and losses by each significant assets and liabilities denominated in foreign currencies. The foreign exchange (losses) gains were (NT$172,419) thousand and NT$44,270 thousand for the years ended December 31, 2020 and 2019, respectively.

(10) Capital management

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust dividend payment to shareholders, returning capital to shareholders or issuing new shares.

13. Other disclosure

• (1) Information at significant transactions and on investees

• A. Financing provided to others for the year ended 31 December 2020: Please refer to Attachment 1.

• B. Endorsement/Guarantee provided to others for the year ended 31 December 2020: Please refer to Attachment 2.

• C. Securities held as of 31 December 2020: Please refer to Attachment 3.

• D. Individual securities acquired or disposed of with accumulated amount exceeding the lowers of NT$300 million or 20% of the capital stock for the year ended 31 December 2020: None.

• E. Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock for the year ended 31 December 2020: None.

• F. Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock for the year ended 31 December 2020: None.

• G. Related party transactions for purchases and sales amounts exceeding the lower of NT$100 million or 20% of the capital stock for the year ended 31 December 2020: Please refer to Attachment 4.

• H. Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of capital stock as of 31 December 2020: Please refer to Attachment 5.

• I. Direct or indirect significant influence or control over the investees for the year ended 31 December 2020 (excluding investments in China): Please refer to Attachment 6.

200

• J. Financial instruments and derivative transactions: None

• K. Others: Significant inter-company transactions during the reporting periods: Please refer to Attachment 8.

• (2) Information on investments in mainland China

• A. Information on investments in mainland China ： Please refer to Attachment 7.

• B. Significant transactions with the investee companies in China directly or indirectly through the third area and the relevant prices, payment terms and unrealized gains and losses:

  • (a)Purchase, ending balance of related payables and their weightings: Please refer to Attachment

• (b)Sales, the ending balance of related receivables and their weightings: Please refer to Attachment 4.

• (c)Ending balance of endorsements/guarantees or collateral provided and the purposes: Please refer to Attachment 2.

• (d)Transactions that have significant impact on the profit or loss of current period or the financial position: None.

• .

• (3) Information of major shareholders: Please refer to Attachment 9

14. Segment information

For management purposes, the Group is organized into business units based on their products and services and has two reportable operating segments as follows:

• (1) General management segment:

The general management segment is responsible for the Group’s operation planning and owns manufacturing, R&D and sales functions.

• (2) Overseas segment:

The overseas segment owns manufacturing and sales functions.

No operating segments have been aggregated to form the above reportable operating segments.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment.

Segment performance is evaluated based on operating profit or loss and is measured based on accounting policies consistent with those in the consolidated financial statements.

However, finance costs, financial benefits and income taxes are managed on a group basis and are not allocated to operating segments.

201

Transfer prices between operating segment are on an arm’s length basis in a manner similar to transactions with third parties.

For the year ended 31 December 2020

Revenue External customer Inter-segment (Note) Total revenue Segment profit	Overseas	General management	Adjustment and elimination	Total
	$13,705,037 33,104,576	$25,960,497 23,720,768	－ ($56,825,344)	$39,665,534 －
	$46,809,613	$49,681,265	($56,825,344)	$39,665,534
	$1,961,273	$959,171	$12,458	$2,932,902

(Note): Inter-segment revenues were eliminated on consolidation.

For the year ended 31 December 2019

Revenue External customer Inter-segment (Note) Total revenue Segment profit	Overseas	General management	Adjustment and elimination	Total
	$11,427,090 30,444,259	$25,107,355 32,061,651	－ ($62,505,910)	$36,534,445 －
	$41,871,349	$57,169,006	($62,505,910)	$36,534,445
	$1,076,838	$408,153	$8,838	$1,493,829

(Note): Inter-segment revenues were eliminated on consolidation

As of 31 December 2020 and 2019, the assets of reportable segment information were as follows:

31 December 2020 Assets 31 December 2019 Assets	Overseas	General management	Adjustment and elimination	Total
	$35,971,889	$23,137,884	($18,433,537)	$40,676,236
	$31,737,437	$21,888,963	($18,067,673)	$35,558,727

Geographic information

A. External customer revenue ：

Area Asia America Europe Others Total	2020	2019
	$34,551,891 2,649,965 2,404,460 59,218	$32,153,672 1,852,861 2,447,973 79,939
	$39,665,534	$36,534,445

Revenue is categorized based on the country in which the customer is located.

202

B. Non-current assets ：

Area Asia America Europe Others Total	2020	2019
	$10,693,968 10,029 5 134,607	$8,647,224 5,783 5 154,637
	$10,838,609	$8,807,649

Major customers

Individual customers accounting for at least 10% of net sales for the years ended December 31, 2020 and 2019 were as follows:

Customer	2020	2019
Customer A Customer B	24.76％ 16.92％	31.38％ 11.03％

203

ASIA VITAL COMPONENTS CO. , LTD AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan Dollars unless Otherwise Specified)

FINANCING PROVIDED TO OTHERS

TABLE 1

TABLE 1
No (Note 1)	Financing Company	Counter-party	Financial Statement Account (Note 2)	Related Party	Maximum Balance for the Period (Note 3)	Ending Balance (Note 9)	Amount Actually Drawn	Interest Rate	Nature of Financing (Note 4)	Transaction Amounts (Note 5)	Reason for Financing (Note 6)	Allowance for Doubtful Accounts	Collateral		Financing Limits for Each Borrower	Financing Company's Total Financing Amount Limits	Note
													Item	Value
１ 2 3 4 5 6	ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD. AVC INTERNATIONAL (SAMOA) CO., LTD. WUCHIDA INTERNATIONAL CO.,LTD. D-MAX TECHNOLOGY CO., LTD. FOSITEK CORP. ASIA VITAL COMPONENTS (CHINA) CO., LTD.	AVC PRECISION, CO., LTD. AVC PRECISION, CO., LTD. (JIASHAN)D-MAX ELECTRONICS CO.,LTD. WUCHIDA INTERNATIONAL CO., LTD. FIRST DOME CORP TELECOM.,LTD. AVC PRECISION, CO., LTD.	Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables	Yes Yes Yes Yes Yes Yes	$372,047 (CNY85,000 thousand) $284,800 (USD10,000 thousand) $56,960 (USD2,000 thousand) $71,200 (USD2,500 thousand) $150,000 $218,851 (CNY50,000 thousand)	$372,047 (CNY85,000 thousand) $284,800 (USD10,000 thousand) $56,960 (USD2,000 thousand) $71,200 (USD2,500 thousand) $150,000 $218,851 (CNY50,000 thousand)	－ $142,400 (USD5,000 thousand) － $71,200 (USD2,500 thousand) $142,400 (USD5,000 thousand) $218,851 (CNY50,000 thousand)	3.00% 3.00% 2.00% 2.00% 3.00% 3.00%	２ ２ ２ ２ ２ ２	－ － － － － －	Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital	－ － － － － －	－ － － － － －	－ － － － － －	$2,115,319 $2,115,319 $2,115,319 $158,147 $354,584 $2,115,319	$4,230,639 $4,230,639 $4,230,639 $158,147 $354,584 $4,230,639	(Note 7) (Note 7) (Note 7) (Note 8) (Note 9) (Note 7)

Note 1 ： Companies are coded as follows ：

• (1) ASIA VITAL COMPONENTS Co., LTD. is coded "0".

• (2) The investees are coded from "1" in the order presented in the table above.

Note 2 ： Receivables from affiliates and related parties, shareholder transactions, prepayments and temporary payments etc. are required to be disclosed in this field if they are financings provided to others.

Note 3 ： The maximum balance of financing provided to others for the year ended December 31, 2020.

Note 4 ： Nature of Financing are coded as follows ：

• (1) Business transaction is coded "1".

• (2) Short-term financing is coded "2".

Note 5 ： If nature of financing is business transaction, the amount of transaction should be disclosed.

Note 6 ： With respect to short-term financing, the reasons of financing and the purpose of use by the counter-party shall be specified, such as loan repayment, equipment acquisition or operating capital.

Note 7 ： For foreign companies of which the Company holds, directly and indirectly, 100% of the voting shares, the financing provided to any single entity shall not exceed 20% of the net worth. Total financing shall not exceed 40% of the net worth.

• Note 8： D-MAX TECHNOLOGY CO., LTD. : The financing provided to any single entity shall not exceed 40% of the net worth. Total financing shall not exceed 40% of the net worth.

• Note 9： FOSITEK CORP. : The financing provided to any single entity shall not exceed 40% of the net worth. Total financing shall not exceed 40% of the net worth.

Note 10 ： If public companies, pursuant to Paragraph 1, Article 14 of Regulations Governing Loaning of Funds and Making of Endorsements / Guarantees by Public Companies, resolve each individual lending at the board meetings, the amounts resolved (before any drawing) shall be the publicly-announced balance to disclose the risk they assume; provided however,

• if any repayment is made subsequently, the outstanding balance after such repayment shall be disclosed to reflect the risk adjusted. If public companies, pursuant to Paragraph 2, Article 14 of the same Regulations, authorize the chairperson by board resolution, within a certain monetary limit and a period not to exceed one year,

• to give loans in instalments or to make a revolving credit line available, the amount resolved shall be the publicly-announced balance. Although repayment may be made subsequently, as drawings are likely to happen, the amount of financing resolved by the board shall be recorded as the publicly-announced balance.

Note 11 ： All the above transactions were eliminated on consolidation.

204

ASIA VITAL COMPONENTS CO. , LTD AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan Dollars unless Otherwise Specified)

ENDORSEMENT/GUARANTEE PROVIDED TO OTHERS

TABLE 2

TABLE 2
(Note 1) No	Endorsement/Guarantee Provider	Guaranteed Party		Limits on Endorsement/Guarantee Amount Provided to Each Guaranteed Party (Note 3&4)	Maximum Balance for the Period (Note 5)	Ending Balance (Note 6)	Amount Actually Drawn (Note 7)	Amount of Endorsement/ Guarantee secured by Properties	Ratio of Accumulated Endorsement/Guarantee to Net Equity per Latest Financial Statements	Maximum Endorsement/ Guarantee Amount Allowed (Note 3&4)	Endorsement provided by parent company to subsidiaries (Note 8)	Endorsement provided by subsidiaries to parent company (Note 8)	Endorsement provided to subsidiaries in China (Note 8)	Note
		Name	Nature of Relationship (Note 2)
０ ０ ０ ０ ０ ０ ０ ０	ASIA VITAL COMPONENTS CO.,LTD ASIA VITAL COMPONENTS CO.,LTD ASIA VITAL COMPONENTS CO.,LTD ASIA VITAL COMPONENTS CO.,LTD ASIA VITAL COMPONENTS CO.,LTD ASIA VITAL COMPONENTS CO.,LTD ASIA VITAL COMPONENTS CO.,LTD ASIA VITAL COMPONENTS CO.,LTD	D-MAX TECHNOLOGY CO., LTD. MACE TECH CORP. AVC INTERNATIONAL CO., LTD.-SAMOA MERIT TRADING CORPORATION AVC INTERNATIONAL (SAMOA) CO., LTD. AVC PRECISION, CO., LTD. AVC OPTICS (WUHAN) CORP. ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD.	2 2 2 2 2 2 2 2	$2,115,319 $10,576,598 $10,576,598 $10,576,598 $10,576,598 $10,576,598 $10,576,598 $10,576,598	$40,000 $142,400 (USD5,000 thousand) $1,033,824 (USD36,300 thousand) $512,640 (USD18,000 thousand) $1,281,600 (USD45,000 thousand) $591,192 (USD10,000 thousand) (CNY70,000 thousand) $854,400 (USD30,000 thousand) $1,158,691 (USD33,000 thousand) (CNY50,000 thousand)	－ － － $512,640 (USD18,000 thousand) $1,139,200 (USD40,000 thousand) $591,192 (USD10,000 thousand) (CNY70,000 thousand) $712,000 (USD25,000 thousand) $1,158,691 (USD33,000 thousand) (CNY50,000 thousand)	－ － － － － $284,800 (USD10,000 thousand) $569,600 (USD20,000 thousand) $655,040 (USD23,000 thousand)	－ － － － － － － －	－ － － 4.85% 10.77% 5.59% 6.73% 10.96%	$15,864,898 $15,864,898 $15,864,898 $15,864,898 $15,864,898 $15,864,898 $15,864,898 $15,864,898	Y Y Y Y Y Y Y Y	N N N N N N N N	N N N N N Y Y Y	(Note 3) (Note 3) (Note 3) (Note 3) (Note 3) (Note 3) (Note 3) (Note 3)

Note 1 ： Companies are coded as follows:

• (1) ASIA VITAL COMPONENTS Co., LTD. is coded "0".

• (2) The investees are coded from "1" in the order presented in the table above.

Note 2 ： The relationships between endorsement/guarantee providers and guaranteed parties are categorized into the following types :

• (1) A company that has a business relationship with AVC.

• (2) A subsidiary in which AVC holds directly over 50% of common equity interest.

• (3) An investee in which AVC and its subsidiaries jointly hold over 50% of common equity interest.

• (4) A parent company that holds directly over 90% or indirectly over 90% through a subsidiary of the company's common equity interest.

• (5) A company that has provided guarantees to AVC, and vice versa, due to contractual requirements.

• (6) A company in which AVC jointly invests with other shareholders, and for which AVC has provided endorsement/guarantee in proportion to its shareholding percentage.

• (7) Companies in the same industry provide among themselves joint and several security for a perfomance guarantee of a sales contract for pre-construction homes pursunat to the Consumer Protection Act for each other.

• Note 3 ： ASIA VITAL COMPONENTS CO.,LTD. ： The aggregate amount of endorsements/guarantees for any single entity shall not exceed 20% of the Company's net worth, and the aggregate amount of endorsements/guarantees for any single overseas associated company shall not exceed 100% of the Company's equity net worth. The overall amount of guarantees/endorsements shall not exceed 150% of the Company's equity net worth.

• Note 4 ： ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD., ASIA VITAL COMPONENTS (CHINA) CO., LTD., ASIA VITAL COMPONENTS (CHENGDU) CO., LTD., AVC OPTICS (WUHAN) CORP., ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD.,AVC PRECISION, CO., LTD. : The amount of guarantees/endorsements provided to any single entity shall not exceed USD200 million dollars.

Note 5 : Maximum balance of endorsements/guarantees provided to others for current period.

Note 6 : The maximum balance for the period and ending balance represent the amounts approved by the Board Directors.

Note 7 : The company which endorsements/guarantees by AVC should disclosed the amount actually drawn within ending balance.

Note 8 : Public company provided endorsements/guarantees to subsidiary or subsidiary provided endorsements/guarantees to public company or provided endorsements/guarantees which located in CHINA area coded "Y".

• ( Continued )

205

ASIA VITAL COMPONENTS CO. , LTD AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan Dollars unless Otherwise Specified)

ENDORSEMENT/GUARANTEE PROVIDED TO OTHERS

(Note 1) No	Endorsement/Guarantee Provider	Guaranteed Party	Guaranteed Party	Limits on Endorsement/Guarantee Amount Provided to Each Guaranteed Party (Note 3&4)	Maximum Balance for the Period (Note 5)	Ending Balance (Note 6)	Amount Actually Drawn (Note 7)	Amount of Endorsement/ Guarantee secured by Properties	Ratio of Accumulated Endorsement/Guarantee to Net Equity per Latest Financial Statements	Maximum Endorsement/ Guarantee Amount Allowed (Note 3&4)	Endorsement provided by parent company to subsidiaries (Note 8)	Endorsement provided by subsidiaries to parent company (Note 8)	Endorsement provided to subsidiaries in China (Note 8)	Note
		Name	Nature of Relationship (Note 2)
１ １ １ 1 １ 1 1 ２ ２	ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. ASIA VITAL COMPONENTS (CHINA) CO., LTD. AVC PRECISION, CO., LTD. ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. ASIA VITAL COMPONENTS (CHINA) CO., LTD. ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD. ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. ASIA VITAL COMPONENTS (CHINA) CO., LTD. ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD. AVC PRECISION, CO., LTD. ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. ASIA VITAL COMPONENTS (CHINA) CO., LTD. ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. ASIA VITAL COMPONENTS (CHENGDU) CO., LTD. ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. ASIA VITAL COMPONENTS (CHINA) CO., LTD. ASIA VITAL COMPONENTS (CHENGDU) CO., LTD. AVC OPTICS (WUHAN) CORP. ASIA VITAL COMPONENTS (CHINA) CO., LTD.	ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD. AVC PRECISION, CO., LTD. ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD. AVC PRECISION, CO., LTD. ASIA VITAL COMPONENTS (CHINA) CO., LTD. ASIA VITAL COMPONENTS (CHINA) CO., LTD. ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. ASIA VITAL COMPONENTS (CHINA) CO., LTD. AVC OPTICS (WUHAN) CORP. ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. ASIA VITAL COMPONENTS (CHENGDU) CO., LTD.	4 4 4 4 4 4 4 4	$5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand)	$306,392 (CNY70,000 thousand) $350,162 (CNY80,000 thousand) $919,176 (CNY210,000 thousand) $218,851 (CNY50,000 thousand) $656,554 (CNY150,000 thousand) $787,865 (CNY180,000 thousand) $656,554 (CNY150,000 thousand) $525,243 (CNY120,000 thousand) $350,162 (CNY80,000 thousand)	$306,392 (CNY70,000 thousand) $350,162 (CNY80,000 thousand) $437,703 (CNY100,000 thousand) $218,851 (CNY50,000 thousand) $656,554 (CNY150,000 thousand) $787,865 (CNY180,000 thousand) $656,554 (CNY150,000 thousand) $525,243 (CNY120,000 thousand) $350,162 (CNY80,000 thousand)	$105,598 (CNY24,125 thousand) $123,900 (CNY28,307 thousand) $221,944 (CNY50,707 thousand) $196,966 (CNY45,000 thousand) $330,689 (CNY75,551 thousand) $437,587 (CNY99,974 thousand) $8,659 (CNY1,978 thousand) $319,649 (CNY73.029 thousand) $213,346 (CNY48,742 thousand)	－ － $328,277 (CNY75,000 thousand) － － － － － －	3.87% 4.05% 4.63% 7.77% 9.24% 18.77% 23.31% 6.24% 8.17%	$5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand)	N N N N N N N N N	N N N N N N N N N	Y Y Y Y Y Y Y Y Y	(Note 4) (Note 4) (Note 4) (Note 4) (Note 4) (Note 4) (Note 4) (Note 4) (Note 4)

Note 1 ： Companies are coded as follows:

• (1) ASIA VITAL COMPONENTS Co., LTD. is coded "0".

• (2) The investees are coded from "1" in the order presented in the table above.

Note 2 ： The relationships between endorsement/guarantee providers and guaranteed parties are categorized into the following types :

• (1) A company that has a business relationship with AVC.

• (2) A subsidiary in which AVC holds directly over 50% of common equity interest.

• (3) An investee in which AVC and its subsidiaries jointly hold over 50% of common equity interest.

• (4) A parent company that holds directly over 90% or indirectly over 90% through a subsidiary of the company's common equity interest.

• (5) A company that has provided guarantees to AVC, and vice versa, due to contractual requirements.

• (6) A company in which AVC jointly invests with other shareholders, and for which AVC has provided endorsement/guarantee in proportion to its shareholding percentage.

• (7) Companies in the same industry provide among themselves joint and several security for a perfomance guarantee of a sales contract for pre-construction homes pursunat to the Consumer Protection Act for each other.

Note 3 ： ASIA VITAL COMPONENTS CO.,LTD. ： The aggregate amount of endorsements/guarantees for any single entity shall not exceed 20% of the Company's net worth, and the aggregate amount of endorsements/guarantees for any single overseas associated company shall not exceed 100% of the Company's equity net worth.

The overall amount of guarantees/endorsements shall not exceed 150% of the Company's equity net worth.

• Note 4 ： ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD., ASIA VITAL COMPONENTS (CHINA) CO., LTD., ASIA VITAL COMPONENTS (CHENGDU) CO., LTD., AVC OPTICS (WUHAN) CORP., LTD., ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD., AVC PRECISION, CO., LTD. :

The amount of guarantees/endorsements provided to any single entity shall not exceed USD200 million dollars.

Note 5 : Maximum balance of endorsements/guarantees provided to others for current period.

Note 6 : The maximum balance for the period and ending balance represent the amounts approved by the Board Directors.

Note 7 : The company which endorsements/guarantees by AVC should disclosed the amount actually drawn within ending balance.

Note 8 : Public company provided endorsements/guarantees to subsidiary or subsidiary provided endorsements/guarantees to public company or provided endorsements/guarantees which located in CHINA area coded "Y".

206

ASIA VITAL COMPONENTS CO. , LTD AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan Dollars unless Otherwise Specified)

MARKETABLE SECURITIES HELD (EXCLUDING INVESTMENTS IN SUBSIDIARIES, ASSOCIATES AND JOINTLY CONTROLLED ENTITIES)

TABLE 3

TABLE 3
Name of Held Company	Type and name of Marketable Securities	Relationship with the Company	Financial Statement Account	December 31, 2019
				Shares (In Thousands)	Carrying Amount	Percentage of Ownership	Market Value
ASIA VITAL COMPONENTS CO.,LTD MERIT TRADING CORPORATION MACE TECH CORP. ASIA VITAL COMPONENTS (CHINA) CO., LTD.	SENTELIC CORPORATION RTR-TECH TECHNOLOGY CO., LTD. APTOS TECHNOLOGY INC. UBIQCONN TECHNOLOGY, INC. FURUKAWA ELECTRIC (SHENZHEN) CO., LTD. SHENG-SHING CORP. Not listed (OTC) stocks SHENZHEN TIMELINK TECHNOLOGY CO., LTD. Not listed (OTC) stocks Not listed (OTC) stocks Not listed (OTC) stocks	－ － － － Other related parties － －	Financial assets measured at fair value through other comprehensive income, noncurrent Financial assets measured at fair value through other comprehensive income, noncurrent Financial assets measured at fair value through other comprehensive income, noncurrent Financial assets measured at fair value through other comprehensive income, noncurrent Financial assets measured at fair value through other comprehensive income, noncurrent Financial assets measured at fair value through other comprehensive income, noncurrent Financial assets measured at fair value through other comprehensive income, noncurrent	509 14,000 1,124 2,500 (Note) 703 2,273	$2,423 － － － $89,415 $9,611 －	1.69% 19.42% 1.27% 6.10% 9.06% 14.06% 10.80%	$2,423 － － － $89,415 $9,611 －

Note ： None amount of shares is issued publicly by Limited Company.

207

ASIA VITAL COMPONENTS CO. , LTD AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan Dollars unless Otherwise Specified)

RELATED PARTY TRANSACTIONS WITH PURCHASE OR SALES AMOUNT OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

TABLE 4

TABLE 4
Company Name	Related Party	Nature of Relationships	Transaction Details				Abnormal Transaction		Notes/Accounts Payable or Receivable		Note
			Purchases/ Sales	Amount	Percentage to Total	Collection/ Payment Terms	Unit Price	Collection/ Payment Terms	Ending Balance	Percentage to Total
ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD	AVC INTERNATIONAL (SAMOA) CO., LTD. MERIT TRADING CORPORATION TONBRIDGE INVESTMENTS LTD. ASIA VITAL COMPONENTS (CHENGDU) CO., LTD. ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. WUCHIDA INTERNATIONAL CO., LTD. JADS CORPORATION (HK) LTD. AVC AMERICA, INC.	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary	Purchases Purchases Purchases Purchases Purchases Purchases Purchases Sales	($12,050,909) ($6,521,064) ($1,519,133) ($899,500) ($653,244) ($830,393) ($568,843) $750,550	(49%) (27%) (6%) (4%) (3%) (3%) (2%) 3%	Net 60 days from the end of the month of when invoice is issued by T/T Net 60 days from the end of the month of when invoice is issued by T/T Net 90 days from the end of the month of when invoice is issued by T/T Net 90 days from the end of the month of when invoice is issued by T/T Net 75 days from the end of the month of when invoice is issued by T/T Net 60 days from the end of the month of when invoice is issued by T/T Net 90 days from the end of the month of when invoice is issued by T/T Net 30 days from the end of the month of when invoice is issued by T/T	N/A N/A N/A N/A N/A N/A N/A N/A	N/A N/A N/A N/A N/A N/A N/A N/A	($3,026,160) ($2,984,589) ($429,846) ($356,992) ($265,892) ($212,525) ($310,209) $119,853	(37%) (37%) (5%) (4%) (3%) (3%) (4%) 5%

( Continued )

208

ASIA VITAL COMPONENTS CO. , LTD AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan Dollars unless Otherwise Specified)

RELATED PARTY TRANSACTIONS WITH PURCHASE OR SALES AMOUNT OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

TABLE 4-1

TABLE 4-1
Company Name	Related Party	Nature of Relationships	Transaction Details				Abnormal Transaction		Notes/Accounts Payable or Receivable		Note
			Purchases/ Sales	Amount	Percentage to Total	Collection/ Payment Terms	Unit Price	Collection/ Payment Terms	Ending Balance	Percentage to Total
AVC INTERNATIONAL (SAMOA) CO., LTD. MERIT TRADING CORPORATION TONBRIDGE INVESTMENTS LTD. ASIA VITAL COMPONENTS (CHENGDU) CO., LTD. ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. WUCHIDA INTERNATIONAL CO., LTD. JADS CORPORATION (HK) LTD. AVC AMERICA, INC.	ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD	The company's ultimate parent The company's ultimate parent The company's ultimate parent The company's ultimate parent The company's ultimate parent The company's ultimate parent The company's ultimate parent The company's ultimate parent	Sales Sales Sales Sales Sales Sales Sales Purchases	$12,050,909 $6,521,064 $1,519,133 $899,500 $653,244 $830,393 $568,843 ($750,550)	93% 88% 75% 45% 8% 88% 95% (57%)	Net 60 days from the end of the month of when invoice is issued by T/T Net 60 days from the end of the month of when invoice is issued by T/T Net 90 days from the end of the month of when invoice is issued by T/T Net 30 days from the end of the month of when invoice is issued by T/T Net 60 days from the end of the month of when invoice is issued by T/T Net 90 days from the end of the month of when invoice is issued by T/T Net 75 days from the end of the month of when invoice is issued by T/T Net 90 days from the end of the month of when invoice is issued by T/T	N/A N/A N/A N/A N/A N/A N/A N/A	N/A N/A N/A N/A N/A N/A N/A N/A	$3,026,160 $2,984,589 $429,846 $356,992 $265,892 $212,525 $310,209 ($119,853)	88% 91% 63% 39% 8% 87% 92% (54%)

Note ： All the above transactions were eliminated on consolidation.

209

ASIA VITAL COMPONENTS CO. , LTD AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan Dollars unless Otherwise Specified)

RECEIVABLES FROM RELATED PARTIES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

TABLE 5

TABLE 5
Company Name	Related Party	Nature of Relationships	(Note 3) Ending Balance	Turnover Ratio (times)	Overdue		Amounts Received in Subsequent Periods	Allowance for Doubtful Accounts
					Amount	Action Taken
AVC INTERNATIONAL (SAMOA) CO., LTD. MERIT TRADING CORPORATION ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. ASIA VITAL COMPONENTS (CHENGDU) CO., LTD. TONBRIDGE INVESTMENTS LTD. WUCHIDA INTERNATIONAL CO., LTD. JADS CORPORATION (HK) LTD.	ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD	The company's ultimate parent The company's ultimate parent The company's ultimate parent The company's ultimate parent The company's ultimate parent The company's ultimate parent The company's ultimate parent	$3,026,160 $2,984,589 $265,892 $356,992 $429,846 $212,525 $310,209	3.33 2.56 2.11 2.60 4.17 4.89 2.61	－ － － － － － －	(Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1)	－ － － － － － －	－ － － － － － －

Note 1 ： The preparation of consolidated statements does not require recording the allowance for doubtful accounts.

Note 2 ： The Company balances its accounts regularly and writes off receivables against payables.

Note 3 ： All the above transactions were eliminated on consolidation.

210

ASIA VITAL COMPONENTS CO. , LTD AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan Dollars unless Otherwise Specified)

NAMES, LOCATIONS AND RELATED INFORMATION OF INVESTEE COMPANIES (Not including investment in Mainland China)

TABLE 6

TABLE 6
Investor Company	Investee Company	Address	Main businesses and products	Initial Investment		Investment as of December 31, 2019			Net income (loss) of investee company	Investment income (loss) recognized	Note
				Ending balance	Beginning balance	Number of shares (thousand)	Percentage of ownership (%)	Carrying amount
ASIA VITAL COMPONENTS CO., LTD	AVC INTERNATIONAL CO., LTD.－B.V.I. CHIHUNG INTERNATIONAL LTD. MERIT TRADING CORPORATION RAYNEY INTERNATIONAL LTD. AVC AMERICA, INC. AVC INTERNATIONAL (SAMOA) CO., LTD. JADS CORPORATION (HK) LTD. ZIMAG TECHNOLOGY CO., INC. AVC INTERNATIONAL CO., LTD.－SAMOA FOSITEK CORP. HUNG YE INVESTMENT CO., LTD. D-MAX TECHNOLOGY CO., LTD. AVC EUROPE TECHNOLOGY GMBH AVC TECHNOLOGY (VIETNAM) COMPANY LI	Vistra Corporate Services Centre, Wickhams CayⅡRoad Town Tortola VG1110 Virgin Islands, British Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road, Apia, Samoa Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road ,Apia, Samoa Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road, Apia, Samoa 48501 Warm Springs Blvd., Suite #109 Fremont, CA 94539-7750 Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road, Apia, Samoa FLAT/RM 6 16/F WORKINGBOND COMMERCIAL CENTRE 162-164 PRINCE EDWARD RD WEST MONGKOK KL No.2-2, Aly. 98, Ln. 800, Zhongshan S. Rd., Yangmei Dist., Taoyuan City 326, Taiwan (R.O.C.) Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road, Apia, Samoa 8F.-4, No.24, Wuquan 2nd Rd., Xinzhuang Dist., New Taipei City 242, Taiwan (R.O.C.) 7F.-3, No.24, Wuquan 2nd Rd., Xinzhuang Dist., New Taipei City 242, Taiwan (R.O.C.) 7F.-3, No.24, Wuquan 2nd Rd., Xinzhuang Dist., New Taipei City 242, Taiwan (R.O.C.) Bismarckstraße 100 (c/o Regus Mönchengladbach City Center), 41061 Mönchengladbach Lot CN05, Dong Van III Supporting Industrial Zone, Dong Van Ward, Duy Tien Town, Ha Nam Province, Vietnam	Investment holding Investment holding Trade Trade Trade Trade Trade Trade Investment holding Trade Sales and manufacture of electronic Sales and manufacture of electronic parts and related products Sales and manufacture of electronic parts, computers and related products Manufacture, process and sales of molds and aluminum products	$5,147,294 $1,040,647 $29,088 $78,950 $91,903 $10,157 $327 $45,000 $32,120 $99,118 $60,000 $201,035 $9,050 $253,411	$5,147,294 $1,040,647 $29,088 $78,950 $91,903 $10,157 $327 $45,000 $32,120 $114,215 $60,000 $201,035 $9,050 －	16 32,770 892 2,400 41 300 10 2,700 1,000 7,524 6,000 28,500 250 －	100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 9.53% 100.00% 19.71% 100.00% 100.00% 100.00% 100.00%	$8,229,670 $4,534,352 $170,579 $122,803 $114,885 $59,458 $14,965 $40,112 $289,235 $174,721 $5,395 $395,369 $8,826 $253,411	$536,751 $563,860 $1,475 ($2,804) $24,639 ($719) $1,080 $58,934 ($14,292) $210,385 ($8,964) $93,167 $189 －	$173,802 $566,341 $1,513 ($2,804) $24,639 ($3,219) ($10,747) $5,706 ($14,292) $53,074 ($8,964) $93,263 $189 －

( Continued )

211

ASIA VITAL COMPONENTS CO. , LTD AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan Dollars unless Otherwise Specified)

NAMES, LOCATIONS AND RELATED INFORMATION OF INVESTEE COMPANIES (Not including investment in Mainland China)

TABLE 6-1

TABLE 6-1
Investor Company	Investee Company	Address	Main businesses and products	Initial Investment		Investment as of December 31, 2019			Net income (loss) of investee company	Investment income (loss) recognized	Note
				Ending balance	Beginning balance	Number of shares (thousand)	Percentage of ownership (%)	Carrying amount
AVC INTERNATIONAL CO., LTD.－B.V.I. CHIHUNG INTERNATIONAL LTD. HUNG YE INVESTMENT CO., LTD. D-MAX TECHNOLOGY CO., LTD. WUCHIDA INTERNATIONAL CO., LTD. FOSITEK CORP.	MACE TECH CORP. AVC OPTICS CORP. TONBRIDGE INVESTMENTS LTD. KEY APPLICATION TECHNOLOGY CO., LTD. WUCHIDA INTERNATIONAL CO., LTD. D-MAX INTERNATIONAL CO., LIMITED FOREVER RICH INVESTMENTS CO.,LTD. MARKETHILL INVESTMENTS LTD.	Vistra Corporate Services Centre, Wickhams CayⅡRoad Town Tortola VG1110 Virgin Islands,British P.O. Box 31119 Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman, KY1-1205 Cayman Islands. Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road, Apia, Samoa 6F.-5, No.87, Xianzheng 6th Rd., Zhubei City, Hsinchu County 302, Taiwan (R.O.C.) Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road, Apia, Samoa FLAT/RM6 16F WORKINGBOND COMMERCIAL CENTRE 162-164 PRINCE EDWARD ROAD W MONG KOK KL 8F.-4, No.24, Wuquan 2nd Rd., Xinzhuang Dist., New Taipei City 242, Taiwan (R.O.C.) Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road, Apia, Samoa	Trade Investment holding Investment holding Investment holding Investment holding Investment holding Investment holding Sales and manufacture of electronic products	$319,776 $3,128,775 $101,772 $15,300 $132,004 $132,004 － $390,575	$319,776 $3,128,775 $101,772 $15,300 $132,004 $132,004 － $132,680	11,068 100,000 3,000 1,115 4,000 4,000 － 13,200	100.00% 100.00% 100.00% 16.31% 100.00% 100.00% － 100.00%	$1,833,263 $2,742,227 $231,274 － $302,372 $274,411 － $750,013	$326,973 $141,328 ($23,101) $29,203 $119,772 $119,423 － $222,131	$326,973 $141,328 ($23,101) ($567) $119,772 $120,869 － $216,100	(Note) (Note)

Note ： The company carried out a simple merger with FOREVER RICH INVESTMENTS CO.,LTD., a wholly-owned subsidiary of the company on May 15, 2020. After the merger, the company became the surviving company, and the former subsidiary held by FOREVER RICH INVESTMENTS CO.,LTD. was transferred to the company.

212

ASIA VITAL COMPONENTS CO. , LTD AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan Dollars unless Otherwise Specified) INFORMATION ON INVESTMENT IN MAINLAND CHINA

TABLE 7	TABLE 7	TABLE 7	TABLE 7	TABLE 7	TABLE 7
Investor Company	Investee Company	Main Businesses and Products	Total Amount of Paid-in Capital	Method ofInvestment (Note 1)	Accumulated Outflow of Investment from Taiwan as of January 1, 2019	Investment Flows		Accumulated Outflow of Investment from Taiwan as of December 31, 2019	Percentage of Ownership (Direct or Indirect Investment)	Profits/ Losses of the Investee Company	Share of Profits/Losses	Carrying Amount as of December 31, 2019	Accumulated Inward Remittance of Earnings as of December 31, 2019
						Outflow	Inflow
ASIA VITAL COMPONENTS CO. , LTD	ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD.	Sales and manufacture of computers related products and computer cooling fans	$642,719	(2) AVC INTERNATIONAL CO., LTD.－B.V.I.	$642,719	－	－	$642,719	100.00%	($71,437)	($71,437)	$2,816,870	－
ASIA VITAL COMPONENTS CO. , LTD	FURUKAWA AVC ELECTRONICS (SUZHOU) CO., LTD.	Sales and manufacture of reflow machines, solder paste printers and notebook thermal modules	$267,247	(2) RAYNEY INTERNATIONAL LTD.	$54,176	－	－	$54,176	30.00%	($9,483)	($2,845)	$92,085	－
ASIA VITAL COMPONENTS CO. , LTD	ASIA VITAL COMPONENTS (SHANGHAI) CO.,LTD.	Sales and manufacture of notebook thermal modules	$200,073	(2) CHIHUNG INTERNATIONAL LTD.	$101,772	－	－	$101,772	100.00%	($23,109)	($23,109)	$229,523	－
ASIA VITAL COMPONENTS CO. , LTD	ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD.	Sales and manufacture of computers, electronic products and related parts	$514,105	(2) AVC INTERNATIONAL CO., LTD.－B.V.I.	$319,776	－	－	$319,776	100.00%	$430,674	$430,127	$1,541,032	－
ASIA VITAL COMPONENTS CO. , LTD	ASIA VITAL COMPONENTS (CHINA) CO., LTD.	Sales and manufacture of computers related products and computer cooling fans	$879,291	(2) CHIHUNG INTERNATIONAL LTD.	$879,291	－	－	$879,291	100.00%	$584,611	$584,611	$4,288,467	－
ASIA VITAL COMPONENTS CO. , LTD	FURUKAWA ELECTRIC (SHENZHEN) CO., LTD.	Sales and manufacture of automobile parts	$321,060	(2) MERIT TRADING CORPORATION	$29,088	－	－	$29,088	9.06%	$194,218	－	$89,415	－
ASIA VITAL COMPONENTS CO. , LTD	ASIA VITAL COMPONENTS (CHENGDU) CO., LTD.	Sales and manufacture of computers, related parts and accessories	$1,055,897	(2) AVC INTERNATIONAL CO., LTD.－B.V.I.	$1,055,897	－	－	$1,055,897	100.00%	$142,926	$142,926	$1,380,962	－
D-MAX TECHNOLOGY CO., LTD.	（JIASHAN）D-MAX ELECTRONICS CO.,LTD.	Sales and manufacture of electronic and photographic equipment	$132,004	(2) WUCHIDA INTERNATIONAL CO., LTD.	$132,004	－	－	$132,004	100.00%	$119,423	$119,423	$274,065	－
ASIA VITAL COMPONENTS CO. , LTD	AVC OPTICS (WUHAN) CORP.	Sales and manufacture of computers related products and computer cooling fans	$3,128,775	(2) AVC INTERNATIONAL CO., LTD.－B.V.I.	$3,128,775	－	－	$3,128,775	100.00%	$141,328	$141,328	$2,742,216	－
FOSITEK CORP.	FIRST DOME CORP TELECOM.,LTD.	Sales and manufacture of rails, shafts and metal stamping tooling	$287,809	(2) MARKETHILL INVESTMENTS LTD.	$29,914	$257,895	－	$287,809	100.00%	$248,120	$248,120	$738,369	－
FOSITEK CORP.	DONG GUAN DOWA ELECTRONICS CO.,LTD.	Sales and manufacture of membrane switches	－	(2) MARKETHILL INVESTMENTS LTD.	$97,879	－	－	$97,879	－	($27,067)	($27,067)	－	－

Accumulated Outflow of Investment from Taiwan to Mainland China as of December 31, 2020	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
(US$218,943,010) $6,729,186	(US$240,750,828) $6,856,583	(Note 3)

Note 1 ： The methods for investment in Mainland China are categorized into the following three types. Please specify the type.

• (1) Direct investment in Mainland China.

(2) Indirectly investment in Mainland China through companies registered in the third area (Please specify the name of the company in third region).

• (3) Others.

Note 2 ： The table is expressed in thousands of New Taiwan Dollars.

Note 3 ： The Company has obtained the certificate of being qualified for operating headquarters, issued by the Industrial Development Bureau, MOEA, the ceiling amount of the investment in Mainland China is not applicable to the Company.

Note 4：DONG GUAN DOWA ELECTRONICS CO., LTD. completed the liquidation process in December 2020, but the amount cannot be deducted because the funds are not remitted back to Taiwan.

Note 5 ： All the above transactions were eliminated on consolidation.

213

ASIA VITAL COMPONENTS CO. , LTD AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan Dollars unless Otherwise Specified)

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS

TABLE 8

TABLE 8
No. (Note 1)	Company Name	Counter Party	Nature of Relationship (Note 2)	IntercompanyTransactions
				Financial Statements Item	Amount	Terms	Percentage of Consolidated Net Revenue or Total Assets(Note 3)
0	ASIA VITAL COMPONENTS CO. , LTD	AVC INTERNATIONAL (SAMOA) CO., LTD.	1	Purchases	$12,050,909	General trading terms	30%
0	ASIA VITAL COMPONENTS CO. , LTD	AVC INTERNATIONAL (SAMOA) CO., LTD.	1	Accounts payable	$3,026,160	General payment terms	7%
0	ASIA VITAL COMPONENTS CO. , LTD	AVC AMERICA, INC.	1	Sales	$750,550	General trading terms	2%
0	ASIA VITAL COMPONENTS CO. , LTD	AVC AMERICA, INC.	1	Accounts receivable	$119,853	General collection period	0%
0	ASIA VITAL COMPONENTS CO. , LTD	JADS CORPORATION (HK) LTD.	1	Purchases	$568,843	General trading terms	1%
0	ASIA VITAL COMPONENTS CO. , LTD	JADS CORPORATION (HK) LTD.	1	Accounts payable	$310,208	General payment terms	1%
0	ASIA VITAL COMPONENTS CO. , LTD	MERIT TRADING CORPORATION	1	Purchases	$6,521,064	General trading terms	16%
0	ASIA VITAL COMPONENTS CO. , LTD	MERIT TRADING CORPORATION	1	Accounts payable	$2,984,589	General payment terms	7%
0	ASIA VITAL COMPONENTS CO. , LTD	TONBRIDGE INVESTMENTS LTD.	1	Purchases	$1,519,133	General trading terms	4%
0	ASIA VITAL COMPONENTS CO. , LTD	TONBRIDGE INVESTMENTS LTD.	1	Accounts payable	$429,846	General payment terms	1%
0	ASIA VITAL COMPONENTS CO. , LTD	ASIA VITAL COMPONENTS (CHENGDU) CO., LTD.	1	Purchases	$899,500	General trading terms	2%
0	ASIA VITAL COMPONENTS CO. , LTD	ASIA VITAL COMPONENTS (CHENGDU) CO., LTD.	1	Accounts payable	$356,992	General payment terms	1%
0	ASIA VITAL COMPONENTS CO. , LTD	ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD.	1	Purchases	$653,244	General trading terms	2%
0	ASIA VITAL COMPONENTS CO. , LTD	ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD.	1	Accounts payable	$265,892	General payment terms	1%
0	ASIA VITAL COMPONENTS CO. , LTD	WUCHIDA INTERNATIONAL CO.,LTD.	1	Purchases	$830,393	General trading terms	2%
0	ASIA VITAL COMPONENTS CO. , LTD	WUCHIDA INTERNATIONAL CO.,LTD.	1	Accounts payable	$212,525	General payment terms	1%

214

ASIA VITAL COMPONENTS CO. , LTD AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan Dollars unless Otherwise Specified)

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS

TABLE 8-1

No. (Note 1)	Company Name	Counter Party	Nature of Relationship (Note 2)	Intercompany Transactions	Intercompany Transactions	Intercompany Transactions	Intercompany Transactions
				Financial Statements Item	Amount	Terms	Percentage of Consolidated Net Revenue or Total Assets (Note 3)
1	AVC INTERNATIONAL (SAMOA) CO., LTD.	AVC OPTICS (WUHAN) CORP.	3	Accounts receivable	$232,281	General collection period	1%
1	AVC INTERNATIONAL (SAMOA) CO., LTD.	AVC OPTICS (WUHAN) CORP.	3	Sales	$470,521	General trading terms	1%
1	AVC INTERNATIONAL (SAMOA) CO., LTD.	ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD.	3	Purchases	$12,868,196	General trading terms	32%
1	AVC INTERNATIONAL (SAMOA) CO., LTD.	ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD.	3	Accounts payable	$3,419,449	General payment terms	8%
1	AVC INTERNATIONAL (SAMOA) CO., LTD.	ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD.	3	Sales	$147,653	General payment terms	0%
1	AVC INTERNATIONAL (SAMOA) CO., LTD.	AVC PRECISION, CO., LTD.	3	Other receivable	$142,400	General collection period	0%
2	AVC AMERICA, INC.	MERIT TRADING CORPORATION	3	Purchases	$418,631	General trading terms	1%
3	ASIA VITAL COMPONENTS (CHENGDU) CO., LTD.	ASIA VITAL COMPONENTS (CHINA) CO., LTD.	3	Accounts receivable	$393,108	General collection period	1%
3	ASIA VITAL COMPONENTS (CHENGDU) CO., LTD.	ASIA VITAL COMPONENTS (CHINA) CO., LTD.	3	Sales	$472,459	General trading terms	1%
3	ASIA VITAL COMPONENTS (CHENGDU) CO., LTD.	RAYNEY INTERNATIONAL	3	Sales	$138,216	General trading terms	0%
4	AVC PRECISION, CO., LTD.	AVC OPTICS (WUHAN) CORP.	3	Sales	$296,173	General trading terms	1%
4	AVC PRECISION, CO., LTD.	ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD.	3	Sales	$1,564,290	General trading terms	4%
4	AVC PRECISION, CO., LTD.	ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD.	3	Accounts receivable	$164,715	General collection period	0%
4	AVC PRECISION, CO., LTD.	ASIA VITAL COMPONENTS (CHINA) CO., LTD.	3	Sales	$415,777	General trading terms	1%
5	ASIA VITAL COMPONENTS (CHINA) CO., LTD.	AVC OPTICS (WUHAN) CORP.	3	Sales	$298,204	General trading terms	1%
5	ASIA VITAL COMPONENTS (CHINA) CO., LTD.	AVC OPTICS (WUHAN) CORP.	3	Purchases	$275,891	General trading terms	1%
5	ASIA VITAL COMPONENTS (CHINA) CO., LTD.	JADS CORPORATION (HK) LTD.	3	Sales	$592,462	General trading terms	1%
5	ASIA VITAL COMPONENTS (CHINA) CO., LTD.	JADS CORPORATION (HK) LTD.	3	Accounts receivable	$355,313	General collection period	1%
5	ASIA VITAL COMPONENTS (CHINA) CO., LTD.	FIRST DOME CORP TELECOM.,LTD.	3	Purchases	$1,578,207	General trading terms	4%
6	AVC OPTICS (WUHAN) CORP.	TONBRIDGE INVESTMENTS LTD.	3	Accounts receivable	$628,222	General collection period	2%
6	AVC OPTICS (WUHAN) CORP.	TONBRIDGE INVESTMENTS LTD.	3	Sales	$1,818,629	General trading terms	5%
7	ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD.	AVC INTERNATION CO.,LTD.－SAMOA	3	Sales	$449,777	General trading terms	1%
7	ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD.	MERIT TRADING CORPORATION	3	Accounts receivable	$3,211,989	General collection period	8%
7	ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD.	MERIT TRADING CORPORATION	3	Sales	$7,382,700	General trading terms	19%
7	ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD.	RAYNEY INTERNATIONAL	3	Purchases	$138,241	General trading terms	0%
7	ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD.	TONBRIDGE INVESTMENTS LTD.	3	Purchases	$290,665	General trading terms	1%
7	ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD.	TONBRIDGE INVESTMENTS LTD.	3	Accounts payable	$197,023	General trading terms	0%
8	ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD.	MACE TECH CORP.	3	Other payable	$138,070	General payment terms	0%
8	ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD.	MERIT TRADING CORPORATION	3	Accounts payable	$159,287	General payment terms	0%
8	ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD.	MERIT TRADING CORPORATION	3	Purchases	$468,879	General trading terms	1%

Note 1 ： The parent company and its subsidiaries are coded as follows:

No.1. The parent company is coded "0".

No.2. The subsidiaries are coded consecutively beginning from "1" in the order presented in the table above.

Note 2 ： Transactions are categorized as follows:

No.1. Transactions from parent company to a subsidiary.

No.2. Transactions from subsidiary to the parent company.

No.3. Transactions between subsidiaries.

Note 3 ： Regarding the percentage of transaction amount to consolidated net revenue or total assets, it is computed based on the ending balance to consolidated total assets for balance sheet items; and based on interim accumulated amount to consolidated net revenue for income statement items.

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Independent Auditors’ Report

To ASIA VITAL COMPONENTS CO., LTD

Opinion

We have audited the accompanying parent company only balance sheets of ASIA VITAL COMPONENTS CO., LTD (the “Company”) as of December 31, 2020 and 2019, and the related parent company only statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2020 and 2019, and notes to the parent company only financial statements, including the summary of significant accounting policies (together “the parent company only financial statements”).

In our opinion, based on our audits and the reports of other auditors (please refer to the Other Matter – Making Reference to the Audits of Component Auditors section of our report), the parent company only financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and its financial performance and cash flows for the years ended December 31, 2020 and 2019, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Parent Company only Financial Statements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the “Norm”), and we have fulfilled our other ethical responsibilities in accordance with the Norm. Based on our audits and the reports of other auditors, 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 most significant in our audit of 2020 parent company only financial statements. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

216

1. Accounts receivable impairment

As of December 31, 2020, the Company’s net accounts receivable and allowance for bad debts amounted to NT$979,931 thousand and NT$70,056 thousand, respectively, constituting 3% of the parent company balance. This ratio is significant to the Company whether or not allowance for bad debts can reflect accounts receivable credit risk and the ultimate net amount of accounts receivable, is related to the management’s significant judgement. Therefore, we considered the appropriateness of this policy and the resulting figures to be a key audit matter.

Our audit procedures included, but are not limited to, assessing the appropriateness of accounts receivable expected credit loss. Included evaluating and testing the effectiveness of internal controls around accounts receivable; selecting samples to test the accuracy of accounts receivable aging, analyzing the variation of accounts receivable, verifying the appropriateness of long-term accounts receivable, performing sample selection for external confirmation of accounts receivable, and cross-checking the receiving status in order to evaluate the possibility of receivable.

We also assessed the adequacy of disclosures of accounts receivable and related risk. Please refer to Note 5 and 6 to the parent company only financial statements.

2. Valuation for inventories

As of December 31, 2020, the Company’s net inventories amounted to NT$ 5,521,393 thousand, constituting 20% of parent company total assets which is significant for the financial statements. The allowance for reduction of obsolete inventory due to the uncertainty caused by the rapid change of product technology, is closely related to the management’s judgement. Therefore, we considered this a key audit matter.

Our audit procedures included, but are not limited to, testing the effectiveness of the internal controls around inventories, including inventory cost carried down; evaluating the inventory status, evaluating management’s stock-taking plan, selecting the ideal warehouse site and performing the physical count to identify the number and status of inventory, testing the accuracy of inventory aging, and analyzing the variation of inventory aging and considering the anticipated demand and market value, evaluating the analysis of obsolete inventory of management, including the possibility of inventory realization and the evaluation of net realizable value, and testing the appropriateness of withdrawing inventory value from the allowance amount of inventory realization.

Please refer to Note 5 and 6 to the parent company only financial statements.

Other Matter – Making Reference to the Audits of Component Auditors

217

We did not audit the financial statements of certain subsidiaries and associates accounted for under the equity method. Those financial statements were audited by other auditors, whose reports thereon have been furnished to us, and our opinions expressed herein are based solely on the reports of other auditors. These subsidiaries and associates under equity method amounted to NT$299,668 thousand and NT$354,462 thousand, representing 1.07% and 1.38% of total assets as of December 31, 2020 and 2019, repectively. The related shares of profits (loss) from the subsidiaries and associates under the equity method amounted to NT$31,581 thousand and NT$9,483 thousand, representing 1.37% and 0.81% of the income before tax for the years ended December 31, 2020 and 2019, respectively, and the related shares of other comprehensive income (loss) from the subsidiaries and associates under the equity method amounted to (NT$1,750) thousand and (NT$439) thousand, representing (2.13%) and 0.11% of the comprehensive income (loss) for the years ended December 31, 2020 and 2019, repectively.

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

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretation Committee as endorsed and as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the parent company only financial statements, management is responsible for assessing the ability to continue as a going concern of the Company, 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 financial reporting process of the Company.

Auditor’s Responsibilities for the Audit of the Parent Company only Financial Statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s 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 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

218

taken on the basis of these parent company only financial statements.

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

1. Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, and we 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 an override of internal controls.

2. Obtain an understanding of internal controls 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 internal control of the Company.

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

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

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

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

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

219

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of 2020 parent company only financial statements and are therefore the key audit matters. We describe these matters in our auditor’s 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.

Ernst & Young, Taiwan Republic of China March 23, 2021

Notice to Readers

The accompanying parent company only financial statements are intended only to present the financial position, results of operations 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 review such parent company only financial statements are those generally accepted and applied in the Republic of China.

Accordingly, the accompanying parent company only financial statements and report of independent accountants 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, Ernst & Young 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.

220

English translation of Parent Company Only Financial Statements Originally issued in Chinese

ASIA VITAL COMPONENTS CO., LTD

PARENT COMPANY ONLY BALANCE SHEETS December 31, 2020 and 2019

(Expressed in thousands of New Taiwan Dollars)

Assets	Notes	December 31, 2020	December 31, 2020	December 31, 2019	December 31, 2019	Liabilities and Equity	Notes	December 31, 2	020	December 31, 2019	December 31, 2019
		Amount	％	Amount	％			Amount	％	Amount	％
Current assets Cash and cash equivalents Financial assets measured at amortized costs, current Accounts receivable, net Accounts receivable-related parties, net Other receivables Other receivables-related parties Inventories, net Prepayments Other current assets Total current assets Non-current assets Financial assets at fair value through other comprehensive income, noncurrent Investments accounted for using the equity method Property, plant and equipment Right-of-use assets Investment property,net Intangible assets Deferred tax assets Other non-current assets Total non-current assets Total assets	6(1) 4, 6(2), 8 4, 6(3) 4, 6(3), 7 6(4) 6(4) 6(5) 4,6(6) 4, 6(7), 8 4, 6(19) 4, 6(8), 8 4, 6(9) 4, 6(23) 6(10), 8	$5,069,376 279,788 909,875 161,471 348,229 11,313 5,521,393 24,201 6,227	18 1 3 1 1 0 20 0 0	$3,004,438 15,690 3,895,869 332,497 330,163 53,125 3,611,002 9,081 14,961	12 0 16 1 1 0 14 0 0	Current liabilities Short-term loans Short-term notes and bills payable Notes payable Accounts payable Accounts payable-related parties, net Other payables Other payables-related parties, net Current tax liabilities Lease liabilities-Current Other current liabilities Current portion of long-term loans Total current liabilities Non-current liabilities Corporate bonds payable Long-term loans Deferred tax liabilities Lease liabilities-Non current Net defined benefit liabilities, noncurrent Guarantee deposits Total non-current liabilities Total liabilities Equity attributable to the parent company Capital Common stock Additional paid-in capital Retained earnings Legal reserve Special reserve Undistributed earnings Total retained earnings Other components of equity Total equity Total liabilities and equity	6(11) 6(12) 7 6(13) 4, 6(23) 4, 6(19) 6(15) 6(14) 6(15) 4, 6(23) 4, 6(19) 4, 6(16) 6(17) 6(17) 6(17) 4	$700,000 － 25,924 548,397 7,591,758 800,171 8,383 370,142 6,752 79,033 1,309,287	3 － 0 2 27 3 0 1 0 0 5	$630,000 100,000 27,490 348,132 7,626,634 810,554 21,492 241,220 6,844 11,107 2,161,667	2 0 0 1 30 4 0 1 0 0 9
		12,331,873	44	11,266,826	44
		2,423 14,413,781 434,590 21,100 51,871 55,026 695,853 27,431	0 52 2 0 0 0 2 0	9,423 13,240,672 400,872 21,788 54,246 53,650 583,492 25,217	0 52 2 0 0 0 2 0
								11,439,847	41	11,985,140	47
								2,400,000 2,475,331 1,121,150 14,863 5,233 926	8 9 4 0 0 0	－ 3,749,166 911,306 15,241 7,382 11,966	－ 15 3 0 0 0
		15,702,075	56	14,389,360	56			6,017,503	21	4,695,061	18
								17,457,350	62	16,680,201	65
								3,533,101 1,601,099 865,492 1,402,573 4,500,820	13 6 3 5 16	3,533,101 1,540,817 769,695 995,284 3,539,661	13 6 3 4 14
								6,768,885	24	5,304,640	21
								(1,326,487)	(5)	(1,402,573)	(5)
								10,576,598	38	8,975,985	35
		$28,033,948	100	$25,656,186	100			$28,033,948	100	$25,656,186	100

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

221

English translation of Parent Company Only Financial Statements originally issued in Chinese

ASIA VITAL COMPONENTS CO., LTD

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31, 2020 and 2019

(Expressed in thousands of New Taiwan Dollars, except for earnings par share)

Items	Notes	2020		2019
		Amount	％	Amount	％
Operating Revenue Operating costs Gross profit Unrealized gross (profit) Realized gross profit Gross profit, net Operating expenses Sales and marketing expenses General and administrative expenses Research and development expenses Subtotal Operating income Non-operating income and expenses Interest income Other income Other gains and losses Finance costs Share of profit or loss of subsidiaries and associates Subtotal Income from continuing operations before income tax Income tax expense Net income Other comprehensive income (loss) Items that will not be reclassified subsequently to profit or loss: Remeasurements of defined benefit pension plans Unrealized gains (losses) from equity instruments investments measured Income tax related to items that will not be reclassified Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign operations Share of other comprehensive income (loss) of associates Income tax related to items that may be reclassified subsequently Total other comprehensive loss, net of tax Total comprehensive income Earnings per share (NTD) Earnings per share-basic Earnings per share-diluted	4,6(18), 7 6(20), 7 6(19).(20) 6(21) 6(21) 6(21) 6(21) 4,6(6) 6(23) 6(22) 6(24)	$25,269,916 (22,837,254)	100 (90)	$23,804,322 (21,874,228)	100 (92)
		2,432,662	10	1,930,094	8
		(85) 472	(0) 0	(473) 322	(0) 0
		2,433,049	10	1,929,943	8
		(250,986) (216,844) (618,395)	(1) (1) (2)	(298,804) (287,234) (697,042)	(1) (1) (3)
		(1,086,225)	(4)	(1,283,080)	(5)
		1,346,824	6	646,863	3
		4,333 135,753 29,523 (95,831) 878,501	0 1 0 (0) 3	8,337 36,913 16,340 (140,108) 603,641	0 0 0 (1) 3
		952,279	4	525,123	2
		2,299,103 (383,257)	10 (2)	1,171,986 (214,017)	5 (1)
		1,915,846	8	957,969	4
		602 16,808 (120) 69,675 (1,750) (2,870)	0 0 (0) 0 (0) (0)	10,398 1,071 (2,079) (469,199) (439) 61,277	0 0 (0) (2) (0) 0
		82,345	0	(398,971)	(2)
		$1,998,191	8	$558,998	2
		$5.42		$2.71
		$5.40		$2.70
(The accompanying notes are an integral part of the parent company only financial statements.)

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

222

English translation of Parent Company Only Financial Statements originally issued in Chinese

ASIA VITAL COMPONENTS CO. , LTD

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY For the years ended December 31, 2020 and 2019

(Expressed in thousands of New Taiwan Dollars)

Items	Capital	Additional Paid-in Capital		Retained Earnings		Other Components of Equity	Other Components of Equity	Total Equity
	Common Stock		Legal Reserve	Special Reserve	Unappropriated Earnings	Exchange Differences on Translation of Foreign Operations	Unrealized Gains (Losses) From Equity Instruments Investments Measured At Fair Value Through Other Comprehensive Income
Balance as of January 1, 2019 Appropriation and distribution of 2018 retained earnings Legal reserve Special reserve Cash dividends Donation from shareholders Net income for the year ended December 31, 2019 Other comprehensive income (loss), net of tax for the year ended December 31, 2019 Total comprehensive income (loss) Balance as of December 31, 2019 Balance as of January 1, 2020 Appropriation and distribution of 2019 retained earnings Legal reserve Special reserve Cash dividends Donation from shareholders Net income for the year ended December 31, 2020 Other comprehensive income (loss), net of tax for the year ended December 31, 2020 Total comprehensive income (loss) Difference between the actual acquisition or disposal price and carrying amounts of subsidiaries Disposal of equity investments at fair value through other comprehensive income Balance as of December 31, 2020	$3,533,101 － $3,533,101 $3,533,101 － $3,533,101	$1,540,647 170	$698,569 71,126	$538,746 456,538	$3,454,347 (71,126) (456,538) (353,310) 957,969 8,319	($655,207) (408,361)	($340,076) 1,071	$8,770,127 － － (353,310) 170 957,969 (398,971)
		－	－	－	966,288	(408,361)	1,071	558,998
		$1,540,817	$769,695	$995,284	$3,539,661	($1,063,568)	($339,005)	$8,975,985
		$1,540,817 260	$769,695 95,797	$995,284 407,289	$3,539,661 (95,797) (407,289) (459,303) 1,915,846 482	($1,063,568) 65,055	($339,005) 16,808	$8,975,985 － － (459,303) 260 1,915,846 82,345
		－	－	－	1,916,328	65,055	16,808	1,998,191
		60,022 $1,601,099	$865,492	$1,402,573	7,220 $4,500,820	1,443 ($997,070)	(7,220) ($329,417)	61,465 － $10,576,598

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

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English translation of Parent Company Only Financial Statements originally issued in Chinese ASIA VITAL COMPONENTS CO., LTD

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

For the years ended December 31, 2020 and 2019

(Expressed in thousands of New Taiwan Dollars)

Items		2020		2019
Cash flows from operating activities: Net income before tax Adjustments to reconcile net income before tax to net cash provided by operating activities: Income and expanse adjustments : Depreciation Amortization Amortization of royalty Expected credit (profit) losses Interest expense Interest income Dividend revenue Compensation costs of share-based payment transaction Share of profit of subsidiaries and associates (Gain) on disposal of property, plant and equipment Unrealized gross profit Realized gross (profit) Others Changes in operating assets and liabilities: Notes receivable Accounts receivable Accounts receivable-related parties Other receivables Other receivables-related parties Inventories Prepayments Other current assets Other operation assets Notes payable Accounts payable Accounts payable-related parties Other payables Other payables-related parties Other current liabilities Net defined benefit liabilities Cash generated from operations Interest received Interest paid Income tax paid Net cash provided (used) by operating activities Cash flows from investing activities: Acquisition of financial assets at fair value through other comprehensive income Acquisition of investments accounted for using the equity method Decrease in advance payments in investment Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment (Increase) in refundable deposits Acquisition of intangible assets (Increase) in noncurrent assets-others Dividends received Net cash (used) in investing activities Cash flows from financing activities: Increase in short-term loans (Decrease) in short-term loans (Decrease) increase in short-term notes and bills payable Increase in corporate bonds payable Proceeds from long-term loans Repayments of long-term loans (Decrease) increase in guarantee deposits Repayment of lease liabilities Cash dividends Disposal of equity of subsidiariess (not lossing of control) Net cash (used) provided in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year		$2,299,103 66,975 27,571 2,417 (24,363) 95,831 (4,333) (763) 1,776 (878,501) (2,132) 85 (472) (35,435) 261 3,088,376 171,026 (96,084) 41,812 (1,874,956) (15,120) 8,734 (264,098) (1,566) 200,265 (34,876) (7,787) (14,875) 67,926 (1,547) 2,815,250 4,333 (96,661) (159,843) 2,563,079 22,220 (253,411) － (107,998) 18,755 (41) (31,364) (2,908) 3,463 (351,284) 5,650,000 (5,580,000) (100,000) 2,400,000 7,369,896 (9,496,111) (11,040) (5,991) (459,303) 85,692 (146,857) 2,064,938 3,004,438 $5,069,376		$1,171,986 61,797 20,861 4,033 23,705 140,108 (8,337) (1,018) 1,776 (603,641) (10,136) 472 (321) 115,615 170 (1,933,601) (206,836) 6,954 35,255 (1,545,706) 14,982 11,998 147,920 (8,008) (128,206) 2,057,018 301,874 (5,506) 938 (1,211) (335,065) 8,337 (142,187) (180,112) (649,027) － (44,870) 9,050 (35,360) 15,219 (1,518) (13,217) (7,021) 3,718 (73,999) 4,630,000 (4,200,000) 100,000 － 6,150,000 (5,381,387) 1,400 (6,918) (353,310) － 939,785 216,759 2,787,679 $3,004,438

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

224

English Translation of Financial Statements Originally Issued in Chinese ASIA VITAL COMPONENTS CO., LTD

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

FOR THE YEARS ENDED 31 December 2020 AND 2019

(Expressed in thousands of New Taiwan Dollars unless otherwise specified)

1. History and organization

ASIA VITAL COMPONENTS CO., LTD. (the Company) was incorporated on December 17, 1991. The Company’s registered address is No.248-27, Xinsheng Rd., Qianzhen Dist., Kaohsiung City. The principal activities of the Company are to manufacture, process, assemble and to import and export electronic parts, electronic materials, communication electronic machinery products, automobile parts, lighting device, computer peripherals.

The Company’s ordinary shares were publicly listed on the Taiwan Stock Exchange (TWSE) on 27 September, 2002.

2. Date and procedures of authorization of financial statements for issue

The parent company only financial statements of the Company for the years ended 31 December 2020 and 2019 were authorized for issue in accordance with a resolution of the Board of Directors’ meeting on March 23, 2021.

3. Newly issued or revised standards and interpretations

• (1) Changes in accounting policies resulting from applying for the first time certain standards and amendments

The Company applied for the first time International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are recognized by Financial Supervisory Commission (“FSC”) and become effective for annual periods beginning on or after 1 January 2020. Apart from the nature and impact of the new standard and amendment is described below, the adoption of these new standards and amendments had no material impact on the Company.

• (2) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) which are endorsed by FSC, but not yet adopted by the Company as at the end of the reporting period are listed below.

Items	New, Revised or Amended Standards and Interpretations	Effective Date issued byIASB
a	Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9,IAS 39,IFRS 7,IFRS 4	1 January 2021

225

and IFRS 16)

• A. Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

The final phase amendments mainly relate to the effects of the interest rate benchmark reform on the companies’ financial statements:

• (a) A company will not have to derecognise or adjust the carrying amount of financial instruments for changes to contractual cash flows as required by the reform, but will instead update the effective interest rate to reflect the change to the alternative benchmark rate;

• (b) A company will not have to discontinue its hedge accounting solely because it makes changes required by the reform, if the hedge meets other hedge accounting criteria; and

• (c) A company will be required to disclose information about new risks arising from the reform and how it manages the transition to alternative benchmark rates.

The abovementioned amendments that are applicable for annual periods beginning on or after 1 January 2021 have no material impact on the Company.

• (3) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) which are not endorsed by FSC, but not yet adopted by the Company as at the end of the reporting period are listed below:

Items	New, Revised or Amended Standards and Interpretations	Effective Date issued by IASB
a	IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures	To be determined by IASB
b	IFRS 17 “Insurance Contracts”	January1,2023
c	Classification of Liabilities as Current or Non-current – Amendments to IAS 1	January 1, 2023
d	Narrow-scope amendments of IFRS, including Amendments to IFRS 3, Amendments to IAS 16, Amendments to IAS 37 and the Annual Improvements	1 January 2022
e	Disclosure Initiative - Accounting Policies – Amendments to IAS 1	1 January 2023
f	Definition of AccountingEstimates – Amendments to IAS 8	1 January2023

• A. IFRS 10“Consolidated Financial Statements” and IAS 28“Investments in Associates and Joint

• Ventures” — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures

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The amendments address the inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures , in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of non-monetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint ventures. IFRS 10 requires full profit or loss recognition on the loss of control of the subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized in full.

IFRS 10 was also amended so that the gains or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors’ interests in the associate or joint venture.

B. IFRS 17 “Insurance Contracts”

IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects (including recognition, measurement, presentation and disclosure requirements). The core of IFRS 17 is the General (building block) Model, under this model, on initial recognition, an entity shall measure a Company of insurance contracts at the total of the fulfilment cash flows and the contractual service margin. The fulfilment cash flows comprise of the following:

• (a)Estimated of future cash flows;

• (b)Discount rate: an adjustment to reflect the time value of money and the financial risks related to the future cash flows, to the extent that the financial risks are not included in the estimates of the future cash flows; and

• (c)A risk adjustment for non-financial risk.

The carrying amount of a Company of insurance contracts at the end of each reporting period shall be the sum of the liability for remaining coverage and the liability for incurred claims. Other than the General Model, the standard also provides a specific adaptation for contracts with direct participation features (the Variable Fee Approach) and a simplified approach (Premium Allocation Approach) mainly for short-duration contracts.

IFRS 17 was issued in May 2017 and it was amended in June 2020. The amendments include deferral of the date of initial application of IFRS 17 by two years to annual beginning on or after 1 January 2023 (from the original effective date of 1 January 2021); provide additional transition reliefs; simplify some requirements to reduce the costs of applying IFRS 17 and revise some requirements to make the results easier to explain. IFRS 17 replaces an interim Standard – IFRS 4 Insurance Contracts – from annual reporting periods beginning on or after 1 January 2023.

• C. Classification of Liabilities as Current or Non-current – Amendments to IAS 1

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These are the amendments to paragraphs 69-76 of IAS 1 Presentation of Financial statements and the amended paragraphs related to the classification of liabilities as current or non-current.

• D. Narrow-scope amendments of IFRS, including Amendments to IFRS 3, Amendments to IAS 16, Amendments to IAS 37 and the Annual Improvements

• (a) Updating a Reference to the Conceptual Framework (Amendments to IFRS 3)

The amendments updated IFRS 3 by replacing a reference to an old version of the Conceptual Framework for Financial Reporting with a reference to the latest version, which was issued in March 2018. The amendments also added an exception to the recognition principle of IFRS 3 to avoid the issue of potential “day 2” gains or losses arising for liabilities and contingent liabilities. Besides, the amendments clarify existing guidance in IFRS 3 for contingent assets that would not be affected by replacing the reference to the Conceptual Framework.

• (b) Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)

The amendments prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or loss.

• (c) Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)

The amendments clarify what costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous.

• (d) Annual Improvements to IFRS Standards 2018 - 2020

Amendment to IFRS 1

The amendment simplifies the application of IFRS 1 by a subsidiary that becomes a first-time adopter after its parent in relation to the measurement of cumulative translation differences.

Amendment to IFRS 9 Financial Instruments

The amendment clarifies the fees a company includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability.

Amendment to Illustrative Examples Accompanying IFRS 16 Leases

The amendment to Illustrative Example 13 accompanying IFRS 16 modifies the treatment of lease incentives relating to lessee’s leasehold improvements.

Amendment to IAS 41

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The amendment removes a requirement to exclude cash flows from taxation when measuring fair value thereby aligning the fair value measurement requirements in IAS 41 with those in other IFRS Standards.

• (e) Disclosure Initiative - Accounting Policies – Amendments to IAS 1

The amendments improve accounting policy disclosures that to provide more useful information to investors and other primary users of the financial statements.

• (f) Definition of Accounting Estimates – Amendments to IAS 8

The amendments introduce the definition of accounting estimates and included other amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to help companies distinguish changes in accounting estimates from changes in accounting policies.

The abovementioned standards and interpretations issued by IASB have not yet endorsed by FSC at the date when the Company’s financial statements were authorized for issue, the local effective dates are to be determined by FSC. As the Company is still currently determining the potential impact of the standards and interpretations listed under (a) to (f), it is not practicable to estimate their impact on the Group at this point in time. The remaining new or amended standards and interpretations have no material impact on the Company.

4. Summary of significant accounting policies

• (1) Statement of compliance

The parent company only financial statements of the Company for the years ended 31 December 2020 and 2019 have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”) and International Financial Reporting Standards, International Accounting Standards, International Financial Reporting Interpretations Committee and Standing Interpretations Committee as endorsed by the FSC.

• (2) Basis of preparation

The parent company only financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The parent company only financial statements are expressed in thousands of New Taiwan Dollars (“NT$”) unless otherwise stated.

(3) Foreign currency transactions

The Company’s parent company only financial statements are presented in NT$, which is also the Company’s functional currency.

Transactions in foreign currencies are initially recorded by the Company entities at their respective functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities

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denominated in foreign currencies are retranslated at the functional currency closing rate of exchange ruling at the reporting date. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.

All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following:

• A. Exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.

• B. Foreign currency items within the scope of IFRS 9 Financial Instruments are accounted for based on the accounting policy for financial instruments.

• C. Exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.

• (4) Translation of financial statements in foreign currency

The assets and liabilities of foreign operations are translated into NT$ at the closing rate of exchange prevailing at the reporting date and their income and expenses are translated at an average rate for the period. The exchange differences arising on the translation are recognized in other comprehensive income. On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on disposal is recognized. The following partial disposals are accounted for as disposals:

• (a) when the partial disposal involves the loss of control of a subsidiary that includes a foreign operation; and

• (b) when the retained interest after the partial disposal of an interest in a joint arrangement or a partial disposal of an interest in an associate that includes a foreign operation is a financial asset that includes a foreign operation.

On the partial disposal of a subsidiary that includes a foreign operation that does not result in a loss of control, the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is re-attributed to the non-controlling interests in that foreign operation. In partial disposal of an associate or joint arrangement that includes a foreign operation that does not result in a loss of significant influence or joint control, only the proportionate share of

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the cumulative amount of the exchange differences recognized in other comprehensive income is reclassified to profit or loss.

Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and expressed in its functional currency.

• (5) Current and non-current distinction

An asset is classified as current when:

• A. The Company expects to realize the asset, or intends to sell or consume it, in its normal operating cycle

• B. The Company holds the asset primarily for the purpose of trading

• C. The Company expects to realize the asset within twelve months after the reporting period

• D. The asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is classified as current when:

• A. The Company expects to settle the liability in its normal operating cycle

• B. The Company holds the liability primarily for the purpose of trading

• C. The liability is due to be settled within twelve months after the reporting period

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

All other liabilities are classified as non-current.

• (6) Cash and cash equivalents

Cash and cash equivalents comprises cash on hand, demand deposits and short-term, highly liquid time deposits (including ones that have maturity within 12 months) or investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

• (7) Financial instruments

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

Financial assets and financial liabilities within the scope of IFRS 9 Financial Instruments are recognized initially at fair value plus or minus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

• A. Financial instruments: Recognition and Measurement

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The Company accounts for regular way purchase or sales of financial assets on the trade date.

The Company classified financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss considering both factors below:

• (a) the Company’s business model for managing the financial assets and

• (b) the contractual cash flow characteristics of the financial asset.

Financial assets measured at amortized cost

A financial asset is measured at amortized cost if both of the following conditions are met and presented as note receivables, trade receivables financial assets measured at amortized cost and other receivables etc., on balance sheet as at the reporting date:

• (a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and

• (b) 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.

Such financial assets are subsequently measured at amortized cost (the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount and the maturity amount and adjusted for any loss allowance) and is not part of a hedging relationship. A gain or loss is recognized in profit or loss when the financial asset is derecognized, through the amortization process or in order to recognise the impairment gains or losses.

Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

• (a) purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.

• (b) financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Financial asset measured at fair value through other comprehensive income

A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:

• (a) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and

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• (b) 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.

Recognition of gain or loss on a financial asset measured at fair value through other comprehensive income are described as below:

• (a) A gain or loss on a financial asset measured at fair value through other comprehensive income recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses, until the financial asset is derecognized or reclassified.

• (b) When the financial asset is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.

• (c) Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

• i. Purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.

• ii. Financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Besides, for certain equity investments within the scope of IFRS 9 that is neither held for trading nor contingent consideration recognized by an acquirer in a business combination to which IFRS 3 applies, the Company made an irrevocable election to present the changes of the fair value in other comprehensive income at initial recognition. Amounts presented in other comprehensive income shall not be subsequently transferred to profit or loss (when disposal of such equity instrument, its cumulated amount included in other components of equity is transferred directly to the retained earnings) and these investments should be presented as financial assets measured at fair value through other comprehensive income on the balance sheet. Dividends on such investment are recognized in profit or loss unless the dividends clearly represents a recovery of part of the cost of investment.

Financial asset measured at fair value through profit or loss

Financial assets were classified as measured at amortized cost or measured at fair value through other comprehensive income based on aforementioned criteria. All other financial assets were measured at fair value through profit or loss and presented on the balance sheet as financial assets measured at fair value through profit or loss.

Such financial assets are measured at fair value, the gains or losses resulting from remeasurement is recognized in profit or loss which includes any dividend or interest received on such financial assets.

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• B. Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on debt instrument investments measured at fair value through other comprehensive income and financial asset measured at amortized cost. The loss allowance on debt instrument investments measured at fair value through other comprehensive income is recognized in other comprehensive income and not reduce the carrying amount in the statement of financial position.

The Company measures expected credit losses of a financial instrument in a way that reflects:

• (a) An unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;

• (b) The time value of money; and

• (c) Reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.

The loss allowance is measures as follow:

• (a) At an amount equal to 12-month expected credit losses: the credit risk on a financial asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Company measures the loss allowance at an amount equal to lifetime expected credit losses in the previous reporting period, but determines at the current reporting date that the credit risk on a financial asset has increased significantly since initial recognition is no longer met.

• (b) At an amount equal to the lifetime expected credit losses: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial asset.

• (c) For trade receivables or contract assets arising from transactions within the scope of IFRS 15, the Company measures the loss allowance at an amount equal to lifetime expected credit losses.

At each reporting date, the Company needs to assess whether the credit risk on a financial asset has increased significantly since initial recognition by comparing the risk of a default occurring at the reporting date and the risk of default occurring at initial recognition. Please refer to Note 12 for further details on credit risk.

• C. Derecognition of financial assets

A financial asset is derecognized when:

• (a) The rights to receive cash flows from the asset have expired

• (b) The Company has transferred the asset and substantially all the risks and rewards of the asset have been transferred

• (c) The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

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On derecognition of a financial asset in its entirety, the difference between the carrying amount and the consideration received or receivable including any cumulative gain or loss that had been recognized in other comprehensive income, is recognized in profit or loss.

• D. Financial liabilities and equity

Classification between liabilities or equity

The Company classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The transaction costs of an equity transaction are accounted for as a deduction from equity (net of any related income tax benefit) to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.

Compound instruments

The Company evaluates the terms of the convertible bonds issued to determine whether it contains both a liability and an equity component. Furthermore, the Company assesses if the economic characteristics and risks of the put and call options contained in the convertible bonds are closely related to the economic characteristics and risk of the host contract before separating the equity element.

For the liability component excluding the derivatives, its fair value is determined based on the rate of interest applied at that time by the market to instruments of comparable credit status. The liability component is classified as a financial liability measured at amortized cost before the instrument is converted or settled.

For the embedded derivative that is not closely related to the host contract (for example, if the exercise price of the embedded call or put option is not approximately equal on each exercise date to the amortized cost of the host debt instrument), it is classified as a liability component and subsequently measured at fair value through profit or loss unless it qualifies for an equity component. The equity component is assigned the residual amount after deducting from the fair value of the instrument as a whole the amount separately determined for the liability component. Its carrying amount is not remeasured in the subsequent accounting periods. If the convertible bond issued does not have an equity component, it is accounted for as a hybrid instrument in accordance with the requirements under IFRS 9 Financial Instruments .

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Transaction costs are apportioned between the liability and equity components of the convertible bond based on the allocation of proceeds to the liability and equity components when the instruments are initially recognized.

On conversion of a convertible bond before maturity, the carrying amount of the liability component being the amortized cost at the date of conversion is transferred to equity.

Financial liabilities

Financial liabilities within the scope of IFRS 9 Financial Instruments are classified as financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost upon initial recognition.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated as at fair value through profit or loss. A financial liability is classified as held for trading if:

• (a) It is acquired or incurred principally for the purpose of selling or repurchasing it in the near term;

• (b) On initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or

• (c) It is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

If a contract contains one or more embedded derivatives, the entire hybrid (combined) contract may be designated as a financial liability at fair value through profit or loss; or a financial liability may be designated as at fair value through profit or loss when doing so results in more relevant information, because either:

• (a) It eliminates or significantly reduces a measurement or recognition inconsistency; or

• (b) A Company of financial liabilities or financial assets and financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the Company is provided internally on that basis to the key management personnel.

Gains or losses on the subsequent measurement of liabilities at fair value through profit or loss including interest paid are recognized in profit or loss.

Financial liabilities at amortized cost

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Financial liabilities measured at amortized cost include interest bearing loans and borrowings that are subsequently measured using the effective interest rate method after initial recognition. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the effective interest rate method amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs.

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor), such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

E. Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

(8) Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• A. In the principal market for the asset or liability, or

• B. In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible to by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

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The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

• (9) Inventories

Inventories are valued at lower of cost and net realizable value item by item.

Costs incurred in bringing each inventory to its present location and condition are accounted for as follows:

Raw materials – Purchase cost on a first in, first out basis

Finished goods and work in progress – Cost of direct materials and labor and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

• (10) Investments accounted for using the equity method

The Company’s investment in its associate or joint venture is accounted for using the equity method other than those that meet the criteria to be classified as held for sale. An associate is an entity over which the Company has significant influence. A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture.

Under the equity method, the investment in the associate or an investment in a joint venture is carried in the balance sheet at cost and adjusted thereafter for the post-acquisition change in the Company’s share of net assets of the associate or joint venture. After the interest in the associate or joint venture is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. Unrealized gains and losses resulting from transactions between the Company and the associate or joint venture are eliminated to the extent of the Company’s related interest in the associate or joint venture.

When changes in the net assets of an associate or a joint venture occur and not those that are recognized in profit or loss or other comprehensive income and do not affects the Company’s percentage of ownership interests in the associate or joint venture, the Company recognizes such changes in equity based on its percentage of ownership interests. The resulting capital surplus recognized will be reclassified to profit or loss at the time of disposing the associate or joint venture on a prorata basis.

When the associate or joint venture issues new stock, and the Company’s interest in an associate or a joint venture is reduced or increased as the Company fails to acquire shares newly issued in the associate or joint venture proportionately to its original ownership interest, the increase or decrease in the interest in the associate or joint venture is recognized in Additional Paid in Capital and Investment accounted for using the equity method. When the interest in the associate or joint venture

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is reduced, the cumulative amounts previously recognized in other comprehensive income are reclassified to profit or loss or other appropriate items. The aforementioned capital surplus recognized is reclassified to profit or loss on a pro rata basis when the Company disposes the associate or joint venture.

The financial statements of the associate or joint venture are prepared for the same reporting period as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Company.

The Company determines at each reporting date whether there is any objective evidence that the investment in the associate or an investment in a joint venture is impaired in accordance with IAS 28 Investments in Associates and Joint Ventures. If this is the case the Company calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value and recognizes the amount in the ‘share of profit or loss of an associate’ in the statement of comprehensive income in accordance with IAS 36 Impairment of Assets. In determining the value in use of the investment, the Company estimates:

• A. Its share of the present value of the estimated future cash flows expected to be generated by the associate or joint venture, including the cash flows from the operations of the associate and the proceeds on the ultimate disposal of the investment; or

• B. The present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal.

Because goodwill that forms part of the carrying amount of an investment in an associate or an investment in a joint venture is not separately recognized, it is not tested for impairment separately by applying the requirements for impairment testing goodwill in IAS 36 Impairment of Assets.

Upon loss of significant influence over the associate or joint venture, the Company measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss. Furthermore, if an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the entity continues to apply the equity method and does not remeasure the retained interest.

(11) Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such costs include the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Company recognizes such parts as individual assets with specific useful lives and depreciation, respectively. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 Property, plant and equipment. When a major inspection is performed, its cost

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is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Buildings 35 ～ 57 years Machinery and Equipment 1 ～ 6 years Molding Equipment 2 years Right-of-use assets/leased assets (Note) 1 ～ 10 years Other Facilities 1 ～ 6 years

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognized in profit or loss.

The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.

(12)Investment property

The Company’s owned investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met and excludes the costs of day-to-day servicing of an investment property. Subsequent to initial recognition, other than those that meet the criteria to be classified as held for sale (or are included in a disposal Company that is classified as held for sale) in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, investment properties are measured using the cost model in accordance with the requirements of IAS 16 Property, plant and equipment for that model. If investment properties are held by a lessee as right-of-use assets and is not held for sale in accordance with IFRS 5, investment properties are measured in accordance with the requirements of IFRS 16.

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets: Buildings 55 ～ 57 years

Investment properties are derecognized when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of derecognition.

The Company transfers to or from investment properties when there is a change in use for these assets. Properties are transferred to or from investment properties when the properties meet, or cease to meet, the definition of investment property and there is evidence of the change in use.

(13)Leases

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For contracts entered on or after January 1, 2019, the Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of time, the Company assesses whether the contract, throughout the period of use, has both of the following:

• A. The right to obtain substantially all of the economic benefits from use of the identified asset; and B. The right to direct the use of the identified asset.

For a contract that is, or contains, a lease, the Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract. For a contract that contains a lease component and one or more additional lease or non-lease components, the Company allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The relative stand-alone price of lease and non-lease components shall be determined on the basis of the price the lessor, or a similar supplier, would charge the Company for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Company estimates the stand-alone price, maximising the use of observable information.

Company as a lessee

Except for leases that meet and elect short-term leases or leases of low-value assets, the Company recognizes right-of-use asset and lease liability for all leases which the Company is the lessee of those lease contracts.

At the commencement date, the Company measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses its incremental borrowing rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:

• A. Fixed payments (including in-substance fixed payments), less any lease incentives receivable;

• B. Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

• C. Amounts expected to be payable by the lessee under residual value guarantees;

• D. The exercise price of a purchase option if the Company is reasonably certain to exercise that option; and

• E. Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

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After the commencement date, the Company measures the lease liability on an amortised cost basis, which increases the carrying amount to reflect interest on the lease liability by using an effective interest method; and reduces the carrying amount to reflect the lease payments made.

At the commencement date, the Company measures the right-of-use asset at cost. The cost of the right-of-use asset comprises:

• A. The amount of the initial measurement of the lease liability;

• B. Any lease payments made at or before the commencement date, less any lease incentives received;

• C. Any initial direct costs incurred by the lessee; and

• D. An estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

For subsequent measurement of the right-of-use asset, the Company measures the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment losses. That is, the Company measures the right-of-use applying a cost model.

If the lease transfers ownership of the underlying asset to the Company by the end of the lease term or if the cost of the right-of-use asset reflects that the Company will exercise a purchase option, the Company depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Company depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

The Company applies IAS 36 “Impairment of Assets” to determine whether the right-of-use asset is impaired and to account for any impairment loss identified.

Except for those leases that the Company accounted for as short-term leases or leases of low-value assets, the Company presents right-of-use assets and lease liabilities in the balance sheet and separately presents lease-related interest expense and depreciation charge in the statements comprehensive income.

For short-term leases or leases of low-value assets, the Company elects to recognize the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis.

Company as a lessor

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At inception of a contract, the Company classifies each of its leases as either an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset. At the commencement date, the Company recognizes assets held under a finance lease in its balance sheet and present them as a receivable at an amount equal to the net investment in the lease.

For a contract that contains lease components and non-lease components, the Company allocates the consideration in the contract applying IFRS 15.

The Company recognizes lease payments from operating leases as rental income on either a straight-line basis or another systematic basis. Variable lease payments for operating leases that do not depend on an index or a rate are recognized as rental income when incurred.

(14)Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditures are reflected in profit or loss for the year in which the expenditures are incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least once at the end of each financial year. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are recognizeed in profit or loss.

Research and development costs

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Research costs are expensed as incurred. Development expenditures, on an individual project, are recognized as an intangible asset when the Company can demonstrate the following:

• A. the technical feasibility of completing the intangible asset so that it will be available for use or sale

• B. its intention to complete and its ability to use or sell the asset

• C. how the asset will generate future economic benefits

• D. the availability of resources to complete the asset

• E. the ability to measure reliably the expenditure during development

Following initial recognition of the development expenditure as an asset, the cost model is applied requiring the asset to be carried at cost less any accumulated amortization and accumulated impairment losses. During the period of development, the asset is tested for impairment annually. Amortization of the asset begins when development is complete and the asset is available for use. It is amortized over the period of expected future benefit.

A summary of the policies applied to the Company’s intangible assets is as follows:

Useful lives Amortization method used Internally generated or acquired	Patents	Computer software Finite(1～4 years) Amortized on a straight-line basis Acquired
	Finite(5 years) Amortized on a straight-line basis Acquired

(15) Impairment of non-financial assets

The Company assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 Impairment of Assets may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (“CGU”) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or Companys of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

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A cash generating unit, or Companys of cash-generating units, to which goodwill has been allocated is tested for impairment annually at the same time, irrespective of whether there is any indication of impairment. If an impairment loss is to be recognized, it is first allocated to reduce the carrying amount of any goodwill allocated to the cash generating unit (Company of units), then to the other assets of the unit (Company of units) pro rata on the basis of the carrying amount of each asset in the unit (Company of units). Impairment losses relating to goodwill cannot be reversed in future periods for any reason.

An impairment loss of continuing operations or a reversal of such impairment loss is recognized in profit or loss.

(16) Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probably that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Company expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

(17) Revenue recognition

The Company’s revenue arising from contracts with customers are primarily related to sale of goods and rendering of services. The accounting policies are explained as follow:

The Company manufactures and sells machinery. Sales are recognized when control of the goods is transferred to the customer and the goods are delivered to the customers. The main product of the Company is 3C electronic products and revenue is recognized based on the consideration stated in the contract.

The credit period of the Company’s sale of goods is from 90 to 150 days. For all of the contracts, when the Company transfers the goods to customers and has a right to an amount of consideration that is unconditional, these contracts are recognized as trade receivables. The Company usually collects the payments shortly after transfer of goods to customers; therefore, there is no significant financing component to the contract.

However, for some rendering of services contracts, part of the consideration was received from customers upon signing the contract, and the Company has the obligation to provide the services subsequently; accordingly, these amounts are recognized as contract liabilities.

The period between the transfers of contract liabilities to revenue is usually within one year, thus, no significant financing component is arised.

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(18) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

(19) Share-based payment transactions

The cost of equity-settled transactions between the Company and its subsidiaries is recognized based on the fair value of the equity instruments granted. The fair value of the equity instruments is determined by using an appropriate pricing model.

The cost of equity-settled transactions is recognized, together with a corresponding increase in other capital reserves in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company’s best estimate of the number of equity instruments that will ultimately vest. The income statement expense or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period.

No expense is recognized for awards that do not ultimately vest, except for equity-settled transactions where vesting is conditional upon a market or non-vesting condition, which are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

Where the terms of an equity-settled transaction award are modified, the minimum expense recognized is the expense as if the terms had not been modified, if the original terms of the award are met. An additional expense is recognized for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it vested on the date of cancellation, and any expense not yet recognized for the award is recognized immediately. This includes any award where non-vesting conditions within the control of either the entity or the employee are not met. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

(20) Post-employment benefits

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All regular employees of the Company and its domestic subsidiaries are entitled to a pension plan that is managed by an independently administered pension fund committee. Fund assets are deposited under the committee’s name in the specific bank account and hence, not associated with the Company and its domestic subsidiaries. Therefore fund assets are not included in the Company’s parent company only financial statements. Pension benefits for employees of the overseas subsidiaries and the branches are provided in accordance with the respective local regulations.

For the defined contribution plan, the Company and its domestic subsidiaries will make a monthly contribution of no less than 6% of the monthly wages of the employees subject to the plan. The Company recognizes expenses for the defined contribution plan in the period in which the contribution becomes due. Overseas subsidiaries and branches make contribution to the plan based on the requirements of local regulations.

Post-employment benefit plan that is classified as a defined benefit plan uses the Projected Unit Credit Method to measure its obligations and costs based on actuarial assumptions. Re-measurements, comprising of the effect of the actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur.

Past service costs are recognized in profit or loss on the earlier of:

• A. The date of the plan amendment or curtailment, and

• B. The date that the Company recognizes restructuring-related costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset, both as determined at the start of the annual reporting period, taking account of any changes in the net defined benefit liability (asset) during the period as a result of contribution and benefit payment.

(21) Income taxes

Income tax expense (income) is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.

Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Current income tax relating to items recognized in other comprehensive income or directly in equity is recognized in other comprehensive income or equity and not in profit or loss.

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The income tax for undistributed earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the Shareholders’ meeting.

Deferred tax

Deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

• A. Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

• B. In respect of taxable temporary differences associated with investments in subsidiaries and associates, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

• A. Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

• B. In respect of deductible temporary differences associated with investments in subsidiaries and associates, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

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

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Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets are reassessed at each reporting date and are recognized accordingly.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

(22) Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The consideration transferred, the identifiable assets acquired and liabilities assumed are measured at acquisition date fair value. For each business combination, the acquirer measures any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are accounted for as expenses in the periods in which the costs are incurred and are classified under administrative expenses.

When the Company acquires a business, it assesses the assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognized at the acquisition-date fair value. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognized in accordance with IFRS 9 Financial Instruments either in profit or loss or as a change to other comprehensive income. However, if the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity.

Goodwill is initially measured as the amount of the excess of the aggregate of the consideration transferred and the non-controlling interest over the net fair value of the identifiable assets acquired and the liabilities assumed. If this aggregate is lower than the fair value of the net assets acquired, the difference is recognized in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Company’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Each unit or Company of

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units to which the goodwill is so allocated represents the lowest level within the Company at which the goodwill is monitored for internal management purpose and is not larger than an operating segment before aggregation.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation. Goodwill disposed of in this circumstance is measured based on the relative recoverable amounts of the operation disposed of and the portion of the cash-generating unit retained.

5. Significant accounting judgements, estimates and assumptions

The preparation of the Company’s parent company only financial statements require management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumption and estimate could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

• (1) Fair value of financial instruments

Where the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be derived from active markets, they are determined using valuation techniques including the income approach (for example the discounted cash flows model) or market approach. Changes in assumptions about these factors could affect the reported fair value of the financial instruments. Please refer to Note 12 for more details.

• (2) Impairment of non-financial assets

An impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date less incremental costs that would be directly attributable to the disposal of the asset or cash generating unit. The value in use calculation is based on a discounted cash flow model. The cash flows projections are derived from the budget for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the asset’s performance of the cash generating unit being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. The key assumptions used to determine the recoverable amount for the different cash generating units, including a sensitivity analysis, are further explained in Note 6.

• (3) Pension benefits

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The cost of post-employment benefit and the present value of the pension obligation under defined benefit pension plans are determined using actuarial valuations. An actuarial valuation involves making various assumptions. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Please refer to Note 6 for more details.

• (4) Revenue recognition – sales returns and allowance

The Company estimates sales returns and allowance based on historical experience and other known factors at the time of sale, which reduces the operating revenue. In assessing the aforementioned sales returns and allowance, trevenue is recognized to the extent it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. Please refer to Note 6 for more details.

• (5) Income tax

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Company establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective counties in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective Company company's domicile.

Deferred tax assets are recognized for all carryforward of unused tax losses and unused tax credits and deductible temporary differences to the extent that it is probable that taxable profit will be available or there are sufficient taxable temporary differences against which the unused tax losses, unused tax credits or deductible temporary differences can be utilized. The amount of deferred tax assets determined to be recognized is based upon the likely timing and the level of future taxable profits and taxable temporary differences together with future tax planning strategies.

• (6) Accounts receivables–estimation of impairment loss

The Company estimates the impairment loss of accounts receivables at an amount equal to lifetime expected credit losses. The credit loss is the present value of the difference between the contractual cash flows that are due under the contract (carrying amount) and the cash flows that expects to receive (evaluate forward looking information). However, as the impact from the discounting of short-term receivables is not material, the credit loss is measured by the undiscounted cash flows. Where the actual future cash flows are lower than expected, a material impairment loss may arise. Please refer to Note 6 for more details.

• (7) Inventories

Estimates of net realisable value of inventories take into consideration that inventories may be damaged, become wholly or partially obsolete, or their selling prices have declined. The estimates are

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based on the most reliable evidence available at the time the estimates are made. Please refer to Note 6 for more details.

6. Contents of significant accounts

(1) Cash and cash equivalents

Cash and cash equivalents
31 Dec 2020 Cash on hand and demand deposits $5,051,868 Time deposits 17,508 Total $5,069,376 Financial assets measured at amortized cost, current 31 Dec 2020 Bank deposits $279,788	31 Dec 2020 $5,051,868 17,508 $5,069,376	31 Dec 2019
		$2,972,150 32,288
		$3,004,438
		31 Dec 2019
Bank deposits
		$15,690

(2) Financial assets measured at amortized cost, current

The Company classified certain financial assets as financial assets measured at amortized cost. Please refer to Note 8 for more details on financial assets measured at amortized cost under pledge and Note 12 for details on credit risk and assessment of impairment loss.

(3) Accounts receivable, net

A.

Accounts receivable, net A.
Account receivables Less: loss allowance Subtotal Accounts receivable-related parties Total	31 Dec 2020	31 Dec 2019
	$979,931 (70,506)	$3,989,557 (93,688)
	$909,875	$3,895,869
	161,471	332,497
	$1,071,346	$4,228,366

• B. Accounts receivables were not pledged.

• C. Trade receivables are generally on 90-150 day terms. The total carrying amount as of December 31, 2020 and December 31, 2019 were $979,931 thousand and $3,989,557 thousand, respectively. The Company follows the requirement of IFRS 9 to assess the impairment, measure the loss allowance of its trade receivables at an amount equal to lifetime expected credit losses, condsider the grouping of note receivables by counterparties’ credit rating, by geographical region and by industry sector, and its loss allowance is recognized based on expected loss ratio, details are as follow. Please refer to Note 12 for more details on credit risk management.

As at 31 Dec 2020	Neither past due nor impaired	Past due but not impaired	Past due but not impaired	Past due but not impaired	Total
		31~90 days	91~180 days	>=181 days

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Gross carrying amount Loss ratio Lifetime expected credit losses Subtotal 31 Dec 2019 Gross carrying amount Loss ratio Lifetime expected credit losses Subtotal	$979,574 0%~10% 70,052	$357 1%~10% 4	－ 5%~20% －	－ 50%~100% －	$979,931 70,056
	$909,552	$353	－	－	$909,875
	$4,319,042 0%~5% 91,577	$910 1%~10% 9	－ 5%~20% －	$2,102 50%~100% 2,102	$4,322,054 93,688
	$4,227,465	$901	－	－	$4,228,366

• D. Movement of the loss allowance table:

Movement of the loss allowance table:
As of 1 Jan 2020 (Reversal) for the current period As of 31 Dec 2020 As of 1 Jan 2019 Charge for the current period As of 31 Dec 2019	Collectively impaired	Total
	$93,688 (23,632)	$93,688 (23,632)
	$70,056	$70,056
	$70,539 23,149	$70,539 23,149
	$93,688	$93,688

• E. The Company entered into a factoring agreement with the following banks to sell its accounts receivable. Under the agreement, the Company is not obligated to bear the default risk of the transferred accounts receivable, but is liable for the losses incurred on any business dispute. The Company does not have any continuing involvement in the transferred accounts receivable. Thus, the Company derecognized the transferred accounts receivable.

As of 31 December 2020 and 2019, other receivables from banks incurred by accounts receivable factoring amounted to NT$245,255 thousand and NT$324,004 thousand, respectively.

As of 31 December 2020 and 31 December 2019, the relevant information of accounts receivable factored and derecognised by the Company is as follows:

(a) 31 December 2020:

The Factor (Transferee) E. Sun Bank CTBC Bank Total The Factor	Rates (%) Accounts receivable factoring not yet due (in thousands of dollars) － $ 70,244 － 13,203 － $83,447 (b) 31 December, 2019: Accounts	Amount received (in thousands of dollars) $ 62,953 11,833 $74,836 Amount received	Retention (recognized as other receivables) (in thousands of dollars) $ 7,291 1,320 $8,611 Retention	Credit Limit (in thousands of dollars)
				$100,000 20,000
				$120,000
				Credit Limit

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(Transferee) E. Sun Bank CTBC Bank Total	Rates (%) － － －	receivable factoring not yet due (in thousands of dollars) $ 85,000 21,402 $106,402	(in thousands of dollars) $76,336 19,258 $95,594	(recognized as other receivables) (in thousands of dollars) $ 8,664 2,144 $10,808	(in thousands of dollars) $ 85,000 21,600
					$106,600

• (4) Other receivables and other receivables-related parties

A.

Tax refund receivable Other receivables Less: loss allowance Subtotal Other receivables－related parties Total	31 Dec 2020 $2,095 350,738 (4,604) 348,229 11,313 $359,542	31 Dec 2019
		$2,950 332,548 (5,335)
		330,163
		53,125
		$383,288

• B. The Company follows the requirement of IFRS 9 to assess the impairment. The Company measures the loss allowance of its other receivables at an amount equal to lifetime expected credit losses, condsiders the grouping of note receivables by counterparties’ credit rating, by geographical region and by industry sector and its loss allowance is recognized based on expected loss ratio, details are as follow. Please refer to Note 12 for more details on credit risk management.

• C. Movement of the loss allowance table:

Movement of the loss allowance table:
As of 1 Jan 2020 (Reversal) for the current period As of 31 Dec 2020 As of 1 Jan 2019 Charge for the current period As of 31 Dec 2019	Collectively impaired $5,335 (731) $4,604 $4,779 556 $5,335	Total
		$5,335 (731)
		$4,604
		$4,779 556
		$5,335

• D. Ageing analysis of accounts receivables that is past due as of the end of the reporting period but not impaired is as follows:

not impaired is	as follows:
As of 31 Dec 2020 31 Dec 2019	Neither past due nor impaired	Past due but not impaired			Total
		31~90 days	91~180 days	>=181 days
	$144,464 $121,287	$176,517 $168,015	$25,153 $37,593	－ $318	$346,134 $327,213

(5) Inventories

• A.

Raw materials Finished goods Total	31 Dec 2020	31 Dec 2019
	$83,869 5,437,524	$33,769 3,577,233
	$5,521,393	$3,611,002

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• B. Expenses and losses incurred on inventories for the years ended 31 December 2020 and 2019 were

were
as follows: Cost of inventories sold (Gain) loss on inventory valuation Cost of goods sale	2020	2019
	$22,872,689 (35,435)	$21,758,613 115,615
	$22,837,254	$21,874,228

• C. For the Gompany's year ended December 31 2020, due to factors such as the rebound in the inventory price of the provision for decline in inventories at the beginning of the period, or the sale or use of the inventory, the assessment of the allowance for the provisioned inventory is recognized. The reduction in inventory recognition benefits was $35,435 thousand.

• D. No inventories were pledged.

• (6) Investments accounted for under the equity method

• A. The following table lists the investments in associates of the Company:

	31 Dec 2020	31 Dec 2020	31 Dec 2019	31 Dec 2019
Investees Carrying amount		Percentage of	Carrying	Percentage of
	amount	ownership (%)	amount	ownership (%)
Investments in subsidiaries
AVC INTERNATIONAL CO., LTD.－ B.V.I. $8,229,670
	$8,229,670	100%	$8,033,045	100%
CHIHUNG INTERNATIONAL LTD.	4,534,352	100%	3,900,058	100%
MERIT TRADING CORPORATION	170,579	100%	167,327	100%
RAYNEY INTERNATIONAL LTD.	122,803	100%	125,288	100%
AVC AMERICA,INC.	114,855	100%	95,053	100%
AVC INTERNATIONAL (SAMOA) CO., LTD. 59,458
	59,458	100%	65,205	100%
JADS CORPORATION (HK)LTD.	14,965	100%	28,027	100%
AVC INTERNATIONAL CO., LTD.－ SAMOA 289,235
	289,235	100%	319,168	100%
	31 Dec 2020		31 Dec 2019
Investees Carrying amount		Percentage of	Carrying	Percentage of
	amount	ownership (%)	amount	ownership (%)
AVC EUROPE TECHNOLOGY GMBH	8,826	100%	8,361	100%
AVC TECHNOLOGY(VIETNAM) COMPANY LIMITED 253,411		100%	－	－
HUNG YE INVESTMENT CO., LTD.	5,395	100%	14,359	100%
D-MAX TECHNOLOGY CO., LTD.	395,369	100%	300,008	100%
FOSITEK CORP.	174,721	19.71%	145,916	29.71%
Subtotal	14,373,669		13,201,815
Investments in associates:
ZIMAG TECHNOLOGY CO., INC. (Note)	40,112	9.53％	38,857	9.53％

255

Total $14,413,781 $13,240,672

Note: The Company evaluated and concluded that it has significant influence over Innovision, thus, this investment of the Company used the equity method for evaluation.

Certain investments accounted for under the equity method were audited by other independent accountants. Shares of profit or loss of these associates amounted to NT$299,668 thousand and NT$354,462 thousand for the years ended 31 December 2020 and 2019, respectively. Share of other comprehensive income (loss) of these subsidiaries and associates amounted to NT$31,581 thousand and NT$9,483 thousand for the years ended 31 December 2020 and 2019, respectively. The balances of investments accounted for under the equity method were (NT$1,750) thousand and (NT$439) thousand as of 31 December 2020 and 2019, respectively.

B. Financial information of associates:

The Company’s investment in ZIMAG TECHNOLOGY CO., INC. is not individually material. The aggregate carrying amount of the Company’s interests in ZIMAG TECHNOLOGY CO., INC. is NT$40,112 and NT$38,857 thousand, for the years ended December 31, 2020 and 2019, respectively. The aggregate financial information of the Company’s investments in ZIMAG TECHNOLOGY CO., INC. is as follows:

Net income Other comprehensive income (loss) Total comprehensive income		For theyears ended December 31	For theyears ended December 31
		2020	2019
		$5,706 (1,750)	$3,273 (439)
		$3,956	$2,834

None of the aforementioned associates were pledged.

(7) Property, plant and equipment

Property, plant and equipment
Owner occupied property, plant and equipment	31 Dec 2020	31 Dec 2019
	$434,590	$400,872

256

A. Owner occupied property, plant and equipment (applicable under IFRS 16 requirements)

Cost: As of 1 Jan 2020 Additions Disposals Other changes As of 31 Dec 2020 Depreciation and impairment: As of 1 Jan 2020 Depreciation Disposals Other changes As of 31 Dec 2020	Land	Buildings	Machinery and equipment	Molding equipment	Other facilities	Construction in progress and equipment awaiting examination	Total
	$167,151 － － －	$197,016 － － －	$145,431 43,299 (23,435) (500)	$42,595 487 (22,981) －	$215,763 64,212 (10,226) 500	－ － － －	$767,956 107,998 (56,642) －
	$167,151	$197,016	$164,795	$20,101	$270,249	－	$819,312
	－ － － －	$73,124 5,021 － －	$102,788 20,309 (13,082) (500)	$42,383 325 (22,890) －	$148,789 32,002 (4,047) 500	－ － － －	$367,084 57,657 (40,019) －
	－	$78,145	$109,515	$19,818	$177,244	－	$384,722

					Construction in
					progress and
					equipment
		Machinery and	Molding		awaiting
Land	Buildings	equipment	equipment	Other facilities	examination	Total

257

Cost: As of 1 Jan 2019 Additions Disposals Other changes As of 31 Dec 2019 Depreciation and impairment: As of 1 Jan 2019 Depreciation Disposals Other changes As of 31 Dec 2019 Net carrying amount as of: As of 31 Dec 2020 Net carrying amount as of: 31 Dec 2019	Land	Buildings	Machinery and equipment	Molding equipment	Other facilities	Construction in progress and equipment awaiting examination	Total
	$167,151 － － －	$150,124 － － 46,892	$157,023 23,375 (34,967) －	$70,387 － (27,792) －	$214,381 11,986 (10,604) －	－ － － －	$759,066 35,361 (73,363) 46,892
	$167,151	$197,016	$145,431	$42,595	$215,763	－	$767,956
	－ － － －	$52,062 5,021 － 16,041	$113,623 19,329 (30,164) －	$69,738 437 (27,792) －	$131,615 27,402 (10,228) －	－ － － －	$367,038 52,189 (68,184) 16,041
	－ $167,151	$73,124 $118,871	$102,788 $55,280	$42,383 $283	$148,789 $93,005	－ －	$367,084 $434,590
	$167,151	$123,892	$42,643	$212	$66,974	－	$400,872

Please refer to Note 8 for more details on property, plant and equipment under pledge.

258

(8) Investment property

Land Cost： As of 1 Jan 2020 － Other changes － As of 31 Dec 2020 － As of 1 Jan 2019 － Other changes － As of 31 Dec 2019 － Depreciation and impairment: As of 1 Jan 2020 － Depreciation － Other changes － As of 31 Dec 2020 － As of 1 Jan 2019 － Depreciation － Other changes － As of 31 Dec 2019 － Net carrying amount as at: As of 31 Dec 2020 － As of 31 Dec 2019 － Rental income from investment property Less: Direct operating expenses from investment property generating rental income Total	Land	Buildings		Total $134,495 － $134,495 $181,387 (46,892) $134,495 $80,249 2,375 － $82,624 $93,915 2,375 (16,041) $80,249 $51,871 $54,246 2019
	－ －	$134,495 －
	－	$134,495
	－ －	$181,387 (46,892)
	－	$134,495
	－ － －	$80,249 2,375 －
	－	$82,624
	－ － －	$93,915 2,375 (16,041)
	－	$80,249
	－	$51,871
	－	$54,246
		2020 $6,063 (4,562) $1,501
				$6,456 (4,577)
				$1,879

Please refer to Note 8 for more details on investment property under pledge.

The investment property held by the Company is industrial land and buildings, and the fair value is equivalent to the carrying value.

259

(9) Intangible assets

Intangible assets
Cost: As of 1 Jan 2020 Addition Other changes As of 31 Dec 2020 As of 1 Jan 2019 Addition Other changes As of 31 Dec 2019 Amortization and impairment: As of 1 Jan 2020 Amortization As of 31 Dec 2020 As of 1 Jan 2019 Amortization As of 31 Dec 2019 Net carrying amount as at: 31 Dec 2020 31 Dec 2019	Computer software	Patents	License fee	Total
	$84,990 31,364 －	$3,686 － －	$25,679 － －	$114,355 31,364 －
	$116,354	$3,686	$25,679	$145,719
	$71,773 13,217 －	$3,686 － －	$25,679 － －	$101,138 13,217 －
	$84,990	$3,686	$25,679	$114,355
	$40,038 27,571	$3,686 －	$16,981 2,417	$60,705 29,988
	$67,609	$3,686	$19,398	$90,693
	$19,177 20,861	$3,686 －	$12,948 4,033	$35,811 24,894
	$40,038	$3,686	$16,981	$60,705
	$48,745	－	$6,281	$55,026
	$44,952	－	$8,698	$53,650

Amortization expense of intangible assets under the statement of comprehensive income:

Operating costs Operating expenses	2020	2019
	－	－
	$29,988	$24,894

(10) Other non-current assets

Other non-current assets
Advance payments in equipments Refundable deposits Total	31 Dec 2020	31 Dec 2019 $20,953 4,264 $25,217
	$23,126 4,305
	$27,431

Please refer to Note 8 for more details on other non-current assets under pledge.

(11) Short-term borrowings

A.

31 Dec 2020

31 Dec 2019

260

$700,000

$630,000

Unsecured bank loans

• B. Interest rate ranges are within 0.7187%~0.8200% and 0.8648%~0.9500% as of 31 December 2020 and 2019, respectively.

• C. The maturity date as of 31 December 2020 due by 21 December 2021.

• D. The Company’s unused short-term lines of credits amounted to NT$2,382,880 thousand and NT$1,479,680 thousand as of 31 December 2020 and 2019, respectively.

(12) Short-term notes and bills payable

	31 Dec. 2020 Guarantee or acceptance agency Issued Period Range of interest rates Amount － － － － 31 Dec. 2019 Guarantee or acceptance agency Issued Period Range of interest rates Amount China bills finance corporation 2019.12.18~2020.1.16 0.54% $100,000 Other payable 31 Mar. 2020 31 Dec. 2019 Labor costs payable $294,255 $257,946 import-export and Freight payable 208,667 231,698 Services expense payable 103,203 66,672 Other 194,046 254,238 Net $800,171 $810,554 Corporate Bonds payable As at 31 Dec. 2020 31 Dec. 2019 Mortgage or guarantee 5 year secured bonds - issued at par value. Issued in August 2020. Interest at 0.62%, bullet repayment, payable annually $2,400,000 None Less: current portion － － Net $2,400,000 －	31 Dec. 2020 Guarantee or acceptance agency Issued Period Range of interest rates Amount － － － － 31 Dec. 2019 Guarantee or acceptance agency Issued Period Range of interest rates Amount China bills finance corporation 2019.12.18~2020.1.16 0.54% $100,000 Other payable 31 Mar. 2020 31 Dec. 2019 Labor costs payable $294,255 $257,946 import-export and Freight payable 208,667 231,698 Services expense payable 103,203 66,672 Other 194,046 254,238 Net $800,171 $810,554 Corporate Bonds payable As at 31 Dec. 2020 31 Dec. 2019 Mortgage or guarantee 5 year secured bonds - issued at par value. Issued in August 2020. Interest at 0.62%, bullet repayment, payable annually $2,400,000 None Less: current portion － － Net $2,400,000 －	31 Dec. 2020 Guarantee or acceptance agency Issued Period Range of interest rates Amount － － － － 31 Dec. 2019 Guarantee or acceptance agency Issued Period Range of interest rates Amount China bills finance corporation 2019.12.18~2020.1.16 0.54% $100,000 Other payable 31 Mar. 2020 31 Dec. 2019 Labor costs payable $294,255 $257,946 import-export and Freight payable 208,667 231,698 Services expense payable 103,203 66,672 Other 194,046 254,238 Net $800,171 $810,554 Corporate Bonds payable As at 31 Dec. 2020 31 Dec. 2019 Mortgage or guarantee 5 year secured bonds - issued at par value. Issued in August 2020. Interest at 0.62%, bullet repayment, payable annually $2,400,000 None Less: current portion － － Net $2,400,000 －	31 Dec. 2020 Guarantee or acceptance agency Issued Period Range of interest rates Amount － － － － 31 Dec. 2019 Guarantee or acceptance agency Issued Period Range of interest rates Amount China bills finance corporation 2019.12.18~2020.1.16 0.54% $100,000 Other payable 31 Mar. 2020 31 Dec. 2019 Labor costs payable $294,255 $257,946 import-export and Freight payable 208,667 231,698 Services expense payable 103,203 66,672 Other 194,046 254,238 Net $800,171 $810,554 Corporate Bonds payable As at 31 Dec. 2020 31 Dec. 2019 Mortgage or guarantee 5 year secured bonds - issued at par value. Issued in August 2020. Interest at 0.62%, bullet repayment, payable annually $2,400,000 None Less: current portion － － Net $2,400,000 －	31 Dec. 2020 Guarantee or acceptance agency Issued Period Range of interest rates Amount － － － － 31 Dec. 2019 Guarantee or acceptance agency Issued Period Range of interest rates Amount China bills finance corporation 2019.12.18~2020.1.16 0.54% $100,000 Other payable 31 Mar. 2020 31 Dec. 2019 Labor costs payable $294,255 $257,946 import-export and Freight payable 208,667 231,698 Services expense payable 103,203 66,672 Other 194,046 254,238 Net $800,171 $810,554 Corporate Bonds payable As at 31 Dec. 2020 31 Dec. 2019 Mortgage or guarantee 5 year secured bonds - issued at par value. Issued in August 2020. Interest at 0.62%, bullet repayment, payable annually $2,400,000 None Less: current portion － － Net $2,400,000 －	31 Dec. 2020 Guarantee or acceptance agency Issued Period Range of interest rates Amount － － － － 31 Dec. 2019 Guarantee or acceptance agency Issued Period Range of interest rates Amount China bills finance corporation 2019.12.18~2020.1.16 0.54% $100,000 Other payable 31 Mar. 2020 31 Dec. 2019 Labor costs payable $294,255 $257,946 import-export and Freight payable 208,667 231,698 Services expense payable 103,203 66,672 Other 194,046 254,238 Net $800,171 $810,554 Corporate Bonds payable As at 31 Dec. 2020 31 Dec. 2019 Mortgage or guarantee 5 year secured bonds - issued at par value. Issued in August 2020. Interest at 0.62%, bullet repayment, payable annually $2,400,000 None Less: current portion － － Net $2,400,000 －	31 Dec. 2020 Guarantee or acceptance agency Issued Period Range of interest rates Amount － － － － 31 Dec. 2019 Guarantee or acceptance agency Issued Period Range of interest rates Amount China bills finance corporation 2019.12.18~2020.1.16 0.54% $100,000 Other payable 31 Mar. 2020 31 Dec. 2019 Labor costs payable $294,255 $257,946 import-export and Freight payable 208,667 231,698 Services expense payable 103,203 66,672 Other 194,046 254,238 Net $800,171 $810,554 Corporate Bonds payable As at 31 Dec. 2020 31 Dec. 2019 Mortgage or guarantee 5 year secured bonds - issued at par value. Issued in August 2020. Interest at 0.62%, bullet repayment, payable annually $2,400,000 None Less: current portion － － Net $2,400,000 －	Amount
		Issued Period			Range of interest rates
	－ Guarantee or acceptance agency							－ Amount
		Issued Period			Range of interest rates
3) 4)					0.54% Mar. 2020
					$294,255 208,667 103,203 194,046
					$800,171
				31 Dec. 2020		31 Dec. 2019
				$2,400,000 －		－
				$2,400,000		－

(13) Other payable

(14) Corporate Bonds payable

The issuance of the above corporate bonds payable is to repay existing loans and expand working capital, the Company entered into a syndicated credit facility agreement with 9 banks by E.SUN Commercial Bank, Taiwan Cooperative Bank, Hua Nan Commercial Bank, Bank of Taiwan, Land Bank of Taiwan, Mega International Commercial Bank, The Shanghai Commercial & Savings Bank, First Commercial Bank and CTBC Bank for a NT$2,424,000 thousand credit line.

261

- (15) Long term borrowings

Unsecured Long-Term Loan from Taiwan Cooperative Bank Unsecured Long-Term Loan from Taiwan Business Bank Unsecured Long-Term Loan from Mega Inernational Commercial Bank Unsecured Long-Term Loan from Taiwan Cooperative Bank Unsecured Long-Term Loan from Shanghai Commercial & Savings Bank Unsecured Long-Term Loan from Shanghai Commercial & Savings Bank Unsecured Long-Term Loan from First Commercial Bank Unsecured Long-Term Loan from HSBC Unsecured Long-Term Loan from Taipei Fubon Bank	31 Dec 2020	31 Dec 2019	Redemption
	－ － － $135,000 － 125,000 － － －	$120,000 91,667 160,000 195,000 150,000 － 133,333 225,000 300,000	Effective 4 Jun 2016 to 4 Jun 2021. Principal is repaid in 20 quarterly payments with monthly interest payments. Effective 16 Nov 2017 to 16 Nov 2020. Three-year loan: principal is repaid in monthly payments. Interest payments are calculated on current principal amount. Three-year loan: first period begins 9 months after first allocation. Principal is repaid in 10 quarterly payments (principal NT$40,000 thousand for each period) with monthly interest payments. Effective 23 Jan 2018 to 23 Jan 2023. Principal is repaid in 20 quarterly payments with monthly interest payments. Effective 5 Mar 2018 to 5 Mar 2021. Three-year loan: interest-only for 6 months from the first date of allocation. Principal and interest are repaid in 10 quarterly payments. Effective 15 Apr 2020 to 2 Apr 2023. Three-year loan: principal is repaid in 12 quarterly payments with monthly interest payments, NT$1,250 thousand for each period. Effective 18 Apr 2018 to 18 Apr 2021. Three-year loan: principal is repaid in monthly payments with monthly interest payments. Effective 21 May 2018 to 21 May 2021. Three-year loan: first period begins 18 months after first allocation. Principal is repaid in 4 quarterly payments with monthly interest payments. Effective 20 Jun 2018 to 20 Jun 2021. Three-year loan: first period begins 18 months after first allocation. Principal is repaid in 6 quarterly payments with monthly

262

Unsecured Long-Term Loan from Hua Nan Bank Unsecured Long-Term Loan from Yuanta Commercial Bank Unsecured Long-Term Loan from Bank of Taiwan Unsecured Long-Term Loan from Chang Hwa Bank Unsecured Long-Term Loan from Taiwan Business Bank Unsecured Long-Term Loan from E. Sun Bank Unsecured Long-Term Loan from Kgi Bank Unsecured Long-Term Loan from Taiwan Cooperative Bank	31 Dec 2020	31 Dec 2019	interest payments. Redemption
	－ － － $136,111 133,334 150,000 100,000 225,000	$222,222 480,000 479,167 252,778 233,333 200,000 $200,000 285,000	Effective 1 Aug 2018 to 1 Aug 2021. Three-year loan: principal is repaid in monthly payments with monthly interest payments. Effective 7 Sep 2018 to 7 Sep 2021. Three-year loan: split loan is available. The first period begins at the expiration date of interest-only. Principal is repaid in 9 quarterly payments with monthly interest payments. Payments 1 to 8 are for NT$60,000 thousand, and the final payment is for NT$120,000 thousand. Effective 19 Nov 2018 to 19 Nov 2021. Three-year loan: interest-only payment for the first year. Principal is repaid with monthly interest payments. Effective 18 Feb 2019 to 19 Feb 2022. Three-year loan: Principal is repaid with monthly interest payments. Effective 1 Apr 2019 to 1 Apr 2022. Three-year loan: Principal is repaid in monthly payments with monthly interest payments. Effective 30 May 2019 to 30 May 2022. Three-year loan: Principal is amortized on a quarterly basis, and interest is paid on a monthly basis. Revolving credit for 2 years from the first day of allocation 24 Jun 2019. Effective 3 Sep 2019 to 3 Sep 2022. Five-year loan: Principal is amortized on a quarterly basis, and interest is paid on a monthly basis.

263

Unsecured Long-Term Loan from DBS Bank Limited Unsecured Long-Term Loan from Jih Sun Bank Unsecured Long-Term Loan from Land Bank of Taiwan Unsecured Long-Term Loan from CTBC Bank Unsecured Long-Term Loan from Shin Kong Bank Unsecured Long-Term Loan from Cathay United Bank Unsecured Long-Term Loan from Taishin International Bank Unsecured Long-Term Loan from HSBC Unsecured Long-Term Loan from Taiwan Business Bank Unsecured Long-Term Loan from Taiwan Cooperative Bank	－ 31 Dec 2020	500,000 31 Dec 2019	Revolving credit for 2 years, but each loan cannot exceed 6 months. Redemption
	－ $183,332 － － － － 120,000 416,667 270,000	$300,000 283,333 500,000 100,000 300,000 200,000 － － －	Effective 7 Oct 2019 to 7 Oct 2022. Two-year loan: Principal is repaid in 8 quarterly payments with monthly interest payments. Effective 18 Oct 2019 to 18 Oct 2022. Three-year loan: Principal is repaid in monthly payments with interest. Revolving credit for 3 years from the first day of allocation 20 Nov 2019. Revolving credit for 3 years from the first day of allocation 22 Aug 2021. Revolving credit for 2 years from 12 Sep 2019 to 12 Sep 2021. Three-year FRCP: first issued on 21 Jun, 2018. The full issuance of the agreement during the effective period(issued and guaranteed by Taishin Bank). Effective 24 Feb 2020 to 24 Feb 2023. Three-year loan: first period begins 18 months after first allocation. Principal is repaid in 7 quarterly payments with monthly interest payments. Effective 1 Apr 2019 to 1 Apr 2022. Four-year loan: Principal is repaid in monthly payments with monthly interest payments. Effective 17 Jun 2020 to 17 Jun 2025. Five-year loan: Principal is amortized on a quarterly basis,

264

and interest is paid on a monthly basis.

			basis.
Unsecured Long-Term Loan from Jih Sun Bank Unsecured Long-Term Loan from Yuanta Commercial Bank Unsecured Long-Term Loan from Hua Nan Bank Unsecured Long-Term Loan from Mega Bank Unsecured Long-Term Loan from Bank of Taiwan Subtotal Less: Due within one year Total	31 Dec 2020	31 Dec 2019	Redemption
	$262,500 600,000 377,778 490,000 59,896	－ － － － －	Effective 7 Jul 2020 to 7 Jul 2022. Two-year loan: Principal is repaid in 8 quarterly payments with monthly interest payments. Effective 7 Sep 2020 to 7 Sep 2024. Four-year loan: split loan is available. The first period begins at the expiration date of interest-only. Principal is repaid in 9 quarterly payments with monthly interest payments. Payments 1 to 8 are for NT$60,000 thousand, and the final payment is for NT$120,000 thousand. Effective 12 Oct 2020 to 12 Oct 2023. Three-year loan: principal is repaid in monthly payments with monthly interest payments. Effective 19 Oct 2020 to 19 Oct 2025. Five-year loan: first period begins 18 months after first allocation. Principal is repaid in 14 quarterly payments with monthly interest payments. Effective 12 Nov 2020 to 12 Nov 2025. Five-year loan: interest-only payment for the two year. Principal is repaid with monthly interest payments.
	3,784,618 (1,309,287)	5,910,833 (2,161,667)
	$2,475,331	$3,749,166
	2020	2019

265

0.9000%~1.08% 0.6777%~1.28%

Interest rates

(16) Post-employment benefits

A. Defined contribution plan

The Company and its domestic subsidiaries adopt a defined contribution plan in accordance with the Labor Pension Act of the R.O.C. Under the Labor Pension Act, the Company and its domestic subsidiaries will make monthly contributions of no less than 6% of the employees’ monthly wages to the employees’ individual pension accounts. The Company and its domestic subsidiaries have made monthly contributions of 6% of each individual employee’s salaries or wages to employees’ pension accounts.

Expenses under the defined contribution plan for the years ended 31 December 2020 and 2019 were NT$27,180 thousand and NT$25,320 thousand, respectively.

B. Defined benefits plan

The Company and its domestic subsidiaries adopt a defined benefit plan in accordance with the Labor Standards Act of the R.O.C. The pension benefits are disbursed based on the units of service years and the average salaries in the last month of the service year. Two units per year are awarded for the first 15 years of services while one unit per year is awarded for each year after the completion of the 15th year. The total units shall not exceed 45 units. Under the Labor Standards Act, the Company and its domestic subsidiaries contribute an amount equivalent to 2% of the employees’ total salaries and wages on a monthly basis to the pension fund deposited at the Bank of Taiwan in the name of the administered pension fund committee. Before the end of each year, the Company and its domestic subsidiaries will estimate the aforementioned Labor Pension reserve accounts balance. If the balance is insufficient for the estimated payments to employees meeting the conditions of receiving labor pension within the following year, the Company will set aside the shortfall in full by end of March in the following year.

The Ministry of Labor is in charge of establishing and implementing the fund utilization plan in accordance with the regulations for revenues, expenditures, safeguard and utilization of the labor retirement fund. The pension fund is invested in-house or under a mandate, based on a passive-aggressive investment strategy for long-term profitability. The Ministry of Labor establishes checks and risk management mechanism based on the assessment of risk factors including market risk, credit risk and liquidity risk, in order to maintain adequate flexibility to achieve targeted return without over-exposure of risk. With regard to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. Treasury funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with IAS 19. The Company expects to contribute NT$2,644 thousand to its defined benefit plan for the following 12 months as of 31 December 2020.

266

The durations of defined benefit obligation for the years ended 31 December 2020 and 2019 will expire in 14 years and 15 years, respectively.

Pension costs recognized in profit or loss are as follows:

Current period service costs Net interest on the net defined benefit liabilities Total	31 Dec 2020	31 Dec 2019
	$1,038 59	$1,246 215
	$1,097	$1,461

Reconciliations of liabilities (assets) of the defined benefit obligation and plan assets at fair value are as follows:

are as follows:
Defined benefit obligation Plan assets at fair value Net defined benefit liabilities	31 Dec 2020	31 Dec 2019
	$126,167 (120,934)	$120,997 (113,615)
	$5,233	$7,382

Reconciliations of liabilities (assets) of the defined benefit plan are as follows:

As of 1 January 2019 Current service cost Interest expense (income) Subtotal Remeasurements of the defined benefit liabilities/assets: Actuarial gains and losses arising from changes in demographic assumptions Actuarial gains and losses arising from changes in financial assumptions Experience adjustments Remeasurements of the defined benefit assets Subtotal Payments from the plan Contribution by employer As of 31 December 2019 Current service cost Interest expense (income) Subtotal Remeasurements of the defined benefit liabilities/assets: Actuarial gains and losses arising from changes in demographic assumptions Actuarial gains and losses arising from changes in financial assumptions Experience adjustments Remeasurements of the defined benefit assets	Defined benefit obligation	Plan assets at fair value	Net defined benefit liabilities
	$126,638 1,246 1,432	($107,647) － (1,217)	$18,991 1,246 215
	129,316	(108,864)	20,452
	(2,142) 5,798 (10,445) －	－ － － (3,609)	(2,142) 5,798 (10,445) (3,609)
	(6,789)	(3,609)	(10,398)
	(1,530)	1,530	－
	－	(2,672)	(2,672)
	$120,997	($113,615)	$7,382
	1,038 986	－ (909)	1,038 59
	123,003 (253) 6,445 (3,028) －	(114,524) － － － (3,766)	8,479 (253) 6,445 (3,028) (3,766)

267

Subtotal Payments from the plan Contribution by employer As of 31 December 2020	Defined benefit obligation	Plan assets at fair value	Net defined benefit liabilities
	3,164	(3,766)	(602)
	－ －	－ (2,644)	－ (2,644)
	$126,167	($120,934)	$5,233

The principal underlying actuarial assumptions are as follows:

Discount Rate Rate of future salary Increase	31 Dec. 2020 0.42% 2.00%	31 Dec. 2019
		0.80% 2.00%

Sensitivity analysis of each major actuarial assumption:

Sensitivity analysis of each major	actuarial assumption:	actuarial assumption:
Discount Rate increase 0.5% Discount Rate decrease 0.5% Future salary increase 0.5% Future salary decrease 0.5%	2020		2019
	Defined benefit obligations increase	Defined benefit obligations decrease	Defined benefit obligations increase	Defined benefit obligations decrease
	－ $9,152 $8,957 －	$8,361 － － $8,276	－ $9,353 $9,190 －	$8,506 － － $8,451

(17) Equities

A. Common stock

As of 31 December 2020 and 2019, the Company’s authorized capital was both NT$4,000,000 thousand, and both issued NT$3,533,101 thousand with 353,310 thousand shares, each at a par value of NT$10. Each share has one voting right and a right to receive dividends.

B. Additional paid-in capital

Additional paid-in capital
Share premium Difference between consideration and carrying amount of subsidiaries acquired or disposed Donated assets received Premium from merger Employee stock option Share options of convertible bonds Total	31 Dec 2020	31 Dec 2019
	$1,055,607 60,022 3,148 443,730 15,300 23,292	$1,055,607 － 2,887 443,730 15,300 23,293
	$1,601,099	$1,540,817

According to the Company Act, the capital reserve shall not be used except for making good the deficit of the company. When a company incurs no loss, it may distribute the capital reserves related to the income derived from the issuance of new shares at a premium or income from endowments received by the company. The distribution could be made in cash or in the form of

268

dividend shares to its shareholders in proportion to the number of shares being held by each of them.

C. Retained earnings and dividend policies

According to the Company’s Articles of Incorporation, current year’s earnings, if any, shall be distributed in the following order:

• (a) Payment of all taxes and dues;

• (b) Offset prior years’ operation losses;

• (c) Set aside 10% of the remaining amount after deducting items (a) and (b) as legal reserve, except

for when accumulated legal reserve has reached total authorized capital.

• (d) Set aside or reverse special reserve in accordance with law and regulations; and

• (e) The distribution of the remaining portion, if any, will be recommended by the Board of Directors and resolved in the shareholders’ meeting.

The policy of dividend distribution should reflect factors such as the current and future development plan, investment environment, fund requirements, domestic and international competition as well as the interest of the shareholders. A percentage of no less than 5% of the distributable profits of the accounting period shall be distributed as shareholders' dividends annually. When the accumulated distributable profits are less than 10% of our paid-up capital, we will no longer be required to make allowances for allocation. Shareholders' dividends could be paid in the form of shares or cash. Accordingly, at least 10% of the dividends must be paid in the form of cash.

According to the Company Act, the Company needs to set aside an amount to legal reserves unless where such legal reserve amounts to the total authorized capital. The legal reserve can be used to make good the deficit of the Company. When the Company incurs no loss, it may distribute the portion of legal reserves that exceeds 25% of the paid-in capital by issuing new shares or by cash in proportion to the number of shares being held by each of the shareholders.

Following the adoption of TIFRS, the FSC on 6 April 2012 issued Order No. Financial-Supervisory-Securities-Corporate-1010012865, which sets out the following provisions for compliance:

On a public company's first-time adoption of the TIFRS, for any unrealized revaluation gains and cumulative translation adjustments (gains) recorded to shareholders’ equity that the company elects to transfer to retained earnings by application of the exemption under IFRS 1, the company shall set aside an equal amount of special reserves. Following a company’s adoption of the TIFRS for the preparation of its financial reports, when distributing distributable earnings, it shall set aside to special reserves, from the profit/loss of the current period and the undistributed earnings from the previous period. The amount should equal to “other net deductions from shareholders’ equity for the current fiscal year, provided that the company has already set aside special reserves according to the requirements in the preceding point, it shall set aside

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supplemental special reserve based on the difference between the amount already set aside and other net deductions from shareholders’ equity. For any subsequent reversal of other net deductions from shareholders’ equity, the amount reversed may be distributed.

As of 31 December 2020, special reserve set aside for the first-time adoption of TIFRS amounts to $95,481 thousand. Furthermore, the Company has not reversed special reserve during the year ended 2020 as results of the no use, disposal or reclassification of related assets.

Details of the 2020 and 2019 earnings distribution and dividends per share as approved and resolved by the Board of Directors’ meeting and shareholders’ meeting on 23 March 2021 and 19 June 2020, respectively, are as follows:

Legal reserve Special reserve Common stock -cash dividend	Appropriation of earnings	Dividendper share(NT$)	Dividendper share(NT$)
	2020 2019 $192,355 $95,797 (76,086) 407,289 989,268 459,303	2020	2019
		$2.8	$1.3

Please refer to Note 6.20 for further details on employees’ compensation and remuneration to directors.

(18) Operating revenues

Disaggregation of revenue

Operating revenues Disaggregation of revenue
Sale of goods Timing of revenue recognition: At a point in time	2020	2019
	$25,269,916	$23,804,322
	$25,269,916	$23,804,322

(19) Lease

• A. Company as a lessee (applicable to the disclosure requirement under IFRS 16)

The Company leases various properties, including real estate such as land and buildings, machinery and equipment and office equipment. The lease terms range from 1 to 50 years.

The Company’s leases effect on the financial position, financial performance and cash flows are as follow:

• (a) Amounts recognized in the balance sheet

• I. Right-of-use assets

The carrying amount of right-of-use assets

Land Buildings Office equipment Total	31 Dec 2020 $7,097 13,540 463 $21,100	31 Dec 2019
		$8,148 13,304 336
		$21,788

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II. Lease liabilities

Lease liabilities
Current Non-current Total	31 Dec 2020	31 Dec 2019
	$6,752 14,863	$6,844 15,241
	$21,615	$22,085

Please refer to Note 6.21(4) for the interest on lease liabilities recognized during the years ended 31 Dec 2020 and refer to Note 12.5 Liquidity Risk Management for the maturity analysis for lease liabilities as of 31 Dec 2020.

• (b) Amounts recognized in the statement of profit or loss

Depreciation charge for right-of-use assets

Land Buildings Office equipment Total	2020	2019(Note)
	$856 5,914 173	$1,100 5,928 205
	$6,943	$7,233

• (c) Income and costs relating to leasing activities

The expenses relating to short-term leases	2020	2019(Note)
	$137	$220

• (d) Cash outflow relating to leasing activities

During the year ended 31 December 2020, the Company’s total cash outflows for leases amounting to $6,128 thousand.

• B. Operating lease commitments – Company as a lessor (applicable to the disclosure requirement in IFRS 16)

Please refer to Note 6.18 for relevant disclosure of the Company 's own occupied investment property. Leases of owned investment properties are classified as operating leases as they do not transfer substantially all the risks and rewards incidental to ownership of underlying assets.

P l e a Lease income for operating leases Income relating to fixed lease payments and variable lease payments that depend on an index or a rate	2020 $6,099	2019
		$6,504

se refer to Note 6.8 for relevant disclosure of property, plant and equipment for operating leases under IFRS 16. For operating leases entered by the Company, the undiscounted lease

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payments to be received and a total of the amounts for the remaining years as of 31 December 2020 are as follow:

December 2020 are as follow:
Not later than one year Later than one year and not later than five years Total	31 Dec 2020	31 Dec 2020
	$5,196 2,520	$2,520 －
	$7,716	$2,520

(20) Summary statement of employee benefits, depreciation and amortization expenses by function:

Function Nature	2020	2020	2020	2019	2019	2019
	Operating costs	Operating expenses	Total amount	Operating costs	Operating expenses	Total amount
Employee benefits expense
Salaries	$94,750	$540,594	$635,344	$69,980	$535,709	$605,689
Labor and health insurance	$7,860	$38,575	$46,435	$6,177	$37,465	$43,642
Pension	$4,595	$23,683	$28,278	$3,520	$23,142	$26,662
Remuneration to directors	－	$36,565	$36,565	－	$19,085	$19,085
Other employee benefits expense	$9,942	$33,938	$43,880	$7,926	$32,725	$40,651
Depreciation	$21,048	$45,927	$66,975	$21,366	$40,431	$61,797
Amortization	－	$27,571	$27,571	－	$20,862	$20,861

The number of the Company’s employees were 623 and 611, including 9 and 9 non-employee directors as of December 31, 2020 and December 31, 2019, respectively.

• A. The Company’s average employee benefit expenses for the years ended December 31, 2020 and 2019 were NT$1,228 thousand and NT$1,190 thousand, respectively.

• B. The Company’s average employee salary expenses for the years ended December 31, 2020 and 2019 were NT$1,035 thousand and NT$1,006 thousand, respectively.

• C. The Company’s average employee salary adjustment for the year ended December 31, 2020 increased by 2.85%.

• D. The Company has set up the audit committee for raplace for the supervisor, so the supervisor’s remuneration for the years ended December 31, 2020 and 2019 were NT$0 thousand an NT$1,991 thousand, respectively.

According to the Company’s Articles of Incorporation, no less than 3% of profit of the current year is distributable as employees’ compensation and no higher than 2% of profit of the current year is distributable as remuneration to directors. However, the company's accumulated losses shall have been covered. The Company may, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, have the profit distributed as employees’ compensation in the form of shares or in cash; and in addition thereto a report of such

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distribution is submitted to the shareholders’ meeting. Information on the board of directors’ resolution regarding the employees’ compensation and remuneration to directors and supervisors can be obtained from the “Market Observation Post System” on the website of the TWSE.

Based on the profit of the current year, the Company estimated the amounts of the employees’ compensation and remuneration to directors for the year ended 31 December 2020 to be NT$84,863 thousand and NT$36,370 thousand, respectively. The Company estimated the amounts of employees’ compensation and remuneration to directors and supervisors for the year ended 31 December, 2019 to be NT$44,098 thousand and NT$18,899 thousand, respectively. The aforementioned amounts were recognized as employee benefits expense. If the Board of Directors resolves to distribute employees’ compensation in the form of stocks, the number of stocks distributed was calculated based on the closing price of the day before the Board of Directors meeting. The difference between the estimation and the resolution of the stockholder’s meeting will be recognized in profit or loss in the subsequent year.

A resolution was passed at a Board of Directors meeting held on 23 March, 2021 to distribute NT$84,863 and NT$36,370 in cash as employees’ compensation and remuneration to directors and supervisors of 2020, respectively.No material differences exist between the estimated amount and the actual distribution of the employee compensation and remuneration to irectors and audit committee for the year ended 31 December, 2019.

(21) Non-operating income and expenses

• A. Interest income

-operating income and expenses Interest income
Interest on Cash from banks Financial assets measured at amortized cost Others Total	2020	2019
	$4,168 154 11	$5,357 706 2,274
	$4,333	$8,337

• B. Other income

Other income
Rental income Others Total Other gains and losses Gains on disposal of property, plant and equipment Foreign exchange gains, net Others Total Finance costs Interest on bonds payable Interest on borrowings from bank Interest on lease liabilities Total	2020		2019
	$6,099 129,654		$6,504 30,409
	$135,753		$36,913
	2020		2019 $10,136 17,889 (11,685) $16,340 2019 － $139,437 671 $140,108
	$2,132 46,880 (19,489)
	$29,523
	2020
	$5,360 89,950 521
	$95,831

• C. Other gains and losses

• D. Finance costs

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(22) Components of other comprehensive income

For the year ended 31 December 2020

(22) Components of other comprehensive income For the year ended 31 December 2020	sive income 2020
For the year ended 31 December 2019 Arising during theperiod Not to be reclassified to profit or loss in subsequent periods: Remeasurements of defined benefit plans $602 Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income 16,808 To be reclassified to profit or loss in subsequent periods: Exchange differences resulting from translating the financial statements of a foreign operation 69,675 Share of other comprehensive income of associates accounted for using the equity method (1,750) Total of other comprehensive income $85,335 Arising during theperiod Not to be reclassified to profit or loss in subsequent periods: Remeasurements of defined benefit plans $10,398 Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income 1,071 To be reclassified to profit or loss in subsequent periods: Exchange differences resulting from translating the financial statements of a foreign operation (469,199) Share of other comprehensive income of associates accounted for using the equity method (439) Total of other comprehensive income ($458,169)	Arising during theperiod	Reclassificatio n adjustments during the period	Other comprehensiv e income, before tax	Income tax relating to components of other comprehensiv e income	Other comprehensiv e income, net of tax
	$602 16,808 69,675 (1,750)	－ － － －	$602 16,808 69,675 (1,750)	($120) － (2,870) －	$482 16,808 66,805 (1,750)
	$85,335	－	$85,335	($2,990)	$82,345
		Reclassificatio n adjustments during the period	Other comprehensiv e income, before tax	Income tax relating to components of other comprehensiv e income	Other comprehensiv e income, net of tax
	$10,398 1,071 (469,199) (439)	－ － － －	$10,398 1,071 (469,199) (439)	($2,079) － 61,277 －	$8,319 1,071 (407,922) (439)
	($458,169)	－	($458,169)	$59,198	($398,971)

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(23) Income tax

The major components of income tax expense are as follows:

A. Income tax expense recognized in profit or loss

Income tax expense recognized in profit or loss
Current income tax expense: Current income tax charge Adjustments in respect of current income tax of prior periods Deferred tax expense (income): Deferred tax expense (income) relating to origination and reversal of temporary differences Total income tax expense Income tax relating to components of other comprehensive income Deferred tax (income): Remeasurements of defined benefit plans Share of other comprehensive income of associates accounted for using the equity method Income tax relating to components of other comprehensive income	2020	2019
	$288,764 － 94,493	$230,719 (9,891) (6,811)
	$383,257	$214,017
	2020	2019
	$120 2,870	$2,079 (61,277)
	$2,990	($59,198)

B. Income tax relating to components of other comprehensive income

C. A reconciliation between income tax expense and income before tax at applicable tax rate was as follows:

Accounting profit before tax from continuing operations At statutory income tax rate Tax effect of expenses not deductible for tax purposes Surtax on undistributed retained earnings Adjustments in respect of current income tax of prior periods Total income tax expense recognized in profit or loss	2020	2019
	$2,299,103	$1,171,986
	459,821 (42,163) 195 (34,596)	234,283 (22,705) 11,152 (8,713)
	$383,257	$214,017

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• D. Deferred tax assets (liabilities) relate to the following: For the year ended 31 December 2020

Temporary differences Allowance for bad debts Allowance for losses on inventory Unrealized profit on intercompany sales Unrealized exchange (losses) Investments accounted for under the equity method Net defined benefit liabilities, noncurrent Others Deferred tax (expense)/ income Net deferred tax (liabilities) Reflected in balance sheet as follows: Deferred tax assets Deferred tax liabilities	Beginning balance as of 1 Jan 2020	Deferred tax income (expense) recognized in profit or loss	Deferred tax income recognized in other comprehensive income	Deferred tax (expense) charged directly to equity	Ending balance as of 31 December 2020
	$11,161 33,290 41,162 7,843 (668,741) 1,477 245,994	$5,723 (7,087) 74,738 2,375 (219,546) (311) 49,615	－ － － － ($2,870) (120) －	－ － － － － － －	$16,884 26,203 115,900 10,218 (891,157) 1,046 295,609
	($327,814)	$94,493	($2,990)	－	($425,297)
	$583,492				$695,853
	$911,306				($1,121,150)

For the year ended 31 December 2019

Temporary differences Allowance for bad debts Allowance for losses on inventory Unrealized profit on intercompany sales Unrealized exchange (losses) Investments accounted for under the equity method Net defined benefit liabilities, noncurrent Others Deferred tax (expense)/ income Net deferred tax (liabilities) Reflected in balance sheet as follows: Deferred tax assets Deferred tax liabilities	Beginning balance as of 1 Jan 2020	Deferred tax income (expense) recognized in profit or loss	Deferred tax income recognized in other comprehensive income	Deferred tax (expense) charged directly to equity	Ending balance as of 31 December 2020
	$10,697 10,167 12,656 1,114 (623,127) 3,798 190,873	$464 23,123 28,506 6,729 (106,891) (242) 55,121	－ － － － $61,277 (2,079) －	－ － － － － － －	$11,161 33,290 41,162 7,843 (668,741) 1,477 245,994
	($393,822)	$6,810	$59,198	－	($327,814)
	$408,505				$583,492
	($802,327)				($911,306)

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E. The assessment of income tax returns

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

(24) Earnings per share

Earnings per share
Basic earnings per share Profit attributable to ordinary equity holders of the Company (in thousand NT$) Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Diluted earnings per share Profit attributable to ordinary equity holders of the Company (in thousand NT$) Basic earnings per share Profit attributable to ordinary equity holders of the Company (in thousand NT$) Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Diluted earnings per share Profit attributable to ordinary equity holders of the Company (in thousand NT$)		2020
	Amount $1,915,846 － $1,915,846	Number of shares (shares in thousands) 353,310 1,284 354,594 2019	Earningsper share
			$5.42
			$5.40
	Amount $957,969 － $957,969	Number of shares (shares in thousands) 353,310 1,120 354,430	Earningsper share
			$2.71
			$2.70

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7. Related party transactions

• (1) Related parties of the company

Relatedparties AVC INTERNATIONAL (SAMOA) CO., LTD. AVC AMERICA, INC. MERIT TRADING CORPORATION RAYNEY INTERNATIONAL LTD. TONBRIDGE INVESTMENTS LTD. JADS CORPORATION (HK) LTD. ASIA VITAL COMPONENTS (CHINA) CO., LTD. ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. ASIA VITAL COMPONENTS (CHENGDU) CO., LTD. FOSITEK CORP. D-MAX TECHNOLOGY CO., LTD.	Relationship
	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

• (2) Significant transactions with the related parties

A. Sales

nificant transactions with the related Sales	parties
Subsidiaries	2020	2019
	$839,788	$765,973

The sales prices and collection terms to related parties were not significantly different from those of sales to non-related parties. The sales price to other related parties was determined through mutual agreement in reference to market conditions.

B. Purchases

Purchases
Subsidiaries	2020	2019
	$23,167,986	$22,668,417

The payment terms from the related party suppliers are comparable with third party suppliers.

C. Account receivable -related parties

Account receivable-related parties
Subsidiaries	31 Dec 2020	31 Dec 2019
	$161,471	$332,497

D. Account payable –related parties

Account payable–related parties
Subsidiaries	31 Dec 2020	31 Dec 2019
	$7,591,758	$7,626,634

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E. Other receivable –related parties

(a) Non-Financing :

Subsidiaries

31 Dec 2020	31 Dec 2019
$11,313	$53,125

(b) Financing

(b) Financing
	2020
Name of the relatedparties Maximum Balance Ending Balance Subsidiaries － －	Actual amount provided	Interest rate range	Total interest income	Interest receivable
	－	－	－	－
	2019
Name of the relatedparties Maximum Balance Ending Balance Subsidiaries $100,000 －	Actual amount provided	Interest rate range	Total interest income	Interest receivable
	－	2.50%	115	－

• F. Endorsement/Guarantee provided to others

Endorsement/Guarantee provided to others	others
31 Dec 2020 Subsidiaries $4,113,723 Key management personnel compensation 2020 Short-term employee benefits $34,101 Post-employment benefits 621 Subsidiaries $34,722	31 Dec 2020	31 Dec 2019
	$4,113,723	$4,924,214
		2019
	$34,101 621	$24,454 540
	$34,722	$24,994

• G. Key management personnel compensation

8. Assets pledged as security

The following table lists assets of the Company pledged as security:

Assetspledged for security	Carryingamount	Carryingamount
	31 Dec 2020	31 Dec 2019
Financial assets measured at amortized costs, current Land Buildings Investment property Refundable deposits Total	$279,788 88,235 105,664 51,871 2,800	$15,690 88,235 108,739 54,246 2,800
	$528,358	$269,710

9. Significant contingencies and unrecognized contractual commitments

• (1) Legal claim contingency ： None

(2) Other

• A. The Company guaranteed a deposit for customs in the amount of NT$2,500 thousand and NT$300 thousand from Bank of Taiwan and Taiwan Cooperative Bank, respectively.

• B. Please refer to Note 7.6 for Endorsement/Guarantee provided to related parties for the year ended 2020.

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10. Losses due to major disasters

None.

11. Significant subsequent events

None.

12. Financial instruments

• (1) Categories of financial instruments

ncial instruments Categories of financial instruments
Financial assets Financial assets at fair value through other comprehensive income Financial assets measured at amortized cost Cash and cash equivalents (excluding cash on hand) Financial assets measured at amortized cost Amounts receivables Subtotal Total Financial liabilities Financial liabilities at amortized cost: Short-term loans Short-term notes and bills payable Amounts payables Corporate bonds payable (including current portion) Long-term loans (including current portion) Lease liabilities (including current portion) Total	31 Dec 2020	31 Dec 2019
	$2,423 5,069,361 279,788 1,430,888	$9,423 3,004,419 15,690 4,611,654
	6,780,037	7,631,763
	$6,782,460	$7,641,186
	31 Dec 2020	31 Dec 2019
	$700,000 － 8,974,633 2,400,000 3,784,618 21,615	$630,000 100,000 8,834,302 － 5,910,833 22,085
	$15,880,866	$15,497,220

• (2) Financial risk management objectives and policies

The Company’s principal financial risk management objective is to manage the market risk, credit risk and liquidity risk related to its operating activates. The Company identifies measures and manages the aforementioned risks based on the Company’s policy and risk appetite.

The Company has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant transactions, due approval process by the Board of Directors must be carried out based on related protocols and internal control procedures. The Company complies with its financial risk management policies at all times.

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(3) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of the changes in market prices. Market prices comprise currency risk, interest rate risk and other price risk (such as equity risk).

In practice, it is rarely the case that a single risk variable will change independently from other risk variable, there is usually interdependencies between risk variables. However the sensitivity analysis disclosed below does not take into account the interdependencies between risk variables.

A. Foreign currency risk

The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expense are denominated in a different currency from the Company’s functional currency) and the Company’s net investments in foreign subsidiaries.

The Company has certain foreign currency receivables to be denominated in the same foreign currency with certain foreign currency payables, therefore forming a natural hedge. Furthermore, as net investments in foreign subsidiaries are for strategic purposes, they are not hedged by the Company.

The foreign currency sensitivity analysis of the possible change in foreign exchange rates on the Company’s profit is performed on significant monetary items denominated in foreign currencies as at the end of the reporting period. The Company’s foreign currency risk is mainly related to the volatility in the exchange rates for USD and RMB. The information of the sensitivity analysis is as follows:

• (a) When NTD strengthens/weakens against USD by 1%, the profit for 2020 and 2019 is decreased/increased by NT$12,801 thousand and NT$801 thousand, respectively.

• (b) When NTD strengthens/weakens against RMB by 1%, the profit for 2020 and 2019 is decreased/increased by NT$200 thousand and NT$352 thousand, respectively.

B. Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to bank borrowings with fixed interest rates and variable interest rates.

The Company manages its interest rate risk by having a balanced portfolio of fixed and variable loans and borrowings and entering into interest rate swaps. Hedge accounting does not apply to these swaps as they do not qualify for it.

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The interest rate sensitivity analysis is performed on items exposed to interest rate risk as at the end of the reporting period. A change of 10 basis points of interest rate in a reporting period could cause the profit for 2020 and 2019 to decrease/increase by NT$1,531 thousand and NT$3,616 thousand, respectively.

C. Equity price risk

The fair value of the Company’s unlisted equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company’s unlisted equity securities are classified as financial assets at fair value through other comprehensive income.

The equity price sensitivity analysis is based on fair value changes as at the end of the reporting period. For the years ended 31 December 2020 and 2019, a change of 5% in the price classified as equity instruments investments measured at fair value through other comprehensive income could cause the other comprehensive income to increase/decrease by NT$121 thousand and NT$121 thousand, respectively.

Please refer to Note 12.8 for sensitivity analysis information of other equity instruments or derivatives that are linked to such equity instruments whose fair value measurement is categorized under Level 3.

(4) Credit risk management

Credit risk is the risk that a counterparty will not meet its obligations under a contract, leading to a financial loss. The Company is exposed to credit risk from operating activities (primarily for accounts receivables and notes receivables) and from its financing activities, including bank deposits and other financial instruments.

Credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to credit risk management. Credit limits are established for all counter parties based on their financial position, rating from credit rating agencies, historical experience, prevailing economic condition and the Company’s internal rating criteria etc. Certain counter parties’ credit risk will also be managed by taking credit enhancing procedures, such as requesting for prepayment or insurance.

As of 31 December 2020 and 2019, amounts receivables from top ten customers represent 86.21% and 72% of the total accounts receivables of the Company, respectively. The credit concentration risk of other accounts receivables is insignificant.

Credit risk from balances with banks, fixed income securities and other financial instruments is managed by the Company’s treasury in accordance with the Company’s policy. The Company only transacts with counterparties approved by the internal control procedures, which are banks and financial institutions, companies and government entities with good credit rating. Consequently, there is no significant credit risk for these counter parties.

282

• (5) Liquidity risk management

The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of cash and cash equivalents and bank borrowings. The table below summarizes the maturity profile of the Company’s financial liabilities based on the contractual undiscounted payments and contractual maturity. The payment amount includes the contractual interest. The undiscounted payment relating to borrowings with variable interest rates is extrapolated based on the estimated interest rate yield curve as of the end of the reporting period.

Non-derivative financial liabilities

Non-derivative financial liabilities
As of 31 December 2020 Loans Short-term notes and bills payable Amounts payables Lease liabilities Non-derivative financial liabilities As of 31 December, 2019 Loans Short-term notes and bills payable Amounts payables Lease liabilities	< 1year	2 to 3years	4 to 5years	> 5year	Total
	$2,013,286 $5,360 $8,965,274 $6,752 < 1year	$1,982,061 － － $9,923 2 to 3years	$493,270 $2,400,000 － $1,787 4 to 5years	－ － － $3,153 > 5year	$4,488,617 $2,405,360 $8,965,274 $21,615 Total
	$2,901,856 $100,000 $8,824,112 $6,844	$3,629,166 － － $9,419	$120,000 － － $1,730	－ － － $4,092	$6,651,022 $100,000 $8,824,112 $22,085

• (6) Reconciliation of liabilities arising from financing activities

Reconciliation of liabilities for 2020:

As at 1 Jan. 2020 Cash flows Non-cash changes As at 31 Dec. 2020 As at 1 Jan. 2020 Cash flows Non-cash changes As at 31 Dec. 2020	Short-term borrowings	Short-term notes and bills payable	Bonds payable	Long-term borrowings
	$630,000 70,000 －	$100,000 (100,000) －	－ $2,400,000 －	$5,910,833 (2,126,215) －
	$700,000	－	$2,400,000	$3,784,618
	Lease liabilities	Guarantee deposits	Total liabilities from financing activities
	$22,085 5,991 (6,461)	$11,966 (11,040) －	$6,674,884 238,736 (6,461)
	$21,615	$926	$6,907,159

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Reconciliation of liabilities for 2019:

As at 1 Jan. 2019 Cash flows Non-cash changes As at 31 Dec. 2019	Short-term borrowings	Short-term notes and bills payable	Long-term borrowings	Lease liabilities	Guarantee deposits	Total liabilities from financing activities
	$200,000 430,000 －	－ $100,000 －	$5,142,220 768,613 －	$19 6,918 15,148	$10,566 1,400 －	$5,352,805 1,306,931 15,148
	$630,000	$100,000	$5,910,833	$22,085	$11,966	$6,674,884

• (7) Fair values of financial instruments

• A. The methods and assumptions applied in determining the fair value of financial instruments:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used by the Company to measure or disclose the fair values of financial assets and financial liabilities:

• (a) The carrying amount of cash and cash equivalents, accounts receivables, accounts payable and other current liabilities approximate their fair value due to their short maturities.

• (b) For financial assets and liabilities traded in an active market with standard terms and conditions, their fair value is determined based on market quotation price (including listed equity securities and bonds) at the reporting date

• (c) Fair value of equity instruments without market quotations (including private placement of listed equity securities, unquoted public company and private company equity securities) are estimated using the market method valuation techniques based on parameters such as prices based on market transactions of equity instruments of identical or comparable entities and other relevant information (for example, inputs such as discount for lack of marketability, P/E ratio of similar entities and Price-Book ratio of similar entities).

• (d) Fair value of debt instruments without market quotations, bank loans, bonds payable and other non-current liabilities are determined based on the counterparty prices or valuation method. The valuation method uses DCF method as a basis, and the assumptions such as the interest rate and discount rate are primarily based on relevant information of similar instrument (such as yield curves published by the Taipei Exchange, average prices for Fixed Rate Commercial Paper published by Reuters and credit risk, etc.)

• B. Fair value of financial instruments measured at amortized cost

The carrying amount of financial assets and financial liabilities measured at amortized cost approximate their fair value due to their short maturities.

• C. Fair value measurement hierarchy for financial instruments

Please refer to Note 12.8 for fair value measurement hierarchy for financial instruments of the Company.

284

• (8) Fair value measurement hierarchy

• A. Fair value measurement hierarchy

All asset and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole. Level 1, 2 and 3 inputs are described as follows:

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities that the entity can access at the measurement date

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

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorization at the end of each reporting period.

• B. Fair value measurement hierarchy of the Company’s assets and liabilities

The Company does not have assets that are measured at fair value on a non-recurring basis. Fair value measurement hierarchy of the Company’s assets and liabilities measured at fair value on a recurring basis is as follows:

recurring basis is as follows:
As at 31 December 2020 Financial assets: Financial assets at fair value through other comprehensive income Equity instrument measured at fair value through other comprehensive income As at 31 December 2019 Financial assets: Financial assets at fair value through other comprehensive income Equity instrument measured at fair value through other comprehensive income	Level 1	Level 2	Level 3	Total
	－ Level 1	－ Level 2	$2,423 Level 3	$2,423 Total
	－	－	$9,423	$9,423

• C. Reconciliation for fair value measurements in Level 3 is as follows:

As at 1 Jan. 2020 Unrealized (losses) from equity instruments investments measured at fair value through other comprehensive income Disposals As at 31 Dec. 2020	Financial assets at fair value through other comprehensive income
	$9,423 15,220 (22,220)
	$2,423

285

As at 1 Jan. 2019 Unrealized (losses) from equity instruments investments measured at fair value through other comprehensive income As at 31 Dec. 2019	Financial assets at fair value through other comprehensive income
	$9,423 －
	$9,423

• D. Fair value measurement hierarchy of the Company’s assets and liabilities not measured at fair value but for which the fair value is disclosed:

The fair value of long-term loans is determined using discounted cash flow model, based on the

Company’s current incremental borrowing rates of similar loans.

As at 31 December 2020 Long-term borrowings (including current portion with maturity less than 1 year) As at 31 December 2019 Long-term borrowings (including current portion with maturity less than 1 year)	Level 1	Level 2	Level 3	Carryingamount
	－ －	$3,784,618 $5,910,833	－ －	$3,784,618 $5,910,833

• (9) Significant assets and liabilities denominated in foreign currencies

Information regarding the significant assets and liabilities denominated in foreign currencies is listed below:

below:
Financial assets		31 December 2020
	Foreign currencies (in thousands)	Foreign exchange rate	NT$ (in thousands)
	$245,431.12 $4,561.39 $484,486.80 $290,377.10 －	28.4800 4.3770 28.4800 28.4800 4.3770	$6,989,878 $19,965 $13,798,184 $8,269,940 －
Monetary items: USD RMB Investments accounted for under the equity method USD Financial liabilities
Monetary items: USD RMB

286

Financial assets		31 December 2019
	Foreign currencies (in thousands)	Foreign exchange rate	NT$ (in thousands)
	$267,669.05 $10,410.39 $425,001.07 $269,059.94 $2,222.34	29.9800 4.3050 29.9800 29.9800 4.3050	$8,024,718 $44,817 $12,741,532 $8,066,417 $9,567
Monetary items: USD RMB Investments accounted for under the equity method USD Financial liabilities
Monetary items: USD RMB

The Company’s functional currency are various, and hence is not able to disclose the information of exchange gains and losses by each significant assets and liabilities denominated in foreign currencies. The foreign exchange gains were NT$46,880 thousand and NT$17,889 thousand for the years ended December 31, 2020 and 2019, respectively.

(10) Capital management

The primary objective of the Company’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value. The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust dividend payment to shareholders, returning capital to shareholders or issuing new shares.

13. Other disclosure

• (1) Information at significant transactions and on investees

• A. Financing provided to others for the year ended 31 December 2020: Please refer to Attachment 1.

• B. Endorsement/Guarantee provided to others for the year ended 31 December 2020: Please refer to Attachment 2.

• C. Securities held as of 31 December 2020: Please refer to Attachment 3.

• D. Individual securities acquired or disposed of with accumulated amount exceeding the lowers of NT$300 million or 20% of the capital stock for the year ended 31 December 2020: None.

• E. Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock for the year ended 31 December 2020: None.

287

• F. Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock for the year ended 31 December 2020: None.

• G. Related party transactions for purchases and sales amounts exceeding the lower of NT$100 million or 20% of the capital stock for the year ended 31 December 2020: Please refer to Attachment 4.

• H. Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of capital stock as of 31 December 2020: Please refer to Attachment 5.

• I. Direct or indirect significant influence or control over the investees for the year ended 31 December 2020 (excluding investments in China): Please refer to Attachment 6.

• J. Financial instruments and derivative transactions: None

• (2) Information on investments in mainland China

• A. Information on investments in mainland China ： Please refer to Attachment 7.

• B. Significant transactions with the investee companies in China directly or indirectly through the third area and the relevant prices, payment terms and unrealized gains and losses:

  • (a)Purchase, ending balance of related payables and their weightings: Please refer to Attachment

• (b)Sales, the ending balance of related receivables and their weightings: Please refer to Attachment 4.

• (c)Ending balance of endorsements/guarantees or collateral provided and the purposes: Please refer to Attachment 2.

• (d)Transactions that have significant impact on the profit or loss of current period or the financial position: None.

• (3) Information of major shareholders: Please refer to Attachment 8.

288

ASIA VITAL COMPONENTS CO. , LTD PARENT COMPANY ONLY FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan Dollars unless Otherwise Specified)

FINANCING PROVIDED TO OTHERS

TABLE 1

TABLE 1
No (Note 1)	Financing Company	Counter-party	Financial Statement Account (Note 2)	Related Party	Maximum Balance for the Period (Note 3)	Ending Balance (Note 9)	Amount Actually Drawn	Interest Rate	Nature of Financing (Note 4)	Transaction Amounts (Note 5)	Reason for Financing (Note 6)	Allowance for Doubtful Accounts	Collateral		Financing Limits for Each Borrower	Financing Company's Total Financing Amount Limits	Note
													Item	Value
1 2 3 4 5 6	ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD. AVC INTERNATIONAL (SAMOA) CO., LTD. WUCHIDA INTERNATIONAL CO.,LTD. D-MAX TECHNOLOGY CO., LTD. FOSITEK CORP. ASIA VITAL COMPONENTS (CHINA) CO., LTD.	AVC PRECISION, CO., LTD. AVC PRECISION, CO., LTD. (JIASHAN)D-MAX ELECTRONICS CO.,LTD. WUCHIDA INTERNATIONAL CO., LTD. FIRST DOME CORP TELECOM.,LTD. AVC PRECISION, CO., LTD.	Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables	Yes Yes Yes Yes Yes Yes	$372,047 (CNY85,000 thousand) $284,800 (USD10,000 thousand) $56,960 (USD2,000 thousand) $71,200 (USD2,500 thousand) $150,000 $218,851 (CNY50,000 thousand)	$372,047 (CNY85,000 thousand) $284,800 (USD10,000 thousand) $56,960 (USD2,000 thousand) $71,200 (USD2,500 thousand) $150,000 $218,851 (CNY50,000 thousand)	－ $142,400 (USD5,000 thousand) － $71,200 (USD2,500 thousand) $142,400 (USD5,000 thousand) $218,851 (CNY50,000 thousand)	3.00% 3.00% 2.00% 2.00% 3.00% 3.00%	２ ２ ２ ２ ２ ２	－ － － － － －	Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital	－ － － － － －	－ － － － － －	－ － － － － －	$2,115,319 $2,115,319 $2,115,319 $158,147 $354,584 $2,115,319	$4,230,639 $4,230,639 $4,230,639 $158,147 $354,584 $4,230,639	(Note 7) (Note 7) (Note 7) (Note 8) (Note 9) (Note 7)

Note 1 ： Companies are coded as follows ：

• (1) ASIA VITAL COMPONENTS Co., LTD. is coded "0".

• (2) The investees are coded from "1" in the order presented in the table above.

Note 2 ： Receivables from affiliates and related parties, shareholder transactions, prepayments and temporary payments etc. are required to be disclosed in this field if they are financings provided to others.

• Note 3 ： The maximum balance of financing provided to others for the year ended December 31, 2020.

Note 4 ： Nature of Financing are coded as follows ：

• (1) Business transaction is coded "1".

• (2) Short-term financing is coded "2".

Note 5 ： If nature of financing is business transaction, the amount of transaction should be disclosed.

• Note 6 ： With respect to short-term financing, the reasons of financing and the purpose of use by the counter-party shall be specified, such as loan repayment, equipment acquisition or operating capital.

• Note 7 ： For foreign companies of which the Company holds, directly and indirectly, 100% of the voting shares, the financing provided to any single entity shall not exceed 20% of the net worth. Total financing shall not exceed 40% of the net worth.

• Note 8： D-MAX TECHNOLOGY CO., LTD. : The financing provided to any single entity shall not exceed 40% of the net worth. Total financing shall not exceed 40% of the net worth.

• Note 9： FOSITEK CORP. : The financing provided to any single entity shall not exceed 40% of the net worth. Total financing shall not exceed 40% of the net worth.

• Note 10 ： If public companies, pursuant to Paragraph 1, Article 14 of Regulations Governing Loaning of Funds and Making of Endorsements / Guarantees by Public Companies, resolve each individual lending at the board meetings, the amounts resolved (before any drawing) shall be the publicly-announced balance to disclose the risk they assume; provided however,

• if any repayment is made subsequently, the outstanding balance after such repayment shall be disclosed to reflect the risk adjusted. If public companies, pursuant to Paragraph 2, Article 14 of the same Regulations, authorize the chairperson by board resolution, within a certain monetary limit and a period not to exceed one year,

• to give loans in instalments or to make a revolving credit line available, the amount resolved shall be the publicly-announced balance. Although repayment may be made subsequently, as drawings are likely to happen, the amount of financing resolved by the board shall be recorded as the publicly-announced balance.

• Note 11 ： All the above transactions were eliminated on consolidation.

289

ASIA VITAL COMPONENTS CO. , LTD PARENT COMPANY ONLY FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan Dollars unless Otherwise Specified)

ENDORSEMENT/GUARANTEE PROVIDED TO OTHERS

TABLE 2

TABLE 2
(Note 1) No	Endorsement/Guarantee Provider	Guaranteed Party		Limits on Endorsement/Guarantee Amount Provided to Each Guaranteed Party(Note 3&4)	Maximum Balance for the Period (Note 5)	Ending Balance (Note 6)	Amount Actually Drawn (Note 7)	Amount of Endorsement/ Guarantee secured by Properties	Ratio of Accumulated Endorsement/Guarantee to Net Equity per Latest Financial Statements	Maximum Endorsement/ Guarantee Amount Allowed (Note 3&4)	Endorsement provided by parent company to subsidiaries (Note 8)	Endorsement provided by subsidiaries to parent company (Note 8)	Endorsement provided to subsidiaries in China (Note 8)	Note
		Name	Nature of Relationship (Note 2)
０ ０ ０ ０ ０ ０ ０ ０	ASIA VITAL COMPONENTS CO.,LTD ASIA VITAL COMPONENTS CO.,LTD ASIA VITAL COMPONENTS CO.,LTD ASIA VITAL COMPONENTS CO.,LTD ASIA VITAL COMPONENTS CO.,LTD ASIA VITAL COMPONENTS CO.,LTD ASIA VITAL COMPONENTS CO.,LTD ASIA VITAL COMPONENTS CO.,LTD	D-MAX TECHNOLOGY CO., LTD. AVC INTERNATIONAL CO., LTD.-SAMOA MACE TECH CORP. MERIT TRADING CORPORATION AVC INTERNATIONAL (SAMOA) CO., LTD. AVC PRECISION, CO., LTD. AVC OPTICS (WUHAN) CORP. ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD.	2 2 2 2 2 2 2 2	$2,115,319 $10,576,598 $10,576,598 $10,576,598 $10,576,598 $10,576,598 $10,576,598 $10,576,598	$40,000 $142,400 (USD5,000 thousand) $1,033,824 (USD36,300 thousand) $512,640 (USD18,000 thousand) $1,281,600 (USD45,000 thousand) $591,192 (USD10,000 thousand) (CNY70,000 thousand) $854,400 (USD30,000 thousand) $1,158,691 (USD33,000 thousand) (CNY50,000 thousand)	－ － － $512,640 (USD18,000 thousand) $1,139,200 (USD40,000 thousand) $591,192 (USD10,000 thousand) (CNY70,000 thousand) $712,000 (USD25,000 thousand) $1,158,691 (USD33,000 thousand) (CNY50,000 thousand)	－ － － － － $284,800 (USD10,000 thousand) $569,600 (USD20,000 thousand) $655,040 (USD23,000 thousand)	－ － － － － － － －	－ － － 4.85% 10.77% 5.59% 6.73% 10.96%	$15,864,898 $15,864,898 $15,864,898 $15,864,898 $15,864,898 $15,864,898 $15,864,898 $15,864,898	Y Y Y Y Y Y Y Y	N N N N N N N N	N N N N N Y Y Y	(Note 3) (Note 3) (Note 3) (Note 3) (Note 3) (Note 3) (Note 3) (Note 3)

Note 1 ： Companies are coded as follows:

• (1) ASIA VITAL COMPONENTS Co., LTD. is coded "0".

• (2) The investees are coded from "1" in the order presented in the table above.

Note 2 ： The relationships between endorsement/guarantee providers and guaranteed parties are categorized into the following types :

• (1) A company that has a business relationship with AVC.

• (2) A subsidiary in which AVC holds directly over 50% of common equity interest.

• (3) An investee in which AVC and its subsidiaries jointly hold over 50% of common equity interest.

• (4) A parent company that holds directly over 90% or indirectly over 90% through a subsidiary of the company's common equity interest.

• (5) A company that has provided guarantees to AVC, and vice versa, due to contractual requirements.

• (6) A company in which AVC jointly invests with other shareholders, and for which AVC has provided endorsement/guarantee in proportion to its shareholding percentage.

• (7) Companies in the same industry provide among themselves joint and several security for a perfomance guarantee of a sales contract for pre-construction homes pursunat to the Consumer Protection Act for each other.

• Note 3 ： ASIA VITAL COMPONENTS CO.,LTD. ： The aggregate amount of endorsements/guarantees for any single entity shall not exceed 20% of the Company's net worth, and the aggregate amount of endorsements/guarantees for any single overseas associated company shall not exceed 100% of the Company's equity net worth. The overall amount of guarantees/endorsements shall not exceed 150% of the Company's equity net worth.

• Note 4 ： ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD., ASIA VITAL COMPONENTS (CHINA) CO., LTD., ASIA VITAL COMPONENTS (CHENGDU) CO., LTD., AVC OPTICS (WUHAN) CORP., ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD.,AVC PRECISION, CO., LTD. : The amount of guarantees/endorsements provided to any single entity shall not exceed USD200 million dollars.

Note 5 : Maximum balance of endorsements/guarantees provided to others for current period.

Note 6 : The maximum balance for the period and ending balance represent the amounts approved by the Board Directors.

Note 7 : The company which endorsements/guarantees by AVC should disclosed the amount actually drawn within ending balance.

• Note 8 : Public company provided endorsements/guarantees to subsidiary or subsidiary provided endorsements/guarantees to public company or provided endorsements/guarantees which located in CHINA area coded "Y".

• ( Continued )

290

ASIA VITAL COMPONENTS CO. , LTD PARENT COMPANY ONLY FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan Dollars unless Otherwise Specified) ENDORSEMENT/GUARANTEE PROVIDED TO OTHERS

(Note 1) No	Endorsement/Guarantee Provider	Guaranteed Party	Guaranteed Party	Limits on Endorsement/Guarantee Amount Provided to Each Guaranteed Party (Note 3&4)	Maximum Balance for the Period (Note 5)	Ending Balance (Note 6)	Amount Actually Drawn (Note 7)	Amount of Endorsement/ Guarantee secured by Properties	Ratio of Accumulated Endorsement/Guarantee to Net Equity per Latest Financial Statements	Maximum Endorsement/ Guarantee Amount Allowed (Note 3&4)	Endorsement provided by parent company to subsidiaries (Note 8)	Endorsement provided by subsidiaries to parent company (Note 8)	Endorsement provided to subsidiaries in China (Note 8)	Note
		Name	Nature of Relationship (Note 2)
１ １ １ 1 １ 1 1 ２ ２	ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. ASIA VITAL COMPONENTS (CHINA) CO., LTD. AVC PRECISION, CO., LTD. ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. ASIA VITAL COMPONENTS (CHINA) CO., LTD. ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD. ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. ASIA VITAL COMPONENTS (CHINA) CO., LTD. ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD. AVC PRECISION, CO., LTD. ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. ASIA VITAL COMPONENTS (CHINA) CO., LTD. ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. ASIA VITAL COMPONENTS (CHENGDU) CO., LTD. ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. ASIA VITAL COMPONENTS (CHINA) CO., LTD. ASIA VITAL COMPONENTS (CHENGDU) CO., LTD. AVC OPTICS (WUHAN) CORP. ASIA VITAL COMPONENTS (CHINA) CO., LTD.	ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD. AVC PRECISION, CO., LTD. ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD. AVC PRECISION, CO., LTD. ASIA VITAL COMPONENTS (CHINA) CO., LTD. ASIA VITAL COMPONENTS (CHINA) CO., LTD. ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. ASIA VITAL COMPONENTS (CHINA) CO., LTD. AVC OPTICS (WUHAN) CORP. ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. ASIA VITAL COMPONENTS (CHENGDU) CO., LTD.	4 4 4 4 4 4 4 4	$5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand)	$306,392 (CNY70,000 thousand) $350,162 (CNY80,000 thousand) $919,176 (CNY210,000 thousand) $218,851 (CNY50,000 thousand) $656,554 (CNY150,000 thousand) $787,865 (CNY180,000 thousand) $656,554 (CNY150,000 thousand) $525,243 (CNY120,000 thousand) $350,162 (CNY80,000 thousand)	$306,392 (CNY70,000 thousand) $350,162 (CNY80,000 thousand) $437,703 (CNY100,000 thousand) $218,851 (CNY50,000 thousand) $656,554 (CNY150,000 thousand) $787,865 (CNY180,000 thousand) $656,554 (CNY150,000 thousand) $525,243 (CNY120,000 thousand) $350,162 (CNY80,000 thousand)	$105,598 (CNY24,125 thousand) $123,900 (CNY28,307 thousand) $221,944 (CNY50,707 thousand) $196,966 (CNY45,000 thousand) $330,689 (CNY75,551 thousand) $437,587 (CNY99,974 thousand) $8,659 (CNY1,978 thousand) $319,649 (CNY73.029 thousand) $213,346 (CNY48,742 thousand)	－ － $328,277 (CNY75,000 thousand) － － － － － －	3.87% 4.05% 4.63% 7.77% 9.24% 18.77% 23.31% 6.24% 8.17%	$5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand) $5,696,000 (USD200,000 thousand)	N N N N N N N N N	N N N N N N N N N	Y Y Y Y Y Y Y Y Y	(Note 4) (Note 4) (Note 4) (Note 4) (Note 4) (Note 4) (Note 4) (Note 4) (Note 4)

Note 1 ： Companies are coded as follows:

• (1) ASIA VITAL COMPONENTS Co., LTD. is coded "0".

• (2) The investees are coded from "1" in the order presented in the table above.

• Note 2 ： The relationships between endorsement/guarantee providers and guaranteed parties are categorized into the following types :

• (1) A company that has a business relationship with AVC.

• (2) A subsidiary in which AVC holds directly over 50% of common equity interest.

• (3) An investee in which AVC and its subsidiaries jointly hold over 50% of common equity interest.

• (4) A parent company that holds directly over 90% or indirectly over 90% through a subsidiary of the company's common equity interest.

• (5) A company that has provided guarantees to AVC, and vice versa, due to contractual requirements.

• (6) A company in which AVC jointly invests with other shareholders, and for which AVC has provided endorsement/guarantee in proportion to its shareholding percentage.

• (7) Companies in the same industry provide among themselves joint and several security for a perfomance guarantee of a sales contract for pre-construction homes pursunat to the Consumer Protection Act for each other.

• Note 3 ： ASIA VITAL COMPONENTS CO.,LTD. ： The aggregate amount of endorsements/guarantees for any single entity shall not exceed 20% of the Company's net worth, and the aggregate amount of endorsements/guarantees for any single overseas associated company shall not exceed 100% of the Company's net worth. The overall amount of guarantees/endorsements shall not exceed 150% of the Company's net worth.

• Note 4 ： ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD., ASIA VITAL COMPONENTS (CHINA) CO., LTD., ASIA VITAL COMPONENTS (CHENGDU) CO., LTD., AVC OPTICS (WUHAN) CORP., LTD., ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD., AVC PRECISION, CO., LTD. : The amount of guarantees/endorsements provided to any single entity shall not exceed USD200 million dollars.

• Note 5 : Maximum balance of endorsements/guarantees provided to others for current period.

• Note 6 : The maximum balance for the period and ending balance represent the amounts approved by the Board Directors.

• Note 7 : The company which endorsements/guarantees by AVC should disclosed the amount actually drawn within ending balance.

• Note 8 : Public company provided endorsements/guarantees to subsidiary or subsidiary provided endorsements/guarantees to public company or provided endorsements/guarantees which located in CHINA area coded "Y".

291

ASIA VITAL COMPONENTS CO. , LTD PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan Dollars unless Otherwise Specified)

MARKETABLE SECURITIES HELD (EXCLUDING INVESTMENTS IN SUBSIDIARIES, ASSOCIATES AND JOINTLY CONTROLLED ENTITIES)

TABLE 3

TABLE 3
Name of Held Company	Type and name of Marketable Securities	Relationship with the Company	Financial Statement Account	December 31, 2020
				Shares (In Thousands)	Carrying Amount	Percentage of Ownership	Market Value
ASIA VITAL COMPONENTS CO.,LTD MERIT TRADING CORPORATION MACE TECH CORP. ASIA VITAL COMPONENTS (CHINA) CO., LTD.	SENTELIC CORPORATION RTR-TECH TECHNOLOGY CO., LTD. APTOS TECHNOLOGY INC. UBIQCONN TECHNOLOGY, INC. FURUKAWA ELECTRIC (SHENZHEN) CO., LTD. SHENG-SHING CORP. Not listed (OTC) stocks SHENZHEN TIMELINK TECHNOLOGY CO., LTD. Not listed (OTC) stocks Not listed (OTC) stocks Not listed (OTC) stocks	－ － － － Other related parties － －	Financial assets measured at fair value through other comprehensive income, noncurrent Financial assets measured at fair value through other comprehensive income, noncurrent Financial assets measured at fair value through other comprehensive income, noncurrent Financial assets measured at fair value through other comprehensive income, noncurrent Financial assets measured at fair value through other comprehensive income, noncurrent Financial assets measured at fair value through other comprehensive income, noncurrent Financial assets measured at fair value through other comprehensive income, noncurrent	509 14,000 1,124 2,500 (Note) 703 2,273	$2,423 － － － $89,415 $9,611 －	1.69% 19.42% 1.27% 6.10% 9.06% 14.06% 10.80%	$2,423 － － － $89,415 $9,611 －

Note ： None amount of shares is issued publicly by Limited Company.

292

ASIA VITAL COMPONENTS CO. , LTD PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan Dollars unless Otherwise Specified)

RELATED PARTY TRANSACTIONS WITH PURCHASE OR SALES AMOUNT OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

TABLE 4	TABLE 4	TABLE 4
Company Name	Related Party	Nature of Relationships	Transaction Details				Abnormal Transaction		Notes/Accounts Payable or Receivable		Note
			Purchases/ Sales	Amount	Percentage to Total	Collection/ Payment Terms	Unit Price	Collection/ Payment Terms	Ending Balance	Percentage to Total
ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD	AVC INTERNATIONAL (SAMOA) CO., LTD. MERIT TRADING CORPORATION TONBRIDGE INVESTMENTS LTD. ASIA VITAL COMPONENTS (CHENGDU) CO., LTD. WUCHIDA INTERNATIONAL CO., LTD. ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. JADS CORPORATION (HK) LTD. AVC AMERICA, INC.	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary	Purchases Purchases Purchases Purchases Purchases Purchases Purchases Sales	($12,050,909) ($6,521,064) ($1,519,133) ($899,500) ($830,393) ($653,244) ($568,843) $750,550	(49%) (27%) (6%) (4%) (3%) (3%) (2%) 3%	Net 30 days from the end of the month of when invoice is issued by T/T Net 90 days from the end of the month of when invoice is issued by T/T Net 60 days from the end of the month of when invoice is issued by T/T Net 60 days from the end of the month of when invoice is issued by T/T Net 90 days from the end of the month of when invoice is issued by T/T Net 60 days from the end of the month of when invoice is issued by T/T Net 90 days from the end of the month of when invoice is issued by T/T Net 75 days from the end of the month of when invoice is issued by T/T	N/A N/A N/A N/A N/A N/A N/A N/A	N/A N/A N/A N/A N/A N/A N/A N/A	($3,026,160) ($2,984,589) ($429,846) ($356,992) ($212,525) ($265,892) ($310,209) $119,853	(37%) (37%) (5%) (4%) (3%) (3%) (4%) 5%

( Continued )

293

ASIA VITAL COMPONENTS CO. , LTD PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan Dollars unless Otherwise Specified)

RELATED PARTY TRANSACTIONS WITH PURCHASE OR SALES AMOUNT OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

Company Name	Related Party	Nature of Relationships	Transaction Details	Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Payable or Receivable	Notes/Accounts Payable or Receivable	Note
			Purchases/ Sales	Amount	Percentage to Total	Collection/ Payment Terms	Unit Price	Collection/ Payment Terms	Ending Balance	Percentage to Total
AVC INTERNATIONAL (SAMOA) CO., LTD. MERIT TRADING CORPORATION TONBRIDGE INVESTMENTS LTD. ASIA VITAL COMPONENTS (CHENGDU) CO., LTD. WUCHIDA INTERNATIONAL CO., LTD. ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. JADS CORPORATION (HK) LTD. AVC AMERICA, INC.	ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD	The company's ultimate parent The company's ultimate parent The company's ultimate parent The company's ultimate parent The company's ultimate parent The company's ultimate parent The company's ultimate parent The company's ultimate parent	Sales Sales Sales Sales Sales Sales Sales Purchases	$12,050,909 $6,521,064 $1,519,133 $899,500 $830,393 $653,244 $568,843 ($750,550)	93% 88% 75% 45% 88% 8% 95% (57%)	Net 30 days from the end of the month of when invoice is issued by T/T Net 90 days from the end of the month of when invoice is issued by T/T Net 60 days from the end of the month of when invoice is issued by T/T Net 75 days from the end of the month of when invoice is issued by T/T Net 90 days from the end of the month of when invoice is issued by T/T Net 60 days from the end of the month of when invoice is issued by T/T Net 60 days from the end of the month of when invoice is issued by T/T Net 90 days from the end of the month of when invoice is issued by T/T	N/A N/A N/A N/A N/A N/A N/A N/A	N/A N/A N/A N/A N/A N/A N/A N/A	$3,026,160 $2,984,589 $429,846 $356,992 $212,525 $265,892 $310,209 ($119,853)	88% 91% 63% 39% 87% 8% 92% (54%)

294

ASIA VITAL COMPONENTS CO. , LTD PARENT COMPANY ONLY FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan Dollars unless Otherwise Specified)

RECEIVABLES FROM RELATED PARTIES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

TABLE 5

TABLE 5
Company Name	Related Party	Nature of Relationships	Ending Balance	Turnover Ratio (times)	Overdue		Amounts Received in Subsequent Periods	Allowance for Doubtful Accounts
					Amount	Action Taken
AVC INTERNATIONAL (SAMOA) CO., LTD. MERIT TRADING CORPORATION ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD. ASIA VITAL COMPONENTS (CHENGDU) CO., LTD. TONBRIDGE INVESTMENTS LTD. WUCHIDA INTERNATIONAL CO., LTD. JADS CORPORATION (HK) LTD.	ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD ASIA VITAL COMPONENTS CO., LTD	The company's ultimate parent The company's ultimate parent The company's ultimate parent The company's ultimate parent The company's ultimate parent The company's ultimate parent The company's ultimate parent	$3,026,160 $2,984,589 $265,892 $356,992 $429,846 $212,525 $310,209	3.33 2.56 2.11 2.60 4.17 4.89 2.61	－ － － － － － －	(Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1)	－ － － － － － －	－ － － － － － －

Note 1 ： The Company balances its accounts regularly and writes off receivables against payables.

295

ASIA VITAL COMPONENTS CO. , LTD PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan Dollars unless Otherwise Specified)

NAMES, LOCATIONS AND RELATED INFORMATION OF INVESTEE COMPANIES (Not including investment in Mainland China)

TABLE 6

TABLE 6
Investor Company	Investee Company	Address	Main businesses and products	Initial Investment		Investment as of December 31, 2020			Net income (loss) of investee company	Investment income (loss) recognized	Note
				Ending balance	Beginning balance	Number of shares (thousand)	Percentage of ownership (%)	Carrying amount
ASIA VITAL COMPONENTS CO., LTD	AVC INTERNATIONAL CO., LTD.－B.V.I. CHIHUNG INTERNATIONAL LTD. MERIT TRADING CORPORATION RAYNEY INTERNATIONAL LTD. AVC AMERICA, INC. AVC INTERNATIONAL (SAMOA) CO., LTD. JADS CORPORATION (HK) LTD. ZIMAG TECHNOLOGY CO., INC. AVC INTERNATIONAL CO., LTD.－SAMOA FOSITEK CORP. HUNG YE INVESTMENT CO., LTD. D-MAX TECHNOLOGY CO., LTD. AVC EUROPE TECHNOLOGY GMBH AVC TECHNOLOGY (VIETNAM) COMPANY LIMITED	Vistra Corporate Services Centre, Wickhams CayⅡRoad Town Tortola VG1110 Virgin Islands, British Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road, Apia, Samoa Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road ,Apia, Samoa Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road, Apia, Samoa 48501 Warm Springs Blvd., Suite #109 Fremont, CA 94539-7750 Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road, Apia, Samoa FLAT/RM 6 16/F WORKINGBOND COMMERCIAL CENTRE 162-164 PRINCE EDWARD RD WEST MONGKOK KL No.2-2, Aly. 98, Ln. 800, Zhongshan S. Rd., Yangmei Dist., Taoyuan City 326, Taiwan (R.O.C.) Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road, Apia, Samoa 8F.-4, No.24, Wuquan 2nd Rd., Xinzhuang Dist., New Taipei City 242, Taiwan (R.O.C.) 7F.-3, No.24, Wuquan 2nd Rd., Xinzhuang Dist., New Taipei City 242, Taiwan (R.O.C.) 7F.-3, No.24, Wuquan 2nd Rd., Xinzhuang Dist., New Taipei City 242, Taiwan (R.O.C.) Bismarckstraße 100 (c/o Regus Mönchengladbach City Center), 41061 Mönchengladbach Lot CN05, Dong Van III Supporting Industrial Zone, Dong Van Ward, Duy Tien Town, Ha Nam Province, Vietnam	Investment holding Investment holding Trade Trade Trade Trade Trade Trade Investment holding Trade Sales and manufacture of electronic products Sales and manufacture of electronic parts and related products Sales and manufacture of electronic parts, computers and related products Manufacture, process and sales of molds and aluminum products	$5,147,294 $1,040,647 $29,088 $78,950 $91,903 $10,157 $327 $45,000 $32,120 $99,118 $60,000 $201,035 $9,050 $253,411	$5,147,294 $1,040,647 $29,088 $78,950 $91,903 $10,157 $327 $45,000 $32,120 $114,215 $60,000 $201,035 $9,050 －	16 32,770 892 2,400 41 300 10 2,700 1,000 7,524 6,000 28,500 250 －	100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 9.53% 100.00% 19.71% 100.00% 100.00% 100.00% 100.00%	$8,229,670 $4,534,352 $170,579 $122,803 $114,885 $59,458 $14,965 $40,112 $289,235 $174,721 $5,395 $395,369 $8,826 $253,411	$536,751 $563,860 $1,475 ($2,804) $24,639 ($719) $1,080 $58,934 ($14,292) $210,385 ($8,964) $93,167 $189 －	$173,802 $566,341 $1,513 ($2,804) $24,639 ($3,219) ($10,747) $5,706 ($14,292) $53,074 ($8,964) $93,263 $189 －

( Continued )

296

ASIA VITAL COMPONENTS CO. , LTD PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan Dollars unless Otherwise Specified)

NAMES, LOCATIONS AND RELATED INFORMATION OF INVESTEE COMPANIES (Not including investment in Mainland China)

Investor Company	Investee Company	Address	Main businesses and products	Initial Investment	Initial Investment	Investment as of December 31, 2020	Investment as of December 31, 2020	Investment as of December 31, 2020	Net income (loss) of investee company	Investment income (loss) recognized	Note
				Ending balance	Beginning balance	Number of shares (thousand)	Percentage of ownership (%)	Carrying amount
AVC INTERNATIONAL CO., LTD.－B.V.I. CHIHUNG INTERNATIONAL LTD. HUNG YE INVESTMENT CO., LTD. D-MAX TECHNOLOGY CO., LTD. WUCHIDA INTERNATIONAL CO., LTD. FOSITEK CORP.	MACE TECH CORP. AVC OPTICS CORP. TONBRIDGE INVESTMENTS LTD. KEY APPLICATION TECHNOLOGY CO., LTD. WUCHIDA INTERNATIONAL CO., LTD. D-MAX INTERNATIONAL CO., LIMITED FOREVER RICH INVESTMENTS CO.,LTD. MARKETHILL INVESTMENTS LTD.	Vistra Corporate Services Centre, Wickhams CayⅡRoad Town Tortola VG1110 Virgin Islands,British P.O. Box 31119 Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman, KY1-1205 Cayman Islands. Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road, Apia, Samoa 6F.-5, No.87, Xianzheng 6th Rd., Zhubei City, Hsinchu County 302, Taiwan (R.O.C.) Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road, Apia, Samoa FLAT/RM6 16F WORKINGBOND COMMERCIAL CENTRE 162-164 PRINCE EDWARD ROAD W MONG KOK KL 8F.-4, No.24, Wuquan 2nd Rd., Xinzhuang Dist., New Taipei City 242, Taiwan (R.O.C.) Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road, Apia, Samoa	Trade Investment holding Investment holding Investment holding Investment holding Investment holding Investment holding Sales and manufacture of electronic products	$319,776 $3,128,775 $101,772 $15,300 $132,004 $132,004 － $390,575	$319,776 $3,128,775 $101,772 $15,300 $132,004 $132,004 － $132,680	11,068 100,000 3,000 1,115 4,000 4,000 － 13,200	100.00% 100.00% 100.00% 16.31% 100.00% 100.00% － 100.00%	$1,833,263 $2,742,227 $231,274 － $302,372 $274,411 － $750,013	$326,973 $141,328 ($23,101) $29,203 $119,772 $119,423 － $222,131	$326,973 $141,328 ($23,101) ($567) $119,772 $120,869 － $216,100	(Note) (Note)

Note ： The company carried out a simple merger with FOREVER RICH INVESTMENTS CO.,LTD., a wholly-owned subsidiary of the company on May 15, 2020. After the merger, the company became the surviving company, and the former subsidiary held by FOREVER RICH INVESTMENTS CO.,LTD. was transferred to the company.

297

ASIA VITAL COMPONENTS CO. , LTD PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan Dollars unless Otherwise Specified)

INFORMATION ON INVESTMENT IN MAINLAND CHINA

INFORMATION ON INVESTMENT IN	INFORMATION ON INVESTMENT IN	INFORMATION ON INVESTMENT IN	INFORMATION ON INVESTMENT IN	INFORMATION ON INVESTMENT IN	INFORMATION ON INVESTMENT IN	MAINLAND CHINA	MAINLAND CHINA	MAINLAND CHINA	MAINLAND CHINA	MAINLAND CHINA	MAINLAND CHINA	MAINLAND CHINA	MAINLAND CHINA
TABLE 7
Investor Company	Investee Company	Main Businesses and Products	Total Amount of Paid-in Capital	Method ofInvestment (Note 1)	Accumulated Outflow of Investment from Taiwan as of January 1, 2020	Investment Flows		Accumulated Outflow of Investment from Taiwan as of December 31, 2020	Percentage of Ownership (Direct or Indirect Investment)	Profits/ Losses of the Investee Company	Share of Profits/Losses	Carrying Amount as of December 31, 2020	Accumulated Inward Remittance of Earnings as of December 31, 2020
						Outflow	Inflow
ASIA VITAL COMPONENTS CO. , LTD	ASIA VITAL COMPONENTS (SHEN ZHEN) CO., LTD.	Sales and manufacture of computers related products and computer cooling fans	$642,719	(2) AVC INTERNATIONAL CO., LTD.－B.V.I.	$642,719	－	－	$642,719	100.00%	($71,437)	($71,437)	$2,816,870	－
ASIA VITAL COMPONENTS CO. , LTD	FURUKAWA AVC ELECTRONICS (SUZHOU) CO., LTD.	Sales and manufacture of reflow machines, solder paste printers and notebook thermal modules	$267,247	(2) RAYNEY INTERNATIONAL LTD.	$54,176	－	－	$54,176	30.00%	($9,483)	($2,845)	$92,085	－
ASIA VITAL COMPONENTS CO. , LTD	ASIA VITAL COMPONENTS (SHANGHAI) CO.,LTD.	Sales and manufacture of notebook thermal modules	$200,073	(2) CHIHUNG INTERNATIONAL LTD.	$101,772	－	－	$101,772	100.00%	($23,109)	($23,109)	$229,523	－
ASIA VITAL COMPONENTS CO. , LTD	ASIA VITAL COMPONENTS (DONGGUAN) CO.,LTD.	Sales and manufacture of computers, electronic products and related parts	$514,105	(2) AVC INTERNATIONAL CO., LTD.－B.V.I.	$319,776	－	－	$319,776	100.00%	$430,674	$430,127	$1,541,032	－
ASIA VITAL COMPONENTS CO. , LTD	ASIA VITAL COMPONENTS (CHINA) CO., LTD.	Sales and manufacture of computers related products and computer cooling fans	$879,291	(2) CHIHUNG INTERNATIONAL LTD.	$879,291	－	－	$879,291	100.00%	$584,611	$584,611	$4,288,467	－
ASIA VITAL COMPONENTS CO. , LTD	FURUKAWA ELECTRIC (SHENZHEN) CO., LTD.	Sales and manufacture of automobile parts	$321,060	(2) MERIT TRADING CORPORATION	$29,088	－	－	$29,088	9.06%	$194,218	－	$89,415	－
ASIA VITAL COMPONENTS CO. , LTD	ASIA VITAL COMPONENTS (CHENGDU) CO., LTD.	Sales and manufacture of computers, related parts and accessories	$1,055,897	(2) AVC INTERNATIONAL CO., LTD.－B.V.I.	$1,055,897	－	－	$1,055,897	100.00%	$142,926	$142,926	$1,380,962	－
D-MAX TECHNOLOGY CO., LTD.	（JIASHAN）D-MAX ELECTRONICS CO.,LTD.	Sales and manufacture of electronic and photographic equipment	$132,004	(2) WUCHIDA INTERNATIONAL CO., LTD.	$132,004	－	－	$132,004	100.00%	$119,423	$119,423	$274,065	－
ASIA VITAL COMPONENTS CO. , LTD	AVC OPTICS (WUHAN) CORP.	Sales and manufacture of computers related products and computer cooling fans	$3,128,775	(2) AVC INTERNATIONAL CO., LTD.－B.V.I.	$3,128,775	－	－	$3,128,775	100.00%	$141,328	$141,328	$2,742,216	－
FOSITEK CORP.	FIRST DOME CORP TELECOM.,LTD.	Sales and manufacture of rails, shafts and metal stamping tooling	$287,809	(2) MARKETHILL INVESTMENTS LTD.	$29,914	$257,895	－	$287,809	100.00%	$248,120	$248,120	$738,369	－
FOSITEK CORP.	DONG GUAN DOWA ELECTRONICS CO.,LTD.	Sales and manufacture of membrane switches	－	(2) MARKETHILL INVESTMENTS LTD.	$97,879	－	－	$97,879	－	($27,067)	($27,067)	－	－

Accumulated Outflow of Investment from Taiwan to Mainland China as of December 31, 2019	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
(US$218,943,010) $6,729,186	(US$240,750,828) $6,856,583	(Note 3)

Note 1 ： The methods for investment in Mainland China are categorized into the following three types. Please specify the type.

• (1) Direct investment in Mainland China.

(2) Indirectly investment in Mainland China through companies registered in the third area (Please specify the name of the company in third region).

• (3) Others.

Note 2 ： The table is expressed in thousands of New Taiwan Dollars.

Note 3 ： The Company has obtained the certificate of being qualified for operating headquarters, issued by the Industrial Development Bureau, MOEA, the ceiling amount of the investment in Mainland China is not applicable to the Company.

Note 4：DONG GUAN DOWA ELECTRONICS CO., LTD. completed the liquidation process in December 2020, but the amount cannot be deducted because the funds are not remitted back to Taiwan.

298

ASIA VITAL COMPONENTS CO. , LTD PARENT COMPANY ONLY FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan Dollars unless Otherwise Specified)

Information of major shareholders

TABLE 9

TABLE 9
Shares Name	Number of shares (thousand)	Percentage of ownership
FURUKAWA ELECTRIC CO., LTD.	62,245	17.61%
The new labor pension found of discretionary Cathay Investment account for the second time in 2018.	29,071	8.22%

Note 1 ： The main shareholder information in this form is calculated by the collection company, on the last business day of each quarter, that the total information of the common

shares and special shares held by shareholders of the company that have completed the non-entity login delivery (including the storage shares) of the company amounts

to more than 5%. As for the share capital recorded in the Company's financial report and the number of unregistered shares actually completed by the Company, there

may be differences or differences due to the basis for the calculation of the company.

• Note 2 ： The opening of the information, if the shareholders will share the shares to the trust, is disclosed to the trustees to open a trust account of the individual sub-accounts.

As for the shareholders to handle the internal ownership declaration of more than 10% of the shares in accordance with the Securities Exchange Act, the shareholding of the

• shareholders includes their own shareholding plus their delivery of the trust and the use of decision-making rights for the trust property, etc., the relevant insider equity

declaration information can be found in the Market Observation Post System.

299